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Letter portraitLegal landscapeQuarterYTD

Southwest Heritage Bank

Scottsdale, AZ · Cert 29087 · Bancorp 34 Inc.

SL · OCC · 8 branches

Q2 2026

$892.8MAssets
$707.2MLoans
$753.6MDeposits
$122.3MEquity
Loan mix
88%RE $618.2M12%C&I $87.7M0%Consumer $0.1MQ2 2025Q2 2026
Deposit mix
79%Interest-bearing $594.5M21%Noninterest $159.1MQ2 2025Q2 2026

NIM

4.80%Q2 ’245.81%Q2 ’255.73%Q2 ’26+28%+4%

Non-interest income vs. expense

2.81%Q2 ’242.85%Q2 ’252.81%Q2 ’26-3%-4%

Market Position · Phoenix-Mesa-Chandler, AZ · 2026 SOD (annual) · 0.2% share · #27 of 55 inst. · $0.3B of $192.0B

0.2% Maricopa
1.3% Pima
2.9% Dona Ana
12.5% Otero

Executive Summary

  • Earnings: ROA of 0.90%, down 21 bps year over year; NIM at 3.77%.
  • Asset quality: problem loans at 0.67% of loans (+2 bps YoY), with net charge-offs at 0.29%.
  • Capital: tier 1 leverage ratio of 13.36%, up 150 bps from a year ago.
  • Funding: loans stand at 93.84% of deposits as of Q2 2026.

Financial Results

Return on Assets (YTD, annualized)

0.90%-21 bps YoY

Net Interest Margin (YTD, annualized)

3.77%+15 bps YoY

Efficiency Ratio (YTD, annualized)

67.51%-496 bps YoY

Tier 1 Leverage Ratio

13.36%+150 bps YoY

Year to date, annualized, through each quarter.

MetricQ2 2025Q3 2025Q4 2025Q1 2026Q2 2026YoY ΔTrend
Earnings
Return on Assets1.11%1.04%0.98%0.85%0.90%-21 bps
Return on Equity9.51%8.62%8.01%6.46%6.74%-276 bps
Net Interest Margin3.62%3.56%3.68%3.81%3.77%+15 bps
Efficiency Ratio72.47%72.82%72.45%68.21%67.51%-496 bps
Non-Interest Burden2.75%2.72%2.79%2.71%2.63%-12 bps
Growth
Asset Growth (YoY)1.06%-4.25%-2.24%-2.64%-3.74%-481 bps
Loan Growth (YoY)-8.04%-1.79%5.38%4.35%4.55%+1,258 bps
Deposit Growth (YoY)3.08%-3.34%-4.31%-4.31%-5.61%-868 bps
Asset Quality
Nonperforming Loans / Loans0.64%1.73%1.60%1.83%0.67%+2 bps
Net Charge-Offs / Loans-0.91%-0.58%-0.42%0.27%0.29%+120 bps
Allowance / Loans1.55%1.41%1.37%1.31%1.23%-32 bps
Allowance Coverage of NPLs2.4x0.8x0.9x0.7x1.8x-0.6x
Capital
Tier 1 Leverage Ratio11.86%12.26%12.90%13.16%13.36%+150 bps
Total Risk-Based Capital15.44%15.54%15.42%15.93%16.25%+82 bps
Equity / Assets12.01%12.97%13.24%13.11%13.70%+168 bps
Liquidity & Funding
Loans / Deposits84.73%90.52%93.41%90.19%93.84%+912 bps
Liquid Assets / Assets10.76%5.83%3.89%7.07%4.70%-606 bps
CRE / Total Capitaln/a460%474%469%n/an/a