QCR HOLDINGS INC

In the second quarter of 2025, the Company incurred income tax expense of $1.6 million, compared to income tax expense of $2.6 million in the same period of the prior year. During the first six months of 2025, the Company incurred income tax expense of $1.9 million, compared to income tax expense of $3.7 million in the first six months of 2024. The effective tax rate for the first six months of 2025 was exceptionally low at 3%, down from 6% in the first six months of 2024. The decline was primarily due to a combination of the tax benefits from equity compensation in the first six months of 2025, new state tax credit investments, and lower pre-tax income from lower capital markets revenue. Given a more normalized mix of revenue, the Company expects its effective tax rate to increase in the second half of 2025.

Refer to the reconciliation of the expected income tax rate to the effective tax rate that is included in Note 6 to the Consolidated Financial Statements for additional detail.