AMES NATIONAL CORP

Notes to Consolidated Financial Statements*(unaudited)*

The accompanying unaudited consolidated financial statements have been prepared by Ames National Corporation (the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the company believes that the disclosures made are adequate to make the informationnot misleading. It is suggested that these interim financial statements be read in conjunction with the year-end audited financial statements contained in the Company's Annual Report on Form10-K for the year ended* December 31, 2024* (the “Annual Report”). The consolidated balance sheet of the Company as of* December 31, 2024* has been derived from the audited consolidated balance sheet of the Company as of that date. In the opinion of management, the accompanying consolidated financial statements of the Company contain all adjustments necessary to fairly present the financial results for the interim periods reported. Those adjustments consist only of normal recurring adjustments. The results of operations for the interim periods arenot necessarily indicative of results which* may*be expected for an entire year. The consolidated financial statements include the accounts of the Company and its wholly-owned banking subsidiaries (the “Banks”). All significant intercompany balances and transactions have been eliminated in consolidation.

Subsequent Events: The Company has evaluated subsequent events through the filing date of this Quarterly Report on Form10-Q with the SEC.

Goodwill: Goodwill represents the excess of cost over the fair value of net assets acquired. Goodwill resulting from acquisitions isnot amortized but is tested for impairment annually or whenever events change, and circumstances indicate that it is more likely thannot that an impairment loss has occurred. Goodwill is tested for impairment with an estimation of the fair value of a reporting unit.

The fair value of a reporting unit is the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date. Asnone of the Company’s reporting units are publicly traded, individual reporting unit fair value determinations cannot be directly correlated to the Company’s stock price. Significant judgment is applied when goodwill is assessed for impairment. This judgment includes developing cash flow projections, selecting appropriate discount rates, identifying relevant market comparables, incorporating general economic and market conditions and selecting an appropriate control premium. The Company completed a quantitative assessment of goodwill as of* October 1,2024 which indicated that goodwill wasnot impaired. Subsequently, the Company determined there wereno adverse changes in criteria and key considerations to the previous assessment. Accordingly, the Company concluded there isno impairment of goodwill as of June 30, 2025*.

New and Pending Accounting Pronouncements:

In* November 2023,the FASB issued ASU2023*-07, Segment Reporting (Topic280): Improvements to Reportable Segment Disclosures. This ASU expands segment disclosure requirements for public entities to include disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss. The updated guidance is effective for fiscal years beginning after* December 15, 2023,and interim periods within the fiscal years beginning after December 15, 2024,and didnot* have a material impact on the consolidated financial statements. See Note13 for the new interim segment disclosures.

In* December 2023,the FASB issued ASUNo.* 2023-09, Income Taxes (Topic740): Improvements to Income Tax Disclosures. The ASU is intended to improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation table and income taxes paid to be disaggregated by jurisdiction. It also includes certain amendments to improve the effectiveness of income tax disclosures. For public business entities, the amendments are effective for fiscal years beginning after* December 15, 2024.*The Company is currently evaluating the impact of the ASU on the Company’s consolidated financial statements.

In* November 2024,the FASB issued ASUNo.* 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic220-40): Disaggregation of Income Statement Expenses. The amendments in this ASU require public companies to disclose, in the notes to the financial statements, specified information about certain costs and expenses at each interim and annual reporting period. Additionally, in* January 2025,the FASB issued ASUNo.* 2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic220-40): Clarifying the Effective Date. This ASU amends the effective date of ASUNo. 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after* December 15, 2026,and interim periods within annual reporting periods beginning after December 15, 2027.Early adoption of ASUNo.* 2024-03 is permitted. The Company is currently evaluating the impact of the ASU on the Company's consolidated financial statements.

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Earnings per share amounts were calculated using the weighted average shares outstanding during the periods presented. The weighted average outstanding shares for thethree months ended* June 30, 2025and2024* was 8,900,515 and 8,992,167, respectively. The weighted average outstanding shares for thesix months ended* June 30, 2025and2024* was 8,908,904 and 8,992,167, respectively. The Company hadno potentially dilutive securities outstanding during the periods presented.

The Company is party to financial instruments with off-balance sheet risk in the normal course of business. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheet.No material changes in the Company’s off-balance sheet arrangements have occurred since* December 31, 2024*.

Assets and liabilities carried at fair value are required to be classified and disclosed according to the process for determining fair value. There arethree levels of determining fair value.

Level1: Inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active markets.

Level2: Inputs to the valuation methodology include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that arenot active; inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatility, prepayment speeds, credit risk); or inputs derived principally from or can be corroborated by observable market data by correlation or other means.

Level3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Level3 assets and liabilities include financial instruments whose value is determined using discounted cash flow methodologies, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

The following is a description of valuation methodologies used for assets and liabilities recorded at fair value on a recurring basis.

Securities available-for-sale: Level1 securities include U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets. U.S. government agencies, mortgage-backed securities, state and political subdivisions, and most corporate bonds are reported at fair value utilizing Level2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that* may*include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the security’s terms and conditions, among other things.

Derivative financial instruments and loans receivable: The Company’s derivative financial instruments and loans receivable consist of interest rate swaps on loans accounted for as fair value hedges. The Company’s derivative financial instruments also include back-to-back loan swaps to assist customers in managing their interest rate risk while executing offsetting interest rate swaps with dealer counterparties. The Company's derivative positions and related loans are classified within Level2 of the fair value hierarchy and are valued using models generally accepted in the financial services industry and that use actively quoted or observable market input values from external market data providers and/or non-binding broker-dealer quotations. The fair value of the derivatives and loans are determined using discounted cash flow models. These models’ key assumptions include the contractual terms of the respective contract along with significant observable inputs, including interest rates, yield curves, nonperformance risk and volatility.

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The following table presents the balances of assets measured at fair value on a recurring basis by level as of* June 30, 2025* and* December 31, 2024* (in thousands):

Certain assets are measured at fair value on a nonrecurring basis; that is, they are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment or a change in previously recognized impairment). The following table presents the assets carried on the balance sheet (after specific reserves) by caption and by level within the valuation hierarchy as of* June 30, 2025* and* December 31, 2024* (in thousands):

As of* June 30, 2025*, individually analyzed collateral dependent loans with a carrying value of $4.2 million were reduced by a specific reserve of $472 thousand, resulting in a reporting fair value of $3.8 million. As of* December 31, 2024*, individually analyzed collateral dependent loans with a carrying value of $483 thousand were reduced by a specific reserve of $98 thousand resulting in a reporting fair value of $385 thousand.

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The significant inputs used in the fair value measurements for Level3 assets measured at fair value on a nonrecurring basis as of* June 30, 2025* and* December 31, 2024* are as follows*(in thousands)*:

Evaluations of the underlying assets are completed for each collateral dependent loan with a specific reserve. The types of collateral vary widely and could include accounts receivables, inventory, a variety of equipment and real estate. Collateral evaluations are reviewed and discounted as appropriate based on knowledge of the specific type of collateral and could include cost approach, sales comparison approach, or income approach. In the case of real estate, an independent appraisal* may*be obtained. Types of discounts considered included aging of receivables, condition of the collateral, potential market for the collateral and estimated disposal costs. These discounts will vary from loan to loan.

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GAAP requires disclosure of the fair value of financial assets and financial liabilities, including those that arenot measured and reported at fair value on a recurring basis or nonrecurring basis. Fair value is defined under ASC820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The following table includes the carrying amounts and estimated fair values of the Company’s financial assets and liabilities as of* June 30, 2025* and* December 31, 2024* (in thousands):

The methodologies used to determine fair value as of* June 30, 2025* didnot change from the methodologies described in the* December 31, 2024* Annual Financial Statements.

Commitments to extend credit and standby letters of credit: The fair values of commitments to extend credit and standby letters of credit are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreement and credit worthiness of the counterparties. The carrying value and fair value of the commitments to extend credit and standby letters of credit arenot considered significant.

Limitations: Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. Becauseno market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

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The amortized cost of securities available-for-sale and their approximate fair values as of* June 30, 2025* and* December 31, 2024* are summarized below*(in thousands):*

The amortized cost and fair value of debt securities available-for-sale as of* June 30, 2025*, are shown below by expected maturity. Expected maturity will differ from contractual maturities because issuers* may*have the right to call or prepay obligations with or without call or prepayment penalties (in thousands).

The Company's investment portfolio had an expected duration of 3.1 years as of* June 30, 2025*.

Securities with a carrying value of $298.3 million and $292.8 million at* June 30, 2025* and* December 31, 2024*, respectively, were pledged on public deposits, securities sold under agreements to repurchase, other borrowings and for other purposes as required or permitted by law.

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The proceeds and losses on securities available-for-sale for thethree andsix months ended* June 30, 2025and2024* are summarized below (in thousands):

Gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of* June 30, 2025* and* December 31, 2024* are summarized as follows*(in thousands)*:

Gross unrealized losses on debt securities totaled $35.6 million as of* June 30, 2025*. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, state or political subdivision, or corporations. Management then determines whether downgrades by bond rating agencies have occurred, and reviews industry analysts’ reports. The Company’s procedures for evaluating investments in states, municipalities and political subdivisions include but arenot limited to reviewing the offering statement and the most current available financial information, comparing yields to yields of bonds of similar credit quality, confirming capacity to repay, assessing operating and financial performance, evaluating the stability of tax revenues, considering debt profiles and local demographics, and for revenue bonds, assessing the source and strength of revenue structures for municipal authorities. These procedures, as applicable, are utilized for all municipal purchases and are utilized in whole or in part for monitoring the portfolio of municipal holdings. The Company doesnot utilizethird party credit rating agencies as a primary component of determining if the municipal issuer has an adequate capacity to meet the financial commitments under the security for the projected life of the investment, and, therefore, doesnot compare internal assessments to those of the credit rating agencies. Credit rating downgrades are utilized as an additional indicator of credit weakness and as a reference point for historical default rates. As of* June 30, 2025* and* December 31, 2024*, the Company determined thatno individual securities in an unrealized loss position represented credit losses that would require an allowance for credit losses. The Company concluded that the unrealized losses were primarily attributable to increases in market interest rates since these securities were purchased and other market conditions. Furthermore, the Company doesnot have the intent to sell any of these AFS debt securities and believes that it is more likely thannot that we willnot have to sell any such securities before a recovery of cost. Accrued interest receivable on AFS debt securities totaled $3.0 million and $2.9 million as of* June 30, 2025* and* December 31, 2024*, respectively, and is excluded from the estimate of credit losses.

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The composition of loans receivable as of* June 30, 2025* and* December 31, 2024* is as follows (in thousands):

1 This amount represents portfolio layer method basis adjustments related to loans hedged in a closed portfolio. Under the portfolio layer method basis adjustments are not allocated to individual loans, however, the amounts impact the net loan balance. These basis adjustments would be allocated to the amortized cost of specific loans within the pool if the hedge was de-designated. See Note 10 (“Derivative Financial Instruments”) for additional information.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost net of the allowance for credit losses (ACL) and other basis adjustments. Amortized cost is the principal balance outstanding, net of deferred loan fees and costs. Interest income is accrued on the unpaid principal balance. In the event that collection of principal becomes uncertain, the Company has policies in place to reverse accrued interest in a timely manner. Accrued interest receivable on loans held for investment totaled $9.1 million and $10.9 million as of* June 30, 2025* and* December 31, 2024*, respectively, and is excluded from the estimate of credit losses. Nonrefundable loan fees and origination costs are deferred and recognized as a yield adjustment over the life of the related loan.

The policy for charging off loans is consistent throughout all loan categories. A loan is charged off based on criteria that includes but isnot limited to: delinquency status, financial condition of the entire customer credit line and underlying collateral coverage, economic or external conditions that might impact full repayment of the loan, legal issues, overdrafts, and the customer’s willingness to work with the Company.

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Allowance for Credit Losses for Loans. The allowance for credit losses is an estimate of expected losses inherent within the Company's existing loans held for investment portfolio. Expected credit loss inherent in non-cancelable off-balance-sheet (“OBS”) credit exposures is accounted for as a separate liability on the consolidated balance sheet. The Company's allowance for credit losses for OBS credit exposures was $944 thousand and $943 thousand as of* June 30, 2025* and* December 31, 2024*, respectively. The allowance for credit losses for loans held for investment, as reported in our consolidated balance sheet, is adjusted by a credit loss expense, which is reported in earnings, and reduced by the charge-off of loan amounts, net of recoveries.

The credit loss estimation process involves procedures to appropriately consider the unique characteristics of loan portfolio segments which consist of construction real estate,1 to4 family residential real estate, multi-family real estate, commercial real estate, agricultural real estate, commercial, agricultural and consumer and other lending. When computing allowance levels, credit loss assumptions are estimated using a model that categorizes loan pools based on loss history, delinquency status and other credit trends and risk characteristics, including current conditions and reasonable and supportable forecasts about the future. The key components in this estimation process include the following:

The Company primarily utilizes loss rate based undiscounted cash flow (UDCF) methods to estimate credit losses by portfolio segment. The UDCF methods obtain estimated life-time credit losses using the conceptual components described above.

Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In future periods evaluations of the overall loan portfolio, in light of the factors and forecasts then prevailing,* may*result in significant changes in the allowance and credit loss expense in those future periods.

Credit quality is assessed and monitored by evaluating various attributes and the results of those evaluations are utilized in underwriting new loans and in our process for estimation of expected credit losses. The following provides the credit quality indicators and risk elements that are most relevant and most carefully considered and monitored for each loan portfolio segment.

Construction loans are underwritten utilizing independent appraisals, sensitivity analysis of absorption, vacancy and lease rates and financial analysis of the developers and property owners. Construction loans are generally based upon estimates of costs and value associated with the completed project. These estimates* mayprove to be inaccurate primarily due to unforeseen circumstances beyond the control of the borrower or lender. Construction loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, general economic conditions and the availability of long-term financing. The Company may*require guarantees on these loans. The Company’s construction loans are secured primarily by properties located in its primary market area. National unemployment rate and national real gross domestic product (GDP) are key economic forecasts used in estimating expected credit losses for this segment.

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The Company originates1-4 family real estate loans utilizing credit reports to supplement the underwriting process. The Company’s underwriting standards for1-4 family loans are generally in accordance with FHLMC and FNMA manual underwriting guidelines. Properties securing1-4 family real estate loans are appraised by either staff appraisers or fee appraisers, both of which are independent of the loan origination function and have been approved by the Board of Directors. The loan-to-value ratios normally donot exceed90% without credit enhancements such as mortgage insurance. The Company will lend up to100% of the lesser of the appraised value or purchase price for conventional1-4 family real estate loans, provided private mortgage insurance is obtained. The Company’s1-4 family real estate loans are secured primarily by properties located in its primary market area. The national unemployment rate is a key economic forecast used in estimating expected credit losses for this segment.

Multi-family, commercial and agricultural real estate loans are subject to underwriting standards and processes similar to commercial and agricultural operating loans, in addition to those unique to real estate loans. These loans are viewed primarily as cash flow loans and, secondarily, as loans secured by real estate. Multi-family, commercial and agricultural real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Loan-to-value generally doesnot exceed80% of the cost or value of the assets. Loans are typically subject to interest rate adjustments betweenfive andseven years from origination. Fully amortized monthly repayment terms normally donot exceedtwenty-five years. Projections and cash flows that show ability to service debt within the amortization period are required. Property and casualty insurance is required to protect the Banks’ collateral interests. Appraisals on properties securing these loans are generally performed by fee appraisers approved by the Board of Directors. Because payments on multi-family, commercial and agricultural real estate loans are often dependent on the successful operation or management of the properties, repayment of such loans* maybe subject to adverse conditions in the real estate market or the economy. Management monitors and evaluates commercial and agricultural real estate loans based on collateral and risk rating criteria. The Company may*require guarantees on these loans. The Company’s multi-family, commercial and agricultural real estate loans are secured primarily by properties located in its primary market areas. The national unemployment rate is a key economic forecast used in estimate credit losses for the multi-family and commercial real estate segments. The national unemployment rate and national real GDP are key economic forecasts used in estimating expected credit losses for the agricultural real estate segment.

Commercial and agricultural operating loans are underwritten based on the Company’s examination of current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed. This underwriting includes the evaluation of cash flows of the borrower, underlying collateral, if applicable, and the borrower’s ability to manage its business activities. The cash flows of borrowers and the collateral securing these loans* mayfluctuate in value after the initial evaluation. Afirst* priority lien on the general assets of the business normally secures these types of loans. Loan-to-value limits vary and are dependent upon the nature and type of the underlying collateral and the financial strength of the borrower. Crop and hail insurance is required for most agricultural borrowers. Loans are generally guaranteed by the principal(s). The Company’s commercial and agricultural operating lending is primarily in its primary market area. The national unemployment rate is a key economic forecast used in estimating expected credit losses for the commercial operating segment. The national unemployment rate and national real GDP are key economic forecasts used in estimating expected credit losses for the agricultural operating segment.

Consumer and other loans utilize credit reports to supplement the underwriting process. The underwriting standards include a determination of the applicant’s payment history on other debts and an assessment of their ability to meet existing obligations and payments on the proposed loan. To monitor and manage loan risk, policies and procedures are developed and modified, as needed by management. This activity, coupled with smaller loan amounts that are spread across many individual borrowers, minimizes risk. Additionally, market conditions are reviewed by management on a regular basis. The national unemployment rate is a key economic forecast used in estimating expected credit losses for this segment.

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Activity in the allowance for credit losses, on a disaggregated basis, for thethree andsix months ended* June 30, 2025and2024* is as follows*(in thousands)*:

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Collateral Dependent Loans.The following table presents the amortized cost basis of collateral dependent loans, by the primary collateral type, which are individually evaluated to determine expected credit losses, and the related ACL allocated to these loans(in thousands):

Nonaccrual Loans. The accrual of interest income on loans is discontinued when, in the opinion of management, there is reasonable doubt as to the borrower's ability to meet payments of interest or principal when they become due, which is generally when a loan is90 days or more past due unless the loan is well secured and in the process of collection. When a loan is placed on nonaccrual status, all previously accrued and unpaid interest is reversed against interest income. Loans are returned to an accrual status when all of the principal and interest amounts contractually due are brought current and repayment of the remaining contractual principal and interest is expected. A loan* mayalso return to accrual status if additional collateral is received from the borrower and, in the opinion of management, the financial position of the borrower indicates that there isno* longer any reasonable doubt as to the collection of the amount contractually due. Payment received on nonaccrual loans are appliedfirst to principal. Once principal is recovered, any remaining payments received are applied to interest income.

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The following table presents the amortized cost basis of loans on nonaccrual status and loans on nonaccrual status withno allowance for credit losses recorded by loan segment*(in thousands)*:

The interest income recognized on nonaccrual loans for thethree months ended* June 30, 2025* was approximately $1 thousand, while there wasno interest income recognized on nonaccrual loans for thethree months ended* June 30, 2024*. The interest income recognized on nonaccrual loans for thesix months ended* June 30, 2025and2024* was approximately $2 thousand and $38 thousand, respectively.

The interest foregone on nonaccrual loans for thethree months ended* June 30, 2025and2024* was approximately $636 thousand and $217 thousand, respectively. The interest foregone on nonaccrual loans for thesix months ended* June 30, 2025and2024* was approximately $963 thousand and $456 thousand, respectively.

Loan Modifications to Borrowers Experiencing Financial Difficulty. Loan modifications* may*include interest rate reductions or below market interest rates, extension of payments terms beyond the original maturity date, principal forgiveness, restructuring amortization schedules and other actions intended to minimize potential losses.

The allowance for credit losses incorporates an estimate of lifetime expected credit losses and is recorded on each asset upon asset origination or acquisition. The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial difficulty. The Company uses a loss rate model to determine the allowance for credit losses. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses, a change to the allowance for credit losses is generallynot recorded upon modification.

The Company madeno loan modifications to borrowers experiencing financial difficulty for thesix months ended* June 30, 2025and2024*.

Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged-off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. The Company hadno net charge-offs for thethree andsix months ended* June 30, 2025and2024* related to loan modifications to borrowers experiencing financial difficulties.

There wereno loan modifications that had a payment default and were modified in thetwelve months before default as of* June 30, 2025*. A loan is considered to be in payment default once it is60 days contractually past due under the modified terms.

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Aging Analysis. An aging analysis of the recorded investments in loans, on a disaggregated basis, as of* June 30, 2025* and* December 31, 2024*, is as follows*(in thousands)*:

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Credit Quality Indicators. As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to (i) the risk ratings of loans, (ii) the level of classified loans, (iii) net charge-offs, (iv) non-performing loans and (v) the general economic conditions in our market areas.

The Company utilizes a risk rating matrix to assign risk ratings to each of its loans. Loans are rated on a scale of1 to7. A description of the general characteristics of the risk ratings is as follows:

Ratings1,* 2 and3** - These ratings include “Pass” loans of average to excellent credit quality borrowers. These borrowers generally have significant capital strength, moderate leverage and stable earnings and growth commensurate to their relative risk rating. These ratings are reviewed at least annually. These ratings also include performing loans of less than$100,000.*

Rating4** - This rating includes loans on management’s “watch list” and is intended to be utilized for pass rated borrowers where credit quality has begun to show signs of financial weakness that now requires management’s heightened attention. This rating is reviewed at least quarterly.

Rating5** - This rating is for “Special Mention” loans in accordance with regulatory guidelines. This rating is intended to be temporary and includes loans to borrowers whose credit quality has clearly deteriorated and are at risk of further decline unless active measures are taken to correct the situation. This rating is reviewed at least quarterly.

Rating6** - This rating includes “Substandard” loans in accordance with regulatory guidelines, for which the accrual of interest hasnot been stopped. Under regulatory guideline definitions, a “Substandard” loan has defined weaknesses which make payment default or principal exposure likely, butnot yet certain. Such loans are apt to be dependent upon collateral liquidation, a secondary source of repayment or an event outside of the normal course of business. This rating is reviewed at least quarterly.

Rating7** - This rating includes “Substandard-Impaired” loans in accordance with regulatory guidelines, for which the accrual of interest has generally been stopped. This rating includes loans: (i) where interest is more than90 days past due, (ii)not fully secured, (iii) where a specific valuation allowance* may*be necessary, or (iv) where the borrower is unable to make contractual principal and interest payments. This rating is reviewed at least quarterly.

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The following tables show the risk category of loans by loan segment and year of origination as of* June 30, 2025* and* December 31, 2024* (in thousands):

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The following sets forth the carrying amounts and accumulated amortization of the intangible assets at* June 30, 2025* and* December 31, 2024* (in thousands):

The weighted average remaining life of the intangible assets is approximately 2.1 years as of* June 30, 2025* and* December 31, 2024*.

The following sets forth the activity related to the intangible assets for thethree andsix months ended* June 30, 2025and2024* (in thousands):

Estimated remaining amortization expense on intangible assets for the years ending* December 31is as follows(in thousands)*:

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The repurchase agreements mature daily and the following sets forth the pledged collateral at estimated fair value related to securities sold under repurchase agreements as of* June 30, 2025* and* December 31, 2024* (in thousands):

In the event the repurchase agreements exceed the estimated fair value of the pledged securities available-for-sale, the Company has unpledged securities available-for-sale that* may*be pledged on the repurchase agreements.

On* April 25, 2024,the Company entered into a promissory note and line of credit agreement with an unaffiliated bank, providing for atwo-year five million dollar line of credit facility. The Company has secured its obligations under the Credit Agreement by pledging to the Lender all outstanding shares of common stock of its subsidiary bank, Reliance State Bank. The Company had $1 million of outstanding borrowings on the line of credit as of June 30, 2025* and* December 31, 2024*. The Company was in compliance with all covenants as of* June 30, 2025.The Company didnot* comply withone covenant as of* December 31, 2024requiring the modified Texas Rationot* exceed 20% at the end of each calendar quarter. The modified Texas Ratio is defined as substandard, substandard-impaired loans and other real estate owned, divided by the sum of Tier1 capital plus the Allowance for Credit Losses – Loans. The modified Texas Ratio was 22.7% as of* December 31, 2024*and the lender waived the noncompliance.

FHLB advances are collateralized by FHLB stock, certain1-4 family residential real estate loans, multifamily real estate loans, commercial real estate loans and agricultural real estate loans. The Banks had available borrowing capacity with the FHLB of Des Moines, Iowa of $235.7 million and $245.3 million at* June 30, 2025* and* December 31, 2024*, respectively. As of* June 30, 2025*, the Company had $27.5 million of FHLB advances with a weighted average interest rate of 4.16%. As of* December 31, 2024*, the Company had $43.5 million of FHLB advances with a weighted average interest rate of 4.42%.

On* June 6, 2022,the Company borrowed $4.0 million on a credit agreement with a commercial bank. The borrowings were used for general corporate purposes. Interest under the note is payable quarterly over four years. Required quarterly principal payments of $150 thousand began in September 2022,with the remaining balance due June 2026.The interest rate is fixed at 3.35% and the outstanding balance was $2.2 million and $2.5 million as of June 30, 2025* and* December 31, 2024*, respectively. The note is secured by property in West Des Moines, Iowa.

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Fair Value Hedges

The Company uses interest rate swaps to convert certain long term fixed rate loans to floating rates to hedge interest rate risk exposure. The Company uses hedge accounting in accordance with ASC815, with the unrealized gains and losses, representing the change in fair value of the derivative and the change in fair value of the risk being hedged on the related loan, being recorded in the consolidated statements of income. The ineffective portions of the unrealized gains or losses, if any, are recorded in interest income and interest expense in the consolidated statements of income.

During2023, the Company executed an interest rate swap designated as a fair value hedge with an original notional amount of $25.0 million to convert certain long-term fixed rate1-4 family loans to floating rates to hedge interest rate risk exposure using the portfolio layer method.

The portfolio layer method allows the Company to designate as the hedged item a stated amount of the assets that arenot expected to be affected by prepayments, defaults and other factors that would affect the timing and amount of cash flow. The fair value portfolio level basis adjustment on the hedged loans hasnot been attributed to the individual loans on the consolidated balance sheet.

The table below identifies the notional amount, fair value and balance sheet category of the Company's interest rate swaps at* June 30, 2025*, and* December 31, 2024* (in thousands):

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The table below identifies the carrying amount of the hedged assets and cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets that are designated as a fair value hedge accounting relationship at* June 30, 2025*, and* December 31, 2024* (in thousands):

Back-to-Back Loan Swaps

The Company has interest rate swap loan relationships with customers to assist them in managing their interest rate risk. Upon entering into these loan swaps, the Company enters into offsetting positions with counterparties in order to minimize interest rate risk. These back-to-back loan swaps qualify as free standing financial derivatives with the fair values reported in other assets and other liabilities on the consolidated balance sheets. Any gains and losses on these back-to-back swaps are recorded in noninterest income on the consolidated statements of income, and for thethree andsix months ended* June 30, 2025*, and* June 30, 2024*,no gain or loss was recognized. The table below identifies the balance sheet category and fair values of the derivative instruments designated as loan swaps at* June 30, 2025*, and* December 31, 2024* (in thousands):

The Company was required to pledge $1.2 million and $1.3 million of securities as collateral for these derivative financial instruments at* June 30, 2025*, and* December 31, 2024*, respectively. The Company's counterparties werenot required to pledge collateral at* June 30, 2025* and* December 31, 2024*.

The tax effects of temporary differences related to income taxes are included in deferred income taxes. The change in deferred income taxes since* December 31, 2024* is due primarily to the decrease in unrealized losses on investment securities.

The Company and the Banks are subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements (as shown in the following table) can result in certain mandatory and possibly additional discretionary actions by regulators, which, if undertaken, could have a direct material effect on the Company's consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Banks must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Company's and the Banks' capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Management believed the Company and the Banks met all capital adequacy requirements to which they were subject as of* June 30, 2025*.

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The Company and the Banks’ capital amounts and ratios as of* June 30, 2025* and* December 31, 2024* are as follows (dollars in thousands):

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The Company and the Banks are subject to the rules of the Basel III regulatory capital framework and related Dodd-Frank Wall Street Reform and Consumer Protection Act. The rules included the implementation of a 2.5 percent capital conservation buffer that is added to the minimum requirements for capital adequacy purposes for all capital ratios except tier1 capital to average assets. A banking organization with a capital conservation buffer of less than the required amount is subject to limitations on capital distributions, including dividend payments, and certain discretionary bonus payments to executive officers. At* June 30, 2025*, the capital ratios for the Company and the Banks were sufficient to meet the conservation buffer.

The Company adopted ASU2023-07, Segment Reporting (Topic280): Improvements to Reportable Segment Disclosures on* January 1, 2024.*The Company has determined that its bank operating model is structured whereby all banking locations serve a similar base of customers utilizing a company-wide offering of similar products and services managed through similar processes and technology platforms that are collectively reviewed by the Company’s Chief Executive Officer, who has been designated as the chief operating decision maker (“CODM”). The CODM regularly assesses performance of the aggregated single banking segment in determining how to allocate resources.

The banking segment generates revenues through personal, business, agricultural and commercial lending, management of the investment securities portfolio, deposit account services and wealth management services.

Accounting policies for the banking segment are the same as those described in Note1, Nature of Business and Significant Accounting Policies, in the Company’s Annual Report on Form10-K for the year ended* December 31, 2024.The CODM assesses performance of the banking segment and decides how to allocate resources based on net income as reported in the Company’s consolidated statements of income. All categories of interest expense, credit loss expense, and noninterest expense as disclosed in the Company’s consolidated statements of income are considered significant to the banking segment. For thesix* months ended* June 30, 2025and2024*, respectively, there wereno adjustments or reconciling items between the banking segment net income and consolidated net income as presented in the consolidated statements of income.

The measure of segment assets is based on total assets as reported on the consolidated balance sheets. For thesix months ended* June 30, 2025*, and the year ended* December 31, 2024*, respectively, there wereno adjustments or reconciling items between the banking segment total assets and total assets as presented on the consolidated balance sheets.