ATLO 10-K & 10-Q changes, risk factors and insider trading

In particular, the national economy iscontinues facingto face challenges due to inflationary pressures that beganbegin building during late 2021 andand, hasalthough improved, have persisted through 2024,2025, resulting in significantcontinuing upward pressure on consumer and wholesale prices. In response, the FOMC has initiated a series of increases in the short-term federal funds interest raterate, beginning in 2022 and continuing through 2023, in an effort to dampen economic activity and bring the rate of inflation back to the FOMC’s target range of two to three percent. TheseAlthough the FOMC began reducing the federal funds rate increasesin havelate 2024 and during 2025, interest rates continue to remain at relatively high levels on a historic basis, as the FOMC has now paused its reductions and adopted a “data-driven” approach under which future cuts will be dependent on favorable data regarding inflation and labor market conditions. The continuation of elevated interest rates has the potential to overly reduce economic activity andand, potentially, tip the domestic economy into a recessionary period of slower or negative growth. As noted above, a period of depressed economic activity could adversely affect our business, financial condition and results of operationoperations by, among other things, increasing the likelihood of borrower defaults on loan obligations, reducing collateral values and weakening the demand for the Banks’ loan and deposit services.products.

HigherContinuing inflationinflationary pressures may affect the Company’s interest rates, credit loss expenses and general operating expenses.

Consumer inflation,inflation as measured by the Consumer Price Index for All Urban Consumers (“CPI”) has increased 2.9%2.7% and 3.4%2.9% for the years ended December 31, 20242025 and 2023,2024, respectively. ElevatedAlthough inflationary pressures in the economy have now moderated from the higher rates of inflation experienced during 2021 through 2023, elevated levels of inflation can create upward pressure on the cost of hiring, training,training and retaining employees, other general operating expenseexpenses and interest rates. OurIf higher rates of inflation persist, our challenge will be keeping wages competitive and maintaining general operating expenses at their current levels, while balancingalso a potential decrease inmanaging our net interest income due to the greater sensitivity to the repricing of our interest-bearing liabilities than our interest-earning assets in the short-term. Our credit loss expensesexpense which may be negatively impacted by our borrowers'customers’ ability to service their debt if inflation is prolonged.obligations.

A significant portion of our loan portfolio consists of loans to borrowers who are directly or indirectly affected by the health of the Iowa agricultural economy, which has recently been under stress due to low commodity and livestock prices andprices, higher input costs caused by inflation.inflation and potential losses of foreign markets due to disruptions in trade relationships. These conditions, together with other risks to which our agricultural borrowers are subject, including poor weather conditions, changes in governmental support programs, tariffs and uncertainty regarding governmental mandates affecting ethanol production, could result in reduced cash flows and profit margins, negatively affecting these borrowers and making it more difficult for them to repay their loan obligations to us. Moreover, uncertainty as to the status of tariffs on products that our agricultural borrowers export to foreign markets could result in further volatility and deterioration of the price of agricultural products, providing further challenges and risk to our portfolio of agricultural loans. A general decline in the agricultural economy could also negatively affect us by reducing the value of agricultural real estate which secures some of our agricultural loans, creating the potential for greater losses if these borrowers are unable to repay their loans and we are forced to rely on this collateral. Moreover, a general decline in the agricultural economy could also negatively impact some of our commercial borrowers whose businesses are directly or indirectly dependent on the health of the agricultural economy. All of these risks, which are beyond our control, could produce losses in our loan portfolio and adversely affect our financial condition or results of operations.

The Company reported net income of $19.0 million for the year ended December 31, 2025 compared to $10.2 million for the year ended December 31, 2024 compared to $10.8 million for the year ended December 31, 2023.2024. This represents aan decreaseincrease in net income of 5.5%86.2% when comparing 20242025 with 2023.2024. The decreaseincrease in earnings in 20242025 from 20232024 is primarily the result of normal increases in salaries and benefits and one-time consultant fees relateddue to negotiating long-term vendor contracts, offset in part by an increase in wealthnet managementinterest income. Net interest income increased due to higher yields on loans and investments, combined with a lower cost of funds driven by declining market rates and reduced borrowings. Earnings per share for 20242025 were $1.14$2.14 compared to $1.20$1.14 in 2023.2024. All six Banks demonstrated profitable operations during 20242025 and 2023.2024.

The Company’s return on average equity for 20242025 was 6.02%9.95% compared to 7.05%6.02% in 2023.2024. The return on average assets for 20242025 was 0.48%0.90% compared to 0.51%0.48% in 2023.2024. The decreaseincrease in return on average equity and return on average assets when comparing 20242025 to 20232024 was primarily a result of aan reductionincrease in earnings.

The current economic environment, characterized by elevated short-term interest rates in response to inflationary pressures in the economy and the potential for a period of slower or negative economic growth resulting from efforts to dampen economic activity, combined with uncertainties related to changes in U.S. trade policies, has heightened the level of challenges, risks and uncertainties facing our business, including the following:

The rate and volume analysis is used to determine how much of the change in interest income or expense is the result of a change in volume or a change in interest rate. For example, real estate loan interest income increased $5.6$2.7 million in 20242025 compared to 2023.2024. IncreasedDecreased volume of real estate loans increaseddecreased interest income in 20242025 by $1.1$507 millionthousand and higher interest rates increased interest income in 20242025 by $4.5$3.2 million.

The high level of competition in the local markets may continue to put downward pressure on the net interest margin of the Company. Currently, the Company’s primary market in Ames, Iowa, has fifteen banks, five credit unions and several other financial investment companies. Multiple banks are also located in the Company’s other market areas in central, north-central and south-central Iowa creating similarly competitive environments.

The credit loss expense reflects management's judgment of the expense to be recognized in order to maintain an adequate allowance for credit losses. The Company’s credit loss expense for the year ended December 31, 20242025 was $592$1.0 thousandmillion compared to a credit loss expense of $789$592 thousand for the previous year. Net loan charge-offs totaled $453$357 thousand for the year ended December 31, 20242025 compared to net loan charge-offs of $213$453 thousand for the previous year. The credit loss expense in 2025 was primarily due to an increase in specific reserves in the commercial real estate and operating loan portfolios. The credit loss expense in 2024 was primarily due to growth in the loan portfolio and charge-offs in the commercial loan portfolio. The credit loss benefit in 2023 was primarily due to growth in the loan portfolio and charge-offs in the agriculture loan portfolio. Loans classified as substandard and substandard-impaired increased $18.0$7.2 million to $49.7$56.8 million in 20242025 primarily due to downgradesweakening in the commercial real estatemulti-family and commercial operatingagricultural loan portfolios. Some commercialmulti-family real estate loans are experiencing a decline in occupancy raterate, andwhile collateralthe valuation.weakening in the agricultural loan portfolio is primarily due to one agricultural loan relationship. Refer to the “Asset Quality Review and Credit Risk Management” discussion for additional details with regard to credit loss expense.

Noninterest income during the years ended 20242025 and 20232024 totaled $9.8$11.2 million and $9.2$9.8 million, respectively. The increase in noninterest income in 20242025 compared to 20232024 is primarily due to an increase in wealth management income due to growth in assets under management and newan accountincrease relationships.in estate and trust fees.

Noninterest expense during the years ended 20242025 and 20232024 totaled $42.0$41.9 million and $40.2$42.0 million, respectively. The increasedecrease in noninterest expense is primarily due to normal increases in salaries and benefits and $799 thousand of consultant fees for certain contract negotiations includedcompleted in professional2024 feesand cost savings reflected in 2024.2025. The cost savings were offset by an increase in salaries and benefits primarily due to normal raises and anticipated bonus payouts as Company performance thresholds are met. The percentage of noninterest expense to average assets was 1.97%1.99% in 2024,2025, compared to 1.88%1.97% during 2023.2024.

The provision for income taxes for 20242025 and 20232024 was $2.0$4.8 million and $2.1$2.0 million, respectively. This amount represents an effective tax rate of 17%20% and 16%,17%, respectively. The Company's federal income tax rate was 21% for the years ended December 31, 20242025 and 2023.2024. The decreaseincrease in income tax expense andwas due to higher taxable income. The lower than expected tax rate in 20242025 and 20232024 was primarily due to a higher proportion of tax-exempt interest income and New Markets Tax Credits to pretax income.Credits.

Total assets decreasedincreased to $2.13$2.134 billion in 20242025 compared to $2.16$2.133 billion in 2023,2024, or 1.0%.0.02%. The decreaseincrease was primarily due to aan increase in interest-bearing deposits in financial institutions, decrease in unrealized losses on securities available-for-sale and partially offset by ana increasedecrease in loans and interest-bearing deposits in financial institutions.receivable.

Net loans as of December 31, 20242025 totaled $1.30$1.28 billion, ana increasedecrease of 2.0%1.8% from the $1.28$1.30 billion as of December 31, 2023.2024. Loans increaseddecreased primarily due to increasesa decline in the 1commercial toreal 4estate loan portfolio and partially offset by an increase in the 1-4 family residential and multi-family real estate and agricultural operating loan portfolios. Loans are the primary contributor to the Company’s revenues and cash flows. The average yield on loans was 299293 and 254299 basis points higher in 20242025 and 2023,2024, respectively, in comparison to the average tax-equivalent investment portfolio yields.

Total investments as of December 31, 20242025 were $648.5$656.0 million, aan decreaseincrease of $87.9$7.4 million or 11.9%1.1% from the prior year end. As of December 31, 20242025 and 2023,2024, the investment portfolio comprised 30%31% and 34%30% of total assets, respectively. The decreaseincrease in investments during 20242025 is primarily due to maturities in excess of purchases. The decrease is offset in part by lower unrealized losses in the investment portfolio.

As of December 31, 20242025 and 2023,2024, the revenue bonds in the Company’s investment securities portfolios were issued by government municipalities and agencies to fund public services such as community school facilities, college and university dormitory facilities and water utilities. The revenue bonds are to be paid from 15 and 16 revenue sources in 20242025 and 2023, respectively.2024. The revenue sources that represent 5% or more, individually, as a percent of the total revenue bonds are summarized in the following table (in thousands):

Total deposits were $1.85$1.855 billion and $1.81$1.847 billion as of December 31, 20242025 and 2023,2024, respectively. The increase of $34.9$8.0 million between the periods can be primarily attributed to increases in timecommercial depositsdemand and publicinterest-bearing funds. A portion of the increase in time deposits and public funds was offset by a decline in noninterest-bearing checking, savings and money marketchecking accounts. Balances fluctuate as customer liquidity needs vary and could be impacted by prevailing market interest rates, competition, and economic conditions. Approximately 14% of deposits are tied to external indexes as of December 31, 2024.2025. Deposit interest expense related to these deposits can be more volatile than our other deposit products in a changing interest rate environment.

The following table shows the amounts and remaining maturities of the portion of estimated time deposits in excess of FIDCFDIC Insurance Limits as of December 31, 20242025 and 20232024 (in thousands).

Borrowed funds that may be utilized by the Company are comprised of the Federal Reserve Bank Term Funding Program (BTFP), FHLB advances, federal funds purchased and securities sold under agreements to repurchase (repurchase agreements). Borrowed funds are an alternative funding source to deposits and can be used to fund the Company’s assets and unforeseen liquidity needs. The BTFP offers loans of up to one year in length to banks pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. The BTFP allows for borrowing from the Federal Reserve Bank up to the par value of the pledged collateral. FHLB advances are loans that can mature daily or have longer maturities for fixed or floating rates of interest. Federal funds purchased are borrowings from other banks that mature daily. Repurchase agreements are similar to deposits as they are funds lent by various Bank customers; however, investment securities are pledged to secure such borrowings. The Company’s repurchase agreements reprice daily.

The Company’s credit risk is centered in the loan portfolio, which on December 31, 2024,2025, totaled $1.30$1.28 billion as compared to $1.28$1.30 billion as of December 31, 2023,2024, ana increasedecrease of 2.0%.1.8%. Net loans comprise approximately 61%60% of total assets as of the end of 2024.2025. The objective in managing loan portfolio risk is to reduce the risk of loss resulting from a customer’s failure to perform according to the terms of a transaction and to quantify and manage credit risk on a portfolio basis. As the following chart indicates, the Company’s non-performing assets have increased by 11.4%1.0% from December 31, 20232024 and total $15.5$15.7 million as of December 31, 2024.2025. The Company’s level of non-performing loans as a percentage of loans of 1.17%1.19% as of December 31, 2024,2025, is higher than the Iowa State Average peer group of FDIC insured institutions as of December 31, 2024,2025, of 0.47%.0.53%. Management believes that the allowance for credit losses as of December 31, 20242025 remains adequate based on its analysis of the non-performing assets and the portfolio as a whole.

Non-performing loans totaled $15.5$15.46 million as of December 31, 20242025 and were $1.6$47 millionthousand higherlower than the non-performing loans as of December 31, 2023.2024. The increasedecrease in non-performing loans was due primarily to oneportfolio resolution activities, such as charge-offs, loan relationshiprestructurings, and return to accrual status following sustained improvement in the commercial real estate and commercial operating portfolios.performance. The Company considers non-performing loans to generally include nonaccrual loans, loans past due 90 days or more and still accruing and other loans that may or may not meet the former non-performing criteria.

The allowance for credit losses related to these non-performing loans was approximately $98$1.1 thousandmillion and $118$98 thousand at December 31, 20242025 and 2023,2024, respectively. The average balances of non-performing loans for the years ended December 31, 20242025 and 20232024 were $14.4$16.9 million and $13.2$14.4 million, respectively. For the years ended December 31, 20242025 and 2023,2024, interest income, which would have been recorded under the original terms of nonaccrual loans, was approximately $963$1.9 thousandmillion and $768$963 thousand, respectively. There were $736$328 thousand and $109$736 thousand of loans greater than 90 days past due and still accruing interest as of December 31, 20242025 and 2023,2024, respectively.

Net cash provided by operating activities for the years ended December 31, 20242025 and 20232024 totaled $14.3$21.3 million and $19.2$14.3 million, respectively. The change in net cash provided by operating activities in 20242025 was primarily due to paymentshigher of accruednet interest on borrowings.income.

Net cash provided by investing activities for the years ended December 31, 20242025 and 20232024 was $72.0$44.2 million and $19.1$72.0 million, respectively. The change in net cash provided by investing activities in 20242025 was primarily due to maturitiespurchases of securities available-for-sale andavailable-for-sale, partially offset by growtha decrease in theloans loanand portfolio.maturities of securities available-for-sale.

Net cash (used in) financing activities for the years ended December 31, 20242025 and 20232024 totaled ($40.2$40.0) million and ($11.1$40.2) million, respectively. The change in net cash (used in) financing activities in 20242025 was due primarily due to fewera proceedsdecrease fromin net payments on other borrowings between periodsperiods, anda partially offset by ansmaller increase in deposits.deposits between periods, and a larger decrease in securities sold under agreements to repurchase.

The Company has unconsolidated cash and interest-bearing deposits totaling $992$3.0 thousandmillion that is available as of December 31, 20242025 to provide additional liquidity to the Banks.

The Company’s total stockholders’ equity increased to $207.9 million at December 31, 2025, from $174.7 million at December 31, 2024, from $165.8 million at December 31, 2023.2024. As of December 31, 20242025 and 2023,2024, stockholders’ equity as a percentage of total assets was 8.2%9.7% and 7.7%,8.2%, respectively. The increase in stockholders’ equity was primarily the result of a decrease in unrealized losses on the investment portfolio and the retention of net income in excess of dividends. The capital levels of the Company currently exceed applicable regulatory guidelines to be considered “well capitalized” as of December 31, 2024.2025. Net unrealized losses on the investment portfolio are excluded from regulatory capital.capital for the purposes of calculating required capital ratios per regulatory standards.

From time to time, the Company’s board of directors has authorized stock repurchase plans. Stock repurchase plans allow the Company to proactively manage its capital position and return excess capital to shareholders. A total of 43,05791,890 shares of common stock were repurchased under stock repurchase plans in 20242025 and no43,057 shares of common stock were repurchased in 2023.2024. Also see Part II, Item 5 - Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities, included elsewhere in this Annual Report.

The Company does not engage in any material business activities apart from its ownership of the Banks. Products and services offered by the Banks are for commercial and consumer purposes including loans, deposits and wealth management services. Wealth management services includes financial planning and managing trust, agencies, estates and investment brokerage accounts. The Company employs twenty-eighttwenty-nine individuals to assist the Banks with its financial reporting, human resources, audit, compliance, marketing, technology systems, training, real estate valuation services and the coordination of management activities, in addition to 231232 full-time equivalent individuals employed by the Banks.

The Company had net income of $6.0$5.9 million, or $0.67 per share, for the three months ended MarchJune 31,30, 2026, compared to net income of $3.4$4.5 million, or $0.39$0.51 per share, for the three months ended MarchJune 31,30, 2025. The Company had net income of $11.9 million, or $1.34 per share, for the six months ended June 30, 2026, compared to net income of $8.0 million, or $0.89 per share, for the six months ended June 30, 2025. The increase in earnings is primarily due to an increase in net interest income and decrease in credit loss expense.income. Net interest income increased due to higher yields and average balances on investments, combined with a lower cost of funds driven by declining market rates and reduced borrowings. The decrease in credit loss expense was primarily due to a decline in loan balances in the first quarter of 2026 and a specific reserve placed on a commercial loan relationship in 2025.

Income Statement Review for the Three Months ended MarchJune 31,30, 2026 and 2025

The following highlights a comparative discussion of the major components of net income and their impact for the three months ended MarchJune 31,30, 2026 and 2025:

For the three months ended MarchJune 31,30, 2026 and 2025, the Company's net interest margin adjusted for tax exempt income was 3.01%3.18% and 2.53%,2.65%, respectively. Net interest income, prior to the adjustment for tax-exempt income, for the three months ended MarchJune 31,30, 2026 totaled $15.4$16.4 million compared to $12.9$13.5 million for the three months ended MarchJune 31,30, 2025.

For the three months ended MarchJune 31,30, 2026, interest income increased $1.1$1.8 million, or 5.2%,8.4%, when compared to the same period in 2025. The increase is primarily due to higher yield and average balances on the investment portfolio.

Interest expense decreased $1.4$1.1 million, or 17.3%,14.0%, for the three months ended MarchJune 31,30, 2026 when compared to the same period in 2025. The lower interest expense for the period is primarily due to a decrease in market rates and reduced borrowings.

A credit loss benefitexpense of ($347)$208 thousand was recognized for the three months ended MarchJune 31,30, 2026 as compared to a credit loss expense of $962$108 thousand for the three months ended MarchJune 31,30, 2025. Net loan recoveriescharge-offs for the three months ended MarchJune 31,30, 2026 totaled $32$255 thousand compared to net loan charge-offs totaledof $48$1.1 thousandmillion for the three months ended MarchJune 31,30, 2025. The credit loss benefit in 2026 was primarily due to a decline in loan balances. The credit loss expense in 2026 and 2025 was primarily due to an increase in specific reservescharge-offs in the commercial loan portfolio.

Noninterest income for the three months ended MarchJune 31,30, 2026 totaled $2.8$2.7 million compared to $2.5$2.6 million for the three months ended MarchJune 31,30, 2025, an increase of 9.3%. The increase is primarily due to an increase in wealth management income due to growth in assets under management and an increase in estate and trust fees.2.3%.

Noninterest expense for the three months ended MarchJune 31,30, 2026 totaled $10.9$11.2 million compared to $10.3$10.4 million recorded for the three months ended MarchJune 31,30, 2025, an increase of 5.9%.7.8%. The increase reflects higher professional fees, salaries and benefits. The increase in professional fees was primarily due to $300 thousand of consultant fees for certain contract negotiations during the three months ended MarchJune 31,30, 2026. The consultant fees are expected to continue throughout 2026 as thenegotiations negotiation isare in process. The increase in salaries and benefits was driven by anticipated bonus payouts as Company performance thresholds are met.met, in addition to normal increases in salaries and benefits. The efficiency ratio was 59.69%58.52% for the firstsecond quarter of 2026 as compared to 66.38%64.34% in the firstsecond quarter of 2025. The efficiency ratio continues to improve as net interest margin increases.

Income tax expense for the three months ended MarchJune 31,30, 2026 totaled $1.7$1.8 million compared to $794$1.1 thousandmillion recorded for the three months ended MarchJune 31,30, 2025. The effective tax rate was 22%23% and 19%20% for the three months ended MarchJune 31,30, 2026 and 2025.2025, respectively. The increase in income tax expense and effective tax rate was primarily due to higher net income and lower New Markets Tax Credits. The final year of tax credits was 2025 for a majority of the New Markets Tax Credit projects.

As of MarchJune 31,30, 2026, total assets were $2.1$2.12 billion, a $9.0$10.6 million increasedecrease compared to December 31, 2025. This increasedecrease in assets is primarily due to an increase in the investment portfolio and partially offset by a decrease in the loan portfolio.portfolio and interest-bearing deposits in financial institutions, partially offset by an increase in securities available-for-sale.

The investment portfolio totaled $688.8$695 million as of MarchJune 31,30, 2026, an increase of $32.8$39 million from the December 31, 2025 balance of $656.0$656 million. The increase in securities available-for-sale is primarily due to purchases in excess of maturities.

On a quarterly basis, the investment portfolio is reviewed for credit losses. As of MarchJune 31,30, 2026, gross unrealized losses of $30.1$27.9 million, are due to the interest rate environment and are not considered credit-related. Certain bonds in the investment portfolio may incur credit losses and could negatively affect the Company’s net income. As a result of the Company’s favorable liquidity position, the Company does not have the intent to sell securities with an unrealized loss at the present time. In addition, management believes it is more likely than not that the Company will hold these securities until recovery of their fair value to cost basis and expects full principal and interest to be collected. Therefore, the Company does not have an allowance for credit losses on these investments as of MarchJune 31,30, 2026.

The loan portfolio, net of the allowance for credit losses, totaled $1.26$1.25 billion and $1.28 billion as of MarchJune 31,30, 2026 and December 31, 2025, respectively. The decrease is primarily due to payoffs in the commercial real estate and agricultural loan portfolios.

Deposits totaled $1.87$1.853 billion and $1.85$1.855 billion as of MarchJune 31,30, 2026 and December 31, 2025, respectively. The increasedecrease in deposits is primarily due to a decrease in retail and commercial interest-bearing deposits, partially offset by an increase in public funds. Securities sold under agreements to repurchase decreased to $36.7$30.9 million as of MarchJune 31,30, 2026 compared to $38.8 million as of December 31, 2025. Securities sold under agreements to repurchase and deposit balances fluctuate as customers’ liquidity needs vary and could be impacted by prevailing market interest rates, competition, and economic conditions. Approximately 15%14% of deposits are tied to external indexes as of MarchJune 31,30, 2026. Deposit interest expense related to these deposits can be more volatile than other deposit products in a changing interest rate environment.

The Company’s credit risk is historically centered in the loan portfolio, which totaled $1.26$1.25 billion and $1.28 billion as of MarchJune 31,30, 2026 and December 31, 2025, respectively. Net loans comprise 59% of total assets as of MarchJune 31,30, 2026. The objective in managing loan portfolio risk is to reduce the risk of loss resulting from a customer’s failure to perform according to the terms of an agreement and to quantify and manage credit risk on a portfolio basis. The Company’s level of problem loans (consisting of nonaccrual loans and loans past due 90 days or more) as a percentage of total loans was 1.57%1.55% at MarchJune 31,30, 2026, as compared to 1.19% at December 31, 2025. The Company’s level of problem loans as a percentage of total loans at MarchJune 31,30, 2026 of 1.57%1.55% is higher as compared to the Iowa State Average peer group of FDIC insured institutions as of DecemberMarch 31, 2025,2026, of 0.52%,0.60%, most recent available.

Substandard-Impaired loans totaled $19.6$19.1 million as of MarchJune 31,30, 2026 and have increased $5.0$4.5 million as compared to the substandard-impaired loans of $14.6 million as of December 31, 2025. The increase is primarily due to one relationship in the agricultural loan portfolio.

Loans past due 90 days or more that are still accruing interest are reviewed no less frequently than quarterly to determine if there continues to be a strong reason that the credit should not be placed on nonaccrual. As of MarchJune 31,30, 2026, nonaccrual loans totaled $20.1$19.6 million and $35 thousand of loans past due 90 days and still accruing. This compares to nonaccrual loans of $15.1 million and $328 thousand of loans past due 90 days and still accruing as of December 31, 2025. There was $212 thousand ofno other real estate owned as of MarchJune 31,30, 2026 and $204 thousand of other real estate owned as of December 31, 2025.

Loans past due 30 days or more totaled $19.4$22.5 million as of MarchJune 31,30, 2026, compared to $7.3 million as of December 31, 2025. The increase is primarily related to twoone agricultural operating loan relationships classified as substandard-impaired and one constructioncommercial real estate loan relationship that matured and is being restructured.

The watch and special mention loans classified as agricultural real estate and operating totaled $36.2$38.2 million as of MarchJune 31,30, 2026 as compared to $30.7 million as of December 31, 2025. The substandard and substandard-impaired loans in these categories totaled $11.1$9.4 million and $9.8 million as of MarchJune 31,30, 2026 and December 31, 2025, respectively. The increasechange is primarily due to variable yields, weather impacts and commodity prices affecting agricultural loans.

The watch and special mention loans classified as commercial real estate totaled $35.0$34.3 million as of MarchJune 31,30, 2026 as compared to $39.0 million as of December 31, 2025. The substandard and substandard-impaired commercial real estate loans totaled $21.0$21.7 million and $26.8 million as of MarchJune 31,30, 2026 and December 31, 2025, respectively. The decrease is primarily due to payoffs of substandard loans.

The allowance for credit losses as a percentage of outstanding loans was 1.36% as of MarchJune 31,30, 2026 and December 31, 2025.The allowance for credit losses totaled $17.4$17.3 million and $17.7 million as of MarchJune 31,30, 2026 and December 31, 2025, respectively. The decrease in the allowance for credit losses is primarily due to a decrease in loan balances.

Commercial real estate and multi-family real estate represent approximately 40%39% of the loan portfolio as of MarchJune 31,30, 2026. The following is an additional breakdown of the Company's commercial real estate and multi-family real estate portfolios (in thousands):

As of MarchJune 31,30, 2026, the level of liquidity and capital resources of the Company remain at a satisfactory level. Management believes that the Company’s liquidity sources will be sufficient to support its existing operations for the foreseeable future.

Liquid assets of cash on hand, balances due from other banks and interest-bearing deposits in financial institutions as of MarchJune 31,30, 2026 and December 31, 2025 totaled $118.2$107.2 million and $126.8 million, respectively, and management believes these sources provide an adequate level of liquidity given current economic conditions.

Other sources of liquidity available to the Banks as of MarchJune 31,30, 2026 include outstanding lines of credit with the FHLB of Des Moines, Iowa of $297.4$304.1 million, with $16.5 million of outstanding FHLB advances. Federal funds borrowing capacity at correspondent banks was $106.7$106.9 million, with no outstanding federal fund purchase balances as of MarchJune 31,30, 2026. The Company had securities sold under agreements to repurchase totaling $36.7$30.9 million as of MarchJune 31,30, 2026.

Total investments as of MarchJune 31,30, 2026 were $688.8$695 million compared to $656.0$656 million as of December 31, 2025. These investments provide the Company with liquidity since all of the investments are classified as available-for-sale as of MarchJune 31,30, 2026. The Company has $384.7$401.6 million of unpledged securities available-for-sale and interest-bearing deposits as of MarchJune 31,30, 2026. The investment portfolio serves an important role in the overall context of balance sheet management in terms of balancing capital utilization and liquidity. The decision to purchase or sell securities is based upon the current assessment of economic and financial conditions, including the interest rate environment, liquidity and credit considerations. The portfolio’s scheduled maturities and payments represent a significant source of liquidity.

Net cash provided by operating activities for the threesix months ended MarchJune 31,30, 2026 totaled $8.4$11.8 million compared to $7.1$11.1 million for the threesix months ended MarchJune 31,30, 2025. The increase of $1.3$666 millionthousand in cash provided by operating activities was primarily due to higher net interest income.

Net cash provided by (used in) investing activities for the threesix months ended MarchJune 31,30, 2026 was ($22.3$12.2) million compared to $15.5$43.4 million for the threesix months ended MarchJune 31,30, 2025. The decrease of $37.8$55.5 million in cash provided by investing activities was primarily due to purchases of securities available-for-sale, partially offset by a decrease in loans and maturities of securities-available-for-sale.loans.

Net cash provided(used byin) financing activities for the threesix months ended MarchJune 31,30, 2026 totaled $5.4($19.2) million compared to $39.6($60.5) million for the threesix months ended MarchJune 31,30, 2025. The decrease of $34.2$41.4 million in cash providedused byin financing activities was primarily due to a smaller increasedecline in deposits.deposits and lower repayments of other borrowings as the Company has continued to reduce borrowings. As of MarchJune 31,30, 2026, the Company did not have any external debt financing, off-balance sheet financing arrangements, or derivative instruments linked to its stock.

The Company’s liquidity on an unconsolidated basis is heavily dependent upon dividends paid to the Company by the Banks. The Banks provide adequate liquidity to pay the Company’s expenses and stockholder dividends. Dividends paid by the Banks to the Company amounted to $4.65$9.3 million and $3.2$6.35 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. Various federal and state statutory provisions limit the amounts of dividends banking subsidiaries are permitted to pay to their holding companies without regulatory approval. Federal Reserve policy further limits the circumstances under which bank holding companies may declare dividends. For example, a bank holding company should not continue its existing rate of cash dividends on its common stock unless its net income is sufficient to fully fund each dividend and its prospective rate of earnings retention appears consistent with its capital needs, asset quality and overall financial condition. In addition, the Federal Reserve and the FDIC have issued policy statements, which provide that insured banks and bank holding companies should generally pay dividends only out of current operating earnings. Federal and state banking regulators may also restrict the payment of dividends by order.

The Company, on an unconsolidated basis, has interest-bearing deposits totaling $4.7$4.8 million as of MarchJune 31,30, 2026.

Review of Commitments for Capital Expenditures, Cash Flow Uncertainties and Known Trends in Liquidity and Cash Flows Needs No other material capital expenditures or material changes in the capital resource mix are anticipated at this time. The primary cash flow uncertainty would be a sudden decline in deposits causing the Banks to liquidate securities. Historically, the Banks have maintained an adequate level of short-term marketable investments to fund the temporary declines in deposit balances. There are no known trends in liquidity and cash flow needs as of MarchJune 31,30, 2026 that are of concern to management.

The Company’s total stockholders’ equity as of MarchJune 31,30, 2026 totaled $207.6$213.1 million and was $324$5.2 thousandmillion lowerhigher than the $207.9 million recorded as of December 31, 2025. The decreaseincrease in stockholders’ equity was primarily the result of an increase in unrealized losses on the investment portfolio and partially offset by the retention of net income in excess of dividends. At MarchJune 31,30, 2026 and December 31, 2025, stockholders’ equity as a percentage of total assets was 9.7%.10.0% and 9.7%, respectively. The capital levels of the Company currently exceed applicable regulatory guidelines to be considered “well capitalized” as of MarchJune 31,30, 2026. Unrealized losses on the investment portfolio are excluded from regulatory capital.

The Private Securities Litigation Reform Act of 1995 provides the Company with the opportunity to make cautionary statements regarding forward-looking statements contained in this NewsQuarterly Release,Report, including forward-looking statements concerning the Company’s future performance and asset quality. Forward-looking statements contained in this NewsQuarterly ReleaseReport are not historical facts and are based on management’s current beliefs, assumptions, predictions and expectations of future events, including the Company’s future performance, taking into account all information currently available to management. These beliefs, assumptions, predictions and expectations are subject to numerous risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to management and many of which are beyond management’s control. If a change occurs, the Company’s business, financial condition, liquidity, results of operations, asset quality, plans and objectives may vary materially from those expressed in the forward-looking statements. Accordingly, investors are cautioned not to place undue reliance on such forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “anticipates,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “forecasts”, “continuing,” “ongoing,” “expects,” “views,” “intends” and similar words or phrases. The risks and uncertainties that may affect the Company’s future performance and asset quality include, but are not limited to, the following: national, regional and local economic conditions and the impact they may have on the Company and its customers; competitive products and pricing available in the marketplace; changes in credit and other risks posed by the Company’s loan and investment portfolios, including declines in commercial or residential real estate values or changes in the allowance for credit losses as dictated by new market conditions or regulatory requirements; changes in local, national and international economic conditions, including rising inflation rates; fiscal and monetary policies of the U.S. government; the imposition of tariffs and retaliatory tariffs; changes in governmental regulations affecting financial institutions (including regulatory fees and capital requirements); changes in prevailing interest rates; credit risk management and asset/liability management; the financial and securities markets; the availability of and cost associated with sources of liquidity; and other risks and uncertainties inherent in the Company’s business, including those discussed under the headings “Forward-Looking Statements and Business Risks” and “Risk Factors” in the Company’s Annual Report on Form 10-K for the year-ended December 31, 2025. Any forward-looking statements are qualified in their entirety by the foregoing risks and uncertainties and speak only as of the date on which such statements are made. The Company undertakes no obligation to revise or update such forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.