First Internet Bancorp 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures The Company maintains disclosure controls and procedures that are designed to ensure that information the Company is required to disclose in reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time period specified in SEC rules and forms. These controls and procedures are also designed to ensure that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating disclosure controls and procedures, the Company has recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Management is required to apply judgment in evaluating its controls and procedures. The Company performed an evaluation under the supervision and with the participation of management, including the Company’s principal executive officer and principal financial officer, to assess the effectiveness of the design and operation of our disclosure controls and procedures under the Exchange Act. Based on that evaluation, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures were effective as of December 31, 2024. Report of Management's Assessment of Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, including accounting and other internal control systems that, in the opinion of management, provide reasonable assurance that (1) transactions are properly authorized, (2) the assets are properly safeguarded, and (3) transactions are properly recorded and reported to permit the preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States. The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013). Based on that assessment, management concluded that, as of December 31, 2024, the Company’s internal control over financial reporting was effective based on those criteria. The Company’s internal control over financial reporting 49 as of December 31, 2024 has been audited by Forvis Mazars, LLP, an independent registered public accounting firm, as stated in its report appearing on page F-2. Changes in Internal Control Over Financial Reporting There has been no change in the Company’s internal control over financial reporting during the quarter ended December 31, 2024, that has materially affected or is reasonably likely to materially affect, the Company's internal control over financial reporting. Item 9B. Other Information None of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act) adopted , modified, or terminated any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Securities Exchange Act or any non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the fiscal quarter ended December 31, 2024. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not Applicable. 50 PART III Certain information required by Part III is incorporated by reference from our definitive Proxy Statement for our 2025 Annual Meeting of Shareholders (the “Proxy Statement”), which we intend to file with the SEC pursuant to Regulation 14A within 120 days after December 31, 2024. Except for those portions specifically incorporated by reference from our Proxy Statement, no other portions of the Proxy Statement are deemed to be filed as part of this report. Item 10. Directors, Executive Officers and Corporate Governance Information about our Executive Officers Our executive officers are as follows: Name Age Position David B. Becker 71 Chairman, Chief Executive Officer and Director Nicole S. Lorch 50 President, Chief Operating Officer and Secretary Kenneth J. Lovik 55 Executive Vice President and Chief Financial Officer David B. Becker has served as our Chairman of the Board since 2006, as our Chief Executive Officer since 2007, and as our President from 2007 to June 2021. Mr. Becker is the founder of the Bank and has served as an officer and director of the Bank since 1998. Nicole S. Lorch has served as Secretary since June of 2022 and as President and Chief Operating Officer since June 2021. Previously, she served as Executive Vice President and Chief Operating Officer since January 2017. Ms. Lorch joined the Company as Director of Marketing in 1999 and served as Vice President, Marketing & Technology from 2003 to 2011 and Senior Vice President, Retail Banking from 2011 to January 2017. She previously served as Director of Marketing at Virtual Financial Services, an online banking services provider, from 1996 to 1999. Kenneth J. Lovik has served as Executive Vice President and Chief Financial Officer of the Company since January 2017. Mr. Lovik joined the Company in August 2014 as Senior Vice President and Chief Financial Officer. Previously, he served as Senior Vice President, Investor Relations and Corporate Development, at First Financial Bancorp, a publicly traded bank holding company headquartered in Cincinnati, Ohio, from February 2013 to May 2014. Prior to that, he served as its Vice President, Investor Relations and Corporate Development, from 2010 to February 2013. Before First Financial Bancorp, he was an investment banker at Milestone Advisors LLC, Howe Barnes Hoefer & Arnett, Inc. and A.G. Edwards & Sons, Inc. Executive officers are elected annually by our Board of Directors and serve a one-year term or until their successors are elected. None of the above-identified executive officers are related to each other or to any of our directors. Code of Business Conduct and Ethics We have adopted a code of business conduct and ethics that applies to all of our directors and officers and other employees, including our principal executive officer and principal financial officer. This code is publicly available through the Corporate Governance section of our website at www.firstinternetbancorp.com. To the extent permissible under applicable law, the rules of the SEC or Nasdaq listing standards, we intend to post on our website any amendment to the code of business conduct and ethics, or any grant of a waiver from a provision of the code of business conduct and ethics, that requires disclosure under applicable law, the rules of the SEC or Nasdaq listing standards. Insider Trading Policy We have adopted insider trading policies and procedures governing the purchase, sale, and/or other dispositions of the Company's securities by directors, officers and employees that are reasonably designed to promote compliance with insider trading laws, rules and regulations, and any listing standards applicable to the Company. A copy of the Company's Trading Policy has been filed as Exhibit 19 to this Annual Report on Form 10-K. 51 The disclosures in the Proxy Statement under the headings “Proposal 1 - Election of Directors,” “Corporate Governance,” “Shareholder Proposals for 2025 Annual Meeting,” and, if applicable “Delinquent Section 16(a) Reports” are incorporated into this Item by reference. Item 11. Executive Compensation Incorporated into this Item by reference is the information in the Proxy Statement regarding the compensation of our named executive officers appearing under the heading “Executive Compensation” (excluding information under the caption “Pay versus Performance”), the information regarding compensation committee interlocks and insider participation under the heading “Corporate Governance” and the information regarding compensation of non-employee directors under the heading “Director Compensation.” Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Incorporated into this Item by reference is the information in the Proxy Statement appearing under the headings “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information.” Item 13. Certain Relationships and Related Transactions, and Director Independence Incorporated into this Item by reference is the information in the Proxy Statement regarding director independence and related person transactions under the heading “Corporate Governance.” Item 14. Principal Accountant Fees and Services Incorporated into this Item by reference is the information in the Proxy Statement under the heading “Audit Matters.” The independent registered public accounting firm is Forvis Mazars, LLP (Public Company Accounting Oversight Board Firm ID No. 686 ) located in Indianapolis, Indiana. 52 PART IV Item 15. Exhibits and Financial Statement Schedules (a) Documents Filed as Part of this Annual Report on Form 10-K: 1. See our financial statements beginning on page F-1. (b) Exhibits: Exhibit No. Description 3.1 Amended and Restated Articles of Incorporation of First Internet Bancorp (incorporated by reference to Exhibit 3.1 to current report on Form 8-K filed May 21, 2020) 3.2 Amended and Restated Bylaws of First Internet Bancorp (incorporated by reference to Exhibit 3.2 to current report on Form 8-K filed May 21, 2020) 4.1 Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934 4.2 Subordinated Indenture, dated as of September 30, 2016, between First Internet Bancorp and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to current report on Form 8-K filed on September 30, 2016) 4.3 Second Supplemental Indenture, dated as of June 12, 2019, between First Internet Bancorp and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to current report on Form 8-K filed on June 12, 2019) 4.4 Third Supplemental Indenture, dated as of October 26, 2020, between First Internet Bancorp and U.S. Bank National Association, as trustee (including form of 6.0% Fixed-to-Floating Rate Subordinated Notes due 2030) (incorporated by reference to Exhibit 4.2 to current report on Form 8-K filed October 26, 2020) 4.5 Fourth Supplemental Indenture, dated as of August 16, 2021, between First Internet Bancorp and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to current report on Form 8-K filed August 16, 2021) 4.6 Form of Global Note representing 6.0% Subordinated Notes due 2026 (incorporated by reference to Exhibit A included in Exhibit 4.2 to current report on Form 8-K filed on September 30, 2016) 4.7 Form of 3.75% Fixed-to-Floating Rate Subordinated Note due September 1, 2031 (incorporated by reference to Exhibit A-1 and Exhibit A-2 included in Exhibit 4.2 to current report on Form 8-K filed on August 16, 2021) 10.1 First Internet Bancorp 2013 Equity Incentive Plan (incorporated by reference to Appendix A to the definitive proxy statement on Schedule 14A filed April 9, 2013)* 10.2 First Internet Bancorp 2011 Directors’ Deferred Stock Plan (incorporated by reference to Exhibit 10.2 to registration statement on Form 10 filed November 30, 2012)* 10.3 Amended and Restated Employment Agreement among First Internet Bank of Indiana, First Internet Bancorp and David B. Becker dated March 28, 2013 (incorporated by reference to Exhibit 10.4 to Annual Report on Form 10-K for the year ended December 31, 2012)* 53 Exhibit No. Description 10.4 Amendment to Amended and Restated Employment Agreement among First Internet Bank of Indiana, First Internet Bancorp and David B. Becker dated April 20, 2022 (incorporated by reference to Exhibit 10.1 to current report on Form 8-K filed April 25, 2022)* 10.5 Employment Agreement among First Internet Bank of Indiana, First Internet Bancorp and Nicole S. Lorch dated April 20, 2022 (incorporated by reference to Exhibit 10.2 to current report on Form 8-K filed April 25, 2022)* 10.6 Employment Agreement among First Internet Bank of Indiana, First Internet Bancorp and Kenneth J. Lovik dated April 20, 2022 (incorporated by reference to Exhibit 10.3 to current report on Form 8-K filed April 25, 2022)* 10.7 First Internet Bancorp Annual Bonus Plan (incorporated by reference to Exhibit 10.1 to quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2017)* 10.8 Form of Subordinated Note Purchase Agreement, dated as of October 26, 2020, between First Internet Bancorp and the purchaser thereunder (incorporated by reference to Exhibit 10.1 to current report on Form 8-K filed October 26, 2020) 10.9 Form of Management Incentive Award Agreement - Restricted Stock Units under 2013 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2022)* 10.10 Form of Management Incentive Award Agreement - Restricted Stock Units (performance based) under 2013 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2021)* 10.11 Form of Subordinated Note Purchase Agreement, dated August 16,2021, by and among First Internet Bancorp and the Purchasers* (incorporated by reference to Exhibit 10.1 to current report on Form 8-K filed August 15, 2021) 10.12 First Internet Bancorp 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to current report on Form 8-K filed May 17, 2022)* 10.13 Form of Non-Employee Director Restricted Stock Award Agreement under 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2023)* 10.14 Form of Management Incentive Award Agreement - Restricted Stock Units under 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2023)* 19 Insider Trading Policy 21.1 List of Subsidiaries 23.1 Consent of Independent Registered Public Accounting Firm 24.1 Powers of Attorney 31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer 31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer 32.1 Section 1350 Certifications 97 Compensation Recoupment Policy (incorporated by reference to Exhibit 97 to Annual Report on Form 10-K for the year ended December 31, 202 3 ) 101 Financial statements from the Annual Report on Form 10-K of First Internet Bancorp for the period ended December 31, 2024, filed with the SEC on March 12, 2025, formatted in inline extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets at December 31, 2024 and 2023, (ii) the Consolidated Statements of Income for the fiscal years ended December 31, 2024, 2023, and 2022, (iii) the Consolidated Statements of Comprehensive Income for the fiscal years ended December 31, 2024, 2023, and 2022, (iv) the Consolidated Statements of Shareholders’ Equity for the fiscal years ended December 31, 2024, 2023, and 2022, (v) Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2024, 2023, and 2022, and (vi) Notes to Consolidated Financial Statements. 104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) __________________________________ *Management contract, compensatory plan or arrangement required to be filed as an exhibit. Item 16. Form 10-K Summary. None. 54 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 12, 2025. FIRST INTERNET BANCORP By: /s/ David B. Becker David B. Becker, Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on March 12, 2025. /s/ David B. Becker /s/ Kenneth J. Lovik David B. Becker, Chairman and Chief Executive Officer (Principal Executive Officer) Kenneth J. Lovik, Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) * * Aasif M. Bade, Director Joseph A. Fenech, Director * * Justin P. Christian, Director Jean L. Wojtowicz, Director * * Ann Colussi Dee, Director John K. Keach, Jr., Director * Michele L. Raines, Director * David B. Becker, by signing his name hereto, does hereby sign this document on behalf of each of the above-named directors of the Registrant pursuant to powers of attorney duly executed by such persons. By: /s/ David B. Becker David B. Becker, Attorney-in-Fact 55 Reports of Independent Registered Public Accounting Firm To the Shareholders, Board of Directors and Audit Committee First Internet Bancorp Fishers, Indiana Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of First Internet Bancorp (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in I nternal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 12, 2025, expressed an unqualified opinion thereon. Change in Accounting Principle As discussed in Note 1 and Note 4 to the consolidated financial statements, in 2023, the Company changed its method of accounting for credit losses on financial instruments due to the adoption of Accounting Standards Codification Topic 326: Financial Instruments – Credit Losses . Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. F-1 Allowance for Credit Losses (ACL) – Loans – Qualitative Adjustments Critical Audit Mater Description As described in Note 4 to the consolidated financial statements, the Company’s consolidated allowance for credit losses (ACL) was $44,769,000 at December 31, 2024. The Company also describes in Note 1 of the consolidated financial statements the “Allowance for Credit Losses” accounting policy around this estimate. The ACL for loans represents management's estimate of all expected credit losses over the expected life of the Company’s existing loan portfolio. Management estimates the ACL balance using relevant available information about the collectability of cash flows, from internal and external sources, including historical information relating to past events, current conditions, and reasonable and supportable forecasts of future economic conditions. The Company utilized a discounted cash flow (“DCF”) method to estimate the quantitative portion of the allowance for credit losses for loans evaluated on a collective pooled basis. Due to its minimal loss history, the Company elected to use peer data for a more accurate calculation. The Company also includes qualitative adjustments to the ACL based on factors and considerations that have not otherwise been fully accounted for. We have identified auditing the qualitative adjustments as a critical audit matter as management’s determination of the qualitative adjustments used in the ACL is subjective and involves significant management judgments; and our audit procedures related to the qualitative adjustments involved a high degree of auditor judgment and required significant audit effort. The primary procedures we performed to address this critical audit matter included: • We obtained an understanding of the Company’s process for establishing the ACL, including the key qualitative factor adjustments applied to the ACL. • Evaluated the design and tested the operating effectiveness of key controls over significant assumptions and judgments applied in the application of the qualitative adjustments used in the ACL calculation • Assessed management’s process for developing the qualitative adjustments and determining the reasonableness of the qualitative adjustments applied in the ACL estimate which included assessing the relevance and reliability of data used to develop the qualitative adjustments. Our evaluation considered evidence from internal and external sources. • Evaluated the reasonableness of the overall ACL and related qualitative adjustments to determine whether the ACL appropriately reflects expected credit losses by assessing trends in relevant factors and evaluating the relationship of those trends to the overall ACL and related qualitative adjustments applied to the ACL. • Evaluated the mathematical accuracy of the qualitative adjustments applied to the loan segments in the ACL calculation. /s/ Forvis Mazars, LLP We have served as the Company's auditor since 2004. Indianapolis, Indiana March 12, 2025 F-2 Reports of Independent Registered Public Accounting Firm To the Shareholders, Board of Directors, and Audit Committee First Internet Bancorp Fishers, Indiana Opinion on the Internal Control Over Financial Reporting We have audited First Internet Bancorp’s (the “Company”) internal control over financial reporting as of December 31, 2024 based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of December 31, 2024 and 2023, and for each of the three years in the period ended December 31, 2024, and our report dated March 12, 2025, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management’s Assessment of Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definitions and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of reliable financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. /s/ Forvis Mazars, LLP Indianapolis, Indiana March 12, 2025 F-3 First Internet Bancorp Consolidated Balance Sheets (Amounts in thousands except share data) December 31, 2024 2023 Assets Cash and due from banks $ 9,249 $ 8,269 Interest-bearing demand deposits 457,161 397,629 Total cash and cash equivalents 466,410 405,898 Securities available-for-sale - at fair value (amortized cost of $ 626,854 and $ 513,315 in 2024 and 2023, respectively) 587,355 474,855 Securities held-to-maturity - at amortized cost, net of allowance for credit losses of $ 0.2 million and $ 0.3 million in 2024 and 2023, respectively, (fair value of $ 228,851 and $ 207,572 in 2024 and 2023, respectively) 249,796 227,153 Loans held-for-sale 54,695 22,052 Loans 4,170,646 3,840,220 Allowance for credit losses - loans ( 44,769 ) ( 38,774 ) Net loans 4,125,877 3,801,446 Accrued interest receivable 28,180 26,746 Federal Home Loan Bank of Indianapolis stock 28,350 28,350 Cash surrender value of bank-owned life insurance 41,394 40,882 Premises and equipment, net 71,453 73,463 Goodwill 4,687 4,687 Servicing asset, at fair value 16,389 10,567 Other real estate owned 272 375 Accrued income and other assets 63,001 51,098 Total assets $ 5,737,859 $ 5,167,572 Liabilities and shareholders’ equity Liabilities 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 Subordinated debt, net of unamortized discount and debt issuance costs of $ 1,850 and $ 2,162 in 2024 and 2023, respectively 105,150 104,838 Accrued interest payable 2,495 3,848 Accrued expenses and other liabilities 17,945 14,184 Total liabilities 5,353,796 4,804,777 Commitments and Contingencies Shareholders’ equity Preferred stock, no par value; 4,913,779 shares authorized; issued and outstanding - none — — Voting common stock, no par value; 45,000,000 shares authorized; 8,667,894 and 8,644,451 shares issued and outstanding in 2024 and 2023, respectively 186,094 184,700 Nonvoting common stock, no par value; 86.221 shares authorized; issued and outstanding - none — — Retained earnings 230,622 207,470 Accumulated other comprehensive loss ( 32,653 ) ( 29,375 ) Total shareholders’ equity 384,063 362,795 Total liabilities and shareholders’ equity $ 5,737,859 $ 5,167,572 See Notes to Consolidated Financial Statements F-4 First Internet Bancorp Consolidated Statements of Income (Amounts in thousands except share and per share data) Year Ended December 31, 2024 2023 2022 Interest income Loans $ 233,844 $ 192,337 $ 140,600 Securities – taxable 26,742 17,189 10,711 Securities – non-taxable 3,775 3,532 1,767 Other earning assets 27,526 26,384 3,830 Total interest income 291,887 239,442 156,908 Interest expense Deposits 183,150 143,363 41,832 Other borrowed funds 21,360 21,175 17,983 Total interest expense 204,510 164,538 59,815 Net interest income 87,377 74,904 97,093 Provision for credit losses - loans 18,815 15,454 4,977 Benefit for credit losses - debt securities held-to-maturity ( 139 ) ( 42 ) — (Benefit) provision for credit losses - off-balance sheet commitments ( 1,606 ) 1,241 — Net interest income after provision for credit losses 70,307 58,251 92,116 Noninterest income 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 Noninterest expense Salaries and employee benefits 51,756 45,322 41,553 Marketing, advertising and promotion 2,589 2,567 3,554 Consulting and professional fees 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 Income before income taxes 27,542 4,940 40,100 Income tax provision (benefit) 2,266 ( 3,477 ) 4,559 Net income $ 25,276 $ 8,417 $ 35,541 Income per share of common stock Basic $ 2.91 $ 0.95 $ 3.73 Diluted 2.88 0.95 3.70 Weighted-average number of common shares outstanding Basic 8,690,416 8,837,558 9,530,921 Diluted 8,765,725 8,858,890 9,595,115 Dividends declared per share $ 0.24 $ 0.24 $ 0.24 See Notes to Consolidated Financial Statements F-5 First Internet Bancorp Consolidated Statements of Comprehensive Income (Amounts in thousands) Year Ended December 31, 2024 2023 2022 Net income $ 25,276 $ 8,417 $ 35,541 Other comprehensive (loss) income Securities available-for-sale Net unrealized holding (losses) gains on securities available-for-sale recorded within other comprehensive income before income tax ( 1,039 ) 7,339 ( 42,336 ) Income tax (benefit) provision ( 800 ) 1,682 ( 9,060 ) Net effect on other comprehensive (loss) income ( 239 ) 5,657 ( 33,276 ) Securities held-to-maturity Reclassification of securities from available-for-sale to held-to-maturity — — ( 5,402 ) Amortization of net unrealized holding losses on securities transferred from available-for-sale to held-to-maturity 789 778 844 Income tax provision (benefit) 90 198 ( 1,039 ) Net effect on other comprehensive income (loss) 699 580 ( 3,519 ) Cash flow hedges Net unrealized holding losses on cash flow hedging derivatives recorded within other comprehensive income before income tax ( 1,082 ) ( 2,566 ) 19,091 Reclassification of gain on termination of interest rate swaps ( 2,904 ) — — Income tax (benefit) provision ( 248 ) ( 590 ) 4,893 Net effect on other comprehensive (loss) income ( 3,738 ) ( 1,976 ) 14,198 Total other comprehensive (loss) income ( 3,278 ) 4,261 ( 22,597 ) Comprehensive income $ 21,998 $ 12,678 $ 12,944 See Notes to Consolidated Financial Statements F-6 First Internet Bancorp Consolidated Statements of Shareholders’ Equity (Amounts in thousands except share and per share data) Voting and Nonvoting Common Stock Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders’ Equity Balance, January 1, 2022 $ 218,946 $ 172,431 $ ( 11,039 ) $ 380,338 Net income — 35,541 — 35,541 Other comprehensive loss — — ( 22,597 ) ( 22,597 ) Dividends declared ($ 0.24 per share) — ( 2,297 ) — ( 2,297 ) Repurchased shares of common stock ( 779,956 ) ( 27,780 ) — — ( 27,780 ) Recognition of the fair value of share-based compensation 2,035 — — 2,035 Deferred stock rights and restricted stock units issued in lieu of cash dividends payable on outstanding deferred stock rights and restricted stock units 21 — — 21 Common stock redeemed for the net settlement of share-based awards ( 287 ) — — ( 287 ) Balance, December 31, 2022 $ 192,935 $ 205,675 $ ( 33,636 ) $ 364,974 Impact of adoption of new accounting standards (1) — ( 4,491 ) — ( 4,491 ) Net income — 8,417 — 8,417 Other comprehensive income — — 4,261 4,261 Dividends declared ($ 0.24 per share) — ( 2,131 ) — ( 2,131 ) Repurchased shares of common stock ( 502,525 ) ( 9,248 ) — — ( 9,248 ) Excise tax on repurchase of common stock ( 92 ) — — ( 92 ) Recognition of the fair value of share-based compensation 1,258 — — 1,258 Deferred stock rights and restricted stock units issued in lieu of cash dividends payable on outstanding deferred stock rights and restricted stock units 9 — — 9 Common stock redeemed for the net settlement of share-based awards ( 162 ) — — ( 162 ) Balance, December 31, 2023 $ 184,700 $ 207,470 $ ( 29,375 ) $ 362,795 Net income — 25,276 — 25,276 Other comprehensive loss — — ( 3,278 ) ( 3,278 ) Dividends declared ($ 0.24 per share) — ( 2,124 ) — ( 2,124 ) Repurchased shares of common stock ( 10,500 ) ( 283 ) — — ( 283 ) Recognition of the fair value of share-based compensation 1,814 — — 1,814 Deferred stock rights and restricted stock units issued in lieu of cash dividends payable on outstanding deferred stock rights and restricted stock units 5 — — 5 Common stock redeemed for the net settlement of share-based awards ( 142 ) — — ( 142 ) Balance, December 31, 2024 $ 186,094 $ 230,622 $ ( 32,653 ) $ 384,063 1 Reflects the impact of adopting Accounting Standards Update (“ASU”) 2016-13. See Notes to Consolidated Financial Statements F-7 First Internet Bancorp Consolidated Statements of Cash Flows (Amounts in thousands) Year Ended December 31, 2024 2023 2022 Operating activities Net income $ 25,276 $ 8,417 $ 35,541 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 8,460 5,748 8,729 Increase in cash surrender value of bank-owned life insurance ( 1,100 ) ( 1,023 ) ( 959 ) Provision for credit losses 17,070 16,653 4,977 Share-based compensation expense 1,814 1,258 2,035 Loans originated for sale ( 517,675 ) ( 328,146 ) ( 518,870 ) Proceeds from sale of loans originated for sale 510,002 342,684 558,817 Gain on sale of loans ( 33,329 ) ( 20,997 ) ( 17,473 ) Gain on sale of other real estate owned ( 27 ) — — Decrease in fair value of loans held-for-sale — 143 184 Loss (gain) on derivatives 4,771 ( 384 ) ( 2,569 ) Gain on prepayment of FHLB advances ( 1,829 ) — — Gain on termination of interest rate swaps ( 2,904 ) — — Gain on bank-owned life insurance ( 149 ) — — Net change in servicing asset 2,537 1,463 1,639 Net deferred income tax ( 1,357 ) ( 4,353 ) 4,632 Net change in other assets ( 3,932 ) ( 6,625 ) 9,815 Net change in other liabilities 5,364 ( 3,158 ) ( 3,775 ) Net cash provided by operating activities 12,992 11,680 82,723 Investing activities Net loan activity, excluding sales and purchases ( 201,768 ) ( 67,851 ) ( 214,761 ) Proceeds from sales of other real estate owned 623 — 1,188 Net proceeds from sales of portfolio loans — — 14,466 Maturities of securities available-for-sale 78,378 53,142 80,223 Purchase of securities available-for-sale ( 193,944 ) ( 130,772 ) ( 12,969 ) Maturities and calls of securities held-to-maturity 31,957 19,104 7,902 Purchase of securities held-to-maturity ( 53,977 ) ( 53,573 ) ( 41,246 ) Redemption of Federal Home Loan Bank of Indianapolis stock — — 431 Purchase of Federal Home Loan Bank of Indianapolis stock — — ( 3,131 ) Proceeds from bank owned life insurance 737 — — Purchase of premises and equipment ( 2,592 ) ( 5,367 ) ( 17,517 ) Loans purchased ( 142,001 ) ( 284,722 ) ( 412,109 ) Purchase of equity investments ( 13,583 ) ( 4,464 ) ( 3,510 ) Net cash used in investing activities ( 496,170 ) ( 474,503 ) ( 601,033 ) Financing activities Net change in deposits 866,233 623,818 262,286 Cash dividends paid ( 2,078 ) ( 2,156 ) ( 2,317 ) Repurchase of common stock ( 283 ) ( 9,340 ) ( 27,780 ) Proceeds from advances from Federal Home Loan Bank 430,000 475,000 615,000 Repayment of advances from Federal Home Loan Bank ( 750,000 ) ( 475,000 ) ( 515,000 ) Other, net ( 182 ) ( 153 ) ( 287 ) Net cash provided by financing activities 543,690 612,169 331,902 Net increase (decrease) in cash and cash equivalents 60,512 149,346 ( 186,408 ) Cash and cash equivalents, beginning of year 405,898 256,552 442,960 Cash and cash equivalents, end of year $ 466,410 $ 405,898 $ 256,552 Supplemental disclosures of cash flows information Cash paid during the year for interest 205,863 163,604 58,920 Cash paid during the year for taxes 684 939 2,005 Loans transferred to other real estate owned 523 375 — Loans transferred to held-for-sale from portfolio — — 14,049 Cash dividends declared, not paid 520 519 544 Securities purchases settled in subsequent period — 2,632 2,997 Transfer of available-for-sale mortgage-backed securities to held-to-maturity mortgage-backed securities at fair value — — 96,220 See Notes to Consolidated Financial Statements F-8 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Note 1: Basis of Presentation and Summary of Significant Accounting Policies The accounting policies of First Internet Bancorp and its subsidiaries (the “Company”) conform to accounting principles generally accepted in the United States of America (“GAAP”). A summary of the Company’s significant accounting policies follows: Description of Business The Company was incorporated on September 15, 2005 , and consummated a plan of exchange on March 21, 2006, by which the Company became a bank holding company and 100 % owner of First Internet Bank of Indiana (the “Bank”). The Bank offers a wide range of commercial, small business, consumer and municipal banking products and services. The Bank conducts its consumer and small business deposit operations primarily through digital channels on a nationwide basis and has no traditional branch offices. The Bank is subject to competition from other financial institutions. The Bank is regulated by certain state and federal agencies and undergoes periodic examinations by those regulatory authorities. The Bank has three wholly owned subsidiaries. JKH Realty Services, LLC was established on August 20, 2012 as a single member limited liability company wholly owned by the Bank to manage other real estate owned properties as needed. First Internet Public Finance Corp., a wholly-owned subsidiary of the Bank, was incorporated on March 6, 2017 and was established to provide municipal finance lending and leasing products to government entities and to purchase, manage, service, and safekeep municipal securities. SPF15, Inc., a wholly-owned subsidiary of the Bank, was incorporated on August 31, 2018 and was established to acquire and hold real estate. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its direct and indirect subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company’s business activities are currently limited to one reporting unit and reportable segment, which is commercial banking. The Company also evaluates its relationships with other entities to identify whether they represent a variable interest entity (“VIE”). The Company is considered to hold a controlling financial interest in a VIE when it is the primary beneficiary. A primary beneficiary has both: 1) the power to direct the activities that most significantly impact the entity’s economic performance; and 2) and the obligation to absorb losses of, or the right to receive benefits from, an entity that could potentially be significant to the entity. The Company considers all of its economic interests in the VIE when determining whether it has the obligation to absorb losses or the right to receive benefits from the VIE. Certain equity investments held by the Company meet the criteria of a VIE. See Note 3 for additional information on the Company’s equity investments and VIEs. Segment Information The Company operates as a single reportable segment. While there are several lines of business within the operating segment, they are closely interrelated and cannot operate independently. Accordingly, the Chief Operation Decision Maker (“CODM”) evaluates operations and financial performance on a Company-wide basis and all of the Company’s operations are aggregated in one reportable operating segment. See Note 22 for additional segment information. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company utilizes processes that involve the use of significant estimates and the judgment of management in determining the amount of the Company’s allowance for credit losses (“ACL”). Actual results could differ from those estimates. Securities F-9 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) The Company classifies its securities in one of three categories and accounts for the investments as follows: • Securities that the Company has the positive intent and ability to hold to maturity are classified as “held-to-maturity” and reported at amortized cost. • 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” and reported at fair value, with unrealized gains and losses included in earnings. The Company had no securities classified as “trading securities” at December 31, 2024 or 2023. • Securities not classified as either “held-to-maturity” or “trading securities” are classified as “available-for-sale” and reported at fair value, with unrealized gains and losses, after applicable taxes, excluded from earnings and reported in a separate component of shareholders’ equity. Interest and dividend income, adjusted by amortization of premium or discount, is included in earnings using the effective interest rate method. Purchases and sales of securities are recorded in the consolidated balance sheets on the trade date. Gains and losses from the sale or disposal of securities are recognized as of the trade date in the consolidated statements of income for the period in which securities are sold or otherwise disposed of. Gains and losses on sales of securities are determined using the specific-identification method. Loans Held-for-Sale Loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance by charges to noninterest income. Gains and losses on loan sales are recorded in noninterest income, and direct loan origination costs and fees are deferred at origination of the loan and are recognized in noninterest income upon sale of the loan. Revenue Recognition The Company recognizes revenues as they are earned based on contractual terms, as transactions occur, or as services are provided and collectability is reasonably assured. The Company's principal source of revenue is interest income from loans and leases and investment securities. Interest income on loans is accrued as earned using the interest method based on unpaid principal balances, except for interest on loans in nonaccrual status. Interest on loans in nonaccrual status is recorded as a reduction of loan principal when received. Premiums and discounts are amortized using the effective interest rate method. Loan fees, net of certain direct origination costs, primarily salaries and wages, are deferred and amortized to interest income as a yield adjustment over the life of the loan. The Company also earns noninterest income through a variety of financial and transaction services provided to commercial and consumer clients such as sales of the government-guaranteed portion of U.S. Small Business Administration loans, SBA servicing revenue, deposit account, debit card, mortgage banking and portfolio loan sales. Revenue is recorded for noninterest income based on the contractual terms for the service or transaction performed. In certain circumstances, noninterest income is reported net of associated expenses. Loans Loans that management intends to hold until maturity are reported at their outstanding principal balance adjusted for unearned income, charge-offs, the ACL, any unamortized deferred fees or costs on originated loans, unamortized premiums or discounts on purchased loans and any carrying value adjustments related to terminated interest rate swaps associated with loans. F-10 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) For loans recorded at cost, interest income is accrued based on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are recorded in accordance with our revenue recognition policy. ASU 2016 - 13 On January 1, 2023, the Company adopted ASU 2016-03 Financial Instruments - Credit losses (“ASC 326”): Measurement of Credit Losses on Financial Instruments, as amended, which replaces the incurred loss methodology with an expected credit loss (“CECL”) methodology. The CECL estimate is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures, including loan commitments, standby letters of credit, financial guarantees and other similar instruments. Additionally, ASC 326 resulted in changes to the accounting for available-for-sale debt securities. The Company adopted ASC 326 for all financial assets measured at amortized cost, available-for-sale securities and off-balance sheet credit exposures. Results for reporting periods beginning after January 1, 2023 are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable U.S. GAAP. The Company recorded a net decrease to retained earnings of $ 4.5 million as of January 1, 2023 for the cumulative effect of adopting ASC 326. The net adjustment to allowance for credit losses (“ACL”) includes $ 2.3 million related to loans, $ 1.9 million related to off-balance sheet credit exposures and $ 0.3 million related to held-to-maturity debt securities. ACL - Available-For-Sale (“AFS”) Debt Securities For AFS debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For AFS debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors, such as interest rates or market conditions. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency and any adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded. Changes in the ACL are recorded as a provision for, or recovery of, credit loss expense. Losses are charged against the allowance when management believes that uncollectibility of an AFS debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met. ACL - Held-To-Maturity (“HTM”) Debt Securities Management measures expected credit losses on HTM debt securities on a collective basis by major security type. Accrued interest receivable on HTM debt securities are excluded from the estimate of credit losses. The Company made the accounting policy election to not measure an ACL for accrued interest. Accrued interest deemed uncollectible will be written off through interest income. The HTM securities portfolio includes municipal securities, residential mortgage-backed-securities, commercial mortgage-backed securities and corporate securities. All residential and commercial mortgage-backed securities are U.S. government issued or sponsored and substantially all municipal and corporate securities are rated investment grade or above. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. ACL - Loans The ACL for loans represents management's estimate of all expected credit losses over the expected life of the Company’s existing loan portfolio. Management estimates the ACL balance using relevant available information about the collectability of cash flows, from internal and external sources, including historical information relating to past F-11 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) events, current conditions, and reasonable and supportable forecasts of future economic conditions. When the Company is unable to forecast future economic events, management may revert to historical information. Accrued interest receivable on loans are excluded from the estimate of credit losses. The Company made the accounting policy election to not measure an ACL for accrued interest receivable. Accrued interest deemed uncollectible will be written off through interest income. ACL - Loans - Collectively Evaluated The ACL is measured on a collective pool basis when similar risk characteristics exist. The Company utilizes a discounted cash flow (“DCF”) method to estimate the quantitative portion of the allowance for credit losses for loans evaluated on a collective pooled basis. For each segment, a loss driver analysis is performed in order to identify loss drivers and create a regression model for use in forecasting cash flows. In creating the DCF model, the Company has established a one-year reasonable and supportable forecast period with a one-year straight line reversion to the long-term historical average. Due to its limited loss history, the Company elected to use peer data for a more accurate calculation. Key inputs into the DCF model include loan-level detail, including the amortized cost basis of individual loans, payment structure, loss history, and forecasted loss drivers. The Company utilizes a third party to provide economic forecasts under various scenarios, which are assessed quarterly considering the scenarios in the context of the current economic environment and loss risk. Expected credit losses are estimated over the contractual term of the loans and adjusted for prepayments when appropriate. The contractual term excludes extensions, renewals, and modifications unless the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company. Additional key assumptions in the DCF model include the probability of default (“PD”), loss given default (“LGD”), and prepayment/curtailment rates. The Company utilizes the model-driven PD and a LGD derived from a method referred to as Frye Jacobs. The Frye Jacobs method is a mathematical formula that traces the relationship between LGD and PD over time and projects the LGD based on the level of PD forecasted. In all cases, the Frye Jacobs method is utilized to calculate LGDs during the forecast period, reversion period and long-term historical average. Prepayment and curtailment rates were calculated through third party analysis of the Company’s own data. Qualitative factors for the DCF 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 Company’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 • 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. The Company has determined that any loans which have been placed on nonaccrual status will be F-12 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) individually evaluated. Individual analysis will establish a specific reserve for loans, if necessary. Specific reserves on nonaccrual loans are typically based on management’s best estimate of the fair value of collateral securing these loans, adjusted for selling costs as necessary. ACL - Off-Balance Sheet Credit Exposures The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The ACL for off-balance sheet credit exposure is recorded as a liability and adjusted as a provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. 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. Regulatory Capital As permitted by the federal banking regulatory agencies, the Company has elected the option to delay the impact of the day one adoption of ASC 326. Refer to “Note 14: Regulatory Capital Requirements” for details of the phase-in transition adjustments. Modified Loans to Borrowers Experiencing Financial Difficulty The Company may make modifications to certain loans in order to alleviate temporary difficulties in the borrower’s financial condition and/or constraints on the borrower’s ability to repay the loan, and to minimize potential losses to the Company. Modifications may include changes in the amortization terms of the loan, reductions in interest rates, acceptance of interest only payments, and/or reductions to the outstanding loan balance. Such loans are typically placed on nonaccrual status when there is doubt concerning the full repayment of principal and interest or the loan has been delinquent for a period of 90 days or more. These loans may be returned to accrual status when all contractual amounts past due have been brought current, and the borrower’s performance under the modified terms of the loan agreement and the ultimate collectability of all contractual amounts due under the modified terms is no longer in doubt. Provision for Credit Losses A provision for estimated credit losses is charged to income based upon management’s evaluation of the potential losses. Such an evaluation, which includes a review of all loans for which full repayment may not be reasonably assured, considers, among other matters, the estimated net realizable value of the underlying collateral, as applicable, economic conditions, loan loss experience, and other factors that are particularly susceptible to changes that could result in a material adjustment in the near term. While management attempts to use the best information available in making its evaluations, future ACL adjustments may be necessary if economic conditions change substantially from the assumptions used in making the evaluations. Nonaccrual Loans Any loan which becomes 90 days delinquent or for which the full collection of principal and interest may be in doubt will be considered for nonaccrual status. At the time a loan is placed on nonaccrual status, all accrued but unpaid interest will be reversed from interest income. Placing a loan on nonaccrual status does not relieve the borrower of the obligation to repay interest. A loan placed on nonaccrual status may be restored to accrual status when all delinquent principal and interest has been brought current, and the Company expects full payment of the remaining contractual principal and interest. Individually Evaluated Loans A loan is individually evaluated, when, based on current information or events, it is probable that the Company will be unable to collect all amounts due (principal and interest) according to the contractual terms of the loan agreement. Payments with delays not exceeding 90 days outstanding generally are not individually evaluated. Certain nonaccrual F-13 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) 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 accrual of interest on individually evaluated and nonaccrual loans is discontinued when, in management’s opinion, the borrower may be unable to meet payments as they become due. Individually evaluated loans include nonperforming loans and also include loans where concessions have been granted to borrowers experiencing financial difficulties. 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. Accounting Standards Codification (“ASC”) Topic 310, Receivables , requires that individually evaluated loans be measured based on the present value of expected future cash flows discounted at the loans’ effective interest rates or the fair value of the underlying collateral, less costs to sell, and allows existing methods for recognizing interest income. Policy for Charging Off Loans The Company’s policy is to charge off a loan at any point in time when it no longer can be considered a bankable asset, meaning collectible within the parameters of policy. A secured loan is generally charged down to the estimated fair value of the collateral, less costs to sell, no later than when it is 120 days past due as to principal or interest. An unsecured loan generally is charged off no later than when it is 180 days past due as to principal or interest. A home improvement loan generally is charged off no later than when it is 90 days past due as to principal or interest. Federal Home Loan Bank (“FHLB”) of Indianapolis Stock Federal law requires a member institution of the FHLB system to hold common stock of its district FHLB according to a predetermined formula. This investment is stated at cost, which represents redemption value, and may be pledged as collateral for FHLB advances. Premises and Equipment Premises and equipment is stated at cost, less accumulated depreciation. Depreciation is computed on the straight-line method over the estimated useful lives, which range from three to five years for software and equipment, ten years for land improvements, and 39 years for buildings. Other Real Estate Owned Other real estate owned represents real estate acquired through foreclosure or deed in lieu of foreclosure and is recorded at its fair value less estimated costs to sell. When property is acquired, it is recorded at its fair value at the date of acquisition with any resulting write-down charged against the ACL. Any subsequent deterioration of the property is charged directly to operating expense. Costs relating to the development and improvement of other real estate owned are capitalized, whereas costs relating to holding and maintaining the property are charged to expense as incurred. Derivative Financial Instruments The Company uses derivative financial instruments to help manage exposure to interest rate risk and the effects that changes in interest rates may have on net income and the fair value of assets and liabilities. The Company enters into interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. Additionally, prior to the Company’s decision to exit its consumer mortgage business in the first quarter 2023, we entered into forward contracts related to our mortgage banking business to hedge the exposures we had from commitments to extend new residential mortgage loans to our customers and from our mortgage loans held-for-sale. The forward contracts were entered into in order to economically hedge the effect of changed interest rates resulting from the Company’s commitment to fund the loans. Designating an interest rate swap as an accounting hedge allows the Company to recognize gains and losses in the income statement within the same period that the hedged item affects earnings. The Company includes the gain or loss on the hedged items in the same line item as the offsetting loss or gain on the related interest rate swaps. For derivative F-14 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) instruments that are designated and qualify as cash flow hedges, any gains or losses related to changes in fair value are recorded in accumulated other comprehensive loss, net of tax. The fair value of interest rate swaps with a positive fair value are reported in accrued income and other assets in the consolidated balance sheets while interest rate swaps with a negative fair value are reported in accrued expenses and other liabilities in the consolidated balance sheets. The interest rate lock commitments (“IRLCs”) and forward contracts are not designated as accounting hedges and are recorded at fair value with changes in fair value reflected in noninterest income in the consolidated statements of income. The fair value of derivative instruments with a positive fair value are reported in accrued income and other assets in the consolidated balance sheets, while derivative instruments with a negative fair value are reported in accrued expenses and other liabilities in the consolidated balance sheets. Fair Value Measurements The Company records or discloses certain assets and liabilities at fair value. ASC Topic 820, Fair Value Measurements , defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are classified within one of three levels in a valuation hierarchy. ASC Topic 820 describes three levels of inputs that may be used to measure fair value: Level 1 Quoted prices in active markets for identical assets or liabilities Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities There were no transfers that occurred and, therefore, recognized, between any of the fair value hierarchy levels at December 31, 2024 or 2023. Income Taxes Deferred income tax assets and liabilities reflect the impact of temporary differences between amounts of assets and liabilities for financial reporting purposes and the basis of such assets and liabilities as measured by tax laws and regulations. Deferred income tax expense or benefit is based upon the change in deferred tax assets and liabilities from period to period, subject to an ongoing assessment of realization of deferred tax assets. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company files income tax returns in the U.S. federal, Indiana, and other state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local examinations by tax authorities for years before 2019. ASC Topic 740-10, Accounting for Uncertainty in Income Taxes , prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company did not identify any material uncertain tax positions that it believes should be recognized in the consolidated financial statements. F-15 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Earnings Per Share Earnings per share of common stock is based on the weighted average number of basic shares and dilutive shares outstanding during the year. The following is a reconciliation of the weighted average common shares for the basic and diluted earnings per share computations. Year Ended December 31, 2024 2023 2022 Basic earnings per share Net income available to common shareholders $ 25,276 $ 8,417 $ 35,541 Weighted average common shares 8,690,416 8,837,558 9,530,921 Basic earnings per common share $ 2.91 $ 0.95 $ 3.73 Diluted earnings per share Net income available to common shareholders $ 25,276 $ 8,417 $ 35,541 Weighted average common shares 8,690,416 8,837,558 9,530,921 Dilutive effect of equity compensation 75,309 21,332 64,194 Weighted average common and incremental shares 8,765,725 8,858,890 9,595,115 Diluted earnings per common share 1 $ 2.88 $ 0.95 $ 3.70 1 Potential dilutive common shares are excluded from the computation of diluted earnings per share in the periods where the effect would be antidilutive. There were no antidilutive shares for the year ended December 31, 2024. Excluded from the computation of diluted earnings per share were weighted average antidilutive shares totaling 20,797 and 2,646 for the years ended December 31, 2023 and 2022, respectively. Share-based Compensation The Company has a share-based compensation plan using the fair value recognition provisions of ASC Topic 718, Compensation - Stock Compensation . The plan is described more fully in Note 11. Comprehensive Income Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains and losses on securities available-for-sale, unrealized gains and losses on the transfer of securities available-for-sale to securities held-to-maturity, and unrealized gains and losses on cash flow hedges. Reclassification adjustments have been determined for all components of other comprehensive income (loss) reported in the consolidated statements of shareholders’ equity. Statements of Cash Flows Cash and cash equivalents are defined to include cash on-hand, noninterest and interest-bearing amounts due from other banks and federal funds sold. Generally, federal funds are sold for one-day periods. The Company reports net cash flows for customer loan transactions and deposit transactions. Bank-Owned Life Insurance Bank-owned life insurance policies are carried at their cash surrender value. The Company recognizes tax-free income from the periodic increases in the cash surrender value of these policies and from death benefits. F-16 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Goodwill Goodwill is tested at least annually for impairment. If the implied fair value of goodwill is lower than its carrying amount, goodwill impairment is indicated and goodwill is written down to its implied fair value. Subsequent increases in goodwill value are not recognized in the consolidated financial statements. Servicing Asset The servicing asset is related to small business lending loans sold. The servicing asset is recognized at the time of sale when servicing is retained and the income statement effect is recorded in loan servicing revenue. Servicing assets are recorded at fair value in accordance with ASC 860. Fair value is based on a third-party valuation model that calculates the present value of net servicing revenue. Note 2: Cash and Cash Equivalents At December 31, 2024, the Company’s interest-bearing and noninterest-bearing cash accounts at other institutions exceeded the limits for full FDIC insurance coverage by $ 1.1 million. In addition, approximately $ 440.8 million and $ 15.7 million of cash was held at the Federal Reserve Bank of Chicago and the FHLB of Indianapolis, respectively, which are not federally insured. The Federal Reserve Act authorizes the Federal Reserve Board to establish reserve requirements within specified ranges for the purpose of implementing monetary policy on certain types of deposits and other liabilities of depository institutions. On March 15, 2020, the Federal Reserve Board reduced requirement ratios to zero percent effective March 26, 2020. As such, the Company is not currently required to maintain reserve funds in cash and/or on deposit with the Federal Reserve Bank. Note 3: Securities The following tables summarize securities available-for-sale and securities held-to-maturity as of December 31, 2024 and 2023. December 31, 2024 Amortized Cost Gross Unrealized Fair Value Gains Losses Securities available-for-sale U.S. Government-sponsored agencies $ 83,811 $ 487 $ ( 1,482 ) $ 82,816 Municipal securities 67,441 — ( 3,787 ) 63,654 Agency mortgage-backed securities - residential 1 300,914 460 ( 31,733 ) 269,641 Agency mortgage-backed securities - commercial 64,214 276 ( 1,159 ) 63,331 Private label mortgage-backed securities - residential 46,623 186 ( 988 ) 45,821 Asset-backed securities 23,802 62 ( 43 ) 23,821 Corporate securities 40,049 71 ( 1,849 ) 38,271 Total available-for-sale $ 626,854 $ 1,542 $ ( 41,041 ) $ 587,355 F-17 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) December 31, 2024 Amortized Cost Gross Unrealized Fair Value Allowance for Credit Losses Net Carrying Value Gains Losses Securities held-to-maturity Municipal securities $ 12,846 $ — $ ( 921 ) $ 11,925 $ ( 3 ) $ 12,843 Agency mortgage-backed securities - residential 201,840 102 ( 17,530 ) 184,412 — 201,840 Agency mortgage-backed securities - commercial 5,705 — ( 1,157 ) 4,548 — 5,705 Corporate securities 29,559 — ( 1,593 ) 27,966 ( 151 ) 29,408 Total held-to-maturity $ 249,950 $ 102 $ ( 21,201 ) $ 228,851 $ ( 154 ) $ 249,796 1 Includes $ 0.3 million of additional premium related to terminated interest rate swaps associated with agency mortgage-backed securities - residential as of December 31, 2024. December 31, 2023 Amortized Cost Gross Unrealized Fair Value Gains Losses Securities available-for-sale U.S. Government-sponsored agencies $ 96,404 $ 402 $ ( 1,629 ) $ 95,177 Municipal securities 69,494 356 ( 1,404 ) 68,446 Agency mortgage-backed securities - residential 1 237,798 101 ( 31,250 ) 206,649 Agency mortgage-backed securities - commercial 40,215 9 ( 1,339 ) 38,885 Private label mortgage-backed securities - residential 21,742 144 ( 1,107 ) 20,779 Asset-backed securities 8,071 17 ( 7 ) 8,081 Corporate securities 39,591 25 ( 2,778 ) 36,838 Total available-for-sale $ 513,315 $ 1,054 $ ( 39,514 ) $ 474,855 December 31, 2023 Amortized Cost Gross Unrealized Fair Value Allowance for Credit Losses Net Carrying Value Gains Losses Securities held-to-maturity Municipal securities $ 13,892 $ 1 $ ( 853 ) $ 13,040 $ ( 3 ) $ 13,889 Agency mortgage-backed securities - residential 166,750 4 ( 14,112 ) 152,642 — 166,750 Agency mortgage-backed securities - commercial 5,767 — ( 1,246 ) 4,521 — 5,767 Corporate securities 41,037 — ( 3,668 ) 37,369 ( 290 ) 40,747 Total held-to-maturity $ 227,446 $ 5 $ ( 19,879 ) $ 207,572 $ ( 293 ) $ 227,153 1 Includes $ 0.4 million of additional premium related to terminated interest rate swaps associated with agency mortgage-backed securities - residential as of December 31, 2023. Accrued interest receivable on AFS and HTM securities at December 31, 2024 was $ 2.8 million and $ 1.1 million, respectively, compared to $ 2.9 million and $ 1.2 million, respectively, at December 31, 2023, and is included in accrued interest receivable on the consolidated balance sheet. The Company elected to exclude all accrued interest receivable from securities when estimating credit losses. At December 31, 2024 and 2023, over 92 % and 95 %, respectively, of mortgage-backed securities (including both AFS and HTM) held by the Company are issued by U.S. government-sponsored entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government and have a long history of no credit losses; therefore, the Company did not record an ACL on these securities. Additionally, the Company evaluated credit impairment for individual AFS securities that are in an unrealized loss position and determined that the unrealized losses are unrelated to credit quality and are primarily attributable to F-18 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) changes in interest rates and volatility in the financial markets. As the Company does not intend to sell the AFS securities that are in an unrealized loss position, and it is unlikely that it will be required to sell these securities before recovery of their amortized cost basis, the Company did not record an ACL on these securities. The Company also evaluated its HTM securities that are in an unrealized loss position and considered issuer bond ratings, historical loss rates for bond ratings and economic forecasts. The ACL on HTM securities at December 31, 2024 and 2023 was $ 0.2 million and $ 0.3 million, respectively. The carrying value of securities at December 31, 2024 is shown below by their contractual maturity date. Actual maturities will differ because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Available-for-Sale Amortized Cost Fair Value Within one year $ 10,725 $ 10,684 One to five years 24,017 23,988 Five to ten years 70,946 68,040 After ten years 85,613 82,029 191,301 184,741 Agency mortgage-backed securities - residential 300,914 269,641 Agency mortgage-backed securities - commercial 64,214 63,331 Private label mortgage-backed securities - residential 46,623 45,821 Asset-backed securities 23,802 23,821 Total $ 626,854 $ 587,355 Held-to-Maturity Amortized Cost Fair Value Within one year $ 1,808 $ 1,796 One to five years 24,721 24,071 Five to ten years 12,381 11,013 After ten years 3,495 3,011 42,405 39,891 Agency mortgage-backed securities - residential 201,840 184,412 Agency mortgage-backed securities - commercial 5,705 4,548 Total $ 249,950 $ 228,851 There were no gross realized gains or losses resulting from the sale of AFS securities recognized during the twelve months ended December 31, 2024, December 31, 2023 and December 31, 2022. As of December 31, 2024, the fair value of securities pledged as collateral was $ 795.0 million. The Company pledged these securities to both the FHLB and the Fed Discount Window to increase the Company’s borrowing capacity and provide collateral for existing FHLB advances. Certain investments in debt securities are reported in the consolidated financial statements at an amount less than their historical cost. The total fair value of these investments at December 31, 2024 and 2023 was $ 603.9 million and $ 578.9 million, which is approximately 72 % and 85 %, respectively, of the Company’s AFS and HTM securities portfolios. As of December 31, 2024, the Company’s securities portfolio consisted of 579 positions, of which 482 were in an unrealized loss position. As of December 31, 2023, the Company’s security portfolio consisted of 512 positions, of which 434 were in an unrealized loss position. The unrealized losses are related to the categories noted below. U.S. Government-Sponsored Agencies, Municipal Securities and Corporate Securities F-19 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) The unrealized losses on the Company’s investments in securities issued by U.S. Government-sponsored agencies, municipal organizations and corporate entities were caused primarily by interest rate changes. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. The Company does not intend to sell the investments, and it is not likely that the Company will be required to sell the investments, before recovery of their amortized cost basis, which may be upon maturity. Agency Mortgage-Backed, Private Label Mortgage-Backed Securities and Asset-Backed Securities The unrealized losses on the Company’s investments in agency mortgage-backed, private label mortgage-backed securities and asset-backed securities were caused primarily by interest rate changes. The Company expects to recover the amortized cost basis over the terms of the securities. The Company does not intend to sell the investments, and it is not more likely than not that the Company will be required to sell the investments, before recovery of their amortized cost basis, which may be upon maturity. The following tables show the securities portfolio’s gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2024 and 2023: December 31, 2024 Less Than 12 Months 12 Months or Longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Securities available-for-sale U.S. Government-sponsored agencies $ 16,856 $ ( 111 ) $ 29,748 $ ( 1,371 ) $ 46,604 $ ( 1,482 ) Municipal securities 8,504 ( 54 ) 52,649 ( 3,733 ) 61,153 ( 3,787 ) Agency mortgage-backed securities - residential 41,005 ( 179 ) 169,483 ( 31,554 ) 210,488 ( 31,733 ) Agency mortgage-backed securities - commercial 18,141 ( 37 ) 12,027 ( 1,122 ) 30,168 ( 1,159 ) Private label mortgage-backed securities - residential 3,003 ( 14 ) 7,450 ( 974 ) 10,453 ( 988 ) Asset-backed securities 10,299 ( 43 ) — — 10,299 ( 43 ) Corporate securities 2,994 ( 6 ) 27,179 ( 1,843 ) 30,173 ( 1,849 ) Total $ 100,802 $ ( 444 ) $ 298,536 $ ( 40,597 ) $ 399,338 $ ( 41,041 ) December 31, 2023 Less Than 12 Months 12 Months or Longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Securities available-for-sale U.S. Government-sponsored agencies $ 41,934 $ ( 161 ) $ 24,579 $ ( 1,468 ) $ 66,513 $ ( 1,629 ) Municipals 2,399 ( 103 ) 36,193 ( 1,301 ) 38,592 ( 1,404 ) Agency mortgage-backed securities - residential 1,089 ( 5 ) 194,095 ( 31,245 ) 195,184 ( 31,250 ) Agency mortgage-backed securities - commercial 21,561 ( 50 ) 14,217 ( 1,289 ) 35,778 ( 1,339 ) Private label mortgage-backed securities - residential 3,567 ( 29 ) 9,114 ( 1,078 ) 12,681 ( 1,107 ) Asset-backed securities 1,654 ( 7 ) — — 1,654 ( 7 ) Corporate securities 1,680 ( 365 ) 24,587 ( 2,413 ) 26,267 ( 2,778 ) Total $ 73,884 $ ( 720 ) $ 302,785 $ ( 38,794 ) $ 376,669 $ ( 39,514 ) F-20 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) The following table summarizes ratings for the Company’s HTM portfolio issued by state and political subdivisions and other securities as of December 31, 2024 and 2023. December 31, 2024 Held-to-Maturity Municipal Securities Mortgage-Backed Securities - Residential Mortgage-Backed Securities - Commercial Corporate Securities Total AAA equivalent - agency $ — $ 201,840 $ 5,705 $ — $ 207,545 Aa1/AA+ 8,878 — — — 8,878 Aa2/AA 2,175 — — — 2,175 Aa3/AA- 1,793 — — — 1,793 A2/A — — — 5,000 5,000 A3/A- — — — — — Baa1/BBB+ — — — 8,500 8,500 Baa2/BBB — — — 5,500 5,500 Baa3/BBB- — — — 8,559 8,559 Ba1/BB+ — — — 2,000 2,000 Total $ 12,846 $ 201,840 $ 5,705 $ 29,559 $ 249,950 December 31, 2023 Held-to-Maturity Municipal Securities Mortgage-Backed Securities - Residential Mortgage-Backed Securities - Commercial Corporate Securities Total AAA equivalent - agency $ — $ 166,750 $ 5,767 $ — $ 172,517 Aa1/AA+ 9,917 — — — 9,917 Aa2/AA 1,538 — — — 1,538 A1/A+ 1,794 — — — 1,794 A2/A 643 — — 5,000 5,643 A3/A- — — — 4,509 4,509 Baa1/BBB+ — — — 8,500 8,500 Baa2/BBB — — — 8,500 8,500 Baa3/BBB- — — — 12,528 12,528 Ba1/BB+ — — — 2,000 2,000 Total $ 13,892 $ 166,750 $ 5,767 $ 41,037 $ 227,446 There were no amounts reclassified from accumulated other comprehensive loss to the consolidated statements of income during the twelve months ended December 31, 2024, 2023 and 2022. Equity Investments Equity investments, largely comprised of non-marketable equity investments, are generally accounted for under equity security accounting and is included within accrued income and other assets on the consolidated balance sheet. The Company’s non-marketable equity investments consist of limited partner interests in venture capital and Small Business Investment Company (“SBIC”) funds. After the initial commitment and over the course of the investment period, the Company will make capital contributions and receive profit and return of capital distributions as a result of fund performance until the funds wind down. While the partnership agreements allow the Company to remove the general partner, this right is not considered to be substantive as the general partner can only be removed for cause. All of these investments are generally non-redeemable and distributions are generally expected to be received through the F-21 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) liquidation of the underlying investments throughout the life of the investment fund. Investments may only be sold or transferred subject to the notice and approval provisions of the underlying investment agreements. The above investments meet the criteria of a VIE. However, the Company is not the primary beneficiary of the entities as it does not have the power to direct the activities that most significantly impact the economic performance of the entities. The Company’s maximum exposure to loss from unconsolidated VIEs includes the value of the investment recorded on the Company’s consolidated balance sheets. The following tables provide additional information related to equity investments accounted for under equity security accounting. The carrying amount of each equity investment with a readily determinable fair value or net asset value at December 31, 2024 and 2023 is reflected in the following table: 2024 2023 GenOpp Financial Fund LP $ 2,724 $ 2,102 Total $ 2,724 $ 2,102 The carrying amount of the Company’s investments in non-marketable equity securities with no readily determinable fair value and amounts recognized in earnings on a cumulative basis for the years ended December 31, 2024 and 2023 is reflected in the following table: 2024 2023 Carrying value 1 $ 20,017 $ 12,374 Carrying value adjustments — — Impairment — — Upward changes for observable prices — — Downward changes for observable prices — — Net change $ 20,017 $ 12,374 1 Excludes $ 9.1 million and $ 11.5 million in unfunded commitments as of December 31, 2024 and 2023, respectively. F-22 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Note 4: Loans Categories of loans include: December 31, 2024 2023 Commercial loans Commercial and industrial $ 120,175 $ 129,349 Owner-occupied commercial real estate 53,591 57,286 Investor commercial real estate 269,431 132,077 Construction 413,523 261,750 Single tenant lease financing 949,748 936,616 Public finance 485,867 521,764 Healthcare finance 181,427 222,793 Small business lending 1 331,914 218,506 Franchise finance 536,909 525,783 Total commercial loans 3,342,585 3,005,924 Consumer loans Residential mortgage 375,160 395,648 Home equity 18,274 23,669 Other consumer 407,947 377,614 Total consumer loans 801,381 796,931 Total commercial and consumer loans 4,143,966 3,802,855 Net deferred loan origination costs, premiums and discounts on purchased loans, and other 2 26,680 37,365 Total loans 4,170,646 3,840,220 Allowance for credit losses ( 44,769 ) ( 38,774 ) Net loans $ 4,125,877 $ 3,801,446 1 Balances include $ 34.0 million and $ 33.5 million that is guaranteed by the U.S. government as of December 31, 2024 and December 31, 2023, respectively. 2 Includes carrying value adjustment 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. The general risk characteristics specific to each loan portfolio segment are as follows: Commercial and Industrial: Commercial and industrial loans’ sources of repayment are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected, and the collateral securing these loans may fluctuate in value. Loans are made for working capital, equipment purchases, or other purposes. Most commercial and industrial loans are secured by the assets being financed and may incorporate a personal guarantee. This portfolio segment is generally concentrated in the Midwest and Southwest regions of the United States. Owner-Occupied Commercial Real Estate: The primary source of repayment is the cash flow from the ongoing operations and activities conducted by the borrower, or an affiliate of the borrower, who owns the property. This portfolio segment is generally concentrated in the Midwest and Southwest regions of the United States and its loans are often secured by manufacturing and service facilities. Investor Commercial Real Estate: These loans are made on a nationwide basis and are underwritten primarily based on the cash flow expected to be generated from the property and are secondarily supported by the value of the real estate. These loans typically incorporate a personal guarantee from the primary sponsor or sponsors. This portfolio segment generally involves larger loan amounts with repayment primarily dependent on the successful leasing and operation of the property securing the loan or the business conducted on the property securing the loan. Investor commercial real estate loans may be more adversely affected by changing economic conditions in the real estate markets, industry dynamics or the overall health of the local economy where the property is located. The F-23 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) properties securing the Company’s investor commercial real estate portfolio tend to be diverse in terms of property type. Management monitors and evaluates commercial real estate loans based on property financial performance, collateral value, guarantor strength, economic and industry conditions together with other risk grade criteria. As a general rule, the Company avoids financing special use projects unless other underwriting factors are present to mitigate these additional risks. Construction: Construction loans are made on a nationwide basis and are secured by land and related improvements and are made to assist in the construction of new structures, which may include commercial (retail, industrial, office, and multi-family) properties, land development for residential properties or single family residential properties offered for sale by the builder. These loans generally finance a variety of project costs, including land, site preparation, architectural services, construction, closing and soft costs and interim financing needs. The cash flows of builders, while initially predictable, may fluctuate with market conditions, and the value of the collateral securing these loans may be subject to fluctuations based on general economic changes. Single Tenant Lease Financing: These loans are made on a nationwide basis to owners of real estate subject to long-term lease arrangements with single tenant operators. The real estate is typically operated by regionally, nationally or globally branded businesses. The loans are underwritten based on the financial strength of the borrower, characteristics of the real estate, cash flows generated from the lease arrangements and the financial strength of the tenant. Similar to the other loan portfolio segments, management monitors and evaluates these loans based on borrower and tenant financial performance, collateral value, industry trends and other risk grade criteria. Public Finance: These loans are made on a nationwide basis to governmental and not-for-profit entities to provide both tax-exempt and taxable loans for a variety of purposes including: short-term cash-flow needs; debt refinancing; economic development; quality of life projects; infrastructure improvements; renewable energy projects; and equipment financing. The primary sources of repayment for public finance loans include pledged revenue sources including, but not limited to: general obligations; property taxes; income taxes; tax increment revenue; utility revenue; gaming revenues; sales tax; and pledged general revenue. Certain loans may also include an additional collateral pledge of mortgaged property or a security interest in financed equipment. Healthcare Finance: These loans are made on a nationwide basis to healthcare providers, primarily dentists, for practice acquisition financing or refinancing that occasionally includes owner-occupied commercial real estate and equipment purchases. The sources of repayment are primarily based on the identified cash flows from operations of the borrower and related entities and secondarily on the underlying collateral provided by the borrower. Small Business Lending: These loans are made on a nationwide basis to small businesses and generally carry a partial guaranty from the U.S. Small Business Administration (“SBA”) under its 7(a) loan program. We generally sell the government guaranteed portion of SBA loans into the secondary market while retaining the non-guaranteed portion of the loan and the servicing rights. Loans in the small business lending portfolio have sources of repayment that are primarily based on the identified cash flows of the borrower and secondarily on any underlying collateral provided by the borrower. Loans may, but do not always, have a collateral shortfall. For SBA loans where the guaranteed portion is retained, the SBA guaranty provides a tertiary source of repayment to the Bank in event of borrower default. Cash flows of borrowers, however, may not be as expected and collateral securing these loans may fluctuate in value. Loans are made for a broad array of purposes including, but not limited to, providing operating cash flow, funding ownership changes, and facilitating equipment and commercial real estate purchases. Franchise Finance: These loans are made on a nationwide basis through our partnership with ApplePie Capital, which through their deep relationships with franchise brands provides franchisees with financing options for new franchise units, recapitalization, expansion, equipment and working capital. The sources of repayment are either based on identified cash flows from existing operations of the borrower or pro forma cash flow for new franchise locations. Residential Mortgage: With respect to residential loans that are secured by 1-to-4 family residences and are generally owner occupied, the Company typically established a maximum loan-to-value ratio and requires private mortgage insurance if that ratio is exceeded. Repayment of these loans is primarily dependent on the financial circumstances of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in residential property values. Risk is mitigated F-24 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers in geographically diverse locations throughout the country. Home Equity: Home equity loans and lines of credit are typically secured by a subordinate interest in 1-to-4 family residences. The properties securing the home equity portfolio segment are generally geographically diverse as the Company offered these products on a nationwide basis. Repayment of these loans and lines of credit is primarily dependent on the financial circumstances of the borrowers and may be impacted by changes in unemployment levels and property values on residential properties, among other economic conditions in the market. Other Consumer: These loans primarily consist of consumer loans and credit cards. Consumer loans may be secured by consumer assets such as horse trailers or recreational vehicles. Some consumer loans are unsecured, such as small installment loans, home improvement loans and certain lines of credit. Repayment of consumer loans is primarily dependent upon the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers in geographically diverse locations throughout the country. Allowance for Credit Losses (“ACL”) Methodology The ACL for loans represents management's estimate of all expected credit losses over the expected life of the Company’s existing loan portfolio. Management estimates the ACL balance using relevant available information about the collectability of cash flows, from internal and external sources, including historical information relating to past events, current conditions, and reasonable and supportable forecasts of future economic conditions. When the Company is unable to forecast future economic events, management may revert to historical information. The Company's methodologies incorporate a one-year reasonable and supportable forecast period with a one-year straight line reversion to the long-term historical average for most segments. The ACL methodology may also consider other adjustments to address changes in conditions, trends, and circumstances such as local industry changes that could have a significant impact on the risk profile of the loan portfolio and provide for adjustments that may not be reflected and/or captured in the historical loss data. These factors include: lending policies, imprecision in forecasting future economic conditions, loan profile, lending staff, problem loan trends, loan review, collateral, credit concentration, or other internal and external factors. The Company also includes qualitative adjustments to the ACL based on factors and considerations that have not otherwise been fully accounted for. Qualitative adjustments include, but are not limited to: • 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 Company’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 • The effect of other external factors (i.e. competition, legal and regulatory requirements) on the level of estimated credit losses The ACL is measured on a collective or pool basis when similar risk characteristics exist. The Company segments its portfolio generally by Federal Financial Institutions Examination Council ("FFIEC") Call Report codes that align with its lines of business. Additional sub-segmentation may be utilized to identify groups of loans with unique risk characteristics relative to the rest of the portfolio. F-25 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Loans that do not share similar risk characteristics are evaluated on an individual basis. These evaluations are typically performed on loans with a deteriorated internal risk rating. The ACL is determined based on several methods, including estimating the fair value of the underlying collateral or the present value of expected cash flows. The Company relies on a third-party platform that offers multiple methodologies to measure historical life-of-loan losses. Modified Loans to Borrowers Experiencing Financial Difficulty The Company may make modifications to certain loans in order to alleviate temporary difficulties in the borrower’s financial condition and/or constraints on the borrower’s ability to repay the loan, and to minimize potential losses to the Company. Modifications may include changes in the amortization terms of the loan, reductions in interest rates, acceptance of interest only payments, and/or reductions to the outstanding loan balance. Such loans are typically placed on nonaccrual status when there is doubt concerning the full repayment of principal and interest or the loan has been delinquent for a period of 90 days or more. These loans may be returned to accrual status when all contractual amounts past due have been brought current, and the borrower’s performance under the modified terms of the loan agreement and the ultimate collectability of all contractual amounts due under the modified terms is no longer in doubt. The Company typically measures the ACL on modified loans to borrowers experiencing financial difficulty on an individual basis when the loans are deemed to no longer share risk characteristics that are similar with other loans in the portfolio. The determination of the ACL for these loans is based on a discounted cash flow approach for both those measured collectively and individually, unless the loan is deemed collateral dependent, which requires measurement of the ACL based on the estimated expected fair value of the underlying collateral, less costs to sell. GAAP requires the Company to make certain disclosures related to these loans, including certain types of modifications, as well as how such loans have performed since their modifications. Provision for Credit Losses A provision for estimated losses on loans is charged to income based upon management’s evaluation of the potential losses. Such an evaluation, which includes a review of all loans for which full repayment may not be reasonably assured, considers, among other matters, the estimated net realizable value of the underlying collateral, as applicable, economic conditions, loan loss experience, and other factors that are particularly susceptible to changes that could result in a material adjustment in the near term. While management attempts to use the best information available in making its evaluations, future ACL adjustments may be necessary if economic conditions change substantially from the assumptions used in making the evaluations. Policy for Charging Off Loans The Company’s policy is to charge off a loan at any point in time when it no longer can be considered a bankable asset, meaning collectible within the parameters of policy. A secured loan is generally charged down to the estimated fair value of the collateral, less costs to sell, no later than when it is 120 days past due as to principal or interest. An unsecured loan generally is charged off no later than when it is 180 days past due as to principal or interest. A home improvement loan generally is charged off no later than when it is 90 days past due as to principal or interest. The following tables present changes in the balance of the ACL during the twelve months ended December 31, 2024 and December 31, 2023, respectively. F-26 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Twelve Months Ended December 31, 2024 Balance, Beginning of Period (Credit) Provision Charged to Expense Losses Charged Off Recoveries Balance, End of Period Allowance for credit losses: Commercial and industrial $ 2,185 $ ( 928 ) $ — $ 8 $ 1,265 Owner-occupied commercial real estate 825 ( 297 ) — — 528 Investor commercial real estate 1,311 ( 162 ) — — 1,149 Construction 2,167 ( 183 ) — — 1,984 Single tenant lease financing 8,129 ( 3,152 ) ( 195 ) — 4,782 Public finance 1,372 ( 669 ) — — 703 Healthcare finance 1,976 ( 564 ) — — 1,412 Small business lending 6,532 19,745 ( 10,441 ) 325 16,161 Franchise finance 6,363 4,079 ( 1,466 ) — 8,976 Residential mortgage 2,054 240 ( 159 ) 1 2,136 Home equity 171 ( 72 ) — 7 106 Other consumer 5,689 778 ( 1,009 ) 109 5,567 Total $ 38,774 $ 18,815 $ ( 13,270 ) $ 450 $ 44,769 Twelve Months Ended December 31, 2023 Balance, Beginning of Period Adoption of CECL Provision (Credit) Charged to Expense Losses Charged Off Recoveries Balance, End of Period Allowance for credit losses: Commercial and industrial $ 1,711 $ ( 120 ) $ 7,400 $ ( 7,049 ) $ 243 $ 2,185 Owner-occupied commercial real estate 651 62 112 — — 825 Investor commercial real estate 1,099 ( 191 ) 994 ( 591 ) — 1,311 Construction 2,074 ( 435 ) 528 — — 2,167 Single tenant lease financing 10,519 ( 346 ) ( 2,044 ) — — 8,129 Public finance 1,753 ( 135 ) ( 246 ) — — 1,372 Healthcare finance 2,997 1,034 ( 1,450 ) ( 605 ) — 1,976 Small business lending 2,168 334 6,539 ( 2,586 ) 77 6,532 Franchise finance 3,988 ( 313 ) 3,019 ( 331 ) — 6,363 Residential mortgage 1,559 406 224 ( 140 ) 5 2,054 Home equity 69 133 ( 37 ) — 6 171 Other consumer 3,149 2,533 415 ( 582 ) 174 5,689 Total $ 31,737 $ 2,962 $ 15,454 $ ( 11,884 ) $ 505 $ 38,774 Prior to the adoption of ASU 2016-13 on January 1, 2023, the Company calculated the allowance for loan losses using the incurred loss methodology. The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of December 31, 2022. F-27 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Twelve Months Ended December 31, 2022 Balance, Beginning of Period (Credit) Provision Charged to Expense Losses Charged Off Recoveries Balance, End of Period Allowance for loan losses: Commercial and industrial $ 1,891 $ ( 185 ) $ — $ 5 $ 1,711 Owner-occupied commercial real estate 742 ( 91 ) — — 651 Investor commercial real estate 328 771 — — 1,099 Construction 1,612 462 — — 2,074 Single tenant lease financing 10,385 ( 1,097 ) — 1,231 10,519 Public finance 1,776 ( 23 ) — — 1,753 Healthcare finance 5,940 ( 2,943 ) — — 2,997 Small business lending 1,387 1,154 ( 402 ) 29 2,168 Franchise finance 1,083 2,905 — — 3,988 Residential mortgage 643 912 — 4 1,559 Home equity 64 ( 134 ) — 139 69 Other consumer 1,990 3,246 ( 2,358 ) 271 3,149 Total $ 27,841 $ 4,977 $ ( 2,760 ) $ 1,679 $ 31,737 In addition to the ACL, the Company established a reserve for off-balance sheet commitments, classified in other liabilities, as required by the adoption of the CECL methodology for measuring credit losses. This reserve is maintained at a level management believes to be sufficient to absorb losses arising from unfunded loan commitments. The adequacy of the reserve for unfunded commitments is determined quarterly based on methodology similar to the methodology for determining the ACL. The following tables details activity in the provision for credit losses on off-balance sheet commitments for the twelve months ended December 31, 2024 and December 31, 2023. Balance December 31, 2023 Provision for credit losses Balance December 31, 2024 Off-balance sheet commitments Commercial loans Commercial and industrial $ 233 $ — $ 233 Owner-occupied commercial real estate 9 2 11 Investor commercial real estate 6 ( 5 ) 1 Construction 2,889 ( 1,321 ) 1,568 Single tenant lease financing — 19 19 Small business lending 541 ( 278 ) 263 Total commercial loans 3,678 ( 1,583 ) 2,095 Consumer loans Residential mortgage 11 ( 10 ) 1 Home equity 45 ( 10 ) 35 Other consumer 11 ( 3 ) 8 Total consumer loans 67 ( 23 ) 44 Total allowance for off-balance sheet commitments $ 3,745 $ ( 1,606 ) $ 2,139 F-28 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Pre-ASC 326 Adoption Impact of ASC 326 Adoption Provision for credit losses Balance December 31, 2023 Off-balance sheet commitments Commercial loans Commercial and industrial $ — $ 110 $ 123 $ 233 Owner-occupied commercial real estate — — 9 9 Investor commercial real estate — 9 ( 3 ) 6 Construction — 2,193 696 2,889 Healthcare finance — 2 ( 2 ) — Small business lending — — 541 541 Total commercial loans — 2,314 1,364 3,678 Consumer loans Residential mortgage — 127 ( 116 ) 11 Home equity — 52 ( 7 ) 45 Other consumer — 11 — 11 Total consumer loans — 190 ( 123 ) 67 Total allowance for off-balance sheet commitments $ — $ 2,504 $ 1,241 $ 3,745 The Company utilizes a risk grading matrix to assign a risk grade to each of its commercial loans, which are evaluated annually. A description of the general characteristics of the risk grades is as follows: • “Pass” - Higher quality loans that do not fit any of the other categories described below. • “Special Mention” - Loans that possess some credit deficiency or potential weakness which deserve close attention. • “Substandard” - Loans that possess a defined weakness or weaknesses that jeopardize the liquidation of the debt. Loans that are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Loans that are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. • “Doubtful” - Such loans have been placed on nonaccrual status and may be heavily dependent upon collateral possessing a value that is difficult to determine or based upon some near-term event which lacks clear certainty. These loans have all of the weaknesses of those classified as Substandard; however, based on existing conditions, these weaknesses make full collection of the principal balance highly improbable. • “Loss” - Loans that are considered uncollectible and of such little value that continuing to carry them as assets is not warranted. The Company does not risk grade its consumer loans. It classifies them as either performing or nonperforming. Below is a description of those classifications: • “Performing” - Loans that are accruing and full collection of principal and interest is expected. • “Nonperforming” - Loans that are 90 days delinquent or for which the full collection of principal and interest may be in doubt. F-29 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) The following table presents the credit risk profile of the Company’s commercial and consumer loan portfolios by loan class and by year of origination for the years indicated based on rating category and payment activity as of December 31, 2024 and December 31, 2023 December 31, 2024 Term Loans (amortized cost basis by origination year) Revolving loans amortized cost basis Revolving loans converted to term 2024 2023 2022 2021 2020 Prior Total Commercial and industrial Pass $ 23,539 $ 8,501 $ 13,853 $ 5,418 $ 2,362 $ 17,829 $ 44,000 $ — $ 115,502 Special Mention 47 164 4,462 — — — — — 4,673 Substandard — — — — — — — — — Doubtful — — — — — — — — — Total commercial and industrial 23,586 8,665 18,315 5,418 2,362 17,829 44,000 — 120,175 Year-to-date gross charge-offs — — — — — — — — — Owner-occupied commercial real estate Pass 7,410 1,458 5,366 6,438 5,716 14,793 — — 41,181 Special Mention — — 570 888 8,144 1,153 — — 10,755 Substandard — — — — — 1,655 — — 1,655 Doubtful — — — — — — — — — Total owner-occupied commercial real estate 7,410 1,458 5,936 7,326 13,860 17,601 — — 53,591 Year-to-date gross charge-offs — — — — — — — — — Investor commercial real estate Pass 71,430 3,849 88,290 65,050 9,607 27,474 — — 265,700 Special Mention — — — — — 3,731 — — 3,731 Substandard — — — — — — — — — Doubtful — — — — — — — — — Total investor commercial real estate 71,430 3,849 88,290 65,050 9,607 31,205 — — 269,431 Year-to-date gross charge-offs — — — — — — — — — Construction Pass 35,177 186,979 140,299 47,598 1,622 — 1,848 — 413,523 Special Mention — — — — — — — — — Substandard — — — — — — — — — Doubtful — — — — — — — — — Total construction 35,177 186,979 140,299 47,598 1,622 — 1,848 — 413,523 Year-to-date gross charge-offs — — — — — — — — — Single tenant lease financing Pass 79,872 46,674 211,005 88,192 63,506 437,564 — — 926,813 Special Mention 644 — 9,696 3,460 — 9,135 — — 22,935 Substandard — — — — — — — — — Doubtful — — — — — — — — — Total single tenant lease financing 80,516 46,674 220,701 91,652 63,506 446,699 — — 949,748 Year-to-date gross charge-offs — — — — — 195 — — 195 Public finance Pass 55,306 1,290 7,790 12,050 463 407,008 — — 483,907 Special Mention — — — — — 1,960 — — 1,960 Substandard — — — — — — — — — Doubtful — — — — — — — — — Total public finance 55,306 1,290 7,790 12,050 463 408,968 — — 485,867 Year-to-date gross charge-offs — — — — — — — — — F-30 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) December 31, 2024 Term Loans (amortized cost basis by origination year) Revolving loans amortized cost basis Revolving loans converted to term 2024 2023 2022 2021 2020 Prior Total Healthcare finance Pass — — — 8,969 104,427 67,413 — — 180,809 Special Mention — — — — — 618 — — 618 Substandard — — — — — — — — — Doubtful — — — — — — — — — Total healthcare finance — — — 8,969 104,427 68,031 — — 181,427 Year-to-date gross charge-offs — — — — — — — — — Small business lending Pass 138,044 94,556 30,486 11,715 9,687 9,896 17,197 — 311,581 Special Mention 1,022 4,691 927 — 354 1,213 697 — 8,904 Substandard 2,940 3,909 1,457 258 970 1,001 894 — 11,429 Doubtful — — — — — — — — — Total small business lending 142,006 103,156 32,870 11,973 11,011 12,110 18,788 — 331,914 Year-to-date gross charge-offs 1,093 4,600 3,038 567 619 524 — — 10,441 Franchise finance Pass 67,065 230,425 172,830 42,869 — — — — 513,189 Special Mention — 1,978 5,084 6,275 — — — — 13,337 Substandard — 3,543 6,367 473 — — — — 10,383 Doubtful — — — — — — — — — Total franchise finance 67,065 235,946 184,281 49,617 — — — — 536,909 Year-to-date gross charge-offs — 1,171 — 295 — — — — 1,466 Consumer loans Residential mortgage Performing 3,577 13,533 183,484 86,213 28,655 55,615 — — 371,077 Nonperforming — — 1,671 609 69 1,734 — — 4,083 Total residential mortgage 3,577 13,533 185,155 86,822 28,724 57,349 — — 375,160 Year-to-date gross charge-offs — — 101 58 — — — — 159 Home equity Performing — 992 1,450 356 414 530 13,621 911 18,274 Nonperforming — — — — — — — — — Total home equity — 992 1,450 356 414 530 13,621 911 18,274 Year-to-date gross charge-offs — — — — — — — — — Other consumer Performing 101,965 97,832 88,872 33,177 20,918 64,251 870 — 407,885 Nonperforming — — 38 11 1 12 — — 62 Total other consumer 101,965 97,832 88,910 33,188 20,919 64,263 870 — 407,947 Year-to-date gross charge-offs 157 242 300 127 1 182 — — 1,009 Total Loans $ 588,038 $ 700,374 $ 973,997 $ 420,019 $ 256,915 $ 1,124,585 $ 79,127 $ 911 $ 4,143,966 Total year-to-date gross charge-offs $ 1,250 $ 6,013 $ 3,439 $ 1,047 $ 620 $ 901 $ — $ — $ 13,270 F-31 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) December 31, 2023 Term Loans (amortized cost basis by origination year) Revolving loans amortized cost basis Revolving loans converted to term 2023 2022 2021 2020 2019 Prior Total Commercial and industrial Pass $ 24,329 $ 19,382 $ 15,464 $ 2,502 $ 12,365 $ 8,703 $ 41,967 $ — $ 124,712 Special Mention — 4,637 — — — — — — 4,637 Substandard — — — — — — — — — Doubtful — — — — — — — — — Total Commercial and industrial 24,329 24,019 15,464 2,502 12,365 8,703 41,967 — 129,349 Year-to-date gross charge-offs — — 6,914 5 130 — — — 7,049 Owner-occupied commercial real estate Pass 1,492 10,731 7,990 6,591 5,255 12,485 — — 44,544 Special Mention — 584 922 8,392 — 1,189 — — 11,087 Substandard — — — — — 1,655 — — 1,655 Doubtful — — — — — — — — — Total owner-occupied commercial real estate 1,492 11,315 8,912 14,983 5,255 15,329 — — 57,286 Year-to-date gross charge-offs — — — — — — — — — Investor commercial real estate Pass 6,571 35,209 26,841 9,864 47,827 5,765 — — 132,077 Special Mention — — — — — — — — — Substandard — — — — — — — — — Doubtful — — — — — — — — — Total investor commercial real estate 6,571 35,209 26,841 9,864 47,827 5,765 — — 132,077 Year-to-date gross charge-offs — — — — — 591 — — 591 Construction Pass 26,539 153,066 70,175 6,121 — — 5,849 — 261,750 Special Mention — — — — — — — — — Substandard — — — — — — — — — Doubtful — — — — — — — — — Total construction 26,539 153,066 70,175 6,121 — — 5,849 — 261,750 Year-to-date gross charge-offs — — — — — — — — — Single tenant lease financing Pass 52,360 221,964 89,075 65,863 142,023 346,695 — — 917,980 Special Mention — 4,362 6,698 3,032 — 4,544 — — 18,636 Substandard — — — — — — — — — Doubtful — — — — — — — — — Total single tenant lease financing 52,360 226,326 95,773 68,895 142,023 351,239 — — 936,616 Year-to-date gross charge-offs — — — — — — — — — Public finance Pass 3,805 30,583 29,750 719 43,611 411,176 — — 519,644 Special Mention — — — — — 2,120 — — 2,120 Substandard — — — — — — — — — Doubtful — — — — — — — — — Total public finance 3,805 30,583 29,750 719 43,611 413,296 — — 521,764 Year-to-date gross charge-offs — — — — — — — — — F-32 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) December 31, 2023 Term Loans (amortized cost basis by origination year) Revolving loans amortized cost basis Revolving loans converted to term 2023 2022 2021 2020 2019 Prior Total Healthcare finance Pass — — 9,955 124,654 63,486 23,484 — — 221,579 Special Mention — — — — 1,214 — — — 1,214 Substandard — — — — — — — — — Doubtful — — — — — — — — — Total healthcare finance — — 9,955 124,654 64,700 23,484 — — 222,793 Year-to-date gross charge-offs — — — — 605 — — — 605 Small business lending Pass 119,149 42,077 15,180 13,948 4,582 9,215 5,388 — 209,539 Special Mention 343 496 — 341 265 698 — — 2,143 Substandard 1,095 1,854 52 1,777 1,155 417 474 — 6,824 Doubtful — — — — — — — — — Total small business lending 120,587 44,427 15,232 16,066 6,002 10,330 5,862 — 218,506 Year-to-date gross charge-offs 67 739 416 1,364 — — — — 2,586 Franchise finance Pass 256,944 210,617 57,919 — — — — — 525,480 Special Mention — — — — — — — — — Substandard — — 303 — — — — — 303 Doubtful — — — — — — — — — Total franchise finance 256,944 210,617 58,222 — — — — — 525,783 Year-to-date gross charge-offs — 331 — — — — — — 331 Consumer loans Residential mortgage Performing 14,942 195,453 91,010 30,092 13,072 48,330 — — 392,899 Nonperforming — 738 456 73 — 1,482 — — 2,749 Total residential mortgage 14,942 196,191 91,466 30,165 13,072 49,812 — — 395,648 Year-to-date gross charge-offs — 53 70 — 17 — — — 140 Home equity Performing 1,369 1,997 436 467 141 585 16,896 1,778 23,669 Nonperforming — — — — — — — — — Total home equity 1,369 1,997 436 467 141 585 16,896 1,778 23,669 Year-to-date gross charge-offs — — — — — — — — — Other consumer Performing 115,736 106,883 41,598 26,527 27,087 58,902 795 — 377,528 Nonperforming — 53 — 5 15 13 — — 86 Total other consumer 115,736 106,936 41,598 26,532 27,102 58,915 795 — 377,614 Year-to-date gross charge-offs 97 115 20 51 56 243 — — 582 Total Loans $ 624,674 $ 1,040,686 $ 463,824 $ 300,968 $ 362,098 $ 937,458 $ 71,369 $ 1,778 $ 3,802,855 Total year-to-date gross charge-offs $ 164 $ 1,238 $ 7,420 $ 1,420 $ 808 $ 834 $ — $ — $ 11,884 F-33 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) The following tables present the Company’s loan portfolio delinquency analysis as of December 31, 2024 and December 31, 2023. December 31, 2024 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Past Due Current Total loans Commercial and industrial $ — $ — $ — $ — $ 120,175 $ 120,175 Owner-occupied commercial real estate — — — — 53,591 53,591 Investor commercial real estate — — — — 269,431 269,431 Construction — — — — 413,523 413,523 Single tenant lease financing — — — — 949,748 949,748 Public finance — — — — 485,867 485,867 Healthcare finance — — — — 181,427 181,427 Small business lending 11,817 1,310 5,587 18,714 313,200 331,914 Franchise Finance 9,431 3,279 9,849 22,559 514,350 536,909 Residential mortgage 648 1,711 3,815 6,174 368,986 375,160 Home equity — — — — 18,274 18,274 Other consumer 194 196 27 417 407,530 407,947 Total $ 22,090 $ 6,496 $ 19,278 $ 47,864 $ 4,096,102 $ 4,143,966 December 31, 2023 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Past Due Current Total loans Commercial and industrial $ 40 $ 21 $ — $ 61 $ 129,288 $ 129,349 Owner-occupied commercial real estate — — — — 57,286 57,286 Investor commercial real estate — — — — 132,077 132,077 Construction — — — — 261,750 261,750 Single tenant lease financing — — — — 936,616 936,616 Public finance — — — — 521,764 521,764 Healthcare finance — — — — 222,793 222,793 Small business lending 2,680 57 2,794 5,531 212,975 218,506 Franchise Finance — 2,923 303 3,226 522,557 525,783 Residential mortgage 70 709 1,663 2,442 393,206 395,648 Home equity — — — — 23,669 23,669 Other consumer 223 68 53 344 377,270 377,614 Total $ 3,013 $ 3,778 $ 4,813 $ 11,604 $ 3,791,251 $ 3,802,855 Loans are reclassified to non-accruing status when, in management’s judgment, the collateral value and financial condition of the borrower do not justify accruing interest. At the time the accrual is discontinued, all unpaid accrued interest is reversed against earnings. Interest income accrued in prior years, if any, is charged to the ACL. Payments subsequently received on nonaccrual loans are applied to principal. A loan is returned to accrual status when principal and interest are no longer past due and collectability is probable, typically after a minimum of nine consecutive months of performance. F-34 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) The following table summarizes the Company’s nonaccrual loans and loans past due 90 days or more and still accruing by loan class for the periods indicated: December 31, 2024 December 31, 2023 Total Nonaccrual Loans Nonaccrual Loans with no Allowance for Credit Losses Total Loans 90 Days or More Past Due and Accruing Total Nonaccrual Loans Nonaccrual Loans with no Allowance for Credit Losses Total Loans 90 Days or More Past Due and Accruing Commercial and industrial $ — $ — $ — $ — $ — $ — Owner-occupied commercial real estate — — — — — — Small business lending 11,429 4,778 1,320 6,824 904 — Franchise finance 10,382 — — 303 — — Residential mortgage 4,083 4,083 1,142 1,911 1,911 838 Other consumer 61 61 4 86 86 — Total loans $ 25,955 $ 8,922 $ 2,466 $ 9,124 $ 2,901 $ 838 There was $ 0.7 million and $ 0.3 million in interest income recognized on nonaccrual loans for the twelve months ended December 31, 2024 and December 31, 2023, respectively. Determining fair value for collateral dependent loans requires obtaining a current independent appraisal of the collateral and applying a discount factor, which includes selling costs if applicable, to the value. The fair value of real estate is generally based on appraisals by qualified licensed appraisers. The appraisers typically determine the value of the real estate by utilizing an income or market valuation approach. If an appraisal is not available, the fair value may be determined by using a cash flow analysis. Fair value on other collateral such as business assets is typically ascertained by assessing, either singularly or some combination of, asset appraisals, accounts receivable aging reports, inventory listings and/or customer financial statements. Both appraised values and values based on borrower’s financial information are discounted as considered appropriate based on age and quality of the information and current market conditions. The following tables present the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses as of December 31, 2024 and December 31, 2023. December 31, 2024 Commercial Real Estate Residential Real Estate Other (Includes Equipment, Machinery and Other Assets) Total Allowance on Collateral Dependent Loans Owner-occupied commercial real estate $ 1,654 $ — $ — $ 1,654 $ — Small business lending 1 723 — 8,571 9,294 4,167 Franchise finance — — 3,468 3,468 679 Residential mortgage — 4,083 — 4,083 — Other consumer loans — — 22 22 — Total loans $ 2,377 $ 4,083 $ 12,061 $ 18,521 $ 4,846 1 Balance includes $ 3.5 million of loans guaranteed by the U.S. government. F-35 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) December 31, 2023 Commercial Real Estate Residential Real Estate Other (Includes Equipment, Machinery and Other Assets) Total Allowance on Collateral Dependent Loans Owner-occupied commercial real estate $ — $ — $ 1,654 $ 1,654 $ — Small business lending 1 2,875 1,210 2,226 6,311 2,391 Residential mortgage — 1,911 — 1,911 — Other consumer loans — — 86 86 — Total loans $ 2,875 $ 3,121 $ 3,966 $ 9,962 $ 2,391 1 Balance includes $ 1.4 million of loans guaranteed by the U.S. government. Loan Modifications to Borrowers Experiencing Financial Difficulty In January 2023, the Company adopted ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures” (“ASU 2022-02”), which eliminated the accounting guidance for troubled debt restructurings (“TDRs”) while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty. This guidance was applied on a prospective basis. Upon adoption of this guidance, the Company no longer establishes a specific reserve for modifications to borrowers experiencing financial difficulty. Instead, these modifications are included in their respective loan pool and a historical loss rate is applied to the current loan balance to arrive at the quantitative baseline portion of the ACL. Modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal or interest forgiveness, other-than-insignificant payment delays, term extensions and other actions intended to minimize loss and to avoid foreclosure or repossession of collateral. The Company had five loan modifications made to borrowers experiencing financial difficulty during the twelve months ended December 31, 2024. The Company did no t have any loan modifications made to borrowers experiencing financial difficulty during the twelve months ended December 31, 2023. The following table present loans that were both experiencing financial difficulty and modified during the twelve months ended December 31, 2024. Twelve Months Ended December 31, 2024 Payment Delay Total Modification by Loan Class % of Class of Loans Investor commercial real estate $ 3,731 $ 3,731 1.4 % Franchise finance 5,566 5,566 1.0 % Total loans $ 9,297 $ 9,297 The following table describe the financial effect of the modifications made to borrowers experiencing financial difficulty. As of December 31, 2024, the Company had no commitments to lend additional funds to these borrowers included in the table below. Twelve Months Ended December 31, 2024 - Payment Delay Loan Type Financial Effect Investor commercial real estate Forbearance average of 9 months. Franchise finance Forbearance average of 7 months. F-36 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the performance of such loans that have been modified in the last twelve months as of December 31, 2024. Current 30 - 89 Days Past Due 90+ Days Past Due Investor commercial real estate $ 3,731 $ — $ — Franchise finance 5,566 — — Total loans $ 9,297 $ — $ — There were four Franchise Finance loans and one Investor CRE loan classified as modifications to borrowers experiencing financial difficulty during the twelve months ended December 31, 2024 with total book balance of $ 9.3 million. There were no loans classified as modifications to borrowers experiencing financial difficulty during the twelve months ended December 31, 2023. Other Real Estate Owned The Company had $ 0.3 million in other real estate owned (“OREO”) as of December 31, 2024, which consisted of one residential mortgage property. The Company had $ 0.4 million in other real estate owned (“OREO”) as of December 31, 2023, which consisted of two residential mortgage properties. There were nine loans totaling $ 2.1 million and one loan totaling $ 0.8 million, in the process of foreclosure at December 31, 2024 and December 31, 2023, respectively. Accrued Interest Receivable Accrued interest receivable on loans totaled $ 23.8 million and $ 22.0 million at December 31, 2024 and December 31, 2023, respectively, and is excluded from the estimate of credit losses. The Company made the accounting policy election to not measure an ACL for accrued interest receivable. Accrued interest deemed uncollectible will be written off through interest income. F-37 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Note 5: Premises and Equipment The following table summarizes premises and equipment at December 31, 2024 and 2023. December 31, 2024 2023 Land $ 5,598 $ 5,598 Construction in process 20 1,119 Right of use leased asset 188 66 Building and improvements 63,069 60,699 Furniture and equipment 22,047 20,836 Less: accumulated depreciation ( 19,469 ) ( 14,855 ) $ 71,453 $ 73,463 Note 6: Goodwill As of December 31, 2024 and 2023, the carrying amount of goodwill was $ 4.7 million. There have been no changes in the carrying amount of goodwill for the three years ended December 31, 2024, 2023 and 2022. Goodwill is tested for impairment on an annual basis as of August 31, or whenever events or changes in circumstances indicate the carrying amount of goodwill exceeds its implied fair value. The annual test indicated no impairment existed as of August 31, 2024. No events or changes in circumstances have occurred since the August 31, 2024 annual impairment test that would suggest it was more likely than not goodwill impairment existed. Note 7: Servicing Asset Activity for the servicing asset and the related changes in fair value for the twelve months ended December 31, 2024, 2023 and 2022 are shown in the table below. Twelve Months Ended December 31, 2024 December 31, 2023 December 31, 2022 Beginning balance $ 10,567 $ 6,255 $ 4,702 Additions: Originated and purchased servicing 8,359 5,775 3,192 Subtractions: Paydowns ( 3,005 ) ( 1,842 ) ( 1,075 ) Changes in fair value due to changes in valuation inputs or assumptions used in the valuation model 468 379 ( 564 ) Loan servicing asset revaluation ( 2,537 ) ( 1,463 ) ( 1,639 ) Ending balance $ 16,389 $ 10,567 $ 6,255 Loans serviced for others are not included in the consolidated balance sheets. The unpaid principal balances of these loans serviced for others as of December 31, 2024, 2023 and 2022 are shown in the table below. December 31, 2024 December 31, 2023 December 31, 2022 Loan portfolios serviced for: SBA guaranteed loans $ 862,089 $ 531,927 $ 318,194 Total $ 862,089 $ 531,927 $ 318,194 Loan servicing revenue totaled $ 6.2 million, $ 3.8 million and $ 2.6 million during the twelve months ended December 31, 2024, 2023 and 2022, respectively. Loan servicing asset revaluation, which represents paydowns and the F-38 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) change in fair value of the servicing asset, resulted in a $ 2.5 million, $ 1.5 million and $ 1.6 million downward valuation for twelve months ended December 31, 2024, 2023 and 2022, respectively. The fair value of servicing rights is highly sensitive to changes in underlying assumptions. Though fluctuations in prepayment speeds and changes in secondary market premiums generally have the most substantial impact on the fair value of servicing rights, other influencing factors include changing economic conditions, changes to the discount rate assumption and the weighted average life of the servicing portfolio. Measurement of fair value is limited to the conditions existing and the assumptions used as of a particular point in time; however, those assumptions may change over time. Refer to Note 16 - Fair Value of Financial Instruments for further details. Note 8: Deposits The following table presents the composition of the Company’s deposit base as of December 31, 2024 and 2023. December 31, 2024 2023 Noninterest-bearing deposits $ 136,451 $ 123,464 Interest-bearing demand deposits 1 896,661 402,976 Savings accounts 19,823 21,364 Money market accounts 1,183,789 1,248,319 Fintech - brokered deposits 1 — 74,401 Certificates of deposits 2,133,455 1,605,156 Brokered deposits 563,027 591,293 Total deposits $ 4,933,206 $ 4,066,973 Time deposits greater than $250 $ 776,788 $ 703,835 1 Fintech - brokered deposits that had been previously classified as brokered deposits were reclassified to interest-bearing demand deposits as of December 31, 2024. The following table presents time deposit maturities by year as of December 31, 2024. Certificates of Deposits Brokered Certificates of Deposits 2025 $ 1,327,799 $ 152,897 2026 178,941 57,509 2027 197,074 34,823 2028 142,667 — 2029 286,974 — Thereafter — — $ 2,133,455 $ 245,229 F-39 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Note 9: FHLB Advances The Company had outstanding FHLB advances of $ 295.0 million and $ 614.9 million as of December 31, 2024 and 2023, respectively. As of December 31, 2024, the stated interest rates on the Company’s outstanding FHLB advances ranged from 1.06 % to 4.16 %, with a weighted average interest rate of 3.39 %. All advances are collateralized by residential mortgage loans and commercial real estate loans pledged and held by the Company and investment securities pledged by the Company and held in safekeeping with the FHLB. Residential mortgage loans pledged were approximately $ 334.3 million and $ 330.3 million as of December 31, 2024 and 2023, respectively, and commercial real estate loans pledged were approximately $ 930.7 million and $ 932.4 million as of December 31, 2024 and 2023, respectively. The fair value of investment securities pledged to the FHLB was approximately $ 795.0 million and $ 662.1 million as of December 31, 2024 and 2023, respectively. Based on this collateral and the Company’s holding of FHLB stock, the Company is eligible to borrow up to an additional $ 1.1 billion at year-end 2024. As of December 31, 2024, the Company had $ 210.0 million of putable advance structures with the FHLB in which the FHLB holds a one-time option to put certain advances on a stated exercise date prior to maturity. Among the Company’s putable advance structures, $ 60.0 million have passed their one-time exercise date, with the next exercise date occurring in 2027. The Company’s FHLB advances are scheduled to mature according to the following schedule: Amount 2025 $ 50,000 2026 10,000 2027 50,000 2028 35,000 2029 — Thereafter 150,000 $ 295,000 Note 10: Subordinated Debt In June 2019, the Company issued $ 37.0 million aggregate principal amount of 6.0 % Fixed-to-Floating Rate Subordinated Notes due 2029 (the “2029 Notes”) in a public offering. The 2029 Notes bear interest at a floating rate equal to three-month Term SOFR plus 4.376 %. All interest on the 2029 Notes is payable quarterly. The 2029 Notes are scheduled to mature on June 30, 2029. The 2029 Notes are unsecured subordinated obligations of the Company and may be repaid at any time, without penalty. The 2029 Notes are intended to qualify as Tier 2 capital under regulatory guidelines. In October 2020, the Company entered into a term loan in the principal amount of $ 10.0 million, evidenced by a term note due 2030 (the “2030 Note”). The 2030 Note initially bears a fixed interest rate of 6.0 % per year to, but excluding, November 1, 2025 and thereafter at a floating rate equal to the then-current benchmark rate (initially three-month Term SOFR plus 5.795 %). The 2030 Note is scheduled to mature on November 1, 2030. The 2030 Note is an unsecured subordinated obligation of the Company and may be repaid, without penalty, on any interest payment date on or after November 1, 2025. The 2030 Note is intended to qualify as Tier 2 capital under regulatory guidelines. The Company used the net proceeds from the issuance of the 2030 Note to redeem a subordinated term note that had been entered into in October 2015. F-40 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) In August 2021, the Company issued $ 60.0 million aggregate principal amount of 3.75 % Fixed-to-Floating Rate Subordinated Notes due 2031 (the “2031 Notes”) in a private placement. The 2031 Notes initially bear a fixed interest rate of 3.75 % per year to, but excluding, September 1, 2026, and thereafter at a floating rate equal to the then-current benchmark rate (initially three-month Term SOFR plus 3.11 %). The 2031 Notes are scheduled to mature on September 1, 2031. The 2031 Notes are unsecured subordinated obligations of the Company and may be repaid, without penalty, on any interest payment date on or after September 1, 2026. The 2031 Notes are intended to qualify as Tier 2 capital under regulatory guidelines. The Company used a portion of the net proceeds from the issuance of the 2031 Notes to redeem subordinated notes issued by the Company in 2016. Pursuant to the terms of a Registration Rights Agreement between the Company and the initial purchasers of the 2031 Notes, the Company offered to exchange the 2031 Notes for subordinated notes that are registered under the Securities Act of 1933, as amended, and have substantially the same terms as the 2031 Notes. On December 30, 2021, we completed an exchange of $ 59.3 million principal amount of the unregistered 2031 Notes for registered 2031 Notes in satisfaction of our obligations under the registration rights agreement. Holders of $ 0.7 million of unregistered 2031 Notes did not participate in the exchange. The following table presents the principal balance and unamortized discount and debt issuance costs for the 2029 Notes, the 2030 Note and the 2031 Notes as of December 31, 2024 and 2023. December 31, 2024 December 31, 2023 Principal Unamortized Discount and Debt Issuance Costs Principal Unamortized Discount and Debt Issuance Costs 2029 Notes $ 37,000 $ ( 703 ) $ 37,000 $ ( 862 ) 2030 Note 10,000 ( 137 ) 10,000 ( 160 ) 2031 Notes 60,000 ( 1,010 ) 60,000 ( 1,140 ) Total $ 107,000 $ ( 1,850 ) $ 107,000 $ ( 2,162 ) Note 11: Benefit Plans 401(k) Plan The Company has a 401(k) plan established for substantially all full-time and part-time employees, as defined in the plan. Employee contributions are limited to the maximum established by the Internal Revenue Service on an annual basis. The Company has elected to match contributions equal to 100 % up to the first 1 % of employee deferrals and 50 % for employee deferrals above 1 % up to a maximum of 6 % equating to a maximum match of 3.5 % of an individual’s eligible earnings, as defined in the plan. The company match vests immediately. Discretionary employer-matching contributions begin vesting immediately at a rate of 50 % per year of employment and are fully vested after the completion of two years of employment. Contributions totaled approximately $ 1.1 million, $ 0.9 million and $ 0.9 million for the twelve months ended December 31, 2024, 2023 and 2022, respectively. Employment Agreements The Company is party to certain employment agreements with each of its Chief Executive Officer, President and Chief Operating Officer and Executive Vice President and Chief Financial Officer. The employment agreements each provide for annual base salaries and annual bonuses, if any, as determined from time to time by the Compensation Committee of our Board of Directors. The annual bonuses are to be determined with reference to the achievement of annual performance objectives established by the Compensation Committee. The agreements also provide that each of the Chief Executive Officer, President and Chief Operating Officer and Executive Vice President and Chief Financial Officer, may be awarded additional compensation, benefits, or consideration as the Compensation Committee may determine. The agreements also provide for the continuation of salary and certain other benefits for a specified period of time upon termination of employment under certain circumstances, including resignation for “good reason,” termination by the Company without “cause” at any time or any termination of employment within twelve months following a “change in control,” along with other specific conditions. F-41 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) 2022 Equity Incentive Plan The First Internet Bancorp 2022 Equity Incentive Plan (the “2022 Plan”) was approved by our Board of Directors and ratified by our shareholders on May 16, 2022. The plan permits awards of incentive and non-statutory stock options, stock appreciation rights, restricted stock awards, stock unit awards, performance awards and other stock-based awards. All employees, consultants and advisors of the Company or any subsidiary, as well as all non-employee directors of the Company, are eligible to receive awards under the 2022 Plan. The 2022 Plan initially authorized the issuance of 400,000 new shares of the Company’s common stock plus all shares of common stock that remained available for future grants under the First Internet Bancorp 2013 Equity Incentive Plan (the “2013 Plan”). Award Activity Under 2022 Plan The Company recorded $ 1.5 million, $ 0.8 million, and $ 0.1 million of share-based compensation expense for the years ended December 31, 2024, 2023 and 2022, respectively, related to stock-based awards under the 2022 Plan. The following table summarizes the stock-based award activity under the 2022 Plan for the year ended December 31, 2024. Restricted Stock Units Weighted-Average Grant Date Fair Value Per Share Restricted Stock Awards Weighted-Average Grant Date Fair Value Per Share Deferred Stock Units Weighted-Average Grant Date Fair Value Per Unit Unvested at January 1, 2024 72,354 $ 24.61 30,030 $ 11.18 — $ — Granted 75,222 24.13 12,040 31.46 — — Forfeited ( 2,534 ) 24.37 — — — — Vested ( 14,294 ) 24.52 ( 30,030 ) 11.18 — — Unvested at December 31, 2024 130,748 $ 24.35 12,040 $ 31.46 — $ — At December 31, 2024 , the total unrecognized compensation cost related to unvested stock-based awards was $ 2.0 million with a weighted-average expense recognition period of 1.6 years. 2013 Equity Incentive Plan The 2013 Plan authorized the issuance of 750,000 shares of the Company’s common stock in the form of stock-based awards to employees, directors and other eligible persons. Although outstanding stock-based awards under the 2013 Plan remain in place according to their terms, our authority to grant new awards under the 2013 Plan terminated upon shareholder approval of the 2022 Plan. Award Activity Under 2013 Plan The Company recorded $ 0.3 million, $ 0.4 million and $ 2.0 million of share-based compensation expense for the years ended December 31, 2024, 2023 and 2022, respectively, related to stock-based awards under the 2013 Plan. The following table summarizes the stock-based award activity under the 2013 Plan for the year ended December 31, 2024: Restricted Stock Units Weighted-Average Grant Date Fair Value Per Share Restricted Stock Awards Weighted-Average Grant Date Fair Value Per Share Deferred Stock Units Weighted-Average Grant Date Fair Value Per Unit Unvested at January 1, 2024 53,985 $ 39.86 — $ — — $ — Forfeited ( 22,899 ) 30.58 — — — — Vested ( 8,089 ) 46.64 — — — — Unvested at December 31, 2024 22,997 $ 46.71 — $ — — $ — F-42 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) As of December 31, 2024, the total unrecognized compensation cost related to unvested awards was less than $ 0.1 million with a weighted-average expense recognition period of 0.1 years. Directors Deferred Stock Plan Until January 1, 2014, the Company had a stock compensation plan for non-employee members of the Board of Directors (“Directors Deferred Stock Plan”). The Company reserved 180,000 shares of common stock that could have been issued pursuant to the Directors Deferred Stock Plan. The plan provided directors the option to elect to receive up to 100 % of their annual retainer in either common stock or deferred stock rights. Deferred stock rights were to be settled in common stock following the end of the deferral period payable on the basis of one share of common stock for each deferred stock right. The following table summarizes the status of deferred stock rights related to the Directors Deferred Stock Plan for the year ended December 31, 2024. Deferred Rights Outstanding, beginning of year 28,538 Granted 283 Outstanding, end of year 28,821 All deferred stock rights granted during 2024 were additional rights issued in lieu of cash dividends payable on outstanding deferred stock rights. Note 12: Income Taxes The provision for income taxes consists of the following: December 31, 2024 2023 2022 Current $ 3,623 $ 876 $ ( 73 ) Deferred ( 1,357 ) ( 4,353 ) 4,632 Total $ 2,266 $ ( 3,477 ) $ 4,559 Income tax provision is reconciled to the statutory 21 % rate applied to pre-tax income. December 31, 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 tax, 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 Total income taxes $ 2,266 $ ( 3,477 ) $ 4,559 F-43 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) The net deferred tax asset at December 31, 2024 and 2023 consists of the following: December 31, 2024 2023 Deferred tax assets (liabilities) Allowance for credits losses $ 10,824 $ 9,847 Net unrealized losses on available-for-sale securities and hedged items 9,753 8,776 Fair value adjustments ( 14,002 ) ( 12,101 ) Depreciation ( 4,168 ) ( 4,306 ) Deferred compensation and accrued payroll 1,486 1,228 Loan origination costs ( 1,533 ) ( 1,379 ) Prepaid assets ( 916 ) ( 806 ) Net operating loss 9,962 13,309 Tax credits 1,956 711 Other ( 309 ) 335 Total deferred tax assets, net $ 13,053 $ 15,614 As of December 31, 2024 and 2023 the Company had federal net operating loss (“NOL”) carryforwards of approximately $ 54.0 million and $ 57.2 million, respectively, and no state NOL carryforwards for December 31, 2024 and $ 8.5 million for December 31, 2023. For federal income tax purposes, the NOL has no expiration period; however, for state income tax purposes, the NOL may have varying expiration periods. The Company expects to generate sufficient taxable income in the future to utilize the loss generated. As of December 31, 2024 the Company had general business credits of $ 0.3 million that will begin expiring in 2044 and qualified zone academy bonds credits of $ 0.4 million that will begin expiring in 2025. The Company has state tax credits of $ 0.3 million that will begin expiring in 2029. Note 13: Related Party Transactions In the normal course of business, the Company may enter into transactions with various related parties. In management’s opinion, such loans, other extensions of credit, and deposits were made in the ordinary course of business and were made on substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions with other persons. Further, in management’s opinion, these loans did not involve more than the normal risk of collectability or present other unfavorable features. Related party loans and extensions of credit at December 31, 2024 and 2023 totaled $ 47.7 million and $ 45.9 million, respectively. The following table presents the change in related party loans as of December 31, 2024 and 2023. Twelve Months Ended December 31, 2024 December 31, 2023 Balance at the beginning of period $ 45,926 $ 21,860 New term loans — 19,139 Additions 1,753 4,956 Repayment of term loans ( 13 ) ( 12 ) Changes in balances of revolving lines of credit 5 ( 17 ) Balance at end of period $ 47,671 $ 45,926 Deposits from related parties held by the Company at December 31, 2024 and 2023 totaled $ 31.9 million and $ 28.3 million, respectively. F-44 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Note 14: Regulatory Capital Requirements The Company and the Bank are subject to various regulatory capital requirements administered by state and federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weighting and other factors. The Basel III Capital Rules became effective for the Company and the Bank on January 1, 2015, subject to a phase-in period for certain provisions. Quantitative measures established by the Basel III Capital Rules to ensure capital adequacy require the maintenance of minimum amounts and ratios of Common Equity Tier 1 capital, Tier 1 capital and Total capital, as defined in the regulations, to risk-weighted assets, and of Tier 1 capital to adjusted quarterly average assets (“Leverage Ratio”). The Basel III Capital Rules were fully phased in on January 1, 2019 and require the Company and the Bank to maintain: 1) a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of 4.5 %, plus a 2.5 % “capital conservation buffer” (resulting in a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of 7.0 %); 2) a minimum ratio of Tier 1 capital to risk-weighted assets of 6.0 %, plus the capital conservation buffer (resulting in a minimum Tier 1 capital ratio of 8.5 %); 3) a minimum ratio of Total capital to risk-weighted assets of 8.0 %, plus the capital conservation buffer (resulting in a minimum Total capital ratio of 10.5 %); and 4) a minimum Leverage Ratio of 4.0 %. The capital conservation buffer is designed to absorb losses during periods of economic stress. Failure to maintain the minimum Common Equity Tier 1 capital ratio plus the capital conservation buffer will result in potential restrictions on a banking institution’s ability to pay dividends, repurchase stock and/or pay discretionary compensation to its employees. F-45 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) The following tables present actual and required capital ratios as of December 31, 2024 and 2023 for the Company and the Bank under the Basel III Capital Rules. The minimum required capital amounts presented include the minimum required capital levels as of December 31, 2024 and 2023 based on the Basel III Capital Rules. Capital levels required to be considered well capitalized are based upon prompt corrective action regulations, as amended to reflect the changes under the Basel III Capital Rules. As permitted by the federal banking regulatory agencies, the Company has elected the option to delay the impact of the day one adoption of ASC 326. The transition adjustments of $ 4.5 million are phased into the regulatory capital calculations over a three-year period, with 25% of the adjustment recognized in 2023, 50% of the adjustment recognized in 2024, 75% of the adjustment recognized in 2025 and 100% of the adjustment recognized in 2026. Actual Minimum Capital Required - Basel III Minimum Required to be Considered Well Capitalized Capital Amount Ratio Capital Amount Ratio Capital Amount Ratio As of December 31, 2024: Common equity tier 1 capital to risk-weighted assets Consolidated $ 400,100 9.30 % $ 301,052 7.00 % N/A N/A Bank 475,793 11.11 % 299,774 7.00 % $ 278,362 6.50 % Tier 1 capital to risk-weighted assets Consolidated 400,100 9.30 % 365,563 8.50 % N/A N/A Bank 475,793 11.11 % 364,012 8.50 % 342,599 8.00 % Total capital to risk-weighted assets Consolidated 542,808 12.62 % 451,578 10.50 % N/A N/A Bank 520,610 12.16 % 449,662 10.50 % 428,249 10.00 % Leverage ratio Consolidated 400,100 6.90 % 232,011 4.00 % N/A N/A Bank 475,793 8.23 % 231,331 4.00 % 289,164 5.00 % Actual Minimum Capital Required - Basel III Minimum Required to be Considered Well Capitalized Capital Amount Ratio Capital Amount Ratio Capital Amount Ratio As of December 31, 2023: Common equity tier 1 capital to risk-weighted assets Consolidated $ 381,001 9.60 % $ 277,914 7.00 % N/A N/A Bank 464,390 11.73 % 277,063 7.00 % $ 257,273 6.50 % Tier 1 capital to risk-weighted assets Consolidated 381,001 9.60 % 337,467 8.50 % N/A N/A Bank 464,390 11.73 % 336,434 8.50 % 316,644 8.00 % Total capital to risk-weighted assets Consolidated 525,283 13.23 % 416,870 10.50 % N/A N/A Bank 503,834 12.73 % 415,595 10.50 % 395,804 10.00 % Leverage ratio Consolidated 381,001 7.33 % 207,929 4.00 % N/A N/A Bank 464,390 8.95 % 207,479 4.00 % 259,349 5.00 % F-46 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Note 15: Commitments and Credit Risk In the normal course of business, the Company makes various commitments to extend credit which are not reflected in the accompanying consolidated financial statements. At December 31, 2024 and 2023, the Company had outstanding loan commitments totaling approximately $ 667.7 million and $ 755.4 million, respectively. Note 16: Fair Value of Financial Instruments ASC Topic 820, Fair Value Measurements , defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASU Topic 820 also specifies a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1 Quoted prices in active markets for identical assets or liabilities Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. Available-for-Sale Securities Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. The Company did not own any securities classified within Level 1 of the hierarchy as of December 31, 2024 or December 31, 2023. Level 2 securities include U.S. Government-sponsored agencies, municipal securities, mortgage and asset-backed securities and corporate securities. Matrix pricing is a mathematical technique widely used in the banking industry to value investment securities. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. Fair values are calculated using discounted cash flows. Discounted cash flows are calculated based off of the anticipated future cash flows updated to incorporate loss severities. Rating agency and industry research reports as well as default and deferral activity are reviewed and incorporated into the calculation. The Company did not own any securities classified within Level 3 of the hierarchy as of December 31, 2024 or December 31, 2023. F-47 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Servicing Asset Fair value is based on a loan-by-loan basis taking into consideration the origination to maturity dates of the loans, the current age of the loans and the remaining term to maturity. The valuation methodology utilized for the servicing asset begins with generating estimated future cash flows for each servicing asset based on their unique characteristics and market-based assumptions for prepayment speeds and costs to service. The present value of the future cash flows is then calculated utilizing market-based discount rate assumptions (Level 3). Interest Rate Swaps The fair values of interest rate swap agreements are estimated using current market interest rates as of the balance sheet date and calculated using discounted cash flows that are observable or that can be corroborated by observable market data (Level 2). Interest Rate Swap Agreements Back-to-Back The Company offers interest rate swaps to certain loan customers to allow them to hedge the risk of rising interest rates on their variable rate loans. The Company originates a variable rate loan and enters into a variable-to-fixed interest rate contract with the customer. The Company also enters into an offsetting interest rate swap with a correspondent bank. These back-to-back swap agreements are intended to offset each other and allow the Company to originate a variable rate loan, while providing a contract for fixed interest payments for the customer. The net cash flow for the Company is equal to the interest income received from a variable rate loan originated with the customer. The fair value of these derivatives is based on a discounted cash flow approach. The fair value assets and liabilities of centrally cleared interest rate swaps are net of variation margin settled-to-market (Level 2). Interest Rate Lock Commitments The fair values of IRLCs are determined using the projected sale price of individual loans based on changes in market interest rates, projected pull-through rates (the probability that an IRLC will ultimately result in an originated loan), the reduction in the value of the applicant’s option due to the passage of time, and the remaining origination costs to be incurred based on management’s estimate of market costs (Level 3). F-48 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) The following tables present the fair value measurements of assets and liabilities recognized in the accompanying consolidated balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2024 and 2023. December 31, 2024 Fair Value Measurements Using Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) U.S. Government-sponsored agencies $ 82,816 $ — $ 82,816 $ — Municipal securities 63,654 — 63,654 — Agency mortgage-backed securities - residential 269,641 — 269,641 — Agency mortgage-backed securities - commercial 63,331 — 63,331 — Private label mortgage-backed securities - residential 45,821 — 45,821 — Asset-backed securities 23,821 — 23,821 — Corporate securities 38,271 — 38,271 — Total available-for-sale securities $ 587,355 $ — $ 587,355 $ — Servicing asset 16,389 — — 16,389 Interest rate swap agreements - assets (back-to-back) 200 — 200 — Interest rate swap agreements - liabilities (back-to-back) ( 200 ) — ( 200 ) — December 31, 2023 Fair Value Measurements Using Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) U.S. Government-sponsored agencies $ 95,177 $ — $ 95,177 $ — Municipal securities 68,446 — 68,446 — Agency mortgage-backed securities - residential 206,649 — 206,649 — Agency mortgage-backed securities - commercial 38,885 — 38,885 — Private label mortgage-backed securities - residential 20,779 — 20,779 — Asset-backed securities 8,081 — 8,081 — Corporate securities 36,838 — 36,838 — Total available-for-sale securities $ 474,855 $ — $ 474,855 $ — Servicing asset 10,567 — — 10,567 Interest rate swaps assets 5,139 — 5,139 — Interest rate swap agreements - assets (back-to-back) 677 — 677 — Interest rate swap agreements - liabilities (back-to-back) ( 677 ) — ( 677 ) — F-49 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) The following table reconciles the beginning and ending balances of recurring fair value measurements recognized in the accompanying consolidated balance sheets using significant unobservable (Level 3) inputs. Servicing Asset Interest Rate Lock Commitments Balance as of January 1, 2022 $ 4,702 $ 718 Total realized gains Additions 3,192 — Paydowns ( 1,135 ) — Change in fair value ( 504 ) ( 585 ) Balance, December 31, 2022 6,255 133 Total realized gains Additions 5,775 — Paydowns ( 1,842 ) — Change in fair value 379 ( 133 ) Balance, December 31, 2023 10,567 — Total realized gains Additions 8,359 — Paydowns ( 3,005 ) — Change in fair value 468 — Balance, December 31, 2024 $ 16,389 $ — The following describes the valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis, as well as the general classification of such assets pursuant to the valuation hierarchy. Individually Analyzed Collateral Dependent Loans Loans for which it is probable that the Company will not collect all principal and interest due according to contractual terms are measured for impairment. The amount of impairment may be determined based on the fair value of the underlying collateral, less costs to sell, the estimated present value of future cash flows or the loan’s observable market price. If the individually evaluated loan is identified as collateral dependent, the fair value of the underlying collateral, less costs to sell, is used to measure impairment. This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value. If the individually evaluated loan is not collateral dependent, the Company utilizes a discounted cash flow analysis to measure impairment. Individually evaluated loans with a specific valuation allowance based on the value of the underlying collateral or a discounted cash flow analysis are classified as Level 3 assets. F-50 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) The following table presents the fair value measurements of assets and liabilities recognized in the accompanying consolidated balance sheets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurement falls at December 31, 2024 and December 31, 2023. December 31, 2024 Fair Value Measurements Using Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Collateral dependent loans $ 4,296 $ — $ — $ 4,296 December 31, 2023 Fair Value Measurements Using Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Collateral dependent loans $ 2,799 $ — $ — $ 2,799 Significant (Level 3) Inputs The following tables present quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements. Fair Value at December 31, 2024 Valuation Technique Significant Unobservable Inputs Range Weighted-Average Range Collateral dependent loans $ 4,296 Fair value of collateral Discount for type of property and current market conditions 0 % - 75 % 24.2 % Servicing asset 16,389 Discounted cash flow Prepayment speeds Discount rate 0 % - 25 % 14 % 11.7 % 14 % Fair Value at December 31, 2023 Valuation Technique Significant Unobservable Inputs Range Weighted - Average Range Collateral dependent loans $ 2,799 Fair value of collateral Discount for type of property and current market conditions 0 % - 90 % 28 % Servicing asset 10,567 Discounted cash flow Prepayment speeds Discount rate 0 % - 25 % 15 % 11.3 % 15 % The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value: Cash and Cash Equivalents For these instruments, the carrying amount is a reasonable estimate of fair value. F-51 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Securities Held-to-Maturity Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. The Company did not own any securities classified within Level 1 of the hierarchy as of December 31, 2024 or December 31, 2023. Level 2 securities include agency mortgage-backed securities - residential, municipal securities and corporate securities. Matrix pricing is a mathematical technique widely used in the banking industry to value investment securities. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. Fair values are calculated using discounted cash flows. Discounted cash flows are calculated based off of the anticipated future cash flows updated to incorporate loss severities. Rating agency and industry research reports as well as default and deferral activity are reviewed and incorporated into the calculation. The Company did not own any securities classified within Level 3 of the hierarchy as of December 31, 2024 or December 31, 2023. Loans Held-for-Sale For loans that are sold in an active secondary market, the fair value of these loans is estimated based on secondary market price indications for loans with similar interest rate and maturity characteristics. The fair value of other loans held-for-sale approximates carrying value. Net Loans The fair value of loans is estimated on an exit price basis incorporating discounts for credit, liquidity and marketability factors. Accrued Interest Receivable The fair value of these financial instruments approximates carrying value. Federal Home Loan Bank of Indianapolis Stock The fair value of this financial instrument approximates carrying value. Deposits The fair value of noninterest-bearing and interest-bearing demand deposits, savings accounts and money market accounts approximates carrying value. The fair value of fixed maturity certificates of deposit and brokered deposits are estimated using rates currently offered for deposits of similar remaining maturities. Advances from Federal Home Loan Bank The fair value of fixed rate advances is estimated using rates currently offered for similar remaining maturities. The carrying value of variable rate advances approximates fair value. Subordinated Debt The fair value of the Company’s publicly traded subordinated debt is obtained from quoted market prices. The fair value of the Company’s remaining subordinated debt is estimated using discounted cash flow analysis based on current borrowing rates for similar types of debt instruments. Accrued Interest Payable The fair value of these financial instruments approximates carrying value. F-52 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Commitments The fair value of commitments to extend credit are based on fees currently charged to enter into similar agreements with similar maturities and interest rates. The Company determined that the fair value of commitments was zero based on the contractual value of outstanding commitments at December 31, 2024 and 2023. The following tables provide the carrying amounts and estimated fair values of the Company's financial instruments at December 31, 2024 and 2023: December 31, 2024 Fair Value Measurements Using Carrying Amount Fair Value Quoted Prices In Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash and cash equivalents $ 466,410 $ 466,410 $ 466,410 $ — $ — Securities held-to-maturity 249,796 228,851 — 228,851 — Loans held-for-sale 54,695 58,510 — 58,510 — Net loans 4,125,877 3,935,009 — — 3,935,009 Accrued interest receivable 28,180 28,180 28,180 — — Federal Home Loan Bank of Indianapolis stock 28,350 28,350 — 28,350 — Deposits 4,933,206 4,943,961 2,236,724 — 2,707,237 Advances from Federal Home Loan Bank 295,000 291,208 — 291,208 — Subordinated debt 105,150 103,062 37,059 66,003 — Accrued interest payable 2,495 2,495 2,495 — — December 31, 2023 Fair Value Measurements Using Carrying Amount Fair Value Quoted Prices In Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash and cash equivalents $ 405,898 $ 405,898 $ 405,898 $ — $ — Securities held-to-maturity 227,153 207,572 — 207,572 — Loans held-for-sale 22,052 22,052 — 22,052 — Net loans 3,801,446 3,611,909 — — 3,611,909 Accrued interest receivable 26,746 26,746 26,746 — — Federal Home Loan Bank of Indianapolis stock 28,350 28,350 — 28,350 — Deposits 4,066,973 4,059,447 1,796,123 — 2,263,324 Advances from Federal Home Loan Bank 614,934 605,366 — 605,366 — Subordinated debt 104,838 102,632 32,560 70,072 — Accrued interest payable 3,848 3,848 3,848 — — F-53 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Note 17: Mortgage Banking Activities The Bank’s residential real estate lending business originated mortgage loans for customers and typically sold a majority of the originated loans into the secondary market. For most of the mortgages sold in the secondary market, the Bank hedged its mortgage banking pipeline by entering into forward contracts for the future delivery of mortgage loans to third party investors and entering into IRLCs with potential borrowers to fund specific mortgage loans that would be sold into the secondary market. To facilitate the hedging of the loans, the Bank elected the fair value option for loans originated and intended for sale in the secondary market under mandatory pricing agreements. Changes in the fair value of loans held-for-sale, IRLCs and forward contracts are recorded in the mortgage banking activities line item within noninterest income. Refer to Note 18 for further information on derivative financial instruments. During the year ended December 31, 2024, the Company had no mortgage loans held-for-sale or sold into the secondary market. During the years ended December 31, 2023 and 2022, the Company originated mortgage loans held-for-sale of $ 36.3 million, and $ 388.0 million, respectively, and received $ 46.5 million, and $ 411.5 million from the sale of mortgage loans, respectively, into the secondary market. During the first quarter 2023, the Company made the decision to exit the residential mortgage business. The following table provides the components of income from mortgage banking activities for the years ended December 31, 2024, 2023 and 2022. Year Ended December 31, 2024 2023 2022 Gain on loans sold $ — $ 471 $ 6,101 Loss resulting from the change in fair value of loans held-for-sale — ( 143 ) ( 184 ) Loss resulting from the change in fair value of derivatives — ( 252 ) ( 453 ) Net revenue from mortgage banking activities $ — $ 76 $ 5,464 F-54 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Note 18: Derivative Financial Instruments The Company uses derivative financial instruments to help manage exposure to interest rate risk and the effects that changes in interest rates may have on net income and the fair value of assets and liabilities. The Company enters into interest rate swap agreements as part of its asset/liability management strategy to help manage its interest rate risk position. Additionally, the Company entered into forward contracts for the future delivery of mortgage loans to third-party investors and entered into IRLCs with potential borrowers to fund specific mortgage loans that were sold into the secondary market. The forward contracts were entered into in order to economically hedge the effect of changes in interest rates resulting from the Company’s commitment to fund the loans. The Company had various interest rate swap agreements designated and qualifying as accounting hedges during the reported periods. Designating an interest rate swap as an accounting hedge allows the Company to recognize gains and losses in the consolidated statements of income within the same period that the hedged item affects earnings. The Company includes the gain or loss on the hedged items in the same line item as the offsetting loss or gain on the related interest rate swaps. For derivative instruments that are designated and qualify as cash flow hedges, any gains or losses related to changes in fair value are recorded in accumulated other comprehensive loss, net of tax. The fair value of interest rate swaps with a positive fair value are reported in accrued income and other assets in the consolidated balance sheets, while interest rate swaps with a negative fair value are reported in accrued expenses and other liabilities in the consolidated balance sheets. The Company offers interest rate swaps to certain loan customers to allow them to hedge the risk of rising interest rates on their variable rate loans. The Company originates a variable rate loan and enters into a variable-to-fixed interest rate contract with the customer. The Company also enters into an offsetting interest rate swap with a correspondent bank. These back-to-back swap agreements are intended to offset each other and allow the Company to originate a variable rate loan, while providing a contract for fixed interest payments for the customer. The net cash flow for the Company is equal to the interest income received from a variable rate loan originated with the customer. The fair value of these derivatives is based on a discounted cash flow approach. The IRLCs and forward contracts are not designated as accounting hedges and were recorded at fair value with changes in fair value reflected in noninterest income on the consolidated statements of income. The fair value of derivative instruments with a positive fair value were reported in accrued income and other assets in the consolidated balance sheets, while derivative instruments with a negative fair value were reported in accrued expenses and other liabilities in the consolidated balance sheets. The following table presents amounts that were recorded in the consolidated balance sheets related to cumulative basis adjustments for interest rate swap derivatives designated as fair value accounting hedges as of December 31, 2024 and 2023. Carrying amount of the hedged assets Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets Line item in the consolidated balance sheet in which the hedged item is included December 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023 Securities available-for-sale 1 $ — $ 69,504 $ — $ ( 1,143 ) 1 These amounts include the amortized cost basis of closed portfolios used to designate hedging relationships in which the hedged item is the last layer expected to be remaining at the end of the hedging relationship. No amounts were hedged as of December 31, 2024. The amount of the designated hedged items was $ 50.0 million as of December 31, 2023. In November 2024, the Company’s interest rate swap derivative designated as fair value hedges matured. As a result, the Company has no remaining fair value hedge exposure at December 31, 2024. The following table presents a summary of interest rate swap derivatives designated as fair value accounting hedges of fixed-rate receivables used in the Company's asset/liability management activities at December 31, 2023, identified by the underlying interest rate-sensitive instruments F-55 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) December 31, 2023 Weighted Average Remaining Maturity (years) Weighted-Average Rate Instruments Associated With Notional Value Fair Value Receive Pay Securities available-for-sale $ 50,000 0.8 $ 1,153 3 month SOFR 2.33 % Total swap portfolio at December 31, 2023 $ 50,000 0.8 $ 1,153 3 month SOFR 2.33 % In December 2024, the Company terminated interest rate swaps utilized as cash flow hedges against Federal Home Loan Bank advances, which resulted in swap termination receipts from counterparties of $ 2.9 million. Given the Company had no further liability exposure to the underlying index hedged, the Company reclassified this amount from accumulated other comprehensive loss to the consolidated statements of income and recognized a gain on termination of interest rate swaps for the year ended December 31, 2024. In March 2021, the Company terminated the last of layer interest rate swaps associated with available-for-sale agency mortgage-backed securities - residential, which resulted in swap termination payments to counterparties totaling $ 1.9 million. The corresponding fair value hedging adjustment was allocated pro-rata to the underlying hedged securities and is being amortized over the remaining lives of the designated securities. The Company had amortization expense totaling $ 0.1 million and $ 0.4 million for the years ended December 31, 2024 and 2023, respectively, which was recognized as a reduction to interest income on securities. In June 2020, the Company terminated all fair value hedging relationships associated with loans, which resulted in swap termination payments to counterparties totaling $ 46.1 million. The corresponding loan fair value hedging adjustment as of the date of termination is being amortized over the remaining lives of the designated loans, which have a weighted average term to maturity of 9.6 years as of December 31, 2024. During the years ended December 31, 2024 and 2023, amortization expense totaling $ 4.9 million and $ 4.7 million, respectively, related to these previously terminated fair value hedges was recognized as a reduction to interest income on loans. The following table presents a summary of interest rate swap derivatives designated as cash flow accounting hedges of variable-rate liabilities used in the Company's asset/liability management activities at December 31, 2023. December 31, 2023 Weighted Average Remaining Maturity (years) Weighted-Average Rate Cash Flow Hedges Notional Value Fair Value Receive Pay Interest rate swaps $ 110,000 3.1 $ 3,596 3 month SOFR 2.88 % Interest rate swaps 40,000 0.4 390 Fed Funds Effective 2.78 % These derivative financial instruments were entered into for the purpose of managing the interest rate risk of certain assets and liabilities. As of December 31, 2024, the Company received no cash collateral from counterparties as security for their obligations related to these swap transactions. As of December 31, 2023, the Company received $ 5.2 million of cash collateral from counterparties as security for their obligations related to these swap transactions. The Company had no pledged cash collateral as of December 31, 2024 and December 31, 2023 to counterparties on interest rate swap agreements as security for its obligations related to these agreements. Collateral posted and received is dependent on the market valuation of the underlying hedges. The following table presents the notional amount and fair value of interest rate swaps utilized by the Company at December 31, 2024 and 2023. F-56 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) December 31, 2024 December 31, 2023 Notional Amount Fair Value Notional Amount Fair Value Asset Derivatives Derivatives designated as hedging instruments Interest rate swaps associated with securities available-for-sale $ — $ — $ 50,000 $ 1,153 Interest rate swaps associated with liabilities — — 150,000 3,986 Derivatives not designated as hedging instruments Back-to-back swaps 27,214 200 1,778 677 Total contracts $ 27,214 $ 200 $ 201,778 $ 5,816 Liability Derivatives Derivatives not designated as hedging instruments Back-to-back swaps $ 27,214 $ ( 200 ) $ 1,778 $ ( 677 ) Total contracts $ 27,214 $ ( 200 ) $ 1,778 $ ( 677 ) The fair values of interest rate swaps were estimated using a discounted cash flow method that incorporates current market interest rates as of the balance sheet date. Refer to “Note 16 - Fair Value of Financial Instruments” for additional information. Back-to-back swaps consist of two interest-rate swaps (a customer swap and an offsetting counterparty swap). As a result of this offsetting relationship, no net gains or losses are recognized in income. The following table presents the effects of the Company's cash flow hedge relationships on the consolidated statements of comprehensive income during the twelve months ended December 31, 2024, 2023 and 2022. Amount of (Loss) / Gain Recognized in Other Comprehensive Income in the Twelve Months Ended December 31, 2024 December 31, 2023 December 31, 2022 Interest rate swap agreements $ — $ ( 2,566 ) $ 19,091 The following table summarizes the periodic changes in the fair value of derivatives not designated as hedging instruments on the consolidated statements of income for the twelve months ended December 31, 2024, 2023 and 2022. Amount of (Loss) / Gain Recognized in the Twelve Months Ended December 31, 2024 December 31, 2023 December 31, 2022 Asset Derivatives Derivatives not designated as hedging instruments Forward contracts $ — $ — $ 127 Liability Derivatives Derivatives not designated as hedging instruments IRLCs $ — $ ( 133 ) $ ( 585 ) Forward contracts — ( 119 ) — F-57 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) The following table presents the effects of the Company's interest rate swap agreements on the consolidated statements of income during the twelve months ended December 31, 2024, 2023 and 2022. Line item in the consolidated statements of income December 31, 2024 December 31, 2023 December 31, 2022 Interest income Securities - non-taxable $ 1,367 $ 1,471 $ ( 244 ) Total interest income 1,367 1,471 ( 244 ) Interest expense Deposits ( 424 ) ( 1,671 ) 1,125 Other borrowed funds ( 2,833 ) ( 2,622 ) 1,110 Total interest expense ( 3,257 ) ( 4,293 ) 2,235 Net interest income $ 4,624 $ 5,764 $ ( 2,479 ) Noninterest income Other 1 $ 2,904 $ — $ — Total noninterest income $ 2,904 $ — $ — 1 The Company recognized a gain on termination of interest rate swaps for the year ended December 31, 2024. Note 19: Shareholders’ Equity 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. 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. F-58 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Note 20: Accumulated Other Comprehensive Income (Loss) The components of accumulated other comprehensive loss, included in stockholders' equity, are presented in the table below. Available-For-Sale Securities Unrealized Losses on Debt Securities Transferred from Available-for-Sale to Held-to-Maturity Cash Flow Hedges Total Balance, January 1, 2022 $ ( 2,555 ) $ — $ ( 8,484 ) $ ( 11,039 ) Net unrealized holding (losses) gains recorded within other comprehensive income before income tax ( 42,336 ) — 19,091 ( 23,245 ) Reclassification of securities available-for-sale to held-to-maturity — ( 5,402 ) — ( 5,402 ) Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity — 844 — 844 Other comprehensive (loss) income before tax ( 42,336 ) ( 4,558 ) 19,091 ( 27,803 ) Income tax (benefit) provision ( 9,060 ) ( 1,039 ) 4,893 ( 5,206 ) Other comprehensive (loss) income- net of tax ( 33,276 ) ( 3,519 ) 14,198 ( 22,597 ) Balance, December 31, 2022 $ ( 35,831 ) $ ( 3,519 ) $ 5,714 $ ( 33,636 ) Net unrealized holding gains (losses) recorded within other comprehensive income before income tax $ 7,339 $ — $ ( 2,566 ) $ 4,773 Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity — 778 — 778 Other comprehensive income (loss) before tax 7,339 778 ( 2,566 ) 5,551 Income tax provision (benefit) 1,682 198 ( 590 ) 1,290 Other comprehensive income (loss) - net of tax 5,657 580 ( 1,976 ) 4,261 Balance, December 31, 2023 $ ( 30,174 ) $ ( 2,939 ) $ 3,738 $ ( 29,375 ) Net unrealized holding losses recorded within other comprehensive income before income tax $ ( 1,039 ) $ — $ ( 1,082 ) $ ( 2,121 ) Reclassification of gain on termination of interest rate swaps — — ( 2,904 ) ( 2,904 ) Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity — 789 — 789 Other comprehensive (loss) income before tax ( 1,039 ) 789 ( 3,986 ) ( 4,236 ) Income tax (benefit) provision ( 800 ) 90 ( 248 ) ( 958 ) Other comprehensive (loss) income- net of tax ( 239 ) 699 ( 3,738 ) ( 3,278 ) Balance, December 31, 2024 $ ( 30,413 ) $ ( 2,240 ) $ — $ ( 32,653 ) F-59 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Note 21: Condensed Financial Information (Parent Company Only) Presented below is condensed financial information as to financial position, results of operations, and cash flows of the Company on a non-consolidated basis: Condensed Balance Sheets Year Ended December 31, 2024 2023 Assets Cash and cash equivalents $ 12,997 $ 11,593 Investment in common stock of subsidiaries 458,025 444,221 Accrued income and other assets 19,983 14,127 Total assets $ 491,005 $ 469,941 Liabilities and shareholders’ equity Subordinated debt, net of unamortized discount and debt issuance costs of $ 1,850 and $ 2,162 in 2024 and 2023, respectively $ 105,150 $ 104,838 Accrued expenses and other liabilities 1,792 2,308 Total liabilities 106,942 107,146 Shareholders’ equity 384,063 362,795 Total liabilities and shareholders’ equity $ 491,005 $ 469,941 F-60 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Condensed Statements of Income Year Ended December 31, 2024 2023 2022 Income Dividends from bank subsidiary $ 16,000 $ 12,000 $ 8,000 Other 905 188 285 Total income 16,905 12,188 8,285 Expenses Interest on borrowings 6,021 5,376 5,371 Salaries and employee benefits 1,223 1,203 1,147 Consulting and professional fees 1,937 1,572 1,814 Premises and equipment 45 126 201 Other 250 280 134 Total expenses 9,476 8,557 8,667 Income (loss) before income tax and equity in undistributed net income of subsidiaries 7,429 3,631 ( 382 ) Income tax benefit ( 2,080 ) ( 1,817 ) ( 1,874 ) Income before equity in undistributed net income of subsidiaries 9,509 5,448 1,492 Equity in undistributed net income of subsidiaries 15,767 2,969 34,049 Net income $ 25,276 $ 8,417 $ 35,541 F-61 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Condensed Statements of Comprehensive Income Year Ended December 31, 2024 2023 2022 Net income $ 25,276 $ 8,417 $ 35,541 Other comprehensive income (loss) Securities available-for-sale Net unrealized holding (losses) gains on securities available-for-sale recorded within other comprehensive income before income tax ( 1,039 ) 7,339 ( 42,336 ) Income tax (benefit) provision ( 800 ) 1,682 ( 9,060 ) Net effect on other comprehensive (loss) income ( 239 ) 5,657 ( 33,276 ) Securities held-to-maturity Reclassification of securities from available-for-sale to held-to-maturity — — ( 5,402 ) Amortization of net unrealized holding losses on securities transferred from available-for-sale to held-to-maturity 789 778 844 Income tax provision (benefit) 90 198 ( 1,039 ) Net effect on other comprehensive income (loss) 699 580 ( 3,519 ) Cash flow hedges Net unrealized holding (losses) gains on cash flow hedging derivatives recorded within other comprehensive income before income tax ( 1,082 ) ( 2,566 ) 19,091 Reclassification of gain on termination of interest rate swaps ( 2,904 ) Income tax (benefit) provision ( 248 ) ( 590 ) 4,893 Net effect on other comprehensive (loss) income ( 3,738 ) ( 1,976 ) 14,198 Total other comprehensive (loss) income ( 3,278 ) 4,261 ( 22,597 ) Comprehensive income $ 21,998 $ 12,678 $ 12,944 F-62 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Condensed Statements of Cash Flows Year Ended December 31, 2024 2023 2022 Operating activities Net income $ 25,276 $ 8,417 $ 35,541 Adjustments to reconcile net income to net cash provided by operating activities: Equity in undistributed net income of subsidiaries ( 15,767 ) ( 2,969 ) ( 34,049 ) Depreciation and amortization 312 318 329 Share-based compensation expense 363 256 795 Net change in other assets 1,506 ( 1,819 ) 350 Net change in other liabilities ( 522 ) 358 ( 490 ) Net cash provided by operating activities 11,168 4,561 2,476 Investing activities Purchase of equity investments ( 7,221 ) ( 3,578 ) ( 2,727 ) Net cash (used in) provided by investing activities ( 7,221 ) ( 3,578 ) ( 2,727 ) Financing activities Cash dividends paid ( 2,078 ) ( 2,156 ) ( 2,317 ) Repurchase of common stock ( 283 ) ( 9,340 ) ( 27,780 ) Other, net ( 182 ) ( 153 ) ( 250 ) Net cash (used in) provided by financing activities ( 2,543 ) ( 11,649 ) ( 30,347 ) Net increase (decrease) in cash and cash equivalents 1,404 ( 10,666 ) ( 30,598 ) Cash and cash equivalents at beginning of year 11,593 22,259 52,857 Cash and cash equivalents at end of year $ 12,997 $ 11,593 $ 22,259 F-63 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Note 22: Segment Information The Company operates as a single reportable segment, managing the business and assessing financial performance on a consolidated basis. While there are several lines of business within the operating segment, they are closely interrelated and cannot operate independently. Accordingly, the CODM evaluates operations and financial performance on a Company-wide basis and all of the Company’s operations are aggregated into one reportable operating segment. The CODM regularly receives and reviews the Company’s net income on a consolidated basis and uses key metrics to evaluate the overall performance of the Company and make decisions regarding the allocation of resources. Additionally, the CODM reviews budget-to-actual variances to analyze these profit measures as a single operating segment. The function of CODM is performed by the Finance Committee. This Committee consists of the highest level of management that is responsible for the Company’s overall resource allocation and performance. The Finance Committee includes the Chairman and Chief Executive Officer, President and Chief Operating Officer and Executive Vice President and Chief Financial Officer. F-64 First Internet Bancorp Notes to Consolidated Financial Statements (Tabular dollar amounts in thousands except per share data) Note 23: Recent Accounting Pronouncements ASU 2023-02 - Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (March 2023) In March 2023, the FASB issued ASU No. 2023-02, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. This ASU permits companies to account for tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. The Company adopted this guidance on January 1, 2024 and it did not have a material impact on its consolidated financial statements. ASU 2023-07 - Segment Reporting (Topic 280): Improvements to Reportable Segments (November 2023) In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segments. This ASU enhances financial reporting by requiring disclosure of incremental segment information on an annual and interim basis. The guidance is effective for fiscal years beginning after December 15, 2023 and for interim periods within fiscal years beginning after December 15, 2024 with early adoption permitted. The Company adopted this guidance in 2024 and it did not have a material impact on its consolidated financial statements. ASU 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures (December 2023) In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. This ASU enhances the transparency and usefulness of income tax disclosures, which addresses investor requests for more transparency about income tax disclosures related primarily to the rate reconciliation and income taxes paid information. The guidance is effective for annual periods beginning after December 15, 2024 with early adoption permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements. ASU 2024-03 - Income Statement-Reporting Comprehensive Income - Expense Disaggregations Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (November 2024) In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregations Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires additional disclosures of the nature of expenses included in the Company’s income statement. The new standard requires disclosures about specific types of expenses included the income statement. The guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of this ASU on its consolidated financial statements. F-65