HBT Financial, Inc. (HBT)

ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless the context requires otherwise, references in this report to the “Company,” “we,” “us” and “our” refer to HBT Financial, Inc. and its subsidiaries.

The following is management’s discussion and analysis of the financial condition as of March 31, 2026 (unaudited), as compared with December 31, 2025, and the results of operations for the three months ended March 31, 2026 and 2025 (unaudited). Management’s discussion and analysis should be read in conjunction with the Company’s unaudited consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q, as well as the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 6, 2026. Results of operations for the three months ended March 31, 2026 and 2025 are not necessarily indicative of results to be attained for the year ended December 31, 2026, or for any other period.

OVERVIEW

HBT Financial, Inc., headquartered in Bloomington, Illinois, is the holding company for Heartland Bank and Trust Company, and has banking roots that can be traced back to 1920. We provide a comprehensive suite of financial products and services to consumers, businesses, and municipal entities throughout Illinois, eastern Iowa, and suburban St. Louis. As of March 31, 2026, the Company had total assets of $6.8 billion, loans held for investment of $4.7 billion, and total deposits of $5.8 billion.

Market Area

As of March 31, 2026, our branch network included 83 full-service branch locations throughout Illinois, eastern Iowa, and suburban St. Louis. We hold a leading deposit share in many of our central Illinois markets, which we define as a top three deposit share rank, providing the foundation for our strong deposit base. The stability provided by this low-cost funding is a key driver of our strong track record of financial performance. Below is a summary of our loan and deposit balances by geographic region:

CNB Acquisition

On March 1, 2026, HBT Financial completed its acquisition of CNB, the holding company for CNB Bank. The acquisition of CNB further enhanced HBT Financial's footprint in the central Illinois, Chicago MSA, and suburban St. Louis markets. Prior to the acquisition, CNB operated 18 full-service branch locations which now operate as branches of Heartland Bank. The core system conversion was successfully completed in March 2026. After considering business combination accounting adjustments, CNB added total assets of $1.81 billion, total loans held for investment of $1.30 billion, and total deposits of $1.52 billion.

Total consideration consisted of 5.5 million shares of HBT Financial’s common stock and $33.8 million in cash. Based on the closing price of HBT Financial common stock of $26.96 on February 27, 2026, the aggregate consideration was approximately $182.1 million. Goodwill of $23.7 million was recorded in the acquisition. Acquisition-related expenses totaled $15.7 million during the three months ended March 31, 2026. There were no acquisition-related expenses during the three months ended March 31, 2025.

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RESULTS OF OPERATIONS

Overview of Recent Financial Results

_________________________________________________

*    Annualized measure.

(1)See "Non-GAAP Financial Information" for reconciliation of non-GAAP measures to their most closely comparable GAAP measures.

(2)On a tax-equivalent basis assuming a federal income tax rate of 21% and a state income tax rate of 9.5%.

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Comparison of the Three Months Ended March 31, 2026 to the Three Months Ended March 31, 2025

For the three months ended March 31, 2026, net income was $11.2 million, decreasing by $7.9 million, or 41.3%, when compared to net income for the three months ended March 31, 2025, primarily as a result of acquisition-related expenses. Notable changes include the following:

•A $7.7 million increase in net interest income, primarily attributable to higher average interest-earning asset balances following the CNB merger, improved yields on debt securities, and lower funding costs;

•CNB acquisition-related expenses totaled $15.7 million during the three months ended March 31, 2026;

•Excluding CNB acquisition-related expenses, noninterest expense increased by $4.8 million, primarily reflecting higher base costs following the CNB merger, including a $2.6 million increase in employee salaries and benefits expense;

•A $0.9 million increase in wealth management fees, primarily driven by an increase in assets under management following the CNB merger;

•A $0.2 million positive mortgage servicing rights ("MSR") fair value adjustment included in the 2026 results, compared to a $0.3 million negative MSR fair value adjustment included in the 2025 results; and

•A $2.6 million decrease in income tax expense, primarily due to a decrease in pre-tax income as a result of CNB acquisition-related expenses.

Net Interest Income

Net interest income equals the excess of interest income on interest earning assets (including discount accretion on acquired loans plus certain loan fees) over interest expense incurred on interest-bearing liabilities. Net interest margin, which is expressed as the percentage of net interest income to average interest-earning assets, is utilized to measure and explain changes in net interest income.

The following table sets forth average balances, average yields and costs, and certain other information. Average balances are daily average balances. Nonaccrual loans are included in the computation of average balances but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees and costs as well as purchase accounting adjustments that are accreted or amortized to interest income or expense.

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[[GREPCENT_TABLE]]
[["","Three Months Ended"],["","March 31, 2026","","March 31, 2025"],["(dollars in thousands)","Average Balance","","Interest","","Yield/Cost *","","Average Balance","","Interest","","Yield/Cost *"],["ASSETS"],["Loans","$","3,890,388","","","$","60,198","","","6.28","%","","$","3,460,906","","","$","54,537","","","6.39","%"],["Debt securities","1,375,875","","","10,202","","","3.01","","","1,204,424","","","7,405","","","2.49"],["Deposits with banks","163,761","","","1,276","","","3.16","","","120,014","","","1,065","","","3.60"],["Other","14,389","","","163","","","4.60","","","12,677","","","131","","","4.19"],["Total interest-earning assets","5,444,413","","","$","71,839","","","5.35","%","","4,798,021","","","$","63,138","","","5.34","%"],["Allowance for credit losses","(48,362)","","","","","","","(42,061)"],["Noninterest-earning assets","317,393","","","","","","","276,853"],["Total assets","$","5,713,444","","","","","","","$","5,032,813"],["LIABILITIES AND STOCKHOLDERS' EQUITY"],["Liabilities"],["Interest-bearing deposits:"],["Interest-bearing demand","$","1,223,982","","","$","1,931","","","0.64","%","","$","1,120,608","","","$","1,453","","","0.53","%"],["Money market","906,663","","","4,448","","","1.99","","","807,728","","","4,397","","","2.21"],["Savings","671,852","","","704","","","0.43","","","569,494","","","370","","","0.26"],["Time","940,019","","","7,026","","","3.03","","","784,099","","","6,719","","","3.48"],["Total interest-bearing deposits","3,742,516","","","14,109","","","1.53","","","3,281,929","","","12,939","","","1.60"],["Securities sold under agreements to repurchase","2,902","","","16","","","2.21","","","8,754","","","22","","","1.02"],["Borrowings","28,886","","","209","","","2.94","","","12,890","","","109","","","3.41"],["Subordinated notes","19,781","","","278","","","5.70","","","39,563","","","470","","","4.82"],["Junior subordinated debentures issued to capital trusts","52,916","","","840","","","6.44","","","52,856","","","890","","","6.83"],["Total interest-bearing liabilities","3,847,001","","","$","15,452","","","1.63","%","","3,395,992","","","$","14,430","","","1.72","%"],["Noninterest-bearing deposits","1,150,594","","","","","","","1,045,733"],["Noninterest-bearing liabilities","45,282","","","","","","","36,373"],["Total liabilities","5,042,877","","","","","","","4,478,098"],["Stockholders' Equity","670,567","","","","","","","554,715"],["Total liabilities and stockholders\u2019 equity","$","5,713,444","","","","","","","$","5,032,813"],["Net interest income/Net interest margin (1)","","","$","56,387","","","4.20","%","","","","$","48,708","","","4.12","%"],["Tax-equivalent adjustment (2)","","","649","","","0.05","","","","","545","","","0.04"],["Net interest income (tax-equivalent basis)/Net interest margin (tax-equivalent basis) (2) (3)","","","$","57,036","","","4.25","%","","","","$","49,253","","","4.16","%"],["Net interest rate spread (4)","","","","","3.72","%","","","","","","3.62","%"],["Net interest-earning assets (5)","$","1,597,412","","","","","","","$","1,402,029"

[Excerpt truncated for page length; source filing is linked above.]

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

Unless the context requires otherwise, references in this report to the “Company,” “we,” “us” and “our” refer to HBT Financial, Inc. and its subsidiaries.

Management’s discussion and analysis should be read in conjunction with the following parts of this Annual Report on Form 10-K: Part I, Item 1 “Business”, Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk”, and Part II, Item 8 “Financial Statements and Supplementary Data”. Detailed discussion and analysis of the financial condition and results of operation for 2025 as compared to 2024 can be found below. Detailed discussion and analysis of the financial condition and results of operation for 2024 as compared to 2023 can be found in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

OVERVIEW

HBT Financial, Inc., headquartered in Bloomington, Illinois, is the holding company for Heartland Bank and Trust Company, and has banking roots that can be traced back to 1920. We provide a comprehensive suite of financial products and services to consumers, businesses, and municipal entities throughout Illinois and eastern Iowa. As of December 31, 2025, the Company had total assets of $5.1 billion, loans held for investment of $3.5 billion, and total deposits of $4.4 billion.

Market Area

As of December 31, 2025, our branch network included 66 full-service branch locations throughout Illinois and eastern Iowa. We hold a leading deposit share in many of our central Illinois markets, which we define as a top three deposit share rank, providing the foundation for our strong deposit base. The stability provided by this low-cost funding is a key driver of our strong track record of financial performance. Below is a summary of our loan and deposit balances by geographic region:

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CNB Bank Shares, Inc. Acquisition

On March 1, 2026, HBT Financial completed its acquisition of CNB, the holding company for CNB Bank. The combined company will have increased density in the central Illinois, Chicago MSA, and St. Louis MSA markets. Prior to the acquisition, CNB operated 18 full-service branch locations which now operate as branches of Heartland Bank. The core system conversion is expected to occur in March 2026.

As of December 31, 2025, CNB had total assets of $1.8 billion, total loans of $1.3 billion, and total deposits of $1.5 billion. This acquisition is a subsequent event and the financial results of CNB are not recognized in this Form 10-K.

Total consideration consisted of 5.5 million shares of HBT Financial's common stock and $34 million in cash. Based upon the closing price of HBT Financial common stock of $26.96 on February 27, 2026, the aggregate consideration was approximately $182 million. Acquisition-related expenses recognized during the year ended December 31, 2025 totaled $1.0 million.

Town and Country Financial Corporation Acquisition

On February 1, 2023, HBT Financial completed its acquisition of Town and Country, the holding company for Town and Country Bank. The acquisition of Town and Country further enhanced HBT Financial’s footprint in central Illinois and expanded our footprint into metro-east St. Louis. At the time of acquisition, Town and Country Bank operated 10 full-service branch locations which began operating as branches of Heartland Bank. The core system conversion was successfully completed in April 2023. After considering business combination accounting adjustments, Town and Country added total assets of $937.2 million, total loans held for investment of $635.4 million, and total deposits of $720.4 million.

Total consideration consisted of 3.4 million shares of HBT Financial’s common stock and $38.0 million in cash. Based upon the closing price of HBT Financial common stock of $21.12 on February 1, 2023, the aggregate consideration was approximately $109.4 million. Goodwill of $30.5 million was recorded in the acquisition. Acquisition-related expenses recognized during the year ended December 31, 2023 totaled $13.7 million, including the recognition of an allowance for credit losses on non-purchased credit deteriorated loans and an allowance for credit losses on unfunded commitments. There were no Town and Country acquisition-related expenses recognized subsequent to the second quarter of 2023.

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RESULTS OF OPERATIONS

Overview of Recent Financial Results

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(1)See "Non-GAAP Financial Information" for reconciliation of non-GAAP measures to their most closely comparable GAAP measures.

(2)On a tax-equivalent basis assuming a federal income tax rate of 21% and a state income tax rate of 9.5%.

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Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024

For the year ended December 31, 2025, net income was $77.0 million, increasing by $5.2 million, or 7.3%, when compared to net income for the year ended December 31, 2024. Notable changes include the following:

•A $10.0 million increase in net interest income, primarily attributable to lower funding costs, higher yields on debt securities, and higher average loan balances;

•A $0.2 million loss on sales of securities included in the 2025 results, compared to a $3.7 million of loss on sales of securities included in the 2024 results;

•A $3.4 million increase in salaries and benefits expense, primarily driven by higher medical benefits expenses and annual merit increases;

•A $1.9 million negative mortgage servicing rights ("MSR") fair value adjustment included in the 2025 results, compared to a $0.2 million negative MSR fair value adjustment included in the 2024 results;

•A $1.2 million increase in wealth management fees, primarily driven by higher values of assets under management and an increase in farm management fees;

•CNB acquisition-related expenses of $1.0 million, primarily related to professional fees and data processing expense; and

•A $1.9 million increase in income tax expense, primarily due to an increase in pre-tax income as a result of the items noted above.

Net Interest Income

Net interest income equals the excess of interest income on interest earning assets (including discount accretion on acquired loans plus certain loan fees) over interest expense incurred on interest-bearing liabilities. Net interest margin, which is expressed as the percentage of net interest income to average interest-earning assets, is utilized to measure and explain changes in net interest income.

The following table sets forth average balances, average yields and costs, and certain other information. Average balances are daily average balances. Nonaccrual loans are included in the computation of average balances but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees and costs as well as purchase accounting adjustments that are accreted or amortized to interest income or expense.

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(1)Net interest margin represents net interest income divided by average total interest-earning assets.

(2)On a tax-equivalent basis assuming a federal income tax rate of 21% and a state income tax rate of 9.5%.

(3)See "Non-GAAP Financial Information" for reconciliation of non-GAAP measure to their most closely comparable GAAP measures.

(4)Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(5)Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.

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The following table sets forth the components of loan interest income and their contributions to the total loan yield.

The following table sets forth the components of net interest income and their contributions to the net interest margin.

_________________________________________________

(1)On a tax-equivalent basis assuming a federal income tax rate of 21% and a state income tax rate of 9.5%.

(2)See "Non-GAAP Financial Information" for reconciliation of non-GAAP measure to their most closely comparable GAAP measures.

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Rate/Volume Analysis

The following table sets forth the dollar amount of changes in interest income and interest expense for the major categories of our interest-earning assets and interest-bearing liabilities. Information is provided for each category of interest-earning assets and interest-bearing liabilities with respect to changes attributable to volume (i.e., changes in average balances multiplied by the prior-period average rate), and changes attributable to rate (i.e., changes in average rate multiplied by prior-period average balances). For purposes of this table, changes attributable to both volume and rate that cannot be segregated have been allocated proportionately to the change due to volume and the change due to rate.

Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024

Net interest income for the year ended December 31, 2025 was $198.9 million, increasing $10.0 million, or 5.3%, when compared to the year ended December 31, 2024. The increase is primarily attributable to lower funding costs, higher yields on debt securities, and higher average loan balances. Additionally, a $1.4 million increase in loan fees and nonaccrual interest recoveries was partially offset by a $0.6 million decrease in acquired loan discount accretion.

Net interest margin increased to 4.13% for the year ended December 31, 2025, compared to 3.96% for the year ended December 31, 2024. The increase was primarily attributable to a decrease in funding costs and higher yields on debt securities. Additionally, the increase in the contribution of loan fees and nonaccrual interest recoveries accounted for 4 basis points of the increase in net interest margin and were partially offset by a 1 basis point decrease in the contribution from acquired loan discount accretion.

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The quarterly net interest margins were as follows:

In early 2024, our net interest margin was relatively stable, with increases in our loans and debt securities yields being mostly offset by increases in funding costs. In September 2024, the Federal Open Market Committee ("FOMC") began lowering interest rates, with the target range for the federal funds rate decreasing by 100 basis points to a range of 4.25% to 4.50% by the end of 2024. The FOMC paused further interest rate cuts until September 2025, and then resumed with three 25 basis point reductions during the remainder of 2025 with the target range for the federal funds rate set to a range of 3.50% to 3.75% as of December 31, 2025. These changes have contributed to a decrease in funding costs and yields on variable rate loans while maturing fixed rate loans and securities continued to reprice at higher rates, driving our net interest margin higher during 2025, relative to 2024.

Decreases in market interest rates, and potential future decreases, may put downward pressure on our net interest margin, as the negative impact on floating rate loans may not be fully offset by the positive impacts of maturing fixed rate loans and securities repricing at higher rates or potential decreases in deposit costs. Generally, we expect increases in market interest rates will increase our net interest income and net interest margin in future periods, while decreases in market interest rates may decrease our net interest income and net interest margin in future periods; however, this depends upon the timing and extent of both short-term and long-term interest rate fluctuations and may not always be the case.

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Provision for Credit Losses

The following table sets forth the components of provision for credit losses for the years indicated:

Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024

The Company recorded a provision for credit losses of $3.2 million for the year ended December 31, 2025, compared to a $3.0 million provision during the year ended December 31, 2024. The 2025 provision for credit losses primarily reflects a $2.2 million increase in required reserves driven by changes within the portfolio; a $1.1 million increase in required reserves resulting from changes in qualitative factors; an $0.8 million increase in required reserves resulting from changes in economic forecasts; and a $0.9 million decrease in specific reserves.

The provision for credit losses is highly dependent on current and forecast economic conditions. Potential deterioration of economic conditions may lead to higher credit losses and adversely impact our financial condition and results of operations. The economic forecasts utilized in estimating the allowance for credit losses on loans and unfunded lending-related commitments include the unemployment rate and changes in GDP as macroeconomic variables, although other economic metrics are considered on a qualitative basis.

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Noninterest Income

The following table sets forth the major categories of noninterest income for the years indicated:

_________________________________________________

NM    Not meaningful.

Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024

Total noninterest income for the year ended December 31, 2025, was $38.2 million, an increase of $2.6 million, or 7.4%, from the year ended December 31, 2024. Notable changes in noninterest income include the following:

•A $0.2 million loss on sales of securities included in the 2025 results, compared to a $3.7 million of loss on sales of securities included in the 2024 results;

•A $1.9 million negative MSR fair value adjustment included in the 2025 results, compared to a $0.2 million negative MSR fair value adjustment included in the 2024 results;

•A $1.2 million increase in wealth management fees, primarily driven by higher values of assets under management and an increase in farm management fees;

•The absence of $0.6 million of impairment losses on bank premises related to the closure of two branch premises recognized in the 2024 results; and

•A $0.2 million decrease in income on bank owned life insurance, primarily attributable to the absence of a $0.2 million gain on life insurance proceeds recognized in the 2024 results.

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Noninterest Expense

The following table sets forth the major categories of noninterest expense for the years indicated:

Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024

Total noninterest expense for the year ended December 31, 2025, was $129.4 million, an increase of $5.4 million, or 4.4%, from the year ended December 31, 2024. Notable changes in noninterest expense include the following:

•A $2.2 million increase in employee benefits expense, primarily driven by higher medical benefits cost;

•A $1.2 million increase in salaries expense, primarily driven by annual merit increases;

•A $1.2 million increase in other noninterest expense, primarily related to higher legal and professional fees driven primarily by $0.6 million of CNB acquisition-related expenses;

•A $0.6 million increase in data processing expense, primarily related to $0.4 million of CNB acquisition-related expenses as well as a planned call center software upgrade;

•A $0.4 million increase in bank occupancy expense, primarily due to planned building maintenance and upgrades; and

•A $0.4 million loss on the extinguishment of debt associated with the early payoff of $40.0 million of subordinated notes in September 2025.

Income Taxes

During the years ended December 31, 2025 and 2024, we recorded income tax expense of $27.5 million, or an effective tax rate of 26.3%, and $25.6 million, or an effective tax rate of 26.3%, respectively. During 2025, we recognized $0.3 million of additional tax expense during the second quarter of 2025, related to the nonrecurring reversal of a stranded tax effect included in accumulated other comprehensive income, in connection with the maturity of a derivative designated as a cash flow hedge. During 2024, we recognized an additional $0.5 million of tax expense for a deferred tax asset write-down, as a result of an Illinois tax law change.

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FINANCIAL CONDITION

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(1)See "Non-GAAP Financial Information" for reconciliation of non-GAAP measure to their most closely comparable GAAP measures.

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Notable changes in our consolidated balance sheet include the following:

•A $73.9 million increase in debt securities, primarily attributable to a reinvestment of cash flows from loans into debt securities and a $30.5 million increase in the fair value of debt securities available-for-sale;

•A $41.0 million increase in deposits was primarily attributable to a vast majority of repurchase agreement account balances being transitioned to reciprocal interest-bearing demand deposit accounts during 2025;

•The $39.6 million of subordinated notes outstanding at December 31, 2024 were paid off in September 2025; and

•A $9.9 million decrease in loans with increases in the multi-family and commercial real estate - non-owner occupied segments being offset by decreases in the construction and land development and commercial and industrial segments.

Loan Portfolio

The following table sets forth the composition of the loan portfolio, excluding loans held-for-sale, by type of loan.

Loans, before allowance for credit losses were $3.46 billion at December 31, 2025, a decrease of $9.9 million, or 0.3%, from December 31, 2024. Notable changes include the following:

•A $113.4 million increase in multi-family loans and a $37.5 million increase in commercial real estate – non-owner occupied loans, primarily attributable to new originations as well as completed construction projects transferred from the construction and land development category, partially offset by early payoffs;

•A $94.4 million decrease in construction and land development loans, primarily attributable to transfers of completed projects into other categories, as well as payoffs from property sales and refinancings;

•A $28.6 million decrease in commercial and industrial loans, primarily attributable to reduced line of credit usage and payoffs from refinancings.

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Commercial Real Estate Portfolios

Commercial real estate – owner occupied loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The commercial real estate – owner occupied portfolio composition, segmented by the owner’s business classification, as of December 31, 2025 was as follows:

Commercial real estate – non-owner occupied loans are primarily made based on projected cash flows from the rental or sale of the underlying collateral. The commercial real estate – non-owner occupied portfolio composition, segmented by the property type, as of December 31, 2025 was as follows:

_________________________________________________

(1)     Weighted average LTV is based on the most recent appraisals available, which are generally obtained at the time of origination.

Multi-family loans totaled $544.9 million as of December 31, 2025, and are primarily made based on projected cash flows from the rental of the underlying collateral. As of December 31, 2025, multi-family loans had a weighted average LTV of 58%, based on the most recent appraisals available, which are generally obtained at the time of origination.

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Construction and land development loans totaled $280.3 million as of December 31, 2025. The majority of these loans consist of multi-family and one-to-four family residential construction projects either to be sold upon completion or held for long-term investment, but also include other property types that may be rented, sold, or owner occupied upon completion. Construction and land development loans are primarily based on projected cash flows from the rental or sale of the underlying collateral, or based on the identified cash flows of the borrower.

Management’s disciplined approach to credit risk management is exercised through portfolio diversification, robust underwriting policies, and routine loan monitoring practices in order to identify and mitigate any credit weakness as early as possible. Management continually monitors and evaluates commercial real estate concentrations by property class, industry, and relative to the Bank’s regulatory capital to remain in line with board-established limits and adapt to changing industry conditions. A centralized credit underwriting group, independent of the originating lender, evaluates a vast majority of the commercial exposures over $750 thousand annually, if not more frequently, through a standardized credit review process to ensure uniform application of policies and procedures as well as analyze credit performance. All loans require appropriate internal approval, with a centralized credit approval group reviewing the vast majority of exposures over $500 thousand. Additionally, more than 45% of loan commitments are reviewed on a rolling 24 month basis between a robust internal review process and an annual third-party review of a sample of the portfolio.

For commercial real estate – non-owner occupied and multi-family loans over $1 million, we evaluate, on a quarterly basis, the impact of current interest rates on the underlying cash flows of the properties securing these loans, based on the most recent cash flow data available. Individual credits with a maturity scheduled within the next five quarters that are presenting stress under current renewal terms are identified, so that ample time is available to develop solutions to manage credit risk. This testing is completed in addition to the various sensitivity testing completed at the initial extension of credit.

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Loan Portfolio Maturities

The following table summarizes the scheduled maturities of the loan portfolio as of December 31, 2025. Demand loans (loans having no stated repayment schedule or maturity) and overdraft loans are reported as being due in one year or less.

The following table summarizes loans maturing after one year, segregated into variable and fixed interest rates.

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Nonperforming Assets

Our nonperforming loans and nonperforming assets were as follows:

Total nonperforming assets were $8.7 million at December 31, 2025, an increase of 8.2%, when compared to $8.0 million at December 31, 2024. The $0.7 million increase in nonperforming assets from December 31, 2024 was primarily attributable to an increase in foreclosed assets. Of the $7.6 million of nonperforming loans held as of December 31, 2025, $2.2 million are either wholly or partially guaranteed by the U.S. Government.

Risk Classification of Loans

Our risk classifications of loans were as follows:

Loans rated pass-watch or worse increased $12.5 million, or 6.2%, from December 31, 2024 to December 31, 2025, primarily attributable to downgrades within the multifamily and commercial real estate - non-owner occupied segments which were partially offset by pay-offs in the construction and land development segment.

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Net Charge-offs (Recoveries)

The following table summarizes net charge-offs (recoveries) to average loans by loan category.