QCR HOLDINGS INC

The following tables set forth the various categories of noninterest expense for the three and nine months ended September 30, 2026 and 2025:

Management places a strong emphasis on overall cost containment and is committed to improving the Company's general efficiency and operating leverage as discussed in the “Strategic Financial Metrics” section.

Salaries and employee benefits, which is the largest component of noninterest expense, decreased 5% when comparing the third quarter of 2026 to the same period of the prior year primarily due to lower capital markets revenue and its impact on variable compensation associated with performance. Salaries and employee benefits increased 7% when comparing the first nine months of 2026 to the same period of the prior year primarily due to annual merit increases and higher capital markets revenue and its impact on variable compensation associated with performance.

Part I

Item 2

Occupancy and equipment expense increased 11% comparing the third quarter of 2026 to the same period of the prior year, and increased 11% when comparing the first nine months of 2026 to the same period of the prior year, due primarily to higher property tax expense and depreciation expense with the opening of new offices in the Cedar Rapids and Ankeny, Iowa markets.

Professional and data processing fees decreased 22% comparing the third quarter of 2026 to the same period of the prior year, and decreased 11% comparing the first nine months of 2026 to the same period of the prior year primarily due to lower costs associated with the data processing core conversion project. 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.

FDIC insurance, other insurance and regulatory fee expense decreased 9% when comparing the third quarter of 2026 to the same period of the prior year, and decreased 1% when comparing the first nine months of 2026 to the same period of the prior year due primarily to an improved quarterly multiplier on FDIC assessment calculation.

Loan/lease expense increased 76% when comparing the third quarter of 2026 to the same period of the prior year primarily due to higher legal expense on loan workouts and lower recoveries of legal expenses incurred on loan workouts. Loan/lease expense decreased 12% when comparing the first nine months of 2026 to the same period of the prior year due primarily to lower legal expense on loan workouts and higher recoveries of legal expenses incurred on loan workouts.

Net cost of and losses on operations of other real estate includes losses on the sale of OREO, write-downs of OREO and all expenses associated with OREO. Net cost of and losses on operations of other real estate for the third quarter of 2026 totaled $24 thousand, compared to net cost of and losses on operations of other real estate of $3 thousand for the third quarter of 2025. Net cost of and losses on operations of other real estate for the first nine months of 2026 totaled $29 thousand, compared to net cost of and losses on operations of other real estate of $44 thousand for the first nine months of 2025.

Advertising and marketing expense increased 17% comparing the third quarter of 2026 to the same period of the prior year, and increased 11% comparing the first nine months of 2026 to the same period of the prior year. The increase in expense was primarily due to an increase in other sales promotions.

Communication and data connectivity expense increased 325% comparing the third quarter of 2026 to the same period of the prior year due primarily to courier expense of $191 thousand reclassed from communication and data connectivity expense to professional fees expense in the third quarter of 2025. Communication and data connectivity expense increased 2% comparing the first nine months of 2026 to the same period of the prior year due to increased telephone expense.

Supplies expense decreased 14% comparing the third quarter of 2026 to the same period of the prior year, and remained stable comparing the first nine months of 2026 to the same period of the prior year. The decrease in the third quarter of 2026 was primarily due to 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, remained stable when comparing the third quarter of 2026 to the same period of the prior year, and increased 3% when comparing the first nine months of 2026 to the same period of the prior year. As transaction volumes and the number of correspondent banking clients fluctuate, the associated expenses are expected to also fluctuate.

Correspondent banking expense decreased 1% when comparing the third quarter of 2026 to the same period of the prior year, and increased 2% when comparing the first nine months of 2026 to the same period of the prior year. These are direct costs incurred to provide services to QCBT's correspondent banking customer portfolio, including safekeeping and cash management services.

Part I

Item 2

Intangibles amortization expense decreased 24% when comparing the third quarter of 2026 to the same period of the prior year, and decreased 24% when comparing the first nine months of 2026 to the same period of the prior year. The decreases across both periods were due to fully amortizing an intangible at CSB in 2025. These expenses are expected to naturally decrease as intangibles become fully amortized unless there is an addition to intangible assets.

Payment card processing expense decreased 3% when comparing the third quarter of 2026 to the same period of the prior year, and decreased 9% when comparing the first nine months of 2026 to the same period of the prior year due to renegotiated debit card contracts.

Trust expense increased 3% when comparing the third quarter of 2026 to the same period of the prior year, and increased 14% when comparing the first nine months of 2026 to the same period of the prior year due to increased assets under management when comparing September 30, 2026 to September 30, 2025.

Other noninterest expense increased 3% when comparing the third quarter of 2026 to the same period of the prior year, and increased 34% when comparing the first nine months of 2026 to the same period of the prior year. The increases across both periods were primarily due to taxes on stock repurchases in 2026. Included in other noninterest expense are items such as meals and entertainment, subscriptions and sales and use tax.