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

Our financial performance generally, and in particular the ability of customers to pay interest on and repay principal of outstanding loans and the value of collateral securing those loans, as well as demand for loans and other products and services we offer, is highly dependent upon the business environment not only in the markets where we operate, but also in the state of Kansas generally and in the U.S. as a whole. A favorable business environment is generally characterized by, among other factors: economic growth; efficient capital markets; low inflation; low unemployment; high business and investor confidence; and strong business earnings. Unfavorable or uncertain economic and market conditions can be caused by: declines in economic growth, business activity or investor or business confidence; limitations on the availability or increases in the cost of credit and capital; increases in inflation or interest rates; high unemployment; uncertainty in U.S. trade policies, legislation, treaties and tariffs; natural disasters; acts of war or terrorism, including ongoing conflicts in the currentMiddle conflict East, the Russian invasion of Ukraine and recent military actions in UkraineVenezuela, or threats thereof, and the response of the United States to any such threats and attacks; widespread disease or pandemics; or a combination of these or other factors.

ContinuedElevated elevated levels of inflation could adversely impact our business and results of operations.

The U.S.United States has recently experienced elevated levels of inflation,inflation in recent years, with the consumer price index climbing approximately 2.9% 2.7% in 2024.2025 before seasonal adjustment. Continued elevated levels of inflation could have complex effects on ourthe businessCompany’s and business, results of operations,operations and financial condition, some of which could be materially adverse. For example, elevatedWhile inflationthe harmsCompany consumergenerally purchasingexpects any power,inflation-related whichincreases in the Company’s interest expense to be offset by increases in interest income, inflation-driven increases in the Company’s levels of noninterest expense could negatively affectimpact our retail customers and the economic environment and, ultimately, manyresults of our business customers, and could also negatively affect our levels of non-interest expense. In addition, if interest rates continue to remain elevated, the value of our securities portfolio would be negatively impacted.operations. Continued elevated levels of inflation could also cause increased volatility and uncertainty in the business environment, which could adversely affect loan demand and ourthe Company’s clients’ ability to repay indebtedness. It is also possible that governmental responses to the current inflation inflation environment could adversely affect our business, such as changes to monetary and fiscal policy that are too strict, or the imposition or threatened imposition of price controls.controls, could adversely affect the Company’s business. The duration and severity of the current inflationary period cannot be estimated with precision.

We maintain our allowance for credit losses at a level considered appropriate by management to absorb all expected future losses expected expected in the loan portfolio at the balance sheet date. Additionally, our Board of Directors regularly monitors the appropriateness of our allowance for credit losses. The allowance is also subject to regulatory examinations and a determination by the regulatory agencies as to the appropriate level of the allowance. The amount of future credit losses is susceptible to changes in economic, operating and other conditions, including changes in interest rates and the value of the underlying collateral, which may be beyond our control, and such losses may exceed current estimates. At December 31, 20242025 and 2023,2024, our allowance for credit losses as a percentage of total loans, was 1.22%1.12% and 1.12%, 1.22%, respectively, and as a percentage of total non-performing loans was 97.79% 124.65% and 443.66%,97.79%, respectively. Although management believes that the allowance for credit losses is appropriate to absorb future losses on any existing loans that may become uncollectible, we cannot predict credit losses with certaintycertainty, nor can we assure you that our allowance for credit losses will prove sufficient to cover actual credit losses in the future. Credit losses in excess of our reserves will adversely affect our business, financial condition and results of operations.

One-to-four family residential mortgage loans comprised $352.2$375.3 million and $302.5$352.2 million, or 33.5%33.8% and 31.9%,33.5%, of our loan portfolio at December 31, 20242025 and 2023,2024, respectively. These loans are secured primarily by properties located in the state of Kansas. Our concentration of these loans results in lower yields relative to other loan categories within our loan portfolio. While these loans generally possess higher yields than investment securities, their repayment characteristics are not as well defined, and they generally possess a higher degree of interest rate risk versus other loans and investment securities within our portfolio. This increased interest rate risk is due to the repayment and prepayment options inherent in residential mortgage loans which are exercised by borrowers based upon the overall level of interest rates. These residentialResidential mortgage loans are generally made on the basis of the borrower’s ability to make repayments from his or her employment and the value of the property securing the loan. Thus, asAs a result, repayment of these loans is also subject to general economic and employment conditions within the communities and surrounding areas where the property is located.

Real estate lending (including CRE, construction and land and residential real estate) comprises the largest portion of our loan portfolio. These categories were $790.2 million, or approximately 71.1% of our total loan portfolio, as of December 31, 2025, as compared to $722.7 million, or approximately 68.7% of our total loan portfolio, as of December 31, 2024, as compared to $644.6 million, or approximately 67.9% of our total loan portfolio, as of December 31, 2023.2024. The market value of real estate can fluctuate significantly in a short period of time as a result of market conditions in the geographic area in which the real estate is located. Although a significant portion of CRE and construction and land loans are secured by a secondary form of collateral, adverse developments affecting real estate values values in one or more of our markets could increase the credit risk associated with our loan portfolio. Additionally, real estate lending typically typically involves higher loan principal amounts, and the repayment of the loans generally is dependent, in large part, on sufficient income from the properties securing the loans to cover operating expenses and debt service. Economic events or governmental regulations outside of the control of the borrower or lender could negatively impact the future cash flow and market values of the affected properties, including including (i) declines in the rents or decreases in occupancy and, therefore, in the cash flows generated by those real properties on which the borrowers depend to fund their loan payments to us, (ii) decreases in the values of those real properties, which make it more difficult difficult for the borrowers to sell those real properties for amounts sufficient to repay their loans in full, and (iii) job losses of residential residential home buyers, which makes it more difficult for these borrowers to fund their loan payments. Adverse changes affecting real estate values, including decreases in office occupancy due to the shift to remote working environments following the COVID-19 pandemic, and the liquidity of real estate in one or more of the Company’s markets could increase the credit risk associated with the Company’s loan portfolio, significantly impair the value of property pledged as collateral on loans and affect the Company’s ability to sell the collateral upon foreclosure without a loss or additional losses or the Company’s ability to sell those loans on the secondary market.

As of December 31, 2024,2025, the Company had $370.5$414.9 million of CRE loans, consisting of $110.7$138.6 million of non-owner occupied loans, $197.2$218.3 million of owner occupied loans, $37.3$37.4 million of loans secured by multifamily residential properties and $25.3$20.5 million of construction and land development loans. CRE loans represented 35.2%37.3% of the Company’s total loan portfolio and 272%258% of the Bank’s total capital at December 31, 2024.2025. The market value of real estate can fluctuate significantly in a short period of time as a result of interest rates and market conditions in the area in which the real estate is located and some of these values have been negatively affected by the recent rise in prevailing interest rates. Adverse developments affecting real estate values in the Company’s market areas could increase the credit risk associated with the Company’s loan portfolio. Additionally, the repayment of CRE loans generally is dependent, in large part, on sufficient income from the properties securing the loans to cover operating expenses and debt service. Economic events, including decreases in office occupancy due to the shift to remote working environments following the COVID-19 pandemic, or governmental regulations outside of the control of the borrower or lender could negatively impact the future cash flow and market values of the affected properties. If the loans that are collateralized by real estate become troubled during a time when market conditions are declining or have declined, then the Company may not be able to realize the full value of the collateral that the Company anticipated at the time of originating the loan, which could force the Company to take charge-offs or require the Company to increase the Company’s provision for credit losses, which could have a material adverse effect on the Company’s business, financial condition, results of operations and growth prospects.

In order for a borrower to be eligible to receive an SBA loan, the lender must establish that the borrower would not be able to secure a bank loan without the credit enhancements provided by a guaranty under the SBA program. Accordingly, the SBA loans in our portfolio generally have weaker credit characteristics than the rest of our portfolio,portfolio and may be at greater risk of default in the event of deterioration in economic conditions or the borrower’s financial condition. In the event of a loss resulting from default and a determination by the SBA that there is a deficiency in the manner in which the loan was originated, funded or serviced by us, the SBA may deny its liability under the guaranty, reduce the amount of the guaranty, or, if it has already paid under the guaranty, seek recovery of the principal loss related to the deficiency from us. Management has estimated losses inherent in the outstanding guaranteed portion of SBA loans and recorded a recourse reserve at a level determined to be appropriate. Significant increases to the recourse reserve may materially decrease our net income, which may adversely affect our business, results of operations and financial condition.

Non-performing assets take significant time to resolve and adversely affect our results of operations and financial condition,condition and could result in further losses in the future.

The Federal Reserve has indicated that it is working to avoid abrupt or unpredictable changes in economic or financial conditions so as not to disrupt the financial systems, also known as “shocks;” despite this, the impact of these changes cannot be certain. Vulnerabilities in the financial system can amplify the impact of an initial shock following rate increases, potentially leading to unintended volatility, as well as to disruptions in the provision of financial services, such as clearing payments, the provision of liquidity, and the availability of credit. Furthermore, asset liquidation pressures can be amplified by liquidity mismatches and the leverage of certain nonbank financial intermediaries such as hedge funds. The financial crisis in March 2020 also demonstrated that pressures on dealer intermediation can limit the availability of liquidity during times of market stress. Given the interconnectedness of the global financial system, these vulnerabilities could impact the Company’s business operations and financial condition.

Our profitability is in part a function of the spread between the interest rates earned on investments and loans and the interest rates paid on deposits and other interest-bearing liabilities. Like most banking institutions, our net interest spread and margin will be affected by general economic conditions and other factors, including fiscal and monetary policies of the federal government that influence market interest rates and our ability to respond to changes in such rates. At any given time, our assets and liabilities will be such that they are affected differently by a given change in interest rates. It is currently expected thatthat, during 2025, and perhaps beyond,2026, the Federal Open Market Committee of the Federal Reserve,Reserve (“ FOMC”) will continue to closely monitor interest rates, in part to reducemanage the rate of inflation to its preferred level. In 2024,the fourth quarter of 2025, the FOMC decreased at various dates throughout the year the target range for the federal funds rate from 5.25% to 5.50% to a range of 4.25% 3.50% to 4.50%.3.75%, Thesefollowing decreasesa wereseries madeof significant increases beginning in response2023. to declining inflationary pressures. If the FOMC further increases or decreasesalters the targeted federal funds rates, overall interest rates likely will alsocontinue riseto or fall,change, which may negatively impact the entire national economy. AsChanges in interest rates directly impact the Company’s net interest income and also may affect the demand for loans and the value of fixed-rate investment securities. These effects from interest rate changes or from other sustained economic stress or a result,recession, anamong increaseother or decrease in rates, the length of loan terms or the mix of adjustable and fixed rate loans in our portfoliomatters, could have a positive or negative effect on our net income, capital and liquidity.material We measure interest rate risk under various rate scenarios and using specific criteria and assumptions. A summary of this process, along with the results of our net interest income simulations, is presented in “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” of this Annual Report on Form 10-K. Although we believe our current level of interest rate sensitivity is reasonable and effectively managed, significant fluctuations in interest rates may have an adverse effect on ourthe Company’s business, financial conditioncondition, liquidity and results of operations.

Continued highelevated interest rates may result in a further decline in value of our fixed-rate debt securities. The unrealized losses resulting from holding these securities would be recognized in other comprehensive income and reduce total stockholders’ equity. Unrealized losses do not negatively impact our regulatory capital ratios; however, tangible common equity and the associated ratios would be reduced. If debt securities in an unrealized loss position are sold, such losses become realized and will reduce our regulatory capital ratios.

The laws, regulations, rules, policies and regulatory interpretations governing us are constantly evolving and may change significantly over time as Congress and various regulatory agencies react to adverse economic conditions or other matters. The implementation of any current, proposed or future regulatory or legislative changes to laws applicable to the financial industry may impact the profitability of our business activities and may change certain of our business practices, including the ability to offer new products, obtain financing, attract deposits, make loans, and achieve satisfactory interest spreads, and could expose us to additional costs, including increased compliance costs. These regulations and legislation may be impacted by the political ideologies of the executive and legislative branches of the U.S. government as well as the heads of regulatory and administrative agencies, which may change as a result of elections.agencies.

TheBank Basel III Rule imposes stringent capital requirements on bank holding companies and banks.banks are subject to stringent capital requirements. In addition to the minimum capital requirements, banks and bank holding companies are also required to maintain a capital conservation buffer of 2.5% of Common Equity Tier 1 Capital on top of minimum risk-weighted asset ratios to make capital distributions (including for dividends and repurchases of stock) and pay discretionary discretionary bonuses to executive officers without restriction. Banking institutions that do not maintain capital in excess of thesuch Baselrequirements, III Rule standards including the capital conservation bufferbuffer, face constraints on the payment of dividends, equity repurchases and compensation based on the amount of the shortfall. Accordingly, if the Bank fails to maintain the applicable minimum capital ratios and the capital conservation conservation buffer, distributions to the Company may be prohibited or limited. Future increases in minimum capital requirements could adversely affect our net income.

FutureFurthermore, increases in minimum capital requirements could adversely affect our net income. Furthermore, our failure to comply with the minimum capital requirements could result in our regulators taking formal or informal actions against us, which could restrict our future growth or operations.

From time to time, the FASB and the SEC change the financial accounting and reporting standards or the interpretation of those standards that govern the preparation of our financial statements. In addition, trends in financial and business reporting, including environmental social and governance (ESG) related disclosures, could require us to incur additional reporting expense. These changes are beyond our control, can be difficult to predict and could materially impact how we report our financial condition and results of operations. Changes in these standards are continuously occurring, and more drastic changes may occur in the future. The implementation of such changes could have a material adverse effect on our financial condition and results of operations.

Issues with the use of artificial intelligence in our marketplace may result in reputational harm or liability,liability or could otherwise adversely affect the Company’s business.

Artificial intelligence, including generative artificial intelligence, is or may be enabled by or integrated into the Company’s products or those developed by its third partythird-party partners. As with many developing technologies, artificial intelligence presents risks and challenges that could affect its further development, adoption, and use, and therefore our business. Artificial intelligence algorithms may be flawed, for example datasets may contain biased information or otherwise be insufficient, and inappropriate or controversial data practices could impair the acceptance of artificial intelligence solutions and result in burdensome new regulations. If the analyses that products incorporating artificial intelligence assist in producing for the Company or its third partythird-party partners are deficient, biased or inaccurate, the Company could be subject to competitive harm, potential legal liability and brand or reputational harm. The use of artificial intelligence may also present ethical issues. If the Company or its third partythird-party partners offer artificial intelligence enabled products that are controversial because of their purported or real impact on human rights, privacy, or other issues, the Company may experience competitive harm, potential legal liability and brand or reputational harm. In addition, the Company expects that governments will continue to assess and implement new laws and regulations concerning the use of artificial intelligence, which may affect or impair the usability or efficiency of products and services and those developed by the Company’s third partythird-party partners.

As a bank, we are susceptible to fraudulent activity, information security breaches and cybersecurity-related incidents that may be committed committed against us or our clients, which may result in financial losses or increased costs to us or our clients, disclosure or misuse of our information or our client information, misappropriation of assets, privacy breaches against our clients, litigation or damage to our reputation. Such fraudulent activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering and other dishonest acts.acts by our employees, clients, third-party vendors or by other outside actors. As described in Note 24 (Subsequent Event) to the Company’s consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K, the Company experienced an instance of employee fraud which resulted in immaterial financial losses. Information security breaches and cybersecurity-related incidents may include fraudulent or unauthorized access to systems used by us or our clients, denial or degradation of service attacks and malware or other cyber-attacks.

Information pertaining to us and our clients is maintained, and transactions are executed, on networks and systems maintained by us and certain thirdthird-party party partners, such as our online banking, mobile banking or accounting systems. The secure maintenance and transmission of confidential information, information, as well as execution of transactions over these systems, are essential to protect us and our clients against fraud and security breaches breaches and to maintain the confidence of our clients. Breaches of information security also may occur through intentional or unintentional acts acts by those having access to our systems or the confidential information of our clients, including employees. In addition, increases in in criminal activity levels and sophistication, advances in computer capabilities, new discoveries, vulnerabilities in third party technologies (including browsers and operating systems) or other developments could result in a compromise or breach of the technology, processes and controls that we use to prevent fraudulent transactions and to protect data about us, our clients and underlying transactions, as well as the technology used by our clients to access our systems. Our third party partners’ inability to anticipate, or failure to adequately mitigate, breaches of security could result in a number of negative events, including losses to us or our clients, loss of business or clients, damage to our reputation, the incurrence of additional expenses, disruption to our business, additional regulatory scrutiny or penalties or our exposure to civil litigation and possible financial liability, any of which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

Our business is highly dependent on the successful and uninterrupted functioning of our information technology and telecommunications systems, third party servicers, accounting systems, mobile and online banking platforms and financial intermediaries. We outsource to third parties many of our major systems, such as data processing and mobile and online banking. The failure of these systems, or the termination of a third partythird-party software license or service agreement on which any of these systems is based, could interrupt our operations. Because our information technology and telecommunications systems interface with and depend on third party systems, we could experience service denials if demand for such services exceeds capacity or such third partythird-party systems fail or experience interruptions. A system failure or service denial could result in a deterioration of our ability to process loans or gather deposits and provide customer service, compromise our ability to operate effectively, result in potential noncompliance with applicable laws or regulations, damage our reputation, result in a loss of customer business or subject us to additional regulatory scrutiny and possible financial liability, any of which could have a material adverse effect on business, financial condition, results of operations and growth prospects. In addition, failures of third parties to comply with applicable laws and regulations, or fraud or misconduct on the part of employees of any of these third parties, could disrupt our operations or adversely affect our reputation.

We maintain a system of internal controls, including internal controls over financial reporting, and insurance coverage to mitigate against operational risks, including data processing system failures and errors and customer or employee fraud. A recently discovered instance of employee fraud, as described in Note 24 (Subsequent Event) to the Company’s consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K, resulted in immaterial financial losses. Should our internal controls fail to prevent or detect anany subsequent occurrence, or if any resulting loss is not insured or exceeds applicable insurance limits, it could have a material adverse effect on our business, financial condition and results of operations.

The stock market has experienced, and may continue to experience, fluctuations that significantly impact the market prices of securities issued by many companies. Market fluctuations could adversely affect our stock price. These fluctuations have often been unrelated or disproportionate to the operating performance of particular companies. These broad market fluctuations, as well as general economic, systemic, political and market conditions, such as recessions, loss of investor confidence, interest rate changes, tariffs, government shutdowns, Brexit, or international currency fluctuations, may negatively affect the market price of our common stock. Moreover, our operating operating results may fluctuate and vary from period to period due to the risk factors set forth herein. As a result, period-to-period comparisons comparisons should not be relied upon as an indication of future performance. Our stock price could fluctuate significantly in response to our quarterly or annual results, annual projections and the impact of these risk factors on our operating results or financial position.

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

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

Currently, our business consists of its ownership of the Bank, with its main office in Manhattan, Kansas and thirty28 additional offices in central, eastern, southeast and southwest Kansas and Missouri, and our ownership of the Captive, a Nevada-based captive insurance company.

On January 1, 2023, we adopted CECL,ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), commonly referred to as “CECL”, which changed our allowance for credit losses from an incurred loss methodology to an expected loss methodology. The CECL model is subject to changes in our economic forecast, which can impact the calculation of our allowance for credit losses substantially. Our most significant critical accounting estimates relate to the allowance for credit losses on loans, which involve significant judgment by our management. The analysis is updated on a quarterly basis based on historical loss information adjusted for current conditions and reasonable and supportable forecasts. Additionally, the Company considers changes in economic and business conditions, changes in policies, procedures and underwriting, changes in management or staff and their related experience, changes in nature and volume of the portfolio, changes in loan review, changes in collateral values, changes in past due and nonaccrualnon-accrual loans, changes in competition, legal and regulatory issues, changes in concentrations and other qualitative factors, which impacts the estimate of future credit losses. These qualitative factors comprise a significant portion of the Company’s allowance for credit losses. Based on a sensitivity analysis of all collectively evaluated loan pools, a five basis point change in the qualitative risk factors across all loan categories would result in an increase or decrease of $520,000, or 4.1%,$551,000 in the allowance for credit losses as of December 31, 2024.2025. See Note 1 (Summary of Significant Accounting Policies) to the Company’s consolidated financial statements in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for a more detailed description methodology and impact of adoption.methodology.

SUMMARY OF PERFORMANCE. Net earnings for 20242025 increased $767,000,$5.8 million, or 6.3%,44.4%, to $13.0$18.8 million as compared to $12.2$13.0 million for 2023.2024. The increase increase in net earnings during 20242025 was primarily related to an increase in net interest income due primarily to an increase in loansloan balances and higher yields on interest-earning assets.

Interest Income. Interest income for 20242025 increased $9.2$7.1 million, or 14.2%,9.6%, to $73.9$81.0 million, as compared to 2023.2024. Interest income on loans increased $9.6$7.8 million, or 18.6%,12.7%, to $61.4$69.2 million million for 2024,2025, as compared to 20232024 due to higher yields and average balances. Our yields increased from 5.81%6.30% in 20232024 to 6.3%6.37% in 2024. 2025. The increase in interest income on loans was also driven by an increase in average loan balances, which increased from $891.5 million in 2023 to $974.3 million in 2024 2024.to $1.1 billion in 2025. Interest income on investment securities decreased $382,000,$737,000, or 3.1%,6.0%, to $12.3$11.6 million during 2024,2025, as compared to 2023.2024. The decrease in interest income on investment securities was primarily the result of a decrease in the average balances of investment securities in 2024,2025, which decreased from $486.3$432.9 million in 20232024 to $432.9$365.8 million in 2024. 2025.

Interest Expense. Interest expense during 20242025 increaseddecreased $6.8$2.8 million, or 31.5%,10.1%, to $28.2$25.3 million as compared to 2023.2024. Interest expense on interest-bearing deposits increaseddecreased $7.1$1.4 million to $22.3$20.9 million for 20242025 as compared to $15.3$22.3 million in 2023.2024. Our total cost of interest-bearing deposits increaseddecreased from 1.71% during 2023 to 2.38% during 2024 2024to 2.14% during 2025 as a result of higherlower ratesinterest andrates. increased competition for deposits. Also contributing toOffsetting the increasedecrease in interest expense due to lower cost of interest-bearing expensedeposits was an increase in average interest-bearing deposit balances, which increased from $892.4$938.2 million in 20232024 to $938.2$979.4 million in in 2024.2025. Interest expense on borrowings decreased $272,000$1.5 million to $5.9$4.4 million during 2024,2025, as compared to 2023,2024, due to a decrease in our average borrowings, which decreased from $114.2 million in 2023 to $104.1 million in 2024.2024 to $87.7 million in 2025.

During 2024,2025, net interest income increased $2.4$10.0 million, or 5.6%,21.8%, to $55.7 million compared to $45.7 million compared to $43.3 million in 2023.2024. The increase in net interest interest income was primarily a result of an increase in interest income on loans, coupled with lower interest expense, partially offset by higherlower interest expense.income on investment securities. The accretion of purchase accounting adjustments increased net interest income by $794,000 in 2025 compared to $1.0 million in 2024 compared to $993,000 in 2023.2024. Compared to the same period last year, highernet interest ratesincome increasedwas thebenefitted by higher average balances and yields on ourloans, interest-earningcoupled assetswith andlower the costcosts of ourinterest-bearing interest-bearing liabilities. Our net interest margin, on a tax-equivalent basis, increased to 3.86% during 2025 from 3.28% during 2024 from 3.17% during 2023.2024. Lower interest rates may not result in a higher net interest margin as a result of increased competition for loans and depositsdeposits. and theThe slope of the yield curve also impacts our net interest margin. Additionally, deposit balances may decline resulting in the need for higher cost funding.

During 2024,2025, we recorded a $2.3$2.4 million provision for credit losses compared to a $349,000$2.3 million provision for credit losses in 2023. The $2.3 million provision for credit losses during 2024 consisted of a $2.4 million provision to the allowance for credit losses on loans and a credit provision of $100,000 to unfunded loan commitments.2024. We recorded net loan charge-offs of $2.7 million during 2025 compared to net charge-offs of $183,000 during 20242024. comparedThe increase in net charge-offs during 2025 was primarily due to netthe loancharge-off recoveries of $44,000a single commercial credit during 2023.the third quarter.

Non-interest Income. Total non-interest income was $14.7$15.0 million in 2024,2025, an increase of $1.5 million,$207,000, or 11.4%,1.4%, compared to 2023.2024. The increase in non-interest income was primarily the result of a decrease in losses on sales of investment securities of $928,000 and an increase of $810,000$789,000 in gains on sales of loans. A loss of $103,000 was recorded on the sale of investment securities during 2025, a decrease from the $1.0 million loss recorded on the sale of investment securities in 2024. These increases were partially offset by a decrease of $604,000 in bank owned life insurance due to the accrual of death benefits recognized in 2024.2024 Alsoand contributinga to the increase in non-interest income was an increasedecrease of $522,000$547,000 in fees and service charges primarily due to higherlower fees to deposit accounts. A loss of $1.0 million was recorded on the sale of investment securities during 2024, a decrease from the $1.2 million loss recorded on the sale of investment securities in 2023.

INCOME TAXES. We recorded income tax expense of $4.3 million in 2025 compared to $1.1 million in 2024 compared to $2.0 million in 2023.2024. The effective tax rate decreasedincreased from 13.8% in 2023 to 7.7% in 2024,2024 to 18.6% in 2025, primarily due to higher tax-exempt income and thedecreased recognition of previously unrecognized tax benefits. During 2024,2025, we recognized $1.0 million $161,000 of previously unrecognized tax benefits compared to $517,000$1.0 million during 2023,2024, which reduced the effective tax rates in both years.

FINANCIAL CONDITION. Economic conditions in the U.S. remained sluggishresilient during 20242025 asdespite elevated inflation levels and highereconomic interestuncertainty over ratestariffs continued continuing to impact the economy. ElevatedRate cuts by the Federal Reserve Bank during 2025 have positively benefitted financial institutions’ earnings and net interest rates and a flat or negative sloping yield curve have impacted financial institutions generally, resulting in continued higher costs of funding and lower fair values for investment securities.margin. The Federal Reserve lowered interest rates by 1.00%75 inbasis thepoints secondduring half of 20242025 due to improvements in the inflation outlook, however, additional rate cuts are dependent upon further reductions in the inflation rate and other economic factors. We maintain strong capital and liquidity, and a stable, conservative deposit portfolio with a significant majority of our deposits being retail-based and insured by the FDIC. We spend significant time each month monitoring our interest rate and concentration risks through our asset/liability management and lending strategies that involve a relationship-based banking model offering stability and consistency. The State of Kansas and the geographic markets in which the Company operates have also been impacted by economic headwinds. Supply chain constraints, labor shortages and geopolitical events have contributed to the rising inflation levels which are impacting all areas of the economy both nationally and locally. The Company’s allowance for credit losses continues to factor in estimates of the economic impact of these conditions and other qualitative factors on our loan portfolio. However, our loan portfolio is diversified across various types of loans and collateral throughout the markets in which we operate. Aside from a few problem loans that management is working to resolve, our asset quality has remained strong over the past few years. While further increases in problem assets may arise, management believes its efforts to run a high quality financial institution with a sound asset base will continue to create a strong foundation for continued growth and profitability in the future.

Asset Quality and Distribution. Our primary investing activities are the origination of one-to-four family residential real estate, construction and land, CRE, commercial, agriculture, municipal and consumer loans and the purchase of investment securities. Total assets were $1.6 billion at both December 31, 20242025 and December2024. 31, 2023. Net loans, excluding loans held for sale, increased $101.6$59.2 million, 10.8%,or 5.7%, to $1.1 billion at December 31, 2025, compared to $1.0 billion at December 31, 2024, compared to $937.6 million at December 31, 2023.2024. Investment securities available-for-sale decreased $80.3$24.4 million, or 17.7%,6.5%, from $452.8 million at December 31, 2023 to $372.5 million at December 31, 2024.2024 to $348.2 million at December 31, 2025.

The allowance for credit losses is established through a provision for credit losses based on our economic projections. At December 31, 2024,2025, our allowance for credit losses on loans totaled $12.8$12.5 million, or 1.22%1.12% of gross loans outstanding, compared to $10.6$12.8 million, or 1.12%1.22% of gross loans outstanding, at December 31, 2023.2024. The increasedecrease in our allowance for credit losses on loans as a percentage of gross loans outstanding was primarily due to ana increasedecrease in the reserves on individually evaluated loans.

As of December 31, 20242025 and 2023,2024, approximately $26.1$22.9 million and $7.5$26.1 million, respectively, of loans were considered classified and assigned a risk rating of special mention, substandard or doubtful. The increasedecrease in classified loans was primarily due to a commercial loan relationshipsrelationship that movedwas tocharged classified statusoff during 2024.2025. These ratings indicate that the loans identified as potential problem loans have more than normal risk which raised doubts as to the ability of the borrower to comply with present loan repayment terms. Even though these borrowers were experiencing moderate cash flow problems as well as some deterioration in collateral value, managementManagement believed the general allowance was sufficient to cover all expected future losses expected in the loan portfolio at the balance sheet date.

Loans past due 30-89 days and still accruing interest totaled $4.3 million, or 0.38% of gross loans, at December 31, 2025, compared to $6.2 million, or 0.59% of gross loans, at December 31, 2024, compared to $1.6 million, or 0.17% of gross loans, at December 31, 2023.2024. At December 31, 2024,2025, $13.1$10.0 million of loans were on non-accrual status, or 1.25%0.90% of gross loans, compared to $2.4$13.1 million, or 0.25%1.25% of gross loans, at December 31, 2023.2024. Past due loans are determined in accordance with the contractual repayment terms. Non-accrual loans consist of loans 90 or more days past due and certain individually evaluated loans. There were no loans 90 days delinquent and accruing interest at either December 31, 20242025 andor 2023.2024.

As part of our credit risk management, we continue to manage the loan portfolio to identify problem loans and have placed additional emphasis on commercial CRE and construction and land relationships. We are working to resolve the remaining problem credits or move theremove non-performing credits out of the loan portfolio. At December 31, 2024,2025, we had no real estate owned compared to $167,000 of real estate owned compared to $928,000 at December 31, 2023. 2024. The decrease in real estate owned as of December 31, 20242025 compared to December 31, 20232024 was primarily due to the sale of properties.properties held Asas of December 31, 2024,other real estate owned consisted of a single parcel of undeveloped land. The Company is currently marketing the property.owned.

Liability Distribution. Our primary ongoing sources of funds are deposits, FHLB borrowings, proceeds from principal and interest payments on loans and investment securities and proceeds from the sale of mortgage loans and investment securities. While maturities and scheduled amortization of loans are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates and economic conditions. We had a balance of $1.3$1.4 billion in deposits at December 31, 20242025 andas compared to $1.3 billion at December 31, 2023.2024.

Non-interest-bearing deposits at December 31, 20242025 were $364.7 million, or 26.3% of deposits, compared to $351.6 million, or 26.5% of deposits, compared to $367.1 million, or 27.9% of deposits, at December 31, 2023.2024. Money market and checking accounts were 47.9%46.9% of our deposit portfolio and totaled $637.0$651.0 million at December 31, 2024,2025, compared to 46.6%47.9% of our deposit portfolio totaling $613.6$637.0 million, at December 31, 2023.2024. Savings accounts decreasedincreased to $145.5$151.4 million, or 10.9%10.8% of deposits, at December 31, 2024,2025, from $152.4$145.5 million, or 11.6%10.9% of deposits, at December 31, 2023.2024. Certificates of deposit totaled $221.8 million, or 16.0% of deposits, at December 31, 2025, compared to $194.7 million, or 14.7% of deposits, at December 31, 2024, compared to $183.2 million, or 13.9% of deposits, at December 31, 2023.2024. Competition for deposits may affect our ability to continue to increase deposit balances and could result in a decrease in our deposit balances in future periods. Such decreases in deposit balances may cause us to secure funding through other borrowings which would likely result in higher interest costs.

CASH FLOWS. During 2024,2025, our cash and cash equivalents decreasedincreased by $6.8 million$707,000 as compared to 2023.2024. Our operating activities provided net net cash of $21.6 million in 2025, compared to $14.2 million in 2024, compared to $12.6 million in 2023, which is primarily the result of increased net earnings and sales of one-to-four one-to-four family residential mortgage loans. Our investing activities used net cash of $18.1$21.4 million during 2024,2025, compared to $50.6 $18.1 million in 2023, 2024, primarily to fund loan growth. Our financing activities usedprovided net cash of $2.9 million$441,000 during 2024,2025, compared to providingusing $3.0 $42.0 million in 2023,2024, primarily as a result of fundingan dividendincrease payments.in deposits.

Liquidity management is both a daily and long-term function of our strategy. Excess funds are generally invested in short-term investments. Excess funds are typically generated as a result of increased deposit balances, while uses of excess funds are generally deposit withdrawals and loan advances. In the event we require funds beyond our ability to generate them internally, additional funds are generally available through the use of brokered deposits, FHLB advances, a line of credit with the FHLB, other borrowings or through sales of investment securities. At December 31, 2024,2025, we had an outstanding balance of $48.8$8.9 million against our line of credit with the FHLB. At December 31, 2024,2025, we had collateral pledged to the FHLB that would allow us to borrow $171.0$239.1 million, subject to FHLB credit requirements and policies. At December 31, 2024,2025, we had no borrowings through the Federal Reserve discount window, while our borrowing capacity with the Federal Reserve was $50.5$42.0 million. We also have various other federal funds agreements, both secured and unsecured, with correspondent banks totaling approximately $35.0 million in available credit under which we had no outstanding borrowings at December 31, 2024.2025. At December 31, 2024,2025, we had subordinated debentures totaling $21.7 million and $13.8$1.5 million of repurchase agreements. At December 31, 2025, 2024, the Company had no borrowings against a $5.0 million line of credit from an unrelated financial institution maturing on November 1, 2025, 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 and other financial ratios.ratios, Atwhich the Company was in compliance with at December 31, 2024, the Company’s tier 1 capital ratio of 12.43% was below the minimum required under such covenants of 12.50%. The Company requested from the lender a waiver of the default, which was granted by the lender. On March 14, 2025, the Company and the lender entered into a Change in Terms Agreement, reducing the minimum risk-based capital ratio required under such covenants to 12.00% going forward.2025. The Company also borrowed $4.2$1.7 million from the same unrelated financial institution at a fixed rate of 6.15%. This borrowing matures on September 1, 2027 and requires quarterly principal and interest payments. The original balance of this borrowing was $10.0 million and was used to fund part of the acquisition of Freedom.

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

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

In AprilJuly 2026, we declared our 99th100th 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 MarchJune 31,30, 2026.

Critical Accounting Policies. Critical accounting policies are those which are both most important to the portrayal of our financial condition and results of operations and require our management’s most difficult, subjectivesubjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies relate to the allowance for credit losses and the accounting for business combinations, each of which involve significant judgment by our management. There have been no material changes to the critical accounting policies included under Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on April 14, 2026.

Summary of Results. During the firstsecond quarter of 2026, we recorded net earnings of $5.1$5.4 million, which was an increase of $365,000,$1.0 million, or 7.8%,22.4%, from net earnings of $4.7$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 quartersix months of 2025.The2025. The increase in net earnings during theboth first quarter of 2026periods 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 non-interestlower income.interest expense due to lower short-term interest rates and lower borrowing balances.

Interest Income. Interest income of $20.2$40.5 million for the quartersix months ended MarchJune 31,30, 2026 represented an increase of $906,000,$1.1 million, or 4.7%,2.7%, compared to the same period of 2025. Interest income on loans increased $865,000,$826,000, or 5.3%,2.5%, to $17.3$34.4 million for the quartersix months ended MarchJune 31,30, 2026, compared compared to the same period of 2025 due to higher yields and average balances. Yield on loans increased from 6.34% in the first quarter of 2025 to 6.40% in the first quarter of 2026. Thean increase in interest income on loans was also driven by an increase of $45.0 million inour 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 $1.0 billion6.36% in the firstsix quartermonths ofended June 30, 2025 to $1.16.35% billion induring the firstsix quartermonths ofended June 30, 2026. Interest Interest income on investment securities increased $30,000,$219,000, or 1.0%,3.8%, to $2.9$6.0 million for the first quartersix months of 2026.2026, 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 higheran increase in yields, which partiallyincreased offsetfrom by3.32% 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. The yield on investment securities increased 26 basis points to 3.55% in the first quarter of 2026. The average balance of investment securitieswhich decreased $27.0from million, or 7.2%, to $350.8$370.8 million in the first quartersix months of 2025 to $350.3 million in the first six months of 2026.

Interest Expense. Interest expense during the quarter ended MarchJune 31,30, 2026 decreased $998,000$1.2 million to $5.2 million, as compared to the same period of 2025. Interest expense on interest-bearing deposits decreased $625,000$795,000 to $4.6$4.3 million for the quarter ended MarchJune 31,30, 2026, as compared to the same period of 2025. TheOur total cost of interest-bearing deposits decreased from 2.17%2.14% in the firstsecond quarter of 2025 to 1.90%1.82% in the firstsecond quarter of 20262026, as a result of lower rates on our deposits. Partially offsetting theThe lower rates on interest-bearing deposits was coupled anwith increase a decrease in average interest-bearing deposit balances, which increaseddecreased from $979.8$965.2 million in the firstsecond quarter of 2025 to $983.1$958.4 million in the first second quarter of 2026. For the firstsecond quarter of 2026, interest expense on borrowings decreased $373,000$449,000 to $614,000, $822,000, as compared to the same period of 20252025, due to a decrease in our average borrowings and repurchase agreements which decreased $20.6 $29.7 million from the first second quarter of 2025 to the firstsecond quarter of 2026. Also contributing to lower interest expense was a decrease in rates, which decreased from 5.09% 4.98% in the firstsecond quarter of 2025 to 4.85%4.54% in the same period of 2026.

Net Interest Income. Net interest income increased $1.9$1.4 million, or 14.5%,10.2%, to $15.0$15.1 million for the firstsecond quarter of 2026, as compared to the firstsecond 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 loans and investment securities, and lower interest expense. The accretion of purchase accounting adjustments increased net interest income by $184,000 in the first quarter of 2025 compared to an increase of $149,000 in the first quarter of 2026, and was primarily related to fair value adjustments on loans acquired in the Freedom Bank transaction.securities. Compared to the same period last year, higher yields on earning assets and growth in average loansinterest-bearing increasedliability balances interestdeclined income$36.5 whilemillion coupled with lower deposit costsrates decreased interest expense. Net interest margin, on a tax-equivalent basis, expanded was39 3.76%basis points from 3.83% in the firstsecond quarter of 2025, compared to 4.24%4.22% in the firstsecond quarter of 2026.

Provision for Credit Losses. During the firstsecond quarter of 2026, we recorded a $500,000 provision for credit losses for loans was recorded,losses, compared to to no provision during the first quarter of 2025. During the first quarter of 2026, a $70,000$1.0 million provision for credit losses recorded in the same period of 2025. The provision for unfundedcredit losses recorded loanin commitmentsthe second quarter of 2026 was recorded.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 $349,000$452,000 during the firstsecond quarter of 2026, compared to net loan charge-offs of $23,000$40,000 during the firstsecond quarter of 2025.

Non-interest Income. Total non-interest income was $3.8$4.1 million in the firstsecond quarter of 2026, an increase of $406,000,$469,000, or 12.1%,12.9%, from the same period in 2025. The increase in non-interest income during the firstsecond quarter of 2026 compared to the same period in the prior year was primarily due to an increase of $323,000$501,000 in gains on sales of one-to-four family residential real estate loans due to an increase in volume.the There was also an increasevolume of $101,000loans sold in bank-owned life insurance income due to the accrualsecondary of death benefits during the first quarter of 2026.market.

Non-interest Expense. Non-interest expense totaled $11.9$12.0 million for the firstsecond quarter of 2026, an increase of $1.1$1.0 million, or 10.6%,9.1%, over the same quarter of 2025. The increase in non-interest expense in the firstsecond quarter of 2026 compared to the same period inlast the prior year was mainly due to increases of $604,000$711,000 in otherprofessional expense, $198,000 in occupancyfees and equipment, $169,000$335,000 in compensation and benefits expense, and $158,000 in data processing expense. The increase in other expenseprofessional fees was driven by $433,000higher ofconsulting fraudexpenses lossesfor recognizedtalent during thedevelopment, firstrisk quarter,assessment, relatedand toforensic theaccounting previously disclosed fraudulent activity by a non-executive officer of the Bank.engagements. The increase in fraud losses was coupled with increased insurance loss reserves of our captive insurance subsidiary. The increases in both occupancy and equipment expense and data processing expense were related to expenses incurred to upgrade our core branch operation systems during the current quarter as compared to the first quarter of 2025. The increase in compensation and benefits 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.

Income Tax Expense. During the firstsecond quarter of 2026, we recorded income tax expense of $1.3 million, compared to income tax expense of $1.0 million$944,000 during the same period of 2025. Our effective tax rate increased from 17.8%17.7% in the firstsecond quarter of 2025 to 19.8%19.7% in the the firstsecond quarter of 2026. The increase in the effective tax rate was due to higher earnings before taxes,taxes coupledwhile with a decrease in tax exempt income.income decreased slightly.

Financial Condition. Economic conditions in the U.S.United States remained resilientsluggish during the first quartersix months of 2026 despiteas elevated inflation levels, levels high interest rates, and economic uncertainty related to ongoing conflicts in the Middle East and tariffs continuingcontinued to impact the economy. RateAlthough cuts by the Federal Reserve Bank have positively benefitted financial institutions’ earnings and net interest margin. The Federal Reserve lowered interest rates bydecreased 75 basis points during the fourth quarter of 2025 due to improvements slightly in the inflationsecond outlook,half however,of additional rate2025, cutssustained arehigh dependentinterest uponrates furtherhave reductionsimpacted financial institutions generally, resulting in thecontinued inflationhigher costs rateof funding and otherlower economicfair factors.values for investment securities. We maintain strong capital and liquidity, and a stable, conservative deposit portfolio with a significant majority of our deposits being retail-basedcore 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.

Asset Quality and Distribution. Our primary investing activities are the origination of one-to-four family residential real estate, construction and land, CRE, commercial, agriculture, municipal and consumer loans and the purchase of investment securities. Total assets were $1.6 billion at both December 31, 2025 and MarchJune 31,30, 2026.

The allowance for credit losses is established through a provision for credit losses based on our economic projections. At MarchJune 31,30, 2026, our allowance for credit losses on loans totaled $12.6$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 loanhigher growthreserves andagainst 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.

As of MarchJune 31,30, 2026 and December 31, 2025, approximately $25.9$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 MarchJune 31,30, 2026 and December 31, 2025, respectively.

Loans past due 30-89 days and still accruing interest totaled $7.4$6.3 million, or 0.68%0.57% of gross loans, at MarchJune 31,30, 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 agriculture portfolio. We are currently working with a small number of delinquent borrowers,commercial and doone-to-four family notresidential believereal theestate increaseloan in delinquent loans is an indicator of broader weakness in the agriculture portfolio.portfolios. At MarchJune 31,30, 2026, $10.4$13.1 million in loans were on non-accrual status, or 0.94%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 MarchJune 31,30, 2026 or December 31, 2025.

As part of our credit risk management strategy, we continue to manage the loan portfolio to identify problem loans and have placed additional emphasis on agricultural, commercial,CRE and CREcommercial loan relationships. We are working to resolve the remaining problem credits or move the non-performing credits out of the loan portfolio. At both MarchJune 31,30, 2026 and December 31, 2025, we had no real estate owned.

Liability Distribution. Our primary ongoing sources of funds are deposits, FHLB borrowings, proceeds from principal and interest payments on loans and investment securities and proceeds from the sale of mortgage loans and investment securities. While maturities and scheduled amortization of loans are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates and economic conditions. We experienced a decrease of $66.2$83.9 million, or 19.3%6.0% in total deposits during the first threesix months of 2026, 2026, to $1.3 billion at MarchJune 31,30, 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.

Non-interest-bearing deposits at MarchJune 31,30, 2026 were $367.7$380.5 million, or 27.8%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 44.6%45.7% of our deposit portfolio and totaled $589.4$596.1 million at MarchJune 31,30, 2026, compared to $651.0 million, or 46.9% of deposits, at December 31, 2025. SavingsThe decrease in money market and checking deposit accounts increasedincluded a decline of $40.1 million in brokered deposits from $40.1 million at December 31, 2025 to $154.6a balance of $29,000 at June 30, 2026. Savings accounts were $151.0 million, or 11.7%11.6%, of deposits,deposits at March 31,June 30, 2026, fromcompared to $151.4 million, or 10.9% of deposits, at December 31, 2025. Certificates of deposit totaled $210.9$177.4 million, or 15.9% 13.6% of deposits, at MarchJune 31,30, 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 $41.5$12.7 million at MarchJune 31,30, 2026.

Overdraft deposits consist of non-interest-bearing deposits, money market and checking deposit accounts with negative balances. These overdraft balances totaled $345,000$443,000 as of MarchJune 31,30, 2026 and $297,000 as of December 31, 2025 and were presented as loans on the balance sheet.

Total deposits include estimated uninsured deposits of $450.7$462.3 million and $490.9 million as of MarchJune 31,30, 2026 and December 31, 2025, respectively. This represented approximately 37.1%35.4% of our total deposits at MarchJune 31,30, 2026 and 35.3% of our deposits at December 31, 2025. Over 96.1%98.6% of the Company’s total deposits were considered core deposits at MarchJune 31,30, 2026. These deposit balances are from retail, commercial and public fund customers located in the markets where the Company has bank branch locations.

Certificates of deposit at MarchJune 31,30, 2026 scheduled to mature in one year or less totaled $201.5$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.

Total borrowings increased $57.3$72.9 million to $91.0$106.7 million at MarchJune 31,30, 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 driven by the reduction in higher-cost brokered deposits.borrowings.

Cash Flows. During the threesix months ended MarchJune 31,30, 2026, our cash and cash equivalents increased by $10.9$5.3 million. Our operating activities activities provided net cash of $7.2$10.2 million during the first threesix months of 2026 primarily as a result of net earnings. Our investing activities activities provided net cash of $13.9$8.5 million during the first threesix months of 2026, primarily due to a decline in loans, coupled with maturities of investment securities.securities and a decrease in loans. Financing activities used net cash of $10.2$13.5 million during the first threesix months of 2026, primarily as a result of a decrease in deposits,deposit partial offset by an increase in borrowings.balances.

Liquidity. Our most liquid assets are cash and cash equivalents and investment securities available-for-sale. The levels of these assets are dependent on the operating, financing, lending and investing activities during any given year. These liquid assets totaled $376.9$373.0 million at MarchJune 31,30, 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.

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 MarchJune 31,30, 2026, we had $65.7$82.4 million of outstanding borrowings under our line of credit with the FHLB. At MarchJune 31,30, 2026, we had collateral pledged to the FHLB that would allow us to borrow $227.0$173.4 million, subject to FHLB credit requirements and policies. At MarchJune 31,30, 2026, we had no borrowings through the Federal Reserve discount window, while our our borrowing capacity with the Federal Reserve was $38.4$37.2 million. We also have various other federal funds agreements, both secured and and unsecured, with correspondent banks totaling approximately $35.0 million in available credit under which we had no outstanding borrowings at MarchJune 31,30, 2026. At MarchJune 31,30, 2026, we had subordinated debentures totaling $21.7 million and $2.3$1.6 million of repurchase agreements. At MarchJune 31,30, 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 MarchJune 31,30, 2026. The Company also has outstanding borrowings of $1.3$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.Inc., which was completed in 2022.

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 MarchJune 31,30, 2026.

At MarchJune 31,30, 2026, we had outstanding loan commitments, excluding standby letters of credit, of $206.1$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.

Capital. The Company and the Bank are subject to various regulatory capital requirements administered by federal banking regulators. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by federal banking regulators that, if undertaken, could have a direct material effect on the Company’s and Bank’s business. Banking organizations are required to maintain minimum capital levels as follows: a ratio of common equity Tier 1 capital equal to 4.5% of risk-weighted assets, a ratio of Tier 1 capital equal to 6.0% of risk-weighted assets, a ratio of total capital equal to 8.0% of risk-weighted assets, and a leverage ratio of Tier 1 capital to total quarterly average assets equal to 4.0% in all circumstances. Regulations also include a capital conservation buffer of 2.5% that is added to these minimum requirements for capital adequacy purposes. A banking organization with a conservation buffer of less than the required amount is subject to limitations on capital distributions, including the amount of dividends that it may pay without prior regulatory approval, stock repurchases and certain discretionary bonus payments to executive officers. Management believes that the Company and the Bank met all capital adequacy requirements to which they were subject as of MarchJune 31,30, 2026 and December 31, 2025, as discussed in more detail in in Note 11 of the Consolidated Financial Statements.

Dividends. During the quarter ended MarchJune 31,30, 2026, we paid a quarterly cash dividend of $0.21 per share to our stockholders.

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 MarchJune 31,30, 2026. The National Bank Act also imposes limitations on the amount of dividends that a national bank may pay without prior prior regulatory approval. Generally, the amount is limited to the bank’s current year net earnings plus the adjusted retained earnings earnings for the threetwo preceding years. As of MarchJune 31,30, 2026, approximately $20.0$23.5 million was available to be paid as dividends to the Company by the Bank without prior regulatory approval.