What changed in this filing

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Item 1A. Risk Factors

2026-03-11 compared with 2025-03-12 · 50 added, 23 removed, 240 unchanged (23% of the section changed)

10 unchanged sentences

Our success depends, to a certain extent, upon favorable economic and political conditions, local and national, as well as governmental monetary policies.

Conditions such as recession, unemployment, trade wars and tariffs, changes in interest

rates, inflation, money supply, and other factors beyond the Company’s control may adversely affect deposit levels, costs, loan demand and/or asset quality and, therefore, our earnings.

Conditions such as recession, unemployment, trade wars and tariffs, changes in interest rates, inflation, money supply, and other factors beyond the Company’s control may adversely affect deposit levels, costs, loan demand and/or asset quality and, therefore, our earnings.

Further, any economic downturn could result in financial stress on our borrowers that would adversely affect consumer confidence, a reduction in general business activity and increased market volatility.

15 unchanged sentences

The Bank could face increased scrutiny or be viewed as higher risk by regulators and/or the investor community due to changing regulatory focus and/or the failures of other financial institutions, which could negatively affect our future results of operations and financial condition.

Reputational risk and social factors may negatively affect us.

Our ability to attract and retain customers is highly dependent upon other external perceptions of our business practices and financial condition.

Adverse perceptions could damage our reputation to a level that could lead to difficulties in generating and maintaining lending and deposit relationships and accessing equity or credit markets, as well as increased regulatory scrutiny of our business.

Adverse developments or perceptions regarding the business practices or financial condition of our competitors, or our industry as a whole, may also indirectly adversely affect our reputation.

In addition, adverse reputational developments with respect to third parties with whom we have important relationships may negatively affect our reputation.

All of the above factors may result in greater regulatory and/or legislative scrutiny, which may lead to laws or regulations that may change or constrain the manner in which we engage with our customers and the products we offer and may also increase our litigation risk.

If these risks were to materialize, they could negatively affect our business, financial condition and results of operations.

Small Business Administration lending and other government guaranteed lending is an important part of our business.

Our government guaranteed lending programs are dependent upon the U.S.

federal government, and we face specific risks associated with originating SBA and other government guaranteed loans.

Our SBA lending program is dependent upon the U.S.

federal government.

As an approved participant in the SBA Preferred Lender’s Program (an "SBA Preferred Lender"), we enable our customers to obtain SBA loans without being subject to the potentially lengthy SBA approval process necessary for lenders that are not SBA Preferred Lenders.

The SBA periodically reviews the lending operations of participating lenders to assess, among other things, whether the lender exhibits prudent risk management.

When weaknesses are identified, the SBA may request corrective actions or impose enforcement actions, including revocation of the lender’s SBA Preferred Lender status.

If we lose our status as an SBA Preferred Lender, we may lose some or all of our customers to lenders who are SBA Preferred Lenders, and as a result we could experience a material adverse effect to our financial results.

Any changes to the SBA program, changes to program-specific rules impacting volume eligibility under the guaranty program, as well as changes to the program amounts authorized by Congress, may also have a material adverse effect on our business.

In addition, any default by the U.S.

government on its obligations or any prolonged government shutdown could impede our ability to originate SBA loans or other government guaranteed loans or sell such loans in the secondary market, which could materially adversely affect our business, results of operations, and financial condition.

Generally, we sell the guaranteed portion of our SBA 7(a) loans in the secondary market.

These sales result in premium income for us at the time of sale and create a stream of future servicing income, as we retain the servicing rights to these loans.

For the reasons described above, we may not be able to continue originating these loans or sell them in the secondary market.

Furthermore, even if we are able to continue to originate and sell SBA 7(a) loans in the secondary market, we might not continue to realize premiums upon the sale of the guaranteed portion of these loans, or the premiums may decline due to economic and competitive factors.

When we originate SBA loans, we incur credit risk on the non-guaranteed portion of the loans, and if a customer defaults on a loan, we share any loss and recovery related to the loan pro-rata with the SBA.

If the SBA establishes that a loss on an SBA guaranteed loan is attributable to significant technical deficiencies in the manner in which the loan was originated, funded, or serviced by us, the SBA may seek recovery of the principal loss related to the deficiency from us.

Generally, we do not maintain reserves or loss allowances for such potential claims and any such claims could materially adversely affect our business, financial condition, or results of operations.

The laws, regulations and standard operating procedures that are applicable to government guaranteed loan products may change in the future, particularly in light of the changes being made and scrutiny being given to government funded programs under the current U.S.

presidential administration.

We cannot predict the effects of these changes on our business and profitability.

Because government regulation greatly affects the business and financial results of all commercial banks and bank holding companies and especially our organization, changes in the laws, regulations and procedures applicable to government guaranteed loans could adversely affect our ability to operate profitably.

Societal, legislative and regulatory responses to environmental, social and governance (ESG) concerns, and anti-ESG concerns, as well as diversity, equity, and inclusion (DEI) and anti-DEI concerns, could adversely affect our business and performance, including indirectly through impacts on our customers.

35 unchanged sentences

These provisions could potentially adversely affect the market price of our common stock.

Our business depends on our ability to successfully manage credit risk.

The operation of our business requires us to manage credit risk.

As a lender, we are exposed to the risk that our borrowers may be unable to repay their loans according to their terms, and that the collateral securing repayment of their loans, if any, may not be sufficient to ensure repayment.

In addition, there are risks inherent in making any loan, including risks with respect to the period of time over which the loan may be repaid, risks relating to proper underwriting, risks resulting from changes in economic and industry conditions and risks inherent in dealing with individual borrowers, including the risk that a borrower may not provide information to us about its business in a timely manner, and/or may present inaccurate or incomplete information to us, and risks relating to the value of collateral.

In order to manage credit risk successfully, we must, among other things, maintain disciplined and prudent underwriting standards.

The weakening of these standards for any reason, a lack of discipline or diligence in underwriting and monitoring loans, the inability to adequately adapt policies and procedures to changes in economic or any other conditions affecting borrowers and the quality of our loan portfolio, may result in defaults, foreclosures and additional charge-offs and may necessitate that we significantly increase our allowance for credit losses, each of which could adversely affect our net income.

As a result, our inability to successfully manage credit risk could have a material adverse effect on our business, financial condition, or results of operations.

Our commercial loan portfolio exposes us to higher credit risks than residential real estate loans, including risks relating to the success of the underlying business and conditions in the market or the economy and concentrations in our commercial loan portfolio.

3 unchanged sentences

Commercial loans typically involve larger loan balances than residential real estate loans and could lead to concentration risks within our commercial loan portfolio.

In addition, our C&I, healthcare finance, franchise finance and small business loans have primarily been extended to small to medium-sized businesses that generally have fewer financial resources in terms of capital or borrowing capacity than larger entities.

In addition, our C&I, specialty finance and small business loans have primarily been extended to small to medium-sized businesses that generally have fewer financial resources in terms of capital or borrowing capacity than larger entities.

Our failure to manage this commercial loan growth and the related risks could have a material adverse effect on our business, financial condition and results of operations.

1 unchanged sentence

If we were required to maintain higher levels of capital than we would otherwise be expected to maintain, our ability to leverage our capital may be limited, and could have a material adverse effect on our business, financial condition, results of operations and prospects.

Portions of our commercial lending activities are geographically concentrated in Central Indiana and adjacent markets, and changes in local economic conditions may impact their performance.

We offer our consumer lending as well as construction, investor CRE, public finance, healthcare finance, franchise finance, small business lending and single tenant financing products and services throughout the United States.

However, we serve C&I and certain CRE borrowers primarily in Central Indiana and adjacent markets.

Accordingly, the performance of our CRE and C&I lending depends upon demographic and economic conditions in those regions.

The profitability of our CRE and C&I loan portfolio may be impacted by changes in those conditions.

Additionally, unfavorable local economic conditions could reduce or limit the growth rate of our CRE and C&I loan portfolios for a significant period of time, or otherwise decrease the ability of those borrowers to repay their loans, which could have a material adverse effect on our business, financial condition and results of operations.

We are subject to risks arising from conditions in the real estate market, as a significant portion of our loans are secured by real estate .

At December 31, 2025, approximately 49.8% of our loans held for investment portfolio was comprised of commercial, residential mortgage and home equity loans with real estate as the primary component of collateral.

Our real estate lending activities, and our exposure to fluctuations in real estate collateral values, are significant and may increase as our assets increase.

Our real estate lending

activities, and our exposure to fluctuations in real estate collateral values, are significant and may increase as our assets increase.

The market value of real estate can fluctuate significantly in a relatively short period of time as a result of market conditions in the geographic area in which the real estate is located;

26 unchanged sentences

If market interest rates rise, especially at the pace they did in 2022 and 2023, the Company will face competitive pressure to increase the rates the Bank pays on deposits, which could negatively affect net interest margin.

In addition, the interest rate on the Company’s other subordinated debt have, and are scheduled to change in 2025 and 2026, from fixed to floating rates.

In addition, the interest rate on the Company’s other subordinated debt have, and are scheduled to change in 2026, from fixed to floating rates.

These changes could result in a decrease of net interest income.

7 unchanged sentences

These sources include brokered deposits and FHLB advances.

the past, we have raised additional capital in the public debt and equity markets to support balance sheet growth, refinance existing debt obligations, or explore strategic alternatives which may include additional asset, deposit or revenue generation channels.

Further, in the past, we have raised additional capital in the public debt and equity markets to support balance sheet growth, refinance existing debt obligations, or explore strategic alternatives which may include additional asset, deposit or revenue generation channels.

Our ability to source deposits and raise future capital, if needed, will depend upon our financial performance and conditions in the capital markets, as well as economic conditions generally.

Further, if we need to raise capital in the future, we may have to do so when many other financial institutions are also seeking to raise capital and would then have to compete with those institutions for investors.

Accordingly, such financing may not be available to us on acceptable terms or at all.

If we cannot raise additional capital when needed, it could have a material adverse effect on our business, financial condition and results of operations.

The recognition of gains on the sale of loans and servicing asset valuations reflect certain assumptions.

We continue to expect that gains on the sale of U.S.

government guaranteed loans will continue to comprise a significant component of our revenue.

The determination of these gains is based on assumptions regarding the value of unguaranteed loans retained, servicing rights retained and deferred fees and costs, and net premiums paid by purchasers of the guaranteed portions of U.S.

government guaranteed loans.

The value of retained unguaranteed loans and servicing rights are determined based on market-derived factors such as prepayment rates, current market conditions and recent loan sales.

Deferred fees and costs are determined using internal analysis of the cost to originate loans.

Significant errors in assumptions used to compute gains on sale of loans or servicing asset valuations could result in material revenue misstatements, which may have a material adverse effect on our business, results of operations and profitability.

In addition, if such valuations are not reflective of fair market value, then our business, results of operations and financial condition may be materially and adversely affected.

The Company’s stock price can be volatile.

11 unchanged sentences

Because our business is highly dependent on technology that is subject to rapid change and transformation, we are subject to risks of obsolescence.

The Bank conducts its deposit gathering activities and a portion of its lending activities through digital channels.

The Bank conducts its deposit gathering activities and a significant portion of its lending activities through digital channels.

The financial services industry is undergoing rapid technological change, and we face constant evolution of customer demand for technology-driven financial and banking products and services.

16 unchanged sentences

Information security risks for financial institutions such as ours have generally increased in recent years in part because of the proliferation of new technologies, the use of digital technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, terrorists, activists and other external parties.

above, our operations rely on the secure processing, transmission and storage of confidential information in our computer systems and networks.

As noted above, our operations rely on the secure processing, transmission and storage of confidential information in our computer systems and networks.

Our business relies on digital technologies, computer and email systems, software and networks to conduct its operations.

13 unchanged sentences

Further, as a result of the increased sophistication of fraud activity, we continue to invest in systems, resources, and controls to detect and prevent fraud.

This will result in continued ongoing investments in the future.

This will result in continued ongoing investments and costs.

Legal and Regulatory Risks

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We are also subject to increased scrutiny of compliance with the rules enforced by the OFAC.

If our policies, procedures and systems are deemed deficient, we would be subject to liability, including fines and regulatory actions, which may include restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan, including our acquisition plans.

Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us.

38 unchanged sentences

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

What changed 10-K

Item 1A. Risk Factors