First Internet Bancorp 10-Q

ITEM 1. FINANCIAL STATEMENTS First Internet Bancorp Condensed Consolidated Balance Sheets (Amounts in thousands except share data) September 30, 2025 December 31, 2024 (Unaudited) Assets Cash and due from banks $ 10,923 $ 9,249 Interest-bearing deposits 776,738 457,161 Total cash and cash equivalents 787,661 466,410 Securities available-for-sale, at fair value (amortized cost of $ 653,291 and $ 626,854 in 2025 and 2024, respectively) 625,906 587,355 Securities held-to-maturity, at amortized cost, net of allowance for credit losses of $ 0.1 million and $ 0.2 million in 2025 and 2024, respectively, (fair value of $ 248,447 and $ 228,851 in 2025 and 2024, respectively) 261,725 249,796 Loans held-for-sale 141,580 54,695 Loans 3,603,506 4,170,646 Allowance for credit losses - loans ( 59,923 ) ( 44,769 ) Net loans 3,543,583 4,125,877 Accrued interest receivable 26,674 28,180 Federal Home Loan Bank of Indianapolis stock 28,350 28,350 Cash surrender value of bank-owned life insurance 42,256 41,394 Premises and equipment, net 68,843 71,453 Goodwill 4,687 4,687 Servicing asset, at fair value 22,107 16,389 Other real estate owned 1,801 272 Accrued income and other assets 84,001 63,001 Total assets $ 5,639,174 $ 5,737,859 Liabilities and Shareholders’ Equity Liabilities Noninterest-bearing deposits $ 243,539 $ 136,451 Interest-bearing deposits 4,671,895 4,796,755 Total deposits 4,915,434 4,933,206 Advances from Federal Home Loan Bank 249,500 295,000 Subordinated debt, net of unamortized debt issuance costs of $ 1,614 and $ 1,850 in 2025 and 2024, respectively 105,386 105,150 Accrued interest payable 1,236 2,495 Accrued expenses and other liabilities 15,450 17,945 Total liabilities 5,287,006 5,353,796 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; 8,713,094 and 8,667,894 shares issued and outstanding in 2025 and 2024, respectively 186,608 186,094 Nonvoting common stock, no par value; 86,221 shares authorized; issued and outstanding - none — — Retained earnings 188,564 230,622 Accumulated other comprehensive loss ( 23,004 ) ( 32,653 ) Total shareholders’ equity 352,168 384,063 Total liabilities and shareholders’ equity $ 5,639,174 $ 5,737,859 See Notes to Condensed Consolidated Financial Statements 1 First Internet Bancorp Condensed Consolidated Statements of Operations – Unaudited (Amounts in thousands except share and per share data) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Interest Income Loans $ 68,958 $ 59,792 $ 198,305 $ 172,321 Securities – taxable 8,614 6,953 26,139 19,123 Securities – non-taxable 652 1,042 1,967 2,981 Other earning assets 6,164 7,203 15,692 19,691 Total interest income 84,388 74,990 242,103 214,116 Interest Expense Deposits 50,134 47,415 144,554 134,039 Other borrowed funds 3,902 5,810 14,111 16,251 Total interest expense 54,036 53,225 158,665 150,290 Net Interest Income 30,352 21,765 83,438 63,826 Provision for credit losses - loans 34,393 3,858 60,110 10,360 Benefit for credit losses - debt securities held to maturity — ( 29 ) ( 32 ) ( 93 ) Provision (benefit) for credit losses - off-balance sheet commitments 396 ( 439 ) 252 ( 398 ) Net Interest (Loss) Income After Provision for Credit Losses ( 4,437 ) 18,375 23,108 53,957 Noninterest (Loss) Income Service charges and fees 369 245 912 711 Loan servicing revenue 2,055 1,570 6,017 4,363 Loan servicing asset revaluation ( 1,332 ) ( 846 ) ( 3,666 ) ( 2,109 ) (Loss) gain on sale of loans ( 27,103 ) 9,933 ( 16,783 ) 24,761 Other 1,364 1,127 4,857 3,683 Total noninterest (loss) income ( 24,647 ) 12,029 ( 8,663 ) 31,409 Noninterest Expense Salaries and employee benefits 14,384 13,456 38,358 37,714 Marketing, advertising and promotion 482 548 1,831 1,893 Consulting and professional services 979 902 3,143 2,777 Data processing 651 675 1,942 1,845 Loan expenses 1,850 1,524 4,901 4,566 Premises and equipment 3,572 2,918 9,968 8,898 Deposit insurance premium 1,584 1,219 4,546 3,536 Other 1,957 1,552 6,127 4,924 Total noninterest expense 25,459 22,794 70,816 66,153 (Loss) Income Before Income Taxes ( 54,543 ) 7,610 ( 56,371 ) 19,213 Income Tax (Benefit) Provision ( 12,950 ) 620 ( 15,914 ) 1,267 Net (Loss) Income $ ( 41,593 ) $ 6,990 $ ( 40,457 ) $ 17,946 (Loss) Income Per Share of Common Stock Basic $ ( 4.76 ) $ 0.80 $ ( 4.63 ) $ 2.07 Diluted $ ( 4.76 ) $ 0.80 $ ( 4.63 ) $ 2.05 Weighted-Average Number of Common Shares Outstanding Basic 8,742,052 8,696,634 8,730,519 8,688,304 Diluted 8,742,052 8,768,731 8,730,519 8,756,544 Dividends Declared Per Share $ 0.06 $ 0.06 $ 0.18 $ 0.18 See Notes to Condensed Consolidated Financial Statements 2 First Internet Bancorp Condensed Consolidated Statements of Comprehensive (Loss) Income – Unaudited (Amounts in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Net (loss) income $ ( 41,593 ) $ 6,990 $ ( 40,457 ) $ 17,946 Other comprehensive income Securities available-for-sale Net unrealized holding gains recorded within other comprehensive income before income tax 4,454 10,620 12,114 7,995 Income tax provision 1,027 2,442 2,788 1,841 Net effect on other comprehensive income 3,427 8,178 9,326 6,154 Securities held-to-maturity Amortization of net unrealized holding losses on securities transferred from available-for-sale to held-to-maturity 180 185 432 607 Income tax provision 44 46 109 149 Net effect on other comprehensive income 136 139 323 458 Cash flow hedges Net unrealized holding losses on cash flow hedging derivatives recorded within other comprehensive loss before income tax — ( 2,670 ) — ( 2,030 ) Income tax benefit — ( 614 ) — ( 467 ) Net effect on other comprehensive income — ( 2,056 ) — ( 1,563 ) Total other comprehensive income 3,563 6,261 9,649 5,049 Comprehensive (loss) income $ ( 38,030 ) $ 13,251 $ ( 30,808 ) $ 22,995 See Notes to Condensed Consolidated Financial Statements 3 First Internet Bancorp Condensed Consolidated Statements of Changes in Shareholders’ Equity - Unaudited Nine Months Ended September 30, 2025 and 2024 (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, 2025 $ 186,094 $ 230,622 $ ( 32,653 ) $ 384,063 Net loss — ( 40,457 ) — ( 40,457 ) Other comprehensive income — — 9,649 9,649 Dividends declared ($ 0.18 per share) — ( 1,601 ) — ( 1,601 ) Recognition of the fair value of share-based compensation 733 — — 733 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 ( 224 ) — — ( 224 ) Balance, September 30, 2025 $ 186,608 $ 188,564 $ ( 23,004 ) $ 352,168 Balance, January 1, 2024 $ 184,700 $ 207,470 $ ( 29,375 ) $ 362,795 Net income — 17,946 — 17,946 Other comprehensive income — — 5,049 5,049 Dividends declared ($ 0.18 per share) — ( 1,592 ) — ( 1,592 ) Recognition of the fair value of share-based compensation 1,356 — — 1,356 Repurchased shares of common stock ( 10,500 shares) ( 283 ) — — ( 283 ) Excise tax on repurchase of common stock ( 3 ) — — ( 3 ) Deferred stock rights and restricted stock units issued in lieu of cash dividends payable on outstanding deferred stock rights and restricted stock units 3 — — 3 Common stock redeemed for the net settlement of share-based awards ( 142 ) — — ( 142 ) Balance, September 30, 2024 $ 185,631 $ 223,824 $ ( 24,326 ) $ 385,129 See Notes to Condensed Consolidated Financial Statements 4 First Internet Bancorp Condensed Consolidated Statements of Changes in Shareholders’ Equity - Unaudited Three Months Ended September 30, 2025 and 2024 (Amounts in thousands except share and per share data) Voting and Nonvoting Common Stock Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders’ Equity Balance, July 1, 2025 186,116 $ 230,690 $ ( 26,567 ) $ 390,239 Net loss — ( 41,593 ) — ( 41,593 ) Other comprehensive income — — 3,563 3,563 Dividends declared ($ 0.06 per share) — ( 533 ) — ( 533 ) Recognition of the fair value of share-based compensation 490 — — 490 Deferred stock rights and restricted stock units issued in lieu of cash dividends payable on outstanding deferred stock rights and restricted stock units 2 — — 2 Balance, September 30, 2025 $ 186,608 $ 188,564 $ ( 23,004 ) $ 352,168 Balance, July 1, 2024 $ 185,175 $ 217,365 $ ( 30,587 ) $ 371,953 Net income — 6,990 — 6,990 Other comprehensive income — — 6,261 6,261 Dividends declared ($ 0.06 per share) — ( 531 ) — ( 531 ) Recognition of the fair value of share-based compensation 454 — — 454 Deferred stock rights and restricted stock units issued in lieu of cash dividends payable on outstanding deferred stock rights and restricted stock units 2 — — 2 Balance, September 30, 2024 $ 185,631 $ 223,824 $ ( 24,326 ) $ 385,129 See Notes to Condensed Consolidated Financial Statements 5 First Internet Bancorp Condensed Consolidated Statements of Cash Flows – Unaudited (Amounts in thousands) Nine Months Ended September 30, 2025 2024 Operating Activities Net (loss) income $ ( 40,457 ) $ 17,946 Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: Depreciation and amortization 5,230 6,030 Increase in cash surrender value of bank-owned life insurance ( 862 ) ( 817 ) Provision for credit losses 60,330 9,869 Share-based compensation expense 733 1,356 Loans originated for sale ( 430,086 ) ( 366,948 ) Proceeds from sale of loans 381,503 374,561 Loss (gain) on loans sold 16,783 ( 24,761 ) Gain on sale of other real estate owned ( 19 ) ( 31 ) (Gain) loss on derivatives ( 106 ) 768 Gain on bank-owned life insurance — ( 149 ) Loan servicing asset revaluation 3,666 2,109 Net change in accrued income and other assets ( 13,115 ) ( 3,525 ) Net change in accrued expenses and other liabilities ( 3,874 ) 2,739 Net cash (used in) provided by operating activities ( 20,274 ) 19,147 Investing Activities Net loan activity, excluding purchases ( 295,966 ) ( 117,719 ) Proceeds from sale of other real estate owned 547 406 Maturities and calls of securities available-for-sale 97,804 54,418 Purchase of securities available-for-sale ( 125,713 ) ( 148,019 ) Maturities and calls of securities held-to-maturity 22,103 18,426 Purchase of securities held-to-maturity ( 33,629 ) ( 53,977 ) Purchase of premises and equipment ( 940 ) ( 2,097 ) Proceeds from bank-owned life insurance — 737 Loans purchased ( 47,674 ) ( 81,605 ) Net proceeds from sale of portfolio loans 799,297 — Other investing activities ( 9,214 ) ( 11,857 ) Net cash provided by (used in) investing activities 406,615 ( 341,287 ) Financing Activities Net (decrease) increase in deposits ( 17,772 ) 730,737 Cash dividends paid ( 1,571 ) ( 1,580 ) Repurchase of common stock — ( 283 ) Proceeds from advances from Federal Home Loan Bank 104,500 430,000 Repayment of advances from Federal Home Loan Bank ( 150,000 ) ( 530,000 ) Other, net ( 247 ) ( 153 ) Net cash (used in) provided by financing activities ( 65,090 ) 628,721 Net Increase in Cash and Cash Equivalents 321,251 306,581 Cash and Cash Equivalents, Beginning of Period 466,410 405,898 Cash and Cash Equivalents, End of Period $ 787,661 $ 712,479 Supplemental Disclosures Cash paid during the period for interest 159,924 151,330 Cash paid during the period for taxes 258 492 Loans transferred to other real estate owned 2,058 251 Loans transferred to held-for-sale from portfolio 863,766 — Cash dividends declared, paid in subsequent period 523 520 See Notes to Condensed Consolidated Financial Statements 6 First Internet Bancorp Notes to Condensed Consolidated Financial Statements – Unaudited (Table amounts in thousands except share and per share data) Note 1: Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information or footnotes necessary for a complete presentation of financial condition, results of operations, changes in shareholders’ equity, or cash flows in accordance with GAAP. In our opinion, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation have been included. The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results expected for the year ending December 31, 2025 or any other period. The September 30, 2025 condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the First Internet Bancorp Annual Report on Form 10-K for the year ended December 31, 2024. The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments, or assumptions that could have a material effect on the carrying value of certain assets and liabilities. These estimates, judgments, and assumptions affect the amounts reported in the condensed consolidated financial statements and the disclosures provided. 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”) and changes in any of these could have a significant impact on the condensed consolidated financial statements. The condensed consolidated financial statements include the accounts of First Internet Bancorp (the “Company”), its wholly owned subsidiary, First Internet Bank of Indiana (the “Bank”), and the Bank’s three wholly owned subsidiaries, First Internet Public Finance Corp., JKH Realty Services, LLC and SPF15, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations, and cash flows of the Company. 7 Note 2: (Loss) Earnings Per Share (Loss) earnings per share of common stock are based on the weighted-average number of basic shares and dilutive shares outstanding during the period. The following is a reconciliation of the weighted-average common shares for the basic and diluted (loss) earnings per share computations for the three and nine months ended September 30, 2025 and 2024. (dollars in thousands, except share and per share data) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Basic earnings per share Net (loss) income $ ( 41,593 ) $ 6,990 $ ( 40,457 ) $ 17,946 Weighted-average common shares 8,742,052 8,696,634 8,730,519 8,688,304 Basic (loss) earnings per common share $ ( 4.76 ) $ 0.80 $ ( 4.63 ) $ 2.07 Diluted earnings per share Net (loss) income $ ( 41,593 ) $ 6,990 $ ( 40,457 ) $ 17,946 Weighted-average common shares 8,742,052 8,696,634 8,730,519 8,688,304 Dilutive effect of equity compensation — 72,097 — 68,240 Weighted-average common and incremental shares 8,742,052 8,768,731 8,730,519 8,756,544 Diluted (loss) earnings per common share 1 $ ( 4.76 ) $ 0.80 $ ( 4.63 ) $ 2.05 1 Potential dilutive common shares are excluded from the computation of diluted EPS in the periods where the effect would be antidilutive. Since the Company was in a loss position for the three and nine months ended September 30, 2025, basic net loss is the same as diluted net loss per share, as the inclusion of all potential shares of common stock outstanding would have been anti-dilutive. There were no antidilutive shares for both the three and nine months ended September 30, 2024. 8 Note 3: Securities The following tables summarize securities available-for-sale and securities held-to-maturity as of September 30, 2025 and December 31, 2024. September 30, 2025 Amortized Cost Gross Unrealized Fair Value (amounts in thousands) Gains Losses Securities available-for-sale U.S. Government-sponsored agencies $ 68,291 $ 441 $ ( 1,196 ) $ 67,536 Municipal securities 64,837 4 ( 2,289 ) 62,552 Agency mortgage-backed securities - residential 1 378,027 615 ( 23,157 ) 355,485 Agency mortgage-backed securities - commercial 61,272 139 ( 902 ) 60,509 Private label mortgage-backed securities - residential 37,389 243 ( 732 ) 36,900 Asset-backed securities 17,458 82 ( 5 ) 17,535 Corporate securities 26,017 273 ( 901 ) 25,389 Total available-for-sale $ 653,291 $ 1,797 $ ( 29,182 ) $ 625,906 September 30, 2025 Amortized Cost Gross Unrealized Fair Value Allowance for Credit Losses Net Carrying Value (amounts in thousands) Gains Losses Securities held-to-maturity Municipal securities $ 11,014 $ 1 $ ( 521 ) $ 10,494 $ ( 3 ) $ 11,011 Agency mortgage-backed securities - residential 221,144 1,218 ( 12,438 ) 209,924 — 221,144 Agency mortgage-backed securities - commercial 5,653 — ( 905 ) 4,748 — 5,653 Corporate securities 24,036 — ( 755 ) 23,281 ( 119 ) 23,917 Total held-to-maturity $ 261,847 $ 1,219 $ ( 14,619 ) $ 248,447 $ ( 122 ) $ 261,725 1 Includes $ 0.2 million of additional premium related to terminated interest rate swaps associated with agency mortgage-backed securities - residential as of September 30, 2025. December 31, 2024 Amortized Cost Gross Unrealized Fair Value (amounts in thousands) 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 9 December 31, 2024 Amortized Cost Gross Unrealized Fair Value Allowance for Credit Losses Net Carrying Value (amounts in thousands) 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. Accrued interest receivable on AFS and HTM securities at September 30, 2025 was $ 2.5 million and $ 1.0 million, respectively, compared to $ 2.8 million and $ 1.1 million, respectively, at December 31, 2024, and is included in accrued interest receivable on the condensed consolidated balance sheet. The Company elected to exclude all accrued interest receivable from securities when estimating credit losses. At September 30, 2025 and December 31, 2024, approximately 95 % and 92 %, 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 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 September 30, 2025 was $ 0.1 million, compared to $ 0.2 million at December 31, 2024. The carrying value of securities at September 30, 2025 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 (amounts in thousands) Amortized Cost Fair Value Within one year $ 594 $ 594 One to five years 28,458 27,829 Five to ten years 61,896 61,169 After ten years 68,197 65,885 159,145 155,477 Agency mortgage-backed securities - residential 378,027 355,485 Agency mortgage-backed securities - commercial 61,272 60,509 Private label mortgage-backed securities - residential 37,389 36,900 Asset-backed securities 17,458 17,535 Total $ 653,291 $ 625,906 10 Held-to-Maturity (amounts in thousands) Amortized Cost Fair Value Within one year $ 935 $ 928 One to five years 20,561 20,391 Five to ten years 10,514 9,701 After ten years 3,040 2,755 35,050 33,775 Agency mortgage-backed securities - residential 221,144 209,924 Agency mortgage-backed securities - commercial 5,653 4,748 Total $ 261,847 $ 248,447 No available-for-sale securities were sold during the three and nine months ended September 30, 2025 and September 30, 2024. As such, the Company did not realize any gains or losses related to the sale of available-for-sale securities during either time period. Certain investments in debt securities are reported in the condensed consolidated financial statements at an amount less than their historical cost. The total fair value of these investments at September 30, 2025 and December 31, 2024 was $ 589.1 million and $ 603.9 million, which was approximately 66 % and 72 %, respectively, of the Company’s AFS and HTM securities portfolios. As of September 30, 2025, the Company’s security portfolio consisted of 593 positions, of which 421 were in an unrealized loss position. As of December 31, 2024, the Company’s security portfolio consisted of 579 positions, of which 482 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 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 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. 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. 11 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 September 30, 2025 and December 31, 2024. September 30, 2025 Less Than 12 Months 12 Months or Longer Total (amounts in thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Securities available-for-sale U.S. Government-sponsored agencies $ 10,971 $ ( 75 ) $ 28,765 $ ( 1,121 ) $ 39,736 $ ( 1,196 ) Municipal securities 2,400 ( 3 ) 49,492 ( 2,286 ) 51,892 ( 2,289 ) Agency mortgage-backed securities- residential 90,486 ( 240 ) 172,553 ( 22,917 ) 263,039 ( 23,157 ) Agency mortgage-backed securities- commercial 12,829 ( 35 ) 26,185 ( 867 ) 39,014 ( 902 ) Private label mortgage-backed securities - residential 13,127 ( 23 ) 6,751 ( 709 ) 19,878 ( 732 ) Asset-backed securities 5,535 — 3,755 ( 5 ) 9,290 ( 5 ) Corporate securities — — 15,101 ( 901 ) 15,101 ( 901 ) Total $ 135,348 $ ( 376 ) $ 302,602 $ ( 28,806 ) $ 437,950 $ ( 29,182 ) December 31, 2024 Less Than 12 Months 12 Months or Longer Total (amounts in thousands) 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 ) 12 The following tables summarize ratings for the Company’s HTM portfolio as of September 30, 2025 and December 31, 2024. September 30, 2025 Held-to-Maturity (amounts in thousands) Municipal Securities Mortgage-Backed Securities - Residential Mortgage-Backed Securities - Commercial Corporate Securities Total AAA equivalent - agency $ — $ 221,144 $ 5,653 $ — $ 226,797 Aa1/AA+ 7,051 — — — 7,051 Aa2/AA 2,170 — — — 2,170 Aa3/AA- 1,793 — — — 1,793 A2/A — — — 5,000 5,000 Baa1/BBB+ — — — 7,500 7,500 Baa2/BBB — — — 4,000 4,000 Baa3/BBB- — — — 5,536 5,536 Ba1/BB+ — — — 2,000 2,000 Total $ 11,014 $ 221,144 $ 5,653 $ 24,036 $ 261,847 December 31, 2024 Held-to-Maturity (amounts in thousands) 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 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 There were no amounts reclassified from accumulated other comprehensive loss to the condensed consolidated statements of operations during the three and nine months ended September 30, 2025 and 2024. 13 Note 4: Loans Loan balances as of September 30, 2025 and December 31, 2024 are summarized in the table below. Categories of loans include: (amounts in thousands) September 30, 2025 December 31, 2024 Commercial loans Commercial and industrial $ 206,301 $ 120,175 Owner-occupied commercial real estate 50,046 53,591 Investor commercial real estate 644,184 269,431 Construction 300,291 413,523 Single tenant lease financing 108,146 949,748 Public finance 480,119 485,867 Healthcare finance 150,522 181,427 Small business lending 1 401,628 331,914 Franchise finance 450,340 536,909 Total commercial loans 2,791,577 3,342,585 Consumer loans Residential mortgage 349,275 375,160 Home equity 15,806 18,274 Other consumer loans 423,004 407,947 Total consumer loans 788,085 801,381 Total commercial and consumer loans 3,579,662 4,143,966 Net deferred loan origination costs, premiums and discounts on purchased loans, and other 2 23,844 26,680 Total loans 3,603,506 4,170,646 Allowance for credit losses ( 59,923 ) ( 44,769 ) Net loans $ 3,543,583 $ 4,125,877 1 Balances include $ 43.5 million and $ 34.0 million that is guaranteed by the U.S. government as of September 30, 2025 and December 31, 2024, respectively. 2 Includes carrying value adjustment of $ 20.2 million and $ 22.9 million related to terminated interest rate swaps associated with public finance loans as of September 30, 2025 and December 31, 2024, respectively. During the nine months ended September 30, 2025, the Company sold $ 836.9 million of single tenant lease financing loans. Subsequent to September 30, 2025, the Company sold an additional $ 14.3 million of single tenant lease financing loans. 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. 14 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 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. 15 Residential Mortgage: With respect to residential loans that are secured by 1-to-4 family residences and are generally owner occupied, the Company typically establishes 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 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 offers 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. 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 allowance 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 organization’s loan review system • Changes in the value of underlying collateral for collateral dependent loans • The existence and effect of any concentrations of credit and changes in the levels of such concentrations • 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. 16 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 allowance for credit loss 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, other-than-insignificant payment delays, reductions in interest rates, acceptance of interest only payments, and/or reductions to the outstanding loan balance. Such loans may be 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 allowance 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 three and nine months ended September 30, 2025 and 2024. 17 (amounts in thousands) Three Months Ended September 30, 2025 Allowance for credit losses: Balance, Beginning of Period (Credit) Provision Charged to Expense Losses Charged Off Recoveries Balance, End of Period Commercial and industrial $ 1,907 $ ( 40 ) $ ( 93 ) $ 2 $ 1,776 Owner-occupied commercial real estate 472 ( 186 ) — — 286 Investor commercial real estate 1,609 1,106 — — 2,715 Construction 1,771 179 — — 1,950 Single tenant lease financing 4,446 ( 3,794 ) — — 652 Public finance 522 ( 93 ) — — 429 Healthcare finance 1,199 ( 482 ) — — 717 Small business lending 13,722 29,634 ( 15,883 ) 635 28,108 Franchise finance 13,082 10,094 ( 5,385 ) 64 17,855 Residential mortgage 1,923 268 ( 17 ) — 2,174 Home equity 92 ( 54 ) — 2 40 Other consumer loans 5,772 ( 2,239 ) ( 374 ) 62 3,221 Total $ 46,517 $ 34,393 $ ( 21,752 ) $ 765 $ 59,923 (amounts in thousands) Nine Months Ended September 30, 2025 Allowance for credit losses: Balance, Beginning of Period Provision (Credit) Charged to Expense Losses Charged Off Recoveries Balance, End of Period Commercial and industrial $ 1,265 $ 598 $ ( 93 ) $ 6 $ 1,776 Owner-occupied commercial real estate 528 ( 242 ) — — 286 Investor commercial real estate 1,149 1,566 — — 2,715 Construction 1,984 ( 34 ) — — 1,950 Single tenant lease financing 4,782 ( 4,130 ) — — 652 Public finance 703 ( 274 ) — — 429 Healthcare finance 1,412 ( 695 ) — — 717 Small business lending 16,161 42,542 ( 31,403 ) 808 28,108 Franchise finance 8,976 22,268 ( 13,471 ) 82 17,855 Residential mortgage 2,136 59 ( 28 ) 7 2,174 Home equity 106 ( 71 ) — 5 40 Other consumer loans 5,567 ( 1,477 ) ( 1,046 ) 177 3,221 Total $ 44,769 $ 60,110 $ ( 46,041 ) $ 1,085 $ 59,923 18 (amounts in thousands) Three Months Ended September 30, 2024 Allowance for credit losses: Balance, Beginning of Period (Credit) Provision Charged to Expense Losses Charged Off Recoveries Balance, End of Period Commercial and industrial $ 1,389 $ ( 166 ) $ — $ 3 $ 1,226 Owner-occupied commercial real estate 561 ( 9 ) — — 552 Investor commercial real estate 1,172 ( 29 ) — — 1,143 Construction 3,140 ( 357 ) — — 2,783 Single tenant lease financing 8,256 ( 1,562 ) — — 6,694 Public finance 742 ( 44 ) — — 698 Healthcare finance 1,809 ( 87 ) — — 1,722 Small business lending 11,993 3,346 ( 1,309 ) 169 14,199 Franchise finance 5,991 1,963 — — 7,954 Residential mortgage 2,112 67 ( 17 ) — 2,162 Home equity 118 ( 6 ) — 3 115 Other consumer loans 6,122 742 ( 425 ) 34 6,473 Total $ 43,405 $ 3,858 $ ( 1,751 ) $ 209 $ 45,721 (amounts in thousands) Nine Months Ended September 30, 2024 Allowance for credit losses: Balance, Beginning of Period (Credit) Provision Charged to Expense Losses Charged Off Recoveries Balance, End of Period Commercial and industrial $ 2,185 $ ( 966 ) $ — $ 7 $ 1,226 Owner-occupied commercial real estate 825 ( 273 ) — — 552 Investor commercial real estate 1,311 ( 168 ) — — 1,143 Construction 2,167 616 — — 2,783 Single tenant lease financing 8,129 ( 1,240 ) ( 195 ) — 6,694 Public finance 1,372 ( 674 ) — — 698 Healthcare finance 1,976 ( 254 ) — — 1,722 Small business lending 6,532 9,564 ( 2,171 ) 274 14,199 Franchise finance 6,363 2,168 ( 577 ) — 7,954 Residential mortgage 2,054 193 ( 86 ) 1 2,162 Home equity 171 ( 62 ) — 6 115 Other consumer loans 5,689 1,456 ( 760 ) 88 6,473 Total $ 38,774 $ 10,360 $ ( 3,789 ) $ 376 $ 45,721 Accrued interest receivable on loans totaled $ 21.6 million and $ 28.2 million at September 30, 2025 and December 31, 2024, 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. 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 detail activity in the (benefit) provision for credit losses on off-balance sheet commitments for the three and nine months ended September 30, 2025. 19 (amounts in thousands) Balance June 30, 2025 (Benefit) Provision for Credit Losses Balance September 30, 2025 Off-balance sheet commitments Commercial loans Commercial and industrial $ 199 $ ( 4 ) $ 195 Investor commercial real estate 33 24 57 Construction 1,757 291 2,048 Single tenant lease financing 5 ( 4 ) 1 Small business lending 1 90 91 Total commercial loans 1,995 397 2,392 Consumer loans Residential mortgage 1 ( 1 ) — Home equity — — — Other consumer loans — — — Total consumer loans 1 ( 1 ) — Total allowance for off-balance sheet commitments $ 1,996 $ 396 $ 2,392 (amounts in thousands) Balance December 31, 2024 (Benefit) Provision for Credit Losses Balance September 30, 2025 Off-balance sheet commitments Commercial loans Commercial and industrial $ 233 $ ( 38 ) $ 195 Owner-occupied commercial real estate 11 ( 11 ) — Investor commercial real estate 1 56 57 Construction 1,568 480 2,048 Single tenant lease financing 19 ( 18 ) 1 Small business lending 263 ( 172 ) 91 Total commercial loans 2,095 297 2,392 Consumer loans Residential mortgage 1 ( 1 ) — Home equity 35 ( 35 ) — Other consumer loans 9 ( 9 ) — Total consumer loans 45 ( 45 ) — Total allowance for off-balance sheet commitments $ 2,140 $ 252 $ 2,392 20 The following table details activity in the (benefit) provision for credit losses on off-balance sheet commitments for the three and nine months ended September 30, 2024. (amounts in thousands) Balance June 30, 2024 Provision (Benefit) for Credit Losses Balance September 30, 2024 Off-balance sheet commitments Commercial loans Commercial and industrial $ 188 $ 24 $ 212 Owner-occupied commercial real estate — 24 24 Investor commercial real estate — 10 10 Construction 3,420 ( 556 ) 2,864 Single tenant lease financing — 28 28 Small business lending 131 31 162 Total commercial loans 3,739 ( 439 ) 3,300 Consumer loans Residential mortgage 3 ( 1 ) 2 Home equity 33 1 34 Other consumer loans 11 — 11 Total consumer loans 47 — 47 Total allowance for off-balance sheet commitments $ 3,786 $ ( 439 ) $ 3,347 (amounts in thousands) Balance December 31, 2023 (Benefit) Provision for Credit Losses Balance September 30, 2024 Off-balance sheet commitments Commercial loans Commercial and industrial $ 233 $ ( 21 ) $ 212 Owner-occupied commercial real estate 9 15 24 Investor commercial real estate 6 4 10 Construction 2,889 ( 25 ) 2,864 Single tenant lease financing — 28 28 Small business lending 541 ( 379 ) 162 Total commercial loans 3,678 ( 378 ) 3,300 Consumer loans Residential mortgage 11 ( 9 ) 2 Home equity 45 ( 11 ) 34 Other consumer loans 11 — 11 Total consumer loans 67 ( 20 ) 47 Total allowance for off-balance sheet commitments $ 3,745 $ ( 398 ) $ 3,347 21 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 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 that 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. 22 The following tables present 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 September 30, 2025 and December 31, 2024. September 30, 2025 Term Loans (amortized cost basis by origination year) Revolving loans amortized cost basis Revolving loans converted to term (amounts in thousands) 2025 2024 2023 2022 2021 Prior Total Commercial and industrial Pass $ 75,319 $ 19,308 $ 7,283 $ 10,921 $ 571 $ 15,248 $ 67,923 $ — $ 196,573 Special Mention — 207 — 5,014 4,243 — — — 9,464 Substandard 66 44 154 — — — — — 264 Doubtful — — — — — — — — — Total commercial and industrial 75,385 19,559 7,437 15,935 4,814 15,248 67,923 — 206,301 Year-to-date gross charge-offs 36 57 — — — — — — 93 Owner-occupied commercial real estate Pass 2,841 6,232 1,431 5,222 4,245 18,489 — — 38,460 Special Mention — — — — 861 9,070 — — 9,931 Substandard — — — — — 1,655 — — 1,655 Doubtful — — — — — — — — — Total owner-occupied commercial real estate 2,841 6,232 1,431 5,222 5,106 29,214 — — 50,046 Year-to-date gross charge-offs — — — — — — — — — Investor commercial real estate Pass 37,347 80,531 181,309 213,610 92,050 35,606 — — 640,453 Special Mention — — — — — 3,731 — — 3,731 Substandard — — — — — — — — — Doubtful — — — — — — — — — Total investor commercial real estate 37,347 80,531 181,309 213,610 92,050 39,337 — — 644,184 Year-to-date gross charge-offs — — — — — — — — — Construction Pass 27,302 119,431 127,286 23,217 — 1,507 1,548 — 300,291 Special Mention — — — — — — — — — Substandard — — — — — — — — — Doubtful — — — — — — — — — Total construction 27,302 119,431 127,286 23,217 — 1,507 1,548 — 300,291 Year-to-date gross charge-offs — — — — — — — — — Single tenant lease financing Pass 38,888 914 1,011 11,948 822 19,876 — — 73,459 Special Mention — 638 — 18,715 4,204 9,465 — — 33,022 Substandard — — — — — 1,665 — — 1,665 Doubtful — — — — — — — — — Total single tenant lease financing 38,888 1,552 1,011 30,663 5,026 31,006 — — 108,146 Year-to-date gross charge-offs — — — — — — — — — Public finance Pass 37,309 47,208 — 5,301 10,385 377,891 — — 478,094 Special Mention — — — — — 2,025 — — 2,025 Substandard — — — — — — — — — Doubtful — — — — — — — — — Total public finance 37,309 47,208 — 5,301 10,385 379,916 — — 480,119 Year-to-date gross charge-offs — — — — — — — — — 23 September 30, 2025 Term Loans (amortized cost basis by origination year) Revolving loans amortized cost basis Revolving loans converted to term (amounts in thousands) 2025 2024 2023 2022 2021 Prior Total Healthcare finance Pass — — — — 7,553 140,660 — — 148,213 Special Mention — — — — — 849 — — 849 Substandard — — — — — 1,460 — — 1,460 Doubtful — — — — — — — — — Total healthcare finance — — — — 7,553 142,969 — — 150,522 Year-to-date gross charge-offs — — — — — — — — — Small business lending Pass 109,376 115,319 71,091 25,449 8,351 14,637 25,662 — 369,885 Special Mention — 3,468 10,746 658 86 1,500 494 — 16,952 Substandard — 5,017 4,768 207 283 1,466 3,050 — 14,791 Doubtful — — — — — — — — — Total small business lending 109,376 123,804 86,605 26,314 8,720 17,603 29,206 — 401,628 Year-to-date gross charge-offs 50 12,394 14,798 2,340 1,001 820 — — 31,403 Franchise finance Pass 741 61,329 185,264 129,660 30,246 — — — 407,240 Special Mention 562 — 2,727 8,833 — — — — 12,122 Substandard — 655 6,743 11,942 11,638 — — — 30,978 Doubtful — — — — — — — — — Total franchise finance 1,303 61,984 194,734 150,435 41,884 — — — 450,340 Year-to-date gross charge-offs — 370 5,901 6,704 496 — — — 13,471 Consumer loans Residential mortgage Performing 2,359 6,325 11,189 168,461 79,894 76,640 — — 344,868 Nonperforming — — — 2,219 598 1,590 — — 4,407 Total residential mortgage 2,359 6,325 11,189 170,680 80,492 78,230 — — 349,275 Year-to-date gross charge-offs — — — 28 — — — — 28 Home equity Performing — — 799 1,150 244 800 11,980 833 15,806 Nonperforming — — — — — — — — — Total home equity — — 799 1,150 244 800 11,980 833 15,806 Year-to-date gross charge-offs — — — — — — — — — Other consumer loans Performing 78,920 89,463 82,096 76,184 27,627 67,827 813 — 422,930 Nonperforming 23 — — 11 23 17 — — 74 Total other consumer loans 78,943 89,463 82,096 76,195 27,650 67,844 813 — 423,004 Year-to-date gross charge-offs 50 140 407 121 28 300 — — 1,046 Total Loans $ 411,053 $ 556,089 $ 693,897 $ 718,722 $ 283,924 $ 803,674 $ 111,470 $ 833 $ 3,579,662 Total year-to-date gross charge-offs $ 136 $ 12,961 $ 21,106 $ 9,193 $ 1,525 $ 1,120 $ — $ — $ 46,041 24 December 31, 2024 Term Loans (amortized cost basis by origination year) Revolving loans amortized cost basis Revolving loans converted to term (amounts in thousands) 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 — — — — — — — — — 25 December 31, 2024 Term Loans (amortized cost basis by origination year) Revolving loans amortized cost basis Revolving loans converted to term (amounts in thousands) 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 loans 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 loans 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 26 The following tables present the Company’s loan portfolio delinquency, including nonperforming loans, as of September 30, 2025 and December 31, 2024. September 30, 2025 (amounts in thousands) 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 $ 175 $ — $ — $ 175 $ 206,126 $ 206,301 Owner-occupied commercial real estate — — — — 50,046 50,046 Investor commercial real estate — — — — 644,184 644,184 Construction — — — — 300,291 300,291 Single tenant lease financing — — — — 108,146 108,146 Public finance — — — — 480,119 480,119 Healthcare finance 1,150 344 1,460 2,954 147,568 150,522 Small business lending 3,106 152 9,825 13,083 388,545 401,628 Franchise finance 761 2,788 30,454 34,003 416,337 450,340 Residential mortgage 3,065 1,422 2,794 7,281 341,994 349,275 Home equity — — — — 15,806 15,806 Other consumer loans 319 69 16 404 422,600 423,004 Total $ 8,576 $ 4,775 $ 44,549 $ 57,900 $ 3,521,762 $ 3,579,662 December 31, 2024 (amounts in thousands) 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 loans 194 196 27 417 407,530 407,947 Total $ 22,090 $ 6,496 $ 19,278 $ 47,864 $ 4,096,102 $ 4,143,966 Loans are reclassified to a 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 allowance for credit losses. 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. 27 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: September 30, 2025 December 31, 2024 (amounts in thousands) Nonaccrual Loans Nonaccrual Loans with No Allowance for Credit Losses Total Loans 90 Days or More Past Due and Accruing Nonaccrual Loans Nonaccrual Loans with No Allowance for Credit Losses Total Loans 90 Days or More Past Due and Accruing Commercial and industrial $ 264 $ — $ — $ — $ — $ — Single tenant lease financing 1,665 — — — — — Healthcare finance 1,460 1,460 — — — — Small business lending 13,524 12,639 877 11,429 4,778 1,320 Franchise finance 30,978 1,456 — 10,382 — — Residential mortgage 4,407 4,407 — 4,083 4,083 1,142 Other consumer loans 75 75 — 61 61 4 Total loans $ 52,373 $ 20,037 $ 877 $ 25,955 $ 8,922 $ 2,466 Interest income recognized on nonaccrual loans was $ 0.1 million and $ 1.1 million for the three and nine months ended September 30, 2025, respectively, and less than $ 0.1 million for both the three and nine months ended September 30, 2024. 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 September 30, 2025 and December 31, 2024. September 30, 2025 (amounts in thousands) 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 1 246 — 9,188 9,434 435 Residential mortgage — 4,407 — 4,407 — Other consumer loans — — 75 75 — Total loans $ 1,900 $ 4,407 $ 9,263 $ 15,570 $ 435 1 Balance includes $ 5.6 million of loans guaranteed by the U.S. government. 28 December 31, 2024 (amounts in thousands) 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. Loan Modifications to Borrowers Experiencing Financial Difficulty The Company may agree to modify the contractual terms of a loan to a borrower experiencing financial difficulty as a part of ongoing loss mitigation strategies. These modifications 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 one loan modification made to borrowers experiencing financial difficulty during the three months ended September 30, 2025. The Company had ten loan modifications made to borrowers experiencing financial difficulty during the nine months ended September 30, 2025. The Company had three loan modifications made to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2024. The following tables present loans that were both experiencing financial difficulty and modified during the three months ended September 30, 2025 and September 30, 2024. Three Months Ended September 30, 2025 (dollars in thousands) Payment Delay Total Modification by Loan Class % of Class of Loans Franchise finance $ 562 $ 562 0.1 % Total $ 562 $ 562 Three Months Ended September 30, 2024 (dollars in thousands) Payment Delay Total Modification by Loan Class % of Class of Loans Investor commercial real estate $ 3,731 $ 3,731 1.4 % Franchise finance 4,028 4,028 0.7 % Total $ 7,759 $ 7,759 The following tables present loans that were both experiencing financial difficulty and modified during the nine months ended September 30, 2025 and September 30, 2025. Nine Months Ended September 30, 2025 (dollars in thousands) Payment Delay Total Modification by Loan Class % of Class of Loans Commercial and industrial $ 386 $ 386 0.2 % Single tenant lease financing 4,672 4,672 4.3 % Healthcare finance 2,610 2,610 1.7 % Small business lending 3,013 3,013 0.8 % Franchise finance 562 562 0.1 % Total $ 11,243 $ 11,243 29 Nine Months Ended September 30, 2024 (dollars in thousands) Payment Delay Total Modification by Loan Class % of Class of Loans Investor commercial real estate $ 3,731 $ 3,731 1.4 % Franchise finance 4,028 4,028 0.7 % Total $ 7,759 $ 7,759 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 loans that were modified within the twelve months ended September 30, 2025. Twelve Months Ended September 30, 2025 (amounts in thousands) Current 30 - 89 Days Past Due 90+ Days Past Due Commercial and industrial $ 386 $ — $ — Single tenant lease financing 3,007 — 1,665 Healthcare finance 1,150 1,460 — Small business lending 3,013 — — Franchise finance 562 1,156 — Total $ 8,118 $ 2,616 $ 1,665 There was one loan totaling $ 1.7 million that was modified within the twelve months ended September 30, 2025 that subsequently defaulted during the period presented. Other Real Estate Owned The Company had $ 1.8 million in other real estate owned (“OREO”) as of September 30, 2025, which consisted of two small business lending properties. The Company had $ 0.3 million in OREO as of December 31, 2024, which consisted of one residential mortgage property. There were seven loans totaling $ 2.4 million and nine loans totaling $ 2.1 million, in the process of foreclosure at September 30, 2025 and December 31, 2024, respectively. 30 Note 5: Premises and Equipment The following table summarizes premises and equipment at September 30, 2025 and December 31, 2024. (amounts in thousands) September 30, 2025 December 31, 2024 Land $ 5,598 $ 5,598 Construction in process 14 20 Right of use leased asset 114 188 Building and improvements 63,379 63,069 Furniture and equipment 22,536 22,047 Less: accumulated depreciation ( 22,798 ) ( 19,469 ) Total $ 68,843 $ 71,453 Note 6: Goodwill As of September 30, 2025 and December 31, 2024, the carrying amount of goodwill was $ 4.7 million. There have been no changes in the carrying amount of goodwill for the three months ended September 30, 2025 or September 30, 2024. Goodwill is assessed for impairment annually as of August 31, or more frequently if events occur or circumstances change that indicate an impairment may exist. When assessing goodwill for impairment, first, a qualitative assessment can be made to determine whether it is more likely than not that the estimated fair value of a reporting unit is less than its estimated carrying value. If the results of the qualitative assessment are not conclusive, a quantitative goodwill test is performed. Alternatively, a quantitative goodwill test can be performed without performing a qualitative assessment. Goodwill was assessed for impairment using a quantitative test performed as of August 31, 2025. The estimated fair value of the reporting unit exceeded the net carrying value, and therefore no goodwill impairment existed as of that date. However, there is a risk for impairment in the event of declines in general economic, market or business conditions and the resultant effect on forecasted growth rates, or any significant unfavorable change in the Company’s forecasted operations resulting from elevated levels of net charge-offs in the franchise finance and small business lending portfolios. If current and long-term projections decrease materially, the Company may be required to recognize impairment charges, which could be material to the results of operations. Note 7: Servicing Asset Activity for the servicing asset and the related changes in fair value for the three and nine months ended September 30, 2025 and 2024 are shown in the table below. Three Months Ended (amounts in thousands) September 30, 2025 September 30, 2024 Balance, beginning of period $ 16,736 $ 13,009 Additions: Originated 1 6,703 2,499 Subtractions: Paydowns ( 903 ) ( 689 ) Changes in fair value due to changes in valuation inputs or assumptions used in the valuation model ( 429 ) ( 157 ) Loan servicing asset revaluation $ ( 1,332 ) $ ( 846 ) Balance, end of period $ 22,107 $ 14,662 1 Balance includes $ 3.8 million of originated servicing asset related to the sale of single tenant lease financing loans that was completed during the three months ended September 30, 2025. 31 Nine Months Ended (amounts in thousands) September 30, 2025 September 30, 2024 Balance, beginning of period 16,389 10,567 Additions: Originated 1 9,384 6,204 Subtractions: Paydowns ( 2,714 ) ( 2,097 ) Changes in fair value due to changes in valuation inputs or assumptions used in the valuation model ( 952 ) ( 12 ) Loan servicing asset revaluation $ ( 3,666 ) $ ( 2,109 ) Balance, end of period $ 22,107 $ 14,662 1 Balance includes $ 3.8 million of originated servicing asset related to the sale of single tenant lease financing loans that was completed during the nine months ended September 30, 2025. Loans serviced for others are not included in the condensed consolidated balance sheets. The unpaid principal balances of these loans serviced for others as of September 30, 2025 and December 31, 2024 are shown in the table below. (amounts in thousands) September 30, 2025 December 31, 2024 Loan portfolios serviced for: SBA guaranteed loans $ 1,047,698 $ 862,089 Single tenant lease financing 835,325 — Total $ 1,883,023 $ 862,089 Loan servicing revenue totaled $ 2.1 million and $ 6.0 million for the three and nine months ended September 30, 2025, respectively, and $ 1.6 million and $ 4.4 million for the three and nine months ended September 30, 2024, respectively. Loan servicing asset revaluation, which represents the change in fair value of the servicing asset, resulted in a $ 1.3 million and $ 3.7 million downward valuation for the three and nine months ended September 30, 2025, respectively, and a $ 0.8 million and $ 2.1 million downward valuation for the three and nine months ended September 30, 2024, 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 11 - Fair Value of Financial Instruments for further details. Note 8: 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. 32 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. 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 September 30, 2025 and December 31, 2024. September 30, 2025 December 31, 2024 (amounts in thousands) Principal Unamortized Discount and Debt Issuance Costs Principal Unamortized Discount and Debt Issuance Costs 2029 Notes $ 37,000 $ ( 585 ) $ 37,000 $ ( 703 ) 2030 Note 10,000 ( 119 ) 10,000 ( 137 ) 2031 Notes 60,000 ( 910 ) 60,000 ( 1,010 ) Total $ 107,000 $ ( 1,614 ) $ 107,000 $ ( 1,850 ) Note 9: Benefit Plans 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. 2022 Equity Incentive Plan 33 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 $ 0.5 million and $ 0.9 million o f share-based compensation expense for the three and nine months ended September 30, 2025, respectively, related to stock-based awards under the 2022 Plan. The Company recorded $ 0.4 million and $ 1.1 million o f share-based compensation expense for the three and nine months ended September 30, 2024, 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 nine months ended September 30, 2025. (dollars in thousands, except per share data) 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 Share Unvested at December 31, 2024 130,748 $ 24.35 12,040 $ 31.46 — $ — Granted 54,948 34.72 16,009 24.72 — — Vested ( 28,192 ) 24.32 ( 12,040 ) 31.46 — — Unvested at September 30, 2025 157,504 $ 27.97 16,009 $ 24.72 — $ — At September 30, 2025, the total unrecognized compensation cost related to unvested stock-based awards under the 2022 Plan was $ 2.7 million with a weighted-average expense recognition period of 1.7 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. No awards under the 2013 Plan remain outstanding and 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 no share-based compensation expense for the three months ended September 30, 2025, and less than $ 0.1 million of share-based compensation expense for the nine months ended September 30, 2025, related to stock-based awards under the 2013 Plan . The Company recorded $ 0.1 million and $ 0.2 million of share-based compensation expense for the three and nine months ended September 30, 2024, 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 nine months ended September 30, 2025. (dollars in thousands, except per share data) 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 Share Unvested at December 31, 2024 22,997 $ 46.71 — $ — — $ — Cancelled/Forfeited ( 15,126 ) 46.71 — — — — Vested ( 7,871 ) 46.71 — — — — Unvested at September 30, 2025 — $ — — $ — — $ — 34 At September 30, 2025, there were no unrecognized compensation costs related to unvested stock-based awards under the 2013 Plan. Directors Deferred Stock Plan Until January 2014, the Company had a practice of granting awards under a stock compensation plan for 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 nine months ended September 30, 2025. Deferred Stock Rights Outstanding, beginning of period 28,821 Granted 145 Outstanding, end of period 28,966 All deferred stock rights granted during the 2025 period were additional rights issued in lieu of cash dividends payable on outstanding deferred stock rights. Note 10: 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 condensed consolidated financial statements. At September 30, 2025 and December 31, 2024, the Company had outstanding loan commitments totaling approximately $ 594.8 million and $ 667.7 million, respectively. Note 11: Fair Value of Financial Instruments ASC Topic 820, Fair Value Measurement , 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. ASC 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 condensed 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 September 30, 2025 and December 31, 2024. 35 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 September 30, 2025 or December 31, 2024. 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 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). The following tables present the fair value measurements of assets and liabilities recognized in the accompanying condensed 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 September 30, 2025 and December 31, 2024. September 30, 2025 Fair Value Measurements Using (amounts in thousands) 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 $ 67,536 $ — $ 67,536 $ — Municipal securities 62,552 — 62,552 — Agency mortgage-backed securities - residential 355,485 — 355,485 — Agency mortgage-backed securities - commercial 60,509 — 60,509 — Private label mortgage-backed securities - residential 36,900 — 36,900 — Asset-backed securities 17,535 — 17,535 — Corporate securities 25,389 — 25,389 — Total available-for-sale securities $ 625,906 $ — $ 625,906 $ — Servicing asset 22,107 — — 22,107 Interest rate swap agreements - assets (back-to-back) 253 — 253 — Interest rate swap agreements - liabilities (back-to-back) ( 253 ) — ( 253 ) — 36 December 31, 2024 Fair Value Measurements Using (amounts in thousands) 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 ) — The following tables reconcile the beginning and ending balances of recurring fair value measurements recognized in the accompanying condensed consolidated balance sheets using significant unobservable (Level 3) inputs for the three and nine months ended September 30, 2025 and 2024. Three Months Ended (amounts in thousands) September 30, 2025 September 30, 2024 Balance, beginning of period $ 16,736 $ 13,009 Total realized gains Additions: Originated 1 6,703 2,499 Subtractions: Paydowns ( 903 ) ( 689 ) Change in fair value ( 429 ) ( 157 ) Balance, end of period $ 22,107 $ 14,662 1 Balance includes $ 3.8 million of originated servicing asset related to the sale of single tenant lease financing loans that was completed during the three months ended September 30, 2025. Nine Months Ended (amounts in thousands) September 30, 2025 September 30, 2024 Balance, beginning of period $ 16,389 $ 10,567 Total realized gains Additions: Originated 1 9,384 6,204 Subtractions: Paydowns ( 2,714 ) ( 2,097 ) Change in fair value ( 952 ) ( 12 ) Balance, end of period $ 22,107 $ 14,662 1 Balance includes $ 3.8 million of originated servicing asset related to the sale of single tenant lease financing loans that was completed during the nine months ended September 30, 2025. 37 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 analyzed 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 analyzed loan is not collateral dependent, the Company utilizes a discounted cash flow analysis to measure impairment. Individually analyzed 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. The following table presents the fair value measurements of assets and liabilities recognized in the accompanying condensed 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 September 30, 2025 and December 31, 2024. September 30, 2025 (amounts in thousands) 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 $ 337 $ — $ — $ 337 Other real estate owned 1,801 — — 1,801 December 31, 2024 (amounts in thousands) 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 38 Significant Unobservable (Level 3) Inputs The following tables present quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements. (dollars in thousands) Fair Value at September 30, 2025 Valuation Technique Significant Unobservable Inputs Range Weighted-Average Range Collateral dependent loans $ 337 Fair value of collateral Discount for type of property and current market conditions 3 0 % - 40 % 31.5 % Servicing asset 22,107 Discounted cash flow Prepayment speeds Discount rate 0 % - 25 % 13 % 12.1 % 13.3 % Other real estate owned 1,801 Fair value of collateral Discount to reflect current market conditions 30 % 30.0 % (dollars in thousands) 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 % The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying condensed 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. 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. 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 September 30, 2025 or December 31, 2024. 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. 39 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 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 available for advances with 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. 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 each of September 30, 2025 and December 31, 2024. 40 The following tables present the carrying value and estimated fair value of all financial assets and liabilities that are not measured at fair value on a recurring basis at September 30, 2025 and December 31, 2024. September 30, 2025 Fair Value Measurements Using (amounts in thousands) Carrying Amount Fair Value Quoted Prices In Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash and cash equivalents $ 787,661 $ 787,661 $ 787,661 $ — $ — Securities held-to-maturity, net 261,725 248,447 — 248,447 — Loans held-for-sale 141,580 151,370 — 151,370 — Net loans 3,543,583 3,482,547 — — 3,482,547 Accrued interest receivable 26,674 26,674 26,674 — — Federal Home Loan Bank of Indianapolis stock 28,350 28,350 — 28,350 — Deposits 4,915,434 4,932,641 2,516,385 — 2,416,256 Advances from Federal Home Loan Bank 249,500 251,975 — 251,975 — Subordinated debt 105,386 104,862 37,059 67,803 — Accrued interest payable 1,236 1,236 1,236 — — December 31, 2024 Fair Value Measurements Using (amounts in thousands) Carrying Amount Fair Value Quoted Prices In Active Markets for Identical Assets (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, net 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 — — Note 12: Derivative Financial Instruments The Company uses derivative financial instruments from time to time 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. The Company entered 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. 41 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. As 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 operations and recognized a gain on termination of interest rate swaps for the year ended December 31, 2024. 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. In March 2021, the Company terminated the last layer of 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 less than $ 0.1 million for both the three and nine months ended September 30, 2025 and 2024, 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 9.0 years as of September 30, 2025. The Company had amortization expense totaling $ 1.0 million and $ 2.7 million for the three and nine months ended September 30, 2025, respectively, and $ 1.6 million and $ 3.7 million for the three and nine months ended September 30, 2024, respectively, related to these previously terminated fair value hedges which was recognized as a reduction to interest income on loans. The following table presents the notional amount and fair value of interest rate swaps utilized by the Company at September 30, 2025 and December 31, 2024. September 30, 2025 December 31, 2024 (amounts in thousands) Notional Amount Fair Value Notional Amount Fair Value Asset Derivatives Derivatives not designated as hedging instruments Back-to-back swaps $ 44,606 $ 253 $ 27,214 $ 200 Total contracts $ 44,606 $ 253 $ 27,214 $ 200 Liability Derivatives Derivatives not designated as hedging instruments Back-to-back swaps $ 44,606 $ ( 253 ) $ 27,214 $ ( 200 ) Total contracts $ 44,606 $ ( 253 ) $ 27,214 $ ( 200 ) The fair value of interest rate swaps was estimated using a discounted cash flow method that incorporates current market interest rates as of the balance sheet date. 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 Company received no cash collateral from counterparties as security for their obligations related to these swap transactions at September 30, 2025 and December 31, 2024. As of September 30, 2025, the Company pledged cash collateral of $ 0.3 million to counterparties as security for its obligations related to these agreements. The Company had no pledged cash collateral as of December 31, 2024 to counterparties 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 effects of the Company’s cash flow hedge relationships on the condensed consolidated statements of comprehensive income during the three and nine months ended September 30, 2025 and 2024. 42 Amount of Loss Recognized in Other Comprehensive Income for the Three Months Ended Amount of Loss Recognized in Other Comprehensive Income for the Nine Months Ended (amounts in thousands) September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024 Interest rate swap agreements $ — $ ( 2,670 ) $ — $ ( 2,030 ) The Company had no changes in the fair value of derivatives not designated as hedging instruments on the condensed consolidated statements of operations for the three and nine months ended September 30, 2025 and 2024. The following table presents the effects of the Company’s interest rate swap agreements on the condensed consolidated statements of operations during the three and nine months ended September 30, 2025 and 2024. (amounts in thousands) Three Months Ended Nine Months Ended Line Item in the Condensed Consolidated Statements of Operations September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024 Interest income Securities - non-taxable $ — $ 421 $ — $ 1,250 Total interest income — 421 — 1,250 Interest expense Deposits — — — ( 424 ) Other borrowed funds — ( 782 ) — ( 2,304 ) Total interest expense — ( 782 ) — ( 2,728 ) Net interest income $ — $ 1,203 $ — $ 3,978 43 Note 13: Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss, included in shareholders' equity, for the nine months ended September 30, 2025 and 2024, respectively, are presented in the table below. (amounts in thousands) Unrealized Losses On Debt Securities Unrealized Losses On Debt Securities Transferred From Available-For-Sale To Held-To-Maturity Cash Flow Hedges Total Balance, January 1, 2025 $ ( 30,413 ) $ ( 2,240 ) $ — $ ( 32,653 ) Other comprehensive income before reclassifications from accumulated other comprehensive loss before tax 12,114 — — 12,114 Reclassifications from accumulated other comprehensive income to earnings before tax — 432 — 432 Other comprehensive gain before tax 12,114 432 — 12,546 Income tax provision 2,788 109 — 2,897 Other comprehensive income - net of tax 9,326 323 — 9,649 Balance, September 30, 2025 $ ( 21,087 ) $ ( 1,917 ) $ — $ ( 23,004 ) Balance, January 1, 2024 $ ( 30,174 ) $ ( 2,939 ) $ 3,738 $ ( 29,375 ) Other comprehensive income (loss) before reclassifications from accumulated other comprehensive loss before tax 7,995 — ( 2,030 ) 5,965 Reclassifications from accumulated other comprehensive loss to earnings before tax — 607 — 607 Other comprehensive gain (loss) before tax 7,995 607 ( 2,030 ) 6,572 Income tax provision (benefit) 1,841 149 ( 467 ) 1,523 Other comprehensive gain (loss) - net of tax 6,154 458 ( 1,563 ) 5,049 Balance, September 30, 2024 $ ( 24,020 ) $ ( 2,481 ) $ 2,175 $ ( 24,326 ) 44 The components of accumulated other comprehensive loss, included in stockholders' equity, for the three months ended September 30, 2025 and 2024, respectively, are presented in the table below. (amounts in thousands) Unrealized Losses On Debt Securities Unrealized Losses On Debt Securities Transferred From Available-For-Sale To Held-To-Maturity Cash Flow Hedges Total Balance, July 1, 2025 $ ( 24,514 ) $ ( 2,053 ) $ — ( 26,567 ) Other comprehensive income before reclassifications from accumulated other comprehensive loss before tax 4,454 — — 4,454 Reclassifications from accumulated other comprehensive loss to earnings before tax — 180 180 Other comprehensive gain before tax 4,454 180 — 4,634 Income tax provision 1,027 44 — 1,071 Other comprehensive income - net of tax 3,427 136 — 3,563 Balance, September 30, 2025 $ ( 21,087 ) $ ( 1,917 ) $ — $ ( 23,004 ) Balance, July 1, 2024 $ ( 32,198 ) $ ( 2,620 ) $ 4,231 ( 30,587 ) Other comprehensive income (loss) before reclassifications from accumulated other comprehensive loss before tax 10,620 — ( 2,670 ) 7,950 Reclassifications from accumulated other comprehensive loss to earnings before tax — 185 — 185 Other comprehensive gain (loss) before tax 10,620 185 ( 2,670 ) 8,135 Income tax provision (benefit) 2,442 46 ( 614 ) 1,874 Other comprehensive income (loss) - net of tax 8,178 139 ( 2,056 ) 6,261 Balance, September 30, 2024 $ ( 24,020 ) $ ( 2,481 ) $ 2,175 $ ( 24,326 ) Amounts Reclassified from Accumulated Other Comprehensive Loss for the Three Months Ended Amounts Reclassified from Accumulated Other Comprehensive Loss for the Nine Months Ended Affected Line Item in the Statements of Operations (amounts in thousands) September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024 Details About Accumulated Other Comprehensive Loss Components Reclassifications from accumulated other comprehensive loss to earnings before tax $ ( 180 ) ( 185 ) $ ( 432 ) $ ( 607 ) Interest income Total amount reclassified before tax ( 180 ) ( 185 ) ( 432 ) ( 607 ) (Loss) income before income taxes Tax benefit ( 44 ) ( 46 ) ( 109 ) ( 149 ) Income tax (benefit) provision Total reclassifications from accumulated other comprehensive loss $ ( 136 ) $ ( 139 ) $ ( 323 ) $ ( 458 ) Net income 45 Note 14: 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 Chief Operating Decision Maker (“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 the 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. Note 15: Recent Accounting Pronouncements 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 believes the adoption of this guidance will not have a material impact on the condensed 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. The new standard requires disclosures about specific types of expenses included in 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. Note 16: Subsequent Event On October 20, 2025, the Board of Directors of the Company authorized the repurchase of up to $ 25.0 million of the Company's outstanding common stock from time to time on the open market or in privately negotiated transactions. The stock repurchase authorization is scheduled to expire on September 30, 2027. The stock repurchase authorization may be modified, suspended, or discontinued at any time and does not commit the Company to repurchase shares of its common stock. The actual number and value of the shares to be purchased, if any, will depend on the performance of the Company’s stock price and other market conditions. 46