BNCCORP : Quarterly Reports - March 31, 2026

Published: 2026-05-15 11:57:06 ET BNCC

Published on 05/15/2026 at 11:57 am EDT

For the quarter ended March 31, 2026

(OTCQX: BNCC)

322 East Main Avenue Bismarck, North Dakota 58501 (701) 250-3040

BNCCORP, INC.

INDEX TO QUARTERLY REPORT

March 31, 2026

TABLE OF CONTENTS

Page

Financial Statements (Interim periods are unaudited)

Consolidated Balance Sheets as of March 31, 2026, and December 31, 2025

Consolidated Statements of Income for the Three Months Ended March 31, 2026, and 2025

Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2026, and 2025

Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2026, and 2025

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026, and 2025 7

Notes to Consolidated Financial Statements 8

Management's Discussion and Analysis of Financial Condition and Results of Operations

Comparison of Results for the Three Months Ended March 31, 2026, and 2025 26

Comparison of Financial Condition as of March 31, 2026, and December 31, 2025 29

Quantitative and Qualitative Disclosures about Market Risk 35

Legal Proceedings 37

BNCCORP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except share data)

March 31, December 31,

2026 2025

ASSETS (unaudited)

Cash and cash equivalents

$ 179,736

$ 211,451

Debt securities available for sale

111,054

114,670

Federal Reserve Bank and Federal Home Loan Bank stock

2,466

2,386

Loans held for investment

734,622

738,700

Allowance for credit losses

(8,635)

(10,318)

Net loans held for investment

725,987

728,382

Premises and equipment, net

9,870

10,120

Operating lease right of use asset

606

514

Accrued interest receivable

4,059

4,395

Other

29,078

28,288

Total assets

$ 1,062,856

$ 1,100,206

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:

Deposits:

Non-interest-bearing

$ 174,630

$ 177,618

Interest-bearing -

Savings, interest checking and money market

645,217

681,350

Time deposits

112,615

112,833

Total deposits

932,462

971,801

Guaranteed preferred beneficial interest in Company's subordinated

debentures

15,464

Accrued interest payable

1,626

1,638

Accrued expenses

1,976

2,877

Operating lease liabilities

653

571

Other

2,083

1,348

Total liabilities

954,264

993,699

STOCKHOLDERS' EQUITY:

Common stock, $.01 par value - Authorized 11,300,000 shares; 3,668,653

issued; 3,520,125 and 3,520,125 shares outstanding

Capital surplus - common stock

27,246

27,230

Retained earnings

89,602

87,438

Treasury stock (148,528 and 148,528 shares, respectively)

(2,753)

Accumulated other comprehensive loss

(5,540)

(5,445)

Total stockholders' equity

108,592

106,507

Total liabilities and stockholders' equity

$ 1,062,856

$ 1,100,206

See accompanying notes to consolidated financial statements.

BNCCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Income For the Three Months Ended March 31,

(In thousands, except per share data, unaudited)

2026

2025

INTEREST INCOME:

Interest and fees on loans

$ 11,186

$ 9,912

Interest and dividends on investments

Taxable

2,684

2,053

Dividends

Total interest income

13,906

12,000

INTEREST EXPENSE:

Deposits

4,491

3,927

Subordinated debentures

197

222

Total interest expense

4,688

4,149

Net interest income

9,218

7,851

PROVISION FOR CREDIT LOSSES:

385

100

Net interest income after provision for credit losses

8,833

7,751

NON-INTEREST INCOME:

Bank charges and service fees

682

668

Wealth management revenues

575

521

Gains on sales of loans, net

(1)

Other

147

196

Total non-interest income

1,410

1,384

NON-INTEREST EXPENSE:

Salaries and employee benefits

3,989

4,088

Professional services

820

262

Data processing fees

924

823

Marketing and promotion

140

183

Occupancy

452

399

Regulatory costs

131

132

Depreciation and amortization

269

273

Office supplies and postage

101

Other

607

576

Total non-interest expense

7,433

6,829

Income before income taxes

2,810

2,306

Income tax expense

646

542

NET INCOME

$ 2,164

$ 1,764

Basic earnings per common share

$ 0.61

$ 0.50

Diluted earnings per common share

$ 0.61

$ 0.50

See accompanying notes to consolidated financial statements.

BNCCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss) For the Three Months Ended March 31,

(In thousands, unaudited)

2026 2025

NET INCOME $ 2,164 $ 1,764

Unrealized (loss) gain on debt securities

available for sale $ (126) $ 2,196 Reclassification adjustment for gains included

in net income - -

Other comprehensive (loss) income before

tax (126) 2,196

Income tax effect related to items of other

comprehensive (loss) income

(540)

Other comprehensive (loss) income

$ (95)

(95)

$ 1,656 1,656

TOTAL COMPREHENSIVE INCOME

$ 2,069

$ 3,420

See accompanying notes to consolidated financial statements.

BNCCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders' Equity

For the Three Months Ended March 31,

(In thousands, except share data, unaudited)

Common Stock Shares

Outstanding Amount

Capital

Surplus Common

Stock

Retained

Earnings

Treasury

Stock

Accumulated

Other Comprehensive

Income (Loss), net

Total

BALANCE, December 31, 2024 3,521,275 $ 36

$ 26,904

$ 78,667

$ (2,696)

$ (9,244)

$ 93,667

Net income - -

1,764

Other comprehensive income - -

1,656

Impact of share-based compensation

2,500

199

29 -

229

BALANCE, March 31, 2025

3,523,875

$ 37

$ 27,103

$ 80,431

$ (2,667) $ (7,588)

$ 97,316

BALANCE, December 31, 2025 3,520,125 $ 37 $ 27,230 $ 87,438 $ (2,753) $ (5,445) $ 106,507

Net income - - - 2,164 - - 2,164 Other comprehensive income - - - - - (95) (95) Impact of share-based compensation - - 16 - - - 16 BALANCE, March 31, 2026 3,520,125 $ 37 $ 27,246 $ 89,602 $ (2,753) $ (5,540) $ 108,592

See accompanying notes to consolidated financial statements.

BNCCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows For the Three Months Ended March 31, (In thousands, unaudited)

2026

2025

OPERATING ACTIVITIES:

Net income

$ 2,164

$ 1,764

Adjustments to reconcile net income to net cash provided by operating activities -

Provision for credit losses

385

100

Depreciation

269

273

Amortization of right of use asset

Net amortization of premiums on debt securities and subordinated debentures

275

363

Share-based compensation

229

Change in accrued interest receivable and other assets, net

(607)

Change in other liabilities, net

(109)

(769)

(Gain) loss on sales of loans, net

(6)

Net cash provided by operating activities

2,480

2,052

INVESTING ACTIVITIES:

Proceeds from maturities of debt securities

3,215

3,531

Purchases of Federal Reserve and Federal Home Loan Bank Stock

(85)

Sales of Federal Reserve and Federal Home Loan Bank Stock

Net decrease (increase) in loans held for investment

2,029

(584)

Purchases of premises and equipment

(20)

(4)

Net cash provided by investing activities

5,144

2,944

FINANCING ACTIVITIES:

Net (decrease) increase in deposits

(39,339)

11,347

Repayments of Federal Home Loan Bank advances

(100)

(1)

Proceeds from Federal Home Loan Bank advances

100

Dividends paid on common stock

(14,304)

Net cash used in financing activities

(39,339)

(2,957)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(31,715)

2,039

CASH AND CASH EQUIVALENTS, beginning of period

211,451

100,815

CASH AND CASH EQUIVALENTS, end of period

$ 179,736

$ 102,854

SUPPLEMENTAL CASH FLOW INFORMATION:

Interest paid

$ 4,700

$ 4,061

Income taxes paid

$ -

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

Additions to repossessed assets in the settlement of loans

$ -

$ 24

Right of use assets obtained in exchange for lease obligations

$ 185

$ -

See accompanying notes to consolidated financial statements.

BNCCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2026

BNCCORP, INC. ("BNCCORP") is a registered bank holding company incorporated under the laws of Delaware. It is the parent company of BNC National Bank (the "Bank"). BNC National Bank operates community banking and wealth management businesses through 11 locations in North Dakota and Arizona.

The accounting and reporting policies of BNCCORP and its subsidiaries (collectively, the "Company") conform to accounting principles generally accepted in the United States of America and general practices within the financial services industry. The consolidated financial statements included herein are for BNCCORP and its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

The accompanying unaudited interim consolidated financial statements have been prepared under the presumption that users of the interim consolidated financial information have read or have access to the audited consolidated financial statements of BNCCORP, INC. and subsidiaries for the year ended December 31, 2025. Accordingly, footnote disclosures which would substantially duplicate the disclosures contained in the December 31, 2025 audited consolidated financial statements have been omitted from these interim consolidated financial statements. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2025, and the notes thereto.

The accompanying interim consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles (GAAP) in the United States of America for interim financial information. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of income and expenses during the reporting period. These estimates are based on information available to management at the time the estimates are made.

The unaudited consolidated financial statements as of March 31, 2026, include, in the opinion of management, all adjustments, consisting primarily of normal recurring adjustments, necessary for a fair presentation of the financial results for the respective interim periods and are not necessarily indicative of results of operations to be expected for the entire fiscal year.

Debt securities have been classified in the consolidated balance sheets according to management's intent. The Company had no securities designated as trading or held-to-maturity in its portfolio at March 31, 2026, or December 31, 2025. The carrying amount of available-for-sale debt securities and their estimated fair values were as follows (in thousands):

As of March 31, 2026

Amortized

Cost

Gross

Unrealized

Gains

Gross

Unrealized

Losses

Estimated

Fair

Value

U.S. treasury securities

$ 10,963

$ -

$ (356)

$ 10,607

U.S. government sponsored entity mortgage-

backed securities issued by FNMA/FHLMC

16,971

(2,391)

14,580

U.S. government agency small business

administration pools guaranteed by SBA

6,720

(406)

6,314

Collateralized mortgage obligations

guaranteed by GNMA

4,575

(112)

4,463

Collateralized mortgage obligations issued by

FNMA/FHLMC

39,873

(3,176)

36,718

Commercial mortgage-backed securities

issued by FHLMC

16,342

(626)

15,716

Other commercial mortgage-backed securities

16,401

(1,019)

15,382

State and municipal bonds

8,037

(763)

7,274

$ 119,882

$ 21

$ (8,849)

$ 111,054

As of December 31, 2025

Amortized

Cost

Gross Unrealized

Gains

Gross Unrealized

Losses

Estimated Fair

Value

U.S. treasury securities

$ 10,956

$ -

$ (373)

$ 10,583

U.S. government sponsored entity mortgage-

backed securities issued by FNMA/FHLMC

17,410

(2,342)

15,068

U.S. government agency small business

administration pools guaranteed by SBA

6,949

(437)

6,512

Collateralized mortgage obligations

guaranteed by GNMA

4,877

(89)

4,788

Collateralized mortgage obligations issued by FNMA/FHLMC

41,384

(3,199)

38,233

Commercial mortgage-backed securities

issued by FHLMC

16,456

(601)

15,855

Other commercial mortgage-backed securities

17,299

(971)

16,328

State and municipal bonds

8,040

(737)

7,303

$ 123,371

$ 48

$ (8,749)

$ 114,670

The amortized cost and estimated fair market value of available-for-sale debt securities classified according to their contractual maturities at March 31, 2026, were as follows (in thousands):

Amortized

Estimated

Cost

Fair Value

Due in one year or less

5,992

5,913

Due after one year through five years

23,133

22,443

Due after five years through 10 years

26,652

25,624

Due after 10 years

64,105

57,074

Total

119,882

111,054

The table above is not intended to reflect actual maturities, cash flows, or interest rate risk. Actual maturities may differ from the contractual maturities shown above as a result of prepayments.

The following table shows the Company's debt securities fair value and gross unrealized losses; aggregated by debt security category and length of time that individual debt securities have been in a continuous unrealized loss position (dollars are in thousands):

March 31, 2026

Less Than 12 Months 12 Months or More Total

Description of

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

Securities

Value

Loss

Value

Loss

Value

Loss

U.S. treasury securities -

U.S. government sponsored entity

$ -

$ 10,607

$ (356)

$ 10,607

$ (356)

mortgage-backed securities

issued by FNMA/FHLMC -

U.S. government agency small

14,580

(2,391)

14,580

(2,391)

business administration pools guaranteed by SBA -

Collateralized mortgage

6,314

(406)

6,314

(406)

obligations guaranteed by

GNMA -

Collateralized mortgage

4,463

(112)

4,463

(112)

obligations issued by

FNMA/ FHLMC 3

2,460

(27)

30,593

(3,149)

33,053

(3,176)

securities issued by FHLMC -

15,716

(626)

15,716

(626)

Other commercial mortgage-backed securities

15,382

(1,019)

15,382

(1,019)

State and municipal bonds

7,274

(763)

7,274

(763)

Total temporarily impaired securities

$ 2,460

$ (27)

$ 104,929

$ (8,822)

$ 107,389

$ (8,849)

Commercial mortgage-backed

December 31, 2025

Less Than 12 Months 12 Months or More Total

Description of

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

Securities

Value

Loss

Value

Loss

Value

Loss

U.S. treasury securities - $ - $ - 3 $ 10,583 $ (373) 3 $ 10,583 $ (373)

15,068

(2,342)

15,068

(2,342)

6,512

(437)

6,512

(437)

4,788

(89)

4,788

(89)

31,684

(3,199)

31,684

(3,199)

15,855

(601)

15,855

(601)

16,328

(971)

16,328

(971)

7,303

(737)

7,303

(737)

$ -

$ 108,121

$ (8,749)

$ 108,121

$ (8,749)

U.S. government sponsored entity mortgage-backed securities issued by FNMA/FHLMC

U.S. government agency small business administration pools guaranteed by SBA

Collateralized mortgage obligations guaranteed by GNMA

Collateralized mortgage obligations issued by FNMA/FHLMC

Commercial mortgage-backed securities issued by FHLMC

Other commercial mortgage-backed securities

State and municipal bonds Total temporarily impaired

securities

The Company does not believe that the debt securities available for sale that were in an unrealized loss position as of March 31, 2026 and December 31, 2025 represent a credit loss impairment. For both periods presented, the gross unrealized loss positions were primarily related to mortgage-backed securities issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities carry the explicit and/or implicit guarantee of the U.S. government and have a history of zero credit loss. Total gross unrealized losses were attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the debt securities. The Company does not intend to sell the debt securities that were in an unrealized loss position and it is unlikely that the Company will be required to sell the debt securities before recovery of their amortized cost basis, which may be at maturity.

NOTE 4 - Loans

The composition of loans is as follows (in thousands):

March 31,

2026

December 31,

2025

Commercial and industrial

$ 247,403

$ 251,336

Commercial real estate

256,000

260,059

SBA

92,976

90,621

Consumer

116,233

117,524

Land and land development

9,626

9,601

Construction

11,826

8,955

Gross loans held for investment

734,064

738,096

Unearned income and net unamortized deferred fees and costs

558

604

Loans, net of unearned income and unamortized fees and costs

734,622

738,700

Allowance for credit losses

(8,635)

(10,318)

Net loans held for investment

$ 725,987

$ 728,382

The following table presents transactions in the allowance for credit losses by portfolio segment (in thousands):

Three Months Ended March 31, 2026

Commercial and

Industrial

Commercial

Real Estate

SBA

Consumer

Land and Land

Development

Construction

Total

Balance, beginning of period

$ 4,622

$ 3,095

$ 1,139

$ 1,190

$ 148

$ 124

$ 10,318

Provision (credit)

263

(144)

150

372

Loans charged off

(2,010)

(55)

(2,065)

Loan recoveries

Balance, end of period

$ 2,876

$ 2,951

$ 1,289

$ 1,194

$ 150

$ 175

$ 8,635

Three Months Ended March 31, 2025

Commercial and

Industrial

Commercial

Real Estate

SBA

Consumer

Land and Land

Development

Construction

Total

Balance, beginning of period

$ 3,128

$ 3,234

$ 1,286

$ 1,280

$ 208

$ 87

$ 9,223

Provision (credit)

(38)

(84)

144

(42)

130

Loans charged off

(8)

(39)

(47)

Loan recoveries

Balance, end of period

$ 3,091

$ 3,150

$ 1,423

$ 1,303

$ 166

$ 178

$ 9,311

The Company recorded a $385 thousand provision for credit losses in the first quarter of 2026. A provision of $372 thousand was recorded as an allowance for loan losses and $13 thousand was recorded as a provision in the allowance for unfunded commitments. This compares to a $100 thousand provision for credit losses in the first quarter of 2025. A provision of $130 thousand was recorded as an allowance for loan losses and $30 thousand was recorded as a reduction in the allowance for unfunded commitments.

At March 31, 2026, the Company maintained an allowance for unfunded commitments of $128 thousand. At December 31, 2025, the Company maintained an allowance for unfunded commitments of $115 thousand. The allowance for unfunded commitments is included as part of the Other liabilities line on the Company's Consolidated Balance Sheets.

Credit Quality Indicators

The Company maintains an internal risk rating process in order to increase the precision and effectiveness of credit risk management. Loans are assigned one of the following four internally assigned grades: pass, special mention, substandard, and doubtful. The following are the definitions of the Company's credit quality indicators:

Pass. Loans designated as pass are not adversely rated, are contractually current as to principal and interest, and are otherwise in compliance with the contractual terms of the loan or lease agreement. Management believes that there is a low likelihood of loss related to those loans and leases that are considered Pass.

Special Mention. Loans designated as special mention are loans that possess some credit deficiency that deserves close attention due to emerging problems. Such loans pose unwarranted financial risk that, if left uncorrected, may result in deterioration of the repayment prospects for the asset or in the Bank's credit position at some future date.

Substandard. Loans graded as substandard or doubtful are considered "Classified" loans for regulatory purposes. Loans classified as substandard are loans that are generally inadequately protected by the current net worth and paying capacity of the obligor, or by the collateral pledged, if any. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the loan. Substandard loans are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have the weaknesses of those classified as substandard, with additional characteristics that make collection in full on the basis of currently existing facts, conditions and values questionable, and there is a higher probability of loss.

Below is a summary of the segments and certain of the inherent risks in the Company's loan portfolio:

Commercial and industrial and SBA. These portfolio segments include guaranteed, secured and unsecured commercial loans. Credit risks inherent in this portfolio segment include fluctuations in the local and national economy.

Commercial real estate. The commercial real estate portfolio segment includes all commercial loans that are secured by real estate, other than those included in the construction and land development segment. Risks inherent in this portfolio segment include fluctuations in property values and changes in the local and national economy impacting the sale or lease of the finished structures.

Construction and Land Development. These portfolio segments include loans for the purpose of construction. Credit risks inherent in these portfolios include fluctuations in property values, unemployment, and changes in the local and national economy.

Consumer. This portfolio segment consists of real estate and non-real estate loans to consumers. This includes mortgages, secured loans, and unsecured loans. The risks inherent in this portfolio segment include those factors that would impact the consumer's ability to meet their obligations under the loan, such as the local unemployment rate.

The following presents by credit quality indicator, loan class, and year of origination, the amortized cost basis of

the Company's loans (in thousands):

Term Loans by Origination Year

Revolving

March 31, 2026

2026

2025

2024

2023

2022

Prior

Loans

Total

Commercial and industrial

Pass

$ 11,618

$ 51,993

$ 41,370

$ 16,143

$ 46,364

$ 49,192

$ 29,241

$ 245,921

Special mention

210

Substandard

177

221

439

970

Doubtful

302

Total commercial and industrial

$ 11,674

$ 52,070

$ 41,580

$ 16,622

$ 46,585

$ 49,631

$ 29,241

$ 247,403

Commercial and industrial loans:

Current period gross write-offs: $ - $ - $ - $ - $ - $ 2,010 $ - $ 2,010

Commercial Real Estate

Pass

$ 7,430

$ 34,698

$ 6,567

$ 42,096

$ 44,217

$ 104,013

$ 14,097

$ 253,118

Special mention

Substandard

2,882

Doubtful

Total commercial real estate

$ 7,430

$ 34,698

$ 6,567

$ 42,096

$ 44,217

$ 106,895

$ 14,097

$ 256,000

Commercial real estate:

Current period gross write-offs:

Small Business Administration

Pass

$ 2,336

$ 15,947

$ 19,541

$ 9,488

$ 19,640

$ 22,390

$ 1,493

$ 90,835

Special mention

281

320

400

1,001

Substandard

615

264

946

Doubtful -

194

Total small business

administration $ 2,336

$ 16,014

$ 19,541

$ 9,769

$ 20,575

$ 23,248

$ 1,493

$ 92,976

Small business administration loans:

Current period gross write-offs: $

Consumer

Pass

$ 3,338

$ 16,577

$ 18,637

$ 19,564

$ 18,490

$ 19,634

$ 18,824

$ 115,064

Special mention

Substandard

917

203

1,169

Doubtful

Total consumer

$ 3,338

$ 16,577

$ 18,637

$ 20,481

$ 18,539

$ 19,837

$ 18,824

$ 116,233

Consumer loans:

Current period gross write-offs:

Land and Land Development

Pass

$ 568

$ 1,924

$ 486

$ 2,219

$ 722

$ 2,721

$ 986

$ 9,626

Special mention

Substandard

Doubtful -

Total land and land

development $ 568

$ 1,924

$ 486

$ 2,219

$ 722

$ 2,721

$ 986

$ 9,626

Land and land development loans:

Current period gross write-offs: $

Construction

Pass

$ - $ - $ - $ - $ - $ - $ 11,826

$ 11,826

Special mention

- - - - - - -

Substandard

- - - - - - -

Doubtful

Total construction

$ -

$ 11,826

Construction loans:

Current period gross write-offs:

Total gross loans

$ 25,346

$ 121,283

$ 86,811

$ 91,187

$ 130,638

$ 202,332

$ 76,467

$ 734,064

Total gross write-offs:

$ -

$ 22

$ -

$ 2,043

$ -

$ 2,065

Term Loans by Origination Year

Revolving

December 31, 2025

2025

2024

2023

2022

2021

Prior

Loans

Total

Commercial and industrial

Pass

$ 55,250

$ 45,350

$ 16,758

$ 48,009

$ 17,327

$ 36,856

$ 28,077

$ 247,627

Special mention

216

177

137

548

Substandard

184

Doubtful

2,784

193

2,977

Total commercial and industrial

$ 55,258

$ 45,566

$ 19,719

$ 48,523

$ 17,327

$ 36,856

$ 28,087

$ 251,336

Commercial and industrial loans:

Current period gross write-offs: $ - $ - $ - $ 140 $ - $ - $ - $ 140

Commercial Real Estate

Pass

$ 34,936

$ 6,976

$ 42,375

$ 44,315

$ 43,160

$ 72,634

$ 12,197

$ 256,593

Special mention

446

3,020

3,466

Substandard

Doubtful

Total commercial real estate

$ 34,936

$ 6,976

$ 42,375

$ 44,761

$ 43,160

$ 75,654

$ 12,197

$ 260,059

Commercial real estate:

Current period gross write-offs:

Small Business Administration

Pass

$ 14,895

$ 19,735

$ 9,573

$ 19,771

$ 8,026

$ 14,745

$ 1,552

$ 88,297

Special mention

281

323

400

124

1,128

Substandard

618

142

827

Doubtful -

360

369

Total small business

administration $ 14,962

$ 19,735

$ 9,854

$ 20,712

$ 8,435

$ 15,371

$ 1,552

$ 90,621

Small business administration loans:

Current period gross write-offs: $

283

Consumer

Pass

$ 16,923

$ 19,750

$ 20,424

$ 19,467

$ 7,690

$ 13,240

$ 18,513

$ 116,007

Special mention

221

Substandard

152

902

137

1,296

Doubtful

Total consumer

$ 16,923

$ 19,902

$ 21,326

$ 19,746

$ 7,827

$ 13,287

$ 18,513

$ 117,524

Consumer loans:

Current period gross write-offs:

$ 5

$ 11

$ 47

$ 94

$ 30

$ 29

$ -

$ 216

Land and Land Development

Pass

$ 1,984

$ 659

$ 2,612

$ 746

$ 2,514

$ 285

$ 801

$ 9,601

Special mention

Substandard

Doubtful -

Total land and land

development $ 1,984

$ 659

$ 2,612

$ 746

$ 2,514

$ 285

$ 801

$ 9,601

Land and land development loans:

Current period gross write-offs: $

Construction

Pass

$ 594

$ - $ - $ - $ - $ - $ 8,361

$ 8,955

Special mention

- - - - - -

Substandard

- - - - - -

Doubtful

Total construction

$ 594

$ -

$ 8,361

$ 8,955

Construction loans:

Current period gross write-offs:

Total gross loans

$ 124,657

$ 92,838

$ 95,886

$ 134,488

$ 79,263

$ 141,453

$ 69,511

$ 738,096

Total gross write-offs:

$ 5

$ 11

$ 47

$ 234

$ 30

$ 312

$ -

$ 639

Performing and Non-Accrual Loans

The Bank's key credit quality indicator is a loan's performance status, defined as accrual or non-accrual. Performing loans are considered to have a lower risk of loss and are on accrual status. Non-accrual loans include loans on which the accrual of interest has been discontinued. Accrual of interest is discontinued when the Bank believes that the borrower's financial condition is such that the collection of interest is doubtful. A delinquent loan is generally placed on non-accrual status when it becomes 90 days or more past due unless the loan is well secured and in the process of collection. When a loan is placed on non-accrual status, accrued but uncollected interest income is reversed against interest income in the current period. No additional interest is accrued on the loan balance until the collection of both principal and interest becomes reasonably certain. Delinquent balances are determined based on the contractual terms of the loan adjusted for charge-offs and payments applied to principal.

The following table sets forth information regarding the Bank's performing and non-accrual loans (in thousands):

March 31, 2026

90 Days or More Past

Current

31-89 Days

Past Due

Due And

Accruing

Total

Performing

Non-accrual

Total

Commercial and industrial:

Business loans

$ 124,380

$ 578

$ -

$ 124,958

$ 725

$ 125,683

Agriculture

39,290

109

39,399

Owner-occupied commercial real estate

82,321

Commercial real estate

255,556

444

256,000

SBA

88,050

136

88,186

4,790

92,976

Consumer:

Automobile

3,510

Home equity

18,261

18,356

1st mortgage

29,157

256

29,413

860

30,273

Other

63,652

236

63,888

206

64,094

Land and land development

9,626

Construction

11,826

Total gross loans

$ 725,629

$ 1,650

$ -

$ 727,279

$ 6,785

$ 734,064

December 31, 2025

90 Days or More Past

Current

31-89 Days

Past Due

Due And

Accruing

Total

Performing

Non-accrual

Total

Commercial and industrial:

Business loans

$ 121,598

$ 20

$ -

$ 121,618

$ 2,977

$ 124,595

Agriculture

41,822

109

41,931

Owner-occupied commercial real estate

84,810

Commercial real estate

259,898

161

260,059

SBA

85,825

4,796

90,621

Consumer:

Automobile

4,002

4,027

Home equity

17,189

17,284

1st mortgage

30,181

860

31,041

Other

64,382

458

64,840

332

65,172

Land and land development

9,601

Construction

8,955

Total gross loans

$ 728,263

$ 664

$ -

$ 728,927

$ 9,169

$ 738,096

The following table sets forth information on the Bank's non-accrual loans (in thousands):

March 31, 2026

Non-accrual loans

Non-accrual loans without a related

Total Non-Accrual

with a related ACL

ACL

Loans

Commercial and industrial:

Business loans

$ 423

$ 302

$ 725

Agriculture

109

SBA

4,309

481

4,790

Consumer:

Home equity

1stmortgage

860

Other

206

Total

$ 5,687

$ 1,098

$ 6,785

December 31, 2025

Non-accrual loans

Non-accrual loans without a related

Total Non-Accrual

with a related ACL

ACL

Loans

Commercial and industrial:

Business loans

$ 2,977

$ -

$ 2,977

Agriculture

109

SBA

4,306

490

4,796

Consumer:

Home equity

1stmortgage

860

Other

332

Total

$ 8,238

$ 931

$ 9,169

The following table indicates the effect on interest income on loans if interest on non-accrual loans outstanding at period end had been recognized at original contractual rates (in thousands):

Three Months Ended

March 31,

2026

2025

Interest income that would have been recorded

$ 206

$ 182

Interest income recorded

Effect on interest income on loans

$ 206

$ 182

Loan Modifications

The Company individually evaluates all modification to loans where the borrower is experiencing financial difficulty. In cases where the modification is determined to be at least as favorable to the Company as the terms for comparable loans to other borrowers with similar risk characteristics the loan is considered a new origination. In the event the evaluation determines that the modification is not in-line with terms for comparable loans, the Company considers these loans to be a modified loan. These types of modifications generally take the form of principal forgiveness, interest rate reduction, other-than-insignificant payment delay, or a term extension.

The following presents the amortized cost of loans to borrowers experiencing financial difficulty that were modified during the period by loan segment and modification type (in thousands):

Payment

March 31, 2026

Percentage of

Modification Total Total Loans

Commercial and industrial $ - $ - - %

SBA

Total

$ -

- %

Loan modifications to borrowers experiencing financial difficulty during the first three months of 2026 did not result in principal forgiveness.

Payment

March 31, 2025

Percentage of

Modification (1) Total Total Loans

Commercial and industrial $ 90 $ 90 - %

SBA

Total

$ 179

- %

(1) Modifications reduced payments for eleven months.

Loan modifications to borrowers experiencing financial difficulty during the first three months of 2025 did not result in principal forgiveness. The following table sets forth information regarding the payment status of modified loans to borrowers experiencing financial difficulty (in thousands):

As of March 31, 2026

Current

31-89 Days

Past Due

90 Days or

More Past Due

Total

Commercial and industrial

SBA

Total

As of March 31, 2025

Current

31-89 Days

Past Due

90 Days or

More Past Due

Total

Commercial and industrial

SBA

Total

179

Collateral-Dependent Loans

A financial asset is considered collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. The following tables present the amortized cost basis of collateral-dependent loans by class and the specific allowance (in thousands):

As of March 31, 2026

Principal

Balance

Specific

Allowance

Commercial and industrial: Business loans

303

Commercial and industrial: Agriculture

109

Commercial real estate

2,761

SBA

4,737

633

Consumer: 1stMortgage

860

Consumer: Other

205

Total

$ 8,975

$ 714

As of December 31, 2025

Principal

Balance

Specific

Allowance

Commercial and industrial: Business loans

2,977

2,010

Commercial and industrial: Agriculture

109

SBA

4,741

511

Consumer: 1stMortgage

860

Consumer: Other

332

Total

$ 9,019

$ 2,602

NOTE 6 - Earnings Per Share

The following table shows the amounts used in computing per share results:

Denominator for basic earnings per share:

Three Months Ended

March 31, 2026

Three Months Ended

March 31, 2025

Average common shares outstanding

3,541,774

3,540,080

Dilutive effect of stock compensation

969

Denominator for diluted earnings per share

3,541,774

3,541,049

Numerator (in thousands): Net income

$ 2,164

$ 1,764

Basic earnings per common share

$ 0.61

$ 0.50

Diluted earnings per common share

$ 0.61

$ 0.50

The Company may grant share-based compensation at prices equal to the fair value of the stock at the grant date. The Company has two share-based plans for certain key employees and directors whereby shares of common stock have been reserved for awards in the form of stock options or restricted stock awards. The plans are as follows:

1995

2015

Total

Total Shares in Plan

250,000

50,000

300,000

Total Shares Available for Issuance

44,701

7,444

52,145

Following is a summary of restricted stock activities for the three-month periods ending March 31:

Three Months Ended Three Months Ended

March 31, 2026 March 31, 2025 Number Weighted Number Weighted Restricted Average Restricted Average

Stock Grant Date Stock Grant Date

Shares Fair Value Shares Fair Value

Outstanding, beginning of period

- 3,750

$ 23.10

Granted

- -

Vested

- -

Forfeited

- -

Outstanding, end of period

- 3,750

23.10

The Company did not recognize any share-based compensation expense related to restricted stock for the three-month period ended March 31, 2026. The Company recognized share-based compensation expense of $7 thousand related to restricted stock for the three-month period ended March 31, 2025.

At March 31, 2026, the Company did not have any remaining unamortized restricted stock compensation expense.

The following table disaggregates non-interest income subject to ASC 606 (in thousands):

Three Months Ended

March 31,

2026

2025

Service charges on deposits

$ 160

$ 145

Bankcard fees

249

Bank charges and service fees not within scope of ASC 606

273

274

Total bank charges and service fees

682

668

Wealth management revenue

575

521

Total wealth management revenues

575

521

Other

Other not within the scope of ASC 606 (a)

136

186

Total other

147

196

Other non-interest income not within the scope of ASC 606 (a)

(1)

Total non-interest income

$ 1,410

$ 1,384

(a) This revenue is not within the scope of ASC 606, and includes fees related to gains on sale of loans, revenue from investments in SBIC, and various other transactions.

The Company had no material contract assets or remaining performance obligations as of March 31, 2026. Total receivables from revenue recognized under the scope of ASC 606 were $573 thousand as of March 31, 2026, and

$573 thousand as of December 31, 2025. These receivables are included as part of the Other assets line on the

Company's Consolidated Balance Sheets.

FASB ASC 820, Fair Value Measurement, defines fair value and establishes a framework for measuring fair value of assets and liabilities using a hierarchy system consisting of three levels based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

Level 1: Valuation is based upon quoted prices for identical instruments traded in active markets that the Company has the ability to access.

Level 2: Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which significant assumptions are observable in the market.

Level 3: Valuation is generated from model-based techniques that use significant assumptions not observable in the market and are used only to the extent that observable inputs are not available. These unobservable assumptions reflect the Company's own estimates of assumptions that market participants would use in pricing the asset or liability.

For the periods presented, Treasury Securities were considered to be Level 1 while all other assets and liabilities valued at fair value were considered to be Level 2. There were no transfers into or out of the respective levels during the periods presented.

The following tables summarize the financial assets and liabilities of the Company for which fair values are determined on a recurring basis (in thousands):

ASSETS

Carrying Value at March 31, 2026

Total Level 1 Level 2 Level 3

Three Months Ended

March 31, 2026 Total

Gains/(Losses)

Debt securities available for sale $ 111,054 $ 10,607 $ 100,447 $ - $ -Total assets at fair value $ 111,054 10,607, $ 100,447 $ - $ -

ASSETS

Carrying Value at December 31, 2025

Total Level 1 Level 2 Level 3

Twelve Months Ended

December 31, 2025 Total

Gains/(Losses)

Debt securities available for sale $ 114,670 $ 10,583 $ 104,087 $ - $ -Total assets at fair value $ 114,670 $ 10,583 $ 104,087 $ - $ -

The estimated fair values of the Company's financial instruments are as follows (in thousands):

Level in Fair Value

March 31, 2026 December 31, 2025

Measurement

Hierarchy

Carrying

Amount

Fair

Value

Carrying

Amount

Fair

Value

Assets:

Cash and cash equivalents

Level 1

$ 179,736

$ 211,451

Federal Reserve Bank and Federal Home Loan Bank stock

Level 2

2,466

2,386

Gross loans held for investment

Level 2

734,064

722,310

738,096

738,061

Accrued interest receivable

Level 2

4,059

4.059

4,395

$ 920,325

$ 908,571

$ 956,328

$ 956,293

Liabilities and Stockholders' Equity:

Deposits, noninterest-bearing

Level 2

$ 174,630

$ 177,618

Deposits, interest-bearing

Level 2

757,832

575,387

794,183

793,792

Accrued interest payable

Level 2

1,626

1,638

Guaranteed preferred beneficial interests in Company's subordinated debentures

Level 2

15,464

12,677

15,464

12,716

$ 949,552

$ 946,320

$ 988,903

$ 985,764

Financial instruments with off-balance-sheet risk:

Commitments to extend credit

Level 2

$ - $ 179

$ - $ 182

Standby and commercial letters of credit

Level 2

$ - $ 51

$ - $ 42

As of March 31, 2026, the Bank had no Federal Home Loan Bank (FHLB) advances outstanding. At March 31, 2026, the Bank had loans with unamortized principal balances of approximately $249.1 million pledged as collateral to the FHLB.

As of December 31, 2025, the Bank had no FHLB advances outstanding. At December 31, 2025, the Bank had loans with unamortized principal balances of approximately $236.7 million pledged as collateral to the FHLB.

As of March 31, 2026, the Bank has the ability to draw advances up to approximately $152.5 million based upon the aggregate collateral that is currently pledged, subject to additional FHLB stock purchase requirements.

The following table presents selected information regarding other borrowings (in thousands):

March 31, 2026

Unsecured Borrowing Lines:

Line Outstanding Available

BNC National Bank lines (1) $ 34,500 $ - $ 34,500

Secured Borrowing Lines:

Collateral

Pledged Line Outstanding Available

BNC National Bank line $ 2,955 $ 1,800 $ - $ 1,800 BNCCORP line 117,805 10,000 - 10,000

Total $ 120,760 $ 11,800 $ - $ 11,800

(1) The unsecured BNC National Bank Lines consists of three separate lines with three institutions in individual amounts of $12.5 million, $12 million, and $10 million.

At March 31, 2026, the pledged collateral for the secured BNC National Bank line was comprised of commercial real estate loans and the pledged collateral for the secured BNCCORP line is the common stock of BNC National Bank.

December 31, 2025

Unsecured Borrowing Lines:

Line Outstanding Available

BNC National Bank lines (1) $ 34,500 $ - $ 34,500

Secured Borrowing Lines:

Collateral

Pledged Line Outstanding Available

BNC National Bank line $ 2,987 $ 1,849 $ - $ 1,849 BNCCORP line 115,083 10,000 - 10,000

Total $ 118,070 $ 11,849 $ - $ 11,849

(1) The unsecured BNC National Bank Lines consists of three separate lines with three institutions in individual amounts of $12.5 million, $12 million, and $10 million.

At December 31, 2025, the pledged collateral for the secured BNC National Bank line was comprised of commercial real estate loans and the pledged collateral for the secured BNCCORP line is the common stock of BNC National Bank.

In July 2007, BNCCORP issued $15.5 million of floating rate subordinated debentures. During the third quarter of 2023 the index rate and spread converted from three-month LIBOR plus 1.40% to three-month SOFR plus 1.66%. The interest rate at March 31, 2026, and December 31, 2025, was 5.32% and 5.65%, respectively. The subordinated debentures mature on October 1, 2037. The subordinated debentures may be redeemed at par and the corresponding debentures may be prepaid at the option of BNCCORP, subject to approval by the Federal Reserve Board.

Regulatory restrictions exist regarding the ability of the Bank to transfer funds to BNCCORP in the form of cash dividends. Approval of the Office of the Comptroller of the Currency (OCC), the Bank's principal regulator, is required for BNC National Bank to pay dividends to BNCCORP in excess of the Bank's net profits from the current year plus retained net profits for the preceding two years.

BNCCORP is required to consult with the Federal Reserve Board prior to declaring a cash dividend to stockholders. On February 2, 2024, BNCCORP's Board of Directors declared a $2.25 per share special cash dividend that was paid on March 25, 2024, and on December 18, 2024, BNCCORP's Board of Directors declared a $4.00 per share special cash dividend that was paid on January 14, 2025.

BNCCORP's Board of Directors approved a share repurchase program authorizing the Company to repurchase up to 175,000 shares of BNCCORP, INC. outstanding common stock. During the first quarter of 2024, the Company repurchased 50,000 shares of common stock for a total cost of $1.2 million, or $23.25 per share, excluding the cost of commissions, transaction charges and taxes. No other share repurchases of common stock have been made by the Company. As of March 31, 2026, 125,000 shares remained under the current authorized share repurchase program. Share repurchases can be made through open market purchases, unsolicited and solicited privately negotiated transactions, or in accordance with terms of Rule 10b-18 promulgated under the Securities Exchange Act of 1934. The Company will not repurchase shares from directors or officers of the Company under the authorization. The Company will contemplate share repurchases subject to market conditions and other factors, including legal and regulatory restrictions and required approvals.

BNCCORP and BNC National Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet capital requirements mandated by regulators can trigger certain mandatory and discretionary actions by regulators. Such actions, if undertaken, could have a direct material adverse effect on the Company's financial condition and results of operations. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, BNCCORP and BNC National 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. Regulators may also impose capital requirements that are specific to individual institutions. The requirements are generally above the statutory ratios.

At March 31, 2026, the Company's capital ratios exceeded all regulatory capital thresholds and maintained sufficient capital conservation buffers to avoid limitations on certain types of capital distributions.

At March 31, 2026, and December 31, 2025, the regulatory capital amounts and ratios were as follows (dollars in thousands):

Actual

For Capital Adequacy

Purposes To be Well Capitalized

Amount in Excess of

Well Capitalized

March 31, 2026

Total Risk-Based Capital:

Amount

Ratio

Amount

Ratio

Amount

Ratio

Amount

Ratio

Consolidated

$ 138,301

15.99 %

$ 69,207

≥8.00 %

$ N/A

N/A %

$ N/A

N/A %

BNC National Bank

131,642

15.24

69,125

≥8.00

86,406

10.00

45,236

5.24

Tier 1 Risk-Based Capital:

Consolidated

129,539

14.97

51,905

≥6.00

N/A

BNC National Bank

122,879

14.22

51,843

≥6.00

69,125

8.00

53,754

6.22

Common Equity Tier 1

Risk-Based Capital:

Consolidated

114,075

13.19

38,929

≥4.50

N/A

BNC National Bank

122,879

14.22

38,883

≥4.50

56,164

6.50

66,715

7.72

Tier 1 Leverage Capital:

Consolidated

129,539

11.87

43,648

≥4.00

N/A

BNC National Bank

122,879

11.28

43,591

≥4.00

54,488

5.00

68,391

6.28

Tangible Common Equity

(to total assets): (a)

Consolidated

108,592

10.22

N/A

BNC National Bank

117,805

11.10

N/A

December 31, 2025

Total Risk-Based Capital:

Consolidated

$ 137,792

16.02%

$ 68,804

≥8.00 %

$ N/A

N/A %

$ N/A

N/A%

BNC National Bank

130,496

15.19

68,722

≥8.00

85,902

10.00

44,594

5.19

Tier 1 Risk-Based Capital:

Consolidated

127,358

14.81

51,603

≥6.00

N/A

BNC National Bank

120,062

13.98

51,541

≥6.00

68,722

8.00

51,340

5.98

Common Equity Tier 1

Risk-Based Capital:

Consolidated

111,894

13.01

38,702

≥4.50

N/A

BNC National Bank

120,062

13.98

38,656

≥4.50

55,836

6.50

64,226

7.48

Tier 1 Leverage Capital:

Consolidated

127,358

12.40

41,071

≥4.00

N/A

BNC National Bank

120,062

11.71

41,015

≥4.00

51,269

5.00

68,793

6.71

Tangible Common Equity

(to total assets): (a)

Consolidated

106,507

9.68

N/A

BNC National Bank

115,083

10.47

N/A

(a) Tangible common equity ratio is calculated by dividing common equity, less intangible assets, by total period end assets.

The most recent notifications from the OCC categorized the Bank as "well capitalized" under the regulatory framework for prompt corrective action. Management believes the Bank remains well capitalized through the date for which subsequent events have been evaluated.

On April 28, 2026, BNCCORP entered into an Agreement and Plan of Merger (the "Merger Agreement") with OppFi Inc. ("OppFi"), and Birch Merger Sub, LLC, a wholly owned subsidiary of OppFi ("Merger Sub"). Pursuant to the Merger Agreement, BNCCORP will merge with and into Merger Sub, with Merger Sub surviving as a wholly owned subsidiary of OppFi (the "Merger"). Immediately following the Merger, an interim bank and wholly owned subsidiary of OppFi will be formed and merge with and into the Bank (to be renamed OppFi Bank, N.A.), surviving as a wholly owned subsidiary of OppFi (together with the Merger, the "Transaction"). At the effective time of the Merger, each outstanding share of the BNCCORP's common stock (other than certain excluded shares) will be converted into the right to receive (i) $19.375 in cash and (ii) 1.90 shares of the Class A common stock of OppFi. Because the exchange ratio of 1.90 shares of OppFi common stock for each share of the BNCCORP's stock is fixed, the value of the merger consideration will fluctuate until closing based on the value of OppFi's stock price. The consummation of the Transaction is subject to customary closing conditions, including the receipt of regulatory approvals.

References to "BNCCORP" or "the Company" refer to BNCCORP, INC. and its consolidated subsidiaries, collectively; references to "the Bank" only refer to BNC National Bank. Where not otherwise indicated below, financial condition and results of operations discussed are of BNCCORP, INC.

Comparison of Results for the Three Months Ended March 31, 2026, and 2025

The Company reported net income of $2.2 million, or $0.61 per diluted share, for the quarter compared to $1.8 million, or $0.50 per diluted share, in the first quarter of 2025.

First quarter interest income increased $1.9 million, or 15.9%, to $13.9 million in the first quarter of 2026 from

$12.0 million in the first quarter of 2025. Average yield on interest-earning assets in the quarter improved to 5.41% from 5.34% in the first quarter of 2025 driven by a $41.8 million period-over-period increase in the average balance of loans held for investment and higher average balances of cash and cash equivalents. Those increases were partially offset by lower yields on cash and cash equivalents and a lower average balance of debt securities during the quarter.

Interest expense in the first quarter of 2026 was $4.7 million, an increase of $539 thousand from the 2025 period. The cost of core deposits in the first quarter of 2026 remained constant at 1.88% unchanged from the first quarter of 2025. The average balance of deposits increased by $119.6 million compared to the first quarter of 2025. The cost of interest-bearing liabilities was 2.35% during the first quarter of 2026, compared to 2.42% in the same period of 2025.

Net interest income for the first quarter of 2026 was $9.2 million, an increase of $1.4 million, or 17.4%, from the first quarter of 2025. Net interest margin was 3.59% in the first quarter of 2026 compared to 3.49% reported in the prior year period.

Non-interest income during the first quarter of 2026 was $1.4 million, compared to $1.4 million in the 2025 first quarter. Bank charges and service fees were $14 thousand higher quarter-over-quarter primarily due to higher servicing income and overdraft fees that were partially offset by lower non-use fees from lines of credit. Wealth management revenues increased by $54 thousand, or 10.4%, as the Company benefitted from significant increases in the market value of financial assets year-over-year. Other income is $49 thousand lower than the prior year period due to the recognition of a $51 thousand gain on sale of repossessed asset in the 2025 period.

Non-interest expense during the first quarter of 2026 increased $604 thousand, or 8.8%, year-over-year, primarily due to a $558 thousand increase in professional services as the Company incurred additional expenses in connection with the negotiation of the recently announced definitive agreement to be acquired by OppFi Inc. The Company reported additional increases in data processing fees and occupancy expense. Core banking services, card processing

charges and higher IT subscriptions provided the largest increases. Occupancy expense increased primarily due to higher expense for snow removal in the 2026 period.

In the first quarter of 2026, income tax expense was $646 thousand, compared to $542 thousand in the first quarter

of 2025. The Company's effective tax rate was 23.0% and 23.5% for the first quarter of 2026 and 2025, respectively.

Tangible book value per common share on March 31, 2026 was $30.85, compared to $30.26 at December 31, 2025. The Company's tangible common equity capital ratio increased to 10.22% as of March 31, 2026, compared to 9.68% on December 31, 2025.

Net Interest Income

The following table presents average balance sheet information, yields on interest-earning assets and costs on interest-bearing liabilities (dollars are in thousands):

Three Months Ended March 31,

2026

2025

Change

Average Balance

Interest

Earned or Owed

Average

Yield or Cost

Average Balance

Interest

Earned or Owed

Average

Yield or Cost

Average Balance

Interest

Earned or Owed

Average

Yield or Cost

Interest-earning assets

Cash and cash equivalents

198,576

1,814

3.71%

94,497

1,039

4.46%

104,079

775

-0.75%

(a)

FHLB Stock

584

5.97%

580

5.59%

0.38%

Federal Reserve Stock

1,807

6.00%

1,807

6.06%

-0.06%

Debt securities - taxable

113,051

870

3.12%

128,144

1,014

3.21%

(15,093)

(144)

-0.09%

(b)

Loans held for investment

737,328

11,186

6.15%

695,519

9,912

5.78%

41,809

1,274

0.37%

(c)

Allowance for loan losses

(8,814)

0.00%

(9,218)

0.00%

404

0.00%

Total interest-earning assets

1,042,532

13,906

5.41%

911,329

12,000

5.34%

131,203

1,906

0.07%

Interest-bearing liabilities

Interest checking and money market

637,093

3,557

2.26%

544,016

3,119

2.33%

93,077

438

-0.07%

(d)

Savings

42,193

0.10%

43,967

0.11%

(1,774)

-0.01%

(d)

Certificates of deposit

112,661

923

3.31%

92,870

797

3.48%

19,791

126

-0.17%

(d)

Total interest-bearing deposits

791,947

4,491

2.30%

680,853

3,927

2.34%

111,094

564

-0.04%

Short-term borrowings

4.21%

0.00%

4.21%

Subordinated debentures

15,464

197

5.18%

15,464

222

5.81%

(25)

-0.63%

Total borrowings

15,466

197

5.17%

15,464

222

5.81%

(25)

-0.64%

Total interest-bearing liabilities

807,413

4,688

2.35%

696,317

4,149

2.42%

111,096

539

-0.07%

Net interest income/spread

9,218

3.05%

7,851

2.92%

1,367

0.13%

Net interest margin

3.59%

3.49%

0.10%

Notation:

Non-interest-bearing deposits

174,676

0.00%

166,133

0.00%

8,543

0.00%

(d)

Total deposits

966,623

4,491

1.88%

846,986

3,927

1.88%

119,637

564

0.00%

Taxable equivalents:

Total interest-earning assets

1,042,531

13,926

5.42%

911,329

12,028

5.35%

131,202

1,898

0.07%

Net interest income/spread

9,238

3.06%

7,879

2.94%

1,359

0.12%

Net interest margin

3.59%

3.51%

0.08%

Balances increased as the cash provided by amortization of the debt securities portfolio and increased deposit balances were more than required for loan growth.

The average balance of debt securities decreased as the Company is utilizing the cash flow from the portfolio to provide liquidity for loan growth.

The increase in average loans held for investment is due to the loan growth produced by the Company during 2025 that has been muted in the first three months of 2026.

Overall, average deposit balances increased. Deposit rates increased as the Company has experienced a migration from non-interest bearing to interest bearing products.

Non-interest Income

The following table presents the major categories of the Company's non-interest income (dollars are in thousands):

Three Months Ended Increase

March 31, (Decrease)

2026

2025

Bank charges and service fees

$ 682

$ 668

$ 14

Wealth management revenues

575

521

(a)

Gains on sales of loans, net

(1)

700

Other

147

196

(49)

(25)

(b)

Total non-interest income

$ 1,410

$ 1,384

$ 26

Wealth management revenues increased as the Company benefitted from significant increases in the market value of financial assets year-over-year.

The decrease is primarily due to lower gains on sale of repossessed assets in the 2026 period.

Non-interest Expense

The following table presents the major categories of the Company's non-interest expense (dollars are in thousands):

Three Months Ended Increase

March 31, (Decrease)

2026

2025

Salaries and employee benefits

$ 3,989

$ 4,088

$ (99)

(2)

Professional services

820

262

558

213

(a)

Data processing fees

924

823

101

(b)

Marketing and promotion

140

183

(43)

(23)

(c)

Occupancy

452

399

(d)

Regulatory costs

131

132

(1)

Depreciation and amortization

269

273

(4)

(1)

Office supplies and postage

101

Other

607

576

Total non-interest expense

$ 7,433

$ 6,829

$ 604

Efficiency ratio

69.9%

74.0%

Professional services increased as the Company incurred additional expenses in connection with the recently announced definitive agreement to be acquired by OppFi Inc.

Data processing fees increased due to higher core banking services, card processing charges and IT subscriptions.

Marketing and promotion decreased primarily due to lower services from advertising agencies than the prior year period.

Occupancy increased due to higher snow removal expenses in the current period.

Income Taxes

In the first quarter of 2026, income tax expense on a consolidated basis was $646 thousand, compared to $542 thousand in the first quarter of 2025. The effective tax rate was 23.0% in the first quarter of 2026 and 23.5% in the same period of 2025.

Assets

The following table presents the Company's assets by category (dollars are in thousands):

March 31, December 31, Increase (Decrease)

2026

2025

Cash and cash equivalents

$ 179,736

$ 211,451

$ (31,715)

(15) %

(a)

Debt securities available for sale

111,054

114,670

(3,616)

(3)

Federal Reserve Bank and Federal

Home Loan Bank stock 2,466

2,386

80 3

Loans held for investment

734,622

738,700

(4,078)

(1)

Allowance for credit losses

(8,635)

(10,318)

1,683

(16)

(b)

Premises and equipment, net

9,870

10,120

(250)

(2)

Operating lease right of use asset

606

514

(c)

Accrued interest receivable

4,059

4,395

(336)

(8)

(d)

Other assets

29,078

28,288

790

Total assets

$ 1,062,856

$ 1,100,206

$ (37,350)

(3) %

Cash balances decreased as the Company experienced a decline in deposit balances during the first quarter of 2026.

Allowance for credit losses decreased due to increased write-downs related to specific problem credits in the first quarter of 2026.

Operating lease right of use asset increased as the Company renewed a lease for the Glendale, AZ office location.

Accrued interest receivable decreased due to lower balances of debt securities and loans.

Loan Participations

Pursuant to the Company's lending policy, loans may not exceed 85 percent of the Bank's legal lending limit (except to the extent collateralized by U.S. Treasury securities or Bank deposits) unless the Bank's Chief Credit Officer or the Executive Credit Committee grant prior approval. To accommodate creditworthy customers whose financing needs exceed lending limits and internal restrictions, the Bank sells loan participations to outside participants without recourse. Loan participations sold on a nonrecourse basis to outside financial institutions were $168.5 million as of March 31, 2026, and $167.8 million as of December 31, 2025. The sales of participations are accounted for pursuant to FASB ASC 860, Transfers and Servicing.

Concentrations of Credit

The following table summarizes the locations and balances of the Company's borrowers (dollars are in thousands):

March 31, 2026

December 31, 2025

North Dakota

411,909

417,106

Arizona

159,555

155,470

Minnesota

37,751

40,550

Other

124,849

124,970

Total gross loans

734,064

100

738,096

100

The Company's borrowers use loan proceeds for projects in various geographic areas. The following table summarizes the locations and balances where borrowers are using loan proceeds (dollars are in thousands):

March 31, 2026

December 31, 2025

North Dakota

387,469

391,236

Arizona

187,912

189,943

Minnesota

29,273

29,137

South Dakota

27,226

27,473

California

27,067

28,032

Montana

17,975

15,301

Nevada

13,832

13,914

Colorado

8,528

8,816

Other

34,782

34,244

Total gross loans

734,064

100

738,096

100

The Company's loans held for investment are geographically concentrated in North Dakota and Arizona. The North Dakota economy is influenced by the energy and agriculture industries. Changes in energy supply and demand, along with market sentiment have recently caused a decrease in oil prices that, if prolonged, could have a negative impact on the oil industry and ancillary services. Potential risks to North Dakota's energy and agriculture industries include the possibility of adverse national legislation, potential effects of trade policy, and changes in economic conditions. Depending on the severity of their impact, these factors could present potential challenges to credit quality in North Dakota. The Arizona economy continues to diversify but remains influenced by the leisure and travel industries. Positive trends in both industries have been noted, but an extended slowdown in these industries could negatively impact credit quality in Arizona. While the Company's portfolio includes various sized loans spread over a large number of industry sectors, it has meaningful concentrations of loans to the hospitality and commercial real estate industries.

The following table approximately describes the Company's concentrations by industry as of March 31, 2026 and December 31, 2025, respectively (dollars are in thousands):

March 31, 2026

December 31, 2025

Non-owner occupied commercial real estate - not otherwise categorized

203,972

200,887

Consumer, not otherwise categorized

94,152

94,999

Hotels

93,262

97,337

Healthcare and social assistance

38,084

37,270

Agriculture, forestry, fishing and hunting

34,977

37,328

Retail trade

30,223

30,110

Non-hotel accommodation and food service

28,205

28,469

Art, entertainment and recreation

27,202

27,821

Transportation and warehousing

24,353

27,329

Construction contractors

24,095

24,178

Manufacturing

20,931

20,127

Mining, oil and gas extraction

20,666

21,495

Real estate and rental and leasing support services

17,515

15,245

Other service

15,343

15,372

Utilities

14,540

14,510

Educational services

12,385

10,932

Professional, scientific, and technical services

10,906

11,406

Finance and insurance

8,561

8,573

Public administration

6,346

6,440

All other

8,346

8,268

Total gross loans

734,064

100

738,096

100

Loan Maturities(1)

The following table sets forth the maturities of loans in each major category of the Company's portfolio as of March 31, 2026 (in thousands):

Over 1 Year

Through 5 Years Over 5 Years

Total Loans

One Year

or Less

Fixed

Rate

Indexed

Rate

Fixed

Rate

Indexed

Rate

Held for

Investment

Commercial and industrial

$ 32,679

$ 25,133

$ 4,275

$ 46,372

$ 138,944

$ 247,403

Commercial real estate

2,200

19,262

4,484

28,806

201,248

256,000

SBA

1,007

7,501

5,062

79,406

92,976

Consumer

667

4,002

8,768

77,104

25,692

116,233

Land and land development

259

4,826

1,551

2,905

9,626

Construction

281

161

6,941

554

3,889

11,826

Total principal amount of loans

$ 37,093

$ 53,384

$ 33,520

$ 157,983

$ 452,084

$ 734,064

Maturities are based on contractual maturities. Indexed rate loans include loans that would reprice prior to maturity if base rates change.

Actual maturities may differ from the contractual maturities shown above as a result of renewals and prepayments. Loan renewals are evaluated in the same manner as new credit applications.

Allocation of the Allowance for Credit Losses

The table below presents the allocation of the allowance for credit losses among the various loan categories and sets forth the percentage of loans in each category to gross loans. The allocation of the allowance for credit losses as shown in the table should neither be interpreted as an indication of future charge-offs, nor as an indication that charge-offs in future periods will necessarily occur in these amounts or in the indicated proportions (dollars are in thousands).

March 31, 2026

December 31, 2025

Allocation of Allowance

Loans as a % of Gross Loans Held for

Investment

Allocation of Allowance

Loans as a % of Gross Loans Held for

Investment

Commercial and industrial

2,876

4,622

Commercial real estate

2,951

3,095

SBA

1,289

1,139

Consumer

1,194

1,190

Land and land development

150

148

Construction

175

124

Total

8,635

100

10,318

100

Nonperforming Loans

The following table sets forth information concerning the Company's nonperforming loans as of the dates indicated (in thousands):

Three Months Twelve Months Ended Ended

March 31, December 31,

2026

2025

Balance, beginning of period

$ 9,169

$ 6,275

Additions to nonperforming

556

1,035

5,998

Charge-offs

(2,010)

(543)

Reclassified back to performing

(8)

(884)

Principal payment received

(930)

(24)

(1,527)

Transferred to repossessed assets

(24)

(150)

Balance, end of period

$ 6,785

$ 7,254

$ 9,169

Nonperforming Assets

The following table sets forth information concerning the Company's nonperforming assets as of the dates indicated (dollars are in thousands):

Nonperforming loans:

March 31,

2026

December 31,

2025

Loans 90 days or more delinquent and still accruing interest

$ -

Non-accrual loans

6,785

9,169

Total nonperforming loans

$ 6,785

$ 9,169

Repossessed assets, net

Total nonperforming assets

$ 6,785

$ 9,169

Allowance for credit losses

$ 8,635

$ 10,318

Ratio of total nonperforming loans to total loans

0.92%

1.24%

Ratio of total nonperforming assets to total assets

0.64%

0.83%

Ratio of nonperforming loans to total assets

0.64%

0.83%

Ratio of allowance for credit losses to nonperforming loans

127%

113%

Problem Loans

Management attempts to quantify potential problem loans with more immediate credit risk. The table below summarizes the amounts of potential problem loans (in thousands):

Special Mention

Substandard

Doubtful

March 31, 2026

$ 1,211

$ 5,967

$ 496

December 31, 2025

5,363

2,307

3,346

At March 31, 2026, the Bank had $6.5 million of classified loans. This compares to $5.7 million of classified loans at December 31, 2025, and $5.0 million of classified loans at March 31, 2025. As of March 31, 2026 and December 31, 2025, the Company had $1.2 million and $5.4 million, respectively, of potentially problematic loans, which are risk-rated as "special mention".

A significant portion of these potential problem loans are not in default but may have characteristics such as recent adverse operating cash flows or general risk characteristics that the loan officer feels might jeopardize the future timely collection of principal and interest payments. The ultimate resolution of these credits is subject to changes in economic conditions and other factors. These loans are closely monitored to ensure that the Company's position as creditor is protected to the fullest extent possible.

Liabilities

The following table presents the Company's liabilities (dollars are in thousands):

March 31, December 31, Increase (Decrease)

2026

2025

Deposits:

Non-interest-bearing

$ 174,630

$ 177,618

$ (2,988)

(2) % (a)

Interest-bearing-

Savings, interest checking and money

market

645,217

681,350

(36,133)

(5)

(a)

Time deposits

112,615

112,833

(218)

(a)

Guaranteed preferred beneficial interests in

Company's subordinated debentures

15,464

Accrued interest payable

1,626

1,638

(12)

(1)

Accrued expenses

1,976

2,877

(901)

(31)

(b)

Operating lease liabilities

653

571

(c)

Other liabilities

2,083

1,348

735

(d)

Total liabilities

$ 954,264

$ 993,699

$ (39,435)

(4) %

Overall, deposits decreased by 4.0% in the first three months of 2026 The Company continues to enjoy strong and enduring customer relationships and continues to focus on developing new deposit relationships.

Accrued expenses decreased due to lower incentive accruals and a reduction in 401k matching contributions that were partially offset by higher accrued expenses for professional services.

Operating lease liabilities increased as the Company renewed a lease for the Glendale, AZ office location

Increase is primarily due to higher income taxes payable.

Deposits

Total deposits decreased $39.3 million to $932.5 million on March 31, 2026, from $971.8 million on December 31, 2025. The Company continues to focus on new deposit relationships and is keenly focused on the importance of liquidity.

The following table provides additional details to the Company's total deposit relationships:

As of

March 31,

December 31,

March 31,

(In thousands)

Deposits:

2026

2025

Non-interest-bearing

$ 174,630

$ 177,618

$ 169,503

Interest-bearing -

Savings, interest checking and money market

645,217

681,350

582,239

Time deposits

112,615

112,833

97,105

Total on balance sheet deposits

932,462

971,801

848,847

Off-balance sheet deposits (1)

18,133

Total available deposits

$ 932,462

$ 971,801

$ 866,980

(1) The off-balance sheet deposits above do not include off-balance sheet time deposits that can be brought back on the balance sheet at various future maturity dates. As of March 31, 2026, the Company managed off-balance sheet time deposit balances of $260 thousand, compared to

$250 thousand as of December 31, 2025 and $6.2 million as of March 31, 2025.

The Company remains highly focused on meeting the needs of its customers and ensuring deposit rates reflect changing market conditions. The Company estimates that deposit insurance and other deposit protection programs secure approximately 69% of its customer's deposit balances. This fact, combined with a strong balance sheet and relationship-focused culture has allowed the Company to maintain a significant deposit base.

Off-balance sheet accounts are primarily utilized to custody larger business customer deposits that require daily access to funds and FDIC insurance coverage. The Company did not have off-balance sheet deposits at year-end 2025 and March 31, 2026. Off-balance sheet deposits can fluctuate greatly as customers balance utilization demands evolve. The Company earns non-interest income through the associated banking network for the utilization of these funds.

At March 31, 2026, and December 31, 2025, the Bank had $25.5 million and $24.2 million, respectively, in time deposits greater than $250 thousand.

Stockholders' Equity

The Company's stockholders' equity increased $2.1 million from December 31, 2025, to March 31, 2026, primarily driven by increased retained earnings and a negative adjustment to the tax-effected fair value of debt securities available for sale as evidenced in the increase of accumulated other comprehensive losses. As presented in Note 15 - Regulatory Capital and Current Operating Environment, the Company maintains capital in excess of regulatory requirements.

Liquidity Risk Management

Liquidity risk is the possibility of being unable to meet present and future financial obligations in a timely manner. Liquidity risk management encompasses the Company's ability to meet all present and future financial obligations in a timely manner. The objectives of the Company's liquidity management policies are to maintain adequate liquid assets, liability diversification among instruments, maturities and customers and a presence in both the wholesale purchased funds market and the retail deposit market.

The Consolidated Statements of Cash Flows in the Consolidated Financial Statements present data on cash and cash equivalents provided by and used in operating, investing, and financing activities. In addition to liquidity from core deposit growth, together with repayments and maturities of loans and debt securities, the Company may utilize brokered deposits, sell debt securities under agreements to repurchase and borrow overnight Federal funds. The Bank is a member of the FHLB of Des Moines. Advances from the FHLB are collateralized by the Bank's mortgage loans. Funding through the issuance of subordinated notes, subordinated debentures, and long-term borrowings also has been utilized.

The Company's liquidity is defined by its ability to meet cash and collateral obligations at a reasonable cost and with a minimum loss of income. Given the uncertain nature of customers' demands, as well as the Company's desire to take advantage of earnings enhancement opportunities, the Company must have adequate sources of on- and off-balance-sheet funds that can be acquired in time of need.

The Company's liquidity position is measured on an as-needed basis, but no less frequently than monthly using each of the following items:

Estimated liquid assets and certain off-balance sheet considerations less estimated volatile liabilities using the aforementioned methodology ($143.5 million as of March 31, 2026);

Borrowing capacity from the FHLB ($152.5 million as of March 31, 2026); and

Capacity to issue brokered deposits with maturities of less than 12 months ($159.2 million as of March 31, 2026).

On an ongoing basis, the Company uses a variety of factors to assess the Company's liquidity position including,

but not limited to, the following:

Stability of its deposit base;

Amount of unpledged debt securities;

Liquidity of its loan portfolio; and

Potential loan demand.

The Company's liquidity assessment process segregates its balance sheet into liquid assets along with certain off-balance sheet considerations and short-term liabilities assumed to be vulnerable to non-replacement over a 30-day horizon in abnormally stringent conditions. Assumptions for the vulnerable short-term liabilities are based upon historical factors. The Company has a targeted range for its liquidity position over this horizon and manage

operations to achieve these targets.

The Company further projects cash flows over a 12-month horizon based on its assets and liabilities and sources and uses of funds for anticipated events.

Pursuant to the Company's contingency funding plan, it estimates cash flows over a 12-month horizon under a variety of stressed scenarios to identify potential funding needs and funding sources. The Company's contingency plan identifies actions that could be taken in response to adverse liquidity events.

The Company believes this process, combined with its policies and guidelines, should provide for adequate levels of liquidity to fund the anticipated needs of on- and off- balance sheet items.

Market risk arises from changes in interest rates, exchange rates, and commodity and equity prices and represents the possibility that changes in future market rates or prices will have a negative impact on the Company's earnings or value. The Company's principal market risk is interest rate risk.

Interest rate risk arises from changes in interest rates. Interest rate risk can result from: (1) Repricing risk - timing differences in the maturity/repricing of assets, liabilities, and off-balance-sheet contracts; (2) Options risk - the effect of embedded options, such as loan prepayments, interest rate caps/floors, and deposit withdrawals; (3) Basis risk - risk resulting from unexpected changes in the spread between two or more different rates of similar maturity, and the resulting impact on the behavior of lending and funding rates; and (4) Yield curve risk - risk resulting from unexpected changes in the spread between two or more rates of different maturities from the same type of instrument. The Company has risk management policies to monitor and limit exposure to interest rate risk. The Company's asset/liability management process is utilized to manage its interest rate risk. The measurement of interest rate risk associated with financial instruments is meaningful only when all related and offsetting on- and off-balance-sheet transactions are aggregated, and the resulting net positions are identified.

The Company's interest rate risk exposure is actively managed with the objective of managing the level and potential volatility of net interest income in addition to the long-term growth of equity, bearing in mind that it will always be in the business of taking on rate risk and that rate risk immunization is not entirely possible. Also, it is recognized that as exposure to interest rate risk is reduced, so too may the overall level of net interest income and equity.

The Company's primary tool for measuring and managing interest rate risk is net interest income simulation. This exercise includes assumptions regarding the changes in interest rates and the impact on the Company's current balance sheet. Interest rate caps and floors are included to the extent that they are exercised in the 12-month simulation period. Additionally, changes in prepayment behavior of the residential mortgage, CMOs, and mortgage-backed securities portfolios in each rate environment are captured using industry estimates of prepayment speeds for various coupon segments of the portfolio. For purposes of this simulation, projected month-end balances of the various balance sheet accounts are held constant at their March 31, 2026 levels. Cash flows from a given account are reinvested back into the same account so as to keep the month end balance constant at its March 31, 2026, level. The static balance sheet assumption is made so as to project the interest rate risk to net interest income embedded in the existing balance sheet. With knowledge of the balance sheet's existing net interest income profile, more informed strategies and tactics may be developed as it relates to the structure/mix of growth.

The Company monitors the results of net interest income simulation on a regular basis. Net interest income is generally simulated for the upcoming 12-month horizon in seven interest rate scenarios. The scenarios generally modeled are parallel interest rate ramps of +/- 100bp, 200bp, and 300bp along with a rates unchanged scenario. Given the current level of interest rates as of March 31, 2026, the downward scenarios for interest rate movements is limited to -200bp. The parallel movement of interest rates means all projected market interest rates move up or down by the same amount. A ramp in interest rates means that the projected change in market interest rates occurs over the 12-month horizon on a pro-rata basis. For example, in the +100bp scenario, the projected Prime rate increases from 7.25% to 8.25% 12 months later. The Prime rate in this example will increase 1/12th of the overall increase of 100 basis points each month.

The net interest income simulation results for the 12-month horizon are shown below (dollars are in thousands):

Net Interest Income Simulation

Movement in interest rates

-200bp

-100bp

Unchanged

+100bp

+200bp

+300bp

Projected 12-month net interest

income

$ 39,170

$ 39,515

$ 39,522

$ 38,640

$ 37,729

$ 36,817

Dollar change from unchanged

scenario

$ (352)

$ (7)

$ -

$ (882)

$ (1,793)

$ (2,705)

Percentage change from

unchanged scenario

(0.89)%

(0.02)%

(2.23)%

(4.54)%

(6.84)%

Since there are limitations inherent in any methodology used to estimate the exposure to changes in market interest rates, these analyses are not intended to be a forecast of the actual effect of changes in market interest rates, such as those indicated above on the Company. Further, these analyses are based on assets and liabilities as of March 31, 2026 (without forward adjustments for planned growth and anticipated business activities) and do not reflect any actions the Company might undertake in response to changes in market interest rates.

Static gap analysis is another tool that may be used for interest rate risk measurement. The net differences between the amount of assets, liabilities, equity and off-balance-sheet instruments repricing within a cumulative calendar period is typically referred to as the "rate sensitivity position" or "gap position." The following table sets forth the Company's rate sensitivity position as of March 31, 2026. Assets and liabilities are classified by the earliest possible repricing date or maturity, whichever occurs first.

Interest Sensitivity Gap Analysis

Interest-earning assets:

Estimated Maturity or Repricing at March 31, 2026 0-3 4-12 1-5 Over

Months Months Years 5 Years Total

(dollars are in thousands)

Interest-bearing deposits with banks

$ 165,974

$ -

$ 165,974

Debt securities (a)

15,634

17,232

48,053

32,601

113,520

FRB and FHLB stock

2,466

Loans held for investment, net

180,198

139,005

392,255

14,529

725,987

Total interest-earning assets

$ 364,272

$ 156,237

$ 440,308

$ 47,130

$ 1,007,947

Interest-bearing liabilities:

Interest checking and money market accounts

$ 602,926

$ -

$ 602,926

Savings

42,291

Time deposits

36,307

73,034

3,239

112,615

Subordinated debentures

15,464

Total interest-bearing liabilities

$ 681,524

$ 88,498

$ 3,239

$ 35

$ 773,296

Interest rate gap

$ (317,252)

$ 67,739

$ 437,069

$ 47,095

$ 234,651

Cumulative interest rate gap at March 31, 2026

$ (317,252)

$ (249,513)

$ 187,556

$ 234,651

Cumulative interest rate gap to total assets

(29.85)%

(23.48)%

17.65%

22.08%

(a) Values for debt securities reflect the timing of the estimated principal cash flows from the securities based on par values, which vary from the amortized cost and fair value of the debt securities.

The table assumes that all savings and interest-bearing demand deposits reprice in the earliest period presented, however, management believes that a significant portion of these accounts are generally not rate sensitive. Management's view is supported by historical non-maturity deposit studies, which indicate that the Company's deposit rates have largely lagged broader market rate changes and the fact that changes in interest rates paid on these deposits historically have not caused notable reductions in balances or net interest income because the

repricing of certain assets and liabilities is discretionary and is subject to competitive and other pressures. As a result, assets and liabilities indicated as repricing within the same period may in fact reprice at different times and at different rate levels.

Static gap analysis does not fully capture the impact of embedded options, lagged interest rate changes, administered interest rate products, or certain off-balance-sheet sensitivities to interest rate movements. Therefore, this tool generally cannot be used in isolation to determine the level of interest rate risk exposure in banking institutions.

Since there are limitations inherent in any methodology used to estimate the exposure to changes in market interest rates, these analyses are not intended to be a forecast of the actual effect of changes in market interest rates such as those indicated above on the Company. Further, these analyses are based on the Company's assets and liabilities as of March 31, 2026, and do not contemplate any actions the Company might undertake in response to changes in market interest rates.

From time to time in the ordinary course of business, the Company and its subsidiaries may be a party to legal proceedings arising out of the Company's lending, deposit operations, or other activities. The Company engages in foreclosure proceedings and other collection actions as part of its loan collection activities. From time to time, borrowers may also bring actions against the Company, in some cases claiming damages.

Management is not aware of any material pending or threatening litigation as of March 31, 2026.

This report is submitted on behalf of the Company by the duly authorized undersigned.

BNCCORP, INC.

Date: May 13, 2026 By: /s/ Daniel J. Collins Daniel J. Collins

President and Chief Executive Officer

By: /s/ Justin C. Currie

Justin C. Currie

Chief Financial Officer

Disclaimer

BNCCORP Inc. published this content on May 15, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 15, 2026 at 15:56 UTC.