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

Commercial real estate loans were a significant portion of our total loan portfolio as of December 31, 2024.2025. The market value of real estate can fluctuate significantly in a short period of time as a result of market conditions in the geographic area in which the real estate is located. Adverse developments affecting real estate values in one or more of our markets could increase the credit risk associated with our loan portfolio. Additionally, commercial real estate lending typically involves higher loan principal amounts, and repayment of the loans is generally dependent, in large part, on sufficient income from the properties securing the loans to cover operating expenses and debt service. Economic events, including governmental regulations outside of the control of the borrower or lenderlender, could negatively impact the future cash flows and market values of the affected properties.

If the loans that are collateralized by real estate become troubled and the value of the real estate has been significantly impaired, then we may not be able to recover the full contractual amount of principal and interest that we anticipated at the time of originating the loans, which could cause us to charge off all or a portion of the loans. This could lead to an increased provision for credit losses and adversely affect our operating results and financial condition.

At December 31, 2024,2025, we had $128.8$93.3 million of net unrealized losses in our securities portfolio. If we are forced to liquidate any of those investments prior to maturity, including because of a lack of liquidity, we would recognize as a charge to earnings the losses attributable to those securities. Our securities portfolio has an average duration of 6.4 years, so we expect an increase in unrealized losses in rising interest rate environments.

If economic influences change so that we do not have access to short-term credit, or our depositors withdraw a substantial amount of their funds for other uses, West Bank might experience liquidity issues. Our efforts to monitor and manage liquidity risk may not be successful or sufficient to deal with dramatic or unanticipated reductions in our liquidity. If this were to occur and additional short-term borrowings or debt isare needed for liquidity purposes in the future, there can be no assurance that such borrowings or debt would be available or, if available, would be on favorable terms. If we increase our short-term borrowings or debt, our cost of funds will increase, thereby reducing our net interest income, or we may need to sell a portion of our investment portfolio, which, depending upon market conditions, could result in the Company or West Bank realizing losses. At December 31, 2024,2025, our borrowed funds decreased to $392.6$376.4 million, compared to $592.6$392.6 million at December 31, 2023. The overall decrease included reductions of $150.3 million in federal funds purchased and other short-term borrowings, $25.0 million in FHLB advances associated with long-term interest rate swaps and $20.0 million in FHLB advances with a fixed interest rate.2024. Although we believe West Bank’s current sources of funds are adequate for its liquidity needs, there can be no assurance in this regard for the future.

We operate in highly competitive markets and face strong competition in originating loans, seekingattracting deposits and offering our other services. We also compete in making loans, attracting deposits, and recruiting and retaining talented employees. The Des Moines metropolitan market area, in particular, has attracted many new financial institutions within the last two decades. We also compete with nonbank financial service providers, such as financial technology companies, many of which are not subject to the same regulatory restrictions that we are and may be able to compete more effectively as a result.

Our earnings and cash flows are largely dependent on our net interest income, which is the difference between the interest income we earn on interest-earning assets, such as loansloans, investment securities and investmentshort-term securities,investments, and the interest expense that we pay on interest-bearing liabilities, such as deposits and borrowings. Additionally, changes in interest rates also affect our ability to fund our operations with client deposits and the fair value of securities in our investment portfolio and derivatives portfolio. Therefore, any change in general market interest rates, including changes in federal fiscal and monetary policies, can have a significant effect on our net interest income and results of operations. Interest rates are sensitive to many factors, including government monetary and fiscal policies, domestic and international economic and political conditions and competition. Following a series of significant increases to the target federal funds rate made by the Federal Reserve throughout 2022 and 2023 as part of an effort to combat elevated levels of inflation affecting the U.S. economy, the Federal Reserve began enacting incremental rate cuts at the end of 2024. While additional rate cuts are anticipated in 2025, the occurrence or significance of changes in interest rates cannot be predicted.

Our financial performance generally, and in particular the ability of customers to pay interest on and repay principal on outstanding loans and the value of collateral securing those loans, as well as demand for loans and other products and services we offer, is highly dependent upon the business environment, not only in the markets where we operate, but also in the states of Iowa and Minnesota, generally, in the United States as a whole, and internationally. A favorable business environment is generally characterized by, among other factors, economic growth, efficient capital markets, low inflation, low unemployment, high business and investor confidence, and strong business earnings. Unfavorable or uncertain economic and market conditions can be caused by declines in economic growth, business activity, or investor or business confidence; limitations on the availability or increases in the cost of credit and capital; inflation or changes in interest rates; recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time that resulted in several bank failures; high unemployment; uncertaintychanges in U.S. trade and foreign policies, legislation, treaties and tariffs; natural disasters; military conflicts and acts of war or terrorism; immigration enforcement, widespread disease or pandemics; or a combination of these or other factors. Such unfavorable conditions could materially and adversely affect us.

The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict,conflicts, including the current conflicts between Russia and Ukraine and between Israel and Palestine,Palestine and recent military activity in Venezuela, which are increasing volatility in commodity and energy prices, creating supply chain issues and causing instability in financial markets and political systems. Sanctions imposed by the United States and other countries in response to such conflicts could further adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability. The specific consequences of the conflicts on our business are difficult to predict at this time, but in addition to inflationary pressures affecting our operations and those of our customers and borrowers, we may also experience an increase in cyberattacks against us, our customers and borrowers, service providers and other third parties.

The United States recentlyhas experienced elevated levels of inflation throughoutin 2022recent andyears, 2023.with Inflationarythe pressuresconsumer moderatedprice index climbing approximately 2.7 percent in 2024,2025, butbefore futureseasonal inflation metrics are uncertain for 2025 and onward.adjustment. Continued elevated levels of inflation could have complex effects on our business, results of operations and financial condition, some of which could be materially adverse. For example, while we generally expect any inflation-related increases in our interest expense to be offset by increases in our interest revenue, inflation-driven increases in our levels of noninterest expense could negatively impact our results of operations. Elevated levels of inflation could also cause increased volatility and uncertainty in the business environment, which could adversely affect loan demand and our clients’ ability to repay indebtedness. It is also possible that governmental responses to elevated inflation rates could adversely affect our business, such as changes to monetary and fiscal policy that are too strict, or the imposition or threatened imposition of price controls. The duration and severity of the current inflationary period cannot be estimated with precision.

Current or proposed regulatory or legislative changes to laws applicable to the financial industry may impact the profitability of our business activities and may change certain of our business practices, including our ability to offer new products, obtain financing, attract deposits, make loans and achieve satisfactory interest spreads, and could expose us to additional costs, including increased compliance costs. In addition, political developments, including the possible implementation of policies proposed by the new presidential administration, including tariffs, mass deportations and tax or financial regulations or the appointment of new personnel in regulatory agencies, add uncertainty to the implementation, scope and timing of regulatory reforms. These changes may also require us to invest significant management attention and resources to make any necessary changes to operations in order to comply and could therefore materially and adversely affect our business, financial condition and results of operations.

Following a series of significant increases to the target federal funds rate made by the Federal Reserve throughout 2022 and 2023 as part of an effort to combat elevated levels of inflation that affected the U.S. economy, the Federal Reserve beganenacted enacting incrementalseveral rate cuts in 2024.2024 Whileand additional2025. rate cuts are anticipated in 2025, theThe occurrence or significance of additional changes in the target federal funds interest ratesrate cannotin be2026 predicted.and beyond is not known at this time.

The stock market has experienced, and may continue to experience, fluctuations that significantly impact the market prices of securities issued by many companies. Market fluctuations could adversely affect our stock price. These fluctuations have often been unrelated or disproportionate to the operating performance of particular companies. These broad market fluctuations, as well as general economic, systemic, political and market conditions, such as recessions, loss of investor confidence, interest rate changes, government shutdowns, presidentialactions taken by the federal government, elections, international trade wars or international currency fluctuations may negatively affect the market price of our common stock. Moreover, our operating results may fluctuate and vary from period to period due to the risk factors set forth herein. As a result, period-to-period comparisons should not be relied upon as an indication of future performance. Our stock price could fluctuate significantly in response to the impact of these risk factors.

As of December 31, 2024,2025, the Company had $20.6 million in junior subordinated debentures outstanding that were issued to the Company’s subsidiary trust, West Bancorporation Capital Trust I, and $60.0 million aggregate principal amount outstanding of the Company’s 5.25% Fixed-to-Floating Rate Subordinated Notes due in 2032 (the Notes). The junior subordinated debentures and the Notes are senior in order of payment to the Company’s shares of common stock. As a result, the Company must make payments on the junior subordinated debentures (and the related trust preferred securities (TPS)) and the Notes before any dividends can be paid on its common stock, and in the event of the Company’s bankruptcy, dissolution or liquidation, the holders of the debentures and the Notes must be satisfied before any distributions can be made to the holders of the common stock. The Company has the right to defer distributions on the junior subordinated debentures (and the related TPS) for up to five years during which time no dividends may be paid to holders of the Company’s common stock. The Company’s ability to pay future distributions depends upon the earnings of West Bank and the issuance of dividends from West Bank to the Company, which may be inadequate to service the obligations. Interest payments on the junior subordinated debentures underlying the TPS are classified as “dividends” by the Federal Reserve supervisory policies and therefore are subject to applicable restrictions and approvals imposed by the Federal Reserve Board.

Total assets were $4,142,244 at December 31, 2025, compared to $4,014,991 at December 31, 2024, compared to $3,825,758 at December 31, 2023, a 4.93.2 percent increase. Our loan portfolio grewdeclined to $3,001,690 as of December 31, 2025, from $3,004,860 as of December 31, 2024,2024. fromDeposits $2,927,535increased to $3,468,470 as of December 31, 2023.2025, Deposits increased tofrom $3,357,596 as of December 31, 2024, from $2,973,779 as of December 31, 2023.2024.

The Company compares three key performance metrics to those of an identified peer group for evaluating its results. The peer group for 20242025 consists of 2120 Midwestern, publicly traded financial institutions including Bank First Corporation, Bridgewater Bancshares, Inc., ChoiceOne Financial Services, Inc., Civista Bancshares, Inc., CrossFirst Bankshares, Inc., Equity Bancshares, Inc., Farmers National Banc Corp., Farmers & Merchants Bancorp., First Business Financial Services, Inc., First Financial Corp., First Mid Bancshares, Inc., German American Bancorp, Inc., HBT Financial, Inc., Hills Bancorporation, Isabella Bank Corporation, LCNB Corp., Mercantile Bank Corporation, MidWestOne Financial Group, Inc., Nicolet Bankshares, Inc., Peoples Bancorp, Inc., and Southern Missouri Bancorp, Inc. The Company is in the middle of the group in terms of asset size. The Company's goal is to perform at or near the top of this peer group relative to what we consider to be three key metrics: return on average equity, efficiency ratio and nonperforming assets to total assets. We believe these measures encompass the factors that define the performance of a community bank. Company and peer results for the key financial performance measures are summarized below.

The following discussion describes the consolidated operations and financial condition of the Company, including its subsidiary West Bank and West Bank’s special purpose subsidiaries. Results of operations for the year ended December 31, 20242025 are compared to the results for the year ended December 31, 20232024 and the consolidated financial condition of the Company as of December 31, 20242025 is compared to December 31, 2023.2024. Results of operations and financial condition for the year ended December 31, 20232024 compared to the year ended December 31, 20222023 can be found in Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s 20232024 annual report on Form 10-K/A filed with the SEC on February 23,20, 2024.2025.

The Company uses a cash flow basedflow-based model to estimate expected credit losses for all loan segments. For each of the loan segments, the Company calculates a cash flow projection using contractual terms, estimated prepayment speeds, estimated curtailment rates, and other relevant data. The Company uses regression analysis that links historical losses of the Company and a peer group to two economic metrics: national unemployment rate and 10-year treasury rate over 2-year treasury rate spread to establish the loss rates applied to the projected cash flows. For all loan segments, the Company uses a forecast period of four quarters and reverts to a historical loss rate after four quarters. When estimating prepayment speed and curtailment rates, the modeling is based on historical internal data. In addition to the historical loss information, the Company utilizes qualitative factors to adjust the ACL as appropriate. Qualitative factors are based on management’s judgment of the changes in underlying loan composition of specific portfolios, trends relating to credit quality and collateral values, company-specific data, or effects of other factors such as market competition or legal and regulatory requirements.

The modest decreaseincrease in net income in 20242025 compared to 20232024 was primarily due to an increase in noninterestnet expense and decrease in noninterestinterest income, partially offset by a decrease in noninterest income and an increase in net interest income and decrease in income taxnoninterest expense. Net interest income increased $2,331,$17,619, or 3.424.7 percent, in 20242025 compared to 2023.2024. The increase in net interest income was primarily due to anthe increase in interest income on loansshort-term assets consisting of deposits with banks and interest-bearingsecurities depositspurchased inunder otheragreements financialto institutions,resell partiallyand offset by an increasedecrease in interest expense on deposits.deposits and borrowed funds, partially offset by a decrease in interest income on securities.

The Company recorded no credit loss expense in 2025, compared to a credit loss expense of $1,000 in 2024, compared to a credit loss expense of $700 in 2023.2024. The credit loss expense recorded in 2024 included a $2,000 increase in the allowance for credit losses related to loans, which was offset by a $1,000 decrease to the allowance for credit losses related to unfunded commitments.

Noninterest income decreased $1,632,$2,170, or 16.225.7 percent, in 20242025 compared to 2023,2024, primarily due to an increase in realized losses on the sales of securities, a decrease in loan swap fees, and a nonrecurring gain from bank-owned life insurance in 2023, partially offset by ana increaseone-time third party contract incentive included in trustother services revenue.income. Noninterest expense increased $2,742,$2,474, or 5.64.8 percent, in 20242025 compared to 2023,2024, primarily due to increases in salaries and employee benefits, occupancy and equipment expense,expense and technology and software expense and FDIC insurance,expense, partially offset by a decrease in businessdata developmentprocessing expenses.expense and FDIC insurance.

The Company’s ratio of nonperforming assets to total assets was 0.00 percent and 0.01 percent as of both December 31, 20242025 and 2023, respectively.2024. For more discussion on loan quality, see the “Loan Portfolio” and “Summary of the Allowance for Credit Losses” sections in this Item of this Form 10-K.

Net interest income increased to $88,981 for 2025 from $71,362 for 2024 from $69,031 for 2023,2024, as the impact of the growth in average balances of interest-earning assets and increasesdecline in average yieldsrate paid on interest-earninginterest-bearing assetsliabilities exceeded the effects of anthe increase in average balances of interest-bearing liabilities and increase in average rate paid on interest-bearing liabilities. The net interest margin for 20242025 decreasedincreased 1044 basis points to 1.912.35 percent, compared to 2.011.91 percent for 2023.2024. The average yield on earning assets increaseddeclined by 442 basis points, while the average rate paid on interest-bearing liabilities increaseddecreased by 5253 basis points. For additional analysis of net interest income, see the section captioned “Distribution of Assets, Liabilities and Stockholders’ Equity; Interest Rates; and Interest Differential” in this Item of this Form 10-K.

ANo credit loss expense was recorded in 2025, compared to a net credit loss expense of $1,000 was recorded in 2024, compared to a credit loss expense of $700 in 2023.2024. The credit loss expense recorded in 2024 included a $2,000 increase in the allowance for credit losses related to loans, which was offset by a $1,000 decrease to the allowance for credit losses related to unfunded commitments. The credit loss expense associated with loans recorded in 2024 was primarily due to changes in forecasted loss rates, driven by an increase in forecasted unemployment rate, and an adjustment to qualitative factors within the commercial real estate segment. The negative $1,000 credit loss expense recorded in 2024 related to unfunded commitments was primarily due to a decrease in the balance of unfunded commitments, primarily from the funding of construction loans. The credit loss expense recorded in 2023 included an allocation of $500 to the allowance for credit losses related to loans and $200 to the allowance for credit losses related to unfunded commitments. The credit loss expense in 2023 was primarily due to growth in loans and unfunded loan commitments. Management believed the allowance for credit losses on loans at December 31, 20242025 was adequate to absorb expected losses in the loan portfolio as of that date.

In 2024,2025, the Company sold $11,841$63,690 of securities from the available for sale securities portfolio and realized a net loss of $1,172,$3,959, compared to sales of $11,285$11,841 of securities available for sale and a realized net loss of $431$1,172 in 2023.2024. The proceeds from both periods were reinvestedtransaction in the2025 loanimproves portfolio.balance Thesheet estimatedflexibility earnand backwill periodbe used to improve our long-term earnings profile through redeployment of the 2024proceeds transactioninto ishigher-earning approximatelyassets twoor years.repayment of higher-costing borrowings.

The Company records a provision for income tax expense currently payable, along with a provision for those taxes payable or refundable in the future (deferred taxes). Deferred taxes arise from differences in the timing of certain items for financial statement reporting compared to income tax reporting and are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Federal income tax expense for 20242025 and 20232024 was $1,928$6,928 and $3,711,$1,928, respectively, while state income tax expense was $1,465$1,930 and $1,938,$1,465, respectively. The effective rate of income tax expense as a percent of income before income taxes was 12.321.3 percent and 18.912.3 percent, respectively, for 20242025 and 2023.2024. In 2024, income tax expense included a $1,842 tax benefit for an energy-related investment tax credit associated with the construction of the Company’s new headquarters building. In 2025, the Company recorded an additional tax benefit of $614 due to a change in estimate of this same 2024 energy-related investment tax credit.

The effective income tax rates differ from the federal statutory income tax rates primarily due to tax-exempt interest income, the tax-exempt increase in cash value of bank-owned life insurance, tax-exempt gain from bank-owned life insurance, disallowed interest expense, stock compensation, state income taxes and the investment tax credit mentioned above. The effective tax rate for both 20242025 and 20232024 was also impacted by federal income tax credits, including low income housing and new markets tax credits of approximately $660 and a$1,508, respectively. The decrease in these federal income tax credits was primarily due to the expiration of the new markets tax credit fromat Westthe Bank’s investment in a qualified community development entity,end of approximately $1,508 and $1,498, respectively.2024. The Company continues to maintain a valuation allowance against the tax effect of state net operating losses carryforwards as management believes it is likely that a portion of such carryforwards will expire without being utilized.

The Company’s largest component of net income is net interest income, which is the difference between interest earned on interest-earning assets, consisting primarily of loans and securities, and interest paid on interest-bearing liabilities, consisting of deposits and borrowings. Fluctuations in net interest income can result from the combination of changes in the average balances of asset and liability categories and changes in interest rates. Interest rates earned and paid are also affected by general economic conditions, particularly changes in market interest rates, and by competitive factors, government policies and the actions of regulatory authorities. The FederalFOMC Reserve increaseddecreased the target federal funds interest rate by a total of 425100 basis points infrom 2022September through December of 2024, and an additional 10075 basis points infrom 2023.September Inthrough 2024,December of 2025, which impacted the Federalcomparability Reserve decreasedof the targetnet federalinterest fundsmargin ratebetween by a total of 100 basis points. The timing2025 and extent of additional interest rate changes by the Federal Reserve is not known at this time.2024.

Tax-equivalent interest income and fees on loans increased $23,154$650 for the year ended December 31, 2024,2025, compared to 2023.2024. The improvement was driven by a combination of an increase in the average balance of total loans and an increase in the total loan yieldsyield in 20242025 compared to 2023.2024. The average balance of total loans increased $185,567$1,130 in 20242025 compared to 2023,2024, while total loan yieldsyield increased by 462 basis points in 20242025 compared to 2023.2024. Loan originations and renewals infor 2024the fixed-rate loan portfolio continued to reprice at prevailing market rates in 2025, which exceeded the current weighted average portfolio rate. This repricing benefit in the fixed-rate loan portfolio was partially offset by a decrease in loan yields on the variable-rate loan portfolio. The decrease in the yield on variable-rate loans was primarily due to reductions in the prime rate and Secured Overnight Financing Rates (SOFR) driven by the reductions in the federal funds target rate that occurred in 2024 and 2025.

The yield on the Company’s loan portfolio is affected by the portfolio’s loan mix, the interest rate environment, the effects of competition, the level of nonaccrual loans and reversals of previously accrued interest on charged-off loans. The yield on the loan portfolio is expected to increase in flat and rising rate environments as variable-rate loans reprice at higher rates and renewals and new originations are priced at prevailing market rates, which exceed the roll-off rate of principal repayments and maturities of existing loans. In a declining rate environment, the yield on variable-rate loans will decline; however, as long as market rates remain higher than the yield on the fixed-rate portfolio, renewals and originations will continue to increase the yield on the fixed-rate portfolio.portfolio, which is what we experienced in 2025. The political and economic environments can also influence the volume of new loan originations and the mix of variable-rate versus fixed-rate loans.

Tax-equivalent interest income on securities decreased $1,128$2,831 for the year ended December 31, 2024,2025, compared to 2023.2024. The average balance of securities available for sale in 20242025 was $49,468$70,990 lower than in 2023,2024, primarily due to principal paydowns on securities,and sales of securities,securities. The proceeds from principal paydowns and thesales declineof securities have increased liquidity and improved balance sheet flexibility to allow for improvement in fairour valuelong-term ofearnings availableprofile. for sale securities during 2024 resulting fromAdditionally, the increase in market interest rates during 2024. The yield on available for sale securities increaseddecreased by 317 basis points in 20242025 compared to 2023.2024.

Interest income on interest-bearingdeposits depositswith banks increased $1,764 in other financial institutions increased $7,426 in 20242025 compared to 2023.2024. This was primarily due to the increase in the average balancebalances of interest-bearinginterest-earning deposits with banks, partially offset by a decline in otherrates. financialThis institutions,increase whichin balance sheet liquidity was driven by the impact that the increasegrowth in average customer deposit balances had onand the Company’sdecline cashin liquidity.average balance of securities available for sale. Additionally, the Company began investing in securities purchased under agreements to resell in 2025. These produced interest income of $2,650 in 2025.

Interest expense on deposits increaseddecreased $30,488$9,534 for the year ended December 31, 2024,2025, compared to 2023.2024. The average balance of interest bearing deposits increased $416,483 in 2024 compared to 2023, while the rates paid on deposits increaseddecreased 6855 basis points in 20242025 compared to 2023.2024, while the average balance of interest-bearing deposits increased $166,967. The increasedecrease in interestcost expense onof deposits was primarily duedriven toby the increasereductions in depositthe balances,federal higherfunds deposittarget ratesrate resultingsince fromSeptember higher market rates and increased competition for deposit balances, and changes in deposit mix.2024.

Interest expense on borrowed funds decreased $3,058$5,926 for the year ended December 31, 2024,2025, compared to 2023.2024, due to a combination of lower average balances of borrowed funds and lower average rate paid on borrowed funds. The average balance of borrowed funds decreased $76,971$122,949 in 20242025 compared to 2023.2024. The average balance of federal funds purchased and other short-term borrowings decreased $119,066$75,736 in 20242025 compared to 20232024 primarily due to increases in deposits.average customer deposits and decline in average balance of securities available for sale. The average balance of FHLB advances increaseddeclined by $46,719$42,363 in 20242025 compared to 2023.2024. This increasedecline in average balances was primarily due to an increase in rolling one-month FHLB advances that are hedged with long-terma interesttotal ratebalance swapof agreements$45,000 to provide fixed-cost wholesale funding. The average rate paid on FHLB advances increased 40 basis pointsmaturing in 2024the comparedfourth toquarter 2023.of 2024.

The balance of securities available for sale decreased by $79,354$76,118 as of December 31, 2024,2025, compared to December 31, 2023.2024. This decrease was primarily due to principal paydowns on securities, a decline in fair value of securities during 2024 resulting from the increase in market interest rates and the sale of $11,841$63,690 of securities in the fourth quarter of 2025, partially offset by a decrease in unrealized losses on securities since December 31, 2024. The proceeds from thisthe sale werein reinvestedDecember into2025 theimprove loanbalance portfolio.sheet The Company expects the securities portfolio as a percentage of total assets to decrease over time as the proceeds from paydownsflexibility and maturities maywill be used forto loanimprove growthour long-term earnings profile through redeployment of the net proceeds into higher-earning assets or repayment of borrowedhigher-cost funds.borrowings.

Loans outstanding at the end of 20242025 increaseddecreased 2.60.1 percent compared to the end of 2023.2024. Changes in the loan portfolio during 20242025 included an increasedecreases of $94,670$81,314 in construction, land and land development loans and decreases of $18,830 in 1-4 family residential first mortgage loans and $17,362$9,173 in commercial and industrial loans and an increase of $68,571 in commercial real estate loans. The Company continues to focus on business development efforts in all of its markets. The political and economic environments could influence the volume of future loan originations and the mix of variable-rate versus fixed-rate loans.

Nonperforming loans declined to $0 at December 31, 2025, compared to $133 at December 31, 2024, compared to $296 at December 31, 2023.2024. The decrease was due to a full payoff on the single loan included in nonperforming loans as of December 31, 2023, partially offset by the addition of one loan as of December 31, 2024.

Nonperforming loans at December 31, 20242025 totaled $0, a slight decrease from $133, or 0.00 percent of total loans, a slight decrease from $296, or 0.01 percent of total loans, at December 31, 2023.2024. The decrease in nonperforming loans at December 31, 2024,2025, compared to December 31, 2023,2024, was due to a full payoff on the single loan included in the nonaccrual balance on December 31, 2023, partially offset by the addition of one loan as of December 31, 2024. Nonperforming loans include loans on nonaccrual status, loans past due 90 days or more and still accruing interest, and loans that have been considered to be loan restructurings made to borrowers experiencing financial difficulty. The Company held no other real estate owned properties as of December 31, 20242025 or 2023.2024.

As of December 31, 20242025 and 20232024, there was no allowance for credit losses related to loans individually evaluated for credit losses. The portion of the allowance for credit losses related to loans collectively evaluated for credit losses increased to $30,525, or 1.02 percent of outstanding loans as of December 31, 2025, compared to $30,432, or 1.01 percent of outstanding loans as of December 31, 2024, compared to $28,342, or 0.97 percent of outstanding loans as of December 31, 2023.2024. The increase was primarily due to thenet credit loss expense of $2,000recoveries for the year ended December 31, 2024. The credit loss expense for loans in 2024 was primarily due to changes in forecasted loss rates, driven by an increase in forecasted unemployment rate, and an adjustment to qualitative factors within the commercial real estate segment. The Company recorded a credit loss expense related to loans of $500 in 2023. The credit loss expense in 2023 was primarily due to growth in loans.2025. Management believed the allowance for credit losses as of December 31, 20242025 was adequate to absorb the expected losses in the portfolio as of that date.

Management reduced interest rates on deposits in the2024 fourthand quarter of 20242025 as a result of the reductions in the target federal funds rate by the Federal Reserve.Reserve in 2024 and 2025. Any deposit rate changes in 20252026 will be dependent on market rates, liquidity needs and competition for deposit balances. To limit the Company’s exposure to market interest rate changes, interest rate swaps are in place on $110,000$70,000 of deposit balances that effectively convert certain customer deposits with variable rates to fixed-rate instruments.

West Bank participates in the IntraFi® ICS and CDARSa reciprocal deposit network, which enables depositors to receive FDIC insurance coverage on deposits otherwise exceeding the maximum insurable amount. We consider these reciprocal deposits to be in-market deposits as distinguished from traditional out-of-market brokered deposits. Time deposits as of December 31, 20242025 and 2023,2024, included $162,148$155,150 and $152,160,$162,148, respectively, of reciprocal deposits. Included in total deposits as of December 31, 20242025 and 2023,2024, were $220,627$244,476 and $165,858,$220,627, respectively, of reciprocal interest-bearing checking and $273,126$264,033 and $254,504,$273,126, respectively, of reciprocal money market deposits.

The Company had $270,000 of FHLB advances outstanding at December 31, 2024, compared to $315,000 at December 31, 2023. This decrease was due to two FHLB advances that matured in 20242025, and were not renewed. One advance, with a balance of $20,000, was a term advance and the other advance, with a balance of $25,000, was part of the Company’s rolling funding program and associated with a corresponding interest rate swap agreement that also matured.2024. As of December 31, 2024,2025, all FHLB advances were hedged with long-term interest rate swaps as part of the Company’s rolling funding program. These interest rate swaps have maturity dates ranging from July 2026 through June 2029 and fixed rates ranging from 1.86 percent to 4.32 percent. This strategy of hedging short-term rolling funding effectively provides fixed cost wholesale funding through the maturity dates of the various interest rate swaps.

In June 2022, the Company issued $60,000 of subordinated notes (Notes). The Notes initially bear interest at 5.25 percent per annum, with interest payable semi-annually for the first five years of the Notes. Beginning June 15, 2027, the interest rate will reset quarterly to a floating rate per annum that will be three-month term Secured Overnight Financing Rate (SOFR) plus 2.41 percent, with payments due quarterly. The Company may redeem the Notes, in whole or in part, on and after June 15, 2027 at a price equal to 100 percent of the principal amount of the Notes being redeemed plus accrued and unpaid interest. The Notes will mature on June 15, 2032 if they are not earlier redeemed. Proceeds from this debt issuance were used to make a $58,650 capital injection into West Bank, the Company’s subsidiary to fund organic growth.

The Company has $20,619 in junior subordinated debentures which mature in 2033 and carry a variable interest rate. The Company has an interest rate swap with a notional amount of $20,000 which converts the variable-rate subordinated debentures to fixed-rate debt. The interest rate is a variable ratedebt based on the 3-month term SOFR plus 0.26161 percent tenor spread adjustment plus 3.05 percent. This interest rate swap has a fixed rate of 4.81 percent and matures in September 2026.

As of December 31, 2024,2025, the allowance for credit losses related to off-balance sheet commitments was $1,544.$1,544, In 2024, the Company recorded a credit loss expense of negative $1,000 for unfunded commitments. The negative credit loss expensewhich was primarily due to the decrease in the balance of unfunded commitments resultingunchanged from theDecember funding31, of construction loans.2024. The allowance for credit losses for off-balance-sheet credit exposures is presented in the “Accrued expenses and other liabilities” line of the Consolidated Balance Sheets.

The objectives of liquidity management are to ensure the availability of sufficient cash flows to meet all financial commitments and to capitalize on opportunities for profitable business expansion. The Company’s principal source of funds is deposits. Other sources include loan principal repayments, proceeds from the maturity and sale of securities, principal payments on amortizing securities, federal funds purchased, advances from the FHLB and Federal Reserve Bank,FHLB, other wholesale funding and funds provided by operations. Liquidity management is conducted on both a daily and a long-term basis. Investments in liquid assets are adjusted based on expected loan demand, projected loan and securities maturities and payments, expected deposit flows and the objectives set by West Bank’s asset-liability management policy. The Company had liquid assets (cash and cash equivalents) of $471,086 as of December 31, 2025 compared with $243,478 as of December 31, 2024 compared with $65,357 as of December 31, 2023.2024.

Our deposit growth strategy emphasizes core deposit growth. Deposit inflows and outflows can vary widely and are influenced by prevailing market interest rates, competition, local and national economic conditions, operating cycles of public fund deposits and fluctuations in our business customers’ and municipal customers’ own liquidity needs. The Company utilizes brokered deposits and other wholesale funding to supplement core deposit fluctuations and loan growth. Brokered deposits are obtained through various programs administered by IntraFi® and through otherwith third party brokers. At December 31, 2024,2025, the Company had $266,418$154,564 in brokered deposits, which included fixed-rate time deposits with maturities through September 20252026 and variable-rate deposits with terms through February 2026.2027.

As of December 31, 2024,2025, West Bank had additional borrowing capacity available from the FHLB of approximately $610,000,$649,000, as well as approximately $116,840$38,341 through the Federal Reserve discount window and $75,000 through unsecured federal funds lines of credit. Net cash from continuing operating activities contributed $39,808,$46,479, $25,249$39,808 and $59,439$25,249 to liquidity for the years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively. Management believed that the combination of high levels of liquid and potentially liquid assets, unencumbered securities, cash flows from operations and additional borrowing capacity provided the Company with sufficient liquidity as of December 31, 2024.2025.

The Company’s total stockholders’ equity increased to $265,985 as of December 31, 2025 from $227,875 as of December 31, 2024 from $225,043 as of December 31, 2023.2024. The increase was primarily duethe toresult of growth in retained income,earnings partially offset by an increase in accumulated other comprehensive loss. At December 31, 2024, tangible common equity as a percent of tangible assets was 5.68 percent compared to 5.88 percent as of December 31, 2023. The increase in accumulated other comprehensive loss was driven byand the increase in netthe unrealizedmarket lossesvalue onof our available for sale securitiesinvestment between December 31, 2023 and December 31, 2024, due to the increase in market interest rates.portfolio. While accumulated other comprehensive losses reduce tangible common equity, they have no impact on regulatory capital. At December 31, 2025, tangible common equity as a percent of tangible assets was 6.42 percent compared to 5.68 percent as of December 31, 2024. As of December 31, 20242025 and 2023,2024, the Company had no intangible assets.

Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to the Company’s business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meanings of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may appear throughout this report. These forward-looking statements are generally identified by the words “believes,” “expects,” “intends,” “anticipates,” “projects,” “forecasts,” “plans,” “targets,” “future,” “confident,” “potentially,” “probably,” “outlook,” “may,” “should,” “would,” “could,” “will,” “strategy,” “plan,” “opportunity,” “will be,” “will likely result,” “will continue” or similar references, as well as the negative of such words, or references to estimates, predictions or future events. Forward-looking statements are not historical facts but instead represent management's current expectations and forecasts regarding future events, many of which are inherently uncertain and outside of our control. Such forward-looking statements are based upon certain underlying assumptions, known and unknown risks and uncertainties. Because of the possibility that the underlying assumptions are incorrect or do not materialize as expected in the future, actual results may differ, possibly materially, from these forward-looking statements. Risks and uncertainties that may affect future results include, but are not limited to: interest rate risk, including the effects of changes in interest rates; fluctuations in the values of the securities held in our investment portfolio, including as a result of rising interest rates; competitive pressures, including from non-bank competitors such as credit unions, "fintech" companies and digital asset service providers; technological changes implemented by us and other parties, including third-party vendors, which may be more difficult to implement or more expensive than anticipated or which may have unforeseen consequences to us and our customers, including the development and implementation of tools incorporating artificial intelligence; pricing pressures on loans and deposits; our ability to successfully manage liquidity risk; changes in credit and other risks posed by the Company’s loan portfolio, including declines in commercial or residential real estate values or changes in the allowance for credit losses dictated by new market conditions, accounting standards or regulatory requirements; the concentration of large deposits from certain clients, including those who have balances above current FDIC insurance limits; the threat or imposition of domestic or foreign tariffs or other governmental policies impacting the global supply chain and the value of products produced by our commercial borrowers; effects on the U.S. economy resulting from actions taken by the federal government, including executive orders and immigration enforcement; changes in local, national and international economic conditions, including the level and impact of inflation, and future monetary policies of the Federal Reserve in response thereto, and possible recession; the impact of bank failures or adverse developments at other banks and related negative publicity about the banking industry in general or investor and depositor sentiment regarding the stability and liquidity of banks; changes in legal and regulatory requirements, limitations and costs; changes in customers’ acceptance of the Company’s products and services; the occurrence of fraudulent activity, breaches or failures of our or our third-party partners' information security controls or cyber-security related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; unexpected outcomes of existing or new litigation involving the Company; the monetary, trade and other regulatory policies of the U.S. government; the effects of acts of war or terrorism, including the wars in Iran and UkraineUkraine, andongoing the military conflict between Israel and Hamasconflicts in the Middle EastEast, and other international military conflicts that can increase levels of political and economic unpredictability, contribute to rising energy and commodity prices, affect global supply chains, increase the volatility of financial markets, and other matters beyond our control; widespread disease, pandemics or epidemics, or other adverse external events; risks related to climate change and the negative impact it may have on our customers and their business; changes to U.S. tax laws, regulations and guidance; potential changes in federal policy and at regulatory agencies; talent and labor shortages; emerging issues related to the development and use of artificial intelligence that could give rise to legal or regulatory action, damage our reputation or otherwise materially harm our business or customers; the availability of future equity and debt issuances and other capital raising opportunities on favorable terms; and any other risks described in the “Risk Factors” sections of this and other reports filed by the Company with the SEC. The Company cautions readers not to place undue reliance on any forward-looking statements. Moreover, any of the forward-looking statements that the Company makes in this report or the documents the Company files with or furnishes to the SEC are based only on information then actually known to the Company and upon management's beliefs and assumptions at the time they are made, which may turn out to be wrong because of inaccurate assumptions they might make, because of the factors described above or because of other factors that the Company cannot foresee. Forward-looking statements speak only as of the date they are made, and the Company does not undertake and specifically disclaims any obligation to revise or update such forward-looking statements to reflect current or future events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

The following discussion describes the consolidated operations and financial condition of the Company, West Bank and West Bank's special purpose subsidiaries. Results of operations for the three and six months ended MarchJune 31,30, 2026 are compared to the results for the same periodperiods in 2025, and the consolidated financial condition of the Company as of MarchJune 31,30, 2026 is compared to that as of December 31, 2025. This discussion and analysis should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 26, 2026.

Net income for the three months ended MarchJune 31,30, 2026 was $10,572,$11,073, or $0.61$0.64 per diluted common share, compared to $7,842,$7,979, or $0.46$0.47 per diluted common share, for the three months ended MarchJune 31,30, 2025. The Company's annualized return on average assets and return on average equity for the three months ended MarchJune 31,30, 2026 were 1.061.10 percent and 15.9116.21 percent, respectively, compared to 0.810.80 percent and 13.8413.65 percent, respectively, for the three months ended MarchJune 31,30, 2025.

Net interest income for the three months ended MarchJune 31,30, 2026 increased $3,530,$4,102, or 16.919.2 percent, compared to the three months ended MarchJune 31,30, 2025. The increase in net interest income was primarily due to increases in interest income on deposits with banksloans and securities purchased under agreements to resellresell, anda decreasesdecrease in interest expense on deposits and borrowed funds, partially offset by a decreasedecreases in interest income on securities.securities and deposits with banks.

Noninterest income increased $311$186 for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025, primarily due to an increase in trust services revenue. Noninterest expense increased $402$282 during the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025, primarily due to an increase in salaries and employee benefits, partially offset by a decrease in FDIC insurance expense.

On a quarterly basis, the Company compares three key performance metrics to those of our identified peer group. The peer group for 2026 consists of 2019 Midwestern, publicly traded financial institutions, including Ames National Corporation, Bank First Corporation, Bridgewater Bancshares Inc., CF Bankshares, Inc., ChoiceOne Financial Services, Inc., Civista Bancshares, Inc., Equity Bancshares, Inc., Farmers National Banc Corp., Farmers & Merchants Bancorp., First Business Financial Services, Inc., First Financial Corp., First Mid Bancshares, Inc., First Savings Financial Group, German American Bancorp, Inc., HBT Financial Inc., Hills Bancorporation, Isabella Bank Corporation, LCNB Corp., Mercantile Bank Corporation, and Southern Missouri Bancorp, Inc. The Company ranks in the middle of the peer group by total assets. The Company's goal is to perform at or near the top of this peer group relative to what we consider to be three key metrics: return on average equity, efficiency ratio and nonperforming assets to total assets. We believe these measures encompass the factors that define the performance of a community bank. Company and peer results for the key financial performance measures are summarized below.

At its meeting on AprilJuly 22, 2026, the Company's Board of Directors declared a regular quarterly cash dividend of $0.25$0.26 per common share. The dividend is payable on MayAugust 20,19, 2026, to stockholders of record on MayAugust 6,5, 2026.

The following table shows selected financial results and measures for the three and six months ended MarchJune 31,30, 2026 compared with the same periodperiods in 2025.

The following tabletables presentspresent average balances and related interest income or interest expense, with the resulting annualized average yield or rate by category of interest-earning assets or interest-bearing liabilities. Interest income and the resulting net interest income are shown on a FTE basis.

The Company's largest component of net income is net interest income, which is the difference between interest earned on interest-earning assets, consisting primarily of loans and securities, and interest paid on interest-bearing liabilities, consisting of deposits and borrowings. Fluctuations in net interest income can result from the combination of changes in the average balances of asset and liability categories and changes in interest rates. Interest rates earned and paid are also affected by general economic conditions, particularly changes in market interest rates, and by competitive factors, government policies and actions of regulatory authorities. The FOMC decreased the target federal funds interest rate by a total of 75 basis points from September through December of 2025, which will impactimpacts the comparability of net interest margin between 2026 and 2025.

Net interest margin on a FTE basis, a non-GAAP financial measure, is a measure of the net return on interest-earning assets and is computed by dividing annualized tax-equivalent net interest income by total average interest-earning assets for the period. The net interest margin for the three and six months ended MarchJune 31,30, 2026 increased 3142 and 37 basis pointspoints, respectively, compared to the three and six months ended MarchJune 31,30, 2025. Tax-equivalent net interest income for the three and six months ended MarchJune 31,30, 2026 increased $3,536,$4,118 and $7,654, respectively, when compared to the same periodperiods in 2025.

Tax-equivalent interest income on loans decreasedincreased $37$375 and $338, respectively, for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025. The decreaseincrease in tax-equivalent interest income on loans during the three and six months ended MarchJune 31,30, 2026 compared to the same periodperiods in 2025 was driven primarily by an increase in loan yields, partially offset by a decrease in the average loan balances,balances. partiallyThe offsetyield on the loan portfolio increased by an6 increaseand 7 basis points, respectively, for the three and six months ended June 30, 2026 compared to the same periods in loan yields.2025. The average balance of loans for the three and six months ended MarchJune 31,30, 2026 decreased $44,621,$5,111 and $24,756, respectively, compared to the three monthsand ended March 31, 2025. The yield on the loan portfolio increased by 7 basis points for the threesix months ended MarchJune 31, 2026 compared to the same period in30, 2025. While the fixed-rate loan portfolio has benefited from higher prevailing market rates for originations and renewals compared to the roll-off rates, the yield on the variable-rate loan portfolio has decreased due to reductions in the prime rate and SOFR rates driven by the reductions in the federal funds rate since September 2025.

Tax-equivalent interest income on securities decreased $749$688 and $1,437, respectively, for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025. The decrease was primarily due to a decrease in average balances of securities. This decrease in average balances of securities was driven by a sale of securities in November 2025 and calls and principal paydowns on securities. ProceedsIn fromJune 2025, the saleCompany andbegan principal paydowns have been reinvestedinvesting in the loan portfolio, deposits with banks and securities purchased under agreements to resell. Changes in the yield on this short-term investment program, along with deposits in banks, are driven by changes in short-term market rates, including changes in the federal funds rate.

Interest expense on deposits decreased $2,162$3,492 and $5,654, respectively, for the three and six months ended MarchJune 31,30, 2026, compared to the three and six months ended MarchJune 31,30, 2025. The decrease in the interest expense on deposits was primarily due to the decline in interest rates paid on deposits of 4046 and 43 basis pointspoints, respectively, for the three and six months ended MarchJune 31,30, 20262026, compared to the three and six months ended MarchJune 31,30, 2025. The decrease in rates paid was primarily driven by the reductions in the federal funds rate since September of 2025. The decline in interest rates paid on deposits was partially offset by the increase in average deposit balances. The average balance of interest-bearing deposits increaseddecreased $79,808$33,304 for the three months ended MarchJune 31,30, 20262026, compared to the samethree periodmonths inended June 30, 2025, and increased $22,940 for the six months ended June 30, 2026, compared to the six months ended June 30, 2025.

Interest expense on borrowed funds decreased $113$98 and $211, respectively, for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025. The average balance of borrowed funds decreased $16,236$16,180 and $16,208, respectively, for the three and six months ended MarchJune 31,30, 20262026, compared to the three and six months ended MarchJune 31,30, 2025. The largest driver of the decrease in average borrowed funds balances was the decrease in average balances on long-term debt, which decreased by $16,499$16,445 and $16,471, respectively for the three and six months ended MarchJune 31,30, 2026, compared to the same periodperiods in 2025. This decrease in average long-term debt balances was due to principal payments on the long-term debt.

Credit Loss Expense and the Related Allowance for Credit Losses The credit loss expense recorded on the income statement represents a charge made to earnings to maintain an adequate allowance for credit losses. The adequacy of the allowance for credit losses is evaluated quarterly by management and reviewed by the Board of Directors. The allowance for credit losses is management's estimate of expected lifetime losses in the loan portfolio as of the balance sheet date. The Company recorded no credit loss expense for loans or unfunded commitments for the three and six months ended MarchJune 31,30, 2026 and 2025. Management believed the allowance for credit losses at MarchJune 31,30, 2026 was adequate to absorb expected losses in the loan portfolio as of that date.

West Bank's policy is to charge off loans when, in management's opinion, a loan or a portion of a loan is deemed uncollectible. Commercially reasonable efforts are made to maximize subsequent recoveries. The following table summarizes the activity in the Company's allowance for credit losses on loans for the three and six months ended MarchJune 31,30, 2026 and 2025 and related ratios.

The following tabletables showsshow the variance from the prior year in the noninterest income categories shown in the Consolidated Statements of Income.

The increase in trust services revenue in the three and six months ended MarchJune 31,30, 20262026, compared to the same periodperiods in 20252025, was primarily due to the increasegrowth in trust assets and trust accounts since MarchJune 31,30, 2025.

The following tabletables showsshow the variance from the prior year in the noninterest expense categories shown in the Consolidated Statements of Income. In addition, accounts within the “other expenses” category that represent a significant portion of the total or a significant variance are shown below.

Salaries and employee benefits increased for the three and six months ended MarchJune 31,30, 20262026, compared to the same periodperiods in 20252025, due to thenormal combination of normalannual merit increases and an increase in full-timeincentive equivalentcompensation employeesrelated since March 31, 2025.accruals. FDIC insurance expense decreased for the three and six months ended MarchJune 31,30, 20262026, compared to the three and six months ended MarchJune 31,30, 20252025, primarily due to a decrease in the assessment rate. New markets tax credit project amortization declined with the expiration of the related tax credit.

The Company recorded income tax expense of $2,902$3,277 (21.522.8 percent of pre-tax income) and $6,179 (22.2 percent of pre-tax income) for the three and six months ended MarchJune 31,30, 2026, respectively, compared with $2,193$2,365 (21.922.9 percent of pre-tax income) and $4,558 (22.4 percent of pre-tax income) for the three and six months ended MarchJune 31,30, 2025.2025, respectively. The tax rates for the first threesix months of 2026 and 2025 were impacted by total year-to-date tax credits of approximately $140$280 and $165,$330, respectively. The Company's consolidated income tax rate differs from the federal statutory income tax rate in each period, primarily due to tax-exempt interest income, the tax-exempt increase in cash value of bank-owned life insurance, disallowed interest expense, and state income taxes. Additionally, for the threesix months ended MarchJune 31,30, 2026 and 2025, a tax benefit of $211$243 and $67,$85, respectively, was recorded as a result of the increase in fair value of restricted stock over the vesting period.

The Company had total assets of $4,010,973$4,029,664 as of MarchJune 31,30, 2026, compared to total assets of $4,142,244 as of December 31, 2025. Changes in the balance sheet included increases in securities purchased under agreements to resell and stockholders' equity and decreases in interest-earning deposits in banks, securities available for sale, loans and deposits.

As of MarchJune 31,30, 2026, the Company held securities purchased under agreements to resell of $141,742$142,080 compared to $121,413 at December 31, 2025. The Company uses these instruments as short-term secured investments which have monthly maturities. Balances will fluctuate based on the Company's liquidity and investment strategies.

Securities available for sale decreased by $12,037$21,872 during the threesix months ended MarchJune 31,30, 2026. This decrease was due to calls and principal paydowns on securities and an increase in unrealized losses on securities since December 31, 2025. Management concluded unrealized losses in the portfolio as of MarchJune 31,30, 2026 are the result of increases in risk-free market interest rates since the securities were purchased and are not an indication of declining credit quality. Unrealized losses are recorded in accumulated other comprehensive loss, net of tax.

As of MarchJune 31,30, 2026, approximately 6261 percent of the available for sale securities portfolio consisted of government agency guaranteed collateralized mortgage obligations and mortgage-backed securities. Management believes these securities have little to no credit risk and provide cash flows for liquidity and repricing opportunities.

Loans outstanding decreased $10,052$51,576 from $3,001,690 as of December 31, 2025 to $2,991,638$2,950,114 as of MarchJune 31,30, 2026. Changes in the loan portfolio during the first threesix months of 2026 included decreases of $50,774$93,080 in construction, land and land development loans and $33,636$41,811 in commercial loans and increases of $45,996$47,711 in commercial real estate loans and $37,829 in 1-4 family residential first mortgage loans and $28,423 in commercial real estate loans. We continue to experience notable loan payoffs as a result of secondary market refinancings and asset and business sales. The change in loan mix is primarily due to reclassifications resulting from completed construction projects moving to permanent financing and commercial loan restructurings adding real estate collateral.

In accordance with regulatory guidelines, the Company exercises heightened risk management practices when non-owner occupied commercial real estate lending exceeds 300 percent of total risk-based capital or construction, land and land development loans exceed 100 percent of total risk-based capital. Although the commercial real estate portfolio exceeded these regulatory guidelines as of MarchJune 31,30, 2026, they were within the Company's established policy limits and management believes that the Company has appropriate risk management policies and procedures to regularly monitor the commercial real estate portfolio. An analysis of the Company's non-owner occupied commercial real estate portfolio as of December 31, 2025 was presented in the Company's Annual Report on Form 10-K, filed with the SEC on February 26, 2026, and the Company has not experienced any material changes to that portfolio since December 31, 2025.

The Company had no nonaccrual loans or loans past due 90 days and still accruing interest as of MarchJune 31,30, 2026 and December 31, 2025. Additionally, the Company had no loan restructurings or other real estate owned as of MarchJune 31,30, 2026 and December 31, 2025.

Deposits decreased $133,498,$123,570, or 3.83.6 percent, during the first threesix months of 2026. Brokered deposits decreased to $116,476$110,450 at MarchJune 31,30, 2026, from $154,564 at December 31, 2025. Excluding brokered deposits, deposits decreased $95,410,$79,456, or 2.92.4 percent, during the first threesix months of 2026. The decline in deposits was due to normal cash flow fluctuations of our core depositors. Deposit inflows and outflows can be influenced by prevailing market interest rates, competition, local and national economic conditions, normal operating cycles of public fund deposits and fluctuations in our business customers' own liquidity needs.

West Bank participates in a reciprocal deposit network which enables depositors to receive FDIC insurance coverage on deposits otherwise exceeding the maximum insurable amount. As of MarchJune 31,30, 2026, estimated uninsured deposits, which exclude deposits in reciprocal deposit networks, brokered deposits and public funds protected by state programs, were approximately 27.027.2 percent of total deposits.

The Company had $270,000 of FHLB advances outstanding at MarchJune 31,30, 2026, all of which are one-month rolling advances hedged with long-term interest rate swaps. The interest rate swaps that hedge the interest rates on these FHLB advances have maturity dates ranging from July 2026 through June 2029 and fixed rates ranging from 1.86 percent to 4.32 percent. This strategy of hedging short-term rolling funding provides cost effective fixed-rate wholesale funding through the maturity dates of the various interest rate swaps.

The objectives of liquidity management are to ensure the availability of sufficient cash flows to meet all financial commitments and to capitalize on opportunities for profitable business expansion. The Company's principal source of funds is deposits. Other sources include loan principal repayments, proceeds from the maturity and sale of securities, principal payments on amortizing securities, federal funds purchased, advances from the FHLB, other wholesale funding and funds provided by operations. Liquidity management is conducted on both a daily and a long-term basis. Investments in liquid assets are adjusted based on expected loan demand, projected loan and security maturities and payments, expected deposit flows and the objectives set by the Company's asset-liability management policy. The Company had liquid assets (cash and cash equivalents) of $361,978$433,699 as of MarchJune 31,30, 20262026, compared with $471,086 as of December 31, 2025.

Our deposit growth strategy emphasizes core deposit growth. Deposit inflows and outflows can vary widely and are influenced by prevailing market interest rates, competition, local and national economic conditions, operating cycles of public fund deposits and fluctuations in our business customers' own liquidity needs. The Company utilizes brokered deposits and other wholesale funding to supplement core deposit fluctuations and loan growth. At MarchJune 31,30, 2026, the Company had $116,476$110,450 in brokered deposits, which included fixed-rate deposits with terms through September 20262027 and variable-rate deposits with terms through February 2027.

As of MarchJune 31,30, 2026, West Bank had additional borrowing capacity available from the FHLB of approximately $674,000,$675,000, as well as approximately $37,000$36,000 through the Federal Reserve discount window and $75,000 through unsecured federal funds lines of credit with correspondent banks. Net cash from operating activities contributed $12,885$27,251 to liquidity for the threesix months ended MarchJune 31,30, 2026. Management believed that the combination of high levels of liquid assets, unencumbered securities, cash flows from operations, and additional borrowing capacity were sufficient to meet our liquidity needs as of MarchJune 31,30, 2026.

The Company had remaining commitments to invest in qualified affordable housing projects totaling $1,329$1,270 and $1,383 as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

The Company's total stockholders' equity increased to $270,743$281,042 at MarchJune 31,30, 2026 from $265,985 at December 31, 2025. The increase was primarily the result of growth in retained earnings. At MarchJune 31,30, 2026, the Company's tangible common equity as a percent of tangible assets was 6.756.97 percent, compared to 6.42 percent as of December 31, 2025.

The Company and West Bank are subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements (as shown in the following table) can result in certain mandatory and possibly additional discretionary actions by regulators, which, if undertaken, could have a direct material effect on the Company's consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and West Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Company's and West Bank's capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Management believed the Company and West Bank met all capital adequacy requirements to which they were subject as of MarchJune 31,30, 2026.

The Company and West Bank are subject to a 2.5 percent capital conservation buffer that is added to the minimum requirements for capital adequacy purposes. A banking organization with a capital conservation buffer of less than the required amount will be subject to limitations on capital distributions, including dividend payments, and certain discretionary bonus payments to executive officers. At MarchJune 31,30, 2026, the capital ratios for the Company and West Bank were sufficient to meet the conservation buffer.