What changed in this filing

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Item 1. Business

2026-03-25 compared with 2025-03-31 · 266 added, 267 removed, 614 unchanged (46% of the section changed)

Business General

Finward Bancorp, an Indiana corporation (the “Company”), was incorporated on January 31, 1994, and is the holding company for Peoples Bank, an Indiana-chartered commercial bank (the “Bank”).

Finward Bancorp, an Indiana corporation, was incorporated on January 31, 1994, and is the holding company for Peoples Bank, an Indiana-chartered commercial bank.

The Bank is a wholly owned subsidiary of the Company.

4 unchanged sentences

Accordingly, all of the Company’s operations are considered by management to be aggregated in one reportable operating segment.

The Bank’s deposit accounts are insured up to applicable limits by the Deposit Insurance Fund (“DIF”), which is administered by the Federal Deposit Insurance Corporation (“FDIC”), an agency of the federal government.

As the holding company for the Bank, the Company is subject to comprehensive examination, supervision and regulation by the Board of Governors of the Federal Reserve System (“FRB”), while the Bank is subject to comprehensive examination, supervision and regulation by both the FDIC and the Indiana Department of Financial Institutions (“DFI”).

The Bank’s deposit accounts are insured up to applicable limits by the Deposit Insurance Fund, which is administered by the Federal Deposit Insurance Corporation, an agency of the federal government.

As the holding company for the Bank, the Company is subject to comprehensive examination, supervision and regulation by the Board of Governors of the Federal Reserve System, while the Bank is subject to comprehensive examination, supervision and regulation by both the FDIC and the Indiana Department of Financial Institutions.

The Bank is also subject to regulation by the FRB governing reserves required to be maintained against certain deposits and other matters.

The Bank is also a member of the Federal Home Loan Bank (“FHLB”) of Indianapolis, which is one of the eleven regional banks comprising the system of Federal Home Loan Banks.

The Bank is also a member of the Federal Home Loan Bank of Indianapolis, which is one of the eleven regional banks comprising the system of Federal Home Loan Banks.

The Company maintains its corporate office at 9204 Columbia Avenue, Munster, Indiana, from which it oversees the operation of its 26 branch locations.

6 unchanged sentences

Risks, uncertainties, and factors that could cause the Company’s actual results to vary materially from those expressed or implied by any forward-looking statement include but are not limited to:

The Bank’s ability to demonstrate compliance with the terms of the previously disclosed consent order and memorandum of understanding entered into between the Bank and the Federal Deposit Insurance Corporation (“FDIC”) and Indiana Department of Financial Institutions (“DFI”), or to demonstrate compliance to the satisfaction of the FDIC and/or DFI within prescribed time frames;

● changes in domestic and international trade policies, including tariffs and other non-tariff barriers, and the effects of such changes on the Bank and its customers;

● risks related to the development and use of AI;

● The Bank’s ability to demonstrate compliance with the terms of the previously disclosed memorandum of understanding entered into between the Bank and the FDIC and DFI, or to demonstrate compliance to the satisfaction of the FDIC and/or DFI within prescribed time frames;

● The Bank’s agreement under the memorandum of understanding to refrain from paying cash dividends without prior regulatory approval;

1 unchanged sentence

● the aggregate effects of inflation experienced in recent years, and the potential for a resurgence in inflation;

current financial conditions within the banking industry, liquidity levels, concentrations in certain loan products or categories, net interest margin levels, and responses by the Federal Reserve, Department of the Treasury, and the Federal Deposit Insurance Corporation to address these issues;

● the use of proceeds of future offerings of securities;

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● loss of key personnel;

continuing risks and uncertainties relating to the COVID-19 pandemic and government responses thereto;

● the impact, extent, and timing of technological changes, capital management activities, and other actions of the Federal Reserve Board and legislative and regulatory actions and reforms;

other factors and risks described under the heading “Risk Factors” in Part I, Item 1A of this Form 10-K, as may be updated from time to time in our other filings with the Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

● other factors and risks described under the heading “Risk Factors” in Part I, Item 1A of this Form 10-K, as may be updated from time to time in our other filings with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended the Exchange Act.

In addition to the above factors, we also caution that the actual amounts and timing of any future common stock dividends or share repurchases will be subject to various factors, including our capital position, financial performance, capital impacts of strategic initiatives, market conditions, and regulatory and accounting considerations, as well as any other factors that our Board of Directors deems relevant in making such a determination.

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The amounts are stated in thousands (000’s).

(Dollars in thousands)

December 31, 2024

December 31, 2023

(Dollars in thousands) December 31, 2025 December 31, 2024

Loans secured by real estate:

Residential real estate $ 442,443 $ 467,293

Home equity 53,497 49,758

Commercial real estate 555,594 551,674

Construction and land development 77,208 82,874

Multifamily 183,902 212,455

Total loans secured by real estate 1,312,644 1,364,054

Commercial business 99,304 104,246

Consumer 870 551

Manufactured homes 23,708 26,708

Government 12,298 11,024

Loans receivable 1,448,824 1,506,583

8 unchanged sentences

The amounts are stated in thousands (000’s).

fifteen years

one year After one

five years After five

fifteen years After

fifteen years Total

Residential real estate $ 8,997 $ 20,065 $ 81,649 $ 331,732 $ 442,443

Home equity 2,005 333 10,726 40,433 53,497

Commercial real estate 40,216 149,462 365,300 616 555,594

Construction and land development 27,022 5,888 34,517 9,781 77,208

Multifamily 31,137 50,670 102,095 - 183,902

Commercial business 49,337 34,297 15,670 - 99,304

Consumer 660 210 - - 870

Manufactured homes 1 209 11,870 11,628 23,708

Government 3,732 7,489 1,077 - 12,298

Total loans receivable $ 163,107 $ 268,623 $ 622,904 $ 394,190 $ 1,448,824

1 unchanged sentence

The amounts are stated in thousands (000’s).

Predetermined

adjustable rates

Predetermined rates Floating or

adjustable rates Total

Residential real estate $ 331,405 $ 102,041 $ 433,446

Home equity 45,300 6,191 51,491

Commercial real estate 46,956 468,422 515,378

Construction and land development 9,827 40,358 50,185

Multifamily 64,004 88,761 152,765

Commercial business 27,092 22,876 49,968

Consumer 210 - 210

Manufactured homes 23,708 - 23,708

Government 8,566 - 8,566

Total loans receivable $ 557,068 $ 728,649 $ 1,285,717

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Designated officers have authorities, established by the Board of Directors, to approve loans.

Loans from $3.0 million to $4.5 million are approved by the loan officers’ loan committee (OLC).

Loans from $4.5 million to $7.0 million are approved by the senior officers’ loan committee (SOLC).

Loans from $7.0 million to $15.0 million are approved by the executive officer’s loan committee (EOLC).

Loans from $3.0 million to $4.5 million are approved by the loan officers’ loan committee.

Loans from $4.5 million to $7.0 million are approved by the senior officers’ loan committee.

Loans from $7.0 million to $15.0 million are approved by the executive officer’s loan committee.

All loans in excess of $15.0 million, up to the legal lending limit of the Bank, must be approved by the Bank’s Board of Directors or its Board Risk Management and Compliance Committee (all members of the Bank’s Board of Directors and Board Risk Management and Compliance Committee are also members of the Company’s Board of Directors and Board Risk Management and Compliance Committee, respectively).

Certain loan renewals and extensions may not require approval by the Board of Directors or the Credit Committee as long as there is no material change, credit downgrade, significant change in borrower or guarantor status, material release or change in collateral value or the eligible loan renewal or extension is not outside the current concentration limits set by the Board of Directors.

The maximum in-house legal lending limit as set by the Board of Directors is the lower of 10% of the Bank’s risk-based capital or $15.0 million.

The maximum in-house legal lending limit as set by the Board of Directors is the lower of 10% of the Bank’s risk-based capital or $15.0

Requests that exceed this amount will be considered on a case-by-case basis, after taking into consideration the legal lending limit, by specific Board or Board Committee action.

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The Current Lending Programs

Residential Mortgage Loans.

Residential Real Estate.

The primary lending activity of the Company has been the granting of conventional mortgage loans to enable borrowers to purchase existing homes, refinance existing homes, or construct new homes.

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Fixed rate mortgage loans with contractual maturities generally exceeding fifteen years may be sold and/or classified as held-for-sale to control exposure to interest rate risk.

The Company’s Adjustable Rate Mortgage Loans (“ARMs”) include offerings that reprice annually or are “Mini-Fixed.” The “Mini-Fixed” mortgage reprices annually after a three, five, seven or ten year period.

The Company’s ARMs include offerings that reprice annually or are “Mini-Fixed.” The “Mini-Fixed” mortgage reprices annually after a three, five, seven or ten year period.

ARM originations totaled $6.5 million for 2025 and $7.3 million for 2024.

During 2025, ARMs represented 12.5% of total mortgage loan originations.

The ability of the Company to successfully market ARM’s depends upon loan demand, prevailing interest rates, volatility of interest rates, public acceptance of such loans and terms offered by competitors.

Construction Loans.

Construction loans on residential properties are made primarily to individuals and contractors who are under contract with individual purchasers.

These loans are personally guaranteed by the borrower.

The maximum loan-to-value ratio is 89% of either the current appraised value or the cost of construction, whichever is less.

Residential construction loans are typically made for periods of one year.

Loans are also made for the construction of commercial properties.

All such loans are made in accordance with well-defined underwriting standards.

Generally if the properties are not owner occupied, these types of loans require proof of intent to lease and a confirmed end-loan takeout.

In general, loans made do not exceed 80% of the appraised value of the property.

Commercial construction loans are typically made for periods not to exceed two years or date of occupancy, whichever is less.

The ability of the Company to successfully market ARMs depends upon loan demand, prevailing interest rates, volatility of interest rates, public acceptance of such loans and terms offered by competitors.

Home Equity Line of Credit.

The Company offers a fixed and variable rate revolving line of credit secured by the equity in the borrower’s home.

Both products offer an interest only option where the borrower pays interest only on the outstanding balance each month.

Equity lines will typically require an appraisal and a second mortgage lender’s title insurance policy.

Loans are generally made up to a maximum of 89% of the appraised value of the property less any outstanding liens.

Fixed-term home improvement and equity loans are made up to a maximum of 85% of the appraised value of the improved property, less any outstanding liens.

These loans are offered on both a fixed and variable rate basis with a maximum term of 240 months.

All home equity loans are made on a direct basis to borrowers.

Commercial Real Estate and Multifamily Loans.

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Projects financed outside of the Company’s primary lending area generally involve borrowers and guarantors who are or were previous customers of the Company or projects that are underwritten according to the Bank’s underwriting standards.

Construction and Land Development.

Construction loans on residential properties are made primarily to individuals and contractors who are under contract with individual purchasers.

These loans are personally guaranteed by the borrower.

The maximum loan-to-value ratio is 89% of either the current appraised value or the cost of construction, whichever is less.

Residential construction loans are typically made for periods of one year.

Loans are also made for the construction of commercial properties.

All such loans are made in accordance with well-defined underwriting standards.

Generally if the properties are not owner occupied, these types of loans require proof of intent to lease and a confirmed end-loan takeout.

In general, loans made do not exceed 80% of the appraised value of the property.

Commercial construction loans are typically made for periods not to exceed two years or date of occupancy, whichever is less.

Commercial Business.

Although the Company’s priority in extending various types of commercial business loans changes from time to time, the basic considerations in determining the makeup of the commercial business loan portfolio are economic factors, regulatory requirements and money market conditions.

The Company seeks commercial loan relationships from the local business community and from its present customers.

Conservative lending policies based upon sound credit analysis governs the extension of commercial credit.

The following loans, although not inclusive, are considered preferable for the Company’s commercial loan portfolio, loans collateralized by liquid assets;

loans secured by general use machinery and equipment;

secured short-term working capital loans to established businesses secured by business assets;

short-term loans with established sources of repayment and secured by sufficient equity and real estate;

and unsecured loans to customers whose character and capacity to repay are firmly established.

Consumer Loans.

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The consumer loan program includes both fixed and variable rate products.

Home Equity Line of Credit.

The Company offers a fixed and variable rate revolving line of credit secured by the equity in the borrower’s home.

Both products offer an interest only option where the borrower pays interest only on the outstanding balance each month.

Equity lines will typically require an appraisal and a second mortgage lender’s title insurance policy.

Loans are generally made up to a maximum of 89% of the appraised value of the property less any outstanding liens.

Home Improvement Loans and Equity Loans — Fixed Term.

Home improvement and equity loans are made up to a maximum of 85% of the appraised value of the improved property, less any outstanding liens.

These loans are offered on both a fixed and variable rate basis with a maximum term of 240 months.

All home equity loans are made on a direct basis to borrowers.

Manufactured Homes.

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further detail regarding this reserve can be found in Note 3– Loans Receivable.

Commercial Business Loans.

The Company seeks commercial loan relationships from the local business community and from its present customers.

Conservative lending policies based upon sound credit analysis governs the extension of commercial credit.

The following loans, although not inclusive, are considered preferable for the Company’s commercial loan portfolio, loans collateralized by liquid assets;

loans secured by general use machinery and equipment;

secured short-term working capital loans to established businesses secured by business assets;

short-term loans with established sources of repayment and secured by sufficient equity and real estate;

and unsecured loans to customers whose character and capacity to repay are firmly established.

Government Loans.

The Company is permitted to purchase non-rated municipal securities, tax anticipation notes, and warrants within the local market area.

Non-Performing Assets, Asset Classification and Provision for Credit Losses

Loans are reviewed on a regular basis and are generally placed on a non-accrual status when, in the opinion of management, serious doubt exists as to the collectability of a loan.

Loans are generally placed on non-accrual status when either principal or interest is 90 days or more past due.

Credit Quality and Allowance for Credit Losses

Loans are reviewed on a regular basis and are generally placed on a nonaccrual status when, in the opinion of management, serious doubt exists as to the collectability of a loan.

Loans are generally placed on nonaccrual status when either principal or interest is 90 days or more past due.

Consumer non-residential loans are generally charged off when the loan becomes over 120 days delinquent.

Interest accrued and unpaid at the time a loan is placed on non-accrual status is charged against interest income.

Interest accrued and unpaid at the time a loan is placed on nonaccrual status is charged against interest income.

Subsequent payments are either applied to the outstanding principal balance, tax and insurance reserve or recorded as interest income, depending on the assessment of the ultimate collectability of the loan.

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Subsequent gains or losses on disposition, including expenses incurred in connection with the disposition, are charged to operations.

The following table sets forth information regarding the Company’s non-performing assets as of December 31, for each period indicated.

The amounts are stated in thousands (000’s).

Loans that qualify as troubled loan modifications and accruing:

Loans accounted for on a non-accrual basis:

Loans accounted for on a nonaccrual basis (amounts are stated in thousands (000's):

Residential real estate $ 5,932 $ 4,665

Home equity 810 483

Commercial real estate 1,561 1,280

Construction and land development 653 658

Multifamily 696 3,362

Commercial business 1,439 3,290

Accruing loans which are contractually past due 90 days or more:

Ratio of non-performing loans to total assets (1)

Ratio of non-performing loans to total loans (1)

(1) Non-performing loans include non-accrual loans and accruing loans which are contractually past due 90 days or more

Manufactured homes 71 -

Total $ 11,162 $ 13,738

Non-performing loans to total loans 0.77 % 0.91 %

Non-performing loans to total assets 0.55 % 0.74 %

Collateralized debt obligations $ 1,882 $ 1,419

Ratio of collateralized debt obligations to total assets 0.09 % 0.07 %

During 2024, gross interest income of $656 thousand would have been recorded on loans accounted for on a non-accrual basis if the loans had been current throughout the period.

Interest on such loans included in income during the period amounted to $313 thousand.

Federal regulations require banks to classify their own loans and to establish appropriate general and specific allowances, subject to regulatory review.

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No loans were internally classified as doubtful or loss at December 31, 2025 or 2024.

The Bancorp's substandard loans are summarized below:

(Dollars in thousands)

December 31, 2024

December 31, 2023

The Company's substandard loans are summarized below:

(Dollars in thousands) December 31, 2025 December 31, 2024

Residential real estate $ 6,016 $ 4,754

Home equity 813 490

Commercial real estate 1,561 1,598

Construction and land development 2,234 2,285

Multifamily 696 3,550

Commercial business 1,439 3,290

Manufactured homes 71 54

Total $ 12,830 $ 16,021

In addition to identifying and monitoring non-performing and other classified loans, management maintains a list of special mention loans.

Special mention loans represent loans management is closely monitoring due to one or more factors that may cause the loan to become classified as substandard.

The Bancorp's special mention loans are summarized below:

(Dollars in thousands)

December 31, 2024

December 31, 2023

The Company's special mention loans are summarized below:

(Dollars in thousands) December 31, 2025 December 31, 2024

Residential real estate $ 4,797 $ 4,291

Home equity 305 459

Commercial real estate 13,200 8,008

Construction and land development 557 3,675

Multifamily 2,857 5,329

Commercial business 2,768 3,528

Manufactured homes 28 -

Total $ 24,512 $ 25,290

Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date.

Purchased credit deteriorated ("PCD") loans have experienced more than insignificant credit deterioration since origination.

Purchased credit deteriorated loans have experienced more than insignificant credit deterioration since origination.

PCD loans are recorded at the amount paid.

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Any subsequent deterioration (improvement) in credit quality is recognized by recording a provision (recapture) for credit losses.

A loan is considered impaired when, based on current information and events, it is probable that a borrower will be unable to pay all amounts due according to the contractual terms of the loan agreement.

Typically, management does not individually classify smaller-balance homogeneous loans, such as residential mortgages or consumer loans, as impaired, unless they are troubled loan modifications.

A loan is individually evaluated for expected credit losses when, based on current information and events, it is probable that a borrower will be unable to pay all amounts due according to the contractual terms of the loan agreement.

Typically, management does not individually evaluate smaller-balance homogeneous loans, such as residential mortgages or consumer loans, as impaired, unless they are troubled loan modifications.

A collateral dependent financial loan relies solely on the operation or sale of the collateral for repayment.

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the prospects for support from any financially responsible guarantors;

and the nature and degree of protection provided by the cash flow and value of any underlying collateral.

and the nature and

degree of protection provided by the cash flow and value of any underlying collateral.

However, as other sources of repayment become inadequate over time, the significance of the collateral's value increases and the loan may become collateral dependent.

The table below presents the amortized cost basis and allowance for credit losses (“ACL”) allocated for collateral dependent loans in accordance with ASC 326, which are individually evaluated to determine expected credit losses.

(Dollars in thousands)

December 31, 2024

Equipment/Inventory

Accounts Receivable

ACL Allocation

The table below presents the amortized cost basis and ACL allocated for collateral dependent loans in accordance with ASC 326, which are individually evaluated to determine expected credit losses.

(Dollars in thousands) December 31, 2025

Real Estate Equipment/Inventory Accounts Receivable Vehicles Total ACL Allocation

Residential real estate $ 2,185 $ - $ - $ - $ 2,185 $ 39

Home equity 4 - - - 4 -

Commercial real estate 1,561 - - - 1,561 86

Construction and land development 2,234 - - - 2,234 -

Multifamily 696 - - - 696 -

Commercial business - 1,267 130 42 1,439 138

At times, the Company will modify the terms of a loan to forego a portion of interest or principal or reduce the interest rate on the loan to a rate materially less than market rates, or materially extend the maturity date of a loan as part of a troubled loan modification.

Total $ 6,680 $ 1,267 $ 130 $ 42 $ 8,119 $ 263

At times, the Company will modify the terms of a loan to forego a portion of interest or principal or reduce the interest rate on the loan to a rate materially less that market rates, or materially extend the maturity date of a loan as part of a troubled loan modification.

Loan Modification Disclosures Pursuant to ASU 2022-02

The following table shows the amortized cost of loans at December 31, 2024, that were both experiencing financial difficulty and modified during the year ended December 31, 2024, segregated by portfolio segment and type of modification.

The following tables show the amortized cost of loans at December 31, 2025 and December 31, 2024, that were both experiencing financial difficulty and modified during the year ended December 31, 2025 and December 31, 2024, segregated by portfolio segment and type of modification.

The percentage of the amortized cost of loans that were modified to borrowers in financial distress as compared to the amortized cost of each segment of financial receivable is also presented below.

For the year ended December 31, 2025

(Dollars in thousands)

Combination Term

Extension and

Interest Rate

(Dollars in thousands) Payment

Extension Interest

Reduction Combination

Term Extension

and Interest Rate

Reduction % of Total

Residential real estate $ - $ 601 $ - $ - 0.14 %

Commercial real estate 131 390 - - 0.09 %

Construction and land development 593 - - - 0.77 %

Commercial business 945 - - - 0.95 %

Total $ 1,669 $ 991 $ - $ - 0.18 %

For the year ended December 31, 2024

(Dollars in thousands)

Combination Term Extension and

Interest Rate

(Dollars in thousands) Payment

Extension Interest

Reduction Combination

Term Extension

and Interest Rate

Reduction % of Total

Residential real estate $ 528 $ 1,115 $ - $ - 0.35 %

Home Equity 41 - - - 0.01 %

Total $ 569 $ 1,115 $ - $ - 0.11 %

There were no commitments to lend additional amounts to the borrowers included in the previous table.

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The performance of such modified loans is presented below.

For the year ended December 31, 2024

(Dollars in thousands)

Greater Than 90

December 31, 2025

(Dollars in thousands) Current 30-59 Days

Past Due 60-89 Days

Past Due Greater Than 90

Days Past Due

Residential real estate $ 582 $ 19 $ - $ -

For the year ended December 31, 2023

(Dollars in thousands)

Greater Than 90

Commercial real estate 390 - - 131

Construction and land development - - - 593

Commercial business - - - 945

Total $ 972 $ 19 $ - $ 1,669

December 31, 2024

(Dollars in thousands) Current 30-59 Days

Past Due 60-89 Days

Past Due Greater Than 90

Days Past Due

Residential real estate $ 545 $ 570 $ - $ 528

Home equity - - - 41

Total $ 545 $ 570 $ - $ 569

The borrowers with term extension have had their maturity dates extended and as a result their monthly payments were reduced.

For the year ended December 31, 2025

(Dollars in thousands)

Principal forgiveness

Weighted average interest

rate reduction

Weighted average term

Payment delay

(Dollars in thousands) Principal Forgiveness Weighted average interest rate reduction Weighted average term extension (months) Payment delay

Residential real estate $ - — % 6 -

Commercial real estate $ - — % 180 5

Construction and land development $ - — % - 5

Commercial business $ - — % - 5

For the year ended December 31, 2024

(Dollars in thousands)

Principal forgiveness

Weighted average interest

rate reduction

Weighted average term

Payment delay

(Dollars in thousands) Principal Forgiveness Weighted average interest rate reduction Weighted average term extension (months) Payment delay

Residential real estate $ - — % 7 6

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Loans charged-off:

Real estate residential

Commercial real estate

Residential real estate (13) (28)

Multifamily (201) (125)

Commercial business (495) (2,249)

Consumer (46) (66)

Total charge-offs

(755) (2,468)

Residential real estate 66 44

Commercial real estate 4 5

Multifamily 29 31

Commercial business 460 310

Consumer 9 22

Total recoveries

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Residential real estate $ 2,757 30.5 % $ 4,481 31.0 %

Home equity 688 3.7 % 835 3.3 %

Commercial real estate 9,152 38.3 % 6,444 36.6 %

Construction and land development 1,114 5.3 % 2,651 5.5 %

Multifamily 2,078 12.7 % 1,003 14.1 %

Commercial business 1,583 6.9 % 1,185 6.9 %

Consumer 2 0.1 % 5 — %

Manufactured homes 116 1.6 % 252 1.8 %

Government 16 0.9 % 55 0.7 %

Total $ 17,506 100.0 % $ 16,911 100.0 %

Investment Activities

The primary objective of the investment portfolio is to provide for the liquidity needs of the Company and to contribute to profitability by providing a stable flow of dependable earnings.

Securities can be classified as trading, held-to-maturity (HTM), or available-for-sale (AFS) at the time of purchase.

Securities can be classified as trading, held-to-maturity, or available-for-sale at the time of purchase.

No securities are classified as trading or as held-to-maturity.

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The amounts are stated in thousands (000’s).

(Dollars in thousands)

government sponsored entities

(Dollars in thousands) December 31, 2025 December 31, 2024

government agency securities $ 8,466 $ 8,061

Collateralized mortgage obligations and residential mortgage-backed securities 104,665 109,325

2 unchanged sentences

Total securities available-for-sale $ 316,227 $ 333,554

The contractual maturities and weighted average yields for the U.S government securities, collateralized mortgage obligations, residential mortgage-backed securities, municipal securities, collateralized debit obligations at December 31, 2024, are summarized in the table below.

The contractual maturities and weighted average yields for the U.S.

government agency securities, municipal securities, and collateralized debt obligations at December 31, 2025, are summarized in the table below.

Securities not due at a single maturity date, such as mortgage-backed securities and collateralized mortgage obligations, are shown separately.

2 unchanged sentences

Yields presented are not on a tax-equivalent basis.

Within 1 Year

After 10 Years

Variable Maturities

government sponsored entities:

Within 1 Year 1 - 5 Years 5 - 10 Years After 10 Years Total

Amount Yield Amount Yield Amount Yield Amount Yield Amount

government agency securities $ - — % $ 8,466 1.00 % $ - — % $ - — % $ 8,466

Collateralized mortgage obligations and residential mortgage-backed securities - — % - — % - — % 104,665 1.54 % 104,665

1 unchanged sentence

Collateralized debt obligations - — % - — % - — % 1,882 3.32 % 1,882

Totals $ - — % $ 12,367 1.46 % $ 35,800 2.96 % $ 268,060 2.42 % $ 316,227

The Company currently holds two collateralized debt obligations and the securities’ quarterly interest payments have been placed in “payment in kind” status.

Payment in kind status results in a temporary delay in the payment of interest.

As a result of a delay in the collection of the interest payments, management placed these securities in non-accrual status.

At December 31, 2024, the cost basis of the two collateralized debt obligations on non-accrual status totaled $2.2 million.

As a result of a delay in the collection of the interest payments, management placed these securities in nonaccrual status.

At December 31, 2025, the cost basis of the two collateralized debt obligations on nonaccrual status totaled $2.1 million.

Unrealized losses on securities have not been recognized into income because the securities are of high credit quality, have undisrupted cash flows, or have been independently evaluated for credit impairment and appropriate write downs taken.

3 unchanged sentences

Deposits are the major source of the Company’s funds for lending and other investment purposes.

In addition to deposits, the Company derives funds from maturing investment securities and certificates of deposit, dividend receipts from the investment portfolio, loan principal repayments, repurchase agreements, advances from the Federal Home Loan Bank of Indianapolis (FHLB) and other borrowings.

Loan repayments are a relatively stable source of funds, while deposit inflows and outflows are significantly influenced by general interest rates and money market conditions.

1 unchanged sentence

They may also be used on a longer-term basis for general business purposes.

The Company uses repurchase agreements, as well as a line-of-credit and advances from the FHLB for borrowings.

At December 31, 2024, the Company had $65.0 million in FHLB fixed rate advances $40.1 million in repurchase agreements.

The Company had no other borrowed funds as of December 31, 2024.

The Company uses repurchase agreements, federal funds purchased, as well as a line-of-credit and advances from the FHLB for borrowings.

Retail and commercial deposits are attracted principally from within the Company’s primary market area.

2 unchanged sentences

Certificate account offerings typically range in maturity from ten days to 42 months.

The deregulation of federal controls on insured deposits has allowed the Company to be more competitive in obtaining funds and to be flexible in meeting the threat of net deposit outflows.

The Company had $21.7 million in brokered deposit balances at December 31, 2024, which were obtained through prior acquisitions.

The deregulation of federal controls on insured deposits has allowed the Company to be more

competitive in obtaining funds and to be flexible in meeting the threat of net deposit outflows.

The Company had $245 thousand in brokered deposit balances at December 31, 2025, which were obtained through prior acquisitions.

The Company did not obtain any deposit funds through brokers during the year ended 2025.

1 unchanged sentence

The amounts are stated in thousands (000’s).

December 31, 2024

December 31, 2023

Noninterest bearing demand deposits

Year Ended December 31,

Amount Rate % Amount Rate %

Non-interest bearing demand deposits $ 282,795 - % $ 293,508 - %

Interest bearing demand deposits 310,811 0.72 % 307,173 0.89 %

3 unchanged sentences

Total deposits $ 1,754,974 2.13 % $ 1,755,547 2.40 %

As of December 31, 2024, and 2023, approximately $498.0 million and $530.2 million, respectively, of our deposit portfolio was uninsured.

As of December 31, 2025, and 2024, approximately $503.0 million and $498.0 million, respectively, of the Company's deposit portfolio was uninsured.

The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank's regulatory reporting requirements.

4 unchanged sentences

Over 12 months 1,319

Borrowed money is used on a short-term basis to compensate for reductions in the availability of other sources of funds and is generally accomplished through repurchase agreements, as well as, through a line of credit and advances from the FHLB.

Total $ 38,509

Borrowed money is used on a short-term basis to compensate for reductions in the availability of other sources of funds and is generally accomplished through federal fund purchased and repurchase agreements, as well as, through a line of credit and advances from the FHLB.

Federal funds generally mature within one day.

Repurchase agreements generally mature within one year and are generally secured by municipal securities, collateralized mortgage obligations and residential mortgage-backed securities, under the Company’s control.

FHLB advances with maturities ranging from one year to five years are used to fund securities and loans of comparable duration, as well as to reduce the impact that movements in short-term interest rates have on the Company’s overall cost of funds.

Fixed rate advances are payable at maturity, with a prepayment penalty.

On March 12, 2023, the Federal Reserve Board announced the creation of a new Bank Term Funding Program (the “BTFP”).

The BTFP offered loans of up to one year to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S.

Treasury securities, agency debt and mortgage-backed securities, and other qualifying assets as collateral.

These assets were valued at par for purposes of the collateral pledge under the BTFP.

During the first quarter of 2023, the Company participated in the BTFP by accessing $80 million of low-cost capital under the program.

As of December 31, 2023, the Company had pledged securities as collateral for the program with a par value of $105.3 million.

During the quarter ending September 30, 2024, the Company terminated its involvement in the Bank Term Funding Program (the “BTFP”) and paid off its outstanding balance of $60 million, in full, through a utilization of excess liquidity and FHLB advances.

The Company’s liquidity position remains strong with solid core deposit customer relationships, excess cash, debt securities, and access to diversified borrowing sources.

Fixed rate advances are payable at maturity, with a prepayment penalty.

The advances were collateralized by mortgage loans with a carrying value totaling approximately $460.8 million at December 31, 2024.

The Bank had no balance at December 31, 2023 and a balance of $65 million at December 31, 2024.

Fixed rate advances are payable at maturity, with a prepayment penalty and FHLB may retain a puttable option to call these advances after a period of time.

At December 31, 2025, the Company had $45.0 million in FHLB fixed rate advances, $39.7 million in federal funds purchased and repurchase agreements.

The Company had no other borrowed funds as of December 31, 2025.

The FHLB advances are collateralized by mortgage loans with a carrying value totaling approximately $380.7 million at December 31, 2025.

In addition to the fixed rate advances, the Bank maintains a $25.0 million line of credit with the Federal Home Loan Bank of Indianapolis.

2 unchanged sentences

At December 31, 2025, the Bank had approximately $673.9 million available in credit lines with various money center banks, including the FHLB and Federal Reserve.

The following tables set forth certain information regarding borrowing and repurchase agreements by the Company at the end of and during the periods indicated.

The amounts are stated in thousands (000’s).

At December 31,

Repurchase agreements:

Securities underlying the agreements:

Ending carrying amount

Ending fair value

Weighted average rate (1)

For year ended December 31,

Highest month-end balance

Average outstanding balance

Weighted average rate on securities sold under agreements to repurchase (2)

The weighted average rate for each period is calculated by weighing the principal balances outstanding for the various interest rates.

The weighted average rate is calculated by dividing the interest expense for the period by the average daily balances of securities sold under agreements to repurchase for the period.

(Dollars in thousands)

Federal Reserve Fixed rate advance with outstanding rate of 4.38%, matured March 22, 2024

FHLB Fixed rate advance with outstanding rate of 4.85%, maturing May 16, 2025

FHLB Fixed rate advance with outstanding rate of 4.77%, maturing May 19, 2025

FHLB Fixed rate advance with outstanding rate of 3.38%, maturing August 7, 2028 (1)

FHLB Fixed rate advance with outstanding rate of 3.22%, maturing August 7, 2029 (1)

FHLB Fixed rate advance with outstanding rate of 3.84%, maturing February 28, 2029 (1)

FHLB Fixed rate advance with outstanding rate of 3.74%, maturing February 28, 2029 (1)

FHLB retains puttable option to call these advances after a period of time.

Repurchase agreements are secured by municipal securities and collateralized mortgage obligations and residential mortgage-backed securities, under the Bank’s control.

At December 31, 2025, the Bank had investment securities with a carrying value of $47.2 million pledged as collateral for the repurchase agreements, and the fair value of the collateral approximated its carrying value.

Wealth Management Group

The Company's Wealth Management Group provides estate and retirement planning, guardianships, land trusts, profit sharing and 401(k) retirement plans, IRA and Keogh accounts, investment agency accounts, and serves as personal representative of estates and acts as trustee for revocable and irrevocable trusts.

At December 31, 2024, the market value of the Wealth Management Group’s assets under management totaled $392.9 million, a increase of $5.8 million, compared to December 31, 2023.

The Company's Wealth Management Group provides estate and retirement planning, guardianships, special needs trusts, IRA accounts, Investment Agency accounts, and serves as personal representative of estates and acts as Trustee for Revocable and Irrevocable Trusts.

At December 31, 2025, the market value of the Wealth Management Group’s assets under management totaled $416.9 million, an increase of $24.0 million, compared to December 31, 2024.

Property, other than cash deposits, held in a fiduciary or agency capacity is not included in the consolidated balance sheets since such property is not owned by the Company.

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Return on average equity 5.10 % 8.06 %

Average equity-to-average assets ratio

Dividend payout ratio

At December 31,

Total stockholders’ equity to total assets

The average balance sheet amounts, the related interest income or expense, and average rates earned or paid are presented in the following table.

The amounts are stated in thousands (000's).

Year ended December 31, 2024

Year ended December 31, 2023

Interest bearing balances in financial institutions

Average Balances, Interest, and Rates

December 31, 2025 December 31, 2024

Average Balance Interest Rate (%) Average Balance Interest Rate (%)

Interest bearing deposits in other financial institutions $ 75,724 $ 3,048 4.03 % $ 51,202 $ 2,967 5.79 %

Federal funds sold 1,160 43 3.71 % 912 38 4.17 %

Nontaxable Securities

Taxable Securities

Total investments

Real estate mortgage loans

Commercial business loans

Consumer loans

Securities available-for-sale 329,646 7,819 2.37 % 347,048 8,250 2.39 %

Loans receivable 1,478,271 80,337 5.43 % 1,504,206 77,515 5.15 %

Federal Home Loan Bank stock 6,547 516 7.88 % 6,547 408 6.23 %

Total interest earning assets 1,891,348 91,763 4.85 % 1,909,915 89,178 4.67 %

Cash and non-interest bearing deposits in other financial institutions 25,829 28,730

Allowance for credit losses (17,821) (18,529)

Money market demand accounts

Savings accounts

Certificates of deposit

Total interest-bearing deposits

Repurchase Agreements

Other non-interest bearing assets 151,196 155,251

Total assets $ 2,050,552 $ 2,075,367

LIABILITIES AND STOCKHOLDERS' EQUITY

Interest-bearing deposits $ 1,472,179 $ 31,426 2.13 % $ 1,462,039 $ 35,162 2.40 %

Federal funds purchased and repurchase agreements 43,444 1,430 3.29 % 41,506 1,600 3.85 %

Borrowed funds 56,050 2,164 3.86 % 85,927 3,969 4.62 %

Total interest bearing liabilities 1,571,673 $ 35,020 2.23 % 1,589,472 40,731 2.56 %

Demand deposit accounts

Other liabilities

Non-interest bearing deposits 282,795 293,508

Other non-interest bearing liabilities 37,621 41,893

Total liabilities 1,892,089 1,924,873

Stockholders' equity

Total stockholders' equity 158,463 150,494

Total liabilities and stockholders' equity $ 2,050,552 $ 2,075,367

Net interest income $ 56,743 $ 48,447

Net interest margin (average earning assets) 3.00 % 2.54 %

Net interest spread 2.62 % 2.11 %

Net interest margin**

Ratio of interest-earning assets to interest-bearing liabilities

* Non-accruing loans have been included in the average balances.

** Net interest income divided by average interest-earning assets.

Ratio of interest-earning assets to interest-bearing liabilities 1.20x 1.20x

The table below sets forth certain information regarding changes in interest income and interest expense of the Company for the periods indicated.

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The amounts are stated in thousands (000's).

Year Ended December 31,

Increase / (Decrease)

Interest income:

Loans receivable

Nontaxable securities

Taxable securities

Interest bearing balances in other financial institutions

2025 Compared to 2024

Increase/(Decrease) Due To

Volume Rate Total

Interest income on:

Interest bearing deposits in other financial institutions $ 1,152 $ (1,071) $ 81

Federal funds sold 10 (5) 5

Securities available-for-sale (369) (62) (431)

Loans receivable (1,349) 4,171 2,822

Federal Home Loan Bank stock - 108 108

Total interest earning assets (556) 3,141 2,585

Interest Expense:

Money market accounts

Savings accounts

Certificates of deposit

Repurchase agreements

Interest expense on:

Interest-bearing deposits 242 (3,978) (3,736)

Federal funds purchased and repurchase agreements 72 (242) (170)

Borrowed funds (1,226) (579) (1,805)

Total interest bearing liabilities (912) (4,799) (5,711)

Net change in net interest income

Net change in interest income $ 356 $ 7,940 $ 8,296

Subsidiary Activities

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All of the Company’s banking centers and offices are located in its primary market area.

Approximately ninety-four percent of the Company’s business activities are within this area.

Approximately ninety-six percent of the Company’s business activities are within this area.

The Company faces strong competition in its primary market area for the attraction and retention of deposits and in the origination of loans.

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The Company competes for loans principally through the interest rates and loan fees it charges and the efficiency and quality of the services it provides borrowers and other third-party sources.

It competes for deposits by offering depositors a wide variety of savings accounts, checking accounts, competitive interest rates, convenient banking center locations, drive-up facilities, automatic teller machines, tax deferred retirement programs, digital banking, and other miscellaneous services.

It competes for deposits by offering depositors a wide variety of savings accounts, checking accounts, competitive interest rates, convenient banking center locations, drive-

up facilities, automatic teller machines, tax deferred retirement programs, digital banking, and other miscellaneous services.

The activities of the Company and the Bank in the geographic market served involve competition with other banks as well as with other financial institutions and enterprises, many of which have substantially greater resources than those available to the Company.

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The Company is registered as a bank holding company for the Bank and has elected to be a financial holding company under the Gramm-Leach-Bliley Act of 1999.

As a bank holding company and financial holding company, the Company is subject to the regulation and supervision of the FRB under the Bank Holding Company Act of 1956, as amended (the "BHCA").

As a bank holding company and financial holding company, the Company is subject to the regulation and supervision of the FRB under the BHCA.

Bank holding companies are required to file periodic reports with and are subject to periodic examination by the FRB.

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Under the BHCA, the FRB has the authority to require a bank holding company to terminate any activity or relinquish control of a nonbank subsidiary (other than a nonbank subsidiary of a bank) upon the FRB's determination that such activity or control constitutes a serious risk to the financial soundness and stability of any bank subsidiary of the bank holding company.

On September 17, 2024, the FDIC, Office of the Comptroller of the Currency, and the Department of Justice (“DOJ”) announced new rules and policy statements impacting their bank merger review process.

Among these actions, the FDIC approved a final statement of policy on bank merger transactions.

The FDIC's statement of policy adopts a principles-based approach and clarifies its policies and expectations in the evaluation of bank merger transactions subject to FDIC approval under the Bank Merger Act.

However, Acting FDIC Chairman Travis Hill has indicated the possibility of withdrawing the new statement of policy.

Concurrent with the FDIC announcement, the DOJ withdrew from its 1995 Bank Merger Guidelines and announced that it would consider bank mergers under its 2023 Merger Guidelines, which are not industry specific, as well as under a separate, recently adopted bank merger addendum.

The Change in Bank Control Act (“CBCA”) prohibits a person or group of persons from acquiring “control” of a bank holding company unless the FRB has been notified and has not objected to the transaction.

The standards by which bank and financial institution acquisitions are evaluated may be subject to change.

In September 2024, the FDIC, OCC, and the DOJ announced new rules and policy statements impacting their bank merger review process.

In May 2025, the OCC adopted a final rule that restored the ability for Bank Merger Act applicants to file a streamlined application form for certain types of acquisitions and the expedited review process for Bank Merger Act applications, which had been removed by the 2024 final rule, and rescinded the 2024 policy statement.

The FDIC similarly rescinded the 2024 statement of policy in May 2025.

Concurrent with the FDIC and OCC issuances of revised policy statements in 2024, the DOJ withdrew from its 1995 Bank Merger Guidelines and announced that it would consider bank mergers under its 2023 Merger Guidelines, which are not industry specific, as well as under a separate, recently adopted bank merger addendum.

Unlike the FDIC and OCC, the DOJ has not reinstated the guidance that was in effect prior to 2024.

The Change in Bank Control Act prohibits a person or group of persons from acquiring “control” of a bank holding company unless the FRB has been notified and has not objected to the transaction.

Under a rebuttable presumption established by the FRB, the acquisition of 10% or more of a class of voting stock of a bank holding company with a class of securities registered under Section 12 of the Exchange Act, such as the Company, would, under the circumstances set forth in the presumption, constitute acquisition of control of the Company.

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Under the final rule, investors can hold up to 24.9% of the voting securities and up to 33% of the total equity of a company without necessarily having a controlling influence.

In addition, Indiana law requires DFI approval for changes in control of companies controlling Indiana banks, with “control” defined to mean the power to direct the management or policies of the holding company or the power to vote at least 25% of the company’s voting securities.

Under the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), a bank holding company is expected to serve as a source of financial and managerial strength to its subsidiary bank(s).

In addition, Indiana law requires DFI

approval for changes in control of companies controlling Indiana banks, with “control” defined to mean the power to direct the management or policies of the holding company or the power to vote at least 25% of the company’s voting securities.

Under the Dodd Frank Act, a bank holding company is expected to serve as a source of financial and managerial strength to its subsidiary bank(s).

Pursuant to this requirement, a bank holding company should stand ready to use its resources to provide adequate capital funds to its subsidiary bank(s) during periods of financial stress or adversity.

This support may be required by the FRB at times when the Company may not have the resources to provide it or, for other reasons, would not be inclined to provide it.

Additionally, under the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), a bank holding company is required to provide limited guarantee of the compliance by any insured depository institution subsidiary that may become "undercapitalized" (as defined in the statute) with the terms of any capital restoration plan filed by such subsidiary with its appropriate federal banking agency.

Additionally, under the Federal Deposit Insurance Corporation Improvement Act of 1991, a bank holding company is required to provide limited guarantee of the compliance by any insured depository institution subsidiary that may become "undercapitalized" (as defined in the statute) with the terms of any capital restoration plan filed by such subsidiary with its appropriate federal banking agency.

State Bank Regulation.

27 unchanged sentences

Tier 2 capital is comprised of capital instruments and related surplus meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock, and subordinated debt.

Also included in Tier 2 capital is the ACL limited to a maximum of 1.25% of risk- weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income (“AOCI”), up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values.

Also included in Tier 2 capital is the ACL limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of AOCI, up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values.

Institutions that have not exercised the AOCI opt-out have AOCI incorporated into common equity Tier 1 capital (including unrealized gains and losses on available-for-sale-securities).

2 unchanged sentences

Higher levels of capital are required for asset categories believed to present greater risk.

For example, a risk weight of 0% is assigned to cash and U.S.

For example, a risk weight of 0%

is assigned to cash and U.S.

government securities, a risk weight of 50% is generally assigned to prudently underwritten first lien one to four-family residential mortgages, a risk weight of 100% is assigned to commercial and consumer loans, a risk weight of 150% is assigned to certain past due loans and a risk weight of between 0% to 600% is assigned to permissible equity interests, depending on certain specified factors.

18 unchanged sentences

Significantly and critically undercapitalized institutions are subject to additional mandatory and discretionary measures.

Section 201 of the Economic Growth, Regulatory Relief and Consumer Protection Act of 2018 (the “Economic Growth Act”) directed federal banking agencies to draft regulations establishing a new optional Community Bank Leverage Ratio (“CBLR”).

Section 201 of the Economic Growth Act directed federal banking agencies to draft regulations establishing a new optional CBLR.

The Economic Growth Act provides that the CBLR will apply to a “qualifying community bank” which the Economic Growth Act defines as a bank with consolidated assets of less than $10 billion and satisfying additional criteria designed to disqualify institutions with a higher risk profile.

Under the Economic Growth Act, qualifying community banks that meet or exceed the CBLR and elect to follow the alternative regulatory capital structure will be deemed to have satisfied all generally applicable leverage capital and risk-based capital requirements and will be considered “well capitalized” under the FDIC prompt corrective action provisions.

The Economic Growth Act directed the FRB, the FDIC, and the Office of the Comptroller of the Currency (“OCC”) to jointly determine a community bank leverage ratio percentage, not less than 8% nor more than 10%, that must be maintained to be deemed to have satisfied all generally applicable leverage capital and risk-based capital requirements and be considered well capitalized.

The Economic Growth Act directed the FRB, the FDIC, and the OCC to jointly determine a community bank leverage ratio percentage, not less than 8% nor more than 10%, that must be maintained to be deemed to have satisfied all generally applicable leverage capital and risk-based capital requirements and be considered well capitalized.

The Economic Growth Act also directed agencies to establish procedures for dealing with a qualifying bank that subsequently falls below the new ratio.

The final regulation implementing Section 201 became effective on January 1, 2021 (the “Final Rule”).

Under the Final Rule, to be eligible to use the CBLR framework, a banking organization must not be an advanced approaches organization and must have (i) a leverage ratio of greater than 9%;

The final regulation implementing Section 201 became effective on January 1, 2021.

Under the Final Rule, to be eligible to use the CBLR framework, a banking organization must not be an advanced approaches organization and must

have (i) a leverage ratio of greater than 9%;

(ii) total consolidated assets of less than $10 billion;

3 unchanged sentences

An institution that ceases to meet any qualifying criteria is provided with a two-quarter grace period to either comply with the CBLR requirements or comply with the general capital regulations, including the risk-based capital requirements.

Section 4012 of the Coronavirus Aid, Relief and Economic Security Act of 2021 (the “CARES Act”) required that the CBLR be temporarily lowered to 8%.

Section 4012 of the CARES Act required that the CBLR be temporarily lowered to 8%.

The federal regulators issued a rule implementing the lower ratio effective April 23, 2021.

3 unchanged sentences

The following table shows that, at December 31, 2025, and December 31, 2024, the Bank’s capital exceeded all applicable regulatory capital requirements as set forth in 12 C.F.R.

Bank Level Capital

Minimum Required To Be

(Dollars in thousands)

Minimum Required For

(Dollars in thousands) Actual Minimum Required For

Capital Adequacy Purposes Minimum Required To Be

Well Capitalized Under Prompt

Capital Adequacy Purposes

Corrective Action Regulations

December 31, 2024

December 31, 2025 Amount Ratio Amount Ratio Amount Ratio

Common equity tier 1 capital to risk-weighted assets $ 186,214 11.86 % $ 70,626 4.50 % $ 102,016 6.50 %

1 unchanged sentence

Total capital to risk-weighted assets $ 205,472 13.09 % $ 125,558 8.00 % $ 156,947 10.00 %

Tier 1 capital to adjusted average assets

Bank Level Capital

Minimum Required To Be

(Dollars in thousands)

Minimum Required For

Tier 1 leverage ratio $ 186,214 8.93 % $ 83,379 4.00 % $ 104,223 5.00 %

(Dollars in thousands) Actual Minimum Required For

Capital Adequacy Purposes Minimum Required To Be

Well Capitalized Under Prompt

Capital Adequacy Purposes

Corrective Action Regulations

December 31, 2023

December 31, 2024 Amount Ratio Amount Ratio Amount Ratio

Common equity tier 1 capital to risk-weighted assets $ 179,625 11.26 % $ 71,771 4.50 % $ 103,670 6.50 %

1 unchanged sentence

Total capital to risk-weighted assets $ 194,499 12.19 % $ 127,594 8.00 % $ 159,492 10.00 %

Tier 1 capital to adjusted average assets

In December 2017, the Basel Committee on Banking Supervision published the last version of the Basel III accord, generally referred to as “Basel IV.” The Basel Committee stated that a key objective of the revisions incorporated into the framework is to reduce excessive variability of risk-weighted assets (“RWA”), which will be accomplished by enhancing the robustness and risk sensitivity of the standardized approaches for credit risk and operational risk, which will facilitate the comparability of banks’ capital ratios;

Tier 1 leverage ratio $ 179,625 8.47 % $ 84,854 4.00 % $ 106,068 5.00 %

In December 2017, the Basel Committee on Banking Supervision published the last version of the Basel III accord, generally referred to as “Basel IV.” The Basel Committee stated that a key objective of the revisions incorporated into the framework is to reduce excessive variability of risk-weighted assets, which will be accomplished by enhancing the robustness and risk sensitivity of the standardized approaches for credit risk and operational risk, which will facilitate the comparability of banks’ capital ratios;

constraining the use of internally modeled approaches;

and complementing the risk-weighted capital ratio with a finalized leverage ratio and a revised and robust capital floor.

The leadership of the FRB, Office of the Comptroller of the Currency (“OCC”), and FDIC, who are tasked with implementing Basel IV, supported the revisions.

The leadership of the FRB, OCC, and FDIC, who are tasked with implementing Basel IV, supported the revisions.

Under the current U.S.

2 unchanged sentences

Among other things, the proposed rule would substantially change the existing calculation of risk-weighted assets and require banking organizations to use revised models for such calculations.

The proposed rule, if adopted as proposed, would be applicable to banking organizations with $100 billion or more in total consolidated assets, and therefore would not apply to the Bank directly.

However, many of the principles included in this proposed rulemaking could result in increased supervisory expectations and closer regulatory scrutiny for institutions that experience substantial growth.

The proposed rule, if adopted as proposed, would have been applicable to banking organizations with $100 billion or more in total consolidated assets, and therefore would not apply to the Bank directly.

However, many of the principles included in this proposed rulemaking could have resulted in increased supervisory expectations and closer regulatory scrutiny for institutions that experience substantial growth.

For example, the proposed rulemaking would add back the impact of accumulated other comprehensive income (loss) to the calculation of regulatory capital for institutions above $100 billion in assets.

The federal banking agencies have discretion during the examination process to require institutions to have higher capital cushions to address a variety of supervisory concerns, which may include a high level of accumulated other comprehensive loss.

On September 10, 2024, Michael Barr, the Vice Chair for Supervision of the Federal Reserve, stated his intention to recommend to the Federal Reserve Board that the Federal Reserve re-propose a rule to implement the Basel IV standards;

however, the federal banking agencies to date have not agreed on the issuance of a re-proposal and, in consideration of the new Trump Administration and the expected changes in leadership of the agencies, including a new Vice Chair for Supervision of the Federal Reserve, the prospects and timing for further rulemaking on these matters are uncertain at this time.

The impact of Basel IV on the Company will depend on the manner in which it is implemented by the federal banking regulators.

In light of the adverse reaction to the proposal, the Federal Reserve announced that it would publish a re-proposal of its regulations finalizing the Basel IV standards.

March 19, 2026, the federal banking regulators issued three proposals to modernize the regulatory capital framework for banks of all sizes.

The federal banking agencies stated the proposals would streamline capital requirements and better align regulatory capital with risk while maintaining the safety and soundness of the banking system.

The proposals are intended to be the final phase of the Basel capital reforms.

Comments on the proposals are due by June 18, 2026.

The Company's management continues to evaluate the impact of these proposals on the Company, the Bank, and its business, financial condition, and results of operations.

Banking regulators may change these capital requirements from time to time, depending on the economic outlook generally and the outlook for the banking industry.

30 unchanged sentences

Tangible equity for this purpose means Tier 1 capital.

Banks with less than $10 billion in assets (such as the Bank) are assigned an individual rate based on a formula using financial data and CAMELS (capital adequacy, asset quality, management, earnings, liquidity, and sensitivity) ratings.

Banks with less than $10

billion in assets (such as the Bank) are assigned an individual rate based on a formula using financial data and CAMELS (capital adequacy, asset quality, management, earnings, liquidity, and sensitivity) ratings.

Beginning in June 2023, the initial base assessment rates range from 5 to 35 basis points.

14 unchanged sentences

At December 31, 2025, the Bank was in compliance with this requirement.

At December 31, 2024, the Company owned $6.5 million of stock of the Federal Home Loan Bank of Indianapolis (“FHLBI”).

At both December 31, 2025 and December 31, 2024, the Company owned $6.5 million of stock of the FHLBI.

The FHLBI stock entitles the Company to dividends from the FHLBI.

The Company recognized dividend income of approximately $408 thousand in 2024.

At December 31, 2024, the Company’s excess borrowing capacity based on collateral from the FHLBI was $461 million.

The Company recognized dividend income of approximately $516 thousand in 2025 and $408 thousand in 2024.

At December 31, 2025 and December 31, 2024, the Company’s excess borrowing capacity based on collateral from the FHLBI was $381 million and $461 million, respe.

Generally, the loan terms from the FHLBI are better than the terms the Company can receive from other sources making it cheaper to borrow money from the FHLBI.

4 unchanged sentences

Community Reinvestment Act.

Under the Community Reinvestment Act (“CRA”), the Bank has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low and moderate income neighborhoods.

Under the Community Reinvestment Act, the Bank has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low and moderate income neighborhoods.

The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the CRA.

2 unchanged sentences

As of the date of its most recent regulatory examination, the Bank was rated “satisfactory” with respect to its CRA compliance.

On October 24, 2023, the federal banking agencies jointly issued a final rule to strengthen and modernize the existing CRA regulations.

Under the final rule, the agencies will evaluate a bank’s CRA performance based upon the varied activities that it conducts and the communities in which it operates.

CRA evaluations and data collection requirements will be tailored based on bank size and type.

The final rule significantly expands the assessment area that financial institutions must consider when evaluating their lending practices by including areas associated with mobile and online banking and includes new metrics and benchmarks to assess retail lending performance.

In addition, the final rule emphasizes smaller loans and investments that can have a high impact and be more responsive to the needs of low- or moderate-income communities.

On October 24, 2023, the federal banking agencies jointly issued a final rule to revise the existing CRA regulations.

On March 29, 2024, a federal district court in Texas granted a preliminary injunction barring implementation of the final rule.

The injunction extends the effective date of April 1, 2024, and all other implementation dates, on a day-for-day basis until the injunction is lifted.

While the federal banking agencies are appealing the district court’s decision, to date the injunction remains in effect and implementation of the final rule is delayed indefinitely.

Compliance with the majority of the final rule's provisions otherwise would not have been required until January 1, 2026 and the data reporting requirements of the final rule would not have taken effect until January 1, 2027.

The injunction remains in effect and implementation of the final rule is delayed indefinitely.

In July 2025, the federal banking agencies issued a joint notice of proposed rulemaking to rescind the October 2023 final rule and restore the CRA framework that existed previously, which has remained in effect due to the aforementioned injunction.

Gramm-Leach-Bliley Act.

Under the Gramm-Leach-Bliley Act ("Gramm-Leach"), bank holding companies are permitted to offer their customers virtually any type of financial service, including banking, securities underwriting, insurance (both agency and underwriting) and merchant banking.

Under the Gramm-Leach-Bliley Act, bank holding companies are permitted to offer their customers virtually any type of financial service, including banking, securities underwriting, insurance (both agency and underwriting) and merchant banking.

In order to engage in these new financial activities, a bank holding company must qualify and register with the FRB as a "financial holding company" by demonstrating that each of its bank subsidiaries is well capitalized, well managed and has at least a satisfactory rating under the CRA.

17 unchanged sentences

Consumer Financial Protection Bureau.

The Dodd-Frank Act established the Consumer Financial Protection Bureau (“CFPB”) within the Federal Reserve, which is granted broad rulemaking, supervisory and enforcement powers under various federal consumer financial protection laws, including the Equal Credit Opportunity Act, Truth in Lending Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Act, the Consumer Financial Privacy provisions of Gramm-Leach and certain other statutes.

The Dodd-Frank Act established the CFPB within the Federal Reserve, which is granted broad rulemaking, supervisory and enforcement powers under various federal consumer financial protection laws, including the Equal Credit Opportunity Act, Truth in Lending Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Act, the Consumer Financial Privacy provisions of Gramm-Leach and certain other statutes.

Many of the consumer financial protection functions formerly assigned to the federal banking and other designated agencies are now performed by the CFPB.

9 unchanged sentences

Federal preemption of state consumer protection law requirements, traditionally an attribute of the federal savings association charter, also was modified by the Dodd-Frank Act and requires a case- by-case determination of preemption by the OCC and eliminates preemption for subsidiaries of a bank.

Depending on the implementation of this revised federal preemption standard, the operations of the Bank could become subject to additional compliance burdens in the states in which it operates.

Depending on the

implementation of this revised federal preemption standard, the operations of the Bank could become subject to additional compliance burdens in the states in which it operates.

Mortgage Reform and Anti-Predatory Lending .

26 unchanged sentences

Artificial Intelligence.

State and federal regulatory agencies have begun adopting rules and guidelines regarding the use of artificial intelligence (“AI”) technologies in connection with the provision of financial services.

State and federal regulatory agencies have begun adopting rules and guidelines regarding the use of artificial intelligence technologies in connection with the provision of financial services.

For example, the CFPB and other federal bank regulatory agencies have provided guidance that creditors may be subject to adverse action notice requirements under the Equal Credit Opportunity Act even if they rely on algorithmic underwriting models.

Additionally, the California Privacy Protection Agency is currently in the process of finalizing regulations regarding the use of automated decision making.

Additionally,

the California Privacy Protection Agency is currently in the process of finalizing regulations regarding the use of automated decision making.

California also enacted new laws that further regulate the use of AI technologies and provide consumers with additional protections around companies’ use of AI technologies, such as requiring companies to disclose certain uses of generative AI, and other states have also passed AI-focused legislation.

11 unchanged sentences

State Taxation

The Bank is subject to Indiana’s Financial Institutions Tax (“FIT”), which is imposed at a flat rate on “adjusted gross income,” subject to scheduled decreases as described herein.

The Bank is subject to Indiana’s Financial Institutions Tax, which is imposed at a flat rate on “adjusted gross income,” subject to scheduled decreases as described herein.

For 2025, this rate was 4.9%.

Additionally, the Bank is subject to Illinois state tax which is imposed at a flat rate of 9.5%.

“Adjusted gross income,” for purposes of the FIT begins with taxable income as defined by Section 63 of the Internal Revenue Code of 1986, as amended (the “Code”) and, thus, incorporates federal tax law to the extent that it affects the computation of taxable income.

“Adjusted gross income,” for purposes of the FIT begins with taxable income as defined by Section 63 of the Internal Revenue Code of 1986, as amended and, thus, incorporates federal tax law to the extent that it affects the computation of taxable income.

Federal taxable income is then adjusted by several Indiana and Illinois modifications.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business