QCR Holdings QCRH Form 10-Q filing Q2 FY2026

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Throughout this Quarterly Report on Form 10-Q, we use certain acronyms and abbreviations, as defined in Note 1 to the Consolidated Financial Statements.

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QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As of June 30, 2026 and December 31, 2025

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See Notes to Consolidated Financial Statements (Unaudited)

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QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Three Months Ended June 30, 2026 and 2025

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See Notes to Consolidated Financial Statements (Unaudited)

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QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Six Months Ended June 30, 2026 and 2025

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QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

For the Three and Six Months Ended June 30, 2026 and 2025

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See Notes to Consolidated Financial Statements (Unaudited)

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QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)

For the Three and Six Months Ended June 30, 2026 and 2025

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See Notes to Consolidated Financial Statements (Unaudited)

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QCR HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

For the Six Months Ended June 30, 2026 and 2025

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See Notes to Consolidated Financial Statements (Unaudited)

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Part I

Item 1

QCR HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

June 30, 2026

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation: The interim unaudited Consolidated Financial Statements contained herein should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes to the Consolidated Financial Statements for the fiscal year ended December 31, 2025, included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on February 27, 2026. Accordingly, footnote disclosures, which would substantially duplicate the disclosures contained in the audited Consolidated Financial Statements, have been omitted.

The financial information of the Company included herein has been prepared in accordance with GAAP for interim financial reporting and has been prepared pursuant to the rules and regulations for reporting on Form 10-Q and Rule 10-01 of Regulation S-X. Such information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the periods presented. Any differences appearing between the numbers presented in financial statements and management's discussion and analysis are due to rounding. The results of the interim period ended June 30, 2026 are not necessarily indicative of the results expected for the year ending December 31, 2026, or for any other period.

The acronyms and abbreviations identified below are used throughout this Quarterly Report on Form 10-Q. It may be helpful to refer back to this page as you read this report.

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ACL: Allowance for credit losses GAAP: Generally Accepted Accounting Principles

AFS: Available for sale GB: Guaranty Bank

Allowance: Allowance for credit losses GFED: Guaranty Federal Bancshares, Inc.

AOCI: Accumulated other comprehensive income (loss) HTM: Held to maturity

ASC: Accounting Standards Codification ICS: Insured Cash Sweep

ASU: Accounting Standards Update ISDA: International Swaps and Derivatives Association

BOLI: Bank-owned life insurance LHFS: Loans held for sale

Caps: Interest rate cap derivatives LIHTC: Low-income housing tax credit

CDARS: Certificate of Deposit Account Registry Service m2: m2 Equipment Finance, LLC

CECL: Current Expected Credit Losses NIM: Net interest margin

Community National: Community National Bancorporation NPA: Nonperforming asset

Company: QCR Holdings, Inc. NPL: Nonperforming loan

CRBT: Cedar Rapids Bank & Trust Company OBS: Off-balance sheet

CRE: Commercial real estate OREO: Other real estate owned

CSB: Community State Bank PCAOB: Public Company Accounting Oversight Board

C&I: Commercial and industrial Provision: Provision for credit losses

EBA: Excess balance account QCBT: Quad City Bank & Trust Company

EPS: Earnings per share ROAA: Return on average assets

Exchange Act: Securities Exchange Act of 1934, as ROAE: Return on average equity

amended SEC: Securities and Exchange Commission

FASB: Financial Accounting Standards Board SOFR: Secured Overnight Financing Rate

FDIC: Federal Deposit Insurance Corporation SPE: Special purpose entity

Federal Reserve: Board of Governors of the Federal Swaption: Swap option

Reserve System TA: Tangible assets

FHLB: Federal Home Loan Bank TCE: Tangible common equity

FRB: Federal Reserve Bank of Chicago TEY: Tax equivalent yield

FTEs: Full-time equivalents VIE: Variable interest entities

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The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries which include the accounts of four commercial banks: QCBT, CRBT, CSB and GB. All four banks are state-chartered commercial banks and all are members of the Federal Reserve system. The Company has historically engaged in direct financing lease contracts through m2, a wholly owned subsidiary of QCBT. Since the third quarter of 2024, m2 has discontinued offering new loans and leases. Additionally, the Company also engages in wealth management services through its banking subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.

Derivatives: During the first quarter of 2026, the Company elected to present certain derivative assets and liabilities on a net basis when such instruments are subject to a legally enforceable master netting arrangement and the company has the intent to settle on a net basis or simultaneously, in accordance with ASC 210-20 “Balance Sheet – Offsetting”. This election applies to all derivative instruments executed with the same counterparty under legally enforceable ISDA master netting arrangements and, where applicable, related cash collateral recognized under ASC 815. Certain derivative positions may remain presented on a gross basis even when subject to a master netting arrangement if they do not meet the balance sheet offsetting criteria as of the reporting date. Master netting arrangements give the Company the ability, in the event of default by the counterparty, to liquidate collateral and to offset receivables and payables with the same counterparty. This change affects the presentation of derivative assets and liabilities on the consolidated balance sheets but does not impact net income or total stockholders’ equity. The reclassification of prior-period amounts was made to conform with the current-period presentation, as the derivative instruments were subject to legally enforceable master netting arrangements in prior periods and no changes occurred to the underlying contractual rights.

Netting adjustments represent amounts recorded to convert derivative assets and derivative liabilities from a gross basis to a net basis in accordance with ASC 815, consistent with the balance sheet presentation. Cash collateral receivables and payables are included in balance sheet netting when they meet the criteria for offsetting under ASC 815-10-45-5A. The net basis represents the aggregate of our net exposure to each counterparty after considering the balance sheet netting adjustments and any cash collateral. The Company manages derivative exposure by monitoring the credit risk associated with each counterparty using counterparty-specific credit risk limits, using master netting arrangements and obtaining collateral.

The consolidated balance sheet as of December 31, 2025 presented herein reflects a reclassification of $77.3 million between assets and liabilities to match current period balance sheet presentation. See Note 5 of the Consolidated Financial Statements for additional information regarding the gross and net presentation of derivative instruments.

Reclassifications: Certain amounts in the prior year’s Consolidated Financial Statements have been reclassified, with no effect on net income or stockholders’ equity to conform with the current period presentation.

Recent accounting developments:

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” Under the standard, the accounting guidance enhances the transparency and decision usefulness of income tax disclosures. Investors, lenders, creditors and other allocators of capital information will be able to use the expanded disclosures to better assess how an entity’s operations and related tax risks and tax planning and operation opportunities affect its tax rate and prospects for future cash flows. The ASU is effective for public business entities for annual periods beginning after December 15, 2024. The standard was adopted for the year ending December 31, 2025, and newly required disclosures have been provided in Note 6 to the Consolidated Financial Statements. The ASU did not have a material impact on the Company’s financial statements.

In March 2024, the FASB issued ASU 2024-01, “Compensation – Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards.” Under the standard, the accounting guidance improves GAAP by adding an illustrative example to demonstrate how an entity should apply the scope guidance of “Topic 718, Compensation - Stock Compensation” for profits interest and similar awards. The illustrative examples will benefit investors and other allocators of capital by providing them with more consistent information. The ASU is effective for public business entities for annual periods beginning after December 15, 2024, and interim periods within those annual periods. The standard was adopted on January 1, 2025 and did not have a significant impact on the Company’s financial statements.

In November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses.” Under the standard, the accounting guidance improves disclosures about a public business entity’s expenses, and provides more detailed information about the types of expenses in commonly presented expense captions. The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The standard is not expected to have a material impact on the Company’s financial statements; however, it will require expanded disaggregation of certain income statement expense captions in the notes to the financial statements in 2027.

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In May 2025, the FASB issued ASU 2025-03, “Business Combinations (Topic 805) and Consolidated (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity.” Under the standard, the accounting guidance limits situations in which entities must identify the primary beneficiary as the accounting acquirer in certain business combinations and requires entities to consider the general factors in Topic 805 when a business combination involving a VIE is primarily effected through exchanging equity interests. The ASU is effective prospectively to annual and interim reporting periods after December 15, 2026. The standard is not expected to have a significant impact on the Company’s financial statements.

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In September 2025, the FASB issued ASU 2025-06, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.” Under the standard, the accounting guidance changes the cost capitalization threshold by eliminating accounting consideration of software project development stages; cost capitalization would begin when (1) management has authorized and committed to funding the project and (2) it is “probable” the project will be completed and the software used to perform its intended function; and enhancing the guidance around the probable-to-complete threshold. The standard also modifies the website development costs guidance. The ASU is effective for annual and interim reporting periods after December 15, 2027 and early adoption is permitted. The standard is not expected to have a significant impact on the Company’s financial statements.

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In September 2025, the FASB issued ASU 2025-07, “Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract.” Under the standard, the accounting guidance refines the scope of Topic 815 (derivatives) by adding a scope exception from derivative accounting for contracts that (1) are not exchange traded and (2) have underlying variables based on operations or activities specific to one of the parties to the contract. The accounting guidance also clarifies that revenue guidance in Topic 606 applies initially to share-based noncash consideration received from a customer for the transfer of goods or services. The ASU is effective in interim and annual periods for fiscal years beginning after December 15, 2026 and may be applied either on a prospective or modified retrospective basis. Early adoption is permitted. The standard is not expected to have a significant impact on the Company’s financial statements.

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In November 2025, the FASB issued ASU 2025-08, “Purchased Loans.” Under the standard, the accounting guidance expands the use of the gross-up method to certain acquired loans beyond purchased financial assets with credit deterioration (PCD assets). The ASU is effective for interim and annual and reporting periods in fiscal years beginning after December 15, 2026, and is applied on a prospective basis. Early adoption is permitted. The standard is not expected to have a significant impact on the Company’s financial statements.

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In November 2025, the FASB issued ASU 2025-09, “Hedge Accounting Improvements.” Under the standard, the accounting guidance is intended to more closely align financial reporting with the economics of some of an entity’s risk management activities. The guidance is applied prospectively to all hedging relationships beginning on or after the date of adoption without dedesignation. The ASU is effective prospectively to annual and interim reporting periods after December 15, 2026. Early adoption is permitted. The standard is not expected to have a significant impact on the Company’s financial statements.

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In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements.” Under the standard, the accounting guidance clarifies the form and content choices for interim financial statements and accompanying notes, adds a comprehensive list of required interim disclosures, and introduces a disclosure principle that requires disclosure of events since the end of the previous annual reporting period that materially affect the entity. The guidance is not intended to significantly change interim reporting or expand or reduce interim disclosure requirements. The ASU is effective for interim reporting periods in fiscal years beginning after December 15, 2027. Early adoption is permitted. The standard is not expected to have a significant impact on the Company’s financial statements.

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In December 2025, the FASB issued ASU 2025-12, “Codification Improvements” Under the standard, the accounting guidance enhances the usability of the Codification by refining accounting guidance and streamlining its application through technical corrections, making standards more consistent and easier to interpret for preparers and users. The ASU is effective for annual and interim reporting periods beginning after December 15, 2026. The standard is not expected to have a significant impact on the Company’s financial statements.

NOTE 2– INVESTMENT SECURITIES

The amortized cost and fair value of investment securities as of June 30, 2026 and December 31, 2025 are summarized as follows:

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The Company's HTM municipal securities consist largely of private issues of municipal debt. The large majority of the municipalities are located within the greater Midwest. The municipal debt investments are underwritten using specific guidelines with ongoing monitoring.

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The Company's residential mortgage-backed and related securities portfolio consists entirely of government sponsored or government guaranteed securities. The Company has not invested in private mortgage-backed securities or pooled trust preferred securities.

Gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of June 30, 2026, and December 31, 2025, are summarized in the tables below. Securities AFS, for which an allowance for credit losses has been provided, are not included in these disclosures as there are no unrealized losses remaining after consideration of the ACL.

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As of June 30, 2026, the investment portfolio included 683 securities. Of this number, 518 securities were in an unrealized loss position. The aggregate losses of these securities totaled approximately 14.3% of the total amortized cost of the portfolio. Of these 518 securities, there were 438 securities that were in an unrealized loss position for twelve months or more. Management has concluded unrealized losses as of June 30, 2026 were temporary due to the changing interest rate environment.

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There was no allowance for credit losses for available for sale securities for each of the three and six months ended June 30, 2026 and 2025. The following tables present the activity in the allowance for credit losses for held to maturity securities by major security type for the three and six months ended June 30, 2026 and 2025:

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Trading securities had a fair value of $116.0 million as of June 30, 2026 and $83.9 million as of December 31, 2025 and consisted of retained beneficial interests acquired in conjunction with Freddie Mac securitizations completed by the Company in prior years. The change in fair value on trading securities for the six months ended June 30, 2026 and 2025 was a net loss of $45 thousand and $77 thousand, respectively. See also Note 4 to the Consolidated Financial Statements for details of these securitizations.

There were no transfers of securities between classifications during either the three or six months ended June 30, 2026 or 2025.

There were no sales of securities during either the three and six months ended June 30, 2026 or 2025.

The amortized cost and fair value of securities as of June 30, 2026 by contractual maturity are shown below. Expected maturities of residential mortgage-backed and related securities and asset-backed securities may differ from contractual maturities because the residential mortgages underlying the securities may be prepaid without any penalties. Therefore, these securities are not included in the maturity categories in the following table:

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Portions of the U.S. government sponsored agency securities and municipal securities contain call options, which, at the discretion of the issuer, terminate the security at par and at predetermined dates prior to the stated maturity, summarized as follows as of June 30, 2026:

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As of June 30, 2026, the Company's municipal securities portfolios were comprised of general obligation bonds issued by 80 issuers with fair values totaling $106.5 million and revenue bonds, issued by 160 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $898.6 million. The Company also held investments in general obligation bonds in 18 states, including nine states in which the aggregate fair value exceeded $5.0 million, and in revenue bonds in 31 states, including 14 states in which the aggregate fair value exceeded $5.0 million.

As of December 31, 2025, the Company's municipal securities portfolios were comprised of general obligation bonds issued by 80 issuers with fair values totaling $106.8 million and revenue bonds, issued by 164 issuers, primarily consisting of states, counties, towns, villages and school districts with fair values totaling $879.6 million. The Company held investments in general obligation bonds in 18 states, including nine states in which the aggregate fair value exceeded $5.0 million, and in revenue bonds in 31 states, including 14 states in which the aggregate fair value exceeded $5.0 million.

The Company monitors the investments and concentration closely. Both general obligation and revenue bonds are diversified across many issuers. As of June 30, 2026 and December 31, 2025, the Company did not hold general obligation bonds of any single issuer, that in aggregate exceed 10% of the Company’s stockholders’ equity. Of the general obligation and revenue bonds in the Company's portfolio, the majority are unrated bonds that represent private issuances. All unrated bonds were underwritten according to the Company’s loan underwriting standards and have an average loan risk rating of 2, indicating very high quality. Additionally, many of these bonds are funding essential municipal services such as water, sewer, education, and medical facilities.

The Company's municipal securities are owned by its four subsidiary banks, whose investment policies set forth limits for various subcategories within the municipal securities portfolio. The investments of each charter are monitored individually, and as of June 30, 2026, all were within policy limitations approved by the Company’s board of directors. Policy limits are calculated as a percentage of each charter's total risk-based capital.

As of June 30, 2026, the Company's standard monitoring of its municipal securities portfolio had not uncovered any facts or circumstances resulting in significantly different credit ratings than those assigned by a nationally recognized statistical rating organization, or in the case of unrated bonds, the rating assigned using the credit underwriting standards.

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The following table summarizes the fair value of investment securities pledged and held under derivatives, public deposits, short-term borrowings and other borrowings as of June 30, 2026 and December 31, 2025:

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• Municipal securities with an amortized cost of $168.2 million and $176.6 million were pledged on secured borrowings as of June 30, 2026 and December 31, 2025, respectively.

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NOTE 3 – LOANS/LEASES RECEIVABLE

The composition of the loan/lease portfolio as of June 30, 2026 and December 31, 2025 is presented as follows:

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• Includes equipment financing agreements outstanding through m2, totaling $128.7 million and $178.1 million as of June 30, 2026 and December 31, 2025, respectively.

** Management performs an evaluation of the estimated unguaranteed residual values of leased assets on an annual basis, at a minimum. The evaluation consists of discussions with reputable and current vendors, which is combined with management's expertise and understanding of the current states of particular industries to determine informal valuations of the equipment. As necessary and where available, management will utilize valuations by independent appraisers. The majority of leases with residual values contain a lease options rider, which requires the lessee to pay the residual value directly, finance the payment of the residual value, or extend the lease term to pay the residual value. In these cases, the residual value is protected and the risk of loss is minimal.

*** Includes residential real estate loans held for sale totaling $3.7 million and $1.4 million as of June 30, 2026 and December 31, 2025, respectively.

Accrued interest on loans, which is excluded from the amortized cost of loans, totaled $29.9 million and $32.8 million at June 30, 2026 and December 31, 2025, respectively, and was included in Other Assets on the consolidated balance sheets.

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The aging of the loan/lease portfolio by classes of loans/leases as of June 30, 2026 and December 31, 2025 is presented as follows and all loans held for sale are current:

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NPLs by classes of loans/leases as of June 30, 2026 and December 31, 2025 are presented as follows and all loans held for sale are performing and not included in this table:

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The Company did not recognize any interest income on nonaccrual loans during the three and six months ended June 30, 2026 or 2025.

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• Included within the C&I – Other column are ACL on leases with a beginning balance of $263 thousand, negative provision of $46 thousand, charge-offs of $5 thousand and no recoveries. The ACL on leases was $212 thousand as of June 30, 2026.

** included within the C&I – Other column are ACL on leases with a beginning balance of $311 thousand, negative provision of $320 thousand, charge -offs of $5 thousand and recoveries of $226 thousand. The ACL on leases was $212 thousand as of June 30, 2026.

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• Included within the C&I – Other column are ACL on leases with a beginning balance of $485 thousand, negative provision of $33 thousand, charge-offs of $30 thousand and recoveries of $1 thousand. The ACL on leases was $423 thousand as of June 30, 2025.

** Included within the C&I – Other column are ACL on leases with a beginning balance of $580 thousand, provision of $54 thousand, charge-offs of $221 thousand and recoveries of $10 thousand. The ACL on leases was $423 thousand as of June 30, 2025.

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The composition of the ACL on loans/leases held for investment by portfolio segment based on evaluation method as of June 30, 2026 and December 31, 2025 are as follows:

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• Included within the C&I – other category are leases individually evaluated of $39 thousand with a related allowance for credit losses of $12 thousand and leases collectively evaluated of $6.3 million with a related allowance for credit losses of $202 thousand as of June 30, 2026.

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• Included within the C&I – other category are leases individually evaluated of $54 thousand with a related allowance for credit losses of $16 thousand and leases collectively evaluated of $9.5 million with a related allowance for credit losses of $295 thousand as of December 31, 2025.

The following table presents the amortized cost basis of collateral dependent loans, by the primary collateral type, which are individually evaluated to determine expected credit losses as of June 30, 2026 and December 31, 2025:

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• Included within the C&I – other category are leases individually evaluated of $39 thousand with primary collateral of equipment.

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• Included within the C&I – other category are leases individually evaluated of $54 thousand with primary collateral of equipment.

For all loans except direct financing leases and equipment financing agreements, the Company’s credit quality indicator consists of internally assigned risk ratings. Each such loan is assigned a risk rating upon origination. The risk rating is reviewed every 15 months, at a minimum, and on an as-needed basis depending on the specific circumstances of the loan.

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For certain C&I loans (including equipment financing agreements and direct financing leases), the Company’s credit quality indicator is performance determined by delinquency status. Delinquency status is updated daily by the Company’s loan system.

The following tables show the credit quality indicator of loans by class of receivable and year of origination as of June 30, 2026, and all loans held for sale are included in the pass rated line:

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• Performing = loans/leases accruing and less than 90 days past due. Nonperforming = loans/leases on nonaccrual and accruing loans/leases that are greater than or equal to 90 days past due.

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The following tables show the credit quality indicator of loans by class of receivable and year of origination as of December 31, 2025, and all loans held for sale are included in the pass rated line:

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• Performing = loans/leases accruing and less than 90 days past due. Nonperforming = loans/leases on nonaccrual and accruing loans/leases that are greater than or equal to 90 days past due.

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The following table shows the gross charge-offs of loans and leases by class of receivable and year of origination for the three and six months ended June 30, 2026 and 2025:

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Any loan and lease modifications to borrowers experiencing financial difficulty during 2025 and 2026 were deemed immaterial.

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Changes in the ACL for OBS exposures for the three and six months ended June 30, 2026 and 2025 are presented as follows:

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NOTE 4 – SECURITIZATIONS AND VARIABLE INTEREST ENTITIES

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In prior years, the Company completed four Freddie Mac sponsored securitizations. The Company retained beneficial interests from each securitization which are classified as trading securities on the consolidated balance sheets. Details related to the prior securitizations and related VIEs can be found in Note 4 to the Consolidated Financial Statements included under Item 8 of Part I of the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

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On April 30, 2026, the Company entered into an arrangement with Freddie Mac to securitize and sell $281.9 million of nontaxable LIHTC loans through Freddie Mac to investors. The Company retained beneficial interests totaling $32.8 million, which are classified as trading securities on the Company’s consolidated balance sheets. The transfer of these loans was accounted for as a sale for financial reporting purposes in accordance with ASC 860, and the resulting $1.3 million net loss on sale, which included the impact of the fair value of retained beneficial interests and transaction costs, was reported in capital markets revenue on the consolidated statements of income.

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Two classes of M-Series certificates were issued in conjunction with the April 2026 securitization. Freddie Mac guarantees timely payment of interest and scheduled principal on M-Series Class A Certificates, which were sold to third-party investors through a Freddie Mac securitization special purpose entity. M-Series Class B Certificates are subordinated to M-Series Class A Certificates and were issued to the Company. M-Series Class B Certificates provide 10% first loss support to Freddie Mac on the M-Series Class A Certificates, or approximately $28.4 million of first loss support. The Company’s ongoing involvement in this transaction is limited to customary obligations of loan sales, including any indemnification for material breach in the Company’s representations.

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As part of the April 2026 securitization transaction, the Company released all servicing obligations and rights to a third party, which included obligations to collect and remit payments of principal and interest, manage payments of taxes and insurance, and otherwise administer the underlying loans.

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The VIE entity for 2026 M-Series securitization was assessed for potential consolidation under the VIE model that requires primary beneficiaries to consolidate the entity’s results. A primary beneficiary is defined as the party that has both the power to direct the activities that most significantly impact the entity, and an interest that could be significant to the entity. To determine if an interest could be significant to the entity, both qualitative and quantitative factors regarding the nature, size and form of involvement with the entity are evaluated. At June 30, 2026, the Company determined it was not the primary beneficiary of this VIE, primarily because the Company did not have the power to direct the activities that most significantly impact the VIE.

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In August 2025, the Company securitized $200.3 million of HTM municipal securities. The securitization was comprised of Class A Certificates of $134.2 million and Class B Certificates of $66.1 million. The Class A Certificates were sold to third-party investors, and the Class B Certificates were retained by the Company. The Class B Certificates provide the first loss support and are subordinate to the Class A Certificates. In order to execute this transaction, the Company created a new bankruptcy-remote special purpose entity (a “Sponsor SPE”), through which the transaction was executed, and which is consolidated by the Company. Based on the structure of the transaction, the Company retains effective control of the HTM municipal securities and accounts for the transaction as a secured borrowing. The full amount of HTM municipal securities remain on the balance sheet denoted as collateralizing the borrowing and the Class A Certificates sold to third-party investors are accounted for as a secured term borrowing and classified with other borrowings on the Company’s consolidated balance sheet. No separate securitization SPE or other financing entity was created for this transaction, rather, a governmental entity securitized the securities and issued the certificates.

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Evaluation and assessment of VIEs for consolidation is performed on an ongoing basis by management. Any changes in facts and circumstances occurring since the previous primary beneficiary determination will be considered as part of this ongoing assessment.

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The Company’s total assets related to the consolidated sponsor VIEs related to securitizations to date as of June 30, 2026 and December 31, 2025 were $116.0 million and $83.9 million, respectively, which are included in trading securities on the consolidated balance sheets and there were no liabilities recorded. Of the $116.0 million reported as of June 30, 2026, $32.9 million related to the 2026 M-Series securitization. The Company’s maximum exposure to loss associated with the consolidated securitization VIEs consists of the capital invested plus any unfunded equity commitments that are binding. As of June 30, 2026, the Company’s maximum exposure to loss related to the VIEs was $113.9 million, of which $28.4 million related to the 2026 M-Series securitization.

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NOTE 5 – DERIVATIVES AND HEDGING ACTIVITIES

Effective January 1, 2026, the Company elected to apply the master netting provisions under ASC 210-20 and ASC 815. See Note 1 to the Consolidated Financial Statements for additional information regarding this election.

Derivatives are summarized as follows as of June 30, 2026 and December 31, 2025:

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The Company uses interest rate swap, collar and swaption instruments to manage interest rate risk related to the variability of interest payments due to changes in interest rates.

Changes in fair values of derivative financial instruments accounted for as cash flow hedges, to the extent that they are included in the assessment of effectiveness, are recorded as a component of AOCI. Changes in fair values of derivative financial instruments accounted for as fair value hedges, to the extent that they are included in the assessment of effectiveness, are recorded as a component of interest income/expense.

The Company has entered into interest rate swaps to hedge against the risk of rising rates on one of its variable rate subordinated notes and its variable rate trust preferred securities. All of the interest rate swaps are designated as cash flow hedges in accordance with ASC 815. The details of the interest rate swaps are as follows:

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The Company uses interest rate collars in an effort to manage future interest rate exposure on variable rate loans. The collar hedging strategy stabilizes interest rate fluctuations by setting both a floor and a cap. The collar is designated as a cash flow hedge in accordance with ASC 815. The details of the interest rate collar is as follows:

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The Company has executed a derivative strategy more commonly known as a swaption. The swaptions are designed to hedge the Company’s regulatory capital ratios against the adverse effects of a significant decline in long-term interest rates. The swaptions are designated as unhedged in accordance with ASC 815, therefore the change in fair value of the derivative instrument is recognized into current earnings. An initial premium of $4.5 million was paid upfront for the swaptions. The details of the swaptions are as follows:

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The Company has entered into interest rate swaps to hedge against the risk of declining interest rates on floating rate loans. The interest rate swaps are designated as cash flow hedges in accordance with ASC 815. The details of the interest rate swaps are as follows:

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The Company uses interest rate collars in an effort to manage future interest rate exposure on variable rate deposits. The collar hedging strategy stabilizes interest rate fluctuations by setting both a floor and a cap. The collars are designated as a cash flow hedge in accordance with ASC 815. The details of the interest rate collars are as follows:

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The Company has entered into interest rate swaps to hedge against the risk of rising rates on loans. The interest rate swaps are designated as fair value hedges in accordance with ASC 815. The details of the interest rate swaps are as follows:

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The Company has also entered into interest rate swap contracts that are not designated as hedging instruments. These derivative contracts relate to transactions in which the Company enters into an interest rate swap with a customer while at the same time entering into an equal and offsetting interest rate swap with an upstream counterparty. Additionally, the Company receives an upfront, non-refundable fee from the upstream counterparty, dependent upon the pricing that is recognized upon receipt from the counterparty. Because the Company acts as an intermediary for the customer, changes in the fair value of the underlying derivative contracts, for the most part, offset each other and do not significantly impact the Company’s results of operations.

Interest rate swaps that were not designated as hedging instruments as of June 30, 2026 and December 31, 2025 are summarized as follows:

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The effect of cash flow hedging and fair value accounting on the consolidated statements of income for the three and six months ended June 30, 2026 and 2025 are as follows:

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The Company’s hedged interest rate swaps and non-hedged interest rate swaps are collateralized with cash and investment securities with carrying values as follows, as of the dates presented:

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The Company may be exposed to credit risk in the event of non-performance by the counterparties to its interest rate derivative agreements. The Company assesses the credit risk of its financial institution counterparties by monitoring publicly available credit ratings and financial information. Additionally, the Company manages financial institution counterparty credit risk by entering into interest rate derivatives only with primary and highly rated counterparties, and uses ISDA master agreements, central clearing mechanisms and counterparty limits. The agreements contain bilateral collateral agreements with the amount of collateral to be posted generally governed by the settlement value of outstanding swaps. The Company manages the risk of default by its borrower/customer counterparties through its normal loan underwriting and credit monitoring policies and procedures. The Company underwrites the combination of the base loan amount and potential swap exposure and focuses on high quality borrowers with strong collateral values. The majority of the Company’s swapped loan portfolio consists of loans on projects with loan-to-values, including the potential swap exposure, below 65%. The Company does not currently anticipate any losses from failure of interest rate derivative counterparties to honor their obligations.

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NOTE 6 – INCOME TAXES

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A reconciliation of the expected federal income tax expense to the income tax expense included in the consolidated statements of income is as follows for the three and six months ended June 30, 2026 and 2025:

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The effective tax rate for the first six months of 2026 was at 7.5%, up from 3.3% in the first six months of 2025. The increase was primarily due to an overall increase in pre-tax income.

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The following table summarizes the impact to the Consolidated Statements of Income relative to the Company’s tax credit programs for which it has elected to apply the proportional amortization method of accounting:

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The Company did not recognize impairment losses resulting from the forfeiture or ineligibility of income tax credits or other circumstances during the three and six months ending June 30, 2026 and 2025.

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NOTE 7 - EARNINGS PER SHARE

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The following information was used in the computation of EPS on a basic and diluted basis:

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NOTE 8 – FAIR VALUE

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Accounting guidance on fair value measurement uses a hierarchy intended to maximize the use of observable inputs and minimize the use of unobservable inputs. This hierarchy includes three levels and is based upon the valuation techniques used to measure assets and liabilities. The three levels are as follows:

• Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in markets;
• Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument; and
• Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Assets and liabilities measured at fair value on a recurring basis comprise the following at June 30, 2026 and December 31, 2025:

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The securities AFS portfolio consists of securities whereby the Company obtains fair values from an independent pricing service. The fair values are determined by pricing models that consider observable market data, such as interest rate volatilities, SOFR yield curve, credit spreads and prices from market makers and live trading systems (Level 2 inputs).

Trading securities consist of retained beneficial interests from securitizations and are classified as a Level 3 in the fair value hierarchy. Fair values are estimated using the discounted cash flow method, including discount rates which are deemed to be significant unobservable inputs. As of June 30, 2026, the discount rates ranged from 3.15% to 6.88%.

Changes in fair value of trading securities for the three and six months ended June 30, 2026 and 2025 are presented as follows:

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Interest rate caps, swaps, collars and swaptions are used for the purpose of hedging interest rate risk on various financial assets and liabilities, further described in Note 5 to the Consolidated Financial Statements. The fair values are determined by pricing models that consider observable market data for derivative instruments with similar structures (Level 2 inputs).

Certain financial assets are measured at fair value on a non-recurring basis; that is, the assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

Assets measured at fair value on a non-recurring basis comprised the following at June 30, 2026 and December 31, 2025:

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Loans/leases evaluated individually are valued at the lower of cost or fair value and are classified as Level 3 in the fair value hierarchy. Fair value is measured based on the value of the collateral securing these loans/leases. Collateral may be comprised of real estate and/or business assets, including equipment, inventory and/or accounts receivable, and is determined based on appraisals by qualified licensed appraisers hired by the Company. Appraised and reported values are discounted based on management's historical knowledge, changes in market conditions from the time of valuation, and/or management's expertise and knowledge of the client and client's business.

OREO in the table above consists of property acquired through foreclosures and settlement of loans. Property acquired is carried at the estimated fair value of the property, less disposal costs, and is classified as a Level 3 in the fair value hierarchy. The estimated fair value of the property acquired is generally determined based on appraisals by qualified licensed appraisers hired by the Company. Appraised and reported values are discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the property.

The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis for which the Company has utilized Level 3 inputs to determine fair value:

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For the loans/leases evaluated individually and OREO, the Company records carrying value at fair value less disposal or selling costs. The amounts reported in the tables above are fair values before the adjustment for disposal or selling costs.

There have been no changes in the valuation techniques used for any assets or liabilities measured at fair value during the three or six months ended June 30, 2026 and 2025.

The following table presents the carrying values and estimated fair values of financial assets and liabilities carried on the Company's consolidated balance sheets, including those financial assets and liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis:

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NOTE 9 – BUSINESS SEGMENT INFORMATION

Selected financial and descriptive information is required to be disclosed for reportable operating segments, applying a “management perspective” as the basis for identifying reportable segments. The management perspective is determined by the view that management takes of the segments within the Company when making operating decisions, allocating resources, and measuring performance. The segments of the Company have been defined by the structure of the Company’s internal organization, focusing on the financial information that the Company’s operating decision-makers routinely use to make decisions about operating matters. The chief operating decision maker consists of the Chief Executive Officer and President of the Company. The chief operating decision maker reviews financial reports that detail the interest income, interest expense, provision for credit losses, noninterest income, salaries and benefits expense, occupancy expense, other noninterest expenses, income tax expense and net income from continuing operations and compares the actual results to the amounts budgeted and the reason for variances. The results of this review allow the Company’s chief operating decision maker to make operating decisions and allocate resources. Capital markets revenue is considered a significant source of noninterest income. Salaries and benefits expense and occupancy expense are considered significant noninterest expenses.

The Company’s Commercial Banking business is geographically divided by markets into the operating segments which are the four subsidiary banks wholly owned by the Company: QCBT, CRBT, CSB, and GB. Each of these operating segments offers similar products and services, but is managed separately due to different pricing, product demand, and consumer markets. Each offers commercial, consumer, and mortgage loans and deposit services.

The Company's All Other segment includes the corporate operations of the parent and operations of all other consolidated subsidiaries and/or defined operating segments that fall below the segment reporting thresholds.

Selected financial information on the Company's business segments is presented as follows as of and for the three and six months ended June 30, 2026 and 2025:

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Intercompany eliminations included in the selected financial information on the Company’s business segments consist of equity in net income of each subsidiary bank and investment in each subsidiary bank as follows:

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NOTE 10 – REGULATORY CAPITAL REQUIREMENTS

The Company (on a consolidated basis) and the subsidiary banks are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company and the subsidiary banks' financial statements.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the subsidiary banks must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain OBS items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company and the subsidiary banks to maintain minimum amounts and ratios (set forth in the following table) of total common equity Tier 1, Tier 1 capital to risk-weighted assets and Tier 1 capital to average assets, each as defined by regulation. Management believes, as of June 30, 2026 and December 31, 2025, that the Company and the subsidiary banks met all capital adequacy requirements to which they are subject.

Under the regulatory framework for prompt corrective action, to be categorized as “well capitalized,” an institution must maintain minimum total risk-based, Tier 1 risk-based, Tier 1 leverage and common equity Tier 1 ratios as set forth in the following tables. The Company and the subsidiary banks’ actual capital amounts and ratios as of June 30, 2026 and December 31, 2025 are presented in the following tables (dollars in thousands). As of June 30, 2026 and December 31, 2025, each of the subsidiary banks met such capital requirements to be “well capitalized.”

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NOTE 11 - COMMITMENTS

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The Company entered into a construction contract in 2025 for the construction of a new corporate headquarters including a new branch facility for QCBT in Bettendorf, Iowa. The Company will pay the contractor a contract price of approximately $66.5 million, subject to certain agreed upon additions and deductions. As of June 30, 2026, the Company had paid $21.2 million of the contract price, resulting in a remaining future commitment of approximately $45.3 million. Construction on this facility is anticipated to be completed in 2027.

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NOTE 12 - LEGAL CONTINGENCIES

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In the normal course of business, the Company and its subsidiaries are subject to pending and threatened litigation, claims investigations and legal and administrative cases and proceedings.

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Under applicable accounting standards, reserves are established for legal claims only when losses associated with the claims are judged to be probable, and the loss can be reasonably estimated. When a material loss contingency is reasonably possible, but not probable, the Company does not record a liability, but instead discloses the nature of the matter and an estimate of the loss or range of losses, to the extent such estimate can be made. Significant judgment is required in both the determination of possibility or probability, and whether the loss or range of losses is reasonably estimable. The Company’s judgments are subjective and based on the status of the legal or regulatory proceedings, the merits of the Company’s defenses and consultation with in-house and outside legal counsel. Because of uncertainties related to these matters, accruals are based on the best information available to the Company and its advisors at the time, including, among other information, settlement agreements. As additional information becomes available, the Company reassesses the potential liability related to pending claims and litigation and may revise its estimates accordingly. Due to the inherent uncertainties of the legal and regulatory processes, such judgments may be materially different than the actual outcomes. Legal costs such as outside counsel fees are expensed in the period in which the services are rendered.

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Assessments of litigation exposure are difficult because they involve inherently unpredictable factors including, but not limited to: whether the proceeding is in the early stages; whether damages are unspecified, unsupported or uncertain; whether there is a potential for punitive or other pecuniary damages; whether the matter involves legal uncertainties, including novel issues of law; whether the matter involves multiple parties and/or jurisdictions; whether discovery has begun or is not complete; whether meaningful settlement discussions have commenced; and whether the proceeding involves class allegations. In many lawsuits and arbitrations, it is not possible to determine whether a liability will be incurred, or to estimate the ultimate or minimum amount of that liability, until the matter is close to resolution, in which case a reserve will not be recognized until that time. As a result, the Company may be unable to estimate reasonably possible losses with respect to litigation matters it faces.

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In June 2025, CSB was named as a defendant in a lawsuit filed in the Iowa District Court in and for Polk County. The plaintiff alleged, on behalf of himself and a proposed statewide class of consumers, breach of contract and unjust enrichment arising from the CSB’s alleged improper assessment and collection of multiple insufficient funds fees and/or overdraft fees specifically for representment transactions. The petition sought an unspecified amount of monetary damages.

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CSB initially filed a motion to dismiss, which was denied in February 2026. CSB filed an Answer and Affirmative Defenses to the petition on April 10, 2026. Management engaged outside counsel experienced in this area to assist with defense and risk assessment. CSB disputed the allegations made by the plaintiff.

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As of June 30, 2026, the parties have reached an agreement to resolve the matter with no material costs to the Company.

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Part I