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What changed in First Internet Bancorp's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of First Internet Bancorp's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+267 added−262 removedSource: 10-K (2026-03-11) vs 10-K (2025-03-12)

Top changes in First Internet Bancorp's 2025 10-K

267 paragraphs added · 262 removed · 201 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

41 edited+1 added−12 removed138 unchanged
Biggest changeFurthermore, we 1 believe partnering with select fintechs will allow us to further diversify our revenue sources, acquire deposits and pursue additional asset generation capabilities. As of December 31, 2024, the Company had consolidated assets of $5.7 billion, consolidated deposits of $4.9 billion and shareholders’ equity of $384.1 million.
Biggest changeThrough partnerships with selected fintechs, we believe our ability to win and retain small business relationships will be significantly enhanced. Furthermore, we believe partnering with select fintechs will allow us to further diversify our revenue sources, acquire deposits and pursue additional asset generation capabilities.
In addition, the SEC maintains an internet site at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. References to the Company’s website address in this Annual Report on Form 10-K are provided as a convenience only and are not incorporated by reference.
In addition, the SEC maintains an internet site at www.sec.gov that contains reports, proxy and information statements, and other information 10 regarding issuers that file electronically with the SEC. References to the Company’s website address in this Annual Report on Form 10-K are provided as a convenience only and are not incorporated by reference.
Among other things, these provisions require that extensions of credit to insiders: (1) be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features; and (2) not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of the Bank’s capital.
Among other things, these 6 provisions require that extensions of credit to insiders: (1) be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features; and (2) not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of the Bank’s capital.
Specifically, the Information Security Guidelines established by the GLBA require each financial institution, under the supervision and ongoing oversight of its board of directors or an appropriate committee thereof, to develop, implement and maintain a comprehensive written information security program designed to ensure the security and confidentiality of customer information (as defined under the GLBA), to protect against anticipated threats or hazards to the security or integrity of such information and to protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any customer.
Specifically, the Information Security Guidelines established by the GLBA require each financial institution, under the supervision and ongoing oversight of its board of directors or an appropriate committee thereof, to develop, implement and maintain a comprehensive written information security program designed to ensure the security and confidentiality of customer 8 information (as defined under the GLBA), to protect against anticipated threats or hazards to the security or integrity of such information and to protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any customer.
As a result, the Company’s growth and earnings performance may be affected not only by management decisions and general economic conditions, but also by the requirements of federal and state statutes and by the regulations and policies of various bank regulatory agencies, including the Indiana Department of Financial Institutions (the “DFI”), the Board of Governors of the Federal Reserve System (the “Federal Reserve”), the FDIC and the Consumer Financial Protection Bureau (“CFPB”).
As a result, the Company’s 2 growth and earnings performance may be affected not only by management decisions and general economic conditions, but also by the requirements of federal and state statutes and by the regulations and policies of various bank regulatory agencies, including the Indiana Department of Financial Institutions (the “DFI”), the Board of Governors of the Federal Reserve System (the “Federal Reserve”), the FDIC and the Consumer Financial Protection Bureau (“CFPB”).
And we remain committed to an entrepreneurial culture, employee growth and empowerment, robust training and support, and competitive compensation and benefits that will enable us to attract the top talent and continue to “Imagine More.” 2 Competition The markets in which we compete to make loans, attract deposits and provide fee based financial services are highly competitive.
And we remain committed to an entrepreneurial culture, employee growth and empowerment, robust training and support, and competitive compensation and benefits that will enable us to attract the top talent and continue to “Imagine More.” Competition The markets in which we compete to make loans, attract deposits and provide fee based financial services are highly competitive.
It does not describe all of the statutes, regulations, and regulatory policies that apply, and the descriptions in this summary are qualified in their entirety by reference to the particular statutory and regulatory provisions involved. 3 Holding Company Regulation General. The Company is registered as a bank holding company under the Bank Holding Company Act of 1956 (the “BHCA”).
It does not describe all of the statutes, regulations, and regulatory policies that apply, and the descriptions in this summary are qualified in their entirety by reference to the particular statutory and regulatory provisions involved. Holding Company Regulation General. The Company is registered as a bank holding company under the Bank Holding Company Act of 1956 (the “BHCA”).
The Bank receives dividends on its FHLB stock. Federal Reserve System . Although the Bank is not a member of the Federal Reserve System, it is subject to provisions of the Federal Reserve Act and the Federal Reserve’s regulations under which depository institutions may be required to maintain reserves against their deposit accounts and certain other liabilities.
The Bank receives dividends on its FHLB stock. 7 Federal Reserve System . Although the Bank is not a member of the Federal Reserve System, it is subject to provisions of the Federal Reserve Act and the Federal Reserve’s regulations under which depository institutions may be required to maintain reserves against their deposit accounts and certain other liabilities.
Federal banking agencies may not accept a capital plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the depository institution’s capital. If a depository institution fails to submit an acceptable 4 plan, it is treated as if it is significantly undercapitalized.
Federal banking agencies may not accept a capital plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the depository institution’s capital. If a depository institution fails to submit an acceptable plan, it is treated as if it is significantly undercapitalized.
The rule also requires a bank service provider to notify each affected banking organization customer as soon as possible when the service provider determines it has experienced a computer security incident that has caused, or is reasonably likely to cause, a material service disruption or degradation for four or more hours.
The rule also requires a bank service provider to notify each affected banking organization customer as soon as 9 possible when the service provider determines it has experienced a computer security incident that has caused, or is reasonably likely to cause, a material service disruption or degradation for four or more hours.
Additionally, the federal banking agencies issued joint rules under Section 315 of the FACT Act that provide guidance regarding reasonable policies and procedures that a user of consumer reports must employ when a consumer reporting agency sends the user a notice of address discrepancy. Privacy .
Additionally, the federal banking agencies issued joint rules under Section 315 of the FACT Act that provide guidance regarding reasonable policies and procedures that a user of consumer reports must employ when a consumer reporting agency sends the user a notice of address discrepancy.
In addition, under the Basel III Rule, institutions that seek the freedom to pay dividends have to maintain 2.50% in Common Equity Tier 1 Capital attributable to the capital conservation buffer. See “Capital Requirements” section above. Source of Strength .
In addition, under the Basel III Rule, institutions that seek the freedom to pay dividends have to maintain 2.50% in Common Equity Tier 1 Capital attributable to the capital conservation buffer. See “Capital Requirements” section above. 5 Source of Strength .
Under the Change in Bank Control Act and the regulations thereunder, a 5 person or group must give advance notice to and obtain approval from the Federal Reserve before acquiring control of any bank holding company, such as the Company.
Under the Change in Bank Control Act and the regulations thereunder, a person or group must give advance notice to and obtain approval from the Federal Reserve before acquiring control of any bank holding company, such as the Company.
If the loans or extensions of credit are fully secured by readily marketable collateral, the Bank may lend up to an additional 10% of its unimpaired capital and surplus. 6 Community Reinvestment Act .
If the loans or extensions of credit are fully secured by readily marketable collateral, the Bank may lend up to an additional 10% of its unimpaired capital and surplus. Community Reinvestment Act .
Notwithstanding the availability of funds for 7 dividends, the FDIC and the DFI may prohibit the payment of dividends by the Bank if either or both determine such payment would constitute an unsafe or unsound practice.
Notwithstanding the availability of funds for dividends, the FDIC and the DFI may prohibit the payment of dividends by the Bank if either or both determine such payment would constitute an unsafe or unsound practice.
We empower our employees to “Imagine More.” We seek the game-changers, innovators and dreamers – those who are driven to find a better way of doing things for customers and each other. Our employees are encouraged to think outside the box and look for innovative ways to improve efficiency, drive revenue and decrease cost.
We empower our employees to “Imagine More.” We seek the game-changers, innovators and dreamers – those who are driven to find a better way of doing things for customers and each other. Our employees are encouraged to think outside the box and look for innovative ways to improve efficiency, drive revenue and decrease costs.
We believe that we differentiate ourselves from larger financial institutions by providing a full suite of services to emerging small businesses and entrepreneurs on a nationwide basis. We ranked as the 8 th largest Small Business Administration (“SBA”) 7(a) lender for the SBA’s 2024 fiscal year. We also offer a top-ranked small business checking account product to our country’s entrepreneurs.
We believe that we differentiate ourselves from larger financial institutions by providing a full suite of services to emerging small businesses and entrepreneurs on a nationwide basis. We ranked as the 7 th largest Small Business Administration (“SBA”) 7(a) lender for the SBA’s 2025 fiscal year. We also offer a top-ranked small business checking account product to our country’s entrepreneurs.
If the Federal Reserve were to apply the same or a very similar well-capitalized standard to bank holding companies as that applicable to the Bank, the Company’s capital ratios as of December 31, 2024 would exceed such revised well-capitalized standard.
If the Federal Reserve were to apply the same or a very similar well-capitalized standard to bank holding companies as that applicable to the Bank, the Company’s capital ratios as of December 31, 2025 would exceed such revised well-capitalized standard.
While the required percentage of stock ownership is subject to change by the FHLB, the Bank is following this requirement with an investment in FHLB stock at December 31, 2024 of $28.4 million.
While the required percentage of stock ownership is subject to change by the FHLB, the Bank is following this requirement with an investment in FHLB stock at December 31, 2025 of $28.4 million.
For our construction, investor commercial real estate, public finance, healthcare finance and franchise finance activities, we compete nationally with superregional, regional and community banks. These competitors may have significantly greater financial resources and higher lending limits than we do and may also offer specialized products and services that we do not.
For our construction, investor commercial real estate, public finance and specialty finance activities, we compete nationally with superregional, regional and community banks. These competitors may have significantly greater financial resources and higher lending limits than we do and may also offer specialized products and services that we do not.
In recent years, the federal banking agencies and the SEC have increased their focus on climate-related risks impacting the operation of banks, the communities they serve and the financial system as a whole. Proposals related to climate-related financial and other risks impacting banks are being considered at both the federal and state level.
Climate-Related Risk Management and Regulation. In recent years, the federal banking agencies and the SEC have increased their focus on climate-related risks impacting the operation of banks, the communities they serve and the financial system as a whole. Proposals related to climate-related financial and other risks impacting banks are being considered at both the federal and state level.
Our commercial banking products and services are delivered through a relationship banking model or through strategic partnerships and include commercial and industrial (“C&I”), construction and investor commercial real estate, single tenant lease financing, public finance, healthcare finance, small business lending, franchise finance and commercial deposits and treasury management.
Our commercial banking products and services are delivered through a relationship banking model or through strategic partnerships and include commercial and industrial (“C&I”) lending, construction and investor commercial real estate lending, single tenant lease financing, public finance, specialty finance, small business lending, and commercial deposits and treasury management.
The Bank believes it has sufficient liquidity to meet its funding obligations for at least the next twelve months. Additionally, as of December 31, 2024, the Bank had access to $1.7 billion in unused borrowing capacity at the Federal Reserve and FHLB. Federal Home Loan Bank System .
The Bank believes it has sufficient liquidity to meet its funding obligations for at least the next twelve months. Additionally, as of December 31, 2025, the Bank had access to $1.6 billion in unused borrowing capacity at the Federal Reserve and FHLB. Federal Home Loan Bank System .
Although to date we have not experienced any material losses relating to cyber-attacks or other information security breaches, our systems and those of our customers and third-party service providers are under constant threat, and it is possible that we could experience a significant event in the future due to the rapidly evolving nature and sophistication of these threats. 10 Climate-Related Risk Management and Regulation.
Although to date we have not experienced any material losses relating to cyber-attacks or other information security breaches, our systems and those of our customers and third-party service providers are under constant threat, and it is possible that we could experience a significant event in the future due to the rapidly evolving nature and sophistication of these threats.
The Bank was well capitalized at December 31, 2024, and brokered deposits are not restricted.
The Bank was well capitalized at December 31, 2025, and brokered deposits are not restricted.
Our focus on employees is evidenced by the number of “best work place” awards we have been honored with over the years.
Our focus on employees is evidenced by the number of “best workplace” awards we have been honored with over the years.
Our commercial deposits and treasury management team works with the other commercial teams to provide deposit products and treasury management services to our commercial and municipal lending customers as well as pursues commercial deposit opportunities in business segments where we have no credit relationships.
Our specialty finance team manages our healthcare, franchise finance and equipment finance portfolios and our commercial deposits and treasury management team works with the other commercial teams to provide deposit products and treasury management services to our commercial and municipal lending customers as well as pursues commercial deposit opportunities in business segments where we have no credit relationships.
Also, the Federal Reserve may require bank holding companies, including the Company, to maintain capital ratios substantially in excess of mandated minimum levels, depending upon general economic conditions and a bank holding company’s particular condition, risk profile and growth plans. Community Bank Leverage Ratio Framework.
Also, the Federal Reserve may require bank holding companies, including the Company, to maintain capital ratios substantially in excess of mandated minimum levels, depending upon general economic conditions and a bank holding company’s particular condition, risk profile and growth plans. 4 Activities, Acquisitions, and Changes in Control.
To that end, we promote and support the development of employee-led business resource groups, which currently include First Ladies, LIFT (a professional development group), and BELONG (a group engaged in celebrating and learning about our unique experiences, heritages, etc.).
To that end, we promote and support the development of employee-led business resource groups, which currently include First Ladies, LIFT (a professional development group), and BELONG (a group engaged in celebrating and learning about our unique experiences, heritages, etc.). We also offer tuition reimbursement for professional development and a robust internal training program.
A number of U.S. states have also enacted data privacy and security laws and regulations that govern the collection, use, disclosure, transfer, storage, disposal and protection of personal information, such as social security numbers, financial information and other information.
A number of U.S. states have also enacted data privacy and security laws and regulations that govern the collection, use, disclosure, transfer, storage, disposal and protection of personal information, such as social security numbers, financial information and other information. These laws and regulations may be more restrictive and not preempted by U.S. federal laws.
The Company has not opted in to the CBLR capital framework. Activities, Acquisitions, and Changes in Control. Bank holding companies generally are limited to the business of banking, managing or controlling banks, and other activities that the Federal Reserve determines to be closely related to banking, or managing or controlling banks as to be a proper incident thereto.
Bank holding companies generally are limited to the business of banking, managing or controlling banks, and other activities that the Federal Reserve determines to be closely related to banking, or managing or controlling banks as to be a proper incident thereto.
Our public finance team provides a range of public and municipal lending and leasing products to government entities on a nationwide basis. Our healthcare finance team was established in conjunction with our strategic partnership with Provide, Inc.
Our public finance team provides a range of public and municipal lending and leasing products to government entities on a nationwide basis.
We also offer tuition reimbursement for professional development, a robust internal training program, and leadership training and coaching through certified coaches within HR as well as a third-party consultant to help employees develop their skills, leverage their strengths, lead effectively, advance their careers and perform competently and confidently.
In addition, we provide leadership training and coaching through certified HR coaches and a third‑party consultant to help employees develop their skills, leverage their strengths, lead effectively, advance their careers, and perform competently and confidently.
The Company and the Bank are subject to the following risk-based capital ratios: a common equity Tier 1 (“CET1”) risk-based capital ratio, a Tier 1 risk-based capital ratio, which includes CET1 and additional Tier 1 capital, and a total risk-based capital ratio, which includes Tier 1 and Tier 2 capital.
The following is a brief description of the relevant provisions of these capital rules and their potential impact on our capital levels. 3 The Company and the Bank are subject to the following risk-based capital ratios: a common equity Tier 1 (“CET1”) risk-based capital ratio, a Tier 1 risk-based capital ratio, which includes CET1 and additional Tier 1 capital, and a total risk-based capital ratio, which includes Tier 1 and Tier 2 capital.
With the rapid evolution of technology that enables small businesses to manage their finances digitally, fintechs are addressing a significantly growing marketplace. Fintechs have created robust digital offerings, unburdened by legacy technology architecture, to address growing customer expectations. Through partnerships with selected fintechs, we believe our ability to win and retain small business relationships will be significantly enhanced.
We also offer payment, deposit, card and lending products and services through partnerships with financial technology companies and platforms (“fintechs”). With the rapid evolution of technology that enables small businesses to manage their finances digitally, fintechs are addressing a significantly growing marketplace. Fintechs have created robust digital offerings, unburdened by legacy technology architecture, to address growing customer expectations.
The GLBA requires financial institutions to implement policies and procedures regarding the disclosure of nonpublic personal information about consumers to nonaffiliated third parties.
Failure to comply with these rules can subject financial institutions to enforcement actions, fines and other penalties. Privacy . The GLBA requires financial institutions to implement policies and procedures regarding the disclosure of nonpublic personal information about consumers to nonaffiliated third parties.
Human Capital As of December 31, 2024, we employed 326 people consisting of 323 full-time employees and 3 part-time employees. Our team members have been, and continue to be, our most valuable assets, helping to create a strong workplace culture that recognizes the unique contributions and perspectives of each individual.
Our team members have been, and continue to be, our most valuable assets, helping to create a strong workplace culture that recognizes the unique contributions and perspectives of each individual.
These laws and regulations may be more restrictive and not preempted by U.S. federal laws. 9 For example, several U.S. territories and all 50 states now have data breach laws that require timely notification to individuals, and at times regulators, the media or credit reporting agencies, if a company has experienced the unauthorized access or acquisition of personal information.
For example, several U.S. territories and all 50 states now have data breach laws that require timely notification to individuals, and at times regulators, the media or credit reporting agencies, if a company has experienced the unauthorized access or acquisition of personal information. Other state laws include the California Consumer Privacy Act (“CCPA”), which took effect on January 1, 2020.
Federal banking regulators are also required to take into account compliance with the CRA in evaluating any proposal for interstate bank acquisitions. Federal law restricts the amount of voting stock of a bank holding company or a bank that a person may acquire without the prior approval of banking regulators.
Federal law restricts the amount of voting stock of a bank holding company or a bank that a person may acquire without the prior approval of banking regulators.
However, a bank holding company may not, following an interstate acquisition, control more than 10% of nationwide insured deposits or 30% of deposits within any state in which the acquiring bank operates. States have the right to lower the 30% limit, although no states within the Company’s current market area have done so.
However, a bank holding company may not, following an interstate acquisition, control more than 10% of nationwide insured deposits or 30% of deposits within any state in which the acquiring bank operates. Federal banking regulators are also required to take into account compliance with the CRA in evaluating any proposal for interstate bank acquisitions.
Many of the statutory provisions in the AMLA require additional 8 rulemaking, reports and other measures, and the impact of the AMLA will depend on, among other things, rulemaking and implementation guidance. The United States has imposed economic sanctions that affect transactions with designated foreign countries, nationals and others. These sanctions, which are administered by the U.S.
The United States has imposed economic sanctions that affect transactions with designated foreign countries, nationals and others. These sanctions, which are administered by the U.S. Treasury Office of Foreign Assets Control (“OFAC”), take many different forms.
Removed
(formerly known as Lendeavor, Inc.), a San Francisco-based technology-enabled lender to healthcare practices, which provided lending on a nationwide basis for healthcare practice finance or acquisition, acquisition or refinancing of owner-occupied commercial real estate and equipment purchases. In the third quarter 2021, Provide was acquired by a super-regional financial institution.
Added
As of December 31, 2025, the Company had consolidated assets of $5.6 billion, consolidated deposits of $4.8 billion and shareholders’ equity of $359.8 million. 1 Human Capital As of December 31, 2025, we employed 355 people consisting of 354 full-time employees and 1 part-time employee.
Removed
Subsequent to Provide being acquired, the acquiring institution has retained most, if not all, of Provide’s loan origination activity and our healthcare finance loan balances have declined. Our franchise finance business was established in July 2021 in conjunction with our business relationship with ApplePie Capital, a company that specializes in providing financing to franchisees in various industry segments.
Removed
We continue to scale up this business with the goal of driving increased earnings and profitability in future periods. We also offer payment, deposit, card and lending products and services through partnerships with financial technology companies and platforms (“fintechs”).
Removed
We strive to maintain a talented work culture in which varied perspectives and experiences are valued and all employees have the opportunity to contribute and thrive. We believe leveraging our employees’ varied experiences, talents and capabilities will enhance innovation, foster a collaborative work culture and enable us to better serve our customers and communities.
Removed
Meaningful training and education, an equitable hiring process, expanded hiring pools and a long-term commitment to fostering a qualified and diverse workforce have all resulted in largely exceptional results over the last several years. In particular, when reviewing the Bank’s employee population, representation of diverse individuals by race and ethnicity increased from 9% in 2019 to 17% in 2024.
Removed
During that same time period, we increased our percentage of racially and ethnically diverse new employees by more than 18% and increased the percentage of promotions among racially and ethnically diverse employees by 12%.
Removed
Similarly, we have created positive trends in gender diversity, increasing women’s representation among our employee population from 46% in 2019 to 49% in 2024 and by increasing our percentage of women receiving promotions from 16% to 47% during the same time range. All hiring and promotion decisions are made on the basis of merit.
Removed
The following is a brief description of the relevant provisions of these capital rules and their potential impact on our capital levels.
Removed
Under the “Community Bank Leverage Ratio” (“CBLR”) framework, for qualifying community banking organizations like the Company with less than $10 billion in total consolidated assets.
Removed
Qualifying institutions that opt in and have a leverage ratio greater than 9%, off-balance sheet exposures of 25% or less of total consolidated assets, and trading assets and liabilities of 5% or less of total consolidated assets are not required to calculate or report risk-based capital and are deemed to have met the well-capitalized ratio requirement.
Removed
Treasury Office of Foreign Assets Control (“OFAC”), take many different forms.
Removed
Other state laws include the California Consumer Privacy Act (“CCPA”), which took effect on January 1, 2020.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

35 edited+27 added−12 removed113 unchanged
Biggest changeSocietal, legislative and regulatory responses to environmental, social and governance (ESG) concerns, and anti ESG concerns, as well as diversity, equity, and inclusion (DEI) and anti-DEI concerns, could adversely affect our business and performance, including indirectly through impacts on our customers. 12 Our business faces increasing public, investor, activist, legislative and regulatory scrutiny related to ESG and anti-ESG, DEI and anti-DEI developments.
Biggest changeBecause government regulation greatly affects the business and financial results of all commercial banks and bank holding companies and especially our organization, changes in the laws, regulations and procedures applicable to government guaranteed loans could adversely affect our ability to operate profitably. 12 Societal, legislative and regulatory responses to environmental, social and governance (ESG) concerns, and anti-ESG concerns, as well as diversity, equity, and inclusion (DEI) and anti-DEI concerns, could adversely affect our business and performance, including indirectly through impacts on our customers.
We manage these risks through internal controls, personnel training, insurance, litigation management, our compliance and ethics processes, and other means. However, the commencement, outcome, and magnitude of litigation cannot be predicted or controlled with any certainty. We establish reserves for legal claims when payments associated with the claims become probable and the losses can be reasonably estimated.
We manage these risks through internal controls, personnel training, insurance, litigation management, our compliance and ethics processes, and other means. However, the commencement, outcome, and magnitude of litigation cannot be predicted or controlled with any certainty. 20 We establish reserves for legal claims when payments associated with the claims become probable and the losses can be reasonably estimated.
If market interest rates decline, the Bank could experience fixed-rate loan prepayments and higher investment portfolio cash flows, resulting in a lower reinvestment yield on earning assets. Earnings can also be impacted by the spread between short-term and long-term market interest rates. The Bank may not be able to pay us dividends.
If market interest rates decline, the Bank could experience fixed-rate loan prepayments and higher investment portfolio cash flows, resulting in a lower reinvestment yield on earning assets. Earnings can also be impacted by the spread between short-term and long-term market interest rates. 15 The Bank may not be able to pay us dividends.
In addition, larger competitors may be able to price loans and deposits more aggressively than we do, which could affect our ability to increase our market share and remain profitable on a long-term basis. Negative developments in the banking industry could adversely affect our current and future business operations and financial condition.
In addition, larger competitors may be able to price loans and deposits more aggressively than we do, which could affect our ability to increase our market share and remain profitable on a long-term basis. 11 Negative developments in the banking industry could adversely affect our current and future business operations and financial condition.
Any failure to successfully keep pace with and fund technological innovation could have a material adverse effect on our business, financial condition and results of operations. We rely on our management team and could be adversely affected by the unexpected loss of key officers.
Any failure to successfully keep pace with and fund technological innovation could have a material adverse effect on our business, financial condition and results of operations. 16 We rely on our management team and could be adversely affected by the unexpected loss of key officers.
If such estimates or assumptions underlying our financial statements are incorrect, our financial condition and results of operations could be adversely affected. 19 From time to time, the FASB and the SEC change the financial accounting and reporting standards or the interpretation of such standards that govern the preparation of our external financial statements.
If such estimates or assumptions underlying our financial statements are incorrect, our financial condition and results of operations could be adversely affected. From time to time, the FASB and the SEC change the financial accounting and reporting standards or the interpretation of such standards that govern the preparation of our external financial statements.
Further, in 15 the past, we have raised additional capital in the public debt and equity markets to support balance sheet growth, refinance existing debt obligations, or explore strategic alternatives which may include additional asset, deposit or revenue generation channels.
Further, in the past, we have raised additional capital in the public debt and equity markets to support balance sheet growth, refinance existing debt obligations, or explore strategic alternatives which may include additional asset, deposit or revenue generation channels.
Operational Risks Because our business is highly dependent on technology that is subject to rapid change and transformation, we are subject to risks of obsolescence. The Bank conducts its deposit gathering activities and a portion of its lending activities through digital channels.
Operational Risks Because our business is highly dependent on technology that is subject to rapid change and transformation, we are subject to risks of obsolescence. The Bank conducts its deposit gathering activities and a significant portion of its lending activities through digital channels.
The occurrence or continuation of any such event could materially adversely impact our business, our ability to provide our services, demand for our services, asset quality, financial condition and results of operations. Anti-takeover provisions could negatively impact our shareholders.
The occurrence or continuation of any such event could materially adversely impact our business, our ability to provide our services, demand for our services, asset quality, financial condition and results of operations. 13 Anti-takeover provisions could negatively impact our shareholders.
In addition, the interest rate on the Company’s other subordinated debt have, and are scheduled to change in 2025 and 2026, from fixed to floating rates. These changes could result in a decrease of net interest income.
In addition, the interest rate on the Company’s other subordinated debt have, and are scheduled to change in 2026, from fixed to floating rates. These changes could result in a decrease of net interest income.
As noted 16 above, our operations rely on the secure processing, transmission and storage of confidential information in our computer systems and networks. Our business relies on digital technologies, computer and email systems, software and networks to conduct its operations.
As noted above, our operations rely on the secure processing, transmission and storage of confidential information in our computer systems and networks. Our business relies on digital technologies, computer and email systems, software and networks to conduct its operations.
We are subject to risks arising from conditions in the real estate market, as a significant portion of our loans are secured by real estate . At December 31, 2024, approximately 49.8% of our loans held for investment portfolio was comprised of commercial, residential mortgage and home equity loans with real estate as the primary component of collateral.
We are subject to risks arising from conditions in the real estate market, as a significant portion of our loans are secured by real estate . At December 31, 2025, approximately 49.8% of our loans held for investment portfolio was comprised of commercial, residential mortgage and home equity loans with real estate as the primary component of collateral.
Further, as a result of the increased sophistication of fraud activity, we continue to invest in systems, resources, and controls to detect and prevent fraud. This will result in continued ongoing investments in the future. Legal and Regulatory Risks We operate in a highly regulated environment, which could restrain our growth and profitability.
Further, as a result of the increased sophistication of fraud activity, we continue to invest in systems, resources, and controls to detect and prevent fraud. This will result in continued ongoing investments and costs. Legal and Regulatory Risks We operate in a highly regulated environment, which could restrain our growth and profitability.
If our policies, procedures and systems are deemed deficient, we would be subject to liability, including fines and regulatory actions, which may include restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan, including our acquisition plans.
If our policies, procedures and systems are deemed deficient, we would be subject to liability, including fines and regulatory actions, which may include restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plans.
Our real estate lending activities, and our exposure to fluctuations in real estate collateral values, are significant and may increase as our assets increase.
Our real estate lending 14 activities, and our exposure to fluctuations in real estate collateral values, are significant and may increase as our assets increase.
Commercial loans typically involve larger loan balances than residential real estate loans and could lead to concentration risks within our commercial loan portfolio. In addition, our C&I, healthcare finance, franchise finance and small business loans have primarily been extended to small to medium-sized businesses that generally have fewer financial resources in terms of capital or borrowing capacity than larger entities.
Commercial loans typically involve larger loan balances than residential real estate loans and could lead to concentration risks within our commercial loan portfolio. In addition, our C&I, specialty finance and small business loans have primarily been extended to small to medium-sized businesses that generally have fewer financial resources in terms of capital or borrowing capacity than larger entities.
Disruptions or failures in the physical infrastructure or operating systems that support our business and clients, or cyber-attacks or security breaches of the networks, systems or devices that our clients use to access our products and services, could result in client attrition, regulatory fines, penalties or intervention, breach investigation and notification expenses, reputational damage, claims or litigation, reimbursement or other compensation costs and/or additional compliance costs, any of which could materially and adversely affect our business, financial condition and results of operations.
Disruptions or failures in the physical infrastructure or operating systems that support our business and clients, or cyber-attacks or security breaches of the networks, systems or devices that our clients use to access our products and services, could result in client attrition, regulatory fines, penalties or intervention, breach investigation and notification expenses, reputational damage, claims or litigation, reimbursement or other compensation costs and/or additional compliance costs, any of which could materially and adversely affect our business, financial condition and results of operations. 17 Our business may be adversely affected by fraud.
Credit Risks Our commercial loan portfolio exposes us to higher credit risks than residential real estate loans, including risks relating to the success of the underlying business and conditions in the market or the economy and concentrations in our commercial loan portfolio. Our commercial loans totaled $3.3 billion, or 80.2% of our total loan portfolio as of December 31, 2024.
Our commercial loan portfolio exposes us to higher credit risks than residential real estate loans, including risks relating to the success of the underlying business and conditions in the market or the economy and concentrations in our commercial loan portfolio. Our commercial loans totaled $2.9 billion, or 78.4% of our total loan portfolio as of December 31, 2025.
Such provisions will also render the removal of the Board of Directors and of management more difficult and, therefore, may serve to perpetuate current management. These provisions could potentially adversely affect the market price of our common stock.
Such provisions will also render the removal of the Board of Directors and of management more difficult and, therefore, may serve to perpetuate current management. These provisions could potentially adversely affect the market price of our common stock. Credit Risks Our business depends on our ability to successfully manage credit risk.
We face risk under the BSA and other anti-money laundering statutes and regulations, as well as general fund transfer and payments-related risk. 18 The BSA, the USA PATRIOT Act and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports as appropriate.
The BSA, the USA PATRIOT Act and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports as appropriate.
The Bank could face increased scrutiny or be viewed as higher risk by regulators and/or the investor community due to changing regulatory focus and/or the failures of other financial institutions, which could negatively affect our future results of operations and financial condition. Reputational risk and social factors may negatively affect us.
The Bank could face increased scrutiny or be viewed as higher risk by regulators and/or the investor community due to changing regulatory focus and/or the failures of other financial institutions, which could negatively affect our future results of operations and financial condition. Small Business Administration lending and other government guaranteed lending is an important part of our business.
Such activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering, spoofing, and other dishonest acts. Although we devote substantial resources to maintaining effective policies and internal controls to identify and prevent such incidents, given the increasing sophistication of possible perpetrators, we may experience financial losses or reputational harm as a result of fraud.
Although we devote substantial resources to maintaining effective policies and internal controls to identify and prevent such incidents, given the increasing sophistication of possible perpetrators, we may experience financial losses or reputational harm as a result of fraud.
Conditions such as recession, unemployment, trade wars and tariffs, changes in interest 11 rates, inflation, money supply, and other factors beyond the Company’s control may adversely affect deposit levels, costs, loan demand and/or asset quality and, therefore, our earnings.
Our success depends, to a certain extent, upon favorable economic and political conditions, local and national, as well as governmental monetary policies. Conditions such as recession, unemployment, trade wars and tariffs, changes in interest rates, inflation, money supply, and other factors beyond the Company’s control may adversely affect deposit levels, costs, loan demand and/or asset quality and, therefore, our earnings.
Our introduction of new products and programs in partnership with fintechs has increased account and transaction volume at the Bank and thereby increased the foregoing risks, the results of which could have a material adverse effect on our business, financial condition and results of operations.
Our introduction of new products and programs in partnership with fintechs has increased account and transaction volume at the Bank and thereby increased the foregoing risks, the results of which could have a material adverse effect on our business, financial condition and results of operations. 19 We may be subject to potential liability and business risk from actions by our regulators related to supervision of third parties.
Any future special assessments, increases in assessment rates or required prepayments in FDIC insurance premiums could reduce our profitability or limit our ability to pursue certain business opportunities, which could have a material adverse effect on our business, financial condition and results of operations.
Any future special assessments, increases in assessment rates or required prepayments in FDIC insurance premiums could reduce our profitability or limit our ability to pursue certain business opportunities, which could have a material adverse effect on our business, financial condition and results of operations. 18 We are subject to numerous laws designed to protect consumers, including the CRA and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.
Our ability to source deposits and raise future capital, if needed, will depend upon our financial performance and conditions in the capital markets, as well as economic conditions generally. Accordingly, such financing may not be available to us on acceptable terms or at all.
Our ability to source deposits and raise future capital, if needed, will depend upon our financial performance and conditions in the capital markets, as well as economic conditions generally.
Our business may be adversely affected by fraud. As a financial institution, we are inherently exposed to risk in the form of theft and other fraudulent activities by customers, employees, or other third parties targeting us or our customers or data.
As a financial institution, we are inherently exposed to risk in the form of theft and other fraudulent activities by customers, employees, or other third parties targeting us or our customers or data. Such activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering, spoofing, and other dishonest acts.
Additionally, our articles of incorporation authorize our Board of Directors to issue one or more classes or series of preferred stock without shareholder approval and such preferred stock could be issued as a defensive measure in response to a takeover proposal. 13 Although these provisions do not preclude a takeover, they may have the effect of discouraging, delaying or deferring a tender offer or takeover attempt that a shareholder might consider in his or her best interest, including those attempts that might result in a premium over the market price of our common stock.
Although these provisions do not preclude a takeover, they may have the effect of discouraging, delaying or deferring a tender offer or takeover attempt that a shareholder might consider in his or her best interest, including those attempts that might result in a premium over the market price of our common stock.
If we cannot raise additional capital when needed, it could have a material adverse effect on our business, financial condition and results of operations. The Company’s stock price can be volatile.
If we cannot raise additional capital when needed, it could have a material adverse effect on our business, financial condition and results of operations. The recognition of gains on the sale of loans and servicing asset valuations reflect certain assumptions.
The Federal Reserve, the FDIC and the DFI periodically examine our business, including our compliance with laws and regulations.
Federal and state regulators periodically examine our business, and we may be required to remediate adverse examination findings. The Federal Reserve, the FDIC and the DFI periodically examine our business, including our compliance with laws and regulations.
If our allowance for credit losses is not sufficient to cover actual credit losses, our earnings could decrease. We maintain an allowance for credit losses (“ACL”) on loans and held-to-maturity debt securities. The ACL represents the Bank’s best estimate of probable losses within the existing portfolio of loans and held-to-maturity debt securities.
We maintain an allowance for credit losses (“ACL”) on loans and held-to-maturity debt securities. The ACL represents the Bank’s best estimate of probable losses within the existing portfolio of loans and held-to-maturity debt securities. Additionally, related to off-balance-sheet credit exposures, we maintain a liability reserve account reported as an other liability in our balance sheet.
A failure of our controls and procedures to detect other than inconsequential errors or fraud could seriously harm our business and results of operations.
A failure of our controls and procedures to detect other than inconsequential errors or fraud could seriously harm our business and results of operations. We face risk under the BSA and other anti-money laundering statutes and regulations, as well as general fund transfer and payments-related risk.
The inability of purchasers of real estate, including residential real estate, to obtain financing may weaken the financial condition of our borrowers who are dependent on the sale or refinancing of property to repay their loans. 14 Changes in the economic health of certain industries can have a significant impact on other sectors or industries which are directly or indirectly associated with those industries, and may impact the value of real estate in areas where such industries are concentrated.
Changes in the economic health of certain industries can have a significant impact on other sectors or industries which are directly or indirectly associated with those industries, and may impact the value of real estate in areas where such industries are concentrated. If our allowance for credit losses is not sufficient to cover actual credit losses, our earnings could decrease.
All of these laws and regulations, and the supervisory framework applicable to our industry, could have a material adverse effect on our business, financial condition and results of operations. 17 Federal and state regulators periodically examine our business and we may be required to remediate adverse examination findings.
Further, any new laws, rules and regulations could make compliance more difficult or expensive. All of these laws and regulations, and the supervisory framework applicable to our industry, could have a material adverse effect on our business, financial condition and results of operations.
The Department of Justice and other federal agencies are responsible for enforcing these laws and regulations.
The CRA, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions. The Department of Justice and other federal agencies are responsible for enforcing these laws and regulations.
Removed
Our success depends, to a certain extent, upon favorable economic and political conditions, local and national, as well as governmental monetary policies.
Added
Our government guaranteed lending programs are dependent upon the U.S. federal government, and we face specific risks associated with originating SBA and other government guaranteed loans. Our SBA lending program is dependent upon the U.S. federal government.
Removed
Our ability to attract and retain customers is highly dependent upon other external perceptions of our business practices and financial condition. Adverse perceptions could damage our reputation to a level that could lead to difficulties in generating and maintaining lending and deposit relationships and accessing equity or credit markets, as well as increased regulatory scrutiny of our business.
Added
As an approved participant in the SBA Preferred Lender’s Program (an "SBA Preferred Lender"), we enable our customers to obtain SBA loans without being subject to the potentially lengthy SBA approval process necessary for lenders that are not SBA Preferred Lenders.
Removed
Adverse developments or perceptions regarding the business practices or financial condition of our competitors, or our industry as a whole, may also indirectly adversely affect our reputation. In addition, adverse reputational developments with respect to third parties with whom we have important relationships may negatively affect our reputation.
Added
The SBA periodically reviews the lending operations of participating lenders to assess, among other things, whether the lender exhibits prudent risk management. When weaknesses are identified, the SBA may request corrective actions or impose enforcement actions, including revocation of the lender’s SBA Preferred Lender status.
Removed
All of the above factors may result in greater regulatory and/or legislative scrutiny, which may lead to laws or regulations that may change or constrain the manner in which we engage with our customers and the products we offer and may also increase our litigation risk.
Added
If we lose our status as an SBA Preferred Lender, we may lose some or all of our customers to lenders who are SBA Preferred Lenders, and as a result we could experience a material adverse effect to our financial results.
Removed
If these risks were to materialize, they could negatively affect our business, financial condition and results of operations.
Added
Any changes to the SBA program, changes to program-specific rules impacting volume eligibility under the guaranty program, as well as changes to the program amounts authorized by Congress, may also have a material adverse effect on our business.
Removed
Portions of our commercial lending activities are geographically concentrated in Central Indiana and adjacent markets, and changes in local economic conditions may impact their performance. We offer our consumer lending as well as construction, investor CRE, public finance, healthcare finance, franchise finance, small business lending and single tenant financing products and services throughout the United States.
Added
In addition, any default by the U.S. government on its obligations or any prolonged government shutdown could impede our ability to originate SBA loans or other government guaranteed loans or sell such loans in the secondary market, which could materially adversely affect our business, results of operations, and financial condition.
Removed
However, we serve C&I and certain CRE borrowers primarily in Central Indiana and adjacent markets. Accordingly, the performance of our CRE and C&I lending depends upon demographic and economic conditions in those regions. The profitability of our CRE and C&I loan portfolio may be impacted by changes in those conditions.
Added
Generally, we sell the guaranteed portion of our SBA 7(a) loans in the secondary market. These sales result in premium income for us at the time of sale and create a stream of future servicing income, as we retain the servicing rights to these loans.
Removed
Additionally, unfavorable local economic conditions could reduce or limit the growth rate of our CRE and C&I loan portfolios for a significant period of time, or otherwise decrease the ability of those borrowers to repay their loans, which could have a material adverse effect on our business, financial condition and results of operations.
Added
For the reasons described above, we may not be able to continue originating these loans or sell them in the secondary market.
Removed
Additionally, related to off-balance-sheet credit exposures, we maintain a liability reserve account reported as an other liability in our balance sheet.
Added
Furthermore, even if we are able to continue to originate and sell SBA 7(a) loans in the secondary market, we might not continue to realize premiums upon the sale of the guaranteed portion of these loans, or the premiums may decline due to economic and competitive factors.
Removed
Further, any new laws, rules and regulations could make compliance more difficult or expensive.
Added
When we originate SBA loans, we incur credit risk on the non-guaranteed portion of the loans, and if a customer defaults on a loan, we share any loss and recovery related to the loan pro-rata with the SBA.
Removed
We are subject to numerous laws designed to protect consumers, including the CRA and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions. The CRA, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions.
Added
If the SBA establishes that a loss on an SBA guaranteed loan is attributable to significant technical deficiencies in the manner in which the loan was originated, funded, or serviced by us, the SBA may seek recovery of the principal loss related to the deficiency from us.
Removed
We may be subject to potential liability and business risk from actions by our regulators related to supervision of third parties.
Added
Generally, we do not maintain reserves or loss allowances for such potential claims and any such claims could materially adversely affect our business, financial condition, or results of operations.
Added
The laws, regulations and standard operating procedures that are applicable to government guaranteed loan products may change in the future, particularly in light of the changes being made and scrutiny being given to government funded programs under the current U.S. presidential administration. We cannot predict the effects of these changes on our business and profitability.
Added
Our business faces increasing public, investor, activist, legislative and regulatory scrutiny related to ESG and anti-ESG, DEI and anti-DEI developments.
Added
Additionally, our articles of incorporation authorize our Board of Directors to issue one or more classes or series of preferred stock without shareholder approval and such preferred stock could be issued as a defensive measure in response to a takeover proposal.
Added
The operation of our business requires us to manage credit risk. As a lender, we are exposed to the risk that our borrowers may be unable to repay their loans according to their terms, and that the collateral securing repayment of their loans, if any, may not be sufficient to ensure repayment.
Added
In addition, there are risks inherent in making any loan, including risks with respect to the period of time over which the loan may be repaid, risks relating to proper underwriting, risks resulting from changes in economic and industry conditions and risks inherent in dealing with individual borrowers, including the risk that a borrower may not provide information to us about its business in a timely manner, and/or may present inaccurate or incomplete information to us, and risks relating to the value of collateral.
Added
In order to manage credit risk successfully, we must, among other things, maintain disciplined and prudent underwriting standards.
Added
The weakening of these standards for any reason, a lack of discipline or diligence in underwriting and monitoring loans, the inability to adequately adapt policies and procedures to changes in economic or any other conditions affecting borrowers and the quality of our loan portfolio, may result in defaults, foreclosures and additional charge-offs and may necessitate that we significantly increase our allowance for credit losses, each of which could adversely affect our net income.
Added
As a result, our inability to successfully manage credit risk could have a material adverse effect on our business, financial condition, or results of operations.
Added
The inability of purchasers of real estate, including residential real estate, to obtain financing may weaken the financial condition of our borrowers who are dependent on the sale or refinancing of property to repay their loans.
Added
Further, if we need to raise capital in the future, we may have to do so when many other financial institutions are also seeking to raise capital and would then have to compete with those institutions for investors. Accordingly, such financing may not be available to us on acceptable terms or at all.
Added
We continue to expect that gains on the sale of U.S. government guaranteed loans will continue to comprise a significant component of our revenue.
Added
The determination of these gains is based on assumptions regarding the value of unguaranteed loans retained, servicing rights retained and deferred fees and costs, and net premiums paid by purchasers of the guaranteed portions of U.S. government guaranteed loans.
Added
The value of retained unguaranteed loans and servicing rights are determined based on market-derived factors such as prepayment rates, current market conditions and recent loan sales. Deferred fees and costs are determined using internal analysis of the cost to originate loans.
Added
Significant errors in assumptions used to compute gains on sale of loans or servicing asset valuations could result in material revenue misstatements, which may have a material adverse effect on our business, results of operations and profitability.
Added
In addition, if such valuations are not reflective of fair market value, then our business, results of operations and financial condition may be materially and adversely affected. The Company’s stock price can be volatile.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur ISO, who has over twenty-five years of experience in the system, network, and cybersecurity space, is responsible for overseeing and managing the Information Security Program alongside our Chief Information Officer. The Chief Information Officer serves on the Enterprise Risk Management Committee, which is chaired by our Chief Risk Officer.
Biggest changeOur ISO and Chief Information Officer, who share the responsibility of overseeing and managing the Information Security Program, collectively have decades of experience in the system, network, and cybersecurity space. The Chief Information Officer serves on the Enterprise Risk Management Committee, which is chaired by our Chief Risk Officer.
Key elements of our Information Security Program include: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise information technology environment are conducted on at least an annual basis; 20 • internal testing of our security controls and our response to cybersecurity incidents; • the use of external service providers, to assess, test or otherwise assist with aspects of our security controls; • training and awareness programs for all employees that include periodic and ongoing assessments to drive adoption and awareness of cybersecurity processes and controls; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; • maintenance and regular testing of a Business Continuity Plan that includes redundant back-up systems for critical functions; • a physical security program that is tested regularly; • obtaining and maintaining cyber insurance; and • a third-party risk management program for service providers, suppliers, and vendors, that provides for the assessment, monitoring and management of cybersecurity risk presented by the Company’s use of such third parties, as well as contractual protections related to cybersecurity incidents affecting third party vendors and service providers.
Key elements of our Information Security Program include: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise information technology environment are conducted on at least an annual basis; • internal testing of our security controls and our response to cybersecurity incidents; • the use of external service providers, to assess, test or otherwise assist with aspects of our security controls; • training and awareness programs for all employees that include periodic and ongoing assessments to drive adoption and awareness of cybersecurity processes and controls; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; • maintenance and regular testing of a Business Continuity Plan that includes redundant back-up systems for critical functions; • a physical security program that is tested regularly; • obtaining and maintaining cyber insurance; and • a third-party risk management program for service providers, suppliers, and vendors, that provides for the assessment, monitoring and management of cybersecurity risk presented by the Company’s use of such third parties, as well as contractual protections related to cybersecurity incidents affecting third party vendors and service providers.
Despite our efforts, there can be no assurance that our cybersecurity risk management processes and measures will be fully implemented, complied with, or effective in protecting our systems and information. We face risks from certain cybersecurity threats that, if realized, are reasonably likely to materially affect our business strategy, result of operations or financial condition.
Despite our efforts, there can be no assurance that our cybersecurity risk management processes and measures described will be fully implemented, complied with, or effective in protecting our systems and information. We face risks from certain cybersecurity threats that, if realized, are reasonably likely to materially affect our business strategy, result of operations or financial condition.
Please see Part I, Item 1A Risk Factors for further discussion of the risks associated with an interruption or breach in our information systems or infrastructure. Cybersecurity Governance Our Board of Directors keeps apprised of and oversees technology risk and cybersecurity of the Company.
Please see Part I, Item 1A Risk Factors for further discussion of the risks associated with an interruption or breach in our information systems or infrastructure. 21 Cybersecurity Governance Our Board of Directors keeps apprised of and oversees technology risk and cybersecurity of the Company.
The Board receives updates from the Company’s Information Security Officer (“ISO”) on a quarterly basis and receives cybersecurity training on at least an annual basis. While the entire Board receives reporting and receives training, the Board has delegated certain specific responsibility for overseeing cybersecurity threats, among other things, to its Risk Committee.
The Board receives updates from the Company’s Chief Information Officer or Information Security Officer (“ISO”) on a quarterly basis and receives cybersecurity training on at least an annual basis. While the entire Board receives reporting and training, the Board has delegated certain specific responsibility for overseeing cybersecurity threats, among other things, to its Risk Committee.
The Company engages in a continuous risk monitoring process that seeks to identify the likelihood and impact of internal and external threats to our information security systems and data, and assesses the sufficiency of the controls in place to mitigate these threats to acceptable levels on a risk-based basis.
The Company engages in a continuous risk monitoring process that seeks to identify the likelihood and impact of internal and external threats to our information security systems and data and assesses the sufficiency of the controls in place to mitigate these threats to acceptable levels.
The program is comprised of policies, procedures, and programs, and is informed by and intended to align with the interagency guidance issued by banking regulators as well as the FFIEC Information Security Booklet and Cybersecurity Assessment Tool (the “Information Security Program”).
The program is comprised of policies, procedures, and programs, and is informed by and intended to align with the interagency guidance issued by banking regulators as well as the NIST Cybersecurity Framework (the “Information Security Program”).
Cybersecurity Risk Management and Strategy Our Information Security Program is integrated into our risk management program and is aligned to the Company’s business strategy and Enterprise Risk Management program. It shares common methodologies, reporting channels and governance processes that apply to other areas of enterprise risk, including legal, compliance, strategic, operational, and financial risk.
We’ve therefore integrated our Information Security Program into the Enterprise Risk Management program, meaning it shares common methodologies, reporting channels and governance processes that apply to other areas of enterprise risk, including legal, compliance, strategic, operational, and financial risk.
Incidents are reported to and handled under our Incident Response Policy, which designates an incident response team and includes procedures and processes to identify, assess, respond to, mitigate and report on cybersecurity incidents.
Incidents are reported to and handled under our Incident Response Policy, which designates an incident response team and includes procedures and processes to identify, assess, respond to, mitigate and report on cybersecurity incidents. In the last three fiscal years, the Company has not experienced any material cybersecurity incidents.
This does not imply that we meet any particular technical standards, specifications, or requirements, but rather that we use the guidance to help us identify, assess, and manage cybersecurity risks relevant to our business.
This does not imply that we meet any particular technical standards, specifications, or requirements, but rather that we use the guidance to help us identify, assess, and manage cybersecurity risks relevant to our business. Cybersecurity Risk Management and Strategy We are a digital bank. As such, data security is a foundational pillar of our business strategy.
Item 1C. Cybersecurity We believe that cybersecurity and the protection of data and customer information in our possession, custody or control is of paramount importance to our business. The Company’s information security program is designed to protect the confidentiality, integrity, and availability of our critical systems and information, including customer information.
Item 1C. Cybersecurity The Company’s information security program is designed to protect the confidentiality, integrity, and availability of our critical systems and information, including customer information.
Removed
The risk and evolving nature of cybersecurity threats, and not a previous cybersecurity incident, has led to the Company to devote significant time and resources to the development and implementation of the Information Security Program described above.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties The Company and the Bank are headquartered in a 172,630 square foot mixed-use building located at 8701 East 116th Street, Fishers, IN 46038. The Bank’s wholly-owned subsidiary, SPF15, Inc., owns the building and property. The Company considers its property to be in adequate condition and suitable for its intended purposes.
Biggest changeItem 2. Properties The Company and the Bank are headquartered in a 172,630 square foot mixed-use building located at 8701 East 116th Street, Fishers, IN 46038. The Bank’s wholly-owned subsidiary, SPF15, Inc., owns and operates the building and property. The Company considers its property to be in adequate condition and suitable for its intended purposes.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities In October 2021, the Company's Board of Directors approved a stock repurchase program authorizing the repurchase of up to $30.0 million, which was subsequently increased to $35.0 million, of our outstanding common stock from time to time on the open market or in privately negotiated transactions.
Biggest changeThe present and future ability of the Bank to distribute funds to the Company are subject to the discretion of the Board of the Directors of the Bank and the Bank is not obligated to pay any distributions to the Company. 22 Issuer Purchases of Equity Securities On December 19, 2022, the Company's Board of Directors approved a stock repurchase program that authorized the repurchase of up to $25.0 million of our outstanding common stock from time to time on the open market or in privately negotiated transactions.
Dividends Total cash dividends declared by the Company in 2024 were $0.24 per share.
Dividends Total cash dividends declared by the Company in 2025 were $0.24 per share.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information The Company’s common stock trades on the Nasdaq Global Select Market under the symbol “INBK.” As of March 7, 2025, the Company had 8,697,085 shares of common stock issued and outstanding, and there were 99 holders of record of common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information The Company’s common stock trades on the Nasdaq Global Select Market under the symbol “INBK.” As of March 6, 2026, the Company had 8,716,662 shares of common stock issued and outstanding, and there were 98 holders of record of common stock.
Under this program, the Company repurchased 559,522 shares of common stock through March 8, 2024, at an average price of $19.06, for a total investment of $10.7 million. No common stock was repurchased during the fourth quarter of 2024 under the repurchase program that expired on December 31, 2024.
The stock repurchase authorization expired on December 31, 2024. Under the program, the Company repurchased 559,522 shares of common stock, at an average price of $19.06, for a total investment of $10.7 million.
In December 2022, the Company’s Board of Directors approved a new stock repurchase program authorizing the repurchase of up to $25.0 million of the Company’s outstanding stock from time to time on the open market or in privately negotiated transactions. The stock repurchase program replaced the stock repurchase program mentioned above and expired on December 31, 2024.
On October 20, 2025, the Board of Directors of the Company authorized the repurchase of up to $25.0 million of the Company's outstanding common stock from time to time on the open market or in privately negotiated transactions.
Stock Performance Graph The following graph and table compares the five-year cumulative total return to shareholders of First Internet Bancorp common stock with that of the Nasdaq Composite Index and the S&P U.S. BMI Banks Index. The following assumes $100 invested on December 31, 2019 in First Internet Bancorp, the Nasdaq Composite Index and the S&P U.S.
BMI Banks Index. The following assumes $100 invested on December 31, 2020 in First Internet Bancorp, the Nasdaq Composite Index and the S&P U.S. BMI Bank Index, and assumes that dividends are reinvested.
Under this program, the Company repurchased 855,956 shares of common stock at an average price of $36.31, for a total investment of $31.1 million. This stock repurchase authorization expired on December 31, 2022.
Under the program, the Company repurchased 27,998 shares of common stock, at an average price of $18.64, for a total investment of $0.5 million as of December 31, 2025. The stock repurchase authorization is scheduled to expire on September 30, 2027.
The historical stock price performance for our common stock is not necessarily indicative of future stock performance. 22 December 31, Index 2019 2020 2021 2022 2023 2024 First Internet Bancorp $ 100.00 $ 122.87 $ 202.50 $ 105.28 $ 106.34 $ 159.41 Nasdaq Composite Index 100.00 144.92 177.06 119.45 172.77 223.87 S&P U.S.
The historical stock price performance for our common stock is not necessarily indicative of future stock performance. 23 December 31, Index 2020 2021 2022 2023 2024 2025 First Internet Bancorp $ 100.00 $ 164.81 $ 85.68 $ 86.54 $ 129.74 $ 75.99 Nasdaq Composite Index 100.00 122.18 82.43 119.22 154.48 187.14 S&P U.S.
Removed
The present and future ability of the Bank to distribute funds to the Company are subject to the discretion of the Board of the Directors of the Bank and the Bank is not obligated to pay any distributions to the Company.
Added
The following table presents information with respect to purchases of the Company’s common stock made during the fourth quarter of 2025 by or on behalf of the Company or any “affiliated purchaser,” as defined in Rule 10b-18(a)(3).
Removed
BMI Bank Index, and assumes that dividends are reinvested.
Added
(dollars in thousands, except per share data) Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased As Part of Publicly Announced Programs Approximate Dollar Value Of Shares That May Yet Be Purchased Under The Programs October 1, 2025 - October 31, 2025 4,000 $ 18.36 4000 $ 24,927 November 1, 2025 - November 30, 2025 19,000 18.38 19,000 24,577 December 1, 2025 - December 31, 2025 4,998 19.89 4,998 24,478 Total 27,998 27,998 Stock Performance Graph The following graph and table compares the five-year cumulative total return to shareholders of First Internet Bancorp common stock with that of the Nasdaq Composite Index and the S&P U.S.
Removed
BMI Banks Index 100.00 87.24 118.61 98.38 107.32 143.68
Added
BMI Banks Index 100.00 135.97 112.77 123.02 164.70 211.47 Item 6. [RESERVED] 24

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

103 edited+35 added−33 removed23 unchanged
Biggest changeReconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the following tables for the last three completed fiscal years ended on December 31. 41 (dollars in thousands, except share and per share data) At or For The Twelve Months Ended December 31, 2024 2023 2022 Total equity - GAAP $ 384,063 $ 362,795 $ 364,974 Adjustments: Goodwill (4,687) (4,687) (4,687) Tangible common equity $ 379,376 $ 358,108 $ 360,287 Total assets - GAAP $ 5,737,859 $ 5,167,572 $ 4,543,104 Adjustments: Goodwill (4,687) (4,687) (4,687) Tangible assets $ 5,733,172 $ 5,162,885 $ 4,538,417 Total common shares outstanding 8,667,894 8,644,451 9,065,883 Book value per common share $ 44.31 $ 41.97 $ 40.26 Effect of goodwill (0.54) (0.54) (0.52) Tangible book value per common share $ 43.77 $ 41.43 $ 39.74 Total shareholders’ equity to assets 6.69 % 7.02 % 8.03 % Effect of goodwill (0.07 %) (0.08 %) (0.09 %) Tangible common equity to tangible assets 6.62 % 6.94 % 7.94 % Total average equity - GAAP $ 377,215 $ 357,800 $ 372,844 Adjustments: Average goodwill (4,687) (4,687) (4,687) Average tangible common equity $ 372,528 $ 353,113 $ 368,157 Return on average shareholders' equity 6.70 % 2.35 % 9.53 % Effect of goodwill 0.08 % 0.03 % 0.12 % Return on average tangible common equity 6.78 % 2.38 % 9.65 % Total interest income $ 291,887 $ 239,442 $ 156,908 Adjustments: Fully-taxable equivalent adjustments 1 4,650 5,233 5,355 Total interest income - FTE $ 296,537 $ 244,675 $ 162,263 Net interest income $ 87,377 $ 74,904 $ 97,093 Adjustments: Fully-taxable equivalent adjustments 1 4,650 5,233 5,355 Net interest income - FTE $ 92,027 $ 80,137 $ 102,448 Net interest margin 1.65 % 1.56 % 2.41 % Effect of fully-taxable equivalent adjustments 1 0.09 % 0.11 % 0.13 % Net interest margin - FTE 1.74 % 1.67 % 2.54 % 1 Assuming a 21% tax rate 42 (dollars in thousands, except share and per share data) At or For The Twelve Months Ended December 31, 2024 2023 2022 Total Revenue - GAAP $ 134,722 $ 101,029 $ 118,350 Adjustments: Mortgage-related revenue — (65) — Gain on prepayment of FHLB advances (1,829) — — Gain on termination of interest rate swaps (2,904) — — Adjusted total revenue $ 129,989 $ 100,964 $ 118,350 Noninterest income - GAAP $ 47,345 $ 26,125 $ 21,257 Adjustments: Mortgage-related revenue — (65) — Gain on prepayment of FHLB advances (1,829) — — Gain on termination of interest rate swaps (2,904) — — Adjusted noninterest income $ 42,612 $ 26,060 $ 21,257 Noninterest expense - GAAP $ 90,110 $ 79,436 $ 73,273 Adjustments: Mortgage-related costs — (3,052) — Acquisition-related expenses — — (273) IT termination fees (452) — — Nonrecurring consulting fee — — (875) Write-down of Software — — (125) Discretionary inflation bonus — — (531) Accelerated equity compensation — — (289) Anniversary expenses (120) — — Adjusted noninterest expense $ 89,538 $ 76,384 $ 71,180 Income before income taxes - GAAP $ 27,542 $ 4,940 $ 40,100 Adjustments: 1 Mortgage-related revenue — (65) — Mortgage-related costs — 3,052 — Partial charge-off of C&I participation loan — 6,914 — Acquisition-related expenses — — 273 IT termination fees 452 — — Nonrecurring consulting fee — — 875 Write-down of software — — 125 Discretionary inflation bonus — — 531 Accelerated equity compensation — — 289 Anniversary expenses 120 — — Gain on prepayment of FHLB advances (1,829) — — Gain on termination of interest rate swaps (2,904) — — Adjusted income before income taxes $ 23,381 $ 14,841 $ 42,193 1 Assuming a 21% tax rate 43 (dollars in thousands, except share and per share data) At or For The Twelve Months Ended December 31, 2024 2023 2022 Income tax provision (benefit) - GAAP $ 2,266 $ (3,477) $ 4,559 Adjustments: 1 Mortgage-related revenue — (14) — Mortgage-related costs — 641 — Partial charge-off of C&I participation loan — 1,452 — Acquisition-related expenses — — 57 IT termination fees 95 — Nonrecurring consulting fee — — 184 Write-down of software — — 26 Discretionary inflation bonus — — 112 Accelerated equity compensation — — 61 Anniversary expenses 25 — — Gain on prepayment of FHLB advances (384) — — Gain on termination of interest rate swaps (610) — — Adjusted income tax provision (benefit) $ 1,392 $ (1,398) $ 4,999 Net income - GAAP $ 25,276 $ 8,417 $ 35,541 Adjustments: Mortgage-related revenue — (51) — Mortgage-related costs — 2,411 — Partial charge-off of C&I participation loan — 5,462 — IT termination fees 357 — — Acquisition-related expenses — — 216 Nonrecurring consulting fee — — 691 Write-down of software — — 99 Discretionary inflation bonus — — 419 Accelerated equity compensation — — 228 Anniversary expenses 95 — — Gain on prepayment of FHLB advances (1,445) — — Gain on termination of interest rate swaps (2,294) — — Adjusted net income $ 21,989 $ 16,239 $ 37,194 Diluted average common shares outstanding 8,765,725 8,858,890 9,595,115 Diluted earnings per share - GAAP $ 2.88 $ 0.95 $ 3.70 Adjustments: Mortgage-related revenue — (0.01) — Mortgage-related costs — 0.27 — Effect of partial charge-off of C&I participation loan — 0.62 — Effect of acquisition-related expenses — — 0.02 Effect of IT termination fees 0.04 — — Effect of nonrecurring consulting fee — — 0.07 Effect of write-down of software — — 0.01 Effect of discretionary inflation bonus — — 0.04 Effect of accelerated equity compensation — — 0.02 Effect of anniversary expenses 0.01 — — Effect of gain on prepayment of FHLB advances (0.16) — — Effect of gain on termination of interest rate swaps (0.26) — — Adjusted diluted earnings per share $ 2.51 $ 1.83 $ 3.86 1 Assuming a 21% tax rate 44 (dollars in thousands, except share and per share data) At or For The Twelve Months Ended December 31, 2024 2023 2022 Return on average assets 0.46 % 0.17 % 0.85 % Effect of mortgage-related revenue 0.00 % 0.00 % 0.00 % Effect of mortgage-related costs 0.00 % 0.05 % 0.00 % Effect of partial charge-off of C&I participation loan 0.00 % 0.11 % 0.00 % Effect of acquisition-related expenses 0.00 % 0.00 % 0.01 % Effect of IT termination fees 0.01 % 0.00 % 0.00 % Effect of nonrecurring consulting fee 0.00 % 0.00 % 0.02 % Effect of discretionary inflation bonus 0.00 % 0.00 % 0.01 % Effect of accelerated equity compensation 0.00 % 0.00 % 0.01 % Effect of anniversary expenses 0.00 % 0.00 % 0.00 % Effect of gain on prepayment of FHLB advances (0.03 %) 0.00 % 0.00 % Effect of gain on termination of interest rate swaps (0.04 %) 0.00 % 0.00 % Adjusted return on average assets 0.40 % 0.33 % 0.90 % Return on average shareholders' equity 6.70 % 2.35 % 9.53 % Effect of mortgage-related revenue 0.00 % (0.01 %) 0.00 % Effect of mortgage-related costs 0.00 % 0.67 % 0.00 % Effect of partial charge-off of C&I participation loan 0.00 % 1.53 % 0.00 % Effect of acquisition-related expenses 0.00 % 0.00 % 0.06 % Effect of IT termination fees 0.09 % 0.00 % 0.00 % Effect of nonrecurring consulting fee 0.00 % 0.00 % 0.19 % Effect of write-down of software 0.00 % 0.00 % 0.03 % Effect of discretionary inflation bonus 0.00 % 0.00 % 0.11 % Effect of accelerated equity compensation 0.00 % 0.00 % 0.06 % Effect of anniversary expenses 0.03 % 0.00 % 0.00 % Effect of gain on prepayment of FHLB advances (0.38 %) 0.00 % 0.00 % Effect of gain on termination of interest rate swaps (0.61 %) 0.00 % 0.00 % Adjusted return on average shareholders' equity 5.83 % 4.54 % 9.98 % Return on average tangible common equity 6.78 % 2.38 % 9.65 % Effect of mortgage-related revenue 0.00 % (0.01 %) 0.00 % Effect of mortgage-related costs 0.00 % 0.68 % 0.00 % Effect of partial charge-off of C&I participation loan 0.00 % 1.55 % 0.00 % Effect of acquisition-related expenses 0.00 % 0.00 % 0.06 % Effect of IT termination fees 0.10 % 0.00 % 0.00 % Effect of nonrecurring consulting fee 0.00 % 0.00 % 0.19 % Effect of write-down of software 0.00 % 0.00 % 0.03 % Effect of subordinated debt redemption cost 0.00 % 0.00 % 0.00 % Effect of discretionary inflation bonus 0.00 % 0.00 % 0.11 % Effect of accelerated equity compensation 0.00 % 0.00 % 0.06 % Effect of anniversary expenses 0.03 % 0.00 % 0.00 % Effect of gain on prepayment of FHLB advances (0.39 %) 0.00 % 0.00 % Effect of gain on termination of interest rate swaps (0.62 %) 0.00 % 0.00 % Adjusted return on average tangible common equity 5.90 % 4.60 % 10.10 % 45 Critical Accounting Policies and Estimates ACL - Loans Management considers the policies related to the ACL- loans to be critical to the financial statement presentation.
Biggest changeReconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the following tables for the last three completed fiscal years ended on December 31. 43 (dollars in thousands, except share and per share data) At or For The Twelve Months Ended December 31, 2025 2024 2023 Total equity - GAAP $ 359,767 $ 384,063 $ 362,795 Adjustments: Goodwill (4,687) (4,687) (4,687) Tangible common equity $ 355,080 $ 379,376 $ 358,108 Total assets - GAAP $ 5,571,647 $ 5,737,859 $ 5,167,572 Adjustments: Goodwill (4,687) (4,687) (4,687) Tangible assets $ 5,566,960 $ 5,733,172 $ 5,162,885 Total common shares outstanding 8,686,994 8,667,894 8,644,451 Book value per common share $ 41.41 $ 44.31 $ 41.97 Effect of goodwill (0.54) (0.54) (0.54) Tangible book value per common share $ 40.87 $ 43.77 $ 41.43 Total shareholders’ equity to assets 6.46 % 6.69 % 7.02 % Effect of goodwill (0.08 %) (0.07 %) (0.08 %) Tangible common equity to tangible assets 6.38 % 6.62 % 6.94 % Total average equity - GAAP $ 384,432 $ 377,215 $ 357,800 Adjustments: Average goodwill (4,687) (4,687) (4,687) Average tangible common equity $ 379,745 $ 372,528 $ 353,113 Return on average shareholders' equity (9.15 %) 6.70 % 2.35 % Effect of goodwill (0.11 %) 0.08 % 0.03 % Return on average tangible common equity (9.26 %) 6.78 % 2.38 % Total interest income $ 320,157 $ 291,887 $ 239,442 Adjustments: Fully-taxable equivalent adjustments 1 4,645 4,650 5,233 Total interest income - FTE $ 324,802 $ 296,537 $ 244,675 Net interest income $ 113,760 $ 87,377 $ 74,904 Adjustments: Fully-taxable equivalent adjustments 1 4,645 4,650 5,233 Net interest income - FTE $ 118,405 $ 92,027 $ 80,137 Net interest margin 2.01 % 1.65 % 1.56 % Effect of fully-taxable equivalent adjustments 1 0.08 % 0.09 % 0.11 % Net interest margin - FTE 2.09 % 1.74 % 1.67 % 1 Assuming a 21% tax rate 44 (dollars in thousands, except share and per share data) At or For The Twelve Months Ended December 31, 2025 2024 2023 Total revenue - GAAP $ 116,472 $ 134,722 $ 101,029 Adjustments: Loss on sale of loans 38,234 — — Mortgage-related revenue — — (65) Gain on prepayment of FHLB advances — (1,829) — Gain on termination of interest rate swaps — (2,904) — Adjusted total revenue $ 154,706 $ 129,989 $ 100,964 Net (loss) income - GAAP $ (35,168) $ 25,276 $ 8,417 Adjustments: 1 Provision for credit losses 72,314 17,070 16,653 Income tax (benefit) provision (15,701) 2,266 (3,477) Pre-provision net revenue $ 21,445 $ 44,612 $ 21,593 Pre-provision net revenue $ 21,445 $ 44,612 $ 21,593 Adjustments: 1 Loss on sale of loans 38,234 — — Mortgage-related revenue — — (65) IT termination fees — 357 — Anniversary expenses — 95 — Gain on prepayment of FHLB advances — (1,829) — Gain on termination of swaps — (2,904) — Adjusted pre-provision net revenue $ 59,679 $ 40,331 $ 21,528 Noninterest income - GAAP $ 2,712 $ 47,345 $ 26,125 Adjustments: Loss on sale of loans 38,234 — — Mortgage-related revenue — — (65) Gain on prepayment of FHLB advances — (1,829) — Gain on termination of interest rate swaps — (2,904) — Adjusted noninterest income $ 40,946 $ 42,612 $ 26,060 Noninterest expense - GAAP $ 95,027 $ 90,110 $ 79,436 Adjustments: Mortgage-related costs — — (3,052) IT termination fees — (452) — Anniversary expenses — (120) — Adjusted noninterest expense $ 95,027 $ 89,538 $ 76,384 Income (loss) before income taxes - GAAP $ (50,869) $ 27,542 $ 4,940 Adjustments: 1 Loss on sale of loans 38,234 Mortgage-related revenue — — (65) Mortgage-related costs — — 3,052 Partial charge-off of C&I participation loan — — 6,914 IT termination fees — 452 — Anniversary expenses — 120 — Gain on prepayment of FHLB advances — (1,829) — Gain on termination of interest rate swaps — (2,904) — Adjusted income before income taxes $ (12,635) $ 23,381 $ 14,841 1 Assuming a 21% tax rate 45 (dollars in thousands, except share and per share data) At or For The Twelve Months Ended December 31, (dollars in thousands, except share and per share data) 2025 2024 2023 Income tax (benefit) provision - GAAP $ (15,701) $ 2,266 $ (3,477) Adjustments: 1 Loss on sale of loans 8,785 — — Mortgage-related revenue — — (14) Mortgage-related costs — — 641 Partial charge-off of C&I participation loan — — 1,452 IT termination fees — 95 — Anniversary expenses — 25 — Gain on prepayment of FHLB advances — (384) — Gain on termination of interest rate swaps — (610) — Adjusted income tax (benefit) provision $ (6,916) $ 1,392 $ (1,398) Net (loss) income - GAAP $ (35,168) $ 25,276 $ 8,417 Adjustments: Loss on sale of loans 29,449 — — Mortgage-related revenue — — (51) Mortgage-related costs — — 2,411 Partial charge-off of C&I participation loan — — 5,462 IT termination fees — 357 — Anniversary expenses — 95 — Gain on prepayment of FHLB advances — (1,445) — Gain on termination of interest rate swaps — (2,294) — Adjusted net (loss) income $ (5,719) $ 21,989 $ 16,239 Diluted average common shares outstanding 8,729,970 8,765,725 8,858,890 Diluted (loss) earnings per share - GAAP $ (4.03) $ 2.88 $ 0.95 Adjustments: Effect of loss on sale of loans 3.37 — — Effect of mortgage-related revenue — — (0.01) Effect of mortgage-related costs — — 0.27 Effect of partial charge-off of C&I participation loan — — 0.62 Effect of IT termination fees — 0.04 — Effect of anniversary expenses — 0.01 — Effect of gain on prepayment of FHLB advances — (0.16) — Effect of gain on termination of interest rate swaps — (0.26) — Adjusted diluted (loss) earnings per share $ (0.66) $ 2.51 $ 1.83 Return on average assets (0.60 %) 0.46 % 0.17 % Effect of loss on sale of loans 0.50 % 0.00 % 0.00 % Effect of mortgage-related revenue 0.00 % 0.00 % 0.00 % Effect of mortgage-related costs 0.00 % 0.00 % 0.05 % Effect of partial charge-off of C&I participation loan 0.00 % 0.00 % 0.11 % Effect of IT termination fees 0.00 % 0.01 % 0.00 % Effect of gain on prepayment of FHLB advances 0.00 % (0.03 %) 0.00 % Effect of gain on termination of interest rate swaps 0.00 % (0.04 %) 0.00 % Adjusted return on average assets (0.10 %) 0.40 % 0.33 % 1 Assuming a 21% tax rate 46 (dollars in thousands, except share and per share data) At or For The Twelve Months Ended December 31, (dollars in thousands, except share and per share data) 2025 2024 2023 Return on average shareholders' equity (9.15 %) 6.70 % 2.35 % Effect of loss on sale of loans 7.66 % 0.00 % 0.00 % Effect of mortgage-related revenue 0.00 % 0.00 % (0.01 %) Effect of mortgage-related costs 0.00 % 0.00 % 0.67 % Effect of partial charge-off of C&I participation loan 0.00 % 0.00 % 1.53 % Effect of IT termination fees 0.00 % 0.09 % 0.00 % Effect of anniversary expenses 0.00 % 0.03 % 0.00 % Effect of gain on prepayment of FHLB advances 0.00 % (0.38 %) 0.00 % Effect of gain on termination of interest rate swaps 0.00 % (0.61 %) 0.00 % Adjusted return on average shareholders' equity (1.49 %) 5.83 % 4.54 % Return on average tangible common equity (9.26 %) 6.78 % 2.38 % Effect of loss on sale of loans 7.75 % 0.00 % 0.00 % Effect of mortgage-related revenue 0.00 % 0.00 % (0.01 %) Effect of mortgage-related costs 0.00 % 0.00 % 0.68 % Effect of partial charge-off of C&I participation loan 0.00 % 0.00 % 1.55 % Effect of IT termination fees 0.00 % 0.10 % 0.00 % Effect of anniversary expenses 0.00 % 0.03 % 0.00 % Effect of gain on prepayment of FHLB advances 0.00 % (0.39 %) 0.00 % Effect of gain on termination of interest rate swaps 0.00 % (0.62 %) 0.00 % Adjusted return on average tangible common equity (1.51 %) 5.90 % 4.60 % 47 Critical Accounting Policies and Estimates ACL - Loans Management considers the policies related to the ACL- loans to be critical to the financial statement presentation.
Securities that we intend to hold until maturity are classified as “held-to-maturity” securities, and all other investment securities are classified as “available-for-sale.” The carrying values of available-for-sale investment securities are adjusted for unrealized gains or losses as a valuation allowance and any gain or loss is reported on an after-tax basis as a component of other comprehensive income (loss).
Securities that we intend to hold until maturity are classified as “held-to-maturity” securities, and all other investment securities are classified as “available-for-sale.” The carrying values of available-for-sale investment securities are adjusted for unrealized gains or losses as a valuation allowance and any gain or loss is reported on an after-tax basis as a component of other comprehensive (loss) income.
Qualitative factors for the DCF and weighted-average remaining maturity methodologies include the following: • Changes in lending policies and procedures, including changes in underwriting standards and collections, charge-offs and recovery practices • Changes in international, national, regional and local conditions • Changes in the nature and volume of the portfolio and terms of loans • Changes in the experience, depth and ability of lending management • Changes in the volume and severity of past due loans and other similar conditions • Changes in the quality of the organization’s loan review system • Changes in the value of underlying collateral for collateral dependent loans • The existence and effect of any concentrations of credit and changes in the levels of such concentrations 46 • The effect of other external factors (i.e. competition, legal and regulatory requirements) on the level of estimated credit losses ACL - Loans - Individually Evaluated Loans that do not share risk characteristics are evaluated on an individual basis and are excluded from the collective evaluation.
Qualitative factors for the DCF and weighted-average remaining maturity methodologies include the following: • Changes in lending policies and procedures, including changes in underwriting standards and collections, charge-offs and recovery practices • Changes in international, national, regional and local conditions • Changes in the nature and volume of the portfolio and terms of loans • Changes in the experience, depth and ability of lending management • Changes in the volume and severity of past due loans and other similar conditions • Changes in the quality of the organization’s loan review system • Changes in the value of underlying collateral for collateral dependent loans • The existence and effect of any concentrations of credit and changes in the levels of such concentrations 48 • The effect of other external factors (i.e. competition, legal and regulatory requirements) on the level of estimated credit losses ACL - Loans - Individually Evaluated Loans that do not share risk characteristics are evaluated on an individual basis and are excluded from the collective evaluation.
We have the ability and intent to hold all investment securities in an unrealized loss position resulting from interest rate changes to the earlier of the forecasted recovery or the maturity of the underlying investment security. As of December 31, 2024, we did not have any investment securities of a single issuer that exceeded 10% of shareholders’ equity.
We have the ability and intent to hold all investment securities in an unrealized loss position resulting from interest rate changes to the earlier of the forecasted recovery or the maturity of the underlying investment security. As of December 31, 2025, and 2024, we did not have any investment securities of a single issuer that exceeded 10% of shareholders’ equity.
Our federal statutory tax rate was 21% in 2024 and 2023. In 2024 and 2023, the variance from the federal statutory rate was due primarily to tax-exempt income. Interest income on certain loans or securities issued by governmental, municipal and not-for-profit entities, and earnings from bank-owned life insurance were the primary components of tax-exempt income.
Our federal statutory tax rate was 21% in 2024. The variance from the federal statutory rate was due primarily to tax-exempt income. Interest income on certain loans or securities issued by governmental, municipal and not-for-profit entities, and earnings from bank-owned life insurance were the primary components of tax-exempt income.
These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance, or other actions intended to maximize collection. 32 Nonperforming loans are comprised of total nonaccrual loans and loans 90 days past due and accruing.
These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance, or other actions intended to maximize collection. Nonperforming loans are comprised of total nonaccrual loans and loans 90 days past due and accruing.
Non-GAAP financial measures, specifically tangible common equity, tangible assets, tangible book value per common share, tangible common equity to tangible assets, average tangible common equity, return on average tangible common equity, total interest income - FTE, net interest income - FTE, net interest margin - FTE, adjusted total revenue, adjusted noninterest income, adjusted noninterest expense, adjusted income before income taxes, adjusted income tax provision (benefit), adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average shareholders’ equity and adjusted return on average tangible common equity are used by the Company's management to measure the strength of its capital and analyze profitability, including its ability to generate earnings on tangible capital invested by its shareholders.
Non-GAAP financial measures, specifically tangible common equity, tangible assets, tangible book value per common share, tangible common equity to tangible assets, average tangible common equity, return on average tangible common equity, total interest income - FTE, net interest income - FTE, net interest margin - FTE, adjusted total revenue, pre-provision net revenue, adjusted pre-provision net revenue, adjusted noninterest income, adjusted noninterest expense, adjusted (loss) income before income taxes, adjusted income tax (benefit) provision, adjusted net (loss) income, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average shareholders’ equity and adjusted return on average tangible common equity are used by the Company's management to measure the strength of its capital and analyze profitability, including its ability to generate earnings on tangible capital invested by its shareholders.
The $16.9 million increase in net income for the twelve months ended December 31, 2024 compared to the twelve months ended December 31, 2023 was due primarily to an increase of $21.2 million, or 81.2%, in noninterest income, an increase of $12.5 million, or 16.7%, in net interest income, partially offset by an increase of $10.7 million, or 13.4%, in noninterest expense, an increase of $5.7 million, in income tax expense and an increase of $0.4 million, or 2.5%, in provision for credit losses.
The increase in net income of $16.9 million for the twelve months ended December 31, 2024 compared to the twelve months ended December 31, 2023 was due primarily to increases of $21.2 million, or 81.2%, in noninterest income and $12.5 million, or 16.7%, in net interest income, partially offset by increases of $10.7 million, or 13.4%, in noninterest expense, $5.7 million in income tax expense and $0.4 million, or 2.5%, in provision for credit losses.
Refer to the “Reconciliation of Non-GAAP Financial Measures” section of Item 7 of Part II of this report, Management's Discussion and Analysis of Financial Condition and Results of Operations 25 Rate/Volume Analysis The following table illustrates the impact of changes in the volume of interest-earning assets and interest-bearing liabilities and interest rates on net interest income for the periods indicated.
Refer to the “Reconciliation of Non-GAAP Financial Measures” section of Item 7 of Part II of this report, Management's Discussion and Analysis of Financial Condition and Results of Operations 26 Rate/Volume Analysis The following table illustrates the impact of changes in the volume of interest-earning assets and interest-bearing liabilities and interest rates on net interest income for the periods indicated.
Nonperforming assets include nonperforming loans, other real estate owned (“OREO”) and other nonperforming assets, which consist of repossessed assets. Nonperforming assets could also include individual securities for which a credit loss has been recognized; however, we did not own any securities classified as such during the two-year period ended December 31, 2024.
Nonperforming assets include nonperforming loans, other real estate owned (“OREO”) and other nonperforming assets, which consist of repossessed assets. Nonperforming assets could also include individual securities for which a credit loss has been recognized; however, we did not own any securities classified as such during the two-year period ended December 31, 2025.
Investment securities that are acquired and held principally for the purpose of selling them in the near term with the objective of generating economic profits on short-term differences in market characteristics are classified as “trading securities.” We did not classify any securities as trading securities as of December 31, 2024 and 2023.
Investment securities that are acquired and held principally for the purpose of selling them in the near term with the objective of generating economic profits on short-term differences in market characteristics are classified as “trading securities.” We did not classify any securities as trading securities as of December 31, 2025 and 2024.
The following tables present contractual interest rates paid on time deposits, their scheduled maturities, and the scheduled maturities for time deposits greater than $250,000.
The following tables present contractual interest rates paid on time deposits and brokered deposits, their scheduled maturities, and the scheduled maturities for time deposits greater than $250,000.
Discussion, analysis and comparisons of the years ended December 31, 2023 and 2022 that are not included in this Annual Report on Form 10-K can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023.
Discussion, analysis and comparisons of the years ended December 31, 2024 and 2023 that are not included in this Annual Report on Form 10-K can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024.
Refer to the “Reconciliation of Non-GAAP Financial Measures” section of Item 7 of Part II of this report, Management's Discussion and Analysis of Financial Condition and Results of Operations for additional information. 29 Loan Portfolio Analysis The following table provides information regarding our loan portfolio as of the end of the last two years.
Refer to the “Reconciliation of Non-GAAP Financial Measures” section of Item 7 of Part II of this report, Management's Discussion and Analysis of Financial Condition and Results of Operations for additional information. 31 Loan Portfolio Analysis The following table provides information regarding our loan portfolio as of the end of the last two years.
Management is not aware of any other events or regulatory requirements that, if implemented, are likely to have a material effect on either the Company’s or the Bank’s liquidity. The following table presents the Company’s significant contractual obligations as of December 31, 2024.
Management is not aware of any other events or regulatory requirements that, if implemented, are likely to have a material effect on either the Company’s or the Bank’s liquidity. The following table presents the Company’s significant contractual obligations as of December 31, 2025.
Adjusted net income for the twelve months ended December 31, 2024, was $22.0 million, and adjusted diluted earnings per share was $2.51. Additionally, for the twelve months ended December 31, 2024, adjusted ROAA, adjusted ROAE and adjusted ROATCE were 0.40%, 5.83% and 5.90%, respectively.
Adjusted for these items, net income for the twelve months ended December 31, 2024 was $22.0 million, and adjusted diluted earnings per share was $2.51. Additionally, for the twelve months ended December 31, 2024, adjusted ROAA, adjusted ROAE and adjusted ROATCE were 0.40%, 5.83% and 5.90%, respectively.
We periodically evaluate each security in an unrealized loss position to determine if there is an impairment. As of December 31, 2024, the unrealized losses in our investment securities portfolio were due primarily to interest rate changes.
We periodically evaluate each security in an unrealized loss position to determine if there is an impairment. As of December 31, 2025, the unrealized losses in our investment securities portfolio were due primarily to interest rate changes.
Fair value hedges were purchased to convert certain fixed rate assets to floating rate. Cash flow hedges were used to convert certain variable rate liabilities into fixed rate liabilities. At December 31, 2024, we had no interest rate swaps that were classified as either fair value or cash flow hedges.
Fair value hedges were purchased to convert certain fixed rate assets to floating rate. Cash flow hedges were used to convert certain variable rate liabilities into fixed rate liabilities. At December 31, 2025 and 2024, we had no interest rate swaps that were classified as either fair value or cash flow hedges.
The change in interest not due solely to volume or rate has been allocated in proportion to the absolute dollar amounts of the change in each. Rate/Volume Analysis of Net Interest Income Twelve Months Ended December 31, 2024 vs. December 31, 2023 Due to Changes in Twelve Months Ended December 31, 2023 vs.
The change in interest not due solely to volume or rate has been allocated in proportion to the absolute dollar amounts of the change in each. Rate/Volume Analysis of Net Interest Income Twelve Months Ended December 31, 2025 vs. December 31, 2024 Due to Changes in Twelve Months Ended December 31, 2024 vs.
The term “issuer” excludes the U.S. Government and its sponsored agencies and corporations. 35 The following tables present the amortized cost and approximate fair value of our investment securities portfolio by security type as of the end of the last two years. (amounts in thousands) December 31, Amortized Cost 2024 2023 Securities available-for-sale U.S.
The term “issuer” excludes the U.S. Government and its sponsored agencies and corporations. 37 The following tables present the amortized cost and approximate fair value of our investment securities portfolio by security type as of the end of the last two years. (amounts in thousands) December 31, Amortized Cost 2025 2024 Securities available-for-sale U.S.
Certificates of deposits and brokered certificates of deposits scheduled to mature in one year or less at December 31, 2024 totaled $1.5 billion. At December 31, 2024, capital ratios for the Company and the Bank were above regulatory requirements for well-capitalized institutions. Refer to “Note 14: Regulatory Capital Requirements” for additional information regarding regulatory capital requirements.
Certificates of deposits and brokered certificates of deposits scheduled to mature in one year or less at December 31, 2025 totaled $1.4 billion. At December 31, 2025, capital ratios for the Company and the Bank were above regulatory requirements for well-capitalized institutions. Refer to “Note 14: Regulatory Capital Requirements” for additional information regarding regulatory capital requirements.
These balances include Indiana-based municipal deposits, which are insured by the Indiana Board for Depositories, as well as larger balance accounts under contractual agreements that only allow withdrawal under certain conditions. After subtracting these types of deposits, the adjusted uninsured deposit balance drops to 20% as of December 31, 2024, compared to 19% as of December 31, 2023.
These balances include Indiana-based municipal deposits, which are insured by the Indiana Board for Depositories, as well as larger balance accounts under contractual agreements that only allow withdrawal under certain conditions. After 39 subtracting these types of deposits, the adjusted uninsured deposit balance drops to 27% as of December 31, 2025, compared to 20% as of December 31, 2024.
The following discussion, analysis and comparisons generally focus on the operating results for the years ended December 31, 2024 and 2023.
The following discussion, analysis and comparisons generally focus on the operating results for the years ended December 31, 2025 and 2024.
Loan officers have underwriting and approval authorization of varying amounts based on their lending experience and product type. Additionally, based on the amount of the loan, multiple approvals may be required. Based on the Bank’s legal lending limit, the maximum it could lend to any one borrower at December 31, 2024 was $78.1 million.
Loan officers have underwriting and approval authorization of varying amounts based on their lending experience and product type. Additionally, based on the amount of the loan, multiple approvals may be required. Based on the Bank’s legal lending limit, the maximum it could lend to any one borrower at December 31, 2025 was $70.4 million.
The Company uses its sources of funds primarily to meet ongoing financial commitments, including withdrawals by depositors, credit commitments to borrowers, operating expenses and capital expenditures. At December 31, 2024, approved outstanding loan commitments, including unused lines of credit and standby letters of credit, amounted to $667.7 million.
The Company uses its sources of funds primarily to meet ongoing financial commitments, including withdrawals by depositors, credit commitments to borrowers, operating expenses and capital expenditures. At December 31, 2025, approved outstanding loan commitments, including unused lines of credit and standby letters of credit, amounted to $617.6 million.
As of December 31, 2023, the Company had two residential mortgage properties in OREO with a carrying value of $0.4 million. 33 Allowance for Credit Losses - Loans The following table provides a rollforward of the ACL on loans by loan portfolio segment for the twelve months ended December 31, 2024 and 2023; however, allocation of a portion of the allowance to one segment does not preclude its availability to absorb losses in other segments.
As of December 31, 2024, the Company had one residential mortgage property in OREO with a carrying value of $0.3 million. 35 Allowance for Credit Losses - Loans The following table provides a rollforward of the ACL on loans by loan portfolio segment for the twelve months ended December 31, 2025 and 2024; however, allocation of a portion of the allowance to one segment does not preclude its availability to absorb losses in other segments.
Results of Operations During the twelve months ended December 31, 2024, net income was $25.3 million, or $2.88 per diluted share, compared to net income of $8.4 million, or $0.95 per diluted share, for the twelve months ended December 31, 2023 and net income of $35.5 million, or $3.70 per diluted share, for the twelve months ended December 31, 2022.
Results of Operations During the twelve months ended December 31, 2025, net loss was $35.2 million, or $4.03 diluted loss per share, compared to net income of $25.3 million, or $2.88 per diluted share, for the twelve months ended December 31, 2024 and net income of $8.4 million, or $0.95 per diluted share, for the twelve months ended December 31, 2023.
The growth in total interest income was due primarily to an increase in interest earned on loans resulting from an increase of 63 bps in the yield earned on loans, as well as an increase of $311.7 million, or 8.5%, in the average balance of loans, including loans held-for-sale.
The growth in total interest income was due primarily to an increase in interest earned on loans, resulting from an increase of 30 bps in the yield earned on loans, as well as an increase of $225.7 million, or 5.6%, in the average balance of loans, including loans held-for-sale.
At December 31, 2024, the Company, on an unconsolidated basis, had $13.0 million in cash generally available for its cash needs, which is in excess of its current annual regular shareholder dividend and operating expenses.
At December 31, 2025, the Company, on an unconsolidated basis, had $14.5 million in cash generally available for its cash needs, which is in excess of its current annual regular shareholder dividend and operating expenses.
The adequacy of the allowance for credit losses and the provision are based on the review and evaluation of the loan portfolio and reflect management’s assessment of the risks and potential losses within the portfolio.
The adequacy of the ACL and the provision are based on the review and evaluation of the loan portfolio and reflect management’s assessment of the risks and potential losses within the portfolio.
The increase in both book value per common share and tangible book value per share was driven primarily by the increases in total shareholders’ equity and tangible common equity.
The decrease in both book value per common share and tangible book value per common share was driven primarily by the decreases in total shareholders’ equity and tangible common equity.
The slight increase in consumer loan balances was due primarily to new origination activity in the other consumer loans portfolios, partially offset by a decrease in the residential mortgage portfolio. 30 Loan Maturities and Rate Sensitivity The following table shows the contractual maturity distribution intervals (without regard to repayment or repricing schedules) of the outstanding loans in our portfolio as of December 31, 2024.
The slight decrease in consumer loan balances was due primarily to expected run-off in the residential mortgage portfolio, partially offset by origination activity in the other consumer loans portfolio. 32 Loan Maturities and Rate Sensitivity The following table shows the contractual maturity distribution intervals (without regard to repayment or repricing schedules) of the outstanding loans in our portfolio as of December 31, 2025.
Twelve Months Ended December 31, (amounts in thousands) 2024 2023 2022 Statutory rate times pre-tax income $ 5,784 $ 1,037 $ 8,421 (Subtract) add the tax effect of: Income from tax-exempt securities and loans (3,500) (3,951) (4,190) State income taxes, net of federal tax effect 47 (30) 592 Bank-owned life insurance (262) (215) (201) Tax credits (110) (168) (143) Other differences 307 (150) 80 Income tax provision (benefit) $ 2,266 $ (3,477) $ 4,559 We recognized an income tax provision of $2.3 million and an effective tax rate of 8.2% in 2024, compared to an income tax benefit of $3.5 million in 2023.
December 31, (amounts in thousands) 2024 2023 Statutory rate times pre-tax income $ 5,784 $ 1,037 (Subtract) add the tax effect of: Income from tax-exempt securities and loans (3,500) (3,951) State income taxes, net of federal tax effect 47 (30) Bank-owned life insurance (262) (215) Tax credits (110) (168) Other differences 307 (150) Income tax provision (benefit) $ 2,266 $ (3,477) We recognized an income tax benefit of $15.7 million in 2025, compared to an income tax provision of $2.3 million and an effective tax rate of 8.2% in 2024 and a benefit of $3.5 million in 2023.
On a fully-taxable equivalent (“FTE”) basis, NIM was 1.74% for the twelve months ended December 31, 2024 compared to 1.67% for the twelve months ended December 31, 2023, an increase of 7 bps.
On a fully-taxable equivalent (“FTE”) basis, NIM was 2.09% for the twelve months ended December 31, 2025 compared to 1.74% for the twelve months ended December 31, 2024, an increase of 35 bps.
This evaluation uses a discounted cash flow analysis based on historical loss data, reasonable and supportable forecasts and prepayment rates, as well as qualitative factors such as economic and business conditions, portfolio growth, concentrations of credit in the portfolio, trends in risk grades, delinquencies within the portfolio and changes in our lending policies and practices. 34 Management actively monitors asset quality and, when appropriate, charges off loans against the ACL.
This evaluation uses a discounted cash flow analysis based on historical loss data, reasonable and supportable forecasts and prepayment rates, as well as qualitative factors such as economic and business conditions, portfolio growth, concentrations of credit in the portfolio, trends in risk grades, delinquencies within the portfolio and changes in our lending policies and practices.
The provision for credit losses - loans was $18.8 million for the twelve months ended December 31, 2024 compared to $15.5 million for the twelve months ended December 31, 2023.
The provision for credit losses - loans was $71.9 million for the twelve months ended December 31, 2025 compared to $18.8 million for the twelve months ended December 31, 2024.
The new program authorized the repurchase of up to $25.0 million of our outstanding common stock from time to time on the open market or in privately negotiated transactions. The stock repurchase authorization expired as of December 31, 2024.
On December 19, 2022, the Company's Board of Directors approved a stock repurchase program that authorized the repurchase of up to $25.0 million of our outstanding common stock from time to time on the open market or in privately negotiated transactions. The stock repurchase authorization expired on December 31, 2024.
The ratio of total shareholders’ equity to total assets decreased to 6.69% as of December 31, 2024 from 7.02% as of December 31, 2023 and the ratio of tangible common equity to tangible assets decreased to 6.62% as of December 31, 2024 from 6.94% as of December 31, 2023.
The ratio of total shareholders’ equity to total assets decreased to 6.46% as of December 31, 2025 from 6.69% as of December 31, 2024 and the ratio of tangible common equity to tangible assets decreased to 6.38% as of December 31, 2025 from 6.62% as of December 31, 2024.
Book value per common share increased 5.6% to $44.31 as of December 31, 2024 from $41.97 as of December 31, 2023. Tangible book value per share increased 5.6% to $43.77 as of December 31, 2024 from $41.43 as of December 31, 2023.
Book value per common share decreased 6.5% to $41.41 as of December 31, 2025 from $44.31 as of December 31, 2024. Tangible book value per share decreased 6.6% to $40.87 as of December 31, 2025 from $43.77 as of December 31, 2024.
Twelve Months Ended December 31, (amounts in thousands) 2024 2023 2022 Salaries and employee benefits $ 51,756 $ 45,322 $ 41,553 Marketing, advertising and promotion 2,589 2,567 3,554 Consulting and professional services 3,744 3,082 4,826 Data processing 2,448 2,373 1,989 Loan expenses 5,947 5,756 4,435 Premises and equipment 11,902 10,599 10,688 Deposit insurance premium 5,000 3,880 1,152 Other 6,724 5,857 5,076 Total noninterest expense $ 90,110 $ 79,436 $ 73,273 27 Noninterest expense for the twelve months ended December 31, 2024 was $90.1 million, representing an increase of $10.7, or 13.4%, compared to $79.4 million for the twelve months ended December 31, 2023.
Twelve Months Ended December 31, (amounts in thousands) 2025 2024 2023 Salaries and employee benefits $ 51,026 $ 51,756 $ 45,322 Marketing, advertising and promotion 2,475 2,589 2,567 Consulting and professional services 4,327 3,744 3,082 Data processing 2,654 2,448 2,373 Loan expenses 6,714 5,947 5,756 Premises and equipment 13,673 11,902 10,599 Deposit insurance premium 6,109 5,000 3,880 Other 8,049 6,724 5,857 Total noninterest expense $ 95,027 $ 90,110 $ 79,436 Noninterest expense for the twelve months ended December 31, 2025 was $95.0 million, representing an increase of $4.9 million or 5.5%, compared to $90.1 million for the twelve months ended December 31, 2024.
The increase in total interest income was partially offset by a $40.0 million, or 24.3%, increase in total interest expense to $204.5 million for the twelve months ended December 31, 2024 compared to $164.5 million for the twelve months ended December 31, 2023.
The increase in total interest income was partially offset by a $1.9 million, or 0.9%, increase in total interest expense to $206.4 million for the twelve months ended December 31, 2025 compared to $204.5 million for the twelve months ended December 31, 2024.
Although management believes it uses the best information available to make determinations with respect to the ACL, future adjustments may be necessary if economic conditions differ substantially from those in the assumptions used to determine the size of the ACL.
Although management believes it uses the best information available to make determinations with respect to the ACL, future adjustments may be necessary if economic conditions differ substantially from those in the assumptions used to determine the size of the ACL. 36 The ACL was $55.7 million as of December 31, 2025, compared to $44.8 million as of December 31, 2024.
The increase was due primarily to increases of $63.0 million in agency mortgage-backed securities - residential, $25.0 million in private label mortgage-backed securities - residential, $24.4 million in agency mortgage-backed securities - commercial, and $15.7 million in asset-backed securities, partially offset by decreases of $12.4 million in U.S. Government-sponsored agencies securities and $4.8 million in municipal securities.
The increase was due primarily to increases of $119.8 million in agency mortgage-backed securities - residential, $77.9 million in private label mortgage-backed securities - residential and $18.7 million in asset-backed securities, partially offset by decreases of $19.1 million in U.S. Government-sponsored agencies securities and $4.9 million in agency mortgage-backed securities - commercial.
The increase in net interest income was the result of a $52.4 million, or 21.9%, increase in total interest income to $291.9 million for the twelve months ended December 31, 2024 compared to $239.4 million for the twelve months ended December 31, 2023.
The increase in net interest income was the result of a $28.3 million, or 9.7%, increase in total interest income to $320.2 million for the twelve months ended December 31, 2025 compared to $291.9 million for the twelve months ended December 31, 2024.
Twelve Months Ended December 31, 2024 December 31, 2023 December 31, 2022 (dollars in thousands) Average Balance Interest/Dividends Yield/Cost Average Balance Interest/Dividends Yield/Cost Average Balance Interest/Dividends Yield/Cost Assets Interest-earning assets Loans, including loans held-for-sale $ 3,997,397 $ 233,844 5.85 % $ 3,685,729 $ 192,337 5.22 % $ 3,142,166 $ 140,600 4.47 % Securities - taxable 692,806 26,742 3.86 % 551,479 17,189 3.12 % 537,921 10,711 1.99 % Securities - non-taxable 77,987 3,775 4.84 % 72,571 3,532 4.87 % 75,382 1,767 2.34 % Other earning assets 516,836 27,526 5.33 % 500,061 26,384 5.28 % 278,073 3,830 1.38 % Total interest-earning assets 5,285,026 291,887 5.52 % 4,809,840 239,442 4.98 % 4,033,542 156,908 3.89 % Allowance for credit losses (42,758) (36,038) (29,143) Noninterest-earning assets 220,462 194,712 166,127 Total assets $ 5,462,730 $ 4,968,514 $ 4,170,526 Liabilities Interest-bearing liabilities Interest-bearing demand deposits $ 494,082 $ 10,448 2.11 % $ 366,082 $ 6,186 1.69 % $ 333,737 $ 2,056 0.62 % Savings accounts 22,336 189 0.85 % 29,200 249 0.85 % 58,156 336 0.58 % Money market accounts 1,230,443 51,036 4.15 % 1,276,602 49,890 3.91 % 1,423,185 18,513 1.30 % Fintech - brokered deposits 141,860 6,023 4.25 % 33,039 1,402 4.24 % 60,699 1,033 1.70 % Certificates and brokered deposits 2,430,205 115,454 4.75 % 2,040,041 85,636 4.20 % 1,147,017 19,894 1.73 % Total interest-bearing deposits 4,318,926 183,150 4.24 % 3,744,964 143,363 3.83 % 3,022,794 41,832 1.38 % Other borrowed funds 629,137 21,360 3.40 % 719,617 21,175 2.94 % 638,526 17,983 2.82 % Total interest-bearing liabilities 4,948,063 204,510 4.13 % 4,464,581 164,538 3.69 % 3,661,320 59,815 1.63 % Noninterest-bearing deposits 114,396 125,816 120,325 Other noninterest-bearing liabilities 23,056 20,317 16,037 Total liabilities 5,085,515 4,610,714 3,797,682 Shareholders' equity 377,215 357,800 372,844 Total liabilities and shareholders' equity $ 5,462,730 $ 4,968,514 $ 4,170,526 Net interest income $ 87,377 $ 74,904 $ 97,093 Interest rate spread 1 1.39 % 1.29 % 2.26 % Net interest margin 2 1.65 % 1.56 % 2.41 % Net interest margin - FTE 3 1.74 % 1.67 % 2.54 % 1 Yield on total interest-earning assets minus cost of total interest-bearing liabilities 2 Net interest income divided by average interest-earning assets 3 On a fully-taxable equivalent (“FTE”) basis assuming a 21% tax rate.
Twelve Months Ended December 31, 2025 December 31, 2024 December 31, 2023 (dollars in thousands) Average Balance Interest/Dividends Yield/Cost Average Balance Interest/Dividends Yield/Cost Average Balance Interest/Dividends Yield/Cost Assets Interest-earning assets Loans, including loans held-for-sale $ 4,223,146 $ 259,840 6.15 % $ 3,997,397 $ 233,844 5.85 % $ 3,685,729 $ 192,337 5.22 % Securities - taxable 839,878 34,950 4.16 % 692,806 26,742 3.86 % 551,479 17,189 3.12 % Securities - non-taxable 79,897 2,618 3.28 % 77,987 3,775 4.84 % 72,571 3,532 4.87 % Other earning assets 519,976 22,749 4.38 % 516,836 27,526 5.33 % 500,061 26,384 5.28 % Total interest-earning assets 5,662,897 320,157 5.65 % 5,285,026 291,887 5.52 % 4,809,840 239,442 4.98 % Allowance for credit losses - loans (51,440) (42,758) (36,038) Noninterest-earning assets 237,366 220,462 194,712 Total assets $ 5,848,823 $ 5,462,730 $ 4,968,514 Liabilities Interest-bearing liabilities Interest-bearing demand deposits $ 1,152,210 $ 36,007 3.13 % $ 494,082 $ 10,448 2.11 % $ 366,082 $ 6,186 1.69 % Savings accounts 20,229 171 0.85 % 22,336 189 0.85 % 29,200 249 0.85 % Money market accounts 1,243,300 45,459 3.66 % 1,230,443 51,036 4.15 % 1,276,602 49,890 3.91 % Fintech - brokered deposits — — — % 141,860 6,023 4.25 % 33,039 1,402 4.24 % Certificates and brokered deposits 2,451,191 106,753 4.36 % 2,430,205 115,454 4.75 % 2,040,041 85,636 4.20 % Total interest-bearing deposits 4,866,930 188,390 3.87 % 4,318,926 183,150 4.24 % 3,744,964 143,363 3.83 % Other borrowed funds 421,947 18,007 4.27 % 629,137 21,360 3.40 % 719,617 21,175 2.94 % Total interest-bearing liabilities 5,288,877 206,397 3.90 % 4,948,063 204,510 4.13 % 4,464,581 164,538 3.69 % Noninterest-bearing deposits 154,712 114,396 125,816 Other noninterest-bearing liabilities 20,802 23,056 20,317 Total liabilities 5,464,391 5,085,515 4,610,714 Shareholders' equity 384,432 377,215 357,800 Total liabilities and shareholders' equity $ 5,848,823 $ 5,462,730 $ 4,968,514 Net interest income $ 113,760 $ 87,377 $ 74,904 Interest rate spread 1 1.75 % 1.39 % 1.29 % Net interest margin 2 2.01 % 1.65 % 1.56 % Net interest margin - FTE 3 2.09 % 1.74 % 1.67 % 1 Yield on total interest-earning assets minus cost of total interest-bearing liabilities 2 Net interest income divided by average interest-earning assets 3 On a fully-taxable equivalent (“FTE”) basis assuming a 21% tax rate.
Twelve Months Ended December 31, (amounts in thousands) 2024 2023 2022 Service charges and fees $ 959 $ 851 $ 1,071 Loan servicing revenue 6,188 3,833 2,573 Loan servicing asset revaluation (2,537) (1,463) (1,639) Mortgage banking activities — 76 5,464 Gain on sale of loans 33,329 20,526 11,372 Other 9,406 2,302 2,416 Total noninterest income $ 47,345 $ 26,125 $ 21,257 During the twelve months ended December 31, 2024, noninterest income totaled $47.3 million, representing an increase of $21.2 million, or 81.2%, compared to $26.1 million for the twelve months ended December 31, 2023.
Twelve Months Ended December 31, (amounts in thousands) 2025 2024 2023 Service charges and fees $ 1,366 $ 959 $ 851 Loan servicing revenue 8,730 6,188 3,833 Loan servicing asset revaluation (5,466) (2,537) (1,463) Mortgage banking activities — — 76 (Loss) gain on sale of loans (8,313) 33,329 20,526 Other 6,395 9,406 2,302 Total noninterest income $ 2,712 $ 47,345 $ 26,125 Noninterest income for the twelve months ended December 31, 2025 was $2.7 million, representing a decrease of $44.6 million, or 94.3%, compared to $47.3 million for the twelve months ended December 31, 2024.
The Company recognized gains of $2.9 million from termination of interest rate swap agreements and $1.8 million from prepayment of FHLB advances as well as expenses of $0.5 million in IT termination fees and $0.1 million in anniversary expenses.
During the twelve months ended December 31, 2024, ROAA, ROAE and ROATCE were 0.46%, 6.70% and 6.78%, respectively. The Company recognized gains of $2.9 million from the termination of interest rate swap agreements and $1.8 million from the prepayment of FHLB advances, as well as expenses of $0.5 million in IT termination fees and $0.1 million in anniversary expenses.
Generally, loans are placed on nonaccrual status at 90 days past due and accrued interest is reversed against earnings, unless the loan is well secured and in the process of collection. The accrual of interest on individually evaluated loans is discontinued when, in management’s opinion, the borrower may be unable to meet payments as they become due.
Certain nonaccrual and substantially all delinquent loans more than 90 days past due may be individually evaluated. Generally, loans are placed on nonaccrual status at 90 days past due and accrued interest is reversed against earnings, unless the loan is well secured and in the process of collection.
The decrease in net income of $27.1 million for the twelve months ended December 31, 2023 compared to the twelve months ended December 31, 2022 was due primarily to a decrease of $22.2 million, or 22.9%, in net interest income, an increase of $11.7 million, or 234.6%, in provision for loan losses and an increase of $6.2 million, or 8.4%, in noninterest expense, partially offset by a decrease of $8.0 million, or 176.3%, in income tax expense and an increase of $4.9 million, or 22.9%, in noninterest income.
The $60.4 million decrease in net income for the twelve months ended December 31, 2025 compared to the twelve months ended December 31, 2024 was due primarily to an increase of $55.2 million, or 323.6%, in provision for credit losses, a decrease of $44.6 million, or 94.3%, in noninterest income and an increase of $4.9 million, or 5.5%, in noninterest expense, partially offset by an increase of $26.4 million, or 30.2%, in net interest income and a decrease of $18.0 million in income tax expense.
December 31, (dollars in thousands) 2024 2023 Commercial loans Commercial and industrial $ 120,175 2.9 % $ 129,349 3.4 % Owner-occupied commercial real estate 53,591 1.3 % 57,286 1.5 % Investor commercial real estate 269,431 6.5 % 132,077 3.4 % Construction 413,523 9.9 % 261,750 6.8 % Single tenant lease financing 949,748 22.7 % 936,616 24.4 % Public finance 485,867 11.6 % 521,764 13.6 % Healthcare finance 181,427 4.4 % 222,793 5.8 % Small business lending 1 331,914 8.0 % 218,506 5.7 % Franchise finance 536,909 12.9 % 525,783 13.7 % Total commercial loans 3,342,585 80.2 % 3,005,924 78.3 % Consumer loans Residential mortgage 375,160 9.0 % 395,648 10.3 % Home equity 18,274 0.4 % 23,669 0.6 % Other consumer 407,947 9.8 % 377,614 9.8 % Total consumer loans 801,381 19.2 % 796,931 20.7 % Total commercial and consumer loans 4,143,966 99.4 % 3,802,855 99.0 % Net deferred loan origination costs, premiums and discounts on purchased loans and other 2 26,680 0.6 % 37,365 1.0 % Total loans 4,170,646 100.0 % 3,840,220 100.0 % Allowance for credit losses - loans (44,769) (38,774) Net loans $ 4,125,877 $ 3,801,446 1 Balances include $34.0 million and $33.5 million that are guaranteed by the U.S. government as of December 31, 2024 and December 31, 2023, respectively. 2 Includes carrying value adjustments of $22.9 million and $27.8 million related to terminated interest rate swaps associated with public finance loans as of December 31, 2024 and December 31, 2023, respectively.
December 31, (dollars in thousands) 2025 2024 Commercial loans Commercial and industrial $ 221,714 5.9 % $ 120,175 2.9 % Owner-occupied commercial real estate 48,575 1.3 % 53,591 1.3 % Investor commercial real estate 647,394 17.3 % 269,431 6.5 % Construction 372,668 9.9 % 413,523 9.9 % Single tenant lease financing 222,925 5.9 % 949,748 22.7 % Public finance 442,234 11.8 % 485,867 11.6 % Healthcare finance 139,469 3.7 % 181,427 4.4 % Small business lending 1 430,024 11.5 % 331,914 8.0 % Franchise finance 417,045 11.1 % 536,909 12.9 % Total commercial loans 2,942,048 78.4 % 3,342,585 80.2 % Consumer loans Residential mortgage 343,110 9.2 % 375,160 9.0 % Home equity 14,725 0.4 % 18,274 0.4 % Other consumer 425,458 11.4 % 407,947 9.8 % Total consumer loans 783,293 21.0 % 801,381 19.2 % Total commercial and consumer loans 3,725,341 99.4 % 4,143,966 99.4 % Net deferred loan origination costs, premiums and discounts on purchased loans and other 2 21,387 0.6 % 26,680 0.6 % Total loans 3,746,728 100.0 % 4,170,646 100.0 % Allowance for credit losses - loans (55,686) (44,769) Net loans $ 3,691,042 $ 4,125,877 1 Balances include $52.2 million and $34.0 million that are guaranteed by the U.S. government as of December 31, 2025 and December 31, 2024, respectively. 2 Includes carrying value adjustments of $19.1 million and $22.9 million related to terminated interest rate swaps associated with public finance loans as of December 31, 2025 and December 31, 2024, respectively.
December 31, (dollars in thousands) 2024 2023 Balance, beginning of period $ 38,774 $ 31,737 Adoption of ASU 2016-13 (CECL) — 2,962 Balance, beginning of period 38,774 34,699 Provision charged to expense 18,815 15,454 Losses charged off Commercial and industrial — (7,049) Investor commercial real estate — (591) Single tenant lease financing (195) — Healthcare finance — (605) Small business lending (10,441) (2,586) Franchise finance (1,466) (331) Residential mortgage (159) (140) Other consumer (1,009) (582) Total losses charged off (13,270) (11,884) Recoveries Commercial and industrial 8 243 Small business lending 325 77 Residential mortgage 1 5 Home equity 7 6 Other consumer 109 174 Total recoveries 450 505 Balance, end of period $ 44,769 $ 38,774 Net charge-offs $ 12,820 $ 11,379 Net (recoveries) charge-offs to average loans (annualized) Commercial and industrial (0.01 %) 6.87 % Investor commercial real estate — % 0.47 % Single tenant lease financing 0.02 % — % Healthcare finance — % 0.25 % Small business lending 3.39 % 1.34 % Franchise Finance 0.27 % 0.08 % Total commercial net charge-offs 0.37 % 0.38 % Residential mortgage 0.04 % 0.03 % Home equity (0.03 %) (0.02 %) Other consumer 0.28 % 0.21 % Total consumer net charge-offs 0.13 % 0.07 % Net charge-offs to average loans 0.32 % 0.31 % The determination of the ACL and the related provision for credit losses are components of our significant accounting policies as discussed within Note 1 to our consolidated financial statements.
December 31, (dollars in thousands) 2025 2024 Balance, beginning of period $ 44,769 $ 38,774 Provision charged to expense 71,921 18,815 Losses charged off Commercial and industrial (153) — Single tenant lease financing — (195) Small business lending (39,650) (10,441) Franchise finance (21,754) (1,466) Residential mortgage (75) (159) Other consumer (1,457) (1,009) Total losses charged off (63,089) (13,270) Recoveries Commercial and industrial 21 8 Small business lending 1,681 325 Franchise finance 94 — Residential mortgage 19 1 Home equity 7 7 Other consumer 263 109 Total recoveries 2,085 450 Balance, end of period $ 55,686 $ 44,769 Net charge-offs $ 61,004 $ 12,820 Net charge-offs (recoveries) to average loans (annualized) Commercial and industrial 0.11 % (0.01 %) Single tenant lease financing — % 0.02 % Small business lending 8.16 % 3.39 % Franchise Finance 4.48 % 0.27 % Total commercial net charge-offs 1.76 % 0.37 % Residential mortgage 0.02 % 0.04 % Home equity (0.04 %) (0.03 %) Other consumer 0.41 % 0.28 % Total consumer net charge-offs 0.16 % 0.13 % Net charge-offs to average loans 1.45 % 0.32 % The determination of the ACL and the related provision for credit losses are components of our significant accounting policies as discussed within Note 1 to our consolidated financial statements.
This increase was due primarily to increases of $528.3 million, or 32.9%, in certificates of deposits, $493.7 million, or 122.5%, in interest-bearing demand deposits and $13.0 million, or 10.5%, in noninterest-bearing deposits, partially offset by decreases of $64.5 million, or 5.2%, in money market accounts, $28.3 million, or 4.8%, in brokered deposits and $1.5 million, or 7.2%, in savings accounts.
This decrease was due primarily to decreases of $287.7 million, or 51.1%, in brokered deposits and $128.5 million, or 6.0%, in certificates of deposits, partially offset by increases of $224.2 million, or 25.0%, in interest-bearing demand deposits, $89.1 million, or 7.5%, in money market accounts and $10.4 million, or 7.6%, in noninterest-bearing deposits.
The increase in interest expense related to interest-bearing demand deposits was due primarily to a 42 bp increase in the cost of these deposits, as well as an increase of $128.0 million, or 35.0%, in the average balance of these deposits.
When combined with deposits formerly classified as fintech - brokered deposits, the increase in interest expense related to interest-bearing demand deposits was due primarily to a 378 bp increase in the cost of these deposits, as well as an increase of $516.3 million, or 81.2%, in the average balance of these deposits.
In addition to its operating expenses, the Company is responsible for paying any dividends declared to its common shareholders and interest and principal on outstanding debt. The Company’s primary sources of funds are cash maintained at the holding company level and dividends from the Bank, the payment of which is subject to regulatory limits.
The Company’s primary sources of funds are cash maintained at the holding company level and dividends from the Bank, the payment of which is subject to regulatory limits.
Total nonperforming loans increased $18.5 million, or 185.3%, to $28.4 million as of December 31, 2024 compared to $10.0 million as of December 31, 2023, due primarily to increases in nonperforming loans related to the small business lending, franchise finance and residential mortgage portfolios, as well as an increase in accruing loans past due 90 days or more.
Total nonperforming loans increased $30.1 million, or 106.0%, to $58.5 million as of December 31, 2025 compared to $28.4 million as of December 31, 2024, due primarily to an increase in nonperforming loans in the franchise finance and small business lending portfolios during the year.
December 31, 2022 Due to Changes in (amounts in thousands) Volume Rate Net Volume Rate Net Interest income Loans, including loans held-for-sale $ 17,100 $ 24,407 $ 41,507 $ 26,264 $ 25,473 $ 51,737 Securities – taxable 4,961 4,592 9,553 275 6,203 6,478 Securities – non-taxable 265 (22) 243 (69) 1,834 1,765 Other earning assets 891 251 1,142 4,967 17,587 22,554 Total 23,217 29,228 52,445 31,437 51,097 82,534 Interest expense Interest-bearing demand deposits 2,491 1,771 4,262 220 3,910 4,130 Savings accounts (60) — (60) (207) 120 (87) Money market accounts (1,847) 2,993 1,146 (2,094) 33,471 31,377 Fintech - brokered deposits 4,618 3 4,621 (634) 1,003 369 Certificates and brokered deposits 17,699 12,119 29,818 23,199 42,543 65,742 Other borrowed funds (2,867) 3,052 185 2,391 801 3,192 Total 20,034 19,938 39,972 22,875 81,848 104,723 Increase /(decrease) in net interest income $ 3,183 $ 9,290 $ 12,473 $ 8,562 $ (30,751) $ (22,189) Net interest income for the twelve months ended December 31, 2024 was $87.4 million, an increase of $12.5 million, or 16.7%, compared to $74.9 million for the twelve months ended December 31, 2023.
December 31, 2023 Due to Changes in (amounts in thousands) Volume Rate Net Volume Rate Net Interest income Loans, including loans held-for-sale $ 13,624 $ 12,372 $ 25,996 $ 17,100 $ 24,407 $ 41,507 Securities – taxable 6,009 2,199 8,208 4,961 4,592 9,553 Securities – non-taxable 90 (1,247) (1,157) 265 (22) 243 Other earning assets 166 (4,943) (4,777) 891 251 1,142 Total 19,889 8,381 28,270 23,217 29,228 52,445 Interest expense Interest-bearing demand deposits 18,753 6,806 25,559 2,491 1,771 4,262 Savings accounts (18) — (18) (60) — (60) Money market accounts 527 (6,104) (5,577) (1,847) 2,993 1,146 Fintech - brokered deposits (6,023) — (6,023) 4,618 3 4,621 Certificates and brokered deposits 976 (9,677) (8,701) 17,699 12,119 29,818 Other borrowed funds (8,047) 4,694 (3,353) (2,867) 3,052 185 Total 6,168 (4,281) 1,887 20,034 19,938 39,972 Increase in net interest income $ 13,721 $ 12,662 $ 26,383 $ 3,183 $ 9,290 $ 12,473 Net interest income for the twelve months ended December 31, 2025 was $113.8 million, an increase of $26.4 million, or 30.2%, compared to $87.4 million for the twelve months ended December 31, 2024.
(amounts in thousands) December 31, Balance Sheet Data: 2024 2023 Total assets $ 5,737,859 $ 5,167,572 Loans 4,170,646 3,840,220 Total securities 837,151 702,008 Loans held-for-sale 54,695 22,052 Noninterest-bearing deposits 136,451 123,464 Interest-bearing deposits 4,796,755 3,943,509 Total deposits 4,933,206 4,066,973 Advances from Federal Home Loan Bank 295,000 614,934 Total shareholders' equity 384,063 362,795 Total assets increased $570.3 million, or 11.0%, to $5.7 billion as of December 31, 2024 compared to $5.2 billion as of December 31, 2023.
(amounts in thousands) December 31, Balance Sheet Data: 2025 2024 Total assets $ 5,571,647 $ 5,737,859 Loans 3,746,728 4,170,646 Total securities 1,029,296 837,151 Loans held-for-sale 108,608 54,695 Noninterest-bearing deposits 146,879 136,451 Interest-bearing deposits 4,692,934 4,796,755 Total deposits 4,839,813 4,933,206 Advances from Federal Home Loan Bank 249,500 295,000 Total shareholders' equity 359,767 384,063 Total assets decreased $166.2 million, or 2.9%, to $5.6 billion as of December 31, 2025 compared to $5.7 billion as of December 31, 2024.
The ACL as a percentage of total loans was 1.07% as of December 31, 2024, compared to 1.01% at December 31, 2023. The ACL as a percentage of nonperforming loans decreased to 157.5% as of December 31, 2024, compared to 389.2% as of December 31, 2023.
The ACL as a percentage of nonperforming loans decreased to 95.1% as of December 31, 2025, compared to 157.5% as of December 31, 2024, as the increase in nonperforming loans outweighed the increase in the ACL.
The increase was due primarily to purchases of CRA-eligible agency mortgage-backed securities - residential. 36 Investment Maturities The following table summarizes the contractual maturity schedule (without regard to repricing schedules) of our investment securities at their amortized cost and their weighted average yields at December 31, 2024. 1 year or less More than 1 year to 5 years More than 5 years to 10 years More than 10 years Total (dollars in thousands) Amortized Cost Wtd.
The slight increase was due primarily to purchases of CRA-eligible agency mortgage-backed securities - residential made in the first quarter 2025, which was partially offset by net paydown activity of corporate and municipal securities. 38 Investment Maturities The following table summarizes the contractual maturity schedule (without regard to repricing schedules) of our investment securities at their amortized cost and their weighted average yields at December 31, 2025.
The increase in NIM and FTE NIM compared to the twelve months ended December 31, 2023 reflects the decelerating pace of increase in the cost of interest-bearing deposits and the Company’s focus on shifting the loan composition towards variable rate and higher-yielding products. Noninterest Income The following table presents noninterest income for the three most recent years.
The increase in NIM and FTE NIM compared to the twelve months ended December 31, 2024 reflects the combination of higher yields on loans and securities and continued improvement in the cost of funds related to deposits. Noninterest Income The following table presents noninterest income for the three most recent years.
Funding rates are based on a historical analysis of the Company’s portfolio, while estimates of credit losses are determined using the same loss rates as funded loans. Allowance for Loan Losses Management believes the allowance for loan losses is a critical accounting policy that requires the most significant judgments and assumptions used in the preparation of our consolidated financial statements.
Funding rates are based on a historical analysis of the Company’s portfolio, while estimates of credit losses are determined using the same loss rates as funded loans. Recent Accounting Pronouncements Refer to Note 23 to our consolidated financial statements.
The primary sources of funds are deposits, principal and interest payments on loans and investment securities, maturing loans and investment securities, access to wholesale funding sources and collateralized borrowings. While scheduled payments and maturities of loans and investment securities are relatively predictable sources of funds, deposit flows are greatly influenced by interest rates, general economic conditions and competition.
While scheduled payments and maturities of loans and investment securities are relatively predictable sources of funds, deposit flows are greatly influenced by interest rates, general economic conditions and competition. Therefore, the Company may supplement deposit growth and enhance interest rate risk management through borrowings and wholesale funding, which are generally advances from the Federal Home Loan Bank and brokered deposits.
To supplement our internal loan review resources, we have engaged independent third-party loan review groups, which are a key component of our overall risk management process related to credit administration. 31 Asset Quality December 31, (dollars in thousands) 2024 2023 Nonaccrual loans Commercial loans: Small business lending $ 11,429 $ 6,824 Franchise finance 10,382 303 Total commercial loans 21,811 7,127 Consumer loans: Residential mortgage 4,083 1,911 Other consumer 61 86 Total consumer loans 4,144 1,997 Total nonaccrual loans 25,955 9,124 Past Due 90 days and accruing loans Commercial loans: Small business lending 1,320 — Total commercial loans 1,320 — Consumer loans: Residential mortgage 1,142 838 Other consumer 4 — Total consumer loans 1,146 838 Total past due 90 days and accruing loans 2,466 838 Total nonperforming loans 28,421 9,962 Other real estate owned Residential mortgage 272 375 Total other real estate owned 272 375 Other nonperforming assets 212 17 Total nonperforming assets $ 28,905 $ 10,354 Total nonperforming loans to total loans 0.68 % 0.26 % Total nonperforming assets to total assets 0.50 % 0.20 % Allowance for credit losses - loans to total loans 1.07 % 1.01 % Nonaccrual loans to total loans 0.68 % 0.24 % Allowance for credit losses - loans to nonaccrual loans 172.5 % 425.0 % Allowance for credit losses - loans to nonperforming loans 157.5 % 389.2 % A loan is individually evaluated, when, based on current information or events, it is probable that we will be unable to collect all amounts due (principal and interest) according to the contractual terms of the loan agreement.
To supplement our internal loan review resources, we have engaged independent third-party loan review groups, which are a key component of our overall risk management process related to credit administration. 33 Asset Quality December 31, (dollars in thousands) 2025 2024 Nonaccrual loans Commercial loans: Commercial and industrial $ 240 $ — Single tenant lease financing 1,665 — Healthcare finance 2,596 — Small business lending 1 19,781 11,429 Franchise finance 26,978 10,382 Total commercial loans 51,260 21,811 Consumer loans: Residential mortgage 4,893 4,083 Other consumer 234 61 Total consumer loans 5,127 4,144 Total nonaccrual loans 56,387 25,955 Past due 90 days and accruing loans Commercial loans: Small business lending — 1,320 Franchise finance 1,144 — Total commercial loans 1,144 1,320 Consumer loans: Residential mortgage 1,007 1,142 Other consumer — 4 Total consumer loans 1,007 1,146 Total past due 90 days and accruing loans 2,151 2,466 Total nonperforming loans 58,538 28,421 Other real estate owned Small business lending 2,631 — Residential mortgage — 272 Total other real estate owned 2,631 272 Other nonperforming assets 186 212 Total nonperforming assets $ 61,355 $ 28,905 Total nonperforming loans to total loans 1.56 % 0.68 % Total nonperforming assets to total assets 1.10 % 0.50 % Allowance for credit losses - loans to total loans 1.49 % 1.07 % Nonaccrual loans to total loans 1.50 % 0.62 % Allowance for credit losses - loans to nonaccrual loans 98.8 % 172.5 % Allowance for credit losses - loans to nonperforming loans 95.1 % 157.5 % 1 Balances include $13.6 million and $4.9 million that are guaranteed by the U.S. government as of December 31, 2025 and December 31, 2024, respectively.
Government-sponsored agencies $ 83,811 $ 96,404 Municipal securities 67,441 69,494 Agency mortgage-backed securities - residential 300,914 237,798 Agency mortgage-backed securities - commercial 64,214 40,215 Private label mortgage-backed securities - residential 46,623 21,742 Asset-backed securities 23,802 8,071 Corporate securities 40,049 39,591 Total securities available-for-sale 626,854 513,315 Securities held-to-maturity Municipal securities 12,843 13,889 Agency mortgage-backed securities - residential 201,840 166,750 Agency mortgage-backed securities - commercial 5,705 5,767 Corporate securities 29,408 40,747 Total securities held-to-maturity, net 249,796 227,153 Total securities $ 876,650 $ 740,468 (amounts in thousands) December 31, Approximate Fair Value 2024 2023 Securities available-for-sale U.S.
Government-sponsored agencies $ 64,298 $ 83,811 Municipal securities 64,777 67,441 Agency mortgage-backed securities - residential 409,718 300,914 Agency mortgage-backed securities - commercial 59,112 64,214 Private label mortgage-backed securities - residential 124,264 46,623 Asset-backed securities 42,492 23,802 Corporate securities 37,761 40,049 Total securities available-for-sale 802,422 626,854 Securities held-to-maturity, net carrying value Municipal securities 11,006 12,843 Agency mortgage-backed securities - residential 213,530 201,840 Agency mortgage-backed securities - commercial 5,635 5,705 Corporate securities 20,438 29,408 Total securities held-to-maturity, net carrying value 250,609 249,796 Total securities $ 1,053,031 $ 876,650 (amounts in thousands) December 31, Approximate Fair Value 2025 2024 Securities available-for-sale U.S.
The increase in total interest expense was due primarily to increases of $29.8 million, or 34.8%, in interest expense associated with certificates and brokered deposits, $4.6 million, or 329.6%, in interest expense associated with fintech - brokered deposits and $4.3 million, or 68.9%, in interest expense associated with interest-bearing demand deposits.
The increase in total interest expense was due primarily to an increase of $25.6 million, or 244.6%, in interest expense associated with interest-bearing demand deposits, partially offset by decreases of $8.7 million, or 7.5%, in interest expense associated with certificates and brokered deposits, $5.6 million, or 10.9%, in interest expense associated with money market accounts and $3.4 million, or 15.7%, in interest expense associated with other borrowed funds.
At or For The Twelve Months Ended December 31, (dollars in thousands) 2024 2023 Balance outstanding at end of period $ 295,000 $ 614,934 Average amount outstanding during period 524,143 614,931 Maximum outstanding at any month end during period 614,935 614,934 Weighted average interest rate at end of period 1 3.39 % 3.04 % Weighted average interest rate during period 1 2.93 % 3.00 % 1 Excludes the impact of interest rate swaps.
At or For The Twelve Months Ended December 31, (dollars in thousands) 2025 2024 Balance outstanding at end of period $ 249,500 $ 295,000 Average amount outstanding during period 316,638 524,143 Maximum outstanding at any month end during period 557,241 614,934 Weighted average interest rate at end of period 3.56 % 3.39 % Weighted average interest rate during period 3.67 % 2.93 % Accrued Expenses and Other Liabilities Accrued expenses and other liabilities decreased $2.6 million, or 14.4%, to $15.4 million at December 31, 2025, compared to $17.9 million at December 31, 2024.
Government-sponsored agencies $ 82,816 $ 95,177 Municipal securities 63,654 68,446 Agency mortgage-backed securities - residential 269,641 206,649 Agency mortgage-backed securities - commercial 63,331 38,885 Private label mortgage-backed securities - residential 45,821 20,779 Asset-backed securities 23,821 8,081 Corporate securities 38,271 36,838 Total securities available-for-sale 587,355 474,855 Securities held-to-maturity Municipal securities 11,925 13,040 Agency mortgage-backed securities - residential 184,412 152,642 Agency mortgage-backed securities - commercial 4,548 4,521 Corporate securities 27,966 37,369 Total securities held-to-maturity 228,851 207,572 Total securities $ 816,206 $ 682,427 The approximate fair value of investment securities available-for-sale increased $112.5 million, or 23.7%, to $587.4 million as of December 31, 2024 compared to $474.9 million as of December 31, 2023.
Government-sponsored agencies $ 63,764 $ 82,816 Municipal securities 63,386 63,654 Agency mortgage-backed securities - residential 389,457 269,641 Agency mortgage-backed securities - commercial 58,477 63,331 Private label mortgage-backed securities - residential 123,673 45,821 Asset-backed securities 42,553 23,821 Corporate securities 37,377 38,271 Total securities available-for-sale 778,687 587,355 Securities held-to-maturity Municipal securities 10,551 11,925 Agency mortgage-backed securities - residential 203,715 184,412 Agency mortgage-backed securities - commercial 4,720 4,548 Corporate securities 19,829 27,966 Total securities held-to-maturity 238,815 228,851 Total securities $ 1,017,502 $ 816,206 The approximate fair value of investment securities available-for-sale increased $191.3 million, or 32.6%, to $778.7 million as of December 31, 2025 compared to $587.4 million as of December 31, 2024.
The increase was primarily attributable to new purchase activity within the available-for-sale portfolios, partially offset by net paydown activity. As of December 31, 2024, the Company had securities with a net carrying value of $249.8 million designated as held-to-maturity compared to $227.2 million as of December 31, 2023.
The Company deployed liquidity during 2025 primarily into new purchases of available-for-sale variable-rate mortgage-backed and asset-backed securities, which was partially offset by net pay down activity in other security types. As of December 31, 2025, the Company had securities with a net carrying value of $250.6 million designated as held-to-maturity compared to $249.8 million as of December 31, 2024.
Total loans were $4.2 billion as of December 31, 2024, an increase of $330.4 million, or 8.6%, compared to December 31, 2023. Total commercial loan balances were $3.3 billion, as of December 31, 2024, an increase of $336.7 million, or 11.2%, from December 31, 2023.
Total loans were $3.7 billion as of December 31, 2025, a decrease of $423.9 million, or 10.2%, compared to December 31, 2024. Total commercial loan balances were $2.9 billion, as of December 31, 2025, a decrease of $400.5 million, or 12.0%, from December 31, 2024.
The increase in the provision for credit losses - loans for the twelve months ended December 31, 2024 was driven primarily by increases in net charge-offs in the small business lending and franchise finance portfolios, as well as growth in ACL discussed above, partially offset by lower net charge-offs in the commercial and industrial portfolio.
The increase in the provision for credit losses - loans for the twelve months ended December 31, 2025 was driven primarily by the net charge-offs and the increase in the ACL related to small business lending and the additional specific reserves related to franchise finance discussed above, partially offset by the decrease in the ACL resulting from the sale of the single tenant lease financing loans mentioned above and by the decrease in specific reserves related to small business lending and franchise finance loans that were charged off.
Liquidity and Capital Resources Liquidity management is the process used by the Company to manage the continuing flow of funds necessary to meet its financial commitments on a timely basis and at a reasonable cost while also maintaining safe and sound operations. Liquidity, represented by cash and investment securities, is a product of the Company’s operating, investing and financing activities.
The decrease was due primarily to decreases of $3.0 million in accrued salary and benefits and $1.1 million in other accrued expenses, partially offset by increases of $1.1 million in unfunded commitments and $0.4 million in the reserve for unfunded loan commitments 40 Liquidity and Capital Resources Liquidity management is the process used by the Company to manage the continuing flow of funds necessary to meet its financial commitments on a timely basis and at a reasonable cost while also maintaining safe and sound operations.
The increase in interest expense related to certificates and brokered deposits was driven by an increase of 55 bps in the cost of these deposits, as well as an increase of $390.2 million, or 19.1%, in the average balance of these deposits.
The decrease in interest expense related to certificates and brokered deposits was driven by a 39 bp decline in cost of these deposits, partially offset by a slight increase in the average balance of these deposits.
As of December 31, 2024, total shareholders’ equity was $384.1 million, an increase of $21.3 million, or 5.9%, compared to December 31, 2023. The increase in shareholders’ equity was due primarily to the net income earned during 2024, partially offset by an increase in accumulated other comprehensive loss.
The decrease in shareholders’ equity was due primarily to the net loss during 2025, partially offset by a decrease in accumulated other comprehensive loss as unrealized losses on securities declined during the year. Tangible common equity totaled $355.1 million as of December 31, 2025, representing a decrease of $24.3 million, or 6.4%, compared to December 31, 2024.
Therefore, the Company supplements deposit growth and enhances interest rate risk management through borrowings and wholesale funding, which are generally advances from the Federal Home Loan Bank and brokered deposits. The Company holds cash and investment securities that qualify as liquid assets to maintain adequate liquidity to ensure safe and sound operations and meet its financial commitments.
The Company holds cash and investment securities that qualify as liquid assets to maintain adequate liquidity to ensure safe and sound operations and meet its financial commitments.
At December 31, 2024, the Bank had the ability to borrow an additional $1.7 billion from the FHLB, the Federal Reserve and correspondent bank Fed Funds lines of credit. The Company is a separate legal entity from the Bank and must provide for its own liquidity.
In addition, the Company can generate funds from wholesale funding sources and collateralized borrowings. At December 31, 2025, the Company had the ability to borrow an additional $1.7 billion from the Federal Home Loan Bank, Federal Reserve and correspondent bank Fed Funds lines of credit.
The increase was due primarily to increases of $6.4 million, or 14.2%, in salaries and employee benefits, $1.3 million, or 12.3%, in premises and equipment, $1.1 million, or 28.9%, in deposit insurance premium, $0.9 million, or 14.8%, in other expenses and $0.7 million, or 21.5%, in consulting and professional fees.
The decline in adjusted noninterest expense of $5.5 million, or 6.1%, was due primarily to increases of $2.2 million, or 19.4%, in premises and equipment, $1.4 million, or 21.9%, in other noninterest expense and $1.1 million, or 22.2%, in deposit insurance premium. The increase in premises and equipment was driven by higher software maintenance costs.
At December 31, 2024, on a consolidated basis, the Company had $1.1 billion in cash and cash equivalents and investment securities available-for-sale, and $54.7 million in loans held-for-sale that were generally available for our cash needs. The Company can also generate funds from wholesale funding sources and collateralized borrowings.
At December 31, 2025, on a consolidated basis, the Company had $1.2 billion in cash and cash equivalents and investment securities available-for-sale, and $108.6 million in loans held-for-sale that were generally available for our cash needs. Importantly, the Company also had access to an additional $1.1 billion in the form of off-balance sheet deposits sold into the IntraFi deposit network.
As of December 31, 2024, the Company had one residential mortgage property in OREO with a carrying value of $0.3 million.
As of December 31, 2025, the Company had three small business lending properties in OREO with a carrying value of $2.6 million.
December 31, (dollars in thousands) 2024 2023 Noninterest-bearing deposits $ 136,451 2.8 % $ 123,464 3.0 % Interest-bearing demand deposits 896,661 18.2 % 402,976 9.9 % Savings accounts 19,823 0.4 % 21,364 0.5 % Money market accounts 1,183,789 24.0 % 1,248,319 30.8 % Fintech - brokered deposits 1 — — % 74,401 1.8 % Certificates of deposits 2,133,455 43.2 % 1,605,156 39.5 % Brokered deposits 563,027 11.4 % 591,293 14.5 % Total $ 4,933,206 100.0 % $ 4,066,973 100.0 % 1 Fintech - brokered deposits that had been previously classified as brokered deposits were reclassified to interest-bearing demand deposits as of December 31, 2024.
December 31, (dollars in thousands) 2025 2024 Noninterest-bearing deposits $ 146,879 3.0 % $ 136,451 2.8 % Interest-bearing demand deposits 1,120,850 23.2 % 896,661 18.2 % Savings accounts 18,991 0.4 % 19,823 0.4 % Money market accounts 1,272,845 26.3 % 1,183,789 24.0 % Certificates of deposits 2,004,909 41.4 % 2,133,455 43.2 % Brokered deposits 275,339 5.7 % 563,027 11.4 % Total $ 4,839,813 100.0 % $ 4,933,206 100.0 % Total deposits decreased $93.4 million, or 1.9%, to $4.8 billion as of December 31, 2025 compared to $4.9 billion as of December 31, 2024.
Total consumer loan balances were $801.4 million as of December 31, 2024, an increase of $4.5 million, or 0.6%, compared to December 31, 2023.
Total consumer loan balances were $783.3 million as of December 31, 2025, a decrease of $18.1 million, or 2.3%, compared to December 31, 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed10 unchanged
Biggest changePresented below is the estimated impact on our NII and EVE position as of December 31, 2024, assuming a static balance sheet and gradual parallel shifts in interest rates over a twelve-month period: % Change from Base Case for Gradual Changes in Rates Implied Forward Curve -200 Basis Points Implied Forward Curve -100 Basis Points Base Implied Forward Curve Implied Forward Curve +50 Basis Points Implied Forward Curve +100 Basis Points NII - Year 1 2.92 % 1.60 % N/A (1.17 %) (2.32 %) NII - Year 2 24.19 % 20.94 % 16.11 % 12.53 % 8.91 % EVE 21.86 % 13.31 % N/A (7.59 %) (15.59 %) 48 The NII and EVE figures presented in both tables above are reflective of a static balance sheet, and do not incorporate either balance sheet growth or strategies to increase net interest income while managing volatility arising from shifts in market interest rates.
Biggest changePresented below is the estimated impact on our NII and EVE position as of December 31, 2025, assuming a static balance sheet and gradual parallel shifts in interest rates over a twelve-month period: % Change from Base Case for Gradual Changes in Rates Implied Forward Curve -200 Basis Points Implied Forward Curve -100 Basis Points Base Implied Forward Curve Implied Forward Curve +50 Basis Points Implied Forward Curve +100 Basis Points NII - Year 1 1.77 % 0.78 % N/A (1.32 %) (2.25 %) NII - Year 2 5.56 % 5.38 % 3.57 % 1.73 % (0.38 %) EVE 5.43 % 5.34 % N/A (4.18 %) (8.87 %) 50 The NII and EVE figures presented in both tables above are reflective of a static balance sheet, and do not incorporate either balance sheet growth or strategies to increase net interest income while managing volatility arising from shifts in market interest rates.
Presented below is the estimated impact on our NII and EVE position as of December 31, 2024, assuming a static balance sheet and instantaneous parallel shifts in interest rates: % Change from Base Case for Instantaneous Parallel Changes in Rates Implied Forward Curve -200 Basis Points Implied Forward Curve -100 Basis Points Base Implied Forward Curve Implied Forward Curve +50 Basis Points Implied Forward Curve +100 Basis Points NII - Year 1 8.88 % 5.04 % N/A (3.10 %) (6.30 %) NII - Year 2 23.01 % 20.69 % 16.12 % 12.65 % 8.89 % EVE 23.73 % 14.33 % N/A (8.32 %) (17.04 %) To supplement the instantaneous rate shocks required by regulatory guidance, we also calculate our interest rate risk position assuming a gradual change in market interest rates.
Presented below is the estimated impact on our NII and EVE position as of December 31, 2025, assuming a static balance sheet and instantaneous parallel shifts in interest rates: % Change from Base Case for Instantaneous Parallel Changes in Rates Implied Forward Curve -200 Basis Points Implied Forward Curve -100 Basis Points Base Implied Forward Curve Implied Forward Curve +50 Basis Points Implied Forward Curve +100 Basis Points NII - Year 1 4.75 % 2.73 % N/A (2.16 %) (4.32 %) NII - Year 2 3.16 % 5.05 % 3.57 % 1.88 % (0.36 %) EVE 6.20 % 5.71 % N/A (4.60 %) (9.70 %) To supplement the instantaneous rate shocks required by regulatory guidance, we also calculate our interest rate risk position assuming a gradual change in market interest rates.

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