BWB US Equity☆

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The following discussion and analysis of the Company’s results of operations and financial condition should be read in conjunction with the Company’s consolidated financial statements and related notes included elsewhere in this report. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Certain risks, uncertainties and other factors, including but not limited to those set forth under “Forward-Looking Statements,” “Risk Factors” and elsewhere in this report, may cause actual results to differ materially from those projected in the forward-looking statements. The Company assumes no obligation to update any of these forward-looking statements. Readers of the Company’s Annual Report on Form 10-K should

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consider these risks and uncertainties in evaluating forward-looking statements and should not place undue reliance on forward-looking statements.

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The following consolidated selected financial data is derived from the Company’s audited consolidated financial statements as of and for the three years ended December 31, 2025. This information should be read in connection with our audited consolidated financial statements and related notes appearing elsewhere in this report.

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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ As of and for the year ended December 31, ​

(dollars in thousands, except per share data) ​ 2025 ​ 2024 ​ 2023 ​

Income Statement ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Provision for (Recovery of) Credit Losses ​ ​ 6,050 ​ ​ 3,525 ​ ​ (175) ​

Net Income Available to Common Shareholders ​ ​ 42,034 ​ ​ 28,771 ​ ​ 35,906 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Per Common Share Data ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Basic Earnings Per Share ​ $ 1.53 ​ $ 1.05 ​ $ 1.29 ​

Diluted Earnings Per Share ​ ​ 1.49 ​ ​ 1.03 ​ ​ 1.27 ​

Adjusted Diluted Earnings Per Share (1) ​ ​ 1.52 ​ ​ 1.04 ​ ​ 1.25 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Selected Performance Ratios ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Return on Average Assets (ROA) ​ ​ 0.87 % ​ 0.70 % ​ 0.89 %

Return on Average Shareholders' Equity (ROE) ​ ​ 9.53 ​ ​ 7.45 ​ ​ 9.73 ​

Return on Average Tangible Common Equity (1) ​ ​ 10.56 ​ ​ 7.75 ​ ​ 10.53 ​

Net Interest Margin (2) ​ ​ 2.63 ​ ​ 2.26 ​ ​ 2.42 ​

Core Net Interest Margin (1)(2) ​ ​ 2.50 ​ ​ 2.19 ​ ​ 2.34 ​

Yield on Interest Earning Assets ​ ​ 5.55 ​ ​ 5.40 ​ ​ 5.08 ​

Yield on Total Loans, Gross ​ ​ 5.73 ​ ​ 5.50 ​ ​ 5.21 ​

Cost of Interest Bearing Liabilities ​ ​ 3.81 ​ ​ 4.14 ​ ​ 3.61 ​

Cost of Total Deposits ​ ​ 3.12 ​ ​ 3.44 ​ ​ 2.73 ​

Noninterest Expense to Average Assets ​ ​ 1.47 ​ ​ 1.35 ​ ​ 1.32 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Adjusted Financial Ratios (1) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Adjusted Return on Average Assets ​ ​ 0.89 % ​ 0.71 % ​ 0.88 %

Adjusted Return on Average Shareholders' Equity ​ ​ 9.69 ​ ​ 7.50 ​ ​ 9.59 ​

Adjusted Return on Average Tangible Common Equity ​ ​ 10.77 ​ ​ 7.82 ​ ​ 10.36 ​

Adjusted Efficiency Ratio ​ ​ 52.2 ​ ​ 57.3 ​ ​ 53.4 ​

Adjusted Noninterest Expense to Average Assets ​ ​ 1.43 ​ ​ 1.34 ​ ​ 1.32 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Balance Sheet ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Average Shareholders' Equity to Average Assets ​ ​ 9.18 % ​ 9.41 % ​ 9.14 %

Loan to Deposit Ratio ​ ​ 99.7 ​ ​ 94.7 ​ ​ 100.4 ​

Core Deposits to Total Deposits (4) ​ ​ 77.6 ​ ​ 76.0 ​ ​ 68.7 ​

Uninsured Deposits to Total Deposits ​ ​ 29.8 ​ ​ 27.7 ​ ​ 24.3 ​

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​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ As of and for the year ended December 31, ​

(dollars in thousands, except per share data) ​ 2025 ​ 2024 ​ 2023 ​

Capital Ratios (Consolidated) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Common Equity Tier 1 Risk-based Capital Ratio ​ ​ 9.17 ​ ​ 9.08 ​ ​ 9.16 ​

Total Risk-based Capital Ratio ​ ​ 14.12 ​ ​ 13.76 ​ ​ 13.97 ​

Tangible Common Equity to Tangible Assets (1) ​ ​ 8.01 ​ ​ 7.36 ​ ​ 7.73 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Growth Ratios ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Percentage Change in Total Assets ​ ​ 6.7 % ​ 9.8 % ​ 6.1 %

Percentage Change in Total Loans, Gross ​ ​ 11.4 ​ ​ 3.9 ​ ​ 4.3 ​

Percentage Change in Total Deposits ​ ​ 5.7 ​ ​ 10.2 ​ ​ 8.6 ​

Percentage Change in Shareholders' Equity ​ ​ 12.9 ​ ​ 7.6 ​ ​ 8.0 ​

Percentage Change in Net Income ​ ​ 40.4 ​ ​ (17.9) ​ ​ (25.2) ​

Percentage Change in Diluted Earnings Per Share ​ ​ 44.9 ​ ​ (18.8) ​ ​ (26.3) ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Selected Asset Quality Data ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Loans 30-89 Days Past Due to Total Loans ​ ​ 0.02 % ​ 0.03 % ​ 0.41 %

Nonperforming Loans to Total Loans ​ ​ 0.51 % ​ 0.01 % ​ 0.02 %

Nonaccrual Loans to Total Loans ​ ​ 0.51 ​ ​ 0.01 ​ ​ 0.02 ​

Foreclosed Assets ​ $ — ​ $ — ​ $ — ​

Nonperforming Assets to Total Assets (3) ​ ​ 0.41 % ​ 0.01 % ​ 0.02 %

Net Loan Charge-Offs to Average Loans ​ ​ 0.04 ​ ​ 0.03 ​ ​ 0.01 ​

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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 other 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 service charges. The Company’s principal expenses are interest paid on deposit accounts and borrowings, employee compensation and other overhead expenses. The Company’s simple, 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.

Recent Developments

On June 24, 2025, the Company entered into a Subordinated Note Purchase Agreement with certain institutional accredited investors and qualified institutional buyers pursuant to which the Company sold and issued $80.0 million in aggregate principal amount of its 7.625% Fixed-to-Floating Rate Subordinated Notes due 2035 (the “Notes”). The Notes were issued by the Company to such purchasers at a price equal to 100% of their face amount. The Company used the net proceeds it received from the sale of the Notes to redeem $50 million of outstanding 5.25% Fixed-to-Floating Rate Subordinated Notes due 2030 and for general corporate purposes.

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On July 4, 2025, the U.S. government enacted tax legislation commonly referred to as the One Big Beautiful Bill Act. The Company evaluated the impact of the legislation in accordance with ASC 740 and determined that it did not have a material effect on the Company’s consolidated financial statements for the year ended December 31, 2025.

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On December 29, 2025, the Company closed its Country Village branch location, given the close proximity to its other branch locations.

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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.

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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 this report. 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. The use of estimates, assumptions, and judgments are necessary when financial assets and liabilities are required to be recorded or adjusted to reflect fair value. Assets carried at fair value inherently result in more financial statement volatility. Fair values and information used to record valuation adjustments for certain assets and liabilities are based on either quoted market prices or are provided by other independent third party sources, when available. When such information is not available, management estimates valuation adjustments. 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.

The following is a discussion of the critical accounting policies and significant estimates that require the Company to make complex and subjective judgments.

Allowance for Credit Losses

In accordance with ASC 326, Financial Instruments - Credit Losses, the allowance for credit losses on loans and leases is a valuation account that is deducted from the amortized cost basis of loans and leases to present the net amount expected to be collected on the loans and leases. Loans and leases are charged against the allowance for credit losses on loans and leases when management determines all or a portion of the loan or lease balance is uncollectible. Subsequent recoveries, if any, are credited to the allowance. The allowance is increased (decreased) by provisions (or recovery of) and reported in the income statement as a component of provisions for credit loss. The allowance for credit losses on off-balance sheet credit exposures is a liability account representing expected credit losses over the contractual period for which the Company is exposed to credit risk resulting from an off-balance sheet exposure.

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The amount of each allowance account represents management's best estimate of current expected credit losses on such financial instruments using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. The allowance for credit losses on loans and leases is measured on a collective basis for portfolios of loans when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. For determining the appropriate allowance for credit losses on a collective basis, the loan portfolio is segmented into pools based upon similar risk characteristics and a lifetime loss-rate model is utilized. Management qualitatively adjusts model results for reasonable and supportable forecasts and risk factors that are not considered within the modeling processes but are relevant in assessing the expected credit losses within the loan segment. These qualitative factor adjustments may increase or decrease management's estimate of expected credit losses by a calculated percentage or amount based upon the estimated level of risk. Due to the subjective nature of

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these estimates the various components of the calculation require significant management judgment and certain assumptions are highly subjective.

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Results of Operations

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Net Income

Net income was $46.1 million for the year ended December 31, 2025, compared to net income of $32.8 million for the year ended December 31, 2024. Earnings per diluted common share for the year ended December 31, 2025 were $1.49, compared to $1.03 per diluted common share for the year ended December 31, 2024. Adjusted net income (a non-GAAP financial measure) was $46.9 million for the year ended December 31, 2025, compared to $33.1 million for the year ended December 31, 2024. Adjusted earnings per diluted common share (a non-GAAP financial measure) were $1.52 for the year ended December 31, 2025, compared to $1.04 for the year ended December 31, 2024.

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 the 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 years ended December 31, 2025, 2024 and 2023, 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. This table is presented on a tax-equivalent basis, if applicable.

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Interest Earning Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Investment Securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Interest Bearing Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Taxable Equivalent Adjustment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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 table presents the changes in

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the volume and rate of interest bearing assets and liabilities for the year ended December 31, 2025, compared to the year ended December 31, 2024, and for the year ended December 31, 2024, compared to the year ended December 31, 2023:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ Year Ended December 31, 2025 ​ ​ Year Ended December 31, 2024

​ ​ ​ Compared with ​ ​ Compared with

​ ​ ​ Year Ended December 31, 2024 ​ ​ Year Ended December 31, 2023

​ ​ ​ Change Due To: ​ ​ Interest ​ ​ Change Due To: ​ ​ Interest

Interest Earning Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Investment Securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Interest Bearing Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Subordinated Debentures ​ ​ 978 ​ ​ 921 ​ ​ 1,899 ​ ​ 19 ​ ​ (19) ​ ​ —

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Interest Income, Interest Expense, and Net Interest Margin

Net interest income was $132.4 million for the year ended December 31, 2025, an increase of $30.2 million compared to $102.2 million for the year ended December 31, 2024. The increase in net interest income was primarily due to higher cash and securities balances, growth and higher yields in the loan portfolio, lower rates paid on deposits, and purchase accounting accretion, offset partially by growth in deposit balances.

Net interest margin (on a fully tax-equivalent basis) for the year ended December 31, 2025 was 2.63%, a 37 basis point increase from 2.26% for the year ended December 31, 2024. 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, for the year ended December 31, 2025 was 2.50%, a 31 basis point increase from 2.19% for the year ended December 31, 2024. The increase in the margin was primarily due to growth in the loan and securities portfolios at higher yields and purchase accounting accretion, offset partially by higher balances and rates paid on FHLB advances, as well as the refinancing of subordinated debt at the end of the second quarter of 2025.

Average interest earning assets were $5.11 billion for the year ended December 31, 2025, an increase of $534.5 million, or 11.7%, compared to $4.58 billion for the year ended December 31, 2024. The increase in average interest earning assets was primarily due to growth in the loan and securities portfolios and an increase in cash balances. Average interest bearing liabilities were $3.92 billion for the year ended December 31, 2025, an increase of $445.7 million, or 12.8%, compared to $3.47 billion for the year ended December 31, 2024. The increase in average

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interest bearing liabilities was primarily due to increases in savings and money market deposits, FHLB advances, and interest bearing transaction deposits, offset partially by a decrease in brokered deposits.

Average interest earning assets produced a tax-equivalent yield of 5.55% for the year ended December 31, 2025, compared to 5.40% for the year ended December 31, 2024. The cost of interest bearing liabilities was 3.81% for the year ended December 31, 2025, compared to 4.14% for the year ended December 31, 2024.

Interest Income. Total interest income on a tax-equivalent basis was $283.7 million for the year ended December 31, 2025, compared to $247.1 million for the year ended December 31, 2024. The $36.6 million, or 14.8%, increase in total interest income on a tax-equivalent basis was primarily due to growth and higher yields in the loan and securities portfolios.

Interest income on cash investments was $8.1 million for the year ended December 31, 2025, compared to $5.7 million for the year ended December 31, 2024. The $2.4 million increase in total interest income on cash investments was primarily due to higher balances during the year, offset partially by a decrease in rates. Interest income on the investment securities portfolio, on a fully-tax equivalent basis, was $39.6 million for the year ended December 31, 2025, compared to $34.3 million for the year ended December 31, 2024. The $5.3 million increase in total interest income on the investment securities portfolio was primarily due to a $101.9 million, or 14.6%, increase in average balances between the two periods.

Interest income on loans, on a fully-tax equivalent basis, for the year ended December 31, 2025 was $234.2 million, compared to $205.6 million for the year ended December 31, 2024. The $28.5 million, or 13.9%, increase was primarily due to loan growth and the repricing of the loan portfolio in the higher interest rate environment.

The aggregate loan yield, on a fully-tax equivalent basis, increased to 5.73% for the year ended December 31, 2025, which was a 23 basis point increase from 5.50% for the year ended December 31, 2024. Core loan yield, a non-GAAP financial measure, continued to rise as new loans originated at higher yields and the existing fixed rate portfolio repriced in the higher rate environment.

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

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ For the year ended December 31,

Accretion ​ 0.04 ​ ​ — ​ ​ — ​

Interest Expense. Interest expense on interest bearing liabilities was $149.4 million for the year ended December 31, 2025, compared to $143.7 million for the year ended December 31, 2024. The $5.7 million, or 4.0%, increase was primarily due to growth of the deposit portfolio.

Interest expense on deposits was $131.4 million for the year ended December 31, 2025, compared to $128.8 million for the year ended December 31, 2024. The $2.6 million, or 2.0%, increase in interest expense on deposits was primarily due to growth of the deposit portfolio, offset partially by lower rates paid on deposits. The cost of total deposits was 3.12% for the year ended December 31, 2025, a 32 basis point decrease, compared to 3.44% for the year ended December 31, 2024. The decrease was primarily due to lower rates paid on deposits following the interest rate cuts in 2024 and 2025 and decreases in brokered deposit balances.

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Interest expense on borrowings was $18.0 million for the year ended December 31, 2025, compared to $14.9 million for the year ended December 31, 2024. The $3.1 million, or 20.8%, increase was primarily due to an increased utilization of FHLB advances and higher balance and rate of subordinated debentures due to the subordinated debt refinance in the second quarter of 2025.

Provision for Credit Losses

The provision for credit losses on loans and leases was $5.7 million for the year ended December 31, 2025, compared to $2.9 million for the year ended December 31, 2024. The increase in the provision for credit losses on loans and leases was primarily attributable to growth in the loan portfolio and an increase in historical loss rates. The allowance for credit losses on loans and leases to total loans was 1.31% at December 31, 2025, compared to 1.35% at December 31, 2024.

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The following table presents a summary of the activity in the allowance for credit losses on loans and leases for the years ended December 31, 2025, 2024, and 2023:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended December 31,

Impact of Adopting CECL ​ ​ — ​ ​ — ​ ​ 650

Day 1 PCD Allowance ​ ​ — ​ ​ 114 ​ ​ —

Recoveries ​ ​ 69 ​ ​ 35 ​ ​ 22

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The provision for credit losses for off-balance sheet credit exposures was $400,000 for the year ended December 31, 2025, compared to $625,000 for the year ended December 31, 2024. The provision for the year ended December 31, 2025 was due to an increase in the volume of newly originated loans with unfunded commitments. The allowance for credit losses on off-balance sheet credit exposures was $4.0 million as of December 31, 2025, compared to $3.6 million as of December 31, 2024.

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The following table presents a summary of the activity in the provision for credit losses for the years ended December 31, 2025, 2024, and 2023:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended December 31,

Provision for Credit Losses on Loans and Leases ​ $ 5,650 ​ $ 2,900 ​ $ 2,050

Provision for (Recovery of) Credit Losses ​ $ 6,050 ​ $ 3,525 ​ $ (175)

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Noninterest Income

Noninterest income was $10.9 million for the year ended December 31, 2025, an increase of $3.5 million, or 48.1%, compared to $7.4 million for the year ended December 31, 2024. The increase was primarily due to higher swap fees, investment advisory fees, and customer service fees.

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

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended ​ ​ ​ ​ Year Ended ​ ​ ​

​ ​ December 31, ​ Increase/ ​ December 31, ​ Increase/

Noninterest Income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net Gain on Sales of Foreclosed Assets ​ ​ — ​ ​ 62 ​ ​ (62) ​ ​ 62 ​ ​ — ​ ​ 62

Investment Advisory Fees ​ ​ 973 ​ ​ — ​ ​ 973 ​ ​ — ​ ​ — ​ ​ —

FHLB Prepayment Income ​ ​ 301 ​ ​ — ​ ​ 301 ​ ​ — ​ ​ 792 ​ ​ (792)

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Noninterest Expense

Noninterest expense totaled $77.3 million for the year ended December 31, 2025, a $14.0 million, or 22.1%, increase compared to $63.3 million for the year ended December 31, 2024. The increase was primarily attributable to increases in salaries and employee benefits, professional and consulting fees, data processing, marketing and advertising, intangible asset amortization, operating costs related to the FMCB acquisition, and merger-related expenses. Merger-related expenses totaled $2.0 million for the year ended December 31, 2025, compared to $712,000 for the year ended December 31, 2024.

The Company had 322 full-time equivalent employees at December 31, 2025, compared to 290 employees at December 31, 2024. The increase during the year was largely driven by the hiring of key talent in roles across the organization.

Efficiency Ratio. The efficiency ratio, 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 was 53.5% for the year ended December 31, 2025, compared to 57.9% for the year ended December 31, 2024. The Company’s efficiency ratio has remained consistently below the industry median due in part to its “branch-light” model.

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

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Year Ended ​ ​ ​ ​ Year Ended ​ ​ ​

​ ​ December 31, ​ Increase/ ​ December 31, ​ Increase/

Noninterest Expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Intangible Asset Amortization ​ ​ 921 ​ ​ 78 ​ ​ 843 ​ ​ 78 ​ ​ 100 ​ ​ (22)

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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 $13.9 million for the year ended December 31, 2025, compared to $9.9 million for the year ended December 31, 2024. The effective combined federal and state income tax rate for both the years ended December 31, 2025 and December 31, 2024 was 23.2%.

Comparison of Results of Operations for the Years Ended December 31, 2024 and 2023

For a discussion of the Company’s results of operations for 2024 compared to 2023, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s 2024 Annual Report on Form 10-K, filed with the SEC on March 6, 2025.

Financial Condition

Overview

Total assets at December 31, 2025 were $5.41 billion, an increase of $340.8 million, or 6.7%, compared to $5.07 billion at December 31, 2024. The increase in total assets was primarily due to organic loan growth, offset partially by a decrease in cash and cash equivalents. Total gross loans at December 31, 2025 were $4.31 billion, an increase of $441.0 million, or 11.4%, compared to $3.87 billion at December 31, 2024.

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

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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 as available for sale.

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Securities available for sale were $776.4 million at December 31, 2025, an increase of $8.2 million, or 1.1%, compared to $768.2 million at December 31, 2024.

The following table presents the amortized cost and fair value of securities available for sale, by type, at December 31, 2025 and 2024:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Amortized ​ Fair ​ ​ ​ Amortized ​ Fair ​ ​ ​

Residential Pass-Through: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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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.

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 board of directors and management oversight, 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 were $4.31 billion at December 31, 2025, an increase of $441.0 million, or 11.4%, compared to $3.87 billion at December 31, 2024. The multifamily, construction and land development, and commercial real estate (“CRE”) nonowner occupied categories contributed most significantly to the $441.0 million of loan growth. As of December 31, 2025, multifamily loans increased $161.7 million, or 11.3%, construction and land development loans increased $118.9 million, or 122.3%, and CRE nonowner occupied loans increased $82.0 million, or 7.6%, when compared to December 31, 2024.The Bank’s pace of loan growth returned to more normalized levels in 2025 compared to the last few years. The Company’s loan growth was driven by the strong brand of the Bank in the Twin Cities market and the MSA-related market disruption resulting in client and banker acquisition opportunities, as well as favorable market conditions.

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

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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Real Estate Mortgage: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Allowance for Credit Losses ​ ​ (56,443) ​ ​ ​ ​ (52,277) ​ ​ ​

Net Deferred Loan Fees ​ ​ (8,966) ​ ​ ​ ​ (6,801) ​ ​ ​

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The Company primarily focuses on real estate mortgage lending, which constituted 79.7% of the portfolio as of December 31, 2025. The composition of the portfolio has remained relatively consistent with prior periods and the Company does not expect any significant changes in the foreseeable future in the composition of the loan portfolio or in the emphasis on real estate lending.

As of December 31, 2025, investor CRE loans totaled $3.01 billion, consisting of $1.59 billion of loans secured by multifamily residential properties, $1.17 billion of loans secured by CRE nonowner occupied, $216.2 million of construction and land development loans, and $45.2 million of 1-4 family construction loans. Investor CRE loans represented 69.9% of the total gross loan portfolio and 473.1% of the Bank’s total risk-based capital at December 31, 2025, compared to 68.4% and 462.0%, respectively, at December 31, 2024.

As of December 31, 2025, over 75% of the Bank’s real estate loan balances were secured by properties located in the Twin Cities MSA.

The following table provides a breakdown of CRE nonowner occupied loans by collateral types as of December 31, 2025 and 2024:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ Percent of ​ Percent of ​ ​ ​ ​ Percent of ​ Percent of ​

​ ​ ​ ​ ​ CRE Nonowner ​ Total Loan ​ ​ ​ ​ ​ CRE Nonowner ​ Total Loan ​

Collateral Type: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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The following tables present time to contractual maturity and sensitivity to interest rate changes for the loan portfolio at December 31, 2025 and 2024:

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​ ​ ​ ​ Due in One Year ​ ​ ​ More Than One ​ ​ ​ More Than Five ​ After

Real Estate Mortgage: ​ ​ ​ ​ ​ ​ ​ ​

Interest Rate Sensitivity: ​ ​ ​ ​ ​ ​ ​ ​

​

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ Due in One Year ​ ​ ​ More Than One ​ ​ ​ More Than Five ​ After

Real Estate Mortgage: ​ ​ ​ ​ ​ ​ ​ ​

Interest Rate Sensitivity: ​ ​ ​ ​ ​ ​ ​ ​

​

​

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 December 31, 2025. The Company had no assets classified as doubtful or loss at December 31, 2025.

​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Risk Category ​ ​ ​ ​

(dollars in thousands) ​ Watch/Special Mention ​ Substandard ​ Total

Leases ​ ​ — ​ ​ — ​ ​ —

Construction and Land Development ​ — ​ 34 ​ 34

1-4 Family Construction ​ ​ — ​ ​ — ​ ​ —

Real Estate Mortgage: ​ ​ ​ ​ ​ ​ ​ ​

Consumer and Other ​ ​ — ​ ​ — ​ ​ —

​

Loans that have potential weaknesses that warranted a watch or special mention rating at December 31, 2025 totaled $47.8 million, compared to $46.6 million at December 31, 2024.Loans that warranted a substandard risk rating at December 31, 2025 totaled $53.0 million, compared to $21.8 million at December 31, 2024. 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. Nonperforming assets consist of nonperforming loans plus foreclosed assets (i.e., real or personal property acquired through foreclosure). Nonaccrual loans totaled $22.0 million at December 31, 2025, compared to $301,000 at December 31, 2024. There were no loans 90 days past due and still accruing as of December 31, 2025 and 2024. There were also no foreclosed assets as of December 31, 2025 and 2024.

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

​ ​ ​ ​ ​ ​ ​ ​

​ ​ December 31, ​

(dollars in thousands) ​ ​ ​ 2025 ​ ​ ​ 2024 ​

Total Nonaccrual Loans ​ $ 22,034 ​ $ 301 ​

Total Nonperforming Loans ​ $ 22,034 ​ $ 301 ​

Total Nonperforming Assets (1) ​ $ 22,034 ​ $ 301 ​

Total Nonperforming Assets and Modified Accruing Loans ​ $ 22,034 ​ $ 301 ​

Nonaccrual Loans to Total Loans ​ 0.51 % 0.01 %

Nonperforming Loans to Total Loans ​ 0.51 ​ 0.01 ​

Nonperforming Assets to Total Loans Plus Foreclosed Assets (1) ​ 0.51 ​ 0.01 ​

​

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, place the loan on nonaccrual status) after it 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 and leases 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 during the years ended December 31, 2025 and 2024 was approximately $556,000 and $163,000, 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 December 31, 2025, the allowance for credit losses on loans and leases was $56.4 million, an increase of $4.2 million from $52.3 million at December 31, 2024. Net charge-offs totaled $1.5 million for the year ended December 31, 2025 and $1.2 million for the year ended December 31, 2024. The allowance for credit losses on loans and leases as a percentage of total loans was 1.31% at December 31, 2025, compared to 1.35% at December 31, 2024.

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

​ ​ ​ ​ ​ ​ ​ ​

​ ​ As of and for the year ended December 31, ​

Net Charge-offs (Recoveries) ​ ​ ​ ​ ​ ​ ​

Commercial ​ $ 1,501 ​ $ (22) ​

Leases ​ ​ 14 ​ ​ 11 ​

Real Estate Mortgage: ​ ​ ​ ​ ​

1-4 Family Mortgage ​ (12) ​ (3) ​

CRE Nonowner Occupied ​ (44) ​ 1,236 ​

Total Real Estate Mortgage Loans ​ (56) ​ 1,233 ​

Consumer and Other ​ 25 ​ ​ 9 ​

Total Net Charge-offs ​ $ 1,484 ​ $ 1,231 ​

Net Charge-offs (Recoveries) to Average Loans ​ ​ ​ ​ ​

Real Estate Mortgage: ​ ​ ​ ​ ​ ​

CRE Nonowner Occupied ​ 0.00 ​ ​ 0.12 ​

Total Real Estate Mortgage Loans ​ 0.00 ​ ​ 0.04 ​

Consumer and Other ​ 0.15 ​ ​ (0.04) ​

Total Net Charge-offs to Average Loans ​ 0.04 % 0.03 %

Allowance for Credit Losses to Total Gross Loans ​ 1.31 % 1.35 %

​

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

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ December 31, ​ December 31, ​

(dollars in thousands) ​ ​ ​ Amount ​ ​ ​ Percent ​ ​ ​ Amount ​ ​ ​ Percent ​

Construction and Land Development ​ 1,687 ​ 3.0 ​ 866 ​ 1.7 ​

Real Estate Mortgage: ​ ​ ​ ​ ​ ​ ​ ​ ​

​

Goodwill and Other Intangible Assets

Goodwill was $12.0 million at both December 31, 2025 and 2024. Goodwill is not amortized but is subject to, at a minimum, an annual test for impairment. Other intangible assets consist of core deposit relationships and favorable lease term intangibles. Total other intangible assets at December 31, 2025 and 2024 were $6.9 million and $7.9 million, respectively. Other intangible assets are amortized over their estimated useful life.

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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:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

Total deposits at December 31, 2025 were $4.32 billion, an increase of $233.6 million, or 5.7%, compared to total deposits of $4.09 billion at December 31, 2024. Core deposits, defined as total deposits excluding brokered deposits and time deposits greater than $250,000, were $3.35 billion at December 31, 2025, an increase of $244.6 million, or 7.9%, compared to $3.11 billion at December 31, 2024. Growth in deposits was primarily due to an increase in noninterest bearing transaction deposits and savings and money market accounts, offset partially by a decrease in time deposits and brokered deposits.

The Company relies on increasing the deposit base to fund loans and other asset growth. The Company is in ahighly competitive market and competes for local deposits by offering attractive products with competitive rates. TheCompany expects to have a higher average cost of funds for local deposits compared to competitor banks due to the lackof an extensive branch network. The Company’s strategy is to offset the higher cost of funding with a lower level ofoperating expense. When appropriate, the Company utilizes alternative funding sources such as brokered deposits. Thebrokered deposit market provides flexibility in structure, optionality and efficiency not afforded in traditional retaildeposit channels. At December 31, 2025, total brokered deposits were $810.5 million, a decrease of $15.3 million, or 1.8%, compared to total brokered deposits of $825.8 million at December 31, 2024. Brokered deposits continue to be used as a supplemental funding source, as needed, to support loan portfolio growth.

The following table presents the average balance and average rate paid on each of the following deposit categories for the years ended December 31, 2025, 2024, and 2023:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ As of and for the ​ As of and for the ​ As of and for the ​

​ ​ Year Ended ​ Year Ended ​ Year Ended ​

​ ​ Average ​ Average ​ Average ​ Average ​ Average ​ Average ​

​

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The following table presents time deposits, including brokered time deposits, that are in excess of the FDIC insurance limit, currently $250,000, by time remaining until maturity:

​ ​ ​ ​

​ ​ December 31,

(dollars in thousands) ​ 2025

Three Months or Less ​ $ 106,553

Over Three Months through Six Months ​ ​ 18,210

Over Six Months through 12 Months ​ ​ 25,903

​

The Company’s total uninsured deposits, which are the amounts of deposit accounts that exceed the FDIC insurance limit, currently $250,000, were approximately $1.29 billion, or 30% of total deposits, at December 31, 2025 and $1.14 billion, or 28% of total deposits, at December 31, 2024. These amounts were estimated based on the same methodologies and assumptions used for regulatory reporting purposes.

Borrowed Funds

Federal Funds Purchased

In addition to deposits, the Company utilizes overnight borrowings to meet the daily liquidity needs as a supplemental funding source for loan growth. The Company had no outstanding federal funds purchased as of each of December 31, 2025 and 2024.

Other Borrowings

At December 31, 2025, the Company had outstanding FHLB advances of $399.5 million, compared to $359.5 million at December 31, 2024. 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 $611.3 million and $483.2 million at December 31, 2025 and 2024, 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 Company’s revolving line of credit is $40.0 million, and the facility matures on September 1, 2026. As of December 31, 2025, the Company had no outstanding balances under the revolving line of credit, compared to $13.8 million as of December 31, 2024. The Company had two outstanding letters of credit totaling $6.4 million under this facility as of December 31, 2025 and 2024, 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 December 31, 2025, 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 $1.03 billion and $925.8 million at December 31, 2025 and 2024, respectively. As of December 31, 2025 and 2024, the Company had no outstanding advances from the discount window.

Subordinated Debentures

As of December 31, 2025 and 2024, the Company had subordinated debentures, net of issuance costs of $108.7 million and $79.7 million, respectively.

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For additional information, see “Note 13 – Subordinated Debentures” of the Company’s Consolidated Financial Statements included as part of this report.

Contractual Obligations

The following table presents supplemental information regarding total contractual obligations at December 31, 2025:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ Within ​ One to ​ Three to ​ After ​ ​ ​

Deposits Without a Stated Maturity ​ $ 3,343,186 ​ $ — ​ $ — ​ $ — ​ $ 3,343,186

Subordinated Debentures ​ ​ — ​ ​ — ​ ​ — ​ ​ 110,000 ​ ​ 110,000

Operating Lease Obligations ​ ​ 543 ​ ​ 733 ​ ​ 237 ​ ​ — ​ ​ 1,513

​

Operating lease obligations are in place for facilities and land on which banking branches are located. See “Note 9 – Leases” of the Company’s Consolidated Financial Statements included as part of this report for additional information.

​

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 December 31, 2025 was $517.1 million, an increase of $59.2 million, or 12.9%, compared to shareholders’ equity of $457.9 million at December 31, 2024. The increase was primarily due to net income retained and a decrease in unrealized losses in the securities portfolio, offset partially by a decrease in unrealized gains in the derivatives portfolio, preferred stock dividends, and stock repurchases.

Tangible book value per share, a non-GAAP financial measure, was $15.55 as of December 31, 2025, an increase of 15.3% from $13.49 as of December 31, 2024. Tangible common equity as a percentage of tangible assets, a non-GAAP financial measure, was 8.01% at December 31, 2025, compared to 7.36% at December 31, 2024.

​

Stock Repurchase Program. During the year ended December 31, 2025, the Company repurchased 167,709 shares of its common stock, representing 0.6% of the Company’s outstanding shares. Shares were repurchased during this period at a weighted average price of $13.07 for a total of $2.2 million. All shares repurchased under the stock repurchase program were converted to authorized but unissued shares. The Company remains committed to maintaining strong capital levels while enhancing shareholder value, use of its stock repurchase program is based on various factors including valuation, capital levels and other uses of capital. As of December 31, 2025, the remaining amount that could be used to repurchase shares under the stock repurchase program was $13.1 million.

​

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 December 31, 2025. The regulatory capital ratios for the Company and the Bank to meet the minimum

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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 are as of the dates indicated.

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ Minimum Required ​ For Capital Adequacy ​ To be Well Capitalized ​

​ ​ Actual ​ Purposes ​ Conservation Buffer ​ Action Regulations ​

December 31, 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Company (Consolidated): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Bank: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ Minimum Required ​ For Capital Adequacy ​ To be Well Capitalized ​

​ ​ Actual ​ Purposes ​ Conservation Buffer ​ Action Regulations ​

December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Company (Consolidated): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Bank: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

The Company and the Bank are subject to stringent regulatory capital requirements and related Dodd-Frank Wall Street Reform and Consumer Protection Act regulations. The rules require a capital conservation buffer of 2.5% that was 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 December 31, 2025, 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.

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

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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 expected credit losses.

The following table presents credit arrangements and financial instruments whose contract amounts represent credit risk as of December 31, 2025 and 2024:

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ Fixed ​ ​ ​ Variable ​ ​ ​ Fixed ​ ​ ​ Variable

(dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

Commitments to extend credit beyond current funding are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Such commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of credit, is based on management’s credit evaluation. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties.

​

Standby letters of credit are conditional commitments issued by us to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. Commercial letters of credit are issued specifically to facilitate trade or commerce and are paid directly when the underlying transaction is consummated. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

​

The Company had outstanding letters of credit with the FHLB in the amount of $109.0 million and $103.2 million at December 31, 2025 and 2024, respectively, on behalf of customers and to secure public deposits.

​

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 flows and collateral needs without adversely affecting either daily operations or financial condition. The Bank’s Asset Liability Management (“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 $2.51 billion as of December 31, 2025, compared to $2.30 billion at December 31, 2024.

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

​ ​ ​ ​ ​ ​ ​ ​

(dollars in thousands) ​ ​ ​ ​ ​ ​

Ratio of Primary Liquidity to Total Deposits ​ 14.3 % 16.3 %

​ ​ ​ ​ ​ ​ ​ ​

Secondary Liquidity—Off-Balance Sheet Borrowing Capacity ​ ​ ​ ​ ​ ​ ​

Net Secured Borrowing Capacity with the FHLB ​ $ 611,349 ​ $ 483,245 ​

Unsecured Borrowing Capacity with Correspondent Lenders ​ 220,000 ​ 200,000 ​

Secured Borrowing Capacity with Correspondent Lender ​ ​ 33,605 ​ ​ 19,855 ​

Ratio of Primary and Secondary Liquidity to Total Deposits ​ 58.1 % 56.2 %

​

During the year ended December 31, 2025, primary liquidity decreased $48.1 million due to a decrease in cash and cash equivalents of $91.9 million, offset partially by a $35.6 million decrease in pledged securities and an increase in securities available for sale of $8.2 million. Secondary liquidity increased $262.5 million as of December 31, 2025 due to a $128.1 million increase in the borrowing capacity with the FHLB, a $100.6 million increase in the borrowing capacity with the Federal Reserve Bank, a $20.0 million increase in the unsecured borrowing capacity with various correspondent lenders, and a $13.8 million increase in the secured borrowing capacity with a correspondent lender.

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 customer 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 December 31, 2025, core deposits totaled approximately $3.35 billion and represented 77.6% 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 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. At December 31, 2024, brokered deposits totaled $825.8 million, consisting of $698.3 million of brokered time deposits and $127.4 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. As of December 31, 2025, the Company was in compliance with all established liquidity guidelines in the policy.

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GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

Some of the financial data included in this report are not measures of financial performance recognized by GAAP. In management’s judgment, the adjustments made to operating revenue allow investors and analysts to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items that are unrelated to the Company’s core business. Management uses these non-GAAP financial measures in the analysis of performance:

​

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​

The Company believes these non-GAAP financial measures provide useful information to management and investors that is supplementary to the financial condition, results of operations and cash flows computed in accordance with GAAP; however, the Company acknowledges that these non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use. Financial measures computed in accordance with GAAP can be found within the consolidated selected financial data appearing at the beginning of management’s discussion and analysis of financial condition and results of operations within this report. The following reconciliation table provides a more detailed analysis of these non-GAAP financial measures:

​

​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ As of and for the year ended December 31, ​

Pre-Provision Net Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: (Gain) Loss on Sales of Securities ​ ​ (614) ​ ​ (385) ​ ​ 33 ​

Less: FHLB Advance Prepayment Income ​ ​ (301) ​ ​ — ​ ​ (792) ​

Total Operating Noninterest Income ​ ​ 10,000 ​ ​ 6,983 ​ ​ 5,734 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Plus: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Non-Operating Revenue Adjustments ​ ​ 915 ​ ​ 385 ​ ​ 759 ​

Less: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Provision (Recovery of) for Credit Losses ​ ​ 6,050 ​ ​ 3,525 ​ ​ (175) ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Pre-Provision Net Revenue Return on Average Assets ​ ​ 1.24 % ​ 0.98 % ​ 1.15 %

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Adjusted Pre-Provision Net Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: Merger-related Expenses ​ ​ (1,981) ​ ​ (712) ​ ​ — ​

Adjusted Total Operating Noninterest Expense ​ $ 75,290 ​ $ 62,588 ​ $ 59,320 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​

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​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ As of and for the year ended December 31, ​

Core Net Interest Margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Purchase Accounting Accretion: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Loan Accretion ​ ​ (1,693) ​ ​ — ​ ​ — ​

Bond Accretion ​ ​ (852) ​ ​ (91) ​ ​ — ​

Bank-Owned Certificates of Deposit Accretion ​ ​ (33) ​ ​ — ​ ​ — ​

Deposit Certificates of Deposit Accretion ​ ​ (88) ​ ​ — ​ ​ — ​

Total Purchase Accounting Accretion ​ ​ (2,666) ​ ​ (91) ​ ​ — ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Core Net Interest Margin ​ 2.50 % 2.19 % 2.34 %

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Core Loan Yield ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Loan Accretion ​ ​ (1,693) ​ ​ — ​ ​ — ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Efficiency Ratio ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: Amortization of Intangible Assets ​ ​ (921) ​ ​ (78) ​ ​ (100) ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: (Gain) Loss on Sales of Securities ​ ​ (614) ​ ​ (385) ​ ​ 33 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Adjusted Efficiency Ratio ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: Amortization of Intangible Assets ​ ​ (921) ​ ​ (78) ​ ​ (100) ​

Less: Merger-related Expenses ​ ​ (1,981) ​ ​ (712) ​ ​ — ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: (Gain) Loss on Sales of Securities ​ ​ (614) ​ ​ (385) ​ ​ 33 ​

Less: FHLB Advance Prepayment Income ​ ​ (301) ​ ​ — ​ ​ (792) ​

Adjusted Efficiency Ratio ​ 52.2 % 57.3 % 53.4 %

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Adjusted Noninterest Expense to Average Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: Merger-related Expenses ​ ​ (1,981) ​ ​ (712) ​ ​ — ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Adjusted Noninterest Expense to Average Assets ​ ​ 1.43 % ​ 1.34 % ​ 1.32 %

​

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​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

​ ​ As of and for the year ended December 31, ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Tangible Common Equity/Tangible Assets ​ ​ 8.01 % 7.36 % 7.73 %

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Tangible Book Value Per Share ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Less: Effects of Intangible Assets ​ ​ (0.68) ​ ​ (0.72) ​ ​ (0.10) ​

Tangible Book Value Per Common Share ​ $ 15.55 ​ $ 13.49 ​ $ 12.84 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Return on Average Tangible Common Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net Income Available to Common Shareholders ​ $ 42,034 ​ $ 28,771 ​ $ 35,906 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Return on Average Tangible Common Equity ​ ​ 10.56 % ​ 7.75 % ​ 10.53 %

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Adjusted Diluted Earnings Per Common Share ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net Income Available to Common Shareholders ​ $ 42,034 ​ $ 28,771 ​ $ 35,906 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Add: Merger-related Expenses ​ ​ 1,981 ​ ​ 712 ​ ​ — ​

Less: FHLB Advance Prepayment Income ​ ​ (301) ​ ​ — ​ ​ (792) ​

Less: (Gain) Loss on Sales of Securities ​ ​ (614) ​ ​ (385) ​ ​ 33 ​

Less: Tax Impact of Adjustments ​ ​ (247) ​ ​ (76) ​ ​ 181 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Adjusted Diluted Earnings Per Common Share ​ $ 1.52 ​ $ 1.04 ​ $ 1.25 ​

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Adjusted Return on Average Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Add: Total Adjustments ​ ​ 1,066 ​ ​ 327 ​ ​ (759) ​

Less: Tax Impact of Adjustments ​ ​ (247) ​ ​ (76) ​ ​ 181 ​

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Adjusted Return on Average Assets ​ ​ 0.89 % ​ 0.71 % ​ 0.88 %

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Adjusted Return on Average Shareholders' Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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Adjusted Return on Average Shareholders' Equity ​ ​ 9.69 % ​ 7.50 % ​ 9.59 %

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Adjusted Return on Average Tangible Common Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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Adjusted Return on Average Tangible Common Equity ​ ​ 10.77 % ​ 7.82 % ​ 10.36 %

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­­ITEM 7A. 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. Fair value swaps are used to mitigate the effect of changing interest rates on the fair values of fixed rate available for sale securities. At December 31, 2025 and 2024, these fair value hedges had a total notional amount of $242.3 million and $145.9 million, respectively. 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. At December 31, 2025 and 2024, these cash flow hedges had a total notional amount of $388.0 million and $303.0 million, 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 can incorporate 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 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

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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 December 31, 2025 and 2024, 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) ​ December 31, 2025 ​ December 31, 2024

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

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The table above indicates that as of December 31, 2025, in the event of an immediate and sustained 400 basis point increase in interest rates, the Company would experience a 6.09% decrease in net interest income. In the event of an immediate 400 basis point decrease in interest rates, the Company would experience a 19.53% 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 prepayment 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.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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Report of Independent Registered Public Accounting Firm

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To the Shareholders and the Board of Directors of Bridgewater Bancshares, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Bridgewater Bancshares, Inc. and its subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated February 25, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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Allowance for credit losses on loans

As described in Notes 1 and Note 6 to the consolidated financial statements, the allowance for credit losses on loans (allowance) totaled $56.4 million at December 31, 2025. The allowance is a valuation account that is deducted from the Company’s amortized cost basis of loans to present the net amount of loans for investment expected to be collected over their contractual life. The allowance is measured on a collective or pooled basis when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated on an individual basis at the balance sheet date. At December 31, 2025 the general reserve on loans collectively evaluated for impairment totaled $52.6 million and there was $3.8 million on loans individually evaluated.

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The measurement of the allowance is based on relevant available information from internal and external sources, related to past events, current conditions and reasonable and supportable forecasts. The Company uses the weighted-average

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remaining maturity (WARM) method as a basis for estimated expected credit loss. The WARM method uses a historical average annual charge off rate. This average annual charge off rate contains loss content over a historical lookback period and is used as a foundation for estimating the allowance for the remaining outstanding balances of loans by segment at the balance sheet date. The average annual charge off rate is applied to the contractual term to determine the unadjusted historical charge off rate. The calculation of the unadjusted historical charge off rate is then adjusted for current conditions and for reasonable and supportable forecast periods through qualitative factors prior to being applied to the current balance of the loan segments.

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Forecast adjustments to the historical loss rate are based on a forecast of the U.S. national unemployment rate, a forecast of the difference between the 10-year and 3-month treasury rates, and the most recent available BBB rated corporate bond spreads to U.S. Treasury securities, or BBB Spread. The forecast overlay adjustment for the reasonable and supportable forecast assumes an immediate reversion after a one-year forecast period to historical loss rates for the remaining life of the respective loan segment. Qualitative factors are used to cover losses that are expected but, in the Company’s assessment, may not be adequately represented in the quantitative (historical loss factors) analysis or the forecasts described above. These qualitative factors serve to compensate for additional areas of uncertainty inherent in the portfolio that are not reflected in the historic loss factors. Each qualitative loss factor, for each loan segment within the portfolio, incorporates consideration for a minimal to maximum range for loss factors. These qualitative factor adjustments may increase or decrease the Company’s estimate of expected credit losses and are applied to each loan segment. The qualitative factors applied to each loan segment include changes in lending policies and procedures, general economic and business conditions, the nature, volume and terms of the loans, the experience, depth and ability of lending staff, quality of the loan review function, the value of underlying collateral, competition, legal and regulatory factors, the volume and severity of watchlist and past due loans and the level of concentrations.

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We identified the qualitative factors and forecasted adjustments applied to the allowance as a critical audit matter as auditing management’s determination of the qualitative factors required significant auditor judgement as the estimate is highly sensitive to changes in significant assumptions.

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Our audit procedures related to the Company’s qualitative factors and forecasted adjustments applied to the allowance included the following, among others:

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