QCR HOLDINGS INC

The following tables set forth the various categories of noninterest expenses for the years ended December 31, 2025 and 2024.

Management places strong emphasis on overall cost containment and is committed to improving the Company’s general efficiency while also continuing to invest in the Company’s digital transformation projects.

Salaries and employee benefits, which is the largest component of noninterest expense, decreased 1% in 2025 as compared to 2024. This decrease was primarily related to capital markets revenue and its impact on variable compensation associated with performance and the capitalization of direct labor costs associated with the Company’s digital transformation projects.

Occupancy and equipment expense increased 10% in 2025 as compared to 2024. This increase was due to higher depreciation expense with the opening of a new office in the Cedar Rapids market and an increase in service contract costs.

Professional and data processing fees increased 31% in 2025 as compared to 2024. The increase was due primarily to higher professional fees related to the Company’s digital transformation projects. Generally, professional and data processing fees can fluctuate depending on certain one-time project costs. Management will continue to focus on minimizing such one-time costs and driving recurring costs down through contract negotiation or managed reduction in activity where costs are determined on a usage basis.

There were no restructuring expenses incurred in 2025. Restructuring expenses totaled $2.0 million in 2024 due to the discontinuation of new loans and leases through m2. The charges consisted primarily of severance and retention compensation as well as vendor contract termination fees.

FDIC insurance, other insurance and regulatory fee expense increased 10% in 2025 as compared to 2024. The increase in expense was due to an increase in asset growth.

Loan/lease expense decreased 7% in 2025 as compared to 2024. The decrease was due primarily to lower legal expense on loan workouts and higher recoveries of legal expenses incurred on loan workouts. Generally, loan/lease expense has a direct relationship with the level of NPLs; however, it may deviate depending upon the individual NPLs. NPLs have decreased 5% since December 31, 2024.

Net cost of (income from) and gains/losses on operations of other real estate includes gains/losses on the sale of OREO, write-downs of OREO and all income/expenses associated with OREO. Net cost of operations totaled $80 thousand for 2025 as compared to net income from operations of $21 thousand for 2024.

Advertising and marketing expense increased 7% in 2025 as compared to 2024. The increase in expense was primarily due to an increase in sponsorships in 2025.

Communication and data connectivity expense decreased 44% in 2025 as compared to 2024. The decrease was primarily due to improvements to our data center connectivity channels and a reduction in cell phone and air card expenses as the Company continues to improve operational efficiencies.

Supplies expense decreased 10% in 2025 as compared to 2024. The decrease was primarily due to improved management of supply stock and the timing of purchases.

Bank service charges, a large portion of which includes indirect costs incurred to provide services to QCBT’s correspondent banking customer portfolio, increased 11% in 2025 as compared to 2024. As transaction volumes and the number of correspondent banking clients fluctuate, associated expenses are expected to also fluctuate.

Loss on liability extinguishment totaled $2.0 million in 2025 due to the prepayment of FHLB borrowings. There was no loss on liability extinguishment recorded in 2024.

Correspondent banking expense remained stable in 2025 as compared to 2024. These are direct costs incurred to provide services to QCBT’s correspondent banking customer portfolio, including safekeeping and cash management services.

Intangible amortization expense increased 8% in 2025 as compared to 2024. Amortization expense is due to prior acquisition activity. The increase was due to fully amortizing in 2025 an intangible that had less than one year of remaining useful life. These expenses will naturally decrease as intangibles become fully amortized unless there is an addition to intangible assets.

There was no goodwill impairment in 2025. Goodwill impairment expense totaled $432 thousand in 2024 due to the discontinuation of new loans and leases through m2.

Payment card processing expense decreased 14% in 2025 as compared to 2024 due to decreased transaction volume.

Trust expense increased 2% in 2025 as compared to 2024. The increase was due to an increase in assets under management of $779.7 million in 2025.

Other noninterest expense increased 10% in 2025 as compared to 2024. The increase was due primarily to excise tax expenses on stock repurchases and increased insurance claim loss reserves at our QCRH Risk Management, Inc. micro captive entity. Also included in other noninterest expense are other items such as meals and entertainment, subscriptions and sales and use tax.