LANDMARK BANCORP INC

Previous wording

Landmark Bancorp, Inc. is a financial holding company incorporated under the laws of the State of Delaware and is engaged in the banking business through its wholly-owned subsidiary, Landmark National Bank, and in the insurance business through its wholly-owned subsidiary, Landmark Risk Management, Inc. The Company is listed on the Nasdaq Global Market under the symbol “LARK.” The Bank is dedicated to providing quality financial and banking services to its local communities. Our strategy includes growing our commercial, CRE and agriculture loan portfolios, while continuing to emphasize and maintaining high quality assets. We are committed to developing relationships with our borrowers and providing a total banking service.

Current wording

Landmark Bancorp, Inc. is a financial holding company incorporated under the laws of the State of Delaware and is engaged in the banking business through its wholly-owned subsidiary, Landmark National Bank, and in the insurance business through its wholly-owned subsidiary, Landmark Risk Management, Inc. The Company is listed on the Nasdaq Global Market under the symbol “LARK.” The Bank is dedicated to providing quality financial and banking services to its local communities. Our strategy includes growing our commercial, CRE and agriculture loan portfolios, while continuing to emphasize and maintain high quality assets. We are committed to developing relationships with our borrowers and providing a total banking service.

Previous wording

Our results of operations depend generally on net interest income, which is the difference between interest income from interest-earning assets and interest expense on interest-bearing liabilities. Net interest income is affected by regulatory, economic and competitive factors that influence interest rates, loan demand and deposit flows. In addition, we are subject to interest rate risk to the degree that our interest-earning assets mature or reprice at different times, or at different speeds, than our interest-bearing liabilities. Our results of operations are also affected by non-interest income, such as service charges, loan fees, gains from the sale of newly originated loans and gains or losses on investments, and certain other non-interest related items. Our principal operating expenses, aside from interest expense, consist of, among others, compensation and employee benefits, occupancy costs, professional fees, amortization of intangibles expense, federal deposit insurance costs, data processing expenses and provision for credit losses.

Current wording

Our results of operations depend generally on net interest income, which is the difference between interest income from interest-earning assets and interest expense on interest-bearing liabilities. Net interest income is affected by regulatory, economic and competitive factors that influence interest rates, loan demand and deposit flows. In addition, we are subject to interest rate risk to the degree that our interest-earning assets mature or reprice at different times, or at different speeds, than our interest-bearing liabilities. Our results of operations are also affected by non-interest income, such as service charges, loan fees, gains from the sale of newly originated loans and gains or losses on investments, and certain other non-interest related items. Our principal operating expenses, aside from interest expense, consist of, among others, compensation and employee benefits, occupancy costs, data processing expenses, professional fees, amortization of intangibles expense, federal deposit insurance costs, and provision for credit losses.

Previous wording

Currently, our business consists of its ownership of the Bank, with its main office in Manhattan, Kansas and thirty additional offices in central, eastern, southeast and southwest Kansas and Missouri, and our ownership of the Captive, a Nevada-based captive insurance company.

Current wording

Currently, our business consists of its ownership of the Bank, with its main office in Manhattan, Kansas and 28 additional offices in central, eastern, southeast and southwest Kansas and Missouri, and our ownership of the Captive, a Nevada-based captive insurance company.

Previous wording

On January 1, 2023, we adopted CECL, which changed our allowance for credit losses from an incurred loss methodology to an expected loss methodology. The CECL model is subject to changes in our economic forecast, which can impact the calculation of our allowance for credit losses substantially. Our most significant critical accounting estimates relate to the allowance for credit losses on loans, which involve significant judgment by our management. The analysis is updated on a quarterly basis based on historical loss information adjusted for current conditions and reasonable and supportable forecasts. Additionally, the Company considers changes in economic and business conditions, changes in policies, procedures and underwriting, changes in management or staff and their related experience, changes in nature and volume of the portfolio, changes in loan review, changes in collateral values, changes in past due and nonaccrual loans, changes in competition, legal and regulatory issues, changes in concentrations and other qualitative factors, which impacts the estimate of future credit losses. These qualitative factors comprise a significant portion of the Company’s allowance for credit losses. Based on a sensitivity analysis of all collectively evaluated loan pools, a five basis point change in the qualitative risk factors across all loan categories would result in an increase or decrease of $520,000, or 4.1%, in the allowance for credit losses as of December 31, 2024. See Note 1 (Summary of Significant Accounting Policies) to the Company’s consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for a more detailed description methodology and impact of adoption.

Current wording

On January 1, 2023, we adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), commonly referred to as “CECL”, which changed our allowance for credit losses from an incurred loss methodology to an expected loss methodology. The CECL model is subject to changes in our economic forecast, which can impact the calculation of our allowance for credit losses substantially. Our most significant critical accounting estimates relate to the allowance for credit losses on loans, which involve significant judgment by our management. The analysis is updated on a quarterly basis based on historical loss information adjusted for current conditions and reasonable and supportable forecasts. Additionally, the Company considers changes in economic and business conditions, changes in policies, procedures and underwriting, changes in management or staff and their related experience, changes in nature and volume of the portfolio, changes in loan review, changes in collateral values, changes in past due and non-accrual loans, changes in competition, legal and regulatory issues, changes in concentrations and other qualitative factors, which impacts the estimate of future credit losses. These qualitative factors comprise a significant portion of the Company’s allowance for credit losses. Based on a sensitivity analysis of all collectively evaluated loan pools, a five basis point change in the qualitative risk factors across all loan categories would result in an increase or decrease of $551,000 in the allowance for credit losses as of December 31, 2025. See Note 1 (Summary of Significant Accounting Policies) to the Company’s consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for a more detailed description methodology.

Previous wording

**SUMMARY OF PERFORMANCE.**Net earnings for 2024 increased $767,000, or 6.3%, to $13.0 million as compared to $12.2 million for 2023. The increase in net earnings during 2024 was primarily related to an increase in net interest income due primarily to an increase in loans and higher yields on interest-earning assets.

Current wording

**SUMMARY OF PERFORMANCE.**Net earnings for 2025 increased $5.8 million, or 44.4%, to $18.8 million as compared to $13.0 million for 2024. The increase in net earnings during 2025 was primarily related to an increase in net interest income due primarily to an increase in loan balances and higher yields on interest-earning assets.

Previous wording

We distributed a 5% stock dividend for the 24 th consecutive year in December 2024. All per share and average share data in this section reflect the 2024 and 2023 stock dividends.

Current wording

We distributed a 5% stock dividend for the 25 th consecutive year in December 2025. All per share and average share data in this section reflect the 2025 and 2024 stock dividends.

Previous wording

**Interest Income.**Interest income for 2024 increased $9.2 million, or 14.2%, to $73.9 million, as compared to 2023. Interest income on loans increased $9.6 million, or 18.6%, to $61.4 million for 2024, as compared to 2023 due to higher yields and average balances. Our yields increased from 5.81% in 2023 to 6.3% in 2024. The increase in interest income on loans was also driven by an increase in average loan balances, which increased from $891.5 million in 2023 to $974.3 million in 2024. Interest income on investment securities decreased $382,000, or 3.1%, to $12.3 million during 2024, as compared to 2023. The decrease in interest income on investment securities was primarily the result of a decrease in the average balances of investment securities in 2024, which decreased from $486.3 million in 2023 to $432.9 million in 2024.

Current wording

**Interest Income.**Interest income for 2025 increased $7.1 million, or 9.6%, to $81.0 million, as compared to 2024. Interest income on loans increased $7.8 million, or 12.7%, to $69.2 million for 2025, as compared to 2024 due to higher yields and average balances. Our yields increased from 6.30% in 2024 to 6.37% in 2025. The increase in interest income on loans was also driven by an increase in average loan balances, which increased from $974.3 million in 2024 to $1.1 billion in 2025. Interest income on investment securities decreased $737,000, or 6.0%, to $11.6 million during 2025, as compared to 2024. The decrease in interest income on investment securities was primarily the result of a decrease in the average balances of investment securities in 2025, which decreased from $432.9 million in 2024 to $365.8 million in 2025.

Previous wording

**Interest Expense.**Interest expense during 2024 increased $6.8 million, or 31.5%, to $28.2 million as compared to 2023. Interest expense on interest-bearing deposits increased $7.1 million to $22.3 million for 2024 as compared to $15.3 million in 2023. Our total cost of interest-bearing deposits increased from 1.71% during 2023 to 2.38% during 2024 as a result of higher rates and increased competition for deposits. Also contributing to the increase in interest expense was an increase in average interest-bearing deposit balances, which increased from $892.4 million in 2023 to $938.2 million in 2024. Interest expense on borrowings decreased $272,000 to $5.9 million during 2024, as compared to 2023, due to a decrease in our average borrowings, which decreased from $114.2 million in 2023 to $104.1 million in 2024.

Current wording

**Interest Expense.**Interest expense during 2025 decreased $2.8 million, or 10.1%, to $25.3 million as compared to 2024. Interest expense on interest-bearing deposits decreased $1.4 million to $20.9 million for 2025 as compared to $22.3 million in 2024. Our total cost of interest-bearing deposits decreased from 2.38% during 2024 to 2.14% during 2025 as a result of lower interest rates. Offsetting the decrease in interest expense due to lower cost of interest-bearing deposits was an increase in average interest-bearing deposit balances, which increased from $938.2 million in 2024 to $979.4 million in 2025. Interest expense on borrowings decreased $1.5 million to $4.4 million during 2025, as compared to 2024, due to a decrease in our average borrowings, which decreased from $104.1 million in 2024 to $87.7 million in 2025.

Previous wording

During 2024, net interest income increased $2.4 million, or 5.6%, to $45.7 million compared to $43.3 million in 2023. The increase in net interest income was primarily a result of an increase in interest income on loans, partially offset by higher interest expense. The accretion of purchase accounting adjustments increased net interest income by $1.0 million in 2024 compared to $993,000 in 2023. Compared to the same period last year, higher interest rates increased the yields on our interest-earning assets and the cost of our interest-bearing liabilities. Our net interest margin, on a tax-equivalent basis, increased to 3.28% during 2024 from 3.17% during 2023. Lower interest rates may not result in a higher net interest margin as a result of increased competition for loans and deposits and the slope of the yield curve also impacts our net interest margin. Additionally, deposit balances may decline resulting in the need for higher cost funding.

Current wording

During 2025, net interest income increased $10.0 million, or 21.8%, to $55.7 million compared to $45.7 million in 2024. The increase in net interest income was primarily a result of an increase in interest income on loans, coupled with lower interest expense, partially offset by lower interest income on investment securities. The accretion of purchase accounting adjustments increased net interest income by $794,000 in 2025 compared to $1.0 million in 2024. Compared to the same period last year, net interest income was benefitted by higher average balances and yields on loans, coupled with lower costs of interest-bearing liabilities. Our net interest margin, on a tax-equivalent basis, increased to 3.86% during 2025 from 3.28% during 2024. Lower interest rates may not result in a higher net interest margin as a result of increased competition for loans and deposits. The slope of the yield curve also impacts our net interest margin. Additionally, deposit balances may decline resulting in the need for higher cost funding.

Previous wording

During 2024, we recorded a $2.3 million provision for credit losses compared to a $349,000 provision for credit losses in 2023. The $2.3 million provision for credit losses during 2024 consisted of a $2.4 million provision to the allowance for credit losses on loans and a credit provision of $100,000 to unfunded loan commitments. We recorded net loan charge-offs of $183,000 during 2024 compared to net loan recoveries of $44,000 during 2023.

Current wording

During 2025, we recorded a $2.4 million provision for credit losses compared to a $2.3 million provision for credit losses in 2024. We recorded net loan charge-offs of $2.7 million during 2025 compared to net charge-offs of $183,000 during 2024. The increase in net charge-offs during 2025 was primarily due to the charge-off of a single commercial credit during the third quarter.

Previous wording

**Non-interest Income.**Total non-interest income was $14.7 million in 2024, an increase of $1.5 million, or 11.4%, compared to 2023. The increase in non-interest income was primarily the result of an increase of $810,000 in bank owned life insurance due to the accrual of death benefits in 2024. Also contributing to the increase in non-interest income was an increase of $522,000 in fees and service charges primarily due to higher fees to deposit accounts. A loss of $1.0 million was recorded on the sale of investment securities during 2024, a decrease from the $1.2 million loss recorded on the sale of investment securities in 2023.

Current wording

**Non-interest Income.**Total non-interest income was $15.0 million in 2025, an increase of $207,000, or 1.4%, compared to 2024. The increase in non-interest income was primarily the result of a decrease in losses on sales of investment securities of $928,000 and an increase of $789,000 in gains on sales of loans. A loss of $103,000 was recorded on the sale of investment securities during 2025, a decrease from the $1.0 million loss recorded on the sale of investment securities in 2024. These increases were partially offset by a decrease of $604,000 in bank owned life insurance due to death benefits recognized in 2024 and a decrease of $547,000 in fees and service charges primarily due to lower fees to deposit accounts.

Previous wording

INCOME TAXES. We recorded income tax expense of $1.1 million in 2024 compared to $2.0 million in 2023. The effective tax rate decreased from 13.8% in 2023 to 7.7% in 2024, primarily due to higher tax-exempt income and the recognition of previously unrecognized tax benefits. During 2024, we recognized $1.0 million of previously unrecognized tax benefits compared to $517,000 during 2023, which reduced the effective tax rates in both years.

Current wording

INCOME TAXES. We recorded income tax expense of $4.3 million in 2025 compared to $1.1 million in 2024. The effective tax rate increased from 7.7% in 2024 to 18.6% in 2025, primarily due to decreased recognition of previously unrecognized tax benefits. During 2025, we recognized $161,000 of previously unrecognized tax benefits compared to $1.0 million during 2024, which reduced the effective tax rates in both years.

Previous wording

FINANCIAL CONDITION. Economic conditions in the U.S. remained sluggish during 2024 as elevated inflation levels and higher interest rates continued to impact the economy. Elevated interest rates and a flat or negative sloping yield curve have impacted financial institutions generally, resulting in continued higher costs of funding and lower fair values for investment securities. The Federal Reserve lowered interest rates by 1.00% in the second half of 2024 due to improvements in the inflation outlook, however, additional rate cuts are dependent upon further reductions in the inflation rate and other economic factors. We maintain strong capital and liquidity, and a stable, conservative deposit portfolio with a significant majority of our deposits being retail-based and insured by the FDIC. We spend significant time each month monitoring our interest rate and concentration risks through our asset/liability management and lending strategies that involve a relationship-based banking model offering stability and consistency. The State of Kansas and the geographic markets in which the Company operates have also been impacted by economic headwinds. Supply chain constraints, labor shortages and geopolitical events have contributed to the rising inflation levels which are impacting all areas of the economy both nationally and locally. The Company’s allowance for credit losses continues to factor in estimates of the economic impact of these conditions and other qualitative factors on our loan portfolio. However, our loan portfolio is diversified across various types of loans and collateral throughout the markets in which we operate. Aside from a few problem loans that management is working to resolve, our asset quality has remained strong over the past few years. While further increases in problem assets may arise, management believes its efforts to run a high quality financial institution with a sound asset base will continue to create a strong foundation for continued growth and profitability in the future.

Current wording

FINANCIAL CONDITION. Economic conditions in the U.S. remained resilient during 2025 despite elevated inflation levels and economic uncertainty over tariffs continuing to impact the economy. Rate cuts by the Federal Reserve Bank during 2025 have positively benefitted financial institutions’ earnings and net interest margin. The Federal Reserve lowered interest rates by 75 basis points during 2025 due to improvements in the inflation outlook, however, additional rate cuts are dependent upon further reductions in the inflation rate and other economic factors. We maintain strong capital and liquidity, and a stable, conservative deposit portfolio with a significant majority of our deposits being retail-based and insured by the FDIC. We spend significant time each month monitoring our interest rate and concentration risks through our asset/liability management and lending strategies that involve a relationship-based banking model offering stability and consistency. The State of Kansas and the geographic markets in which the Company operates have also been impacted by economic headwinds. Supply chain constraints, labor shortages and geopolitical events have contributed to the rising inflation levels which are impacting all areas of the economy both nationally and locally. The Company’s allowance for credit losses continues to factor in estimates of the economic impact of these conditions and other qualitative factors on our loan portfolio. However, our loan portfolio is diversified across various types of loans and collateral throughout the markets in which we operate. Aside from a few problem loans that management is working to resolve, our asset quality has remained strong over the past few years. While further increases in problem assets may arise, management believes its efforts to run a high quality financial institution with a sound asset base will continue to create a strong foundation for continued growth and profitability in the future.

Previous wording

Asset Quality and Distribution. Our primary investing activities are the origination of one-to-four family residential real estate, construction and land, CRE, commercial, agriculture, municipal and consumer loans and the purchase of investment securities. Total assets were $1.6 billion at both December 31, 2024 and December 31, 2023. Net loans, excluding loans held for sale, increased $101.6 million, 10.8%, to $1.0 billion at December 31, 2024, compared to $937.6 million at December 31, 2023. Investment securities available-for-sale decreased $80.3 million, or 17.7%, from $452.8 million at December 31, 2023 to $372.5 million at December 31, 2024.

Current wording

Asset Quality and Distribution. Our primary investing activities are the origination of one-to-four family residential real estate, construction and land, CRE, commercial, agriculture, municipal and consumer loans and the purchase of investment securities. Total assets were $1.6 billion at both December 31, 2025 and 2024. Net loans, excluding loans held for sale, increased $59.2 million, or 5.7%, to $1.1 billion at December 31, 2025, compared to $1.0 billion at December 31, 2024. Investment securities available-for-sale decreased $24.4 million, or 6.5%, from $372.5 million at December 31, 2024 to $348.2 million at December 31, 2025.

Previous wording

The allowance for credit losses is established through a provision for credit losses based on our economic projections. At December 31, 2024, our allowance for credit losses on loans totaled $12.8 million, or 1.22% of gross loans outstanding, compared to $10.6 million, or 1.12% of gross loans outstanding, at December 31, 2023. The increase in our allowance for credit losses on loans as a percentage of gross loans outstanding was primarily due to an increase in the reserves on individually evaluated loans.

Current wording

The allowance for credit losses is established through a provision for credit losses based on our economic projections. At December 31, 2025, our allowance for credit losses on loans totaled $12.5 million, or 1.12% of gross loans outstanding, compared to $12.8 million, or 1.22% of gross loans outstanding, at December 31, 2024. The decrease in our allowance for credit losses on loans as a percentage of gross loans outstanding was primarily due to a decrease in the reserves on individually evaluated loans.

Previous wording

As of December 31, 2024 and 2023, approximately $26.1 million and $7.5 million, respectively, of loans were considered classified and assigned a risk rating of special mention, substandard or doubtful. The increase in classified loans was primarily due to commercial loan relationships that moved to classified status during 2024. These ratings indicate that the loans identified as potential problem loans have more than normal risk which raised doubts as to the ability of the borrower to comply with present loan repayment terms. Even though these borrowers were experiencing moderate cash flow problems as well as some deterioration in collateral value, management believed the general allowance was sufficient to cover all expected future losses expected in the loan portfolio at the balance sheet date.

Current wording

As of December 31, 2025 and 2024, approximately $22.9 million and $26.1 million, respectively, of loans were considered classified and assigned a risk rating of special mention, substandard or doubtful. The decrease in classified loans was primarily due to a commercial loan relationship that was charged off during 2025. These ratings indicate that the loans identified as potential problem loans have more than normal risk which raised doubts as to the ability of the borrower to comply with present loan repayment terms. Management believed the general allowance was sufficient to cover all expected future losses expected in the loan portfolio at the balance sheet date.

Previous wording

Loans past due 30-89 days and still accruing interest totaled $6.2 million, or 0.59% of gross loans, at December 31, 2024, compared to $1.6 million, or 0.17% of gross loans, at December 31, 2023. At December 31, 2024, $13.1 million of loans were on non-accrual status, or 1.25% of gross loans, compared to $2.4 million, or 0.25% of gross loans, at December 31, 2023. Past due loans are determined in accordance with the contractual repayment terms. Non-accrual loans consist of loans 90 or more days past due and certain individually evaluated loans. There were no loans 90 days delinquent and accruing interest at December 31, 2024 and 2023.

Current wording

Loans past due 30-89 days and still accruing interest totaled $4.3 million, or 0.38% of gross loans, at December 31, 2025, compared to $6.2 million, or 0.59% of gross loans, at December 31, 2024. At December 31, 2025, $10.0 million of loans were on non-accrual status, or 0.90% of gross loans, compared to $13.1 million, or 1.25% of gross loans, at December 31, 2024. Past due loans are determined in accordance with the contractual repayment terms. Non-accrual loans consist of loans 90 or more days past due and certain individually evaluated loans. There were no loans 90 days delinquent and accruing interest at either December 31, 2025 or 2024.

Previous wording

As part of our credit risk management, we continue to manage the loan portfolio to identify problem loans and have placed additional emphasis on commercial CRE and construction and land relationships. We are working to resolve the remaining problem credits or move the non-performing credits out of the loan portfolio. At December 31, 2024, we had $167,000 of real estate owned compared to $928,000 at December 31, 2023. The decrease in real estate owned as of December 31, 2024 compared to December 31, 2023 was primarily due to the sale of properties. As of December 31, 2024, real estate owned consisted of a single parcel of undeveloped land. The Company is currently marketing the property.

Current wording

As part of our credit risk management, we continue to manage the loan portfolio to identify problem loans and have placed additional emphasis on commercial CRE and construction and land relationships. We are working to resolve or remove non-performing credits out of the loan portfolio. At December 31, 2025, we had no real estate owned compared to $167,000 of real estate owned at December 31, 2024. The decrease in real estate owned as of December 31, 2025 compared to December 31, 2024 was due to the sale of properties held as other real estate owned.

Previous wording

**Liability Distribution.**Our primary ongoing sources of funds are deposits, FHLB borrowings, proceeds from principal and interest payments on loans and investment securities and proceeds from the sale of mortgage loans and investment securities. While maturities and scheduled amortization of loans are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates and economic conditions. We had a balance of $1.3 billion in deposits at December 31, 2024 and December 31, 2023.

Current wording

**Liability Distribution.**Our primary ongoing sources of funds are deposits, FHLB borrowings, proceeds from principal and interest payments on loans and investment securities and proceeds from the sale of mortgage loans and investment securities. While maturities and scheduled amortization of loans are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates and economic conditions. We had a balance of $1.4 billion in deposits at December 31, 2025 as compared to $1.3 billion at December 31, 2024.

Previous wording

Total borrowings decreased $10.5 million, or 10.6%, to $88.5 million at December 31, 2024, from $99.0 million at December 31, 2023. The decrease in borrowings was primarily due to deposit growth and the sale of investment securities.

Current wording

Total borrowings decreased $54.8 million, or 61.9%, to $33.7 million at December 31, 2025, from $88.5 million at December 31, 2024. The decrease in borrowings was primarily due to deposit growth and the sale of investment securities.

Previous wording

Non-interest-bearing deposits at December 31, 2024 were $351.6 million, or 26.5% of deposits, compared to $367.1 million, or 27.9% of deposits, at December 31, 2023. Money market and checking accounts were 47.9% of our deposit portfolio and totaled $637.0 million at December 31, 2024, compared to 46.6% of our deposit portfolio totaling $613.6 million, at December 31, 2023. Savings accounts decreased to $145.5 million, or 10.9% of deposits, at December 31, 2024, from $152.4 million, or 11.6% of deposits, at December 31, 2023. Certificates of deposit totaled $194.7 million, or 14.7% of deposits, at December 31, 2024, compared to $183.2 million, or 13.9% of deposits, at December 31, 2023. Competition for deposits may affect our ability to continue to increase deposit balances and could result in a decrease in our deposit balances in future periods.

Current wording

Non-interest-bearing deposits at December 31, 2025 were $364.7 million, or 26.3% of deposits, compared to $351.6 million, or 26.5% of deposits, at December 31, 2024. Money market and checking accounts were 46.9% of our deposit portfolio and totaled $651.0 million at December 31, 2025, compared to 47.9% of our deposit portfolio totaling $637.0 million, at December 31, 2024. Savings accounts increased to $151.4 million, or 10.8% of deposits, at December 31, 2025, from $145.5 million, or 10.9% of deposits, at December 31, 2024. Certificates of deposit totaled $221.8 million, or 16.0% of deposits, at December 31, 2025, compared to $194.7 million, or 14.7% of deposits, at December 31, 2024. Competition for deposits may affect our ability to continue to increase deposit balances and could result in a decrease in our deposit balances in future periods. Such decreases in deposit balances may cause us to secure funding through other borrowings which would likely result in higher interest costs.

Previous wording

Certificates of deposit at December 31, 2024, scheduled to mature in one year or less totaled $181.0 million. Historically, maturing deposits have generally remained with the Bank, and we believe that a significant portion of the deposits maturing in one year or less will remain with us upon maturity in some type of deposit account.

Current wording

Certificates of deposit at December 31, 2025, scheduled to mature in one year or less totaled $213.4 million. Historically, maturing deposits have generally remained with the Bank, and we believe that a significant portion of the deposits maturing in one year or less will remain with us upon maturity in some type of deposit account.

Previous wording

CASH FLOWS. During 2024, our cash and cash equivalents decreased by $6.8 million as compared to 2023. Our operating activities provided net cash of $14.2 million in 2024, compared to $12.6 million in 2023, which is primarily the result of net earnings and sales of one-to-four family residential mortgage loans. Our investing activities used net cash of $18.1 million during 2024, compared to $50.6 million in 2023, primarily to fund loan growth. Our financing activities used net cash of $2.9 million during 2024, compared to providing $42.0 million in 2023, primarily as a result of funding dividend payments.

Current wording

CASH FLOWS. During 2025, our cash and cash equivalents increased by $707,000 as compared to 2024. Our operating activities provided net cash of $21.6 million in 2025, compared to $14.2 million in 2024, which is primarily the result of increased net earnings and sales of one-to-four family residential mortgage loans. Our investing activities used net cash of $21.4 million during 2025, compared to $18.1 million in 2024, primarily to fund loan growth. Our financing activities provided net cash of $441,000 during 2025, compared to using $3.0 million in 2024, primarily as a result of an increase in deposits.

Previous wording

**Liquidity.**Our most liquid assets are cash and cash equivalents and investment securities available-for-sale. The levels of these assets are dependent on the operating, financing, lending and investing activities during any given year. These liquid assets totaled $396.9 million at December 31, 2024 and $484.8 million at December 31, 2023. During periods in which we are not able to originate a sufficient amount of loans and/or periods of high principal prepayments, we generally increase our liquid assets by investing in short-term, high-grade investments.

Current wording

**Liquidity.**Our most liquid assets are cash and cash equivalents and investment securities available-for-sale. The levels of these assets are dependent on the operating, financing, lending and investing activities during any given year. These liquid assets totaled $372.4 million at December 31, 2025 and $396.9 million at December 31, 2024. During periods in which we are not able to originate a sufficient amount of loans and/or periods of high principal prepayments, we generally increase our liquid assets by investing in short-term, high-grade investments.

Previous wording

Liquidity management is both a daily and long-term function of our strategy. Excess funds are generally invested in short-term investments. Excess funds are typically generated as a result of increased deposit balances, while uses of excess funds are generally deposit withdrawals and loan advances. In the event we require funds beyond our ability to generate them internally, additional funds are generally available through the use of brokered deposits, FHLB advances, a line of credit with the FHLB, other borrowings or through sales of investment securities. At December 31, 2024, we had an outstanding balance of $48.8 million against our line of credit with the FHLB. At December 31, 2024, we had collateral pledged to the FHLB that would allow us to borrow $171.0 million, subject to FHLB credit requirements and policies. At December 31, 2024, we had no borrowings through the Federal Reserve discount window, while our borrowing capacity with the Federal Reserve was $50.5 million. We also have various other federal funds agreements, both secured and unsecured, with correspondent banks totaling approximately $35.0 million in available credit under which we had no outstanding borrowings at December 31, 2024. At December 31, 2024, we had subordinated debentures totaling $21.7 million and $13.8 million of repurchase agreements. At December 31, 2024, the Company had no borrowings against a $5.0 million line of credit from an unrelated financial institution maturing on November 1, 2025, with an interest rate that adjusts daily based on the prime rate less 0.50%. This line of credit has covenants specific to capital and other financial ratios. At December 31, 2024, the Company’s tier 1 capital ratio of 12.43% was below the minimum required under such covenants of 12.50%. The Company requested from the lender a waiver of the default, which was granted by the lender. On March 14, 2025, the Company and the lender entered into a Change in Terms Agreement, reducing the minimum risk-based capital ratio required under such covenants to 12.00% going forward. The Company also borrowed $4.2 million from the same unrelated financial institution at a fixed rate of 6.15%. This borrowing matures on September 1, 2027 and requires quarterly principal and interest payments. The original balance of this borrowing was $10.0 million and was used to fund part of the acquisition of Freedom.

Current wording

Liquidity management is both a daily and long-term function of our strategy. Excess funds are generally invested in short-term investments. Excess funds are typically generated as a result of increased deposit balances, while uses of excess funds are generally deposit withdrawals and loan advances. In the event we require funds beyond our ability to generate them internally, additional funds are generally available through the use of brokered deposits, FHLB advances, a line of credit with the FHLB, other borrowings or through sales of investment securities. At December 31, 2025, we had an outstanding balance of $8.9 million against our line of credit with the FHLB. At December 31, 2025, we had collateral pledged to the FHLB that would allow us to borrow $239.1 million, subject to FHLB credit requirements and policies. At December 31, 2025, we had no borrowings through the Federal Reserve discount window, while our borrowing capacity with the Federal Reserve was $42.0 million. We also have various other federal funds agreements, both secured and unsecured, with correspondent banks totaling approximately $35.0 million in available credit under which we had no outstanding borrowings at December 31, 2025. At December 31, 2025, we had subordinated debentures totaling $21.7 million and $1.5 million of repurchase agreements. At December 31, 2025, the Company had no borrowings against a $5.0 million line of credit from an unrelated financial institution maturing on November 1, 2026, with an interest rate that adjusts daily based on the prime rate less 0.50%. This line of credit has covenants specific to capital and other financial ratios, which the Company was in compliance with at December 31, 2025. The Company also borrowed $1.7 million from the same unrelated financial institution at a fixed rate of 6.15%. This borrowing matures on September 1, 2027 and requires quarterly principal and interest payments. The original balance of this borrowing was $10.0 million and was used to fund part of the acquisition of Freedom.

Previous wording

OFF-BALANCE SHEET ARRANGEMENTS. As a provider of financial services, we routinely issue financial guarantees in the form of financial and performance standby letters of credit. Standby letters of credit are contingent commitments issued by us generally to guarantee the payment or performance obligation of a customer to a third party. While these standby letters of credit represent a potential outlay by us, a significant amount of the commitments may expire without being drawn upon. We have recourse against the customer for any amount the customer is required to pay to a third party under a standby letter of credit. The letters of credit are subject to the same credit policies, underwriting standards and approval process as loans made by us. Most of the standby letters of credit are secured, and in the event of nonperformance by the customers, we have the right to the underlying collateral, which could include CRE, physical plant and property, inventory, receivables, cash and marketable securities. The contract amount of these standby letters of credit, which represents the maximum potential future payments guaranteed by us, was $1.9 million at December 31, 2024 as compared to $1.6 million at December 31, 2023.

Current wording

OFF-BALANCE SHEET ARRANGEMENTS. As a provider of financial services, we routinely issue financial guarantees in the form of financial and performance standby letters of credit. Standby letters of credit are contingent commitments issued by us generally to guarantee the payment or performance obligation of a customer to a third party. While these standby letters of credit represent a potential outlay by us, a significant amount of the commitments may expire without being drawn upon. We have recourse against the customer for any amount the customer is required to pay to a third party under a standby letter of credit. The letters of credit are subject to the same credit policies, underwriting standards and approval process as loans made by us. Most of the standby letters of credit are secured, and in the event of nonperformance by the customers, we have the right to the underlying collateral, which could include CRE, physical plant and property, inventory, receivables, cash and marketable securities. The contract amount of these standby letters of credit, which represents the maximum potential future payments guaranteed by us, was $2.2 million at December 31, 2025 as compared to $1.9 million at December 31, 2024.

Previous wording

At December 31, 2024, we had outstanding loan commitments, excluding standby letters of credit, of $201.2 million, as compared to $211.8 million at December 31, 2023. We anticipate that sufficient funds will be available to meet current loan commitments. These commitments consist of unfunded lines of credit and commitments to finance real estate loans.

Current wording

At December 31, 2025, we had outstanding loan commitments, excluding standby letters of credit, of $203.5 million, as compared to $201.2 million at December 31, 2024. We anticipate that sufficient funds will be available to meet current loan commitments. These commitments consist of unfunded lines of credit and commitments to finance real estate loans.

Previous wording

At December 31, 2024, the Bank maintained a leverage ratio of 9.10% and a total risk-based capital ratio of 13.5%. As shown by the following table, the Bank’s capital exceeded the minimum capital requirements in effect at December 31, 2024, including the capital conservation buffers.

Current wording

At December 31, 2025, the Bank maintained a leverage ratio of 9.67% and a total risk-based capital ratio of 13.96%. As shown by the following table, the Bank’s capital exceeded the minimum capital requirements in effect at December 31, 2025, including the capital conservation buffers.

Previous wording

During the year ended December 31, 2024, we paid quarterly cash dividends of $0.20 per share to our stockholders, as adjusted to give effect to 5% stock dividends, which we distributed for the 24th consecutive year in December 2024. The 2023 quarterly cash dividends were $0.19 per share as adjusted to give effect to 5% stock dividends.

Current wording

During the year ended December 31, 2025, we paid quarterly cash dividends of $0.20 per share to our stockholders, as adjusted to give effect to 5% stock dividends, which we distributed for the 25 th consecutive year in December 2025. The 2024 quarterly cash dividends were $0.19 per share as adjusted to give effect to 5% stock dividends.

Previous wording

The payment of dividends by any financial institution or its holding company is affected by the requirement to maintain adequate capital pursuant to applicable capital adequacy guidelines and regulations. As described above, the Bank exceeded its minimum capital requirements under applicable guidelines as of December 31, 2024. The National Bank Act imposes limitations on the amount of dividends that a national bank may pay without prior regulatory approval. Generally, the amount is limited to the bank’s current year’s net earnings plus the adjusted retained earnings for the three preceding years. As of December 31, 2024, $4.9 million was available to be paid as dividends to the Company by the Bank without prior regulatory approval.

Current wording

The payment of dividends by any financial institution or its holding company is affected by the requirement to maintain adequate capital pursuant to applicable capital adequacy guidelines and regulations. As described above, the Bank exceeded its minimum capital requirements under applicable guidelines as of December 31, 2025. The National Bank Act imposes limitations on the amount of dividends that a national bank may pay without prior regulatory approval. Generally, the amount is limited to the bank’s current year’s net earnings plus the adjusted retained earnings for the three preceding years. As of December 31, 2025, $3.0 million was available to be paid as dividends to the Company by the Bank without prior regulatory approval.