LANDMARK BANCORP INC

Previous wording

Overview. 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. References to the “Company,” “we,” “us,” and “our” refer collectively to Landmark Bancorp, Inc., Landmark National Bank and 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, commercial real estate (“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.

Current wording

Overview. 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. References to the “Company,” “we,” “us,” and “our” refer collectively to Landmark Bancorp, Inc., Landmark National Bank and 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 continuing a tradition of holding and acquiring quality assets while growing our commercial, commercial real estate (“CRE”) and agriculture loan portfolios. We are committed to developing relationships with our borrowers and providing a total banking service.

Previous wording

We are significantly impacted by prevailing economic conditions, including federal monetary and fiscal policies, and federal regulations of financial institutions. Deposit balances are influenced by numerous factors such as competing investments, the level of income and the personal rate of savings within our market areas. Factors influencing lending activities include the demand for housing, the interest rate pricing competition from other lending institutions, and rates of inflation.

Current wording

We are significantly impacted by prevailing economic conditions, including federal monetary and fiscal policies, and federal regulations of financial institutions. Deposit balances are influenced by numerous factors such as competing investments, the level of income and the personal rate of savings within our market areas. Factors influencing lending activities include the demand for housing and the interest rate pricing competition from other lending institutions.

Previous wording

Currently, our business consists of ownership of the Bank, with its main office in Manhattan, Kansas and 28 additional branch offices in central, eastern, southeast and southwest Kansas, one loan production office in Kansas City, Missouri and our ownership of Landmark Risk Management, Inc.

Current wording

Currently, our business consists of ownership of the Bank, with its main office in Manhattan, Kansas and 27 additional branch offices in central, eastern, southeast and southwest Kansas, one loan production office in Kansas City, Missouri and our ownership of Landmark Risk Management, Inc.

Previous wording

In April 2026, we declared our 99 th consecutive quarterly dividend, and we currently have no plans to change our dividend strategy given our current capital and liquidity position. However, while we have achieved a strong capital base and expect to continue operating profitably, our future dividend practice is dependent upon the performance of the economy and the Company’s overall performance. In addition, as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, we will not be permitted to make capital distributions (including for dividends and repurchases of stock) or pay discretionary bonuses to executive officers without restriction if we do not maintain 2.5% in Common Equity Tier 1 Capital attributable to a capital conservation buffer, a standard we exceeded at March 31, 2026.

Current wording

In July 2026, we declared our 100 th consecutive quarterly dividend, and we currently have no plans to change our dividend strategy given our current capital and liquidity position. However, while we have achieved a strong capital base and expect to continue operating profitably, our future dividend practice is dependent upon the performance of the economy and the Company’s overall performance. In addition, as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, we will not be permitted to make capital distributions (including for dividends and repurchases of stock) or pay discretionary bonuses to executive officers without restriction if we do not maintain 2.5% in Common Equity Tier 1 Capital attributable to a capital conservation buffer, a standard we exceeded at June 30, 2026.

Previous wording

Interest Income. Interest income of $20.2 million for the quarter ended March 31, 2026 represented an increase of $906,000, or 4.7%, compared to the same period of 2025. Interest income on loans increased $865,000, or 5.3%, to $17.3 million for the quarter ended March 31, 2026, compared to the same period of 2025 due to higher yields and average balances. Yield on loans increased from 6.34% in the first quarter of 2025 to 6.40% in the first quarter of 2026. The increase in interest income on loans was also driven by an increase of $45.0 million in average loan balances, which increased from $1.0 billion in the first quarter of 2025 to $1.1 billion in the first quarter of 2026. Interest income on investment securities increased $30,000, or 1.0%, to $2.9 million for the first quarter of 2026. The increase in interest income on investment securities was primarily the result of higher yields, partially offset by a decrease in average balances of investment securities. The yield on investment securities increased 26 basis points to 3.55% in the first quarter of 2026. The average balance of investment securities decreased $27.0 million, or 7.2%, to $350.8 million in the first quarter of 2026.

Current wording

Interest Income. Interest income of $20.3 million for the quarter ended June 30, 2026 represented an increase of $153,000, or 0.8%, compared to the same period of 2025. Interest income on investment securities increased $189,000, or 6.6%, to $3.1 million for the second quarter of 2026, as compared to $2.9 million in the same period of 2025. The increase in interest income on investment securities was primarily the result of an increase in yields, which increased from 3.34% in the second quarter of 2025 to 3.66% in the second quarter of 2026. Partially offsetting the increase in yields was a decrease in the average balances of investment securities, which decreased from $363.9 million in the second quarter of 2025 to $349.8 million in the second quarter of 2026. Interest income on loans decreased $39,000, or 0.2%, to $17.1 million for the quarter ended June 30, 2026, compared to the same period of 2025, due to higher average balances, partially offset by lower yields. Average loan balances increased $8.6 million from the second quarter of 2025. The yield on loans decreased from 6.37% in the second quarter of 2025 to 6.31% in the second quarter of 2026.

Previous wording

Interest Expense. Interest expense during the quarter ended March 31, 2026 decreased $998,000 to $5.2 million, as compared to the same period of 2025. Interest expense on interest-bearing deposits decreased $625,000 to $4.6 million for the quarter ended March 31, 2026, as compared to the same period of 2025. The total cost of interest-bearing deposits decreased from 2.17% in the first quarter of 2025 to 1.90% in the first quarter of 2026 as a result of lower rates on our deposits. Partially offsetting the lower rates was an increase in average interest-bearing deposit balances, which increased from $979.8 million in the first quarter of 2025 to $983.1 million in the first quarter of 2026. For the first quarter of 2026, interest expense on borrowings decreased $373,000 to $614,000, as compared to the same period of 2025 due to a decrease in our average borrowings and repurchase agreements which decreased $20.6 million from the first quarter of 2025 to the first quarter of 2026. Also contributing to lower interest expense was a decrease in rates, which decreased from 5.09% in the first quarter of 2025 to 4.85% in the same period of 2026.

Current wording

Interest Expense. Interest expense during the quarter ended June 30, 2026 decreased $1.2 million to $5.2 million, as compared to the same period of 2025. Interest expense on interest-bearing deposits decreased $795,000 to $4.3 million for the quarter ended June 30, 2026, as compared to the same period of 2025. Our total cost of interest-bearing deposits decreased from 2.14% in the second quarter of 2025 to 1.82% in the second quarter of 2026, as a result of lower rates on our deposits. The lower rates on interest-bearing deposits was coupled with a decrease in average interest-bearing deposit balances, which decreased from $965.2 million in the second quarter of 2025 to $958.4 million in the second quarter of 2026. For the second quarter of 2026, interest expense on borrowings decreased $449,000 to $822,000, as compared to the same period of 2025, due to a decrease in our average borrowings and repurchase agreements which decreased $29.7 million from the second quarter of 2025 to the second quarter of 2026. Also contributing to lower interest expense was a decrease in rates, which decreased from 4.98% in the second quarter of 2025 to 4.54% in the same period of 2026.

Previous wording

Net Interest Income. Net interest income increased $1.9 million, or 14.5%, to $15.0 million for the first quarter of 2026, as compared to the first quarter of 2025. The increase in net interest income was primarily a result of an increase in interest income on loans and investment securities, and lower interest expense. The accretion of purchase accounting adjustments increased net interest income by $184,000 in the first quarter of 2025 compared to an increase of $149,000 in the first quarter of 2026, and was primarily related to fair value adjustments on loans acquired in the Freedom Bank transaction. Compared to the same period last year, higher yields on earning assets and growth in average loans increased interest income while lower deposit costs decreased interest expense. Net interest margin, on a tax-equivalent basis, was 3.76% in the first quarter of 2025, compared to 4.24% in the first quarter of 2026.

Current wording

Net interest income increased $3.3 million, or 12.3%, to $30.1 million for the six months ended June 30, 2026, as compared to the same period of 2025. The increase in net interest income was primarily a result of a decrease in interest expense, coupled with an increase in loan interest income. Compared to the same period last year, average interest-bearing liability balances declined $30.3 million coupled with lower rates decreased interest expense. The increase in loan interest income was driven by growth in average loans. The accretion of purchase accounting adjustments increased net interest income by $346,000 in the first six months of 2026 compared to an increase of $380,000 in the first six months of 2025, and was primarily related to fair value adjustments on loans acquired in the Freedom Bank transaction completed in 2022. Compared to the same period last year, net interest margin, on a tax-equivalent basis, was 3.80% in the first six months of 2025, compared to 4.23% in the first six months of 2026.

Previous wording

Provision for Credit Losses. During the first quarter of 2026, a $500,000 provision for credit losses for loans was recorded, compared to no provision during the first quarter of 2025. During the first quarter of 2026, a $70,000 provision for credit losses for unfunded loan commitments was recorded. We recorded net loan charge-offs of $349,000 during the first quarter of 2026, compared to net loan charge-offs of $23,000 during the first quarter of 2025.

Current wording

During the first six months of 2026, we recorded a $1.1 million provision for credit losses compared to a $1.0 million provision for credit losses recorded in the first six months of 2025. The provision for credit losses during the first six months of 2026 consisted of a $1.0 million provision to the allowance for credit losses on loans and a $70,000 credit provision to the allowance for unfunded loan commitments. We recorded net loan charge-offs of $801,000 during the first six months of 2026, compared to net loan charge-offs of $63,000 during the first six months of 2025.

Previous wording

Non-interest Income. Total non-interest income was $3.8 million in the first quarter of 2026, an increase of $406,000, or 12.1%, from the same period in 2025. The increase in non-interest income during the first quarter of 2026 compared to the same period in the prior year was primarily due to an increase of $323,000 in gains on sales of one-to-four family residential real estate loans due to an increase in volume. There was also an increase of $101,000 in bank-owned life insurance income due to the accrual of death benefits during the first quarter of 2026.

Current wording

Total non-interest income was $7.9 million in the first six months of 2026, an increase of $875,000, or 12.5%, from the same period in 2025. The increase in non-interest income during the first six months of 2026 compared to the same period in the prior year was primarily due to an increase of $824,000 in gains on sales of one-to-four family residential real estate loans due to an increase in the volume of loans sold in the secondary market. Additionally, there was an increase of $108,000 in bank-owned life insurance income due to the accrual of death benefits during 2026.

Previous wording

Non-interest Expense. Non-interest expense totaled $11.9 million for the first quarter of 2026, an increase of $1.1 million, or 10.6%, over the same quarter of 2025. The increase in non-interest expense in the first quarter of 2026 compared to the same period in the prior year was mainly due to increases of $604,000 in other expense, $198,000 in occupancy and equipment, $169,000 in compensation and benefits expense, and $158,000 in data processing expense. The increase in other expense was driven by $433,000 of fraud losses recognized during the first quarter, related to the previously disclosed fraudulent activity by a non-executive officer of the Bank. The increase in fraud losses was coupled with increased insurance loss reserves of our captive insurance subsidiary. The increases in both occupancy and equipment expense and data processing expense were related to expenses incurred to upgrade our core branch operation systems during the current quarter as compared to the first quarter of 2025. The increase in compensation and benefits was attributable to an increase in the number of employees in the current year, coupled with higher benefits expense as compared to the prior year.

Current wording

Non-interest expense totaled $23.9 million for the first six months of 2026, an increase of $2.1 million, or 9.8%, over the same period of 2025. The increase in non-interest expense in the first six months of 2026 compared to the same period in the prior year was mainly due to increases of $743,000 in other expense, $730,000 in professional fees and $504,000 in compensation and benefits expense. The increase in other expense was driven by $433,000 of fraud losses recognized during the first quarter of 2026, related to the previously disclosed fraudulent activity by a non-executive officer of the Bank. The increase in fraud losses was coupled with increased insurance loss reserves of our captive insurance subsidiary and increased advertising expense. The increase in professional fees was driven by higher consulting expenses for talent development, risk assessment, and forensic accounting engagements. The increase in compensation and benefits expense was attributable to an increase in the number of employees in the current year, coupled with higher benefits expense as compared to the prior year.

Previous wording

Income Tax Expense. During the first quarter of 2026, we recorded income tax expense of $1.3 million, compared to income tax expense of $1.0 million during the same period of 2025. Our effective tax rate increased from 17.8% in the first quarter of 2025 to 19.8% in the first quarter of 2026. The increase in the effective tax rate was due to higher earnings before taxes, coupled with a decrease in tax exempt income.

Current wording

Income Tax Expense. During the second quarter of 2026, we recorded income tax expense of $1.3 million, compared to income tax expense of $944,000 during the same period of 2025. Our effective tax rate increased from 17.7% in the second quarter of 2025 to 19.7% in the second quarter of 2026. The increase in the effective tax rate was due to higher earnings before taxes while tax exempt income decreased slightly.

Previous wording

***Financial Condition.***Economic conditions in the U.S. remained resilient during the first quarter of 2026 despite elevated inflation levels and economic uncertainty related to ongoing conflicts in the Middle East and tariffs continuing to impact the economy. Rate cuts by the Federal Reserve Bank have positively benefitted financial institutions’ earnings and net interest margin. The Federal Reserve lowered interest rates by 75 basis points during the fourth quarter of 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 Federal Deposit Insurance Corporation (“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 United States remained sluggish during the first six months of 2026 as elevated inflation levels, high interest rates, and conflicts in the Middle East continued to impact the economy. Although interest rates decreased slightly in the second half of 2025, sustained high interest rates have impacted financial institutions generally, resulting in continued higher costs of funding and lower fair values for investment securities. We maintain strong capital and liquidity, and a stable, conservative deposit portfolio with a majority of our deposits being core customer-based and insured by the Federal Deposit Insurance Corporation (“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

The allowance for credit losses is established through a provision for credit losses based on our economic projections. At March 31, 2026, our allowance for credit losses on loans totaled $12.6 million, or 1.15% of gross loans outstanding, compared to $12.5 million, or 1.12% of gross loans outstanding, at December 31, 2025. The increase in our allowance for credit losses on loans as a percentage of gross loans outstanding was primarily due to loan growth and current and projected economic conditions and other qualitative factors.

Current wording

The allowance for credit losses is established through a provision for credit losses based on our economic projections. At June 30, 2026, our allowance for credit losses on loans totaled $12.7 million, or 1.15% of gross loans outstanding, compared to $12.5 million, or 1.12% of gross loans outstanding, at December 31, 2025. The increase in our allowance for credit losses on loans as a percentage of gross loans outstanding was primarily due to higher reserves against individually evaluated loans on non-accrual due to an increase in loans on non-accrual as of June 30, 2026. The balance of our allowance for credit losses reflects current and projected economic conditions and other qualitative factors.

Previous wording

As of March 31, 2026 and December 31, 2025, approximately $25.9 million and $27.2 million, respectively, of loans were considered classified and assigned a risk rating of special mention, substandard or doubtful. These ratings indicate that these loans were identified as potential problem loans having more than normal risk and raised doubts as to the ability of the borrowers to comply with present loan repayment terms. Even though borrowers were experiencing moderate cash flow problems as well as some deterioration in collateral value, management believed the allowance for credit losses was sufficient to cover expected losses related to such loans at March 31, 2026 and December 31, 2025, respectively.

Current wording

As of June 30, 2026 and December 31, 2025, approximately $25.7 million and $27.2 million, respectively, of loans were considered classified and assigned a risk rating of special mention, substandard or doubtful. These ratings indicate that these loans were identified as potential problem loans having more than normal risk and raised doubts as to the ability of the borrowers to comply with present loan repayment terms. Even though borrowers were experiencing moderate cash flow problems as well as some deterioration in collateral value, management believed the allowance for credit losses was sufficient to cover expected losses related to such loans at June 30, 2026 and December 31, 2025, respectively.

Previous wording

Loans past due 30-89 days and still accruing interest totaled $7.4 million, or 0.68% of gross loans, at March 31, 2026, compared to $4.3 million, or 0.38% of gross loans, at December 31, 2025. The increase in past due loans was primarily related to loans in our agriculture portfolio. We are currently working with a small number of delinquent borrowers, and do not believe the increase in delinquent loans is an indicator of broader weakness in the agriculture portfolio. At March 31, 2026, $10.4 million in loans were on non-accrual status, or 0.94% of gross loans, compared to $10.0 million, or 0.90% of gross loans, at December 31, 2025. 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 March 31, 2026 or December 31, 2025.

Current wording

Loans past due 30-89 days and still accruing interest totaled $6.3 million, or 0.57% of gross loans, at June 30, 2026, compared to $4.3 million, or 0.38% of gross loans, at December 31, 2025. The increase in past due loans was primarily related to loans in our commercial and one-to-four family residential real estate loan portfolios. At June 30, 2026, $13.1 million in loans were on non-accrual status, or 1.18% of gross loans, compared to $10.0 million, or 0.90% of gross loans, at December 31, 2025. The increase in non-accrual loans was primarily related to loans in our agriculture loan portfolio. 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 June 30, 2026 or December 31, 2025.

Previous wording

As part of our credit risk management strategy, we continue to manage the loan portfolio to identify problem loans and have placed additional emphasis on agricultural, commercial, and CRE relationships. We are working to resolve the remaining problem credits or move the non-performing credits out of the loan portfolio. At both March 31, 2026 and December 31, 2025, we had no real estate owned.

Current wording

As part of our credit risk management strategy, we continue to manage the loan portfolio to identify problem loans and have placed additional emphasis on CRE and commercial loan relationships. We are working to resolve the remaining problem credits or move the non-performing credits out of the loan portfolio. At both June 30, 2026 and December 31, 2025, we had no 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 experienced a decrease of $66.2 million, or 19.3% in total deposits during the first three months of 2026, to $1.3 billion at March 31, 2026. The decrease in deposits was primarily due to a decrease in brokered deposits, coupled with a seasonal decrease in our public fund deposit accounts.

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 experienced a decrease of $83.9 million, or 6.0% in total deposits during the first six months of 2026, to $1.3 billion at June 30, 2026. The decrease in deposits was primarily due to a decrease in brokered deposits, coupled with a seasonal decrease in our public fund deposit accounts.

Previous wording

Non-interest-bearing deposits at March 31, 2026 were $367.7 million, or 27.8% of deposits, compared to $364.7 million, or 26.3% of deposits, at December 31, 2025. Money market and checking deposit accounts were 44.6% of our deposit portfolio and totaled $589.4 million at March 31, 2026, compared to $651.0 million, or 46.9% of deposits, at December 31, 2025. Savings accounts increased to $154.6 million, or 11.7% of deposits, at March 31, 2026, from $151.4 million, or 10.9% of deposits, at December 31, 2025. Certificates of deposit totaled $210.9 million, or 15.9% of deposits, at March 31, 2026, compared to $221.8 million, or 16.0% of deposits, at December 31, 2025. The decrease in certificates of deposit was primarily related to lower brokered certificates of deposits, which decreased from $57.9 million at December 31, 2025 to $41.5 million at March 31, 2026.

Current wording

Non-interest-bearing deposits at June 30, 2026 were $380.5 million, or 29.2% of deposits, compared to $364.7 million, or 26.3% of deposits, at December 31, 2025. Money market and checking deposit accounts were 45.7% of our deposit portfolio and totaled $596.1 million at June 30, 2026, compared to $651.0 million, or 46.9% of deposits, at December 31, 2025. The decrease in money market and checking deposit accounts included a decline of $40.1 million in brokered deposits from $40.1 million at December 31, 2025 to a balance of $29,000 at June 30, 2026. Savings accounts were $151.0 million, or 11.6%, of deposits at June 30, 2026, compared to $151.4 million, or 10.9% of deposits, at December 31, 2025. Certificates of deposit totaled $177.4 million, or 13.6% of deposits, at June 30, 2026, compared to $221.8 million, or 16.0% of deposits, at December 31, 2025. The decrease in certificates of deposit was primarily related to lower brokered certificates of deposits, which decreased from $57.9 million at December 31, 2025 to $12.7 million at June 30, 2026.

Previous wording

Overdraft deposits consist of non-interest-bearing deposits, money market and checking deposit accounts with negative balances. These overdraft balances totaled $345,000 as of March 31, 2026 and $297,000 as of December 31, 2025 and were presented as loans on the balance sheet.

Current wording

Overdraft deposits consist of non-interest-bearing deposits, money market and checking deposit accounts with negative balances. These overdraft balances totaled $443,000 as of June 30, 2026 and $297,000 as of December 31, 2025 and were presented as loans on the balance sheet.

Previous wording

Total deposits include estimated uninsured deposits of $450.7 million and $490.9 million as of March 31, 2026 and December 31, 2025, respectively. This represented approximately 37.1% of our total deposits at March 31, 2026 and 35.3% of our deposits at December 31, 2025. Over 96.1% of the Company’s total deposits were considered core deposits at March 31, 2026. These deposit balances are from retail, commercial and public fund customers located in the markets where the Company has bank branch locations.

Current wording

Total deposits include estimated uninsured deposits of $462.3 million and $490.9 million as of June 30, 2026 and December 31, 2025, respectively. This represented approximately 35.4% of our total deposits at June 30, 2026 and 35.3% of our deposits at December 31, 2025. Over 98.6% of the Company’s total deposits were considered core deposits at June 30, 2026. These deposit balances are from retail, commercial and public fund customers located in the markets where the Company has bank branch locations.

Previous wording

Certificates of deposit at March 31, 2026 scheduled to mature in one year or less totaled $201.5 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 June 30, 2026 scheduled to mature in one year or less totaled $168.2 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

Total borrowings increased $57.3 million to $91.0 million at March 31, 2026, from $33.7 million at December 31, 2025. The increase in total borrowings was primarily due to an increase in FHLB line of credit borrowings driven by the reduction in higher-cost brokered deposits.

Current wording

Total borrowings increased $72.9 million to $106.7 million at June 30, 2026, from $33.7 million at December 31, 2025. The increase in total borrowings was primarily due to an increase in FHLB line of credit borrowings.

Previous wording

Cash Flows. During the three months ended March 31, 2026, our cash and cash equivalents increased by $10.9 million. Our operating activities provided net cash of $7.2 million during the first three months of 2026 primarily as a result of net earnings. Our investing activities provided net cash of $13.9 million during the first three months of 2026, primarily due to a decline in loans, coupled with maturities of investment securities. Financing activities used net cash of $10.2 million during the first three months of 2026, primarily as a result of a decrease in deposits, partial offset by an increase in borrowings.

Current wording

Cash Flows. During the six months ended June 30, 2026, our cash and cash equivalents increased by $5.3 million. Our operating activities provided net cash of $10.2 million during the first six months of 2026 primarily as a result of net earnings. Our investing activities provided net cash of $8.5 million during the first six months of 2026, primarily due to maturities of investment securities and a decrease in loans. Financing activities used net cash of $13.5 million during the first six months of 2026, primarily as a result of a decrease in deposit balances.

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 $376.9 million at March 31, 2026 and $372.4 million at December 31, 2025. 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 or holding higher balances of cash and cash equivalents.

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 $373.0 million at June 30, 2026 and $372.4 million at December 31, 2025. 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 or holding higher balances of cash and cash equivalents.

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 FHLB advances, a line of credit with the FHLB, other borrowings or through pledging or sales of investment securities. While the sale of available-for-sale investment securities would result in losses due to the current interest environment, pledging these securities as collateral would not result in a loss. At March 31, 2026, we had $65.7 million of outstanding borrowings under our line of credit with the FHLB. At March 31, 2026, we had collateral pledged to the FHLB that would allow us to borrow $227.0 million, subject to FHLB credit requirements and policies. At March 31, 2026, we had no borrowings through the Federal Reserve discount window, while our borrowing capacity with the Federal Reserve was $38.4 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 March 31, 2026. At March 31, 2026, we had subordinated debentures totaling $21.7 million and $2.3 million of repurchase agreements. At March 31, 2026, 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 March 31, 2026. The Company also has outstanding borrowings of $1.3 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 $10.0 million of borrowings was used to fund part of the acquisition of Freedom Bancshares, Inc.

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 FHLB advances, a line of credit with the FHLB, other borrowings or through pledging or sales of investment securities. While the sale of available-for-sale investment securities would result in losses due to the current interest environment, pledging these securities as collateral would not result in a loss. At June 30, 2026, we had $82.4 million of outstanding borrowings under our line of credit with the FHLB. At June 30, 2026, we had collateral pledged to the FHLB that would allow us to borrow $173.4 million, subject to FHLB credit requirements and policies. At June 30, 2026, we had no borrowings through the Federal Reserve discount window, while our borrowing capacity with the Federal Reserve was $37.2 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 June 30, 2026. At June 30, 2026, we had subordinated debentures totaling $21.7 million and $1.6 million of repurchase agreements. At June 30, 2026, 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 June 30, 2026. The Company also has outstanding borrowings of $1.0 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 $10.0 million of borrowings was used to fund part of the acquisition of Freedom Bancshares, Inc., which was completed in 2022.

Previous wording

At March 31, 2026, we had outstanding loan commitments, excluding standby letters of credit, of $206.1 million. 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 June 30, 2026, we had outstanding loan commitments, excluding standby letters of credit, of $195.0 million. 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

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 discussed above, banking organizations must maintain a capital conservation buffer of 2.5% that is added to certain regulatory minimum requirements for capital adequacy purposes in order to pay dividends and make other capital distributions. As described above, the Bank exceeded its minimum capital requirements under applicable guidelines as of March 31, 2026. The National Bank Act also 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 net earnings plus the adjusted retained earnings for the three preceding years. As of March 31, 2026, approximately $20.0 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 discussed above, banking organizations must maintain a capital conservation buffer of 2.5% that is added to certain regulatory minimum requirements for capital adequacy purposes in order to pay dividends and make other capital distributions. As described above, the Bank exceeded its minimum capital requirements under applicable guidelines as of June 30, 2026. The National Bank Act also 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 net earnings plus the adjusted retained earnings for the two preceding years. As of June 30, 2026, approximately $23.5 million was available to be paid as dividends to the Company by the Bank without prior regulatory approval.