QCR HOLDINGS INC

The ACL is established through provision expense to provide an estimated ACL. The following table shows the components of the provision for credit losses for the three and six months ended June 30, 2026 and 2025:

The Company had a total provision for credit losses on loans and leases of $4.7 million for both the second quarter of 2026 and the same period of 2025. The provision related to OBS was $56 thousand for the second quarter of 2026 compared to a negative provision of $624 thousand for the second quarter of 2025 and was a negative provision of $178 thousand for the first six months of 2026 compared to negative $1.1 million for the first six months of 2025. The balance primarily fluctuates with changes in the balance of unfunded commitments. Provision for credit losses on loans and leases for the first six months of 2026 totaled $7.3 million, a decrease from $9.4 million for the first six months of 2025. The decrease was primarily driven by a decrease in NPAs and net charge-offs, partially offset by loan growth. There was no provision related to HTM securities for the first six months of 2026 or 2025.

The ACL for loans and leases is established based on a number of factors, including the Company's historical loss experience, delinquencies and charge-off trends, economic and other forecasts, the local, state and national economies and risk associated with the loans/leases and securities in the portfolio, as described in more detail in the “Critical Accounting Policies and Critical Accounting Estimates” section of this report.

The Company had an ACL for loans/leases held for investment of 1.24% of total gross loans/leases held for investment at June 30, 2026, compared to 1.26% at March 31, 2026 and 1.28% at June 30, 2025.

Additional discussion of the Company's allowance can be found in the “Financial Condition” section of this report.

Part I

Item 2