HWBK 10-K & 10-Q changes, risk factors and insider trading

Because We Primarily Serve Central, West Central Missouri, and Eastern Kansas, a Decline in the Local Economic Conditions Could Lower the Company's Profitability. The profitability of the Company is dependent on the profitability of the Bank, which operates out of central and west-central Missouri,Missouri and extends into eastern Kansas as part of the Kansas City metro.MSA. The financial condition of the Bank is affected by slowing or recessionary economic conditions and business activity prevailing in the portionsportion of Missouri and Kansas in which its operations are located. Although our customers' business and financial interests may extend well beyond our market areas, the financial conditions of both the Company and the Bank would be adversely affected by deterioration in the general economic and real estate climate in Missouriour and Kansas.markets.

Interest Rate Changes May Reduce the Profitability of the Company and the Bank. The primary source of earnings for the Bank is net interest income. To be profitable, the Bank has to earn more money in interest and fees on loans and other interest-earning assets than it pays as interest on deposits and other interest-bearing liabilities and as other expenses. If prevailing interest rates decrease, the amount of interest the Bank earns on loans and investment securities may decrease more rapidly than the amount of interest the Bank has to pay on deposits and other interest-bearing liabilities. This would result in a decrease in the profitability of the Company and the Bank.

Fluctuations in interest rates will ultimately affect both the level of income and expense recorded on a large portion of the Bank's assets and liabilities, and the fair value of all interest-earning assets, other than interest-earning assets that mature in the short term. In the fourth quarter of 2023, the Company repositioned its balance sheet by selling $83.7 million in book value of investment securities for an after-tax realized loss of $9.1 million. The Bank's interest rate management strategy is designed to stabilize net interest income and preserve capital over a broad range of interest rate movements by matching the interest rate sensitivity of assets and liabilities. Although the Company believes that the Bank's current mix of loans, mortgage-backed securities, investment securities and deposits is reasonable, significant fluctuations in interest rates may have a negative effect on the profitability of the Bank.

Our Business Depends On Our Ability to Successfully Manage Credit Risk. The operation of our business requires us to manage credit risk. As a lender, the Bank is exposed to the risk that borrowers will be unable to repay their loans according to their terms, and that the collateral securing repayment of their loans, if any, may not be sufficient to ensure repayment. In addition, there are risks inherent in making any loan, including risks with respect to the period of time over which the loan may be repaid, risks relating to proper loan underwriting, risks resulting from changes in economic and industry conditions and risks inherent in dealing with individual borrowers. In order to successfully manage credit risk, we must, among other things, maintain disciplined and prudent underwriting standards and ensure that our loan officers follow those standards. The weakening of these standards for any reason, such as an attempt to attract higher yielding loans, a lack of discipline or diligence by our employees in underwriting and monitoring loans, the inability of our employees to adequately adapt policies and procedures to address changes in economic or other conditions affecting borrowers (such as the current recessionaryinflationary environment and higherelevated interest rates) and the quality of our loan portfolio, may result in loan defaults, foreclosures and additional charge-offs and may necessitate that we significantly increase our allowance for credit losses, each of which could adversely affect our net income. As a result, our inability to successfully manage credit risk could have a material adverse effect on our business, financial condition or results of operations.

The Company's Profitability Depends On the Bank's Asset Quality and Lending Risks. Success in the banking industry largely depends on the quality of loans and other assets. A significant source of risk for us arises from the possibility that losses will be sustained because borrowers, guarantors and related parties may fail to perform in accordance with the terms of their loans. The Bank's loan officers are actively encouraged to identify deteriorating loans. Loans are also monitored and categorized through an analysis of their payment status. The Bank's failure to timely and accurately monitor the quality of its loans and other assets could have a materially adverse effect on the operations and financial condition of the Company and the Bank. There is a degree of credit risk associated with any lending activity. The Bank attempts to minimize its credit risk through loan diversification. Although the Bank's loan portfolio is varied, with no undue concentration in any one industry, substantially all of the loans in the portfolio have been made to borrowers in central, west central, and southwest Missouri, and eastern Kansas as part of the Kansas City metro.Missouri. Therefore, the loan portfolio is susceptible to factors affecting the central, west central, and southwest Missouri,Missouri andarea, easternas well as the Kansas City MSA, and the level of non-performing assets is heavily dependent upon local conditions. There can be no assurance that the level of the Bank's non-performing assets will not increase above current levels. High levels of non-performing assets could have a materially adverse effect on the operations and financial condition of the Company and the Bank.

The Provision for Probable Credit Losses May Need to Be Increased. The Bank makes a provision for credit losses based upon management's estimate of probable losses in the loan portfolio and its consideration of prevailing economic and environmental conditions. The amount of future loan losses is susceptible to changes in economic, operating and other conditions, including changes in interest rates, which may be beyond the Company's control, and these losses may exceed current estimates. We cannot fully predict the amount or timing of losses or whether the loss allowance will be adequate in the future. The Bank may need to increase the provision for credit losses through additional provisions in the future if, among other things, the financial condition of any of its borrowers deteriorates, if its borrower fails to perform its obligations to it, or if real estate values decline. Furthermore, various regulatory agencies, as an integral part of their examination process, periodically review the Bank's loan portfolio, provision for credit losses, and real estate acquired by foreclosure. Such agencies may require the Bank to recognize additions to the provision for credit losses based on their judgments of information available to them at the time of the examination. Any additional provision for probable credit losses, whether required as a result of regulatory review or initiated by the Company itself, may materially alter the financial outlook of the Company and the Bank and may have a material adverse effect on the Company's financial condition and results of operations.

Adverse Market Conditions in the U.S. Economy and the Markets in Which We Operate Could Adversely Impact the Company's Business. Unfavorable or uncertain economic and market conditions, including slowing or recessionary economic conditions, reduced availability of commercial credit, rising inflation, and increasing unemployment may negatively impact the credit performance of commercial and consumer credit, resulting in additional write-downs. Concerns over the stability of the financial markets and the economy havemay resultedresult in decreased lending by financial institutions to their customers and to each other. This marketMarket turmoil andmay tightening of credit has ledlead to increased commercial and consumer deficiencies, lack of customer confidence, increased market volatility and widespread reduction in general business activity. Competition among depository institutions for deposits has increased significantly. Financial institutions havemay experiencedexperience decreased access to deposits or borrowings.borrowings due to unfavorable or uncertain economic and market conditions.

Smaller Commercial Borrowers May Have Fewer Financial Resources, Which May Impair Their Ability to Repay Loans. We provide lending to many small- toand medium-sized customers,businesses, which frequentlygenerally have fewer financial resources than larger entities (in terms of capital or borrowing capacity). Accordingly, these businesses may be more vulnerable to economic downturns, often need substantial additional capital to expand or compete, and may experience substantial volatility in operating results, any of which may impair the borrower's ability to repay a loan. If these or other borrowers are harmed by adverse business conditions in the markets in which we operate, it may result in an adverse effect to the business, financial condition and results of operations of the Company or the Bank.

The Soundness of Other Financial Institutions Could Adversely Affect Us. The Company's ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships. We have exposure to many different industries and counterparties, and we routinely execute transactions with counterparties in the financial industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, and other institutional clients. As a result, defaults by, or even rumors or questions about, one or more financial services institutions, or the financial services industry generally, havecould ledlead to market-wide liquidity problems and could lead to losses or defaults by us or by other institutions. Many of these transactions expose us to credit risk in the event of default of a counterparty or client. In addition, the Company's credit risk may be exacerbated when the collateral held by us cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure due us. There is no assurance that any such losses would not materially and adversely affect the Company's results of operations.

BankThe failures, such as thebank failures of Silicon Valley Bank, Signature Bank and First Republic Bank in 2023,California mayand causeSignature Bank in New York during 2023 caused a degree of panic and uncertainty in the investor community and among bank customers generally. BankAny future bank failures may also reduce customer confidence, affect sources of funding and liquidity, increase regulatory requirements and costs, adversely affect financial markets and/or have a negative reputational ramification for the banking industry, including the Company. The Company will monitor events concerning any future potential bank failures and volatility within the banking industry generally, together with any responsive measures taken by the banking regulators to mitigate or manage potential turmoil in the banking industry.

Liquidity Risk Could Impair Our Ability to Fund Operations and Meet Our Obligations as They Become Due, and Failure to Maintain Sufficient Liquidity Could Materially Adversely Affect Our Growth, Business, Profitability and Financial Condition. Liquidity is essential to our business. Liquidity risk is the potential that we will be unable to meet our obligations as they become due because of an inability to liquidate assets or obtain adequate funding at a reasonable cost, in a timely manner and without adverse conditions or consequences. We require sufficient liquidity to fund asset growth, meet customer loan requests, customer deposit maturities and withdrawals, payments on our debt obligations as they become due and other cash commitments under both normal operating conditions and other unpredictable circumstances, including events causing industry or general financial market stress. Liquidity risk can increase due to a number of factors, including an over-reliance on a particular source of funding or market-wide phenomena such as market dislocation and major disasters. Factors that could detrimentally impact access to liquidity sources include, but are not limited to, a decrease in the level of our business activity as a result of a slowdown in our market, adverse regulatory actions against us, or changes in the liquidity needs of our depositors. Market conditions or other events could also negatively affect the level or cost of funding, affecting our ongoing ability to accommodate liability maturities and deposit withdrawals, meet contractual obligations, and fund asset growth and new business transactions at a reasonable cost, in a timely manner, and without adverse consequences. Our inability to raise funds through deposits, borrowings, the sale of loans, other sources, and our ability to maintain sufficient deposits, could have a substantial negative effect on our business, and could result in the closure of the Bank. Our access to funding sources in amounts adequate to finance our activities or on acceptable terms could be impaired by factors that affect our organization specifically or the financial services industry or economy in general. Any substantial, unexpected, and/or prolonged change in the level or cost of liquidity could impair our ability to fund operations and meet our obligations as they become due and could have a material adverse effect on our business, financial condition and results of operations.

We rely on customer deposits, including brokered deposits, and to a lesser extent on advances from the Federal Home Loan Bank ("FHLB") and federal funds purchased to fund our operations. Although we have historically been able to replace customer deposit withdrawals, maturing deposits, and advances if desired, we may not be able to replace such funds in the future if our financial condition, the financial condition of the FHLB or market conditions were to change. FHLB borrowings and other current sources of liquidity may not be available or, if available, sufficient to provide adequate funding for operations.

Deterioration in the Housing Market Could Cause Further Increases in Delinquencies and Non-Performing Assets, Including Loan Charge-Offs, and Depress the Company's Income and Growth. The volume of one-to-four family residential mortgages and home equity lines of credit may decrease during economic downturns as a result of, among other things, a decrease in real estate values, an increase in unemployment, a slowdown in housing price appreciation or increases in interest rates. These factors could reduce earnings and consequently the Company's financial condition because:

We May Elect or Be Compelled To Seek Additional Capital In The Future, But That Capital May Not Be Available When Needed. We are required by regulatory authorities to maintain adequate levels of capital to support operations. In addition, we may elect to raise additional capital to support the growth of the Company's business or to finance acquisitions, if any, or we may elect to raise additional capital for other reasons. In that regard, a number of financial institutions have recently raised considerable amounts of capital as a result of a deterioration in their results of operations and financial condition arising from the turmoil in the mortgage loan market, deteriorating economic conditions, declines in real estate values and other factors. Should we elect or be required by regulatory authorities to raise additional capital, we may seek to do so through the issuance of, among other things, common stock or securities convertible into common stock, which could dilute your ownership interest in the Company. Although we remain "well-capitalized" and have not had a deterioration in liquidity,, the future cost and availability of capital may be adversely affected by illiquid credit markets, economic conditions and a number of other factors, many of which are outside of the Company's control. Accordingly, we cannot assure you of the ability to raise additional capital if needed or on terms acceptable to us. If we cannot raise additional capital when needed or on terms acceptable to us, it may have a material adverse effect on the Company's financial condition and results of operations.

If Wewe Areare Unableunable to Successfullysuccessfully Competecompete for Customerscustomers in the Company's Marketmarket Area,area, the Company's Financialfinancial Conditioncondition and Resultsresults of Operationsoperations Couldcould Bebe Adverselyadversely Affected. The Bank faces substantial competition in making loans, attracting deposits and providing other financial products and services. The Bank has numerous competitors for customers in its market area.affected.

Many of these competitors have greater financial resources and name recognition, more locations, more advanced technology and more financial products to offer than the Bank. Competition from larger institutions may increase due to an acceleration of bank mergers and consolidations in Missouri and the rest of the nation. In addition, the Gramm-Leach-Bliley Act removes many of the remaining restrictions in federal banking law against cross-ownership between banks and other financial institutions, such as insurance companies and securities firms. The law will likely further increase the number and financial strength of companies that compete directly with the Bank. In addition, competition from emerging financial technology companies, including crypto currencies, stable coins and other digital assets, may also increase if current adoption and usage trends continue.

We May Experience Difficulties in Managing Growth and in Effectively Integrating Newly Acquired Companies. As part of the Company's general strategy, it may continue to acquire banks and businesses that it believes provide a strategic fit with its business. To the extent that the Company does grow, there can be no assurances that we will be able to adequately and profitably manage such growth. Acquiring other banks and businesses will involve risks commonly associated with acquisitions, including:

•competitive pressures among financial services companies may increase significantly,significantly;

•changes in the interest rate environment may reduce interest margins,margins;

•general economic conditions, either nationally or in Missouri,the communities we serve, may be less favorable than expected and may adversely affect the quality of the Company's loans and other assets,assets;

•increases in non-performing assets in the Company's loan portfolios and adverse economic conditions may necessitate increases to the provisions for credit losses,losses;

•costs or difficulties related to the integration of the business of the Company and its acquisition targets may be greater than expected,expected;

•legislative, regulatory, or tax law changes may adversely affect the business in which the Company and its subsidiaries are engaged,engaged;

•changes may occur in the securities markets,markets;

•changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses,losses; and

•technological changes, including potential cyber-securitycybersecurity incidents and other disruptions, or innovations to the financial services industry, including as a result of the increased telework environment.industry.

This report contains certain forward-looking statements with respect to the financial condition, results of operations, plans, objectives, strategy, future performance and business of Hawthorn Bancshares, Inc., and its subsidiaries (collectively, the “Company”, “we”, “our”, or “us”), including, without limitation statements that are not historical in nature, and statements preceded by, followed by or that include the words believes, expects, may, will, should, could, anticipates, estimates, intends, plans, hopes or similar expressions. Forward-looking statements are not guarantees of future performance or results. They involve risks, uncertainties and assumptions. Actual results may differ materially from those contemplated by the forward-looking statements due to, among others, such possible events or factors such as: changes in economic conditions generally or in the Company's market area, changes in policies by regulatory agencies, governmental legislation and regulation, tariffs and trade disruptions, fluctuations in interest rates, changes in liquidity requirements, demand for loans in the Company’s market area, changes in accounting and tax principles, estimates made on income taxes, competition with other entities that offer financial services, cybersecurity threats, economic or other disruptions caused by acts of terrorism, war or other conflicts, changes in geopolitical conditions, natural disasters, such as hurricanes, wild fires, freezes, flooding and other man-made disasters, health emergencies, epidemics or pandemics, climate changes or other catastrophic events and such other factors as described in the forward-looking statements under the caption Risk Factors in Item 1A. of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”), and in other reports filed by us with the Securities and Exchange Commission (“SEC”) from time to time. Other factors that have not been identified in this report could also have this effect. You are cautioned not to put undue reliance on any forward-looking statement, which speak only as of the date they were made. Except as required by law, the Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events, or changes in its business, results of operations or financial condition over time. During the quarter ended MarchJune 31,30, 2026, there were no material changes to the Risk Factors disclosed in the Company’s 2025 Form 10-K.

Crucial to the Company’s community banking strategy is growth in its commercial banking services, retail mortgage lending and retail banking services. Through the branch network of its subsidiary bank, Hawthorn Bank (the “Bank”), the Company, with $1.86$1.77 billion in assets at MarchJune 31,30, 2026, provides a broad range of commercial and personal banking services. The Bank's specialties include commercial banking for small and mid-sized businesses, including equipment, operating, commercial real estate, Small Business Administration (“SBA”) loans, and personal banking services including real estate mortgage lending, installment and consumer loans, certificates of deposit, individual retirement and other time deposit accounts, checking accounts, savings accounts, and money market accounts. The Company also provides other financial services through its Wealth Management business, including trust services, estate planning, investment and asset management services and a comprehensive suite of cash management services. Beginning with the first quarter of 2025, the Company's Wealth Management business is reported as a separate reporting segment, and the Company operates two reporting segments, consisting of the Bank and the Wealth Management business. The geographic areas in which the Company provides products and services include the Missouri communities in and surrounding Jefferson City, Columbia, Clinton, Warsaw, Springfield, and the greater Kansas City metropolitan area.

The Wealth Management segment was immaterial to the Company’s total consolidated operating results for the periods presented in this report. Accordingly, for presentation purposes, the financial information and discussion below is presented on an aggregated basis, except as otherwise noted. Refer to Note 15, “Segment Information,” in the Company’s consolidated financial statements offor further details regarding the financial results of each segment.

Consolidated net income was $5.7$7.3 million, or $0.83$1.06 per diluted shareshare, forand the three months ended March 31, 2026, compared to $5.4$13.1 million, or $0.77$1.89 per diluted share, for the three and six months ended MarchJune 31,30, 2025.2026, respectively, compared to $6.1 million, or $0.88 per diluted share, and $11.5 million, or $1.65 per diluted share, for the three and six months ended June 30, 2025, respectively. For the three and six months ended MarchJune 31,30, 2026, the return on average assets was 1.26%,1.63% and 1.45%, respectively, the return on average stockholders’ equity was 13.07%,16.39% and 14.74%, respectively, and the efficiency ratio was 64.29%.60.73% and 62.44%, respectively.

Net interest income was $17.1$17.3 million and $34.4 million for the three and six months ended MarchJune 31,30, 2026, respectively, compared to $15.3$16.1 million and $31.4 million for the three and six months ended MarchJune 31,30, 2025.2025, respectively. Net interest margin, on a fully taxable equivalent (“FTE”) basis, was 4.07%4.16% and 4.11% for the three and six months ended MarchJune 31,30, 2026, respectively, compared to 3.67%3.89% and 3.78% for the three and six months ended MarchJune 31,30, 2025.2025, respectively. The change to net interest margin on an FTE basis is discussed in greater detail under the Average Balance Sheet Data and Rate and Volume Analysis sections.

Non-interest income was $3.1$5.4 million and $8.5 million for the three and six months ended MarchJune 31,30, 2026, respectively, compared to $3.5 million and $7.0 million for the three and six months ended MarchJune 31,30, 2025.2025, respectively. These changes are discussed in greater detail under the Non-interest Income and Expense section.

Non-interest expense was $13.0$13.7 million and $26.7 million for the three and six months ended MarchJune 31,30, 2026, respectively, compared to $12.5$12.3 million and $24.8 million for the three and six months ended MarchJune 31,30, 2025.2025, respectively. These changes are discussed in greater detail under the Non-interest Income and Expense section.

Cash and cash equivalents – Cash and cash equivalents decreased $2.4$71.6 million to $101.9$32.7 million as of MarchJune 31,30, 2026 compared to $104.3 million as of December 31, 2025, and decreased $0.3$67.6 million compared to $102.3$100.3 million as of MarchJune 31,30, 2025. See the Liquidity Management section for further discussion.

Loans – Loans held for investment decreased $32.6$70.4 million to $1.45$1.42 billion as of MarchJune 31,30, 2026 compared to $1.49 billion as of December 31, 2025, and decreased $16.2$46.5 million compared to $1.47$1.46 billion as of MarchJune 31,30, 2025.

Asset quality – Non-performing assets totaled $6.9$7.5 million, or 0.47%0.53% of total loans, at MarchJune 31,30, 2026 compared to $7.0 million, or 0.47% of total loans, at December 31, 2025 and $3.1$5.2 million, or 0.21%0.35% of total loans, at MarchJune 31,30, 2025.

In the firstsecond quarter of 2026, the Company had net loan charge-offs of $0.06$0.14 million, or 0.02%0.04% of average loans, compared to net loan recoveriescharge-offs of $0.02$0.05 million, or 0.01% of average loans, in the same prior year quarter.

The allowance for credit losses was $20.9$20.7 million, or 1.44%1.46% of loans outstanding, at MarchJune 31,30, 2026 compared to $21.1 million, or 1.42% of loans outstanding, at December 31, 2025, and $21.8$21.6 million, or 1.48%1.47% of loans outstanding, at MarchJune 31,30, 2025. These changes are discussed in greater detail under the Lending and Credit Management section.

Deposits – Total deposits decreased $35.8$66.0 million to $1.52$1.49 billion as of MarchJune 31,30, 2026 compared to $1.55 billion as of December 31, 2025, and decreased $25.6$29.8 million compared to $1.54$1.52 billion as of MarchJune 31,30, 2025.

Federal Home Loan Bank (“FHLB”) advances and other borrowings – Total FHLB advances and other borrowings decreased $7.7$72.7 million to $94.4$29.4 million as of MarchJune 31,30, 2026, compared to $102.1 million as of December 31, 2025, and decreased $29.7$110.7 million compared to $124.1$140.1 million as of MarchJune 31,30, 2025.

Capital – The Company maintains its “well-capitalized” regulatory capital position. At MarchJune 31,30, 2026, capital ratios were as follows: total risk-based capital to risk-weighted assets 15.84%16.40%; tier 1 capital to risk-weighted assets 14.59%15.15%; tier 1 leverage 12.34%12.91%; and stockholders’ equity to assets 9.45%.10.31%.

Net interest income is the largest source of revenue resulting from the Company’s lending, investing, borrowing, and deposit gathering activities. It is affected both by changes in the level of interest rates and changes in the amounts and mix of interest earning assets and interest bearing liabilities. The following tables present average balance sheet data, net interest income, average yields of earning assets, average costs of interest bearing liabilities, net interest spread and net interest margin on an FTE basis for each of the three and six month periods ended MarchJune 31,30, 2026 and 2025, respectively. The average balances used in this table and other statistical data were calculated using average daily balances.

(1)Interest income and yields are presented on an FTE basis using the federal statutory income tax rate of 21%, net of nondeductible interest expense, for both the three months ended MarchJune 31,30, 2026 and 2025. Such adjustments totaled $0.4$0.3 million and $0.2$0.4 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

The following table summarizes the changes in net interest income on an FTE basis, by major category of interest earning assets and interest bearing liabilities, identifying changes related to volumes and rates for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025. The change in interest due to the combined rate/volume variance has been allocated to rate and volume changes in proportion to the absolute dollar amounts of change in each.

(1)Interest income and yields are presented on an FTE basis using the federal statutory income tax rate of 21%, net of nondeductible interest expense, for botheach of the three and six months ended MarchJune 31,30, 2026 and 2025. Such adjustments totaled $0.4$0.3 million and $0.7 million for the three and six months ended MarchJune 31,30, 2026, respectively, compared to $0.2$0.4 million and $0.6 million for the three and six months ended MarchJune 31,30, 2025.2025, respectively.

Financial results for the quarter ended MarchJune 31,30, 2026 compared to the quarter ended MarchJune 31,30, 2025, reflected an increase in net interest income on an FTE basis of $1.9$1.1 million, or 12.4%.6.5%. Measured as a percentage of average earning assets, the net interest margin (expressed on an FTE basis) increased to 4.07%4.16% for the quarter ended MarchJune 31,30, 2026 compared to 3.67%3.89% for the quarter ended MarchJune 31,30, 2025 and increased to 4.11% for the six months ended June 30, 2026 compared to 3.78% for the six months ended June 30, 2025.

Average interest earning assets increasedremained $23.0consistent million,at or 1.3%, to $1.74$1.70 billion for the quarterquarters ended MarchJune 31,30, 2026 comparedand toJune $1.72 billion for the quarter ended March 31,30, 2025, and average interest bearing liabilities decreased $15.9$26.5 million, or 1.3%,2.2%, to $1.24$1.19 billion for the quarter ended MarchJune 31,30, 2026 compared to $1.26$1.22 billion for the quarter ended MarchJune 31,30, 2025.

Average borrowingsinterest earning assets increased $8.1$8.7 million, or 6.5%,0.5%, to $133.2$1.72 millionbillion for the quartersix months ended MarchJune 31,30, 2026 compared to $125.0$1.71 millionbillion for the quartersix months ended MarchJune 31,30, 2025.2025, Theand average costinterest ofbearing borrowingsliabilities decreased $21.2 million, or 1.7%, to 4.33%$1.22 billion for the quartersix months ended MarchJune 31,30, 2026 compared to 4.38%$1.24 billion for the quartersix months ended MarchJune 31,30, 2025.

The following table shows the principal components of non-interest income for the three and six months ended MarchJune 31,30, 2026 and 2025.

Total non-interest income decreasedincreased $0.4$1.8 million, or 10.5%,51.7%, to $3.1$5.4 million for the quarter ended MarchJune 31,30, 2026 compared to $3.5 million for the quarter ended MarchJune 31,30, 2025, and increased $1.5 million, or 21.0% to $8.5 million for the six months ended June 30, 2026 compared to $7.0 million for the six months ended June 30, 2025. ComparedThe toincrease for the priorthree yearand quarter,six themonths decreaseended June 30, 2026 was primarily due to agains write-downrecorded ofon aother bankreal propertyestate owned and premises and equipment held for sale. No such activity occurred in the prior year quarter.

Service charges and other fees decreased $0.1 million, or 10.3%,13.3%, to $0.8 million for the quarter ended MarchJune 31,30, 2026 compared to $0.9 million for the quarter ended MarchJune 31,30, 2025, and decreased $0.2 million, or 11.8%, to $1.6 million for the six months ended June 30, 2026 compared to $1.9 million for the six months ended June 30, 2025. The decrease for the three and six months ended MarchJune 31,30, 2026 was primarily attributable to a decrease in overall service charges on accounts and lower NSF charges.

Wealth management revenue increased $0.1 million, or 30.2%,20.7%, to $0.6$0.7 million for the quarter ended MarchJune 31,30, 2026 compared to $0.5 million for the quarter ended MarchJune 31,30, 2025, and increased $0.3 million, or 25.0% to $1.3 million for the six months ended June 30, 2026 compared to $1.0 million for the six months ended June 30, 2025. The increase for the three monthand periodsix months ended June 30, 2026 was primarily attributable to continued growth in accounts.

The following table shows the principal components of non-interest expense for the three and six months ended MarchJune 31,30, 2026 and 2025.

Total non-interest expense increased $0.5$1.5 million, or 4.0%,12.0%, to $13.0$13.7 million for the quarter ended MarchJune 31,30, 2026 compared to $12.5$12.3 million for the quarter ended MarchJune 31,30, 2025, and increased $2.0 million, or 8.0%, to $26.7 million for the six months ended June 30, 2026 compared to $24.8 million for the six months ended June 30, 2025.

Occupancy expense, net,Salaries increased $0.06$0.8 million, or 6.0%,14.1%, to $1.0$6.2 million for the quarter ended MarchJune 31,30, 2026 compared to $0.9$5.4 million for the quarter ended MarchJune 31,30, 2025, and increased $0.8 million, or 7.1%, to $11.5 million for the six months ended June 30, 2026 compared to $10.8 million for the six months ended June 30, 2025. The increase for the three and six months ended MarchJune 31,30, 2026 primarilyis resultedattributed fromto incentive payouts paid during the expansionperiods and increases in number of onefull-time branchequivalent and the opening of two new branch locations and one new operations facility in the first quarter of 2026.employees.