What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-02-17 compared with 2025-02-18 · 198 added, 170 removed, 1582 unchanged (19% of the section changed)

13 unchanged sentences

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial condition of 1st Source Corporation (Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively referred to as the financial statements).

We have audited the accompanying consolidated statements of financial condition of 1st Source Corporation (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income (loss), shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 18, 2025, expressed an unqualified opinion thereon.

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 17, 2026, expressed an unqualified opinion thereon.

Basis for Opinion

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The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

26 unchanged sentences

Opinion on the Internal Control over Financial Reporting

We have audited 1st Source Corporation’s (Company) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework:

We have audited 1st Source Corporation’s (the “Company”) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework:

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) .

26 unchanged sentences

Federal funds sold and interest bearing deposits with other banks 50,608 47,989

Investment securities available-for-sale

Investment securities available-for-sale, at fair value

(amortized cost of $ 1,568,429 and $ 1,650,684 at December 31, 2025 and 2024, respectively)

44 unchanged sentences

Retained earnings 1,015,160 890,937

Cost of common stock in treasury ( 3,685,512 shares at December 31, 2024 and 3,771,070 shares at December 31, 2023)

Cost of common stock in treasury ( 3,836,656 and 3,685,512 shares at December 31, 2025 and December 31, 2024,

respectively)

( 141,950 ) ( 129,175 )

70 unchanged sentences

Net income — — 124,927 — — 124,927 7 124,934

Other comprehensive loss — — — — ( 137,829 ) ( 137,829 ) — ( 137,829 )

Other comprehensive income — — — — 41,367 41,367 — 41,367

Issuance of 82,840 common shares under

9 unchanged sentences

Balance at December 31, 2023 $ — $ 436,538 $ 789,842 $ ( 130,489 ) $ ( 106,323 ) $ 989,568 $ 78,695 $ 1,068,263

Net income — — 124,927 — — 124,927 7 124,934

Net income (loss) — — 132,623 — — 132,623 ( 5 ) 132,618

Other comprehensive income — — — — 19,091 19,091 — 19,091

7 unchanged sentences

— — ( 34,390 ) — — ( 34,390 ) — ( 34,390 )

Contributions from noncontrolling interests — — — — — — 20,343 20,343

Distributions to noncontrolling interests — — — — — — ( 2,332 ) ( 2,332 )

Liquidation of noncontrolling interests — — — — — — ( 5,920 ) ( 5,920 )

Balance at December 31, 2024 $ — $ 436,538 $ 890,937 $ ( 129,175 ) $ ( 87,232 ) $ 1,111,068 $ 70,438 $ 1,181,506

Net income — — 132,623 — — 132,623 ( 5 ) 132,618

Net income (loss) — — 158,277 — — 158,277 ( 18 ) 158,259

Other comprehensive income — — — — 52,455 52,455 — 52,455

21 unchanged sentences

Stock-based compensation 6,198 5,655 4,891

Amortization of investment securities premiums and accretion of discounts, net 1,709 3,939 3,951

Net (accretion) amortization of investment securities available-for-sale ( 3,117 ) 1,709 3,939

Amortization of mortgage servicing rights 767 781 845

24 unchanged sentences

Proceeds from disposal of premises and equipment 254 613 142

Purchases of bank owned life insurance policies — — ( 10,000 )

Proceeds from sales of other real estate and repossessions 5,606 3,727 1,886

19 unchanged sentences

Liquidation of noncontrolling interests 22,986 5,920 —

Purchases of mandatorily redeemable securities with common stock 739 — —

Cash paid for:

Purchases of mandatorily redeemable securities with common stock held in treasury 102 739 —

Issuance of long-term debt for intangible asset acquisition 258 — —

Cash paid (received) for:

Interest $ 177,976 $ 176,227 $ 114,739

54 unchanged sentences

The accrual of interest on loans and leases is discontinued when a loan or lease becomes contractually delinquent for 90 days, or when an individual analysis of a borrower’s credit worthiness indicates a credit should be placed on nonperforming status, except for residential mortgage loans and consumer loans that are well secured and in the process of collection.

Residential mortgage loans are placed on nonaccrual at the time the loan is placed in foreclosure.

When interest accruals are discontinued, interest credited to income in the current year is reversed and interest accrued in the prior year is charged to the allowance for loan and lease losses.

71 unchanged sentences

These loans can be identified from a variety of sources including delinquency, non-accrual status, and complex or unusual transactions.

The scope may include accruing loans that exhibit risk characteristics which differ from their pool or non-performing loans with risk characteristics not similar to other special attention loans in their pool.

The scope may include accruing loans that exhibit risk characteristics which differ from their pool or non-performing loans with risk characteristics dissimilar to other special attention loans in their pool.

Individual reserves are determined based on an analysis of the loan’s expected future cash flows, the loan’s observable market value, or the fair value of the collateral less costs to sell.

113 unchanged sentences

Segment Information — 1st Source has one principal business segment, commercial banking.

While our chief decision makers monitor the revenue streams of various products and services, the identifiable segments’ operations are managed and financial performance is evaluated on a company-wide basis.

While our chief operating decision maker monitors the revenue streams of various products and services, the identifiable segments’ operations are managed and financial performance is evaluated on a company-wide basis.

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

23 unchanged sentences

Level 3 valuations are typically performed using pricing models, discounted cash flow methodologies, or similar techniques that incorporate management’s own estimates of assumptions that market participants would use in pricing the instrument, or valuations that require significant management judgment or estimation .

Reclassifications — Certain amounts in the prior periods consolidation financial statements have been reclassified to conform with the current year presentation.

These reclassifications had no effect on total assets, shareholders’ equity or net income as previously reported.

Note 2 — Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (FASB) issued ASU No.

Codification Improvements:

In December 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2025-12 “ Codification Improvements.

” These amendments update the FASB Accounting Standards Codification for a broad range of Topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements.

The amendments in the ASU, which addresses 33 issues, affect a wide variety of Topics in the Codification and apply to all reporting entities within the scope of the affected accounting guidance.

The amendments in this ASU are effective for all entities for annual periods beginning after December 15, 2026, and interim periods within those annual periods.

Early adoption is permitted in both interim and annual periods in which financial statements have not yet been issued or made available for issuance.

If an entity adopts the amendments in this ASU in an interim period, it must adopt them as of the beginning of the annual period that includes that interim period.

An entity may elect to early adopt the amendments on an issue-by-issue basis.

The Company is assessing ASU 2025-12 and its impact on its accounting and disclosures.

Interim Reporting:

In December 2025, the FASB issued ASU No.

2025-11 “ Interim Reporting (Topic 270):

Narrow-Scope Improvements.

” This ASU does not change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements.

The amendments in this ASU (1) clarify that the guidance in Topic 270 applies to all entities that provide interim financial statements and notes in accordance with generally accepted accounting principles (GAAP);

(2) create a comprehensive list in FASB Accounting Standards Codification® Topic 270 of interim disclosures that are required in interim financial statements and notes in accordance with GAAP;

(3) incorporate a disclosure principle, which is modeled after previous Securities and Exchange Commission (SEC) guidance, that requires entities to disclose events and changes that occur after the end of the most recent fiscal year that have a material impact on the entity;

and (4) improve guidance about information included in and the format of interim financial statements.

The amendments in this ASU are effective for pubic business entities for interim periods within annual periods beginning after December 15, 2027, and for entities other than public business entities the amendments are effective for interim periods within annual periods beginning after December 15, 2028.

Early adoption is permitted for all entities.

The amendments can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements.

The Company is assessing ASU 2025-11 and its impact on its accounting and disclosures.

Financial Instruments:

In July 2025, the FASB issued ASU No.

2025-05 “ Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets.

” The amendments provide (1) all entities with a practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the assets and (2) entities other than public business entities with an accounting policy election to consider collection activity after the balance sheet date when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606.

This ASU is effective for fiscal years including interim periods within those fiscal years, beginning after December 15, 2025.

Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance.

An entity should apply ASU No.

2025-05 prospectively to estimates of expected credit losses on asset balances described in ASC paragraph 326-20-30-10A performed after the date of adoption.

The Company adopted ASU 2025-05 on January 1, 2026 and it did not have a material impact on its accounting and disclosures.

In November 2024, the FASB issued ASU No.

2024-04 “ Debt with Conversion and Other Options (Subtopic 470-20):

3 unchanged sentences

Early adoption is permitted in any interim period.

The Company is assessing ASU 2024-04 and its impact on its accounting and disclosures.

The Company adopted ASU 2024-04 on January 1, 2026 and it did not have a material impact on its accounting and disclosures.

Income Statement:

9 unchanged sentences

and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption.

• Include certain amounts that are already required to be disclosed under current generally accepted accounting principles (GAAP) in the same disclosure as the other disaggregation requirements.

• Include certain amounts that are already required to be disclosed under current GAAP in the same disclosure as the other disaggregation requirements.

• Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively.

5 unchanged sentences

Income Taxes:

In December 2023, the FASB issued Accounting Standards Update (ASU) No.

In December 2023, the FASB issued ASU No.

2023-09 “ Income Taxes (Topic 740):

4 unchanged sentences

The amendments should be applied on a prospective basis although retrospective application is permitted.

The Company is assessing ASU 2023-09 and its impact on its disclosures.

Segment Reporting:

In November 2023, the FASB issued ASU 2023-07 “ Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

” These amendments require, among other things, that a public entity that has a single reportable segment provide all the disclosures required by the amendments in this ASU and all existing segment disclosures in Topic 208.

The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

A public entity should apply the amendments retrospectively to all periods presented in the financial statements.

The Company adopted ASU 2023-07 on January 1, 2024 and it did not have a material impact on its accounting and disclosures.

The Company adopted ASU 2023-09 on January 1, 2025 on a retrospective basis and it did not have a material impact on its accounting and disclosures.

Note 3 — Investment Securities Available-For-Sale

6 unchanged sentences

Corporate debt securities 500 3 — 503

Foreign government securities — — — —

Total investment securities available-for-sale $ 1,650,684 $ 249 $ ( 114,634 ) $ 1,536,299

Total debt securities available-for-sale $ 1,568,429 $ 7,879 $ ( 53,822 ) $ 1,522,486

December 31, 2024

2 unchanged sentences

Mortgage-backed securities - Federal agencies 777,962 192 ( 82,236 ) 695,918

Corporate debt securities 8,448 — ( 119 ) 8,329

Foreign government securities 600 — ( 11 ) 589

Total investment securities available-for-sale $ 1,762,357 $ 1,162 $ ( 140,919 ) $ 1,622,600

Total debt securities available-for-sale $ 1,650,684 $ 249 $ ( 114,634 ) $ 1,536,299

Amortized cost excludes accrued interest receivable which is included in Accrued Income and Other Assets on the Consolidated Statements of Financial Condition.

At December 31, 2025 and 2024, accrued interest receivable on investment securities available for sale was $ 8.04 million and $ 4.68 million, respectively.

At December 31, 2024, the residential mortgage-backed securities held by the Company consisted primarily of GNMA, FNMA and FHLMC pass-through certificates which are guaranteed by those respective agencies of the United States government (Government Sponsored Enterprise, GSEs).

At December 31, 2025 and 2024, the residential mortgage-backed securities held by the Company consisted primarily of GNMA, FNMA and FHLMC pass-through certificates which are guaranteed by those respective agencies of the United States government (Government Sponsored Enterprise, GSEs).

The Company did not hold any marketable equity securities at December 31, 2025 and 2024.

16 unchanged sentences

Mortgage-backed securities - Federal agencies 75,414 ( 355 ) 415,247 ( 48,025 ) 490,661 ( 48,380 )

Corporate debt securities — — — — — —

Foreign government securities — — — — — —

Total debt securities available-for-sale $ 235,253 $ ( 736 ) $ 617,931 $ ( 53,086 ) $ 853,184 $ ( 53,822 )

3 unchanged sentences

Mortgage-backed securities - Federal agencies 191,779 ( 3,355 ) 466,204 ( 78,881 ) 657,983 ( 82,236 )

Corporate debt securities — — 8,329 ( 119 ) 8,329 ( 119 )

Foreign government securities — — 589 ( 11 ) 589 ( 11 )

Total debt securities available-for-sale $ 332,417 $ ( 5,349 ) $ 1,150,098 $ ( 109,285 ) $ 1,482,515 $ ( 114,634 )

2 unchanged sentences

The unrealized losses occurred as a result of changes in interest rates, market spreads and market conditions subsequent to purchase.

The following table shows the gross realized gains and losses from the available-for-sale debt securities portfolio.

The following table shows the proceeds from sales of available-for-sale debt securities and the gross realized gains and gross realized losses that have been included in earnings as a result of these sales.

Realized gains and losses of all securities are computed using the specific identification cost basis.

(Dollars in thousands) 2025 2024 2023

Proceeds from sales $ 254,500 $ 62,616 $ 102,437

Gross realized gains — — 733

Gross realized losses ( 8,679 ) ( 3,889 ) ( 3,659 )

Net realized (losses) gains $ ( 3,889 ) $ ( 2,926 ) $ ( 184 )

At December 31, 2025 and 2024, investment securities with carrying values of $ 237.34 million and $ 359.10 million, respectively, were pledged as collateral for security repurchase agreements and for other purposes.

1 unchanged sentence

Total loans and leases outstanding were recorded net of unearned income and deferred loan fees and costs at December 31, 2025 and 2024, and totaled $ 7.05 billion and $ 6.85 billion, respectively.

At December 31, 2024 and 2023, net deferred loan and lease costs were $ 1.43 million and $ 1.65 million, respectively.

At December 31, 2025 and 2024, net deferred loan and lease (fees) costs were $( 0.79 ) million and $ 1.43 million, respectively.

Accrued interest receivable on loans and leases at December 31, 2025 and 2024 was $ 27.43 million and $ 28.02 million, respectively.

14 unchanged sentences

The criteria used to assign grades to extensions of credit that exhibit potential problems or well-defined weaknesses are primarily based upon the degree of risk and the likelihood of orderly repayment, and their effect on the Company’s safety and soundness.

Loans or leases graded 7 or weaker are considered “special attention” credits and, as such, relationships in excess of $ 250,000 are reviewed quarterly as part of management’s evaluation of the appropriateness of the allowance for loan and lease losses.

Loans or leases graded 7 or weaker are considered “special attention” credits and, as such, undergo enhanced monitoring on a quarterly basis.

Grade 7 credits are defined as “watch” and contain greater than average credit risk and are monitored to limit the Company’s exposure to increased risk;

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Renewable energy – loans are for the purpose of financing primarily solar related projects and may include construction draw notes, operating loans, letters of credit and may entail a tax equity structure.

The Company’s core focus is solar financing, but its lending activities may also include a limited amount of battery storage projects or other alternative energy resources.

Collateral in a multi-state area includes tangible assets of the borrower, assignment of intangible assets including power purchase agreements, and pledges of permits and licenses.

8 unchanged sentences

Risks include economic risks and collateral risks, principally used vehicle values.

Medium and heavy duty truck – loans and full-service truck leases are secured by heavy-duty trucks, commonly Class 8 trucks, and are generally personally guaranteed.

Medium and heavy duty truck – loans and full-service truck leases are secured by heavy-duty trucks, commonly Class 8 trucks and trailers, and are generally personally guaranteed.

In addition to economic risks, collateral risk is significant.

14 unchanged sentences

Commercial real estate – loans are generally to entities within the local market communities served by the Company with advances generally within regulatory guidelines.

Historically, the Company’s exposure to commercial real estate had been primarily to the less risky owner-occupied segment although growth in the non-owner-occupied segment of this portfolio has increased over the last several years.

Historically, the Company’s exposure to commercial real estate has been primarily to the less risky owner-occupied segment, although growth has occurred in the non-owner-occupied segment of this portfolio over the last several years.

The non-owner-occupied segment includes hotels, apartment complexes and warehousing facilities.

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The following table shows the amortized cost of loans and leases, segregated by portfolio segment, with delinquency aging and nonaccrual status.

(Dollars in thousands) Current 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due and Accruing Total Accruing Loans Nonaccrual Total Financing Receivables

(Dollars in thousands) Current 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due and Accruing Total Accruing Total Nonaccrual Nonaccrual with No Allowance for Credit Loss Total Financing Receivables

December 31, 2025

18 unchanged sentences

Residential real estate and home equity 675,669 1,010 585 96 677,360 2,711 — 680,071

634,345 1,623 51 142 636,161 1,812 637,973

Consumer 131,585 852 208 10 132,655 810 — 133,465

1 unchanged sentence

Interest income for the years ended December 31, 2025, 2024, and 2023, would have increased by approximately $ 5.83 million, $ 2.06 million, and $ 1.47 million, respectively, if the nonaccrual loans and leases had earned interest at their full contract rate.

A loan or lease is considered collateral-dependent when the borrower is experiencing financial difficulty and the loan or lease is expected to be repaid substantially through the operation or sale of the collateral.

Expected credit losses for collateral-dependent loans and leases are based on the fair value of the collateral, adjusted for selling costs as appropriate.

Significant quarter over quarter changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraisal value.

The following table shows the amortized cost basis of collateral-dependent loans, segregated by portfolio segment, which are individually evaluated to determine credit losses.

(Dollars in thousands) Real Estate Equipment General

Assets Total Allowance on Collateral Dependent Loans and Leases

December 31, 2025

Commercial and agricultural $ — $ — $ 1,136 $ 1,136 $ 19

Auto and light truck — 53,981 — 53,981 1,080

Medium and heavy duty truck — 1,507 — 1,507 166

Construction equipment — 10,797 — 10,797 —

Commercial real estate 1,798 — — 1,798 —

Total $ 1,798 $ 66,285 $ 1,136 $ 69,219 $ 1,265

December 31, 2024

Commercial and agricultural $ — $ — $ 4,102 $ 4,102 $ 209

Auto and light truck — 939 — 939 —

Construction equipment — 17,404 — 17,404 —

Commercial real estate 1,055 — — 1,055 —

Total $ 1,055 $ 18,343 $ 4,102 $ 23,500 $ 209

Loan Modifications to Borrowers Experiencing Financial Difficulty

10 unchanged sentences

Medium and heavy duty truck — — — 1,508 0.56

Commercial real estate 988 — — — 0.08

Construction equipment — 386 — — 0.03

Total $ 18,104 $ 32,109 $ — $ 3,199 0.76 %

1 unchanged sentence

Commercial and agricultural $ 1,052 $ — $ — $ — 0.14 %

Auto and light truck — — — 40,150 4.23

Medium and heavy duty truck — — — 3,017 1.04

Construction equipment — 1,496 — — 0.14

Commercial real estate 988 — — — 0.08

11 unchanged sentences

Medium and heavy duty truck 1,508 — — — —

Commercial real estate 988 — — — —

Construction equipment 386 — — — —

Total $ 35,264 $ 5,387 $ 12,717 $ 44 $ 18,148

1 unchanged sentence

Commercial and agricultural $ 1,052 $ — $ — $ — $ —

Auto and light truck 39,664 — 486 — 486

Medium and heavy duty truck 3,017 — — — —

Construction equipment 1,496 — — — $ —

Commercial real estate 988 — — — —

8 unchanged sentences

Medium and heavy duty truck — 0 0 3

Commercial real estate — % 0 6 0

Construction equipment — 5 0 0

Total — % 17 3 5

1 unchanged sentence

Commercial and agricultural — % 0 6 0

Auto and light truck — 0 0 3

Medium and heavy duty truck — 0 0 4

Construction equipment — % 5 0 0

Commercial real estate — 0 6 0

Total — % 0 6 3

There was one modified loan to a borrower experiencing financial difficulty that had a payment default and was modified within the twelve months prior to such default during each of the twelve month periods ended December 31, 2024 and December 31, 2023, respectively.

There was one modified loan to a borrower experiencing financial difficulty which had a payment default within twelve months of modification during each of the twelve month periods ended December 31, 2025 and December 31, 2024, respectively.

Upon the Company’s determination that a modified loan or lease has subsequently been deemed uncollectible, the loan or lease is written off.

24 unchanged sentences

Balance, end of year $ 17,385 $ 6,610 $ 16,858 $ 8,965 $ 37,653 $ 26,510 $ 23,690 $ 7,698 $ 2,183 $ 147,552

The allowance for loan and lease losses increased year-over-year in 2024 as most portfolio segments experienced loan growth, and special attention balances, which are reserved at higher rates, also increased.

The Company remains cautious on the forward-outlook and the forecast adjustment was little changed from the prior period, reflecting fragile growth expectations during the forecast period.

Allowance increases were partially offset by declines in historical loss rates due to recovery activity in select portfolios and lower specific impairments as compared to the prior year-end.

Commercial and agricultural – allowance increased year-over-year due to modest loan growth, an increase in special attention balances which carry higher reserves, and higher loss rates within the portfolio.

Renewable energy – allowance increased primarily due to loan growth along with an increase in qualitative adjustments to address higher interest rate and maturity risk within the portfolio.

Auto and light truck – allowance increased due to higher special attention balances, which are reserved at higher rates, and an increase in qualitative adjustments to address increasing risk within the auto rental segment, partially offset by a slight decline in loan balances within the portfolio and recovery activity during the period.

Medium and heavy duty truck – allowance decreased due to lower loan balances within the portfolio.

The industry remains challenged by overcapacity.

Aircraft – the allowance declined due to lower loss ratios from recovery activity primarily in the foreign aircraft segment during the period.

Loan growth was modest and credit quality metrics remain stable.

The Company carries a higher allowance in this portfolio due to historical risk volatility.

Construction equipment – allowance increase was primarily driven by strong loan growth during the year.

Commercial real estate – the allowance increase was due to loan growth across multiple segments.

The Company continues to monitor construction risk and maturity repricing risk in the elevated interest rate environment.

Residential real estate and home equity – the allowance increased due to loan growth.

Consumer – the allowance showed minimal change as a qualitative adjustment for increased delinquency and nonperforming activity in the segment offset a decline in loan balances during the period.

The allowance for loan and lease losses increased year-over-year in 2025 due to loan growth, the accretive impact of changes in the forecast adjustment, and a modest increase in special attention balances, which are reserved at higher rates.

The Company remains cautious on the forward-outlook and the forecast adjustment reflects an increase in downside risk as compared to the prior year-end analysis.

Growth expectations remain fragile, and the forecast reflects heightened uncertainty and a broader range of potential negative macroeconomic outcomes as compared to the previous year-end.

Allowance increases were partially offset by declines in historical loss rates due to generally modest charge-offs and/or recovery activity in select portfolios as compared to the prior year-end.

Economic Outlook

As of December 31, 2024, the most significant economic factors impacting the Company’s loan portfolios was a fragile domestic growth outlook impacted by continued elevated inflation and high interest rates, along with various foreign conflicts and resultant geopolitical uncertainty.

Consumer stressors are evident, and the Company remains concerned about small businesses prospects and their ability to absorb high interest rates and ever-increasing expenses.

A few of the Company’s target industries are exhibiting signs of elevated risk including the auto rental, commercial and agricultural, and medium and heavy duty trucking segments.

Tighter lending conditions and the current high-rate environment continue to impact commercial real estate activity.

The forecast considers global and domestic impacts from these factors as well as other key economic factors such as changes in unemployment, commodity prices, and the housing market which may impact the Company’s clients.

The Company maintains a cautious outlook for economic growth prospects in 2025 and 2026 with the expectation of an elevated interest rate environment and inflation slowly moving back towards the 2% Federal Reserve target rate resulting in an adverse impact on the loan and lease portfolio over the next two years.

As a result of geopolitical risk and economic uncertainty, the Company’s future loss estimates may vary considerably from the December 31, 2024 assumptions.

As of December 31, 2025, the most significant economic factors impacting the Company’s loan portfolios are uncertainty in the domestic growth outlook, the ongoing impact of changes in trade policy, still-elevated inflation and interest rates, along with ongoing foreign conflicts and geopolitical instability.

The labor market has exhibited broadening signs of softening, including a decline in job openings, and slower payroll growth.

Payroll growth has lacked industry sector breadth for multiple consecutive quarters.

Uncertainty regarding tariff policy and timing raises downside risks relative to the prior year.

The Company remains concerned about tariff policies, uncertainty surrounding policy implementation, and the impact on the Company’s markets.

To date, tariff impacts have largely been absorbed within the supply chain, but pass-through to the consumer remains a risk.

Consumer stressors are evident and consumer confidence is weakening.

The Company remains concerned about small businesses’ ability to manage expenses in an environment of broad instability, elevated interest rates, and higher cost of capital.

Restrictive trade policies increase the potential for volatility in asset prices which collateralize the Company’s loans.

The forecast considers global and domestic economic impacts from these factors, as well as other key economic factors, such as changes in gross domestic product and unemployment, which may impact the Company’s clients.

Forecast assumptions as of year-end represent a broadening of economic risks as compared to the prior year-end’s analysis.

The forecast reflects uncertain economic growth expectations and a continued weighting towards downside risks during the forecast period over the next two years with inflation slowly moving back towards the 2% Federal Reserve target rate resulting in an adverse impact on the loan and lease portfolio.

Although the Company’s current loss estimates consider geopolitical and economic risk, due to the level of uncertainty associated with these and other risk factors, the complexity of the current environment, and the potential for future changes in the forecast, the Company’s future loss estimates may vary considerably from the December 31, 2025 assumptions.

Liability for Credit Losses on Unfunded Loan Commitments

3 unchanged sentences

Balance, beginning of year $ 6,985 $ 8,182 $ 5,616

(Recovery of) provision ( 1,197 ) 2,566 1,420

Provision (recovery of provision) 2,050 ( 1,197 ) 2,566

Balance, end of year $ 9,035 $ 6,985 $ 8,182

38 unchanged sentences

During the years ended December 31, 2025, 2024, and 2023, the Company recorded impairment charges of $ 0.00 million , $ 0.00 million , and $ 0.00 million , respectively.

The impairment charges were recorded as a result of the annual review of operating lease residual values and was recognized in Depreciation — Leased Equipment on the Consolidated Statements of Income.

Impairment charges are recorded as a result of the annual review of operating lease residual values and are recognized in Depreciation — Leased Equipment on the Consolidated Statements of Income.

Note 7 — Premises and Equipment

5 unchanged sentences

Total premises and equipment 137,771 131,064

Accumulated depreciation and amortization ( 77,608 ) ( 76,993 )

Accumulated depreciation ( 79,453 ) ( 77,608 )

Net premises and equipment $ 58,318 $ 53,456

Depreciation and amortization of properties and equipment totaled $ 4.46 million in 2024, $ 4.45 million in 2023, and $ 4.60 million in 2022.

Depreciation of properties and equipment totaled $ 5.07 million in 2025, $ 4.46 million in 2024, and $ 4.45 million in 2023.

Note 8 — Mortgage Servicing Rights

15 unchanged sentences

Fair value of mortgage servicing rights at end of year $ 7,325 $ 7,480

The balance of MSRs is located in Accrued Income and Other Assets on the Consolidated Statements of Financial Condition.

At December 31, 2025, the fair value of MSRs exceeded the carrying value reported on the Consolidated Statements of Financial Condition by $ 4.03 million.

2 unchanged sentences

Mortgage loan contractual servicing fees, including late fees and ancillary income, were $ 2.38 million, $ 2.40 million, and $ 2.54 million for 2025, 2024, and 2023, respectively.

Mortgage loan contractual servicing fees are included in Mortgage Banking Income on the Consolidated Statements of Income.

Mortgage loan contractual servicing fees are included in Mortgage Banking on the Consolidated Statements of Income.

Note 9 — Intangible Assets and Goodwill

2 unchanged sentences

Intangible asset amortization was $ 0.26 million, $ 0.02 million, and $ 0.11 million for 2025, 2024, and 2023, respectively.

Amortization on other intangible assets is expected to total $ 0.00 million, $ 0.00 million, $ 0.00 million, $ 0.00 million, and $ 0.00 million in 2025, 2026, 2027, 2028, and 2029, respectively.

There is no expected future amortization expense related to other intangible assets as of December 31, 2025, as such assets are fully amortized.

The following table shows a summary of other intangible assets as of December 31.

19 unchanged sentences

Note 11 — Borrowed Funds and Mandatorily Redeemable Securities

The following table shows the details of long-term debt and mandatorily redeemable securities as of December 31, 2024 and 2023.

The following table shows the details of long-term debt and mandatorily redeemable securities as of December 31.

(Dollars in thousands) 2025 2024

17 unchanged sentences

Total interest expense recorded for 2025, 2024, and 2023 was $ 4.48 million, $ 2.97 million, and $ 3.60 million, respectively.

Negative interest expense recognized during 2022 was due to a decrease in book value per share during the year as a result of increased unrealized losses on available-for-sale investment securities within shareholders’ equity during 2022.

The following table shows the details of short-term borrowings as of December 31, 2024 and 2023.

The following table shows the details of short-term borrowings as of December 31.

(Dollars in thousands) Amount Weighted Average Rate Amount Weighted Average Rate

Federal funds purchased $ 50,000 3.68 % $ — — %

Securities sold under agreements to repurchase 62,470 0.73 72,346 1.15

22 unchanged sentences

The Company’s unfunded capital and other commitments related to these unconsolidated VIEs are generally carried in Other Liabilities on the Consolidated Statements of Financial Condition.

The Company’s maximum exposure to loss from these unconsolidated VIEs include the investment recorded on the Consolidated Statements of Financial Condition, net of unfunded capital commitments, and previously recorded tax credits which remain subject to recapture by taxing authorities based on compliance features required to be met at the project level.

While the Company believes potential losses from these investments are remote, the maximum exposure was determined by assuming a scenario where the community-based business, housing projects and renewable energy projects completely fail and do not meet certain taxing authority compliance requirements resulting in recapture of the related tax credits.

The Company’s maximum exposure to loss from these unconsolidated VIEs includes the investment recorded on the Consolidated Statements of Financial Condition, net of unfunded capital commitments, and previously recorded tax credits which remain subject to recapture by taxing authorities based on compliance features required to be met at the project level.

While the Company believes potential losses from these investments are remote, the maximum exposure was determined by assuming a scenario where the community-based business projects, housing projects, and renewable energy projects completely fail and do not meet certain taxing authority compliance requirements, resulting in recapture of the related tax credits.

The following table provides a summary of investments in affordable housing, community development and renewable energy VIEs that the Company has not consolidated as of December 31, 2025 and 2024.

3 unchanged sentences

Maximum exposure to loss 84,442 74,242

The Company is required to consolidate VIEs in which it has concluded it has significant involvement in and the ability to direct the activities that impact the entity’s economic performance.

The Company is the managing general partner of entities to which it shares interest in tax-advantaged investments with a third party.

The Company is required to consolidate VIEs in which it has concluded it has significant involvement and the ability to direct the activities that impact the entity’s economic performance.

The Company is the managing general partner of entities in which it shares interest in tax-advantaged investments with a third party.

At December 31, 2025 and 2024, approximately $ 47.87 million and $ 78.20 million, respectively, of the Company’s assets and $ 0.00 million and $ 0.00 million, respectively, of its liabilities included on the Consolidated Statements of Financial Condition were related to tax-advantaged investment VIEs which the Company has consolidated.

The assets of the consolidated VIE are reported in Other Assets, the liabilities are reported in Other Liabilities and the non-controlling interest is reported in Equity on the Consolidated Statements of Financial Condition.

The assets of the consolidated VIEs are reported in Other Assets, the liabilities are reported in Other Liabilities, and the non-controlling interest is reported in Equity on the Consolidated Statements of Financial Condition.

The assets of a particular VIE are the primary source of funds to settle its obligations.

4 unchanged sentences

The subordinated notes held by the Capital Trust are the sole assets of the Capital Trust.

The Capital Trust qualifies as a variable interest entity for which the Company is not the primary beneficiary and therefore reported in the financial statements as an unconsolidated subsidiary.

The Capital Trust qualifies as a variable interest entity for which the Company is not the primary beneficiary and is therefore reported in the financial statements as an unconsolidated subsidiary.

The junior subordinated debentures are reflected as subordinated notes on the Consolidated Statements of Financial Condition with the corresponding interest distributions reflected as Interest Expense on the Consolidated Statements of Income.

54 unchanged sentences

Contribution expense for the years ended December 31, 2025, 2024, and 2023, amounted to $ 7.78 million, $ 6.53 million, and $ 6.76 million, respectively.

During the year ended December 31, 2024, the Company utilized $ 0.65 million of accumulated Plan forfeitures to offset employer contribution expense.

During the years ended December 31, 2025, 2024, and 2023, the Company utilized $ 0.08 million, $ 0.65 million, and $ 0.00 million of accumulated Plan forfeitures to offset employer contribution expense.

Note 16 — Stock Based Compensation

70 unchanged sentences

Total provision $ 46,118 $ 38,439 $ 36,746

The following table shows the reasons for the difference between income tax expense and the amount computed by applying the statutory federal income tax rate ( 21 %) to income before income taxes.

The following table shows the composition of income taxes paid (refunded).

State taxes are disclosed for years when they exceed 5% of the total net taxes paid (refunded).

Year Ended December 31 (Dollars in thousands)

2025 2024 2023

Federal $ ( 10,712 ) $ 7,700 $ 12,200

State 4,027 3,581 5,599

Total $ ( 6,685 ) $ 11,281 $ 17,799

Indiana $ 1,900 $ 1,850 $ 3,800

Illinois 365 — —

California 422 — —

The following table shows the reasons for the difference between income tax expense and the amount computed by applying the U.S.

federal statutory income tax rate ( 21 %) to income before income taxes.

2025 2024 2023

Year Ended December 31 (Dollars in thousands)

Amount Percent of Pretax Income Amount Percent of Pretax Income Amount Percent of Pretax Income

Statutory federal income tax $ 35,922 21.0 % $ 33,953 21.0 % $ 32,925 21.0 %

federal statutory income tax $ 42,919 21.0 % $ 35,922 21.0 % $ 33,953 21.0 %

(Decrease) increase in income taxes resulting from:

Tax-exempt interest income ( 465 ) ( 0.3 ) ( 592 ) ( 0.4 ) ( 504 ) ( 0.3 )

State taxes, net of federal income tax benefit (1)

Other ( 628 ) ( 0.3 ) ( 241 ) ( 0.1 ) ( 441 ) ( 0.3 )

4,703 2.3 3,610 2.1 3,626 2.2

Tax credits ( 861 ) ( 0.4 ) ( 701 ) ( 0.4 ) ( 510 ) ( 0.3 )

Nontaxable or nondeductible items ( 643 ) ( 0.3 ) ( 392 ) ( 0.2 ) ( 323 ) ( 0.2 )

Total $ 46,118 22.6 % $ 38,439 22.5 % $ 36,746 22.7 %

The tax benefit related to losses on investment securities available-for-sale for the years 2024, 2023, and 2022 was approximately $ 937,000 , $ 720,000 , and $ 39,000 , respectively.

(1) State taxes in Indiana made up the majority (greater than 50%) of the tax effect.

The tax benefit related to losses on investment securities available-for-sale for the years 2025, 2024, and 2023 was approximately $ 2.09 million, $ 0.94 million and $ 0.72 million, respectively.

The following table shows the composition of deferred tax assets and liabilities as of December 31, 2025 and 2024.

4 unchanged sentences

Accruals for employee benefits 5,223 4,361

Tax advantaged partnerships — 1,658

Tax credit carryover 2,546 —

Net unrealized losses on securities available-for-sale 11,165 27,153

78 unchanged sentences

The transaction allows the client to effectively convert a variable rate loan to a fixed rate.

Because the terms of the swaps with the customers and the other financial institution offset each other, with the only difference being counterparty credit risk, changes in the fair value of the underlying derivative contracts are not materially different and do not significantly impact the Company’s results of operations.

Because the terms of the swaps with the customers and the other financial institutions offset each other, with the only difference being counterparty credit risk, changes in the fair value of the underlying derivative contracts are not materially different and do not significantly impact the Company’s results of operations.

The following table shows the amounts of non-hedging derivative financial instruments at December 31, 2025 and 2024.

3 unchanged sentences

Loan commitments 8,208 Mortgages held for sale 153 N/A —

Forward contracts - mortgage loan 4,500 Mortgages held for sale 17 N/A —

Forward contracts - mortgage loan 10,000 N/A — Mortgages held for sale 21

Total - December 31, 2025 $ 1,260,904 $ 16,639 $ 16,819

1 unchanged sentence

Loan commitments 3,586 Mortgages held for sale 118 N/A —

Forward contracts - mortgage loan 3,500 N/A — Mortgages held for sale 16

Forward contracts - mortgage loan 4,500 Mortgages held for sale 17 N/A —

Total - December 31, 2024 $ 1,091,759 $ 16,559 $ 16,727

76 unchanged sentences

The Company economically hedges its mortgages held for sale at the time the interest rate locks are issued to the customers.

The Company believes the election for mortgages held for sale will reduce certain timing differences and better match changes in the value of these assets with changes in the value of the derivatives or best-efforts forward sales commitments.

At December 31, 2024 and 2023, all mortgages held for sale are carried at fair value.

The following table shows the differences between fair value carrying amount of mortgages held for sale measured at fair value and the aggregate unpaid principal amount the Company is contractually entitled to receive at maturity on December 31, 2024 and 2023.

The Company believes the election for mortgages held for sale will reduce certain timing differences and better match changes in the value of these assets with changes in the value of derivatives or best-efforts forward sales commitments.

At December 31, 2025 and 2024, all mortgages held for sale were carried at fair value.

The following table shows the differences between the fair value carrying amount of mortgages held for sale measured at fair value and the aggregate unpaid principal amount the Company is contractually entitled to receive at maturity on December 31, 2025 and 2024.

(Dollars in thousands) Fair value carrying amount Aggregate unpaid principal Excess of fair value carrying amount over (under) unpaid principal

5 unchanged sentences

Total Loans $ 2,569 $ 2,343 $ 226 (1)

(1) The excess of fair value carrying amount over (under) unpaid principal is included in mortgage banking income and includes changes in fair value at and subsequent to funding and gains and losses on the related loan commitment prior to funding.

(1) The excess of fair value carrying amount over (under) unpaid principal is included in Mortgage Banking Income on the Consolidated Statements of Income and includes changes in fair value at and subsequent to funding and gains and losses on the related loan commitment prior to funding.

Financial Instruments on Recurring Basis:

17 unchanged sentences

Since some securities are not traded daily and due to other grouping limitations, active market quotes are often obtained using benchmarking for like securities.

Local direct placement municipal securities, with very little market activity, are priced using an appropriate market yield curve which incorporates a credit spread assumption.

Mortgages held for sale and the related loan commitments and forward contracts (economic hedges) are valued by a third party pricing agent.

Local direct placement municipal securities, with very little market activity, are priced using an appropriate market yield curve, which includes a credit spread assumption.

Mortgages held for sale and the related loan commitments and forward contracts (hedges) are valued by a third-party pricing agent.

Prices supplied by the independent pricing agent, as well as their pricing methodologies, are reviewed by the Company for reasonableness and to ensure such prices are aligned with market values.

13 unchanged sentences

Corporate debt securities — 503 — 503

Foreign government and other securities — — — —

Total debt securities available-for-sale 516,892 1,004,611 983 1,522,486

9 unchanged sentences

Mortgage-backed securities - Federal agencies — 695,918 — 695,918

Corporate debt securities — 8,329 — 8,329

Foreign government and other securities — 589 — 589

Total debt securities available-for-sale 446,021 1,089,246 1,032 1,536,299

4 unchanged sentences

Total $ — $ 16,727 $ — $ 16,727

The following table shows the changes in Level 3 assets and liabilities measured at fair value on a recurring basis.

The following table shows changes in Level 3 assets measured at fair value on a recurring basis.

(Dollars in thousands) U.S.

3 unchanged sentences

Included in earnings —

Included in other comprehensive income 51

Included in other comprehensive income (loss) 41

Settlements —

6 unchanged sentences

Included in earnings —

Included in other comprehensive income ( 43 )

Purchases 3,000

Included in other comprehensive income (loss) 51

Settlements —

3 unchanged sentences

Ending balance December 31, 2024 $ 1,032

There were no gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held at December 31, 2024 or 2023.

The following table shows the valuation methodology and unobservable inputs for Level 3 assets and liabilities measured at fair value on a recurring basis.

There were no gains or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at December 31, 2025 or 2024.

The following table shows the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a recurring basis.

(Dollars in thousands) Fair Value Valuation Methodology Unobservable Inputs Range of Inputs Weighted Average

8 unchanged sentences

These adjustments to fair value usually result from application of lower of cost or market accounting or impairment charges of individual assets.

The Credit Policy Committee (CPC), a management committee, is responsible for overseeing the valuation processes and procedures for Level 3 measurements of impaired loans, other real estate and repossessions.

The CPC reviews these assets on a quarterly basis to determine the accuracy of the observable inputs, generally third-party appraisals, auction values, values derived from trade publications and data submitted by the borrower, and the appropriateness of the unobservable inputs, generally discounts due to current market conditions and collection issues.

The CPC establishes discounts based on asset type and valuation source;

deviations from the standard are documented.

The discounts are reviewed periodically, annually at a minimum, to determine they remain appropriate.

Consideration is given to current trends in market values for the asset categories and gain and losses on sales of similar assets.

The Loan and Funds Management Committee of the Board of Directors is responsible for overseeing the CPC.

The Credit Policy Committee (CPC), a management committee, is responsible for overseeing the processes and controls for supporting Level 3 valuation inputs used for collateral-dependent loans and leases, other real estate, and repossessions.

The CPC reviews these assets on a quarterly basis to determine the appropriateness and accuracy of observable inputs which can include, third-party appraisals, auction values, trade publications and borrower-provided information, and unobservable inputs which may include discounts for current market conditions, collateral condition, estimated time to liquidation, and collection considerations.

Standard discount frameworks by asset type and valuation source are utilized and deviations from the standard are documented.

The discounts are reviewed at least annually to determine whether they remain appropriate.

Consideration is given to current trends in market values for the asset categories and realized gains and losses on sales of similar assets.

The Loan and Funds Management Committee of the Board of Directors provides oversight for the CPC.

Discounts vary depending on the nature of the assets and the source of value.

Aircraft are generally valued using quarterly trade publications adjusted for engine time, condition, maintenance programs, discounted by 10 %.

Likewise, autos are valued using current auction values, discounted by 10 %;

medium and heavy duty trucks are valued using trade publications and auction values, discounted by 15 %.

Construction equipment is generally valued using trade publications and auction values, discounted by 20 %.

Real estate is valued based on appraisals or evaluations, discounted by 20 % at a minimum with higher discounts for property in poor condition or property with characteristics which may make it more difficult to market.

Commercial loans subject to borrowing base certificates are generally discounted by 20 % for receivables and 40 % - 75 % for inventory with higher discounts when monthly borrowing base certificates are not required or received.

Collateral-dependent impaired loans and related write-downs are based on the fair value of the underlying collateral if repayment is expected solely from the collateral.

Collateral values are reviewed quarterly and estimated using customized discounting criteria, appraisals and dealer and trade magazine quotes which are used in a market valuation approach.

In accordance with fair value measurements, only impaired loans for which an allowance for loan loss has been established based on the fair value of collateral require classification in the fair value hierarchy.

As a result, only a portion of the Company’s impaired loans are classified in the fair value hierarchy.

The Company has established MSRs valuation policies and procedures based on industry standards and to ensure valuation methodologies are consistent and verifiable.

MSRs and related adjustments to fair value result from application of lower of cost or fair value accounting.

For purposes of impairment, MSRs are stratified based on the predominant risk characteristics of the underlying servicing, principally by loan type.

The fair value of each tranche of the servicing portfolio is estimated by calculating the present value of estimated future net servicing cash flows, taking into consideration actual and expected mortgage loan prepayment rates, discount rates, servicing costs, and other economic factors.

Aircraft valuations may incorporate quarterly trade publication data adjusted for engine time, condition, and maintenance programs, typically discounted by 10 %.

Likewise, autos are valued using current auction data, generally discounted by 10 %;

medium and heavy duty trucks are valued using trade publications and auction data, commonly discounted by 15 %.

Construction equipment values may reference trade publications and auction data, typically discounted by 20 %.

Real estate is valued based on appraisals or evaluations, generally discounted by 20 % with higher discounts for property in poor condition or property with characteristics which may make it more difficult to market.

For commercial loans subject to borrowing base certificates, discounts of at least 20 % are applied to receivables and 40 % - 75 % for inventory with higher discounts when monthly borrowing base certificates are not required or received.

For collateral dependent loans and leases, where repayment is expected substantially from the collateral, expected credit losses are measured based on the fair value of the underlying collateral, less estimated cost to sell.

Collateral values are reviewed at least quarterly and estimated using a market-based valuation approach that may include appraisals, dealer and auction quotations, trade publications, and other relevant market data, adjusted for collateral condition, market trends, and liquidation assumptions.

In accordance with ASC 820, Fair Value Measurements, the collateral dependent loans and leases themselves are carried at amortized cost and are not classified within the fair value hierarchy.

However, collateral dependent loans and leases for which an allowance for loan and lease loss has been established based on the fair value of collateral require classification in the fair value hierarchy.

The Company has established MSRs valuation policies and procedures based on industry standards, designed to ensure that valuation methodologies are applied consistently and resulting fair value measurements are verifiable.

MSRs are accounted for at the lower of cost or fair value.

For purposes of impairment assessment, MSRs are stratified based on the predominant risk characteristics of the underlying servicing assets, principally by loan type.

The fair value of each tranche of the servicing portfolio is estimated by calculating the present value of expected future net servicing cash flows, taking into consideration actual and expected mortgage loan prepayment rates, discount rates, servicing costs, and other relevant economic factors.

Prepayment rates and discount rates are derived through a third-party pricing agent.

Changes in the most significant inputs, including prepayment rates and discount rates, are compared to the changes in the fair value measurements and appropriate resolution is made.

A fair value analysis is also obtained from an independent third-party agent and compared to the internal valuation for reasonableness.

MSRs do not trade in an active, open market with readily observable prices and though sales of MSRs do occur, precise terms and conditions typically are not readily available and the characteristics of the Company’s servicing portfolio may differ from those of any servicing portfolios that do trade.

Other real estate is based on the fair value of the underlying collateral less expected selling costs.

Collateral values are estimated primarily using appraisals and reflect a market value approach.

Changes in the most significant valuation inputs, including prepayment rates and discount rates, are evaluated in relation to changes in the fair value measurements and an appropriate resolution is made.

In addition, an independent third-party fair value analysis is obtained and compared to the Company’s internal valuation for reasonableness.

MSRs do not trade in an active, open market with readily observable prices, and while MSR sales do occur, the specific terms and conditions are not typically publicly available.

Accordingly, the characteristics of the Company’s servicing portfolio may differ from those of other MSR servicing portfolios that do trade.

Other real estate is carried at fair value less estimated costs to sell.

Fair value is determined primarily using appraisals and reflects a market value approach.

Fair values are reviewed quarterly and new appraisals are obtained annually.

1 unchanged sentence

For assets measured at fair value on a nonrecurring basis the following represents impairment charges (recoveries) recognized on these assets during the year ended December 31, 2025 and 2024, respectively:

collateral-dependent impaired loans - $ 10.43 million and $ 4.28 million;

collateral dependent loans and leases - $ 0.24 million and $ 10.43 million;

MSRs - $ 0.00 million and $ 0.00 million;

3 unchanged sentences

December 31, 2025

Collateral-dependent impaired loans $ — $ — $ 725 $ 725

Collateral dependent loans and leases $ — $ — $ 26,175 $ 26,175

Accrued income and other assets (mortgage servicing rights) — — 3,300 3,300

Accrued income and other assets (repossessions) — — 267 267

Accrued income and other assets (other real estate) — — 460 460

Total $ — $ — $ 29,742 $ 29,742

December 31, 2024

Collateral-dependent impaired loans $ — $ — $ 6,289 $ 6,289

Collateral dependent loans and leases $ — $ — $ 725 $ 725

Accrued income and other assets (mortgage servicing rights) — — 3,436 3,436

2 unchanged sentences

Total $ — $ — $ 4,776 $ 4,776

The following table shows the valuation methodology and unobservable inputs for Level 3 assets and liabilities measured at fair value on a non-recurring basis.

The following table below shows the valuation methodology and unobservable inputs for Level 3 assets and liabilities measured at fair value on a non-recurring basis.

(Dollars in thousands) Carrying Value Fair Value Valuation Methodology Unobservable Inputs Range of Inputs Weighted Average

December 31, 2025

Collateral-dependent impaired loans $ 725 $ 725 Collateral based measurements including appraisals, trade publications, and auction values Discount for lack of marketability and current conditions 25 % - 30 %

Collateral dependent loans and leases $ 26,175 $ 26,175 Collateral based measurements including appraisals, trade publications, and auction values Discount for lack of marketability and current conditions 15 % - 30 %

Mortgage servicing rights 3,300 7,325 Discounted cash flows Constant prepayment rate (CPR) 6.4 % - 33.4 %

1 unchanged sentence

Repossessions 267 297 Appraisals, trade publications and auction values Discount for lack of marketability 0 % - 20 %

Other real estate 460 500 Appraisals Discount for lack of marketability 0 % - 8 %

December 31, 2024

Collateral-dependent impaired loans $ 6,289 $ 6,289 Collateral based measurements including appraisals, trade publications, and auction values Discount for lack of marketability and current conditions 10 % - 20 %

Collateral dependent loans and leases $ 725 $ 725 Collateral based measurements including appraisals, trade publications, and auction values Discount for lack of marketability and current conditions 25 % - 30 %

Mortgage servicing rights 3,436 7,480 Discounted cash flows Constant prepayment rate (CPR) 7.6 % - 23.0 %

8 unchanged sentences

Federal funds sold and interest bearing deposits with other banks 50,608 50,608 50,608 — —

Investment securities available-for-sale 1,536,299 1,536,299 446,021 1,089,246 1,032

Other investments 22,140 22,140 22,140 — —

Mortgages held for sale 2,569 2,569 — 2,569 —

Loans and leases, net of allowance for loan and lease losses 6,884,823 6,946,110 — — 6,946,110

Mortgage servicing rights 3,436 7,480 — — 7,480

Accrued interest receivable 35,539 35,539 — 35,539 —

Interest rate swaps 16,424 16,424 — 16,424 —

Deposits $ 7,225,575 $ 7,223,139 $ 5,638,975 $ 1,584,164 $ —

3 unchanged sentences

Accrued interest payable 24,738 24,738 — 24,738 —

Interest rate swaps 16,727 16,727 — 16,727 —

Off-balance-sheet instruments * — 139 — 139 —

3 unchanged sentences

47,989 47,989 47,989 — —

Investment securities available-for-sale 1,622,600 1,622,600 541,461 1,079,978 1,161

Other investments 23,855 23,855 23,855 — —

Mortgages held for sale 1,442 1,442 — 1,442 —

Loans and leases, net of allowance for loan and lease losses 6,699,268 6,608,109 — — 6,608,109

Mortgage servicing rights 3,670 8,151 — — 8,151

Accrued interest receivable 32,790 32,790 — 32,790 —

Interest rate swaps 22,704 22,704 — 22,704 —

Deposits $ 7,230,035 $ 7,226,239 $ 5,440,309 $ 1,785,930 $ —

3 unchanged sentences

Accrued interest payable 36,494 36,494 — 36,494 —

Interest rate swaps 23,140 23,140 — 23,140 —

Off-balance-sheet instruments * — 144 — 144 —

10 unchanged sentences

The Company has one reportable operating segment, commercial banking.

While our chief operating decision makers monitor revenue streams of various products and services, the identifiable segments’ operations are managed, and financial performance is evaluated on a company-wide basis.

While our chief operating decision maker monitors revenue streams of various products and services, the identifiable segments’ operations are managed, and financial performance is evaluated on a company-wide basis.

The commercial banking segment provides a broad array of financial products and services including commercial and consumer banking services, trust and wealth advisory services, and insurance to individual and business clients through most of its 78 banking center locations in 19 counties in Indiana and Michigan and Sarasota County in Florida.

The accounting policies of the commercial banking segment are the same as those described in Note 1 of the Notes to Consolidated Financial Statements.

The chief operating decision makers assess performance for the commercial banking segment and decide how to allocate resources based on net income available to common shareholders which is also reported on the Consolidated Statements of Income as net income available to common shareholders.

The chief operating decision maker assesses performance for the commercial banking segment and decides how to allocate resources based on net income available to common shareholders which is also reported on the Consolidated Statements of Income as net income available to common shareholders.

The measure of segment assets is reported on the Consolidated Statements of Financial Condition as total assets.

The chief operating decision makers use net income available to common shareholders to evaluate income generated from segment assets (return on average total assets) in deciding whether to reinvest profits into the commercial banking segment or to pay dividends or fund acquisitions.

Net income available to common shareholders is also used by the chief operating decision makers to monitor budget versus actual results.

Net income available to common shareholders as well as other common company-wide financial performance and credit quality metrics such as return on average assets, return on average shareholders’ equity, earnings per common share, net interest margin, efficiency ratio, and nonperforming assets to total assets, among others, are used for competitive analysis by benchmarking to the Company’s competitors as well as used in assessing the performance of the segment and for establishing management’s compensation.

The chief operating decision maker uses net income available to common shareholders to evaluate income generated from segment assets in deciding whether to reinvest profits into the commercial banking segment, pay dividends, or fund acquisitions.

Net income available to common shareholders is also used by the chief operating decision maker to monitor budget versus actual results.

Net income available to common shareholders as well as other common company-wide financial performance and credit quality metrics such as earnings per common share and net interest margin, among others, are used for competitive analysis by benchmarking to the Company’s competitors as well as used in assessing the performance of the segment and for establishing management’s compensation.

See the Consolidated Statements of Financial Condition, the Consolidated Statements of Income, the Consolidated Statements of Comprehensive Income (Loss), the Consolidated Statements of Shareholders’ Equity, and the Consolidated Statements of Cash Flows.

The Company’s chief operating decision makers are the members of the Strategic Deployment Committee which includes the Chairman of the Board and Chief Executive Officer, the President, the Chief Financial Officer, and several Group/Division Heads that report directly to the Chief Executive Officer or President.

The Company’s chief operating decision maker is the Strategic Deployment Committee which includes the Executive Chairman of the Board, the President and Chief Executive Officer, the President of 1st Source Bank, the Chief Financial Officer, and several Group/Division Heads that report directly to the Chief Executive Officer or the President of 1st Source Bank.

Note 23 — 1st Source Corporation (Parent Company Only) Financial Information

67 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 8. Financial Statements and Supplementary Data