LANDMARK BANCORP INC

Previous 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.

Current wording

In October 2026, we declared our 101 st 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 September 30, 2026.

Previous wording

Summary of Results. During the second quarter of 2026, we recorded net earnings of $5.4 million, which was an increase of $1.0 million, or 22.4%, from net earnings of $4.4 million in the second quarter of 2025. During the first six months of 2026, we recorded net earnings of $10.5 million, which was an increase of $1.4 million, or 14.9%, from $9.1 million in the first six months of 2025. The increase in net earnings during both periods was primarily related to an increase in net interest income which was driven by growth in interest income on loans due to increased average loan balances and lower interest expense due to lower short-term interest rates and lower borrowing balances.

Current wording

Summary of Results. During the third quarter of 2026, we recorded net earnings of $5.5 million, which was an increase of $544,000, or 11.0%, from net earnings of $4.9 million in the third quarter of 2025. During the first nine months of 2026, we recorded net earnings of $15.9 million, which was an increase of $1.9 million, or 13.5%, from $14.0 million in the first nine months of 2025. The increase in net earnings during both periods was primarily related to an increase in net interest income partially offset by an increase in non-interest expense.

Previous 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.

Current wording

Interest Income. Interest income of $20.9 million for the quarter ended September 30, 2026 represented an increase of $112,000, or 0.5%, compared to the same period of 2025. Interest income on investment securities increased $367,000, or 12.7%, to $3.3 million for the third 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 3.35% in the third quarter of 2025 to 3.80% in the third quarter of 2026. Partially offsetting the increase in yields was a decrease in the average balances of investment securities, which decreased from $362.7 million in the third quarter of 2025 to $355.1 million in the third quarter of 2026. Interest income on loans decreased $235,000, or 1.3%, to $17.5 million for the quarter ended September 30, 2026, compared to the same period of 2025, due to lower average balances, partially offset by higher yields. Average loan balances decreased $30.4 million from the third quarter of 2025. The yield on loans increased from 6.37% in the third quarter of 2025 to 6.46% in the third quarter of 2026.

Previous wording

Interest income of $40.5 million for the six months ended June 30, 2026 represented an increase of $1.1 million, or 2.7%, compared to the same period of 2025. Interest income on loans increased $826,000, or 2.5%, to $34.4 million for the six months ended June 30, 2026, compared to the same period of 2025 due to an increase in our average loan balances, which increased $26.7 million during the first six months of 2026 compared to the same period in 2025. The increase in average balances was partially offset by a decrease in yields on loans which decreased one basis point from 6.36% in the six months ended June 30, 2025 to 6.35% during the six months ended June 30, 2026. Interest income on investment securities increased $219,000, or 3.8%, to $6.0 million for the first six months of 2026, as compared to $5.8 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 3.32% in the first six months of 2025 to 3.61% in the first six months of 2026. Partially offsetting the higher yields was a decrease in the average balances of investment securities which decreased from $370.8 million in the first six months of 2025 to $350.3 million in the first six months of 2026.

Current wording

Interest income of $61.4 million for the nine months ended September 30, 2026 represented an increase of $1.2 million, or 1.9%, compared to the same period of 2025. Interest income on loans increased $591,000, or 1.2%, to $52.0 million for the nine months ended September 30, 2026, compared to the same period of 2025 due to an increase in average loan balances, which increased $7.4 million during the first nine months of 2026 compared to the same period in 2025. The increase in average balances was coupled with an increase in yields on loans which increased three basis points from 6.36% in the nine months ended September 30, 2025 to 6.39% during the nine months ended September 30, 2026. Interest income on investment securities increased $586,000, or 6.8%, to $9.2 million for the first nine months of 2026, as compared to $8.7 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 3.33% in the first nine months of 2025 to 3.67% in the first nine months of 2026. Partially offsetting the higher yields was a decrease in the average balances of investment securities which decreased from $368.1 million in the first nine months of 2025 to $351.9 million in the first nine months of 2026.

Previous 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.

Current wording

Interest Expense. Interest expense during the quarter ended September 30, 2026 decreased $1.4 million to $5.2 million, as compared to the same period of 2025. Interest expense on interest-bearing deposits decreased $1.1 million to $4.3 million for the quarter ended September 30, 2026, as compared to the same period of 2025. Our total cost of interest-bearing deposits decreased from 2.18% in the third quarter of 2025 to 1.81% in the third 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 $984.3 million in the third quarter of 2025 to $938.8 million in the third quarter of 2026. For the third quarter of 2026, interest expense on borrowings decreased $313,000 to $922,000, as compared to the same period of 2025, due to a decrease in our average borrowings and repurchase agreements which decreased $15.8 million from the third quarter of 2025 to the third quarter of 2026. Also contributing to lower interest expense was a decrease in rates, which decreased from 5.09% in the third quarter of 2025 to 4.54% in the same period of 2026.

Previous wording

Interest expense during the six months ended June 30, 2026 decreased $2.2 million to $10.4 million, as compared to the same period of 2025. Interest expense on interest-bearing deposits decreased $1.4 million to $9.0 million for the six months ended June 30, 2026, as compared to the same period of 2025. Our total cost of interest-bearing deposits decreased from 2.15% in the first six months of 2025 to 1.86% in the first six months of 2026, as a result of lower rates on our deposits. The impact from lower rates was coupled with a decrease in average interest-bearing deposit balances, which decreased from $972.5 million in the first six months of 2025 to $970.7 million in the first six months of 2026. For the first six months of 2026, interest expense on borrowings decreased $822,000 to $1.4 million, as compared to the same period of 2025, due to a decrease in our average borrowings and repurchase agreements which decreased $28.5 million from the first six months of 2025 to the first six months of 2026. Also contributing to lower interest expense was a decrease in rates, which decreased from 5.03% in the first six months of 2025 to 4.66% in the same period of 2026.

Current wording

Interest expense during the nine months ended September 30, 2026 decreased $3.7 million to $15.6 million, as compared to the same period of 2025. Interest expense on interest-bearing deposits decreased $2.5 million to $13.2 million for the nine months ended September 30, 2026, as compared to the same period of 2025. Our total cost of interest-bearing deposits decreased from 2.16% in the first nine months of 2025 to 1.85% in the first nine months of 2026, as a result of lower rates on our deposits. The impact from lower rates was coupled with a decrease in average interest-bearing deposit balances, which decreased from $976.5 million in the first nine months of 2025 to $960.0 million in the first nine months of 2026. For the first nine months of 2026, interest expense on borrowings decreased $1.1 million to $2.4 million, as compared to the same period of 2025, due to a decrease in our average borrowings and repurchase agreements which decreased $24.2 million from the first nine months of 2025 to the first nine months of 2026. Also contributing to lower interest expense was a decrease in rates, which decreased from 5.05% in the first nine months of 2025 to 4.62% in the same period of 2026.

Previous wording

Net Interest Income. Net interest income increased $1.4 million, or 10.2%, to $15.1 million for the second quarter of 2026, as compared to the second quarter of 2025. The increase in net interest income was primarily a result of a decrease in interest expense, coupled with an increase in interest income on investment securities. Compared to the same period last year, average interest-bearing liability balances declined $36.5 million coupled with lower rates decreased interest expense. Net interest margin, on a tax-equivalent basis, expanded 39 basis points from 3.83% in the second quarter of 2025, to 4.22% in the second quarter of 2026.

Current wording

Net Interest Income. Net interest income increased $1.5 million, or 11.0%, to $15.6 million for the third quarter of 2026, as compared to the third quarter of 2025. The increase in net interest income was primarily a result of a decrease in interest expense, coupled with an increase in interest income on investment securities. Compared to the same period last year, the decrease in interest expense was driven by lower average interest-bearing liability balances, which declined $61.4 million, coupled with lower rates. Net interest margin, on a tax-equivalent basis, expanded 52 basis points from 3.83% in the third quarter of 2025, to 4.35% in the third quarter of 2026.

Previous 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.

Current wording

Net interest income increased $4.8 million, or 11.9%, to $45.7 million for the nine months ended September 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 interest income on loans and investment securities. Compared to the same period last year, the decrease in interest expense was driven by lower average interest-bearing liability balances, which declined $40.7 million during the nine months ended September 30, 2026 compared to the same period in the prior year, coupled with lower rates. The increase in loan interest income was driven by growth in average loans, coupled with higher yields on loans. The accretion of purchase accounting adjustments increased net interest income by $585,000 in the first nine months of 2026 compared to an increase of $636,000 in the first nine 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, increased 46 basis points, from 3.81% in the first nine months of 2025, to 4.27% in the first nine months of 2026.

Previous wording

Provision for Credit Losses. During the second quarter of 2026, we recorded a $500,000 provision for credit losses, compared to a $1.0 million provision for credit losses recorded in the same period of 2025. The provision for credit losses recorded in the second quarter of 2026 was primarily due to lower reserves against individually evaluated loans on non-accrual as compared to the second quarter of 2025. We recorded net loan charge-offs of $452,000 during the second quarter of 2026, compared to net loan charge-offs of $40,000 during the second quarter of 2025.

Current wording

Provision for Credit Losses. During the third quarter of 2026, we recorded a $205,000 provision for credit losses, compared to an $850,000 provision for credit losses recorded in the same period of 2025. The provision for credit losses during the third quarter of 2026 consisted of a $250,000 provision to the allowance for credit losses on loans and a $45,000 credit to the allowance for unfunded loan commitments. The decrease in provision for credit losses recorded in the third quarter of 2026 as compared to the prior year was primarily due to a decrease in loans as compared to the third quarter of 2025. We recorded net loan charge-offs of $14,000 during the third quarter of 2026, compared to net loan charge-offs of $2.3 million during the third quarter of 2025. The decrease in net charge-offs was primarily related to the charge-off of a single commercial credit during the third quarter of 2025.

Previous 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.

Current wording

During the first nine months of 2026, we recorded a $1.3 million provision for credit losses compared to a $1.9 million provision for credit losses recorded in the first nine months of 2025. The provision for credit losses during the first nine months of 2026 consisted of a $1.3 million provision to the allowance for credit losses on loans and a $25,000 provision to the allowance for unfunded loan commitments. We recorded net loan charge-offs of $815,000 during the first nine months of 2026, compared to net loan charge-offs of $2.4 million during the first nine months of 2025. The decrease in net charge-offs was primarily related to the charge-off of a single commercial credit during the third quarter of 2025.

Previous wording

Non-interest Income. Total non-interest income was $4.1 million in the second quarter of 2026, an increase of $469,000, or 12.9%, from the same period in 2025. The increase in non-interest income during the second quarter of 2026 compared to the same period in the prior year was primarily due to an increase of $501,000 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.

Current wording

Non-interest Income. Total non-interest income was $3.6 million in the third quarter of 2026, a decrease of $466,000, or 11.5%, from the same period in 2025. The decrease in non-interest income during the third quarter of 2026 compared to the same period in the prior year was primarily due to a decrease of $300,000 in gains on sales of one-to-four family residential real estate loans due to a decrease in the volume of loans sold in the secondary market, coupled with a decrease of $133,000 in fees and service charges.

Previous 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.

Current wording

Total non-interest income was $11.5 million in the first nine months of 2026, an increase of $409,000, or 3.7%, from the same period in 2025. The increase in non-interest income during the first nine months of 2026 compared to the same period in the prior year was primarily due to an increase of $524,000 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, coupled with an increase of $122,000 in bank-owned life insurance income due to the accrual of death benefits during 2026. These increases were partially offset by a decrease of $183,000 in fees and service charges.

Previous wording

Non-interest Expense. Non-interest expense totaled $12.0 million for the second quarter of 2026, an increase of $1.0 million, or 9.1%, over the same quarter of 2025. The increase in non-interest expense in the second quarter of 2026 compared to the same period last year was mainly due to increases of $711,000 in professional fees and $335,000 in compensation and benefits 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.

Current wording

Non-interest Expense. Non-interest expense totaled $12.3 million for the third quarter of 2026, an increase of $1.0 million, or 8.9%, over the same quarter of 2025. The increase in non-interest expense in the third quarter of 2026 compared to the same period last year was primarily due to increases of $503,000 in compensation and benefits, $249,000 in other expense, and $192,000 in professional fees. The increase in compensation and benefits was attributable to strengthening our associate base and related benefits programs, which resulted in higher salary and benefits expense in the third quarter of 2026, as compared to the third quarter of 2025. The increase in other expense was primarily due to higher advertising costs and director compensation in the third quarter of 2026 compared to the third quarter of 2025. The increase in professional fees was attributable to an increase in consulting expenses for talent recruitment and development, and internal audit co-sourcing.

Previous 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.

Current wording

Non-interest expense totaled $36.1 million for the first nine months of 2026, an increase of $3.1 million, or 9.5%, over the same period of 2025. The increase in non-interest expense in the first nine months of 2026 compared to the same period in the prior year was mainly due to increases of $1.0 million in compensation and benefits, $992,000 in other expense, $922,000 in professional fees and $182,000 in occupancy and equipment expense. The increase in compensation and benefits was attributable to strengthening our associate base and related benefits programs, which resulted in higher salary 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 during 2026 as compared to the prior year. The increase in equipment and occupancy expense was driven by expenses incurred to upgrade our core branch operation systems during the first nine months of 2026 as compared to the same period in the prior year.

Previous 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.

Current wording

Income Tax Expense. During the third quarter of 2026, we recorded income tax expense of $1.3 million, compared to income tax expense of $1.1 million during the same period of 2025. Our effective tax rate increased from 18.7% in the third quarter of 2025 to 19.3% in the third 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

During the first six months of 2026, we recorded income tax expense of $2.6 million, compared to income tax expense of $2.0 million during the same period of 2025. Our effective tax rate increased from 17.7% in the first half of 2025 to 19.8% in the first half of 2026. The increase in the effective tax rate was due to higher earnings before taxes while tax exempt income decreased slightly.

Current wording

During the first nine months of 2026, we recorded income tax expense of $3.9 million, compared to income tax expense of $3.1 million during the same period of 2025. Our effective tax rate increased from 18.0% in the first nine months of 2025 to 19.6% in the first nine months 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 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.

Current wording

***Financial Condition.***Economic conditions in the United States remained sluggish during the first nine 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, the Federal Reserve increased the federal funds rate 25 basis points during September 2026, and 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 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.

Current wording

The allowance for credit losses is established through a provision for credit losses based on our economic projections. At September 30, 2026, our allowance for credit losses on loans totaled $12.9 million, or 1.19% 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 a decrease in gross loans outstanding, coupled with an increase in loans on non-accrual as of September 30, 2026. The balance of our allowance for credit losses reflects current and projected economic conditions and other qualitative factors.

Previous 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.

Current wording

As of September 30, 2026 and December 31, 2025, approximately $32.7 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 September 30, 2026 and December 31, 2025, respectively.

Previous 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.

Current wording

Loans past due 30-89 days and still accruing interest totaled $8.3 million, or 0.77% of gross loans, at September 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 real estate loan portfolio. At September 30, 2026, $12.5 million in loans were on non-accrual status, or 1.16% 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 September 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 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.

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 September 30, 2026, there was $441,000 in real estate owned compared to none at December 31, 2025. The increase in real estate owned as of September 30, 2026 was due to a property coming into the portfolio during the third quarter of 2026.

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 $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.

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 $142.9 million, or 10.3%, in total deposits during the first nine months of 2026, to $1.2 billion at September 30, 2026. The decrease in total 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 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.

Current wording

Non-interest-bearing deposits at September 30, 2026 were $364.7 million, or 29.3% 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 $569.0 million at September 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 $32,000 at September 30, 2026. Savings accounts were $145.3 million, or 11.7% of deposits, at September 30, 2026, compared to $151.4 million, or 10.9% of deposits, at December 31, 2025. Certificates of deposit totaled $167.0 million, or 13.4% of deposits, at September 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 $11.4 million at September 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 $443,000 as of June 30, 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 $329,000 as of September 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 $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.

Current wording

Total deposits include estimated uninsured deposits of $415.7 million and $490.9 million as of September 30, 2026 and December 31, 2025, respectively. This represented approximately 33.4% of our total deposits at September 30, 2026 and 35.3% of our deposits at December 31, 2025. Over 98.8% of the Company’s total deposits were considered core deposits at September 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 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.

Current wording

Certificates of deposit at September 30, 2026 scheduled to mature in one year or less totaled $158.3 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 $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.

Current wording

Total borrowings increased $122.4 million to $156.1 million at September 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 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.

Current wording

Cash Flows. During the nine months ended September 30, 2026, our cash and cash equivalents increased by $10.7 million. Our operating activities provided net cash of $19.9 million during the first nine months of 2026 primarily as a result of net earnings. Our investing activities provided net cash of $15.1 million during the first nine months of 2026, primarily due to a decrease in loans, offset by purchases of investment securities. Financing activities used net cash of $24.3 million during the first nine months of 2026, primarily as a result of a decrease in deposit balances, partially offset by an increase in borrowings with the FHLB.

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 $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.

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 $378.6 million at September 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 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.

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 September 30, 2026, we had $132.7 million of outstanding borrowings under our line of credit with the FHLB. At September 30, 2026, we had collateral pledged to the FHLB that would allow us to borrow $159.9 million, subject to FHLB credit requirements and policies. At September 30, 2026, we had no borrowings through the Federal Reserve discount window, while our borrowing capacity with the Federal Reserve was $33.7 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 September 30, 2026. At September 30, 2026, we had subordinated debentures totaling $21.7 million and $1.1 million of repurchase agreements. At September 30, 2026, the Company had no borrowings against a $7.5 million line of credit from an unrelated financial institution maturing on November 1, 2027, 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 September 30, 2026. The Company also has outstanding borrowings of $669,000 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

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 June 30, 2026.

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 $1.9 million at September 30, 2026.

Previous 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.

Current wording

At September 30, 2026, we had outstanding loan commitments, excluding standby letters of credit, of $195.1 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.

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 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.

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 September 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 September 30, 2026, approximately $27.2 million was available to be paid as dividends to the Company by the Bank without prior regulatory approval.