PART I [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's total assets decreased to $998.4 million as of June 30, 2025, from $1.13 billion at December 31, 2024, with net income for Q2 2025 at $3.7 million, down from $4.6 million in Q2 2024, and H1 2025 net income at $3.2 million, a significant drop from $11.6 million in the prior year period [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased from $1.13 billion at year-end 2024 to $998.4 million as of June 30, 2025, driven by a decrease in commercial mortgage loans held-for-investment from $1.05 billion to $905.4 million, while total liabilities also decreased from $890.7 million to $766.9 million, and total equity saw a slight reduction from $237.9 million to $231.5 million Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $59,404 | $69,173 | | Commercial mortgage loans held-for-investment, net | $905,420 | $1,048,803 | | Real estate owned, held-for-investment, net | $23,818 | $0 | | **Total Assets** | **$998,387** | **$1,128,594** | | **Liabilities** | | | | Collateralized loan obligations and secured financings, net | $709,863 | $828,390 | | **Total Liabilities** | **$766,931** | **$890,695** | | **Total Equity** | **$231,456** | **$237,899** | - The company's consolidated balance sheets include significant assets and liabilities from consolidated variable interest entities (VIEs) As of June 30, 2025, assets of consolidated VIEs totaled **$934.1 million** and liabilities totaled **$712.8 million**[10](index=10&type=chunk) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) For the second quarter of 2025, net interest income was $7.0 million, down from $9.5 million in Q2 2024, with net income attributable to common stockholders at $2.5 million, or $0.05 per share, compared to $3.4 million, or $0.07 per share, in the prior-year quarter, and for the six-month period, net income attributable to common stockholders was $0.8 million, a sharp decline from $9.2 million year-over-year Quarterly Performance Comparison (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Interest Income | $6,961 | $9,523 | | Provision for credit losses, net | ($95) | ($1,400) | | Net Income | $3,691 | $4,598 | | Net Income Attributable to Common Stockholders | $2,506 | $3,413 | | Basic and Diluted EPS | $0.05 | $0.07 | Six-Month Performance Comparison (in thousands, except per share data) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Interest Income | $14,695 | $22,515 | | Provision for credit losses, net | ($5,792) | ($3,177) | | Net Income | $3,168 | $11,579 | | Net Income Attributable to Common Stockholders | $798 | $9,209 | | Basic and Diluted EPS | $0.02 | $0.18 | [Consolidated Statements of Changes in Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity decreased from $237.9 million at the end of 2024 to $231.5 million at June 30, 2025, primarily driven by common and preferred stock dividends totaling $9.7 million, partially offset by net income of $3.2 million and minor common stock issuances - For the six months ended June 30, 2025, total equity decreased by approximately **$6.4 million** Key activities included net income of **$3.2 million**, offset by common stock dividends of **$7.3 million** and preferred stock dividends of **$2.4 million**[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities was $7.7 million, net cash provided by investing activities was $116.0 million, and net cash used in financing activities was $134.5 million, resulting in a net decrease in cash of $10.8 million Six-Month Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $7,705 | $14,571 | | Net Cash Provided by Investing Activities | $115,958 | $162,272 | | Net Cash (Used in) Financing Activities | ($134,480) | ($161,768) | | **Net (Decrease) Increase in Cash** | **($10,816)** | **$15,075** | - A significant non-cash investing activity was the transfer of a senior loan to Real Estate Owned (REO) valued at **$23.96 million** during the first six months of 2025[20](index=20&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of the company's accounting policies and financial activities, including the structure of its commercial mortgage loan portfolio, the use of Collateralized Loan Obligations (CLOs) as VIEs for financing, management fee structures, and the methodology for calculating the allowance for credit losses under CECL [NOTE 3 - COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT](index=13&type=section&id=NOTE%203%20-%20COMMERCIAL%20MORTGAGE%20LOANS%20HELD-FOR-INVESTMENT) The commercial mortgage loan portfolio, consisting entirely of senior secured floating-rate loans, decreased to a carrying value of $905.4 million as of June 30, 2025, from $1.05 billion at year-end 2024, with the allowance for credit losses increasing to $14.3 million from $11.3 million, and the portfolio's average risk rating remaining stable at 3.5, heavily concentrated in multifamily properties (90.6%) and geographically focused in the South (36.3%) and Southwest (32.8%) Loan Portfolio Characteristics | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Unpaid Principal Balance | $924.2M | $1,065.6M | | Carrying Value (net of allowance) | $905.4M | $1,048.8M | | Loan Count | 56 | 65 | | Weighted Average Coupon | 7.9% | 8.1% | | Allowance for Credit Losses | $14.3M | $11.3M | Loan Portfolio Risk Rating (by Outstanding Principal) | Risk Rating | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | 2 (Low Risk) | $80.4M | $57.8M | | 3 (Moderate Risk) | $495.5M | $616.6M | | 4 (High Risk) | $224.2M | $292.8M | | 5 (Default Risk) | $124.1M | $98.3M | | **Total** | **$924.2M** | **$1,065.6M** | - As of June 30, 2025, there were **eight loans** with a risk rating of '5' (Default Risk) totaling **$124.1 million** in principal, an increase from **six loans** totaling **$98.3 million** at year-end 2024 Several loans were placed on non-accrual status or required specific allowances for credit losses due to monetary or maturity defaults[70](index=70&type=chunk)[71](index=71&type=chunk)[78](index=78&type=chunk) - The allowance for credit losses on loans held-for-investment increased from **$11.3 million** at the beginning of the period to **$14.3 million** at the end of June 2025, after a provision of **$5.8 million** and charge-offs of **$2.9 million**[75](index=75&type=chunk) [NOTE 4 - USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES](index=17&type=section&id=NOTE%204%20-%20USE%20OF%20SPECIAL%20PURPOSE%20ENTITIES%20AND%20VARIABLE%20INTEREST%20ENTITIES) The company utilizes two primary Variable Interest Entities (VIEs) for financing, the 2021-FL1 CLO and the LMF 2023-1 Financing, which LFT consolidates, holding $934.1 million in assets and $712.8 million in liabilities as of June 30, 2025, with all collateralization and coverage tests met Consolidated VIE Assets and Liabilities (June 30, 2025) | Account | Amount (in millions) | | :--- | :--- | | **Assets** | | | Loans held for investment, net | $902.9 | | Real estate owned, net | $23.8 | | **Total VIE Assets** | **$934.1** | | **Liabilities** | | | Collateralized loan obligations and secured financings | $709.9 | | **Total VIE Liabilities** | **$712.8** | - The 2021-FL1 CLO's reinvestment period expired in December 2023, meaning principal proceeds now reduce the outstanding debt The LMF 2023-1 Financing has a reinvestment period through July 2025[97](index=97&type=chunk)[98](index=98&type=chunk) [NOTE 5 - REAL ESTATE OWNED](index=19&type=section&id=NOTE%205%20-%20REAL%20ESTATE%20OWNED) As of June 30, 2025, the company held two multifamily properties as Real Estate Owned (REO) with a net book value of $23.8 million, acquired during the first half of 2025 through foreclosure on defaulted bridge loans within its consolidated CLO and financing vehicles, with a weighted average occupancy of approximately 73.5% - During the first six months of 2025, the company foreclosed on two multifamily bridge loans, resulting in the acquisition of REO assets One had a net carrying value of **$13.0 million** (net of **$2.4 million** CECL reserves) and the other had a net carrying value of **$11.0 million** (net of **$0.5 million** CECL reserves)[104](index=104&type=chunk)[105](index=105&type=chunk) [NOTE 7 - SECURED TERM LOAN](index=20&type=section&id=NOTE%207%20-%20SECURED%20TERM%20LOAN) The company has a $47.75 million Secured Term Loan maturing in February 2026, with its interest rate subject to step-ups, increasing to 7.50% on February 24, 2025, and to 7.85% on June 23, 2025, secured by substantially all assets of the credit parties and in compliance with all financial covenants as of June 30, 2025 Secured Term Loan Details | Metric | Value | | :--- | :--- | | Outstanding Balance (June 30, 2025) | $47.75M | | Maturity Date | February 14, 2026 | | Interest Rate (as of June 23, 2025) | 7.85% | [NOTE 10 - RELATED PARTY TRANSACTIONS](index=23&type=section&id=NOTE%2010%20-%20RELATED%20PARTY%20TRANSACTIONS) The company is externally managed by Lument Investment Management (Lument IM), to whom it paid management fees of $2.2 million and incentive fees of $0.7 million for the six months ended June 30, 2025, with the Manager waiving $453,222 in incentive fees for this period, and also reimbursing the Manager for certain operating expenses totaling $0.9 million for the first half of 2025 Fees Paid to Manager (Six Months Ended June 30) | Fee Type | 2025 | 2024 | | :--- | :--- | :--- | | Management Fees | $2,214,753 | $2,209,196 | | Incentive Fees (incurred) | $654,309 | $2,171,752 | | Reimbursable Expenses | $899,421 | $875,074 | - The Manager agreed to waive **$453,222** in incentive fees that would have otherwise been incurred for the six months ended June 30, 2025[129](index=129&type=chunk) [NOTE 13 - EQUITY](index=25&type=section&id=NOTE%2013%20-%20EQUITY) As of June 30, 2025, the company had 52.3 million common shares and 2.4 million Series A Preferred shares outstanding, with $9.4 million remaining authorized under its $10 million stock repurchase program, and declared common dividends of $0.14 per share and preferred dividends of $0.98438 per share during the first six months of 2025, also issuing 31,837 shares under an Independent Directors Stock-for-Fees Program Dividends Declared (H1 2025) | Stock Type | Total Dividend Amount | Per Share | | :--- | :--- | :--- | | Common Stock | $7,326,421 | $0.14 | | Series A Preferred Stock | $2,362,500 | $0.98438 | - The company has a stock repurchase program with **$9.4 million** remaining authorized as of June 30, 2025 No repurchases have been made since January 2016[150](index=150&type=chunk) [NOTE 16 - SUBSEQUENT EVENTS](index=29&type=section&id=NOTE%2016%20-%20SUBSEQUENT%20EVENTS) In August 2025, subsequent to the reporting period, the company acquired a multifamily property in San Antonio, TX, through foreclosure, where the associated loan, held in the 2021-FL1 CLO, had a risk rating of '5' and an outstanding principal balance of $26.6 million as of June 30, 2025 - In August 2025, the company foreclosed on a multifamily property in San Antonio, TX The loan had an outstanding principal of **$26.6 million** and was risk-rated '5'[166](index=166&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the challenging market environment characterized by high interest rates and slowing economic growth, which has increased credit risk in the portfolio, leading to a significant year-over-year decrease in net income due to lower net interest income and higher credit loss provisions on several risk-rated '5' multifamily loans, with the loan portfolio decreasing to $0.9 billion, financed primarily by $0.7 billion in non-mark-to-market CLOs, and key performance metrics for Q2 2025 including a net income of $0.05 per share and Distributable Earnings of $0.05 per share, with a declared dividend of $0.06 per share, and book value per common share declining to $3.27 [Recent Developments and Market Conditions](index=31&type=section&id=Recent%20Developments%20and%20Market%20Conditions) The market continues to face volatility from high inflation and interest rates, slowing economic growth, and geopolitical uncertainty, with elevated Federal Reserve rates posing challenges to commercial real estate values and borrower performance, although partially mitigated by interest rate caps on 75% of performing loans - Market volatility is driven by high inflation, elevated interest rates, and slowing economic growth, which adversely impacts the real estate industry and the company's borrowers[178](index=178&type=chunk) - The Federal Reserve has held the federal funds target range at **4.25% to 4.50%** through July 2025 The prolonged period of elevated rates may adversely affect borrowers and strain the operating cash flows of collateral properties[179](index=179&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk) [Second Quarter 2025 Summary](index=31&type=section&id=Second%20Quarter%202025%20Summary) For the second quarter of 2025, the company reported net income attributable to common stockholders of $2.5 million, or $0.05 per share, and Distributable Earnings of $2.8 million, or $0.05 per share, declared a common dividend of $0.06 per share, saw book value per common share stand at $3.27, and experienced $63.4 million in loan payoffs while funding $3.6 million in new loan participations Q2 2025 Key Metrics | Metric | Value | | :--- | :--- | | Net Income per Share | $0.05 | | Distributable Earnings per Share | $0.05 | | Common Dividend per Share | $0.06 | | Book Value per Share | $3.27 | [Key Financial Measures and Indicators](index=32&type=section&id=Key%20Financial%20Measures%20and%20Indicators) The company uses Earnings per Share, Dividends Declared, Distributable Earnings, and Book Value per Share as key indicators, with Q2 2025 Distributable Earnings at $2.8 million ($0.05/share), reconciled from GAAP net income by excluding non-cash items, and book value per common share decreasing to $3.27 from $3.40 at the end of 2024, impacted by a CECL allowance of $0.27 per share Reconciliation of Net Income to Distributable Earnings (Q2 2025) | Item | Amount (in thousands) | | :--- | :--- | | Net income attributable to common stockholders | $2,506 | | Unrealized loss on MSRs | $36 | | Unrealized provision for credit losses | $95 | | Depreciation of REO | $139 | | Adjustment for income taxes | ($4) | | **Distributable Earnings** | **$2,772** | Book Value Per Share Calculation | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total stockholders' equity | $231.4M | $237.8M | | Less: Preferred stock | ($60.0M) | ($60.0M) | | Total common stockholders' equity | $171.4M | $177.8M | | **Book value per share** | **$3.27** | **$3.40** | [Results of Operations](index=41&type=section&id=Results%20of%20Operations) Comparing Q2 2025 to Q1 2025, net income increased from a loss of $1.7 million to a gain of $2.5 million, primarily due to a significantly lower provision for credit losses in Q2, while net interest income decreased slightly from $7.7 million to $7.0 million due to a smaller loan portfolio, and on a year-over-year basis for the six-month period, net income fell sharply from $9.2 million in H1 2024 to $0.8 million in H1 2025, driven by a $7.8 million decrease in net interest income and a $2.6 million increase in other expenses - The increase in net income from Q1 2025 to Q2 2025 was mainly driven by a decrease in the provision for credit losses, from a **$5.7 million** provision in Q1 to a **$0.1 million** provision in Q2[255](index=255&type=chunk)[254](index=254&type=chunk) - The decrease in net income for the six months ended June 30, 2025 compared to the same period in 2024 was primarily due to a **$7.8 million** reduction in net interest income and a **$2.6 million** increase in total other expense, largely from higher credit loss provisions[268](index=268&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary liquidity sources are cash flow from operations, proceeds from stock issuance, and debt facilities, with unrestricted cash at $59.4 million as of June 30, 2025, and a total debt-to-equity ratio of 3.3:1 on a GAAP basis, facing heightened risk of using unrestricted cash to purchase defaulted assets out of its CLOs to satisfy coverage tests, though management believes current liquidity is sufficient for short-term needs, with long-term requirements dependent on additional financing - Unrestricted cash and cash equivalents decreased to **$59.4 million** at June 30, 2025, from **$69.2 million** at December 31, 2024[282](index=282&type=chunk) - The company's total debt to equity ratio was **3.3:1** as of June 30, 2025 The ratio of recourse debt to equity was much lower at **0.2:1**[283](index=283&type=chunk)[284](index=284&type=chunk) - There is a heightened possibility that the Company may need to use unrestricted cash to purchase defaulted mortgage assets out of its CLO structures to ensure compliance with interest and overcollateralization coverage tests[280](index=280&type=chunk) [Quantitative and Qualitative Disclosures about Market Risks](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risks) The company has indicated that this item is not applicable for this reporting period - Not applicable[299](index=299&type=chunk) [Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the most recently completed fiscal quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[301](index=301&type=chunk) - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[302](index=302&type=chunk) PART II - Other Information [Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) The company is not involved in any material legal proceedings as of the reporting date - As of the report date, the company is not subject to any legal proceedings that it considers to be material[303](index=303&type=chunk) [Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors since the Annual Report on Form 10-K for the year ended December 31, 2025, with risks disclosed in the Q1 2025 10-Q incorporated by reference - No material changes to risk factors have occurred since the company's Annual Report on Form 10-K for the year ended December 31, 2025[304](index=304&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities during the period - None[305](index=305&type=chunk) [Defaults Upon Senior Securities](index=48&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the period - None[306](index=306&type=chunk) [Other Information](index=48&type=section&id=Item%205.%20Other%20Information) During the quarter ended June 30, 2025, no directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the quarter[308](index=308&type=chunk) [Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the report, including CEO and CFO certifications and XBRL data files - The exhibits filed with the report include certifications from the CEO and CFO pursuant to Sarbanes-Oxley Sections 302 and 906, as well as XBRL Interactive Data Files[312](index=312&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________________ to ___________________ Commission File Number: 0-11774 INVESTORS TITLE COMPANY (Exact name of registrant as specified in its charter) North Carolina 5 ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Essent Group Ltd.'s H1 2025 unaudited financials report **$7.22 billion** in assets, **$370.8 million** net income, and strong operating cash flow despite share repurchases [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) Total assets increased to **$7.22 billion**, liabilities rose to **$1.55 billion**, and stockholders' equity slightly increased to **$5.67 billion** as of June 30, 2025 | (In thousands) | June 30, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | **Total Assets** | **$7,220,561** | **$7,111,649** | | Total Investments | $6,326,360 | $6,180,621 | | Cash | $92,116 | $131,480 | | **Total Liabilities** | **$1,547,713** | **$1,507,991** | | Reserve for losses and LAE | $364,749 | $328,866 | | Net deferred tax liability | $427,202 | $392,428 | | **Total Stockholders' Equity** | **$5,672,848** | **$5,603,658** | [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)) Q2 2025 net income decreased to **$195.3 million**, and H1 2025 net income was **$370.8 million**, primarily due to a higher provision for losses | (In thousands, except per share) | Three Months Ended June 30, 2025 (USD) | Three Months Ended June 30, 2024 (USD) | Six Months Ended June 30, 2025 (USD) | Six Months Ended June 30, 2024 (USD) | | :--- | :--- | :--- | :--- | :--- | | **Total revenues** | $319,143 | $312,942 | $636,701 | $611,299 | | **Provision (benefit) for losses and LAE** | $17,055 | $(334) | $48,342 | $9,579 | | **Net income** | **$195,339** | **$203,609** | **$370,772** | **$385,328** | | **Diluted EPS** | **$1.93** | **$1.91** | **$3.62** | **$3.61** | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20(Unaudited)) Stockholders' equity increased to **$5.67 billion** in H1 2025, driven by **$370.8 million** net income, partially offset by dividends and share repurchases - Key drivers for the change in stockholders' equity in the first six months of 2025 include: - Net income: **+$370.8 million**[21](index=21&type=chunk) - Dividends declared: **-$63.2 million**[21](index=21&type=chunk) - Cancellation of treasury stock (share repurchases): **-$340.2 million**[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Operating cash flow was **$411.1 million** in H1 2025, but significant financing activities, including **$339.4 million** in share repurchases, led to a **$39.4 million** net cash decrease | (In thousands) | Six Months Ended June 30, 2025 (USD) | Six Months Ended June 30, 2024 (USD) | | :--- | :--- | :--- | | Net cash provided by operating activities | $411,104 | $405,626 | | Net cash used in investing activities | $(48,576) | $(255,272) | | Net cash used in financing activities | $(401,892) | $(94,739) | | **Net (decrease) increase in cash** | **$(39,364)** | **$55,615** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The notes detail the single mortgage insurance segment, **$6.3 billion** investment portfolio, extensive reinsurance, and **$328.5 million** in H1 2025 share repurchases - The company operates in **one reportable business segment: Mortgage Insurance**, which offers private mortgage insurance and reinsurance for U.S. residential properties[34](index=34&type=chunk)[125](index=125&type=chunk) | Investment Type | Fair Value (June 30, 2025, USD thousands) | % of Total | | :--- | :--- | :--- | | Corporate debt securities | $1,908,167 | 32.0% | | U.S. agency mortgage-backed securities | $1,172,715 | 19.7% | | Asset-backed securities | $796,065 | 13.4% | | Municipal debt securities | $600,618 | 10.0% | | Money market funds | $580,964 | 9.7% | | Other | $909,726 | 15.2% | | **Total Investments Available for Sale** | **$5,966,537** | **100.0%** | - The company utilizes both **Quota Share (QSR)** and **Excess of Loss (XOL)** reinsurance agreements to manage risk[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - As of June 30, 2025, total risk in force (RIF) ceded under QSR agreements was **$9.5 billion**[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - The XOL coverage is provided through both traditional reinsurance panels and insurance-linked notes (Radnor Re Transactions)[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - In H1 2025, the company repurchased **5,755,400 common shares** at a cost of **$328.5 million** under its authorized share repurchase plan[82](index=82&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses stable mortgage insurance performance with **$12.5 billion** NIW, strong capital (9.2:1 risk-to-capital), and increased provision for losses due to aging defaults [Overview & Current Developments](index=34&type=section&id=Overview%20%26%20Current%20Developments) Essent's core mortgage insurance business saw stable **$12.5 billion** NIW for Q2 2025, with elevated interest rates impacting investment income and persistency - New insurance written (NIW) was approximately **$12.5 billion** for Q2 2025, consistent with the **$12.5 billion** from Q2 2024[140](index=140&type=chunk) - Elevated mortgage interest rates have **reduced home buying and refinance activity**, leading to **lower NIW and title insurance volumes**, but have **increased net investment income and the persistency** of the mortgage insurance in force[144](index=144&type=chunk) [Key Performance Indicators](index=40&type=section&id=Key%20Performance%20Indicators) Insurance in Force grew to **$246.8 billion**, with a stable net premium rate of **0.36%** and a strong risk-to-capital ratio of **9.2:1** | (In thousands) | End of Q2 2025 (USD) | End of Q2 2024 (USD) | | :--- | :--- | :--- | | Insurance in Force (IIF) | $246,797,619 | $240,669,165 | | Risk in Force (RIF) | $56,811,096 | $55,521,538 | - The average net premium rate for the U.S. mortgage insurance portfolio was stable at **0.36%** for both the three and six months ended June 30, 2025 and 2024[187](index=187&type=chunk) - The risk-to-capital ratio for Essent Guaranty was **9.2:1** as of June 30, 2025, indicating a **strong capital position** relative to its net risk in force of **$34.0 billion** and statutory capital of **$3.7 billion**[188](index=188&type=chunk) [Results of Operations](index=42&type=section&id=Results%20of%20Operations) Consolidated net income decreased in Q2 2025 to **$195.3 million** due to a higher provision for losses, partially offset by increased net investment income | (In thousands, except per share) | Q2 2025 (USD) | Q2 2024 (USD) | H1 2025 (USD) | H1 2024 (USD) | | :--- | :--- | :--- | :--- | :--- | | Net Premiums Earned | $248,809 | $251,891 | $494,657 | $497,481 | | Net Investment Income | $59,289 | $56,086 | $117,499 | $108,171 | | Provision (benefit) for losses | $17,055 | $(334) | $48,342 | $9,579 | | **Net Income** | **$195,339** | **$203,609** | **$370,772** | **$385,328** | - The provision for losses **increased significantly** in Q2 and H1 2025 compared to the same periods in 2024, primarily due to the **aging of defaults** remaining within the mortgage insurance portfolio, which **increased the average reserve per default**[196](index=196&type=chunk)[208](index=208&type=chunk) - The Mortgage Insurance segment's combined ratio **increased to 22.1%** in Q2 2025 **from 16.2%** in Q2 2024, driven by a **higher loss ratio**[200](index=200&type=chunk) [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$1.0 billion** in cash and investments at the holding company and Essent Guaranty's PMIERs Available Assets at **176%** of minimum required - As of June 30, 2025, the holding companies had **$1.0 billion in cash and investments**, and there was **$500 million of available capacity** under the Revolving Credit Facility[226](index=226&type=chunk) - Essent Guaranty's risk-to-capital ratio was **9.2:1** as of June 30, 2025, with statutory capital of **$3.7 billion**[247](index=247&type=chunk) - The company was **in compliance with Private Mortgage Insurer Eligibility Requirements (PMIERs)**, with Essent Guaranty's Available Assets at **$3.7 billion**, or **176%** of its Minimum Required Assets of **$2.1 billion**[251](index=251&type=chunk) [Financial Condition](index=55&type=section&id=Financial%20Condition) Stockholders' equity increased to **$5.7 billion**, and the **$6.3 billion** investment portfolio is primarily high-quality, investment-grade securities - Stockholders' equity **increased to $5.7 billion** at June 30, 2025, **from $5.6 billion** at December 31, 2024, driven by net income, partially offset by dividends and share repurchases[254](index=254&type=chunk) | Asset Class | Fair Value (June 30, 2025, USD thousands) | Percent | | :--- | :--- | :--- | | Corporate debt securities | $1,908,167 | 32.0% | | U.S. agency mortgage-backed securities | $1,172,715 | 19.7% | | Asset-backed securities | $796,065 | 13.4% | | **Total Investments Available for Sale** | **$5,966,537** | **100.0%** | [Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, with an investment portfolio effective duration of **4.0 years** as of June 30, 2025 - The primary market risk is **interest rate risk** affecting the investment portfolio's value[265](index=265&type=chunk) - The effective duration of the investments available for sale was **4.0 years** at June 30, 2025, indicating that a **100 basis point change** in interest rates would change the portfolio's fair value by **approximately 4.0%**[267](index=267&type=chunk) [Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - Management concluded that disclosure controls and procedures were **effective** as of June 30, 2025[268](index=268&type=chunk) - **No material changes** to internal control over financial reporting occurred during the quarter[269](index=269&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) The company is **not currently subject to any material legal proceedings** - The company is **not currently subject to any material legal proceedings**[272](index=272&type=chunk) [Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) There have been **no material changes in risk factors** from those disclosed in the Annual Report on Form 10-K for 2024 - There have been **no material changes in risk factors** from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[273](index=273&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q2 2025, the company repurchased **2,970,779** common shares for **$171.3 million**, with **$318.8 million** remaining for future repurchases | Period | Total Shares Purchased | Average Price Paid (USD) | Total Cost (approx., USD) | | :--- | :--- | :--- | :--- | | Q2 2025 | 2,970,779 | $57.66 | $171.3 million | - As of June 30, 2025, **$318.8 million** remained available for share repurchases under the company's authorized plan[275](index=275&type=chunk) [Exhibits](index=58&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and financial statements in Inline XBRL format - The exhibits filed with this report include CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1) and financial data in Inline XBRL format (Exhibit 101)[276](index=276&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 or o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to ________ Commission file number: 001-38956 RICHMOND MUTUAL BANCORPORATION, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of inco ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2025 (858) 794-9600 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-40789 Calidi Biotherapeutics, Inc. (Exact name of registrant as specified in its charter) Delaware 86-2967193 (State or other jurisdiction of incorporation or ...

[PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the unaudited financial statements and management's analysis for the quarter ended June 30, 2025, along with market risk and control disclosures [Item 1. Condensed Consolidated Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section presents the unaudited financial statements for the quarter ended June 30, 2025, highlighting a net loss, accumulated deficit, and substantial doubt about the company's going concern ability [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $5,279 | $9,591 | | Total current assets | $6,049 | $10,227 | | Total Assets | $9,351 | $14,182 | | **Liabilities & Equity** | | | | Total current liabilities | $5,353 | $9,496 | | Total Liabilities | $7,275 | $12,214 | | Accumulated deficit | $(132,416) | $(121,715) | | Total Equity | $2,076 | $1,968 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance, detailing revenues, expenses, and net loss for the three and six months ended June 30, 2025 Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $(2,593) | $(2,167) | $(5,018) | $(4,910) | | General and administrative | $(3,071) | $(3,605) | $(5,708) | $(7,614) | | Loss from operations | $(5,664) | $(5,772) | $(10,726) | $(12,524) | | **Net Loss** | **$(5,761)** | **$(5,767)** | **$(10,823)** | **$(12,992)** | | Net loss per share | $(1.99) | $(16.75) | $(4.17) | $(39.61) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(12,011) | $(9,325) | | Net cash used in investing activities | $(64) | $(5) | | Net cash provided by financing activities | $7,639 | $8,213 | | **Net decrease in cash** | **$(4,430)** | **$(1,113)** | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides critical disclosures regarding the company's business, significant events, going concern status, and legal proceedings - The company is a clinical-stage biotechnology firm developing genetic medicines and genetically-engineered oncolytic viruses[28](index=28&type=chunk) - On August 4, 2025, the company executed a **1-for-12 reverse stock split**, with all share and per-share data retroactively adjusted[10](index=10&type=chunk)[32](index=32&type=chunk) - Due to recurring losses, an accumulated deficit of **$132.4 million**, and negative operating cash flows, management has concluded there is **substantial doubt about the company's ability to continue as a going concern**[35](index=35&type=chunk)[36](index=36&type=chunk) - The company is involved in several legal proceedings, including a lawsuit with its former Chief Accounting Officer and a securities fraud complaint, with uncertain outcomes[178](index=178&type=chunk)[184](index=184&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial condition, operational results, and liquidity, emphasizing its clinical-stage biotech focus and going concern challenges [Company Overview](index=44&type=section&id=Company%20Overview) This section introduces Calidi as a clinical-stage biotechnology company developing genetic medicines and oncolytic viruses across three distinct platforms - Calidi is a clinical-stage biotechnology company developing genetic medicines and proprietary genetically-engineered oncolytic viruses through three platforms: RedTail, SuperNova, and NeuroNova[215](index=215&type=chunk) - The RedTail platform is designed for systemic administration to target metastatic tumor sites, with the first compound, CLD-401, expected to enter a Phase I trial by the end of **2026**[215](index=215&type=chunk)[218](index=218&type=chunk) - In July 2025, the FDA granted **Fast Track Designation** to CLD-201, an investigational drug candidate from the SuperNova platform, for the treatment of soft tissue sarcoma[217](index=217&type=chunk) [Results of Operations](index=50&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, focusing on changes in research and development, general and administrative expenses, and net loss Comparison of Operating Results (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Research and development | $(5,018) | $(4,910) | 2% | | General and administrative | $(5,708) | $(7,614) | (25)% | | **Loss from operations** | **$(10,726)** | **$(12,524)** | **(14)%** | | **Net loss** | **$(10,823)** | **$(12,992)** | **(17)%** | - The **$1.9 million decrease** in general and administrative expenses for the first six months of 2025 was primarily driven by reductions in legal fees (**$0.6 million**), salaries and benefits (**$0.4 million**), and insurance expenses (**$0.3 million**)[256](index=256&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, capital raising activities, and its ability to meet future operational needs - As of June 30, 2025, the company had a cash balance of **$5.3 million** and has concluded there is **substantial doubt about its ability to continue as a going concern** for at least one year without additional funding[259](index=259&type=chunk)[278](index=278&type=chunk) - During the first six months of 2025, the company raised approximately **$10.1 million** in proceeds from public offerings and a registered direct offering[260](index=260&type=chunk) - Subsequent to the quarter end, in July 2025, the company raised an additional **$4.6 million** in gross proceeds through a warrant inducement offer[261](index=261&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Calidi is not required to provide detailed market risk disclosures - The company is a smaller reporting company and is not required to provide the information under this item[296](index=296&type=chunk) - The company is not currently exposed to significant market risk from interest rates as its debt is primarily fixed-rate[287](index=287&type=chunk) [Item 4. Controls and Procedures](index=58&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective at a reasonable assurance level as of June 30, 2025 - Based on an evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were **effective at a reasonable assurance level** as of June 30, 2025[298](index=298&type=chunk) - There were no changes in the company's internal control over financial reporting during the quarter ended June 30, 2025, that materially affected, or were reasonably likely to materially affect, its internal controls[299](index=299&type=chunk) [PART II - OTHER INFORMATION](index=59&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides additional information including legal proceedings, risk factors, equity sales, defaults, mine safety, other disclosures, and a list of exhibits [Item 1. Legal Proceedings](index=59&type=section&id=Item%201.%20Legal%20Proceedings) The company refers to its Form 10-K for the year ended December 31, 2024, for information on legal proceedings and states that no other material legal proceedings occurred during the quarter ended June 30, 2025 - The company is not currently party to any other material legal proceedings that occurred during the quarter ended June 30, 2025, beyond those discussed in its 2024 Form 10-K[301](index=301&type=chunk) [Item 1A. Risk Factors](index=59&type=section&id=Item%201A.%20Risk%20Factors) The company reports no material changes from the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes from the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[302](index=302&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities during the period - The company had no unregistered sales of equity securities during the reporting period[303](index=303&type=chunk) [Item 3. Defaults Upon Senior Securities](index=59&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None[304](index=304&type=chunk) [Item 4. Mine Safety Disclosures](index=59&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[305](index=305&type=chunk) [Item 5. Other Information](index=59&type=section&id=Item%205.%20Other%20Information) The company states that no director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter - During the quarter ended June 30, 2025, no director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement[306](index=306&type=chunk) [Item 6. Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including an amendment to the Certificate of Incorporation, a form of Series H Common Warrant, a form of Inducement Letter, and various officer certifications - The report includes exhibits such as an amendment to the Certificate of Incorporation, a form of Series H Common Warrant, a form of Inducement Letter, and officer certifications required by the Sarbanes-Oxley Act[307](index=307&type=chunk)[308](index=308&type=chunk)

PART I – FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and related disclosures for Creative Medical Technology Holdings, Inc [Item 1. Financial Statements](index=1&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Creative Medical Technology Holdings, Inc., including the Balance Sheets, Statements of Operations, Statements of Cash Flows, and Statements of Stockholders' Equity (Deficit), along with their accompanying notes, providing a snapshot of the company's financial position and performance for the periods ended June 30, 2025, and December 31, 2024 [Unaudited Condensed Consolidated Balance Sheets](index=2&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :------------------ | | **ASSETS** | | | | Cash | $6,544,120 | $5,940,402 | | Total Current Assets | $6,632,707 | $6,135,303 | | Licenses, net | $469,240 | $530,559 | | TOTAL ASSETS | $7,105,228 | $6,669,143 | | **LIABILITIES & EQUITY** | | | | Total Current Liabilities | $277,644 | $327,644 | | TOTAL LIABILITIES | $277,644 | $327,644 | | TOTAL STOCKHOLDERS' EQUITY | $6,827,584 | $6,341,499 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $7,105,228 | $6,669,143 | [Unaudited Condensed Consolidated Statements of Operations](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance, including revenues, expenses, and net loss for the three and six months ended June 30, 2025, and 2024 | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $ - | $ 8,000 | $ 3,000 | $ 8,000 | | Gross profit | $ - | $ 4,800 | $ 1,800 | $ 4,800 | | Research and development | $ 501,261 | $ 924,749 | $ 1,244,565 | $ 1,347,141 | | Selling, general and administrative | $ 731,517 | $ 676,086 | $ 1,619,914 | $ 1,347,570 | | TOTAL EXPENSES | $ 1,263,520 | $ 1,630,106 | $ 2,925,798 | $ 2,753,253 | | Operating loss | $ (1,263,520) | $ (1,625,306) | $ (2,923,998) | $ (2,748,453) | | Interest income | $ 30,217 | $ 67,578 | $ 52,598 | $ 149,181 | | NET LOSS | $ (1,233,303) | $ (1,557,728) | $ (2,871,400) | $ (2,599,272) | | NET LOSS PER SHARE - BASIC AND DILUTED | $ (0.48) | $ (1.11) | $ (1.26) | $ (1.84) | | WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | 2,580,532 | 1,405,208 | 2,282,290 | 1,413,324 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025, and 2024 | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $ (2,871,400) | $ (2,599,272) | | Net cash used in operating activities | $ (2,750,282) | $ (2,366,168) | | Net cash provided by investing activities | $ - | $ 6,520,191 | | Net cash provided by (used in) financing activities | $ 3,354,000 | $ (149,414) | | NET INCREASE IN CASH | $ 603,718 | $ 4,004,609 | | ENDING CASH BALANCE | $ 6,544,120 | $ 7,471,476 | [Unaudited Condensed Consolidated Statements of Stockholder' Equity (Deficit)](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholder'%20Equity%20(Deficit)) This section presents changes in the company's equity, including common stock, additional paid-in capital, and accumulated deficit, for the period ended June 30, 2025 | Metric | December 31, 2024 | June 30, 2025 | | :-------------------------- | :---------------- | :-------------- | | Common Stock Shares | 1,748,428 | 2,585,532 | | Common Stock Amount | $1,749 | $2,586 | | Additional Paid-in Capital | $70,931,663 | $74,298,311 | | Accumulated Deficit | $(64,591,913) | $(67,463,313) | | Treasury Stock | $ - | $(10,000) | | Total Stockholders' Equity | $6,341,499 | $6,827,584 | - The company's total stockholders' equity increased from **$6,341,499** at December 31, 2024, to **$6,827,584** at June 30, 2025, primarily due to proceeds from the exercise of warrants (**$3,700,000**) offset by a net loss of **$2,871,400** and treasury stock purchases (**$10,000**)[16](index=16&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=4&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanatory notes accompanying the financial statements, offering further context on accounting policies, agreements, and equity changes [NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=5&type=section&id=NOTE%201%20%E2%80%93%20ORGANIZATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note describes the company's business, operational segment, limited operating history, and key accounting policies for revenue recognition and net loss per share - Creative Medical Technology Holdings, Inc. is a commercial-stage biotechnology company focused on novel biological therapeutics in immunotherapy, endocrinology, urology, neurology, and orthopedics. It conducts commercial operations through CMT, marketing CaverStem® and FemCelz® kits for erectile and female sexual dysfunction[20](index=20&type=chunk)[22](index=22&type=chunk) - The company manages its operations as one reportable segment, with the CEO acting as the Chief Operating Decision Maker (CODM) who reviews and manages the business at a consolidated level[24](index=24&type=chunk) - The company has a limited operating history and minimal revenues, facing risks related to general economic conditions, limited marketing capabilities, rapid technological changes, and capital resource constraints for product development[27](index=27&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - Revenue is recognized from the sale of disposable stem cell concentration kits upon transfer of control to customers, typically on delivery. Deferred revenue was **$0** as of June 30, 2025, down from **$40,000** at December 31, 2024[33](index=33&type=chunk)[34](index=34&type=chunk) - Basic and diluted net loss per share calculations exclude common stock equivalents (options and warrants) during loss periods as they are anti-dilutive. For the six months ended June 30, 2025, **4,147,478 warrants** and **11,183 options** were anti-dilutive[36](index=36&type=chunk) [NOTE 2 – LICENSING AGREEMENTS](index=6&type=section&id=NOTE%202%20%E2%80%93%20LICENSING%20AGREEMENTS) This note details the company's patent licensing agreements, including amortization schedules and carrying values for various intellectual properties Patent Amortization and Carrying Values (as of June 30, 2025) | Patent | Expiration | Amortization (6 months ended June 30, 2025) | Carrying Value (June 30, 2025) | | :------------------------------------------ | :--------- | :------------------------------------------ | :----------------------------- | | ED Patent | 2025 | $4,986 | $6,083 | | Multipotent Amniotic Fetal Stem Cells License | Feb 2026 | $586 | $275 | | Lower Back Patent (Initial) | May 2027 | $5,267 | $19,733 | | Lower Back Patent (Additional $300k) | 2026 | $22,970 | $41,524 | | Lower Back Patent (IND Filing $100k) | 2033 | $5,119 | $79,055 | | Lower Back Patent (First Patient Dosing $200k) | 2034 | $9,912 | $185,049 | | ImmCelz™ Patent | 2030 | $12,479 | $137,521 | Licensing Agreements Rollforward (Six Months Ended June 30, 2025) | Metric | Assets | Accumulated Amortization | | :-------------------------- | :------- | :----------------------- | | Balances at December 31, 2024 | $1,060,000 | $(529,441) | | Amortization | $ - | $(61,319) | | Balances at June 30, 2025 | $1,060,000 | $(590,760) | [NOTE 3 – RELATED PARTY TRANSACTIONS](index=8&type=section&id=NOTE%203%20%E2%80%93%20RELATED%20PARTY%20TRANSACTIONS) This note discloses transactions with related parties, specifically the CEO's purchase and redemption of Series B Preferred Stock for voting purposes - On **May 14, 2024**, the CEO purchased **one share** of Series B Preferred Stock for **$100**, which carried **100,000,000 votes** on a specific Share Increase Proposal. This share was automatically redeemed upon approval of the proposal on **December 9, 2024**[54](index=54&type=chunk) [NOTE 4 – STOCK-BASED COMPENSATION](index=8&type=section&id=NOTE%204%20%E2%80%93%20STOCK-BASED%20COMPENSATION) This note outlines the company's stock-based compensation plan, including outstanding options and related expenses - The 2021 Equity Incentive Plan authorized **60,000 shares** for awards. As of June 30, 2025, **11,183 stock options** were outstanding with an average exercise price of **$83.96** and a remaining life of **6.61 years**. No options were issued, exercised, or expired during the six months ended June 30, 2025[55](index=55&type=chunk)[58](index=58&type=chunk) - Stock-based compensation expense for the six-month periods ended June 30, 2025 and 2024 was **$3,485**. All stock-based compensation has been expensed as of June 30, 2025[58](index=58&type=chunk) [NOTE 5 – STOCKHOLDERS' EQUITY](index=8&type=section&id=NOTE%205%20%E2%80%93%20STOCKHOLDERS'%20EQUITY) This note details changes in stockholders' equity, including share repurchases and warrant exercise inducement offers - The Board approved a share repurchase program on **June 12, 2023**, authorizing up to **$2 million** in common stock repurchases. During the six months ended June 30, 2025, the company repurchased **5,000 shares** for **$10,000**, recorded as treasury stock[60](index=60&type=chunk) - On **March 6, 2025**, the company entered into warrant exercise inducement offer letters, resulting in the exercise of **837,104 existing warrants** at **$4.42/share** and the issuance of **1,674,208 new inducement warrants** at **$3.75/share**. This transaction generated approximately **$3.7 million** in net proceeds for working capital[61](index=61&type=chunk)[62](index=62&type=chunk) Warrant Activity (Six Months Ended June 30, 2025) | Metric | Warrants | Weighted Average Exercise Price | | :-------------------------- | :------- | :------------------------------ | | Outstanding, December 31, 2024 | 3,184,808 | $20.30 | | Issuances | 1,799,774 | $3.75 | | Exercises | (837,104) | $4.42 | | Outstanding, June 30, 2025 | 4,147,478 | $16.32 | [NOTE 6 – SUBSEQUENT EVENTS](index=9&type=section&id=NOTE%206%20%E2%80%93%20SUBSEQUENT%20EVENTS) This note confirms the absence of material subsequent events after the reporting period - There were no material subsequent events reported after June 30, 2025[66](index=66&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=9&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for the three and six months ended June 30, 2025, compared to the prior year. It covers an overview of the company's biotechnology platforms and recent developments, detailed financial performance, liquidity, capital resources, and critical accounting policies [Forward-Looking Statement Notice](index=9&type=section&id=Forward-Looking%20Statement%20Notice) This section advises readers that the report contains forward-looking statements subject to risks and uncertainties, and the company disclaims any obligation to update them - The report contains forward-looking statements regarding product development, business, financial condition, and strategies, which are subject to risks and uncertainties that could cause actual results to differ materially from expectations[68](index=68&type=chunk)[69](index=69&type=chunk) - The company disclaims any obligation to update or revise forward-looking statements to reflect events or circumstances arising after the report date[71](index=71&type=chunk) [Overview](index=10&type=section&id=Overview) This section provides a high-level summary of Creative Medical Technology Holdings, Inc.'s business as a commercial-stage biotechnology company and highlights key developments in its therapeutic platforms - Creative Medical Technology Holdings, Inc. is a commercial-stage biotechnology company focused on novel biological therapeutics across immunotherapy, endocrinology, urology, neurology, and orthopedics[72](index=72&type=chunk) - The company's commercial operations are primarily through Creative Medical Technologies, Inc. (CMT), which monetizes intellectual property related to erectile dysfunction (ED) and has expanded into 're-programmed' stem cell treatments for various disorders[74](index=74&type=chunk) - Key developments include: [ImmCelz™ Platform Development](index=10&type=section&id=ImmCelz%E2%84%A2%20Platform%20Development) This section details the development and advancements of the ImmCelz™ platform, including its efficacy improvements and Orphan Drug Designation for Brittle Type 1 Diabetes - ImmCelz™ (CELZ-100) platform develops treatments using 'reprogrammed' patient immune cells for multiple indications, demonstrating improved purity (**>95%**), reduced donor cell requirements (**75% fewer**), and enhanced functional suppression of effector T cells (**>200% reduction**) compared to industry standards[75](index=75&type=chunk)[89](index=89&type=chunk) - In **March 2024**, ImmCelz™ (CELZ-100) received Orphan Drug Designation (ODD) from the FDA for treating Brittle Type 1 Diabetes, offering benefits like tax advantages, user fee exemptions, and market exclusivity[81](index=81&type=chunk) [iPSCelz™ Program and AI Integration](index=10&type=section&id=iPSCelz%E2%84%A2%20Program%20and%20AI%20Integration) This section describes the progress of the iPScelz™ program, including viral-free iPSC line development, insulin-producing islet cells, and AI integration for drug discovery - The iPScelz™ program, in collaboration with Greenstone Biosciences Inc., successfully developed a viral-free human induced pluripotent stem cell (iPSC) line, saving **2-3 years** in R&D and showing potential for therapeutic biologics and drug discovery[76](index=76&type=chunk) - In **June 2024**, the company successfully generated human iPSCs-derived islet cells that produce human insulin, with potential for clinical translation and stand-alone insulin production[86](index=86&type=chunk) - In **July 2024**, a program was initiated to combine AI with proprietary iPSCs for diagnosing and treating patients exposed to biological and chemical weapons, aiming to accelerate research efficiency, precision, and innovation in drug discovery and therapeutic interventions[87](index=87&type=chunk) [AlloStem™ Clinical Cell Line Development](index=10&type=section&id=AlloStem%E2%84%A2%20Clinical%20Cell%20Line%20Development) This section outlines the development and clinical trial progress of the AlloStem™ Clinical Cell Line across various indications, including Type I Diabetes and Chronic Lower Back Pain - The AlloStem™ Clinical Cell Line (CELZ-200) was developed in **October 2022**, intended for use across multiple programs including ImmCelz™ immunotherapy, OvaStem™ for Premature Ovarian Failure, Type I Diabetes (CELZ-201 CREATE-1), and AlloStemSpine® Chronic Lower Back Pain (CELZ-201 ADAPT)[77](index=77&type=chunk) - The FDA cleared the Type I Diabetes (CELZ-201 CREATE-1) IND application in **November 2022**, allowing a Phase I/II clinical trial to begin patient recruitment in **September 2023**[78](index=78&type=chunk) - In **September 2023**, FDA clearance was received for a Phase I/II clinical trial of AlloStemSpine® Chronic Lower Back Pain (CELZ-201 ADAPT), with patient recruitment and dosing initiated between **November 2023** and **July 2024**[83](index=83&type=chunk)[84](index=84&type=chunk)[90](index=90&type=chunk) - Initial data from the CELZ-201 ADAPT clinical trial's **first cohort (10 participants)** in **January 2025** showed no dose-limiting toxicities or serious adverse events, with preliminary efficacy signals for back pain relief. The Data Safety Monitoring Board (DSMB) recommended proceeding to the next cohort, and the **second cohort of 10 patients** was dosed in **Q2 2025**[91](index=91&type=chunk) - In **March 2024**, FDA authorization was secured for an expanded access therapy using CELZ-201 to manage abnormal glucose tolerance and prevent Type I Diabetes in high-risk individuals[85](index=85&type=chunk) [StemSpine® Pilot Study](index=11&type=section&id=StemSpine%C2%AE%20Pilot%20Study) This section reports on the positive three-year follow-up data from the StemSpine® pilot study for chronic lower back pain treatment - Positive **three-year follow-up data** for the StemSpine® pilot study was reported in **February 2023**, demonstrating continued efficacy for treating chronic lower back pain without serious adverse effects[79](index=79&type=chunk) [Type 2 Diabetes Treatment (CELZ-001)](index=11&type=section&id=Type%202%20Diabetes%20Treatment%20(CELZ-001)) This section presents positive one-year follow-up data for CELZ-001 in Type 2 Diabetes patients, highlighting significant insulin requirement reduction - Positive **one-year follow-up data** for CELZ-001 in Type 2 Diabetes patients was reported in **April 2023**, showing significant efficacy with **93% of treated patients** achieving at least a **50% reduction** in insulin requirement, with no safety concerns[82](index=82&type=chunk) [Results of Operations – For the Three-month Periods Ended June 30, 2025, and 2024](index=12&type=section&id=Results%20of%20Operations%20%E2%80%93%20For%20the%20Three-month%20Periods%20Ended%20June%2030,%202025,%20and%202024) This section analyzes the company's financial performance, including revenues, expenses, and net loss, for the three-month periods ended June 30, 2025, and 2024 Financial Performance (Three Months Ended June 30) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------- | :--- | :--- | :--------- | :--------- | | Gross Revenue | $ - | $ 8,000 | $ (8,000) | -100% | | Cost of Goods Sold | $ - | $ 3,200 | $ (3,200) | -100% | | Gross Profit/(Loss) | $ - | $ 4,800 | $ (4,800) | -100% | | Selling, General and Administrative Expenses | $ 731,517 | $ 676,086 | $ 55,431 | 8% | | Research and Development Expenses | $ 501,261 | $ 924,749 | $ (423,488) | -46% | | Operating Loss | $ (1,263,520) | $ (1,625,306) | $ 361,786 | -22% | | Other Income | $ 30,217 | $ 67,578 | $ (37,361) | -55% | | Net Loss | $ (1,233,303) | $ (1,557,728) | $ 324,425 | -21% | - The decrease in R&D expenses by **$423,488 (46%)** was primarily due to the timing of efforts with industry partners[99](index=99&type=chunk) - The increase in SG&A expenses by **$55,431 (8%)** was mainly driven by higher marketing expenses (**$38,362**) and public company expenses (**$21,454**)[97](index=97&type=chunk) [Results of Operations – For the Six-month Periods Ended June 30, 2025, and 2024](index=12&type=section&id=Results%20of%20Operations%20%E2%80%93%20For%20the%20Six-month%20Periods%20Ended%20June%2030,%202025,%20and%202024) This section analyzes the company's financial performance, including revenues, expenses, and net loss, for the six-month periods ended June 30, 2025, and 2024 Financial Performance (Six Months Ended June 30) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------- | :----------- | :----------- | :--------- | :--------- | | Gross Revenue | $ 3,000 | $ 8,000 | $ (5,000) | -62.5% | | Cost of Goods Sold | $ 1,200 | $ 3,200 | $ (2,000) | -62.5% | | Gross Profit/(Loss) | $ 1,800 | $ 4,800 | $ (3,000) | -62.5% | | Selling, General and Administrative Expenses | $ 1,619,914 | $ 1,347,570 | $ 272,344 | 20% | | Research and Development Expenses | $ 1,244,565 | $ 1,347,141 | $ (102,576) | -8% | | Operating Loss | $ (2,923,998) | $ (2,748,453) | $ (175,545) | 6% | | Other Income | $ 52,598 | $ 149,181 | $ (96,583) | -65% | | Net Loss | $ (2,871,400) | $ (2,599,272) | $ (272,128) | 10% | - The **20% increase** in SG&A expenses was primarily due to a **$169,213 increase** in marketing expenses, a **$50,512 general liability contract renewal**, and a **$37,243 increase** in legal expenses[105](index=105&type=chunk) - The **8% decrease** in R&D expenses was due to a **$466,520 reduction** in general R&D and a **$149,729 reduction** in Type I Diabetes clinical trial expenses, partially offset by a **$280,333 increase** in the AlloStemSpine® Chronic Lower Back Pain trial[107](index=107&type=chunk) [Liquidity and Capital Resources](index=13&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its short-term and long-term financial obligations, detailing its cash position and working capital Liquidity Position | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :-------------- | :------------------ | | Available Cash & US Treasuries | $6,544,120 | $5,940,402 | | Positive Working Capital | $6,355,063 | $5,807,659 | [Cash Flows](index=13&type=section&id=Cash%20Flows) This section provides an analysis of the company's cash generation and usage from operating, investing, and financing activities for the six months ended June 30, 2025, and 2024 Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2025 | 2024 | | :-------------------------------- | :----------- | :----------- | | Net cash used in operating activities | $ (2,750,282) | $ (2,366,168) | | Net cash received from investing activities | $ - | $ 6,520,191 | | Net cash from financing activities | $ 3,354,000 | $ (149,414) | - Net cash used in operating activities increased by **$384,114 (16%)** primarily due to increased R&D investments and corporate marketing[111](index=111&type=chunk) - Financing activities provided **$3,354,000** in 2025, mainly from warrant exercises, a significant shift from **$149,414** used in 2024 for treasury stock purchases[113](index=113&type=chunk) [Critical Accounting Policies and Estimates](index=13&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section discusses the significant accounting policies and estimates that require management's judgment and can materially affect the financial statements - The preparation of financial statements requires management to make assumptions and estimates about future events and apply judgments that affect reported amounts. These are regularly reviewed, but actual results may differ materially[114](index=114&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=13&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Creative Medical Technology Holdings, Inc. has elected not to provide the disclosures typically required for quantitative and qualitative information about market risk - The company, as a smaller reporting company, has elected not to provide quantitative and qualitative disclosures about market risk[115](index=115&type=chunk) [Item 4. Controls and Procedures](index=13&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting during the period [Evaluation of disclosure controls and procedures](index=13&type=section&id=Evaluation%20of%20disclosure%20controls%20and%20procedures) This section confirms management's assessment of the effectiveness of the company's disclosure controls and procedures as of June 30, 2025 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, ensuring timely and accurate reporting of required information[116](index=116&type=chunk)[118](index=118&type=chunk) [Changes in internal control over financial reporting](index=14&type=section&id=Changes%20in%20internal%20control%20over%20financial%20reporting) This section reports on any material changes in the company's internal control over financial reporting during the period - There were no changes in internal control over financial reporting during the period covered by this report that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[119](index=119&type=chunk) PART II – OTHER INFORMATION This section provides additional information including legal proceedings, equity sales, and a list of exhibits [Item 1. Legal Proceedings](index=14&type=section&id=Item%201.%20Legal%20Proceedings) This section addresses the company's involvement in legal proceedings, noting that while lawsuits may arise in the ordinary course of business, litigation outcomes are inherently uncertain and could potentially harm the business - The company may become involved in various lawsuits and legal proceedings in the ordinary course of business, with inherent uncertainties that could adversely affect the business[121](index=121&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=14&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds,%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section reports on the company's share repurchase program, indicating no share repurchases occurred during the three months ended June 30, 2025 - The company's Board of Directors authorized a share repurchase program for up to **$2 million** of common stock on **June 12, 2023**. No share repurchases were made during the three months ended June 30, 2025[122](index=122&type=chunk) [Item 6. Exhibits](index=14&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including corporate governance documents, certifications, and XBRL-related files - The exhibits include Articles of Incorporation, Bylaws, Rule 13a-14(a)/15d-14a(a) Certifications of Principal Executive and Financial Officers, Section 1350 Certifications, and Inline XBRL documents[123](index=123&type=chunk)

PART I - FINANCIAL INFORMATION This section presents the company's unaudited interim financial statements and management's analysis of its financial condition and operational results [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed interim consolidated financial statements, including balance sheets, statements of operations, cash flows, and changes in shareholders' equity, along with detailed notes explaining the company's operations, accounting policies, assets, liabilities, equity, and related party transactions for the periods ended June 30, 2025 and 2024 [Condensed Interim Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Interim%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and shareholders' equity at specific points in time Condensed Interim Consolidated Balance Sheets (June 30, 2025 vs. September 30, 2024) | Metric | June 30, 2025 | September 30, 2024 | | :-------------------------------- | :------------ | :----------------- | | Cash and cash equivalents | $12,361,690 | $1,037,320 | | Total current assets | $12,761,092 | $1,675,622 | | Total assets | $14,804,800 | $3,813,982 | | Total current liabilities | $672,674 | $1,832,827 | | Total shareholders' equity | $14,132,126 | $1,981,155 | - Cash and cash equivalents significantly increased to **$12.4 million** as of June 30, 2025, from **$1.0 million** at September 30, 2024[10](index=10&type=chunk) - Total assets grew substantially to **$14.8 million** from **$3.8 million**, while total current liabilities decreased to **$0.7 million** from **$1.8 million**[10](index=10&type=chunk) [Condensed Interim Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Operations) This statement outlines the company's revenues, expenses, and net loss over specific interim periods Condensed Interim Consolidated Statements of Operations (Three and Nine Months Ended June 30) | Metric (USD) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Research and development | $939,067 | $897,305 | $2,443,191 | $2,778,100 | | General and administrative | $964,676 | $1,035,140 | $2,998,127 | $3,232,248 | | Loss from operations | $(1,903,743) | $(1,932,445) | $(5,441,318) | $(6,010,348) | | Net loss | $(1,749,464) | $(1,668,212) | $(4,957,165) | $(5,207,994) | | Loss per common share - basic and diluted | $(0.25) | $(0.52) | $(0.95) | $(1.64) | - Net loss for the nine months ended June 30, 2025, improved to **$5.0 million** from **$5.2 million** in the prior year, with basic and diluted loss per share decreasing to **$0.95** from **$1.64**[12](index=12&type=chunk) - Research and development expenses decreased for the nine-month period, while general and administrative expenses also saw a reduction[12](index=12&type=chunk) [Condensed Interim Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Cash%20Flows) This statement details the cash inflows and outflows from operating, investing, and financing activities over specific interim periods Condensed Interim Consolidated Statements of Cash Flows (Nine Months Ended June 30) | Cash Flow Activity (USD) | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(5,601,268) | $(3,923,166) | | Net cash provided by financing activities | $16,844,415 | $623,466 | | Net change in cash and cash equivalents | $11,324,370 | $(3,320,513) | | Cash and cash equivalents, end of period | $12,361,690 | $2,040,884 | - Net cash provided by financing activities significantly increased to **$16.8 million** for the nine months ended June 30, 2025, compared to **$0.6 million** in the prior year, primarily due to proceeds from common and preferred share issuances[14](index=14&type=chunk) - The company experienced a positive net change in cash and cash equivalents of **$11.3 million**, ending the period with **$12.4 million** in cash[14](index=14&type=chunk) [Condensed Interim Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Condensed%20Interim%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) This statement tracks the changes in the company's equity components, including common shares, preferred shares, and accumulated deficit, over specific interim periods Shareholders' Equity Changes (Nine Months Ended June 30, 2025) | Metric | September 30, 2024 | June 30, 2025 | | :-------------------------------- | :----------------- | :------------ | | Common Shares (value) | $47,236,024 | $54,271,112 | | Series A-1 Preferred Shares | - | $1,054,735 | | Series B-1 Preferred Shares | - | $8,168,063 | | Additional Paid-in Capital | $13,576,757 | $14,406,511 | | Accumulated Deficit | $(58,589,013) | $(63,645,218) | | Total Shareholders' Equity | $1,981,155 | $14,132,126 | - Total shareholders' equity increased significantly from **$2.0 million** at September 30, 2024, to **$14.1 million** at June 30, 2025, driven by the issuance of common and preferred shares[15](index=15&type=chunk)[16](index=16&type=chunk) - The company issued Series A-1 and Series B-1 Preferred Shares, contributing **$1.05 million** and **$8.17 million**, respectively, to equity[15](index=15&type=chunk)[16](index=16&type=chunk) [1. Nature of Operations](index=8&type=section&id=1.%20Nature%20of%20Operations) This section describes the company's core business, its financial performance, and its ability to continue as a going concern - Edesa Biotech, Inc. is a biopharmaceutical company focused on acquiring, developing, and commercializing clinical-stage drugs for inflammatory and immune-related diseases[17](index=17&type=chunk) - The company incurred a comprehensive loss of **$4.8 million** for the nine months ended June 30, 2025, resulting in an accumulated deficit of **$63.6 million**, and had a net cash outflow from operating activities of **$5.6 million**[20](index=20&type=chunk) - The company's ability to continue as a going concern is dependent on obtaining additional funding through financings, strategic activities, and grants[20](index=20&type=chunk) [2. Basis of Presentation](index=8&type=section&id=2.%20Basis%20of%20Presentation) This section explains the accounting principles, estimates, and currency used in preparing the unaudited condensed interim consolidated financial statements - The unaudited condensed interim consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and include the accounts of the Company and its wholly-owned subsidiaries, with all intercompany balances and transactions eliminated[22](index=22&type=chunk)[23](index=23&type=chunk) - The preparation of financial statements requires management to make estimates and assumptions, particularly in areas such as valuation of assets, deferred income taxes, and share-based compensation[24](index=24&type=chunk) - The consolidated financial statements are presented in U.S. dollars, which is the functional currency for the Company and its U.S. subsidiary, while its Canadian subsidiary's functional currency is Canadian dollars[25](index=25&type=chunk) [3. Intangible Assets](index=9&type=section&id=3.%20Intangible%20Assets) This section details the company's intangible assets, primarily an acquired license, and their associated amortization - The company holds an acquired license for certain monoclonal antibodies (the Constructs), granting exclusive world-wide rights for 25 years from the first commercial sale, recorded as an intangible asset[26](index=26&type=chunk)[28](index=28&type=chunk) Intangible Assets, Net (USD) | Metric | June 30, 2025 | September 30, 2024 | | :-------------------------- | :------------ | :----------------- | | The Constructs | $2,529,483 | $2,529,483 | | Less: accumulated amortization | $(526,514) | $(450,635) | | Total intangible assets, net | $2,002,969 | $2,078,848 | - Amortization expense was **$0.03 million** for each of the three months ended June 30, 2025 and 2024, and **$0.08 million** for each of the nine months ended June 30, 2025 and 2024[30](index=30&type=chunk) [4. Right-of-Use Lease with Related Party](index=9&type=section&id=4.%20Right-of-Use%20Lease%20with%20Related%20Party) This section describes the company's lease agreement for executive offices with a related party and the associated costs - The company leases executive offices from a related company, with the lease extended until November 30, 2025, after which it will be month-to-month[32](index=32&type=chunk) Right-of-Use Lease Cost (USD) | Period | June 30, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------ | | Three Months Ended | $0 | $19,299 | | Nine Months Ended | $17,885 | $59,208 | [5. Commitments](index=10&type=section&id=5.%20Commitments) This section outlines the company's contractual obligations, including research organization payments and contingent license and royalty commitments Approximate Aggregate Future Contractual Payments (as of June 30, 2025) | Year Ending September 30, | Amount (USD) | | :------------------------ | :----------- | | 2025 | $234,000 | | 2026 | $34,000 | | 2027 | $34,000 | | Total | $302,000 | - The company has commitments for contracted research organizations totaling **$302 thousand**, primarily due in fiscal year 2025[34](index=34&type=chunk) - Contingent license and royalty commitments include up to **$356 million** for the Constructs, **$18.4 million** for a pharmaceutical product (2016 agreement), and **$68.9 million** for global rights to the same product (2021 agreement)[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) - The company's drug candidate, EB05, was selected for a U.S. government-funded Phase 2 platform trial for Acute Respiratory Distress Syndrome (ARDS), with Edesa providing drug product and technical support[38](index=38&type=chunk) [6. Capital Shares](index=11&type=section&id=6.%20Capital%20Shares) This section details the company's equity issuances, warrant activity, and share-based compensation expenses - In February 2025, the company issued 834 Series B-1 Preferred Shares and 3,468,746 Common Shares in a private placement, generating approximately **$15.0 million** in gross proceeds[39](index=39&type=chunk) - In October 2024, the company issued 150 Series A-1 Preferred Shares and warrants to an entity controlled by its CEO for an aggregate purchase price of **$1.54 million**[44](index=44&type=chunk) Warrant Activity (Nine Months Ended June 30) | Metric | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Balance - September 30 | 609,717 | 720,909 | | Issued | 326,560 | - | | Expired | (1,687) | (111,192) | | Balance - June 30 | 934,590 | 609,717 | - As of June 30, 2025, the company had **934,590** warrants outstanding with a weighted average exercise price of **$15.35** and **378,235** share options outstanding with a weighted average exercise price of **$24.71**[54](index=54&type=chunk)[58](index=58&type=chunk) - The company recorded **$0.2 million** and **$0.3 million** in share-based compensation expenses for the three and nine months ended June 30, 2025, respectively[66](index=66&type=chunk) [7. Government Contributions](index=16&type=section&id=7.%20Government%20Contributions) This section describes the company's multi-year contribution agreement with the Canadian Government's Strategic Innovation Fund and related grant income - In October 2023, the company entered into a multi-year contribution agreement with the Canadian Government's Strategic Innovation Fund (SIF) for up to **C$23 million** in partially repayable funding for its EB05 Phase 3 clinical study and related activities[68](index=68&type=chunk) Reimbursement Grant Income (USD) | Period | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Three Months Ended | $0.2 million | $0.2 million | | Nine Months Ended | $0.5 million | $0.7 million | [8. Financial Instruments](index=18&type=section&id=8.%20Financial%20Instruments) This section discusses the company's financial instruments, fair value measurements, and exposures to interest rate, credit, and foreign exchange risks - The company uses the fair value measurement framework, categorizing inputs into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[73](index=73&type=chunk)[74](index=74&type=chunk)[80](index=80&type=chunk) - Interest rate and credit risks are managed by maintaining bank accounts with credit-worthy institutions and assessing collectability of receivables[76](index=76&type=chunk)[77](index=77&type=chunk) - The company is exposed to foreign exchange risk from Canadian dollar balances; a **10%** annual change in the Canadian/U.S. exchange rate would impact loss and other comprehensive loss by approximately **$0.3 million**[78](index=78&type=chunk) [9. Loss per Share](index=19&type=section&id=9.%20Loss%20per%20Share) This section explains the calculation of basic and diluted loss per share, noting the anti-dilutive effect of certain securities - Securities that could potentially dilute basic earnings per share were excluded from the computation of diluted loss per share because their effect would have been anti-dilutive[81](index=81&type=chunk) [10. Related Party Transactions](index=19&type=section&id=10.%20Related%20Party%20Transactions) This section details transactions with related parties, including equity issuances, investor rights agreements, and lease payments - In February 2025, the CEO, directors, and affiliated entities participated in the Series B-1 private placement, purchasing Series B-1 Preferred Shares and Common Shares[82](index=82&type=chunk) - An Investor Rights Agreement grants the lead investor certain nomination rights to the board and protective provisions regarding amendments to governing documents and share rights[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) - The company paid **$20 thousand** and **$60 thousand** for a lease from a CEO-controlled company for the three and nine months ended June 30, 2025, respectively[87](index=87&type=chunk) - A **$10.0 million** revolving credit agreement with a CEO-controlled entity was terminated in October 2024, with no funds borrowed[88](index=88&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational results, highlighting key developments, financial performance comparisons, and liquidity outlook. It emphasizes the company's focus on biopharmaceutical development, recent financing activities, and the need for future funding to support its clinical pipeline [Disclosure Regarding Forward-Looking Statements](index=20&type=section&id=Disclosure%20Regarding%20Forward-Looking%20Statements) This section cautions readers about forward-looking statements, outlining inherent risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements identified by words such as 'expects,' 'anticipates,' and 'believes,' which are subject to risks and uncertainties that could cause actual results to differ materially[90](index=90&type=chunk)[92](index=92&type=chunk) - Key risk factors include the ability to obtain funding, timing and results of clinical trials, regulatory approvals, market acceptance, competition, intellectual property protection, and general economic conditions[93](index=93&type=chunk)[94](index=94&type=chunk)[98](index=98&type=chunk) [Overview](index=22&type=section&id=Overview) This section introduces Edesa Biotech as a biopharmaceutical company developing therapies for inflammatory and immune-related diseases, highlighting its clinical pipeline - Edesa Biotech is a biopharmaceutical company developing innovative therapies for inflammatory and immune-related diseases, focusing on indications with unmet medical needs and large market opportunities[95](index=95&type=chunk) - The clinical pipeline includes EB06 for vitiligo (Phase 2), EB01 for Allergic Contact Dermatitis (Phase 3-ready, partnering stage), and EB05 for Acute Respiratory Distress Syndrome (ARDS) in a U.S. government-funded Phase 2 study[96](index=96&type=chunk)[97](index=97&type=chunk) [Recent Developments](index=23&type=section&id=Recent%20Developments) This section summarizes recent corporate activities, including equity offerings and the creation of new preferred share classes - The company sold **304,057** common shares through an At The Market (ATM) offering program (HCW ATM) for net proceeds of **$0.8 million** during the nine months ended June 30, 2025[99](index=99&type=chunk) - Amended Articles were filed to create Series A-1 and Series B-1 Convertible Preferred Shares, which rank senior to common shares in liquidation[100](index=100&type=chunk)[101](index=101&type=chunk) - The Series A-1 Preferred Shares offering generated **$1.54 million** from an entity controlled by the CEO, while the Series B-1 Preferred Shares offering generated approximately **$15.0 million** in gross proceeds from a private placement[102](index=102&type=chunk)[103](index=103&type=chunk) [Significant Accounting Policies and Estimates](index=24&type=section&id=Significant%20Accounting%20Policies%20and%20Estimates) This section confirms that there have been no material changes to the company's significant accounting policies or estimates - There have been no material changes to the company's significant accounting policies or estimates since the Annual Report on Form 10-K for the year ended September 30, 2024[104](index=104&type=chunk) [Results of Operations - Comparison of the Three Months Ended June 30, 2025 and 2024](index=24&type=section&id=Results%20of%20Operations%20-%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) This section analyzes the company's financial performance, including operating expenses and net loss, for the three-month periods ended June 30, 2025 and 2024 Key Financials (Three Months Ended June 30) | Metric (USD) | June 30, 2025 | June 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :------------ | :--------- | :--------- | | Total operating expenses | $1.9 million | $1.9 million | $0 | 0% | | Research and development | $0.9 million | $0.9 million | $0 | 0% | | General and administrative | $1.0 million | $1.0 million | $0 | 0% | | Net loss | $(1.7 million)| $(1.7 million)| $0 | 0% | | Loss per common share | $(0.25) | $(0.52) | $0.27 | -51.9% | | Total other income | $154,000 | $264,000 | $(110,000) | -41.7% | | Grant income | $183,000 | $236,000 | $(53,000) | -22.5% | | Interest income | $600 | $33,000 | $(32,400) | -98.2% | | Foreign exchange loss | $(30,000) | $(5,000) | $(25,000) | 500% | - Net loss remained consistent at **$1.7 million** for both periods, but loss per common share improved to **$0.25** from **$0.52** due to an increased weighted average number of common shares[106](index=106&type=chunk) - Total other income decreased by **$110 thousand**, primarily due to a **$53 thousand** decrease in grant income and a significant drop in interest income from **$33 thousand** to **$0.6 thousand**[106](index=106&type=chunk)[107](index=107&type=chunk) [Results of Operations - Comparison of the Nine Months Ended June 30, 2025 and 2024](index=25&type=section&id=Results%20of%20Operations%20-%20Nine%20Months%20Ended%20June%2030,%202025%20and%202024) This section analyzes the company's financial performance, including operating expenses and net loss, for the nine-month periods ended June 30, 2025 and 2024 Key Financials (Nine Months Ended June 30) | Metric (USD) | June 30, 2025 | June 30, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------ | :------------ | :--------- | :--------- | | Total operating expenses | $5.4 million | $6.0 million | $(0.6M) | -10% | | Research and development | $2.4 million | $2.8 million | $(0.4M) | -14.3% | | General and administrative | $3.0 million | $3.2 million | $(0.2M) | -6.3% | | Net loss | $(5.0 million)| $(5.2 million)| $0.2M | -3.8% | | Loss per common share | $(0.95) | $(1.64) | $0.69 | -42.1% | | Total other income | $0.5 million | $0.8 million | $(0.3M) | -37.5% | | Grant income | $0.5 million | $0.6 million | $(0.1M) | -16.7% | | Interest income | $3,000 | $137,000 | $(134,000) | -97.8% | | Foreign exchange loss | $(54,000) | $(10,000) | $(44,000) | 440% | - Total operating expenses decreased by **$0.6 million** to **$5.4 million**, driven by a **$0.4 million** reduction in R&D expenses (lower EB05 costs offset by EB06) and a **$0.2 million** decrease in G&A expenses[108](index=108&type=chunk)[111](index=111&type=chunk) - Net loss improved to **$5.0 million** from **$5.2 million**, and loss per common share decreased to **$0.95** from **$1.64**[109](index=109&type=chunk) [Capital Expenditures](index=25&type=section&id=Capital%20Expenditures) This section reports on the company's capital spending, noting the absence of significant expenditures during the reported periods - There were no significant capital expenditures for the three and nine months ended June 30, 2025 and 2024[110](index=110&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's funding sources, cash position, working capital, and future capital requirements - The company's operations are funded through equity issuances, preferred shares, government grants, and tax incentives, as it continues to incur operating losses as a clinical-stage company[112](index=112&type=chunk) - Net cash used in operating activities increased to **$5.6 million** for the nine months ended June 30, 2025, from **$3.9 million** in the prior year[113](index=113&type=chunk) - Recent financing activities include **$15.0 million** gross proceeds from Series B-1 shares, **$0.8 million** net proceeds from HCW ATM, and **$1.54 million** from Series A-1 shares, significantly bolstering cash reserves[114](index=114&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk) - As of June 30, 2025, the company had an accumulated deficit of **$63.6 million**, working capital of **$12.1 million**, and **$12.4 million** in cash and cash equivalents[121](index=121&type=chunk) - Management expects current cash and proceeds from recent financings to fund operations through the end of fiscal 2026, but plans to seek additional financing through equity, grants, debt, or strategic arrangements[121](index=121&type=chunk) [Cash Flows](index=28&type=section&id=Cash%20Flows) This section provides a detailed breakdown of cash generated from or used in operating, investing, and financing activities - Net cash used in operating activities was **$5.6 million** for the nine months ended June 30, 2025, compared to **$3.9 million** for the same period in 2024[123](index=123&type=chunk) - Net cash provided by financing activities significantly increased to **$16.8 million** for the nine months ended June 30, 2025, from **$0.6 million** in the prior year, primarily due to proceeds from common and preferred share sales[125](index=125&type=chunk) - There was no cash used in investing activities for the nine months ended June 30, 2025 and 2024[124](index=124&type=chunk) [Research and Development](index=29&type=section&id=Research%20and%20Development) This section details the company's research and development expenses and their expected fluctuations based on clinical program activity - R&D expenses were **$0.9 million** for the three months and **$2.4 million** for the nine months ended June 30, 2025, reflecting a decrease primarily due to lower clinical expenses for EB05, partially offset by increased costs for EB06[126](index=126&type=chunk) - R&D expenses are expected to fluctuate based on clinical program activity, study initiation, and patient recruitment rates[126](index=126&type=chunk) [Off-Balance Sheet Arrangements](index=29&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of any material off-balance sheet arrangements that could impact the company's financial condition - The company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on its financial condition or results of operations[127](index=127&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Edesa Biotech, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide disclosure under this item[128](index=128&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, and reported no material changes in internal control over financial reporting during the quarter - Management, including the Principal Executive Officer and Principal Financial Officer, concluded that the disclosure controls and procedures were effective as of June 30, 2025[130](index=130&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[131](index=131&type=chunk) PART II - OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and other disclosures [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings or claims outside the ordinary course of business - The company is not currently a party to any material legal proceedings or claims outside the ordinary course of business[133](index=133&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously discussed in the company's Annual Report on Form 10-K - There have been no material changes to the risk factors discussed in Item 1A. Risk Factors in the Annual Report on Form 10-K for the year ended September 30, 2024[134](index=134&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the period - None to report for unregistered sales of equity securities and use of proceeds[135](index=135&type=chunk) [Item 3. Defaults Upon Senior Securities](index=30&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the quarter - None to report for defaults upon senior securities[136](index=136&type=chunk) [Item 4. Mine Safety Disclosures](index=30&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable to the company[137](index=137&type=chunk) [Item 5. Other Information](index=30&type=section&id=Item%205.%20Other%20Information) No Rule 10b-1 or non-Rule 10b5-1 trading arrangements were adopted, modified, or terminated by the company's directors and officers during the fiscal quarter - None of the company's directors and officers adopted, modified, or terminated a Rule 10b-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fiscal quarter ended June 30, 2025[138](index=138&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including employment agreements, consulting agreements, plan amendments, and certifications - The exhibit index includes employment and consulting agreements, an amendment to the equity incentive compensation plan, and certifications from the CEO and CFO[141](index=141&type=chunk)

PART I FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Presents Equity Bancshares, Inc.'s unaudited condensed interim consolidated financial statements and accompanying notes for the periods ended June 30, 2025, and December 31, 2024 [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Summarizes Equity Bancshares, Inc.'s financial position, including assets, liabilities, and equity, as of June 30, 2025, and December 31, 2024 Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total Assets | $5,373,837 | $5,332,047 | | Total Liabilities | $4,738,201 | $4,739,129 | | Total Stockholders' Equity | $635,636 | $592,918 | | Loans, net | $3,555,458 | $3,457,549 | | Total Deposits | $4,234,918 | $4,374,789 | [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) Details Equity Bancshares, Inc.'s revenues, expenses, and net income for the three and six months ended June 30, 2025, and 2024 Consolidated Statements of Income Highlights (in thousands, except per share) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Interest and Dividend Income | $74,187 | $75,132 | $148,871 | $146,899 | | Total Interest Expense | $24,385 | $28,656 | $48,777 | $56,241 | | Net Interest Income | $49,802 | $46,476 | $100,094 | $90,658 | | Provision for Credit Losses | $19 | $265 | $2,741 | $1,265 | | Total Non-Interest Income | $8,589 | $8,958 | $18,919 | $20,689 | | Total Non-Interest Expense | $40,001 | $38,871 | $79,051 | $76,023 | | Net Income | $15,264 | $11,716 | $30,305 | $25,784 | | Diluted EPS | $0.86 | $0.76 | $1.72 | $1.67 | [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Presents Equity Bancshares, Inc.'s comprehensive income, including net income and other comprehensive income (loss), for the periods ended June 30, 2025, and 2024 Consolidated Statements of Comprehensive Income Highlights (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income | $15,264 | $11,716 | $30,305 | $25,784 | | Other Comprehensive Income (Loss), net of tax | $4,696 | ($1,217) | $14,912 | ($4,085) | | Comprehensive Income (Loss) | $19,960 | $10,499 | $45,217 | $21,699 | [Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Outlines changes in Equity Bancshares, Inc.'s stockholders' equity, including common stock, retained earnings, and comprehensive income, for the periods ended June 30, 2025, and January 1, 2025 Consolidated Statements of Stockholders' Equity Highlights (in thousands) | Metric | Balance at June 30, 2025 | Balance at January 1, 2025 | | :-------------------- | :----------------------- | :------------------------- | | Common Stock | $231 | $230 | | Additional Paid-In Capital | $587,547 | $584,424 | | Retained Earnings | $219,876 | $194,920 | | Accumulated Other Comprehensive Income (Loss) | ($40,269) | ($55,181) | | Treasury Stock | ($131,749) | ($131,475) | | Total Stockholders' Equity | $635,636 | $592,918 | - Cash dividends paid on common stock for the six months ended June 30, 2025, totaled **$5,260 thousand**, at **$0.30 per share**[22](index=22&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Reports Equity Bancshares, Inc.'s cash flows from operating, investing, and financing activities for the six months ended June 30, 2025, and 2024 Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net Cash Provided by Operating Activities | $49,943 | $28,669 | | Net Cash (Used in) Provided by Investing Activities | ($47,428) | $28,870 | | Net Cash (Used in) Provided by Financing Activities | ($20,058) | ($176,372) | | Net Change in Cash and Cash Equivalents | ($17,543) | ($118,833) | | Ending Cash and Cash Equivalents | $366,204 | $260,266 | - Investing activities included significant purchases of available-for-sale securities (**$78,940 thousand**) and government guaranteed loans (**$61,987 thousand**), offset by proceeds from sales/maturities of available-for-sale securities (**$131,214 thousand**)[25](index=25&type=chunk) - Financing activities were impacted by a decrease in deposits (**$139,927 thousand**) and principal payments on subordinated debt (**$75,000 thousand**), partially offset by FHLB advances (**$205,603 thousand** net)[26](index=26&type=chunk) [Condensed Notes to Interim Consolidated Financial Statements](index=12&type=section&id=Condensed%20Notes%20to%20Interim%20Consolidated%20Financial%20Statements) Provides detailed disclosures on significant accounting policies, financial instruments, loans, and other financial matters for the interim periods - The financial statements are prepared in accordance with GAAP for interim financial information and SEC guidance, and do not include all footnotes required for complete annual financial statements[29](index=29&type=chunk) - Recent accounting pronouncements (ASU 2023-09, ASU 2024-03, ASU 2025-01) will impact financial statement disclosures but not the Company's financial condition, results of operations, or cash flows[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) Available-for-Sale Securities Fair Value (in thousands) | Security Type | June 30, 2025 | December 31, 2024 | | :------------ | :------------ | :---------------- | | U.S. Government-sponsored entities | $66,423 | $65,094 | | U.S. Treasury securities | $43,710 | $86,563 | | Mortgage-backed securities | $701,301 | $690,174 | | Corporate | $51,535 | $58,652 | | SBA loan pools | $39,281 | $29,928 | | State and political subdivisions | $71,152 | $74,044 | | **Total Available-for-Sale Securities** | **$973,402** | **$1,004,455** | - Unrealized losses on available-for-sale and held-to-maturity securities have not been recognized into income due to high credit quality of issuers, management's intent not to sell, and expectation of recovery as securities approach maturity[42](index=42&type=chunk) Loan Categories (in thousands) | Loan Category | June 30, 2025 | December 31, 2024 | | :------------ | :------------ | :---------------- | | Commercial real estate | $1,854,294 | $1,830,514 | | Commercial and industrial | $753,339 | $658,865 | | Residential real estate | $565,755 | $566,766 | | Agricultural real estate | $226,125 | $267,248 | | Agricultural | $94,981 | $87,339 | | Consumer | $106,234 | $90,084 | | **Total Loans** | **$3,600,728** | **$3,500,816** | | Allowance for credit losses | ($45,270) | ($43,267) | | **Net Loans** | **$3,555,458** | **$3,457,549** | - The Company purchased **$61,987 thousand** in government-guaranteed loans during the six months ended June 30, 2025, compared to **$6,907 thousand** in the same period of 2024[62](index=62&type=chunk) Allowance for Credit Losses Activity (in thousands) - Six Months Ended June 30 | Metric | 2025 | 2024 | | :----- | :--- | :--- | | Beginning balance | $43,267 | $43,520 | | Provision for credit losses | $2,741 | $1,265 | | Loans charged-off | ($2,257) | ($2,262) | | Recoveries | $1,519 | $368 | | **Total ending allowance balance** | **$45,270** | **$43,487** | - Non-accrual loans totaled **$50,242 thousand** at June 30, 2025, up from **$35,404 thousand** at December 31, 2024[69](index=69&type=chunk)[70](index=70&type=chunk) - Loans modified to borrowers experiencing financial difficulty totaled **$3,958 thousand** for the six months ended June 30, 2025, compared to **$4,301 thousand** in the prior year[90](index=90&type=chunk) - The Company uses interest rate swaps for fair value hedges (commercial real estate loans) and cash flow hedges (subordinated debt, FHLB advances, adjustable rate loans)[101](index=101&type=chunk)[102](index=102&type=chunk) Notional Balances and Fair Values of Derivatives (in thousands) | Derivative Type | Notional Amount (June 30, 2025) | Derivative Assets (June 30, 2025) | Derivative Liabilities (June 30, 2025) | Notional Amount (Dec 31, 2024) | Derivative Assets (Dec 31, 2024) | Derivative Liabilities (Dec 31, 2024) | | :-------------- | :------------------------------ | :-------------------------------- | :----------------------------------- | :----------------------------- | :------------------------------- | :------------------------------------ | | Hedging Instruments | $13,903 | $1,072 | $0 | $14,503 | $1,465 | $0 | | Cash Flow Hedges | $107,500 | $2,180 | $0 | $107,500 | $2,753 | $0 | | Non-Hedging Instruments | $179,113 | $3,039 | $2,898 | $143,831 | $3,837 | $3,546 | | **Total** | **$300,516** | **$6,291** | **$2,898** | **$265,834** | **$8,055** | **$3,546** | Recorded Investment in OREO and Repossessed Assets (in thousands) | Asset Type | June 30, 2025 | December 31, 2024 | | :--------- | :------------ | :---------------- | | Other Real Estate Owned | $4,621 | $4,773 | | Other Repossessed Assets | $187 | $4,811 | | **Total** | **$4,808** | **$9,584** | - Total operating lease liability was **$3,580 thousand** at June 30, 2025, with a weighted average lease term of **12.6 years** and a discount rate of **3.30%**[123](index=123&type=chunk) Borrowings (in thousands) | Borrowing Type | June 30, 2025 | December 31, 2024 | | :------------- | :------------ | :---------------- | | Federal funds purchased and retail repurchase agreements | $36,420 | $37,246 | | Federal Home Loan Bank advances | $383,676 | $178,073 | | Subordinated debt | $24,125 | $97,477 | | **Total** | **$444,221** | **$312,796** | - The Company executed an early redemption on subordinated notes on June 30, 2025, realizing a loss of **$1,361 thousand** from the write-off of debt issue costs[150](index=150&type=chunk) - The Board authorized a share repurchase plan for up to **1,000,000 shares** of common stock, effective October 1, 2024, and concluding September 30, 2025. As of June 30, 2025, **7,500 shares** were repurchased under this program[159](index=159&type=chunk) Accumulated Other Comprehensive Income (Loss) (in thousands) | Component | June 30, 2025 | December 31, 2024 | | :-------- | :------------ | :---------------- | | Net unrealized or unamortized gains (losses) | ($52,929) | ($72,724) | | Tax effect | $12,660 | $17,543 | | **Total** | **($40,269)** | **($55,181)** | - Equity Bank was categorized as "**well capitalized**" under regulatory frameworks as of June 30, 2025, meeting all minimum regulatory capital ratios[165](index=165&type=chunk) Capital Ratios (Equity Bancshares, Inc.) | Capital Ratio | June 30, 2025 | December 31, 2024 | Minimum Required (Basel III) | | :------------ | :------------ | :---------------- | :--------------------------- | | Total Capital to Risk Weighted Assets | 16.84% | 18.07% | 10.50% | | Tier 1 Capital to Risk Weighted Assets | 15.67% | 15.11% | 8.50% | | Common Equity Tier 1 Capital to Risk Weighted Assets | 15.07% | 14.51% | 7.00% | | Tier 1 Leverage to Average Assets | 12.07% | 11.67% | 4.00% | Basic and Diluted EPS | EPS Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Basic EPS | $0.87 | $0.77 | $1.73 | $1.68 | | Diluted EPS | $0.86 | $0.76 | $1.72 | $1.67 | - The Company uses Level 1 and Level 2 inputs for recurring fair value measurements of available-for-sale securities and derivatives, and Level 3 inputs for non-recurring measurements of individually evaluated loans and OREO[178](index=178&type=chunk)[179](index=179&type=chunk)[184](index=184&type=chunk) Commitments to Originate Loans and Unused Lines of Credit (in thousands) | Commitment Type | June 30, 2025 Fixed Rate | June 30, 2025 Variable Rate | Dec 31, 2024 Fixed Rate | Dec 31, 2024 Variable Rate | | :-------------- | :----------------------- | :-------------------------- | :---------------------- | :------------------------- | | Commitments to make loans | $39,584 | $313,401 | $28,758 | $389,370 | | Unused lines of credit | $165,155 | $419,052 | $162,753 | $377,091 | - Standby letters of credit totaled **$45,010 thousand** at June 30, 2025, compared to **$42,796 thousand** at December 31, 2024[200](index=200&type=chunk) - Equity Bank is party to three class action lawsuits alleging improperly collected overdraft fees, with the Company intending to vigorously defend against the claims and currently unable to reasonably estimate loss amounts[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk) - The majority of the Company's revenue comes from interest income on financial instruments, with ASC 606-scoped revenues (service charges, debit card income, etc.) recognized in non-interest income[205](index=205&type=chunk) Non-Interest Income (in thousands) | Non-Interest Income | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Service charges and fees | $2,177 | $2,541 | $4,241 | $5,110 | | Debit card income | $3,052 | $2,621 | $5,556 | $5,068 | | Mortgage banking | $212 | $245 | $318 | $433 | | Increase in value of bank-owned life insurance | $1,321 | $911 | $4,914 | $1,739 | | Other | $1,815 | $2,607 | $3,866 | $7,023 | | **Total Non-Interest Income** | **$8,589** | **$8,958** | **$18,919** | **$20,689** | - On April 2, 2025, the Company entered into an agreement to acquire NBC Corp. of Oklahoma, with the merger closing on July 2, 2025. Acquisition-related costs for Q2 2025 were **$356 thousand**[208](index=208&type=chunk)[219](index=219&type=chunk) - The Company operates as a single operating segment for financial reporting purposes, focusing on loan and deposit products[209](index=209&type=chunk) - On July 17, 2025, the Company completed an offering of **$75,000 thousand** in **7.125%** fixed-to-floating rate subordinated notes due August 1, 2035[220](index=220&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=57&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analyzes Equity Bancshares, Inc.'s financial condition and operating results, including net interest income, credit losses, non-interest income/expense, and capital, for Q2 2025 and 2024 [Overview](index=59&type=section&id=Overview) Provides a high-level summary of Equity Bancshares, Inc.'s financial performance and key metrics for the periods presented Key Financial Highlights (in millions) | Metric | June 30, 2025 | | :----- | :------------ | | Total Assets | $5,370 | | Total Loans (net of allowance) | $3,560 | | Total Deposits | $4,230 | | Total Stockholders' Equity | $635.6 | | Net Income (3 months) | $15.3 | | Net Income (6 months) | $30.3 | [Critical Accounting Policies](index=59&type=section&id=Critical%20Accounting%20Policies) Discusses key accounting policies, including the Allowance for Credit Losses and Goodwill impairment, and their impact on financial reporting - The Allowance for Credit Losses (ACL) is management's estimate of all expected credit losses over the expected life of the loan portfolio, considering historical loss experience, current and projected economic conditions, and asset quality trends[228](index=228&type=chunk) - Goodwill, resulting from business acquisitions, is assessed at least annually for impairment, with a qualitative assessment performed quarterly. No triggering event for impairment was identified for the quarter ended June 30, 2025[230](index=230&type=chunk) [Results of Operations](index=60&type=section&id=Results%20of%20Operations) Analyzes Equity Bancshares, Inc.'s net income, net interest income, provision for credit losses, non-interest income, and non-interest expense for the periods Net Income and Diluted EPS (YoY Change) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :----- | :--------------------------- | :--------------------------- | :----- | | Net Income (in thousands) | $15,264 | $11,716 | +$3,548 | | Diluted EPS | $0.86 | $0.76 | +$0.10 | | | | | | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :----- | :--------------------------- | :--------------------------- | :----- | | Net Income (in thousands) | $30,305 | $25,784 | +$4,521 | | Diluted EPS | $1.72 | $1.67 | +$0.05 | Net Interest Income and Margin | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :----- | :--------------------------- | :--------------------------- | :----- | | Net Interest Income (in thousands) | $49,802 | $46,476 | +$3,326 | | Net Interest Margin (annualized) | 4.17% | 3.94% | +23 bp | | Net Interest Spread (annualized) | 3.50% | 3.28% | +22 bp | | | | | | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :----- | :--------------------------- | :--------------------------- | :----- | | Net Interest Income (in thousands) | $100,094 | $90,658 | +$9,436 | | Net Interest Margin (annualized) | 4.22% | 3.84% | +38 bp | | Net Interest Spread (annualized) | 3.57% | 3.19% | +38 bp | - The increase in net interest income for the three months was driven by a **$3.1 million** volume increase, partially offset by a **$211 thousand** rate/yield decrease[244](index=244&type=chunk) - For the six months, net interest income increased due to a **$5.6 million** volume increase and a **$3.9 million** rate/yield increase[255](index=255&type=chunk) Provision for Credit Losses and Net Charge-offs (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :----- | :--------------------------- | :--------------------------- | :----- | | Provision for Credit Losses | $19 | $265 | -$246 | | Net Charge-offs | $573 | $1,227 | -$654 | | | | | | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :----- | :--------------------------- | :--------------------------- | :----- | | Provision for Credit Losses | $2,741 | $1,265 | +$1,476 | | Net Charge-offs | $738 | $1,894 | -$1,156 | - The lower provision for Q2 2025 was due to decreased exposure in commercial and industrial and agricultural portfolios. The increase for the six months was primarily due to loan growth and a general decline in the economic outlook[260](index=260&type=chunk)[261](index=261&type=chunk) Non-Interest Income (in thousands) | Non-Interest Income | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :------------------ | :--------------------------- | :--------------------------- | :----- | | Service charges and fees | $2,177 | $2,541 | -$364 | | Debit card income | $3,052 | $2,621 | +$431 | | Increase in value of bank-owned life insurance | $1,321 | $911 | +$410 | | Recovery on zero-basis purchased loans | $1 | $1,028 | -$1,027 | | **Total Non-Interest Income** | **$8,589** | **$8,958** | **-$369** | | | | | | | Non-Interest Income | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :------------------ | :--------------------------- | :--------------------------- | :----- | | Service charges and fees | $4,241 | $5,110 | -$869 | | Debit card income | $5,556 | $5,068 | +$488 | | Increase in value of bank-owned life insurance | $4,914 | $1,739 | +$3,175 | | Recovery on zero-basis purchased loans | $3 | $4,373 | -$4,370 | | Net gain on acquisition and branch sales | $0 | $1,300 | -$1,300 | | **Total Non-Interest Income** | **$18,919** | **$20,689** | **-$1,770** | - The decrease in non-interest income was largely due to a reduction in recovery on zero-basis loans and a net decrease in gain on branch acquisition and sales, partially offset by an increase in the value of bank-owned life insurance[266](index=266&type=chunk)[268](index=268&type=chunk) Non-Interest Expense (in thousands) | Non-Interest Expense | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :------------------- | :--------------------------- | :--------------------------- | :----- | | Salaries and employee benefits | $19,735 | $17,827 | +$1,908 | | Loss on debt extinguishment | $1,361 | $0 | +$1,361 | | Merger expenses | $355 | $2,287 | -$1,932 | | **Total Non-Interest Expense** | **$40,001** | **$38,871** | **+$1,130** | | | | | | | Non-Interest Expense | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :------------------- | :--------------------------- | :--------------------------- | :----- | | Salaries and employee benefits | $39,689 | $35,924 | +$3,765 | | Courier and postage | $1,633 | $1,226 | +$407 | | Loss on debt extinguishment | $1,361 | $0 | +$1,361 | | Merger expenses | $421 | $3,843 | -$3,422 | | **Total Non-Interest Expense** | **$79,051** | **$76,023** | **+$3,028** | - The increase in non-interest expense was primarily due to higher salaries and employee benefits, and a **$1.4 million** loss on debt extinguishment, partially offset by a significant decrease in merger expenses[272](index=272&type=chunk)[273](index=273&type=chunk)[275](index=275&type=chunk)[278](index=278&type=chunk)[279](index=279&type=chunk)[281](index=281&type=chunk) Efficiency Ratio | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :----- | :--------------------------- | :--------------------------- | :----- | | Efficiency Ratio | 63.62% | 63.77% | -0.15% | | | | | | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :----- | :--------------------------- | :--------------------------- | :----- | | Efficiency Ratio | 63.01% | 63.61% | -0.60% | - The efficiency ratio improved due to a greater percentage increase in interest and other income compared to the percentage increase in non-interest expenses (excluding merger and debt extinguishment costs)[283](index=283&type=chunk)[284](index=284&type=chunk) Effective Income Tax Rate | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :----- | :--------------------------- | :--------------------------- | :----- | | Effective Income Tax Rate | 16.9% | 28.1% | -11.2% | | | | | | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :----- | :--------------------------- | :--------------------------- | :----- | | Effective Income Tax Rate | 18.6% | 24.3% | -5.7% | - The decrease in the effective tax rate for Q2 2025 was due to interest income from federal carry-back claims and increased tax benefits from a new solar tax investment, as well as non-recurrence of a prior year BOLI tax gain[287](index=287&type=chunk) [Financial Condition](index=69&type=section&id=Financial%20Condition) Examines Equity Bancshares, Inc.'s balance sheet components, including assets, liabilities, loan portfolio, and nonperforming assets, as of June 30, 2025, and December 31, 2024 Financial Condition Summary (in millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :----- | :------------ | :---------------- | :----- | | Total Assets | $5,370 | $5,332 | +$41.8 | | Total Liabilities | $4,738 | $4,739 | -$0.9 | | Total Stockholders' Equity | $635.6 | $592.9 | +$42.7 | - The increase in total assets was primarily due to a **$97.9 million** increase in loans held for investment, net of allowance, partially offset by a **$31.1 million** decrease in available-for-sale securities and a **$17.5 million** decrease in cash and cash equivalents[289](index=289&type=chunk) Loan Portfolio Composition (in thousands) | Loan Type | June 30, 2025 Amount | June 30, 2025 Percent | December 31, 2024 Amount | December 31, 2024 Percent | Change | % Change | | :-------- | :------------------- | :-------------------- | :----------------------- | :------------------------ | :----- | :------- | | Commercial and industrial | $753,339 | 20.9% | $658,865 | 18.8% | +$94,474 | 14.3% | | Commercial real estate | $1,854,294 | 51.5% | $1,830,514 | 52.3% | +$23,780 | 1.3% | | Residential real estate | $565,755 | 15.7% | $566,766 | 16.2% | -$1,011 | (0.2)% | | Agricultural real estate | $226,125 | 6.3% | $267,248 | 7.6% | -$41,123 | (15.4)% | | Agricultural | $94,981 | 2.6% | $87,339 | 2.5% | +$7,642 | 8.7% | | Consumer | $106,234 | 3.0% | $90,084 | 2.6% | +$16,150 | 17.9% | | **Total Loans Held for Investment** | **$3,600,728** | **100.0%** | **$3,500,816** | **100.0%** | **+$99,912** | **2.9%** | - Gross total loans, including loans held for sale, were **85.0%** of deposits and **67.0%** of total assets at June 30, 2025, up from **80.0%** of deposits and **65.7%** of total assets at December 31, 2024[295](index=295&type=chunk) Loan Maturity and Interest Rate Sensitivity (June 30, 2025, in thousands) | Maturity | Fixed Interest Rate | Adjustable/Floating Interest Rate | Total | | :------- | :------------------ | :-------------------------------- | :---- | | One year or less | $345,364 | $558,141 | $903,505 | | After one year through five years | $605,595 | $997,557 | $1,603,152 | | After five years through fifteen years | $102,759 | $390,518 | $493,277 | | After fifteen years | $281,376 | $319,418 | $600,794 | | **Total** | **$1,335,094** | **$2,265,634** | **$3,600,728** | Nonperforming Assets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | Non-accrual loans | $42,598 | $27,050 | | Accruing loans 90 or more days past due | $482 | $181 | | OREO acquired through foreclosure, net | $2,480 | $2,632 | | Other repossessed assets | $187 | $4,812 | | **Total Nonperforming Assets** | **$45,747** | **$34,675** | | Nonperforming assets to total assets | 0.85% | 0.65% | - The increase in nonperforming assets was primarily due to an increase in non-accrual loans[310](index=310&type=chunk) - Potential problem loans (special mention or substandard, but performing) totaled **$24.0 million** at June 30, 2025, down from **$35.4 million** at December 31, 2024[313](index=313&type=chunk) - Management believes the allowance for credit losses of **$45.27 million** at June 30, 2025, was adequate to cover current expected credit losses[318](index=318&type=chunk)[319](index=319&type=chunk) ACL to Total Loans and Non-accrual Loans | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | ACL to total loans | 1.3% | 1.3% | | ACL to non-accrual loans | 106.3% | 163.8% | - Securities represented **18.2%** of total assets at June 30, 2025, a slight decrease from **18.9%** at December 31, 2024[321](index=321&type=chunk) Available-for-Sale Securities (in thousands) | Security Type | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :------------ | :----------------------- | :--------------------------- | | U.S. Government-sponsored entities | $66,423 | $65,094 | | U.S. Treasury securities | $43,710 | $86,563 | | Mortgage-backed securities | $701,301 | $690,174 | | Corporate | $51,535 | $58,652 | | SBA loan pools | $39,281 | $29,928 | | State and political subdivisions | $71,152 | $74,044 | | **Total** | **$973,402** | **$1,004,455** | - At June 30, 2025, **71.0%** of residential mortgage-backed securities had contractual final maturities of more than ten years, with a weighted average life of **4.8 years**[331](index=331&type=chunk) Composition of Deposits (in thousands) | Deposit Type | June 30, 2025 Amount | June 30, 2025 Percent | December 31, 2024 Amount | December 31, 2024 Percent | | :----------- | :------------------- | :-------------------- | :----------------------- | :------------------------ | | Non-interest-bearing demand | $912,898 | 21.6% | $954,065 | 21.8% | | Interest-bearing demand | $1,067,555 | 25.2% | $1,172,577 | 26.8% | | Savings and money market | $1,426,730 | 33.7% | $1,511,620 | 34.6% | | Time | $827,735 | 19.5% | $736,527 | 16.8% | | **Total Deposits** | **$4,234,918** | **100.0%** | **$4,374,789** | **100.0%** | - Total deposits decreased by **$139.9 million (3.2%)** from December 31, 2024, primarily due to decreases in savings and money market deposits and interest-bearing demand deposits, partially offset by an increase in time deposits[336](index=336&type=chunk) Reciprocal and Brokered Deposits (in thousands) | Deposit Type | June 30, 2025 | December 31, 2024 | | :----------- | :------------ | :---------------- | | Total reciprocal and brokered deposits | $609,490 | $730,653 | [Liquidity and Capital Resources](index=79&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses Equity Bancshares, Inc.'s liquidity position, funding sources, and regulatory capital compliance as of June 30, 2025 - Cash and cash equivalents decreased by **$17.5 million** to **$366.2 million** at June 30, 2025, driven by net cash used in investing (**$47.4 million**) and financing (**$20.1 million**) activities, offset by net cash provided by operating activities (**$49.9 million**)[350](index=350&type=chunk) - The Company's liquidity needs are primarily met by core deposits, security and loan maturities, and amortizing portfolios, supplemented by federal funds purchased, brokered CDs, and FHLB/Federal Reserve Bank borrowings[348](index=348&type=chunk) - As of June 30, 2025, both Equity Bancshares, Inc. and Equity Bank met all "**well capitalized**" regulatory capital requirements[355](index=355&type=chunk)[357](index=357&type=chunk) [Non-GAAP Financial Measures](index=80&type=section&id=Non-GAAP%20Financial%20Measures) Reconciles and presents non-GAAP financial measures such as tangible book value, core return on equity, and core earnings per share Tangible Book Value Per Share | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | Book value per common share | $36.27 | $34.04 | | Tangible book value per common share | $32.17 | $30.07 | | Tangible book value per diluted common share | $31.89 | $29.70 | Tangible Common Equity to Tangible Assets | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | Equity to assets | 11.83% | 11.12% | | Tangible common equity to tangible assets | 10.63% | 9.95% | Core Return on Average Equity & ROATCE (Annualized) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | | Return on average equity (ROAE) | 9.76% | 10.35% | | Core return on average equity | 11.18% | 14.25% | | Return on average tangible common equity (ROATCE) | 11.69% | 13.31% | | Core return on average tangible common equity (CROATCE) | 12.64% | 16.89% | Core Net Income and EPS (in thousands, except per share) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | | Net income (loss) allocable to common stockholders | $15,264 | $11,716 | | Adjusted operating net income | $17,515 | $16,217 | | GAAP earnings (loss) per diluted share | $0.86 | $0.76 | | Core earnings (loss) per diluted share | $0.99 | $1.05 | Efficiency Ratio | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | | Efficiency Ratio | 63.62% | 63.77% | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=85&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Identifies interest rate volatility as the primary market risk and details its potential impact on net interest income and economic value of equity - The primary component of market risk is interest rate volatility, impacting net interest income (NII) and economic value of equity (EVE)[382](index=382&type=chunk) - The Asset Liability Committee (ALCO) manages interest rate risk by structuring the balance sheet and using simulation analysis to monitor NII and EVE sensitivity[384](index=384&type=chunk)[386](index=386&type=chunk) Impact on Net Interest Income from Interest Rate Shocks | Change in Prevailing Interest Rates | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :---------------- | | +300 basis points | 8.9% | 11.9% | | +200 basis points | 5.9% | 7.9% | | +100 basis points | 2.8% | 3.9% | | -100 basis points | (1.1)% | (2.4)% | | -200 basis points | (2.3)% | (4.9)% | | -300 basis points | (3.8)% | (8.1)% | Impact on Economic Value of Equity from Interest Rate Shocks | Change in Prevailing Interest Rates | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :---------------- | | +300 basis points | (8.4)% | (6.5)% | | +200 basis points | (5.7)% | (4.2)% | | +100 basis points | (3.1)% | (2.4)% | | -100 basis points | (0.2)% | 0.3% | | -200 basis points | (2.2)% | (1.5)% | | -300 basis points | (6.2)% | (5.1)% | [Item 4. Controls and Procedures](index=87&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms the effectiveness of Equity Bancshares, Inc.'s disclosure controls and procedures and reports no material changes in internal control over financial reporting - Disclosure controls and procedures were deemed effective as of June 30, 2025, ensuring timely and accurate reporting of information[394](index=394&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[395](index=395&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=88&type=section&id=Item%201.%20Legal%20Proceedings) Details ongoing legal matters, including class action lawsuits regarding overdraft fees, and the Company's inability to estimate potential losses - Equity Bank is defending against three class action lawsuits concerning alleged improperly collected overdraft fees[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk)[396](index=396&type=chunk) - The Company is currently unable to reasonably estimate the loss amount for these legal proceedings[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk) [Item 1A. Risk Factors](index=88&type=section&id=Item%201A.%20Risk%20Factors) States that no material changes to previously disclosed risk factors have occurred since the last annual report filing - No material changes to risk factors were reported compared to the Annual Report on Form 10-K filed March 7, 2025[397](index=397&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=88&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports on the Company's share repurchase program and the number of shares repurchased during the period - A share repurchase program for up to **1,000,000 shares** was authorized, effective October 1, 2024, and ending September 30, 2025[398](index=398&type=chunk) Common Stock Repurchases (April 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Maximum Number of Shares That May Yet Be Purchased | | :----- | :------------------------------- | :--------------------------- | :------------------------------------------------- | | April 1, 2025 through April 30, 2025 | 7,500 | $36.49 | 992,500 | [Item 3. Defaults Upon Senior Securities](index=88&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Confirms that no defaults on senior securities were reported by the Company during the specified period - No defaults upon senior securities were reported[400](index=400&type=chunk) [Item 4. Mine Safety Disclosures](index=88&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Indicates that this disclosure item is not applicable to Equity Bancshares, Inc.'s operations - Mine Safety Disclosures are not applicable[400](index=400&type=chunk) [Item 5. Other Information](index=88&type=section&id=Item%205.%20Other%20Information) Confirms that no Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted, terminated, or modified by directors or officers - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted, terminated, or modified by directors or officers during the period[401](index=401&type=chunk) [Item 6. Exhibits](index=88&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including acquisition agreements and regulatory certifications - Key exhibits include the Agreement and Plan of Reorganization with NBC Corp. of Oklahoma, CEO and CFO certifications (Rule 13a-14(a) and 18 U.S.C. Section 1350), and Inline XBRL documents[402](index=402&type=chunk)[405](index=405&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-07120 HARTE HANKS, INC. (Exact name of registrant as specified in its charter) Delaware 1 Executive Drive, Chelmsfor ...