# Finward Bancorp (FNWD) Informational only - not investment advice. CIK: 0000919864 SIC: 6035 Savings Institution, Federally Chartered SIC breadcrumb: [Finance, Insurance, And Real Estate](/division/H/) > [Depository Institutions](/major-group/60/) > [SIC 6035 Savings Institution, Federally Chartered](/industry/6035/) Latest 10-K filed: 2026-03-25 SEC page: https://www.sec.gov/edgar/browse/?CIK=919864 Filing source: https://www.sec.gov/Archives/edgar/data/919864/000162828026021073/fnwd-20251231.htm ## Selected Fundamentals | Metric | Value | Unit | FY | Filed | | --- | ---: | --- | ---: | --- | | Revenue | 91763000 | USD | 2025 | 2026-03-25 | | Net income | 8087000 | USD | 2025 | 2026-03-25 | | Assets | 2021181000 | USD | 2025 | 2026-03-25 | ## Financials Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-25. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000919864.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts. | Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Revenue | 32,399,000 | 33,358,000 | 39,450,000 | 52,250,000 | 51,621,000 | 50,655,000 | 72,035,000 | 85,783,000 | 89,178,000 | 91,763,000 | | Net income | 9,142,000 | 8,961,000 | 9,337,000 | 12,097,000 | 15,932,000 | 14,963,000 | 15,080,000 | 8,380,000 | 12,130,000 | 8,087,000 | | Diluted EPS | 3.20 | 3.13 | 3.17 | 3.53 | 4.60 | 4.30 | 3.60 | 1.96 | 2.84 | 1.88 | | Operating cash flow | 10,390,000 | 12,298,000 | 10,540,000 | 10,957,000 | 19,736,000 | 17,043,000 | 17,730,000 | 24,211,000 | 9,805,000 | 9,901,000 | | Capital expenditures | 1,710,000 | 1,657,000 | 1,011,000 | 3,041,000 | 3,735,000 | 3,128,000 | 3,031,000 | 1,148,000 | 3,074,000 | 853,000 | | Dividends paid | 3,143,000 | 3,264,000 | 3,432,000 | 4,085,000 | 4,291,000 | 4,310,000 | 5,075,000 | 5,335,000 | 2,069,000 | 1,557,000 | | Assets | 913,626,000 | 927,259,000 | 1,096,158,000 | 1,328,722,000 | 1,496,292,000 | 1,620,743,000 | 2,070,339,000 | 2,108,279,000 | 2,060,699,000 | 2,021,181,000 | | Liabilities | 829,518,000 | 835,199,000 | 994,694,000 | 1,194,619,000 | 1,344,603,000 | 1,464,128,000 | 1,933,946,000 | 1,960,934,000 | 1,909,285,000 | 1,846,518,000 | | Stockholders' equity | 84,108,000 | 92,060,000 | 101,464,000 | 133,542,000 | 151,689,000 | 156,615,000 | 130,275,000 | 147,345,000 | 151,414,000 | 174,663,000 | | Free cash flow | 8,680,000 | 10,641,000 | 9,529,000 | 7,916,000 | 16,001,000 | 13,915,000 | 14,699,000 | 23,063,000 | 6,731,000 | 9,048,000 | ### Ratios ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported. | Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Net margin | 28.22% | 26.86% | 23.67% | 23.15% | 30.86% | 29.54% | 20.93% | 9.77% | 13.60% | 8.81% | | Return on equity | 10.87% | 9.73% | 9.20% | 9.06% | 10.50% | 9.55% | 11.58% | 5.69% | 8.01% | 4.63% | | Return on assets | 1.00% | 0.97% | 0.85% | 0.91% | 1.06% | 0.92% | 0.73% | 0.40% | 0.59% | 0.40% | | Liabilities / equity | 9.86 | 9.07 | 9.80 | 8.95 | 8.86 | 9.35 | 14.85 | 13.31 | 12.61 | 10.57 | ## Quarterly Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-13. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000919864.json. Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived. | Quarter | End date | Revenue | Net income | Diluted EPS | Method | | --- | --- | ---: | ---: | ---: | --- | | 2022-Q2 | 2022-06-30 | | | 1.04 | reported discrete quarter | | 2022-Q3 | 2022-09-30 | | | 1.07 | reported discrete quarter | | 2023-Q1 | 2023-03-31 | | | 0.51 | reported discrete quarter | | 2023-Q2 | 2023-06-30 | 21,613,000 | 2,438,000 | 0.57 | reported discrete quarter | | 2023-Q3 | 2023-09-30 | 21,778,000 | 2,191,000 | 0.51 | reported discrete quarter | | 2023-Q4 | 2023-12-31 | 22,256,000 | 1,511,000 | | derived Q4 = FY annual - nine-month YTD | | 2024-Q1 | 2024-03-31 | 21,984,000 | 9,279,000 | 2.17 | reported discrete quarter | | 2024-Q2 | 2024-06-30 | 22,127,000 | 143,000 | 0.03 | reported discrete quarter | | 2024-Q3 | 2024-09-30 | 22,472,000 | 606,000 | 0.14 | reported discrete quarter | | 2024-Q4 | 2024-12-31 | 22,595,000 | 2,101,000 | | derived Q4 = FY annual - nine-month YTD | | 2025-Q1 | 2025-03-31 | 22,341,000 | 455,000 | 0.11 | reported discrete quarter | | 2025-Q2 | 2025-06-30 | 22,670,000 | 2,151,000 | 0.50 | reported discrete quarter | | 2025-Q3 | 2025-09-30 | 23,340,000 | 3,497,000 | 0.81 | reported discrete quarter | | 2025-Q4 | 2025-12-31 | 23,412,000 | 1,984,000 | | derived Q4 = FY annual - nine-month YTD | | 2026-Q1 | 2026-03-31 | 22,721,000 | 2,242,000 | 0.52 | reported discrete quarter | ## Macro Cross-References - [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average - [UNRATE](/indicator/UNRATE/): Unemployment Rate - [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate - [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private - [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit - [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit - [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity - [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity - [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity - [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity - [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity - [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy - [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food - [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy - [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter - [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index - [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index - [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities - [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate - [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons - [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm - [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate - [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio - [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed - [CE16OV](/indicator/CE16OV/): Employment Level - [ICSA](/indicator/ICSA/): Initial Claims - [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm - [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm - [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product - [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period - [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index - [TCU](/indicator/TCU/): Capacity Utilization: Total Index - [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units - [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units - [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade - [PCE](/indicator/PCE/): Personal Consumption Expenditures - [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income - [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate - [M2SL](/indicator/M2SL/): M2 - [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance - [MSPUS](/indicator/MSPUS/): Median Sales Price of Houses Sold for the United States - [HSN1F](/indicator/HSN1F/): New One Family Houses Sold: United States - [RHORUSQ156N](/indicator/RHORUSQ156N/): Homeownership Rate in the United States - [TTLCONS](/indicator/TTLCONS/): Total Construction Spending: Total Construction in the United States - [RRVRUSQ156N](/indicator/RRVRUSQ156N/): Rental Vacancy Rate in the United States - [TOTALSL](/indicator/TOTALSL/): Total Consumer Credit Owned and Securitized - [REVOLSL](/indicator/REVOLSL/): Revolving Consumer Credit Owned and Securitized - [DRCCLACBS](/indicator/DRCCLACBS/): Delinquency Rate on Credit Card Loans, All Commercial Banks - [GDP](/indicator/GDP/): Gross Domestic Product - [GPDI](/indicator/GPDI/): Gross Private Domestic Investment - [GCE](/indicator/GCE/): Government Consumption Expenditures and Gross Investment - [PCEC](/indicator/PCEC/): Personal Consumption Expenditures - [NETEXP](/indicator/NETEXP/): Net Exports of Goods and Services - [GFDEBTN](/indicator/GFDEBTN/): Federal Debt: Total Public Debt - [GFDEGDQ188S](/indicator/GFDEGDQ188S/): Federal Debt: Total Public Debt as Percent of Gross Domestic Product - [FYFSD](/indicator/FYFSD/): Federal Surplus or Deficit - [FGRECPT](/indicator/FGRECPT/): Federal Government Current Receipts - [FGEXPND](/indicator/FGEXPND/): Federal Government: Current Expenditures - [MANEMP](/indicator/MANEMP/): All Employees, Manufacturing - [USCONS](/indicator/USCONS/): All Employees, Construction - [USTRADE](/indicator/USTRADE/): All Employees, Retail Trade - [USFIRE](/indicator/USFIRE/): All Employees, Financial Activities - [USGOVT](/indicator/USGOVT/): All Employees, Government - [AWHAETP](/indicator/AWHAETP/): Average Weekly Hours of All Employees, Total Private - [DGORDER](/indicator/DGORDER/): Manufacturers' New Orders: Durable Goods - [NEWORDER](/indicator/NEWORDER/): Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft - [BUSINV](/indicator/BUSINV/): Total Business Inventories - [EXPGS](/indicator/EXPGS/): Exports of Goods and Services - [IMPGS](/indicator/IMPGS/): Imports of Goods and Services - [IR](/indicator/IR/): Import Price Index (End Use): All Commodities - [PPIFIS](/indicator/PPIFIS/): Producer Price Index by Commodity: Final Demand ## Latest quarter (10-Q) Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/919864/000162828026034588/fnwd-20260331.htm Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high Filing date: 2026-05-13 Report date: 2026-03-31 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Summary Finward Bancorp is a financial holding company registered with the Board of Governors of the Federal Reserve System. Peoples Bank, an Indiana commercial bank, is a wholly-owned subsidiary of the Company. The Company has no other business activity other than being a holding company for the Bank. The following management’s discussion and analysis presents information concerning our financial condition as of March 31, 2026 and December 31, 2025, and the results of operations for the three months ending March 31, 2026 and March 31, 2025. This discussion should be read in conjunction with the condensed consolidated financial statements and other financial data presented elsewhere herein and with the condensed consolidated financial statements and other financial data, as well as the Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. At March 31, 2026, the Company had total assets of $2.0 billion, loans receivable, net of deferred fees and costs, of $1.4 billion and total deposits of $1.7 billion. Stockholders' equity totaled $172.4 million or 8.6% of total assets, with a book value per share of $39.81. Net income for the three months ended March 31, 2026, was $2.2 million, or $0.52 earnings per diluted common share. For the three months ended March 31, 2026, the ROA was 0.44%, while the ROE was 5.00%. On August 9, 2024, the Bank entered into a memorandum of understanding with the FDIC and DFI. The MOU is an informal administrative agreement pursuant to which the Bank has agreed to take various actions and comply with certain requirements to enhance certain areas of the Bank’s operations. The MOU documents an understanding among the Bank, the FDIC, and DFI that, among other things, the Bank will: refrain from paying cash dividends without prior regulatory approval and develop and implement certain plans regarding the Bank’s operations, capital, and strategy. The Bank will submit written quarterly progress reports to the FDIC and DFI detailing compliance with the MOU. The MOU will remain in effect until modified or terminated by the FDIC and DFI. Management does not expect the actions called for by the MOU to have a substantial impact on the Company’s or the Bank’s ongoing day-to-day operations, although they may have the effect of limiting or delaying the Bancorp’s or the Bank’s ability or plans to expand and engage in business acquisitions. Financial Condition General During the three months ended March 31, 2026, total assets decreased by $6.0 million (0.30%), with interest-earning assets decreasing by $2.2 million (0.12%). At both March 31, 2026 and December 31, 2025, interest-earning assets totaled $1.9 billion. Earning assets represented 92.9% of total assets at March 31, 2026 and 92.7% December 31, 2025. Loan Portfolio Loans receivable, net of deferred fees and costs totaled $1.46 billion at March 31, 2026 and $1.45 billion at December 31, 2025. The loan portfolio, which is the Company’s largest asset, is the primary source of both interest and fee income. The Company’s lending strategy emphasizes quality loan growth, product diversification, and competitive and profitable pricing. 40 The Company’s end-of-period loan balances were as follows: March 31, 2026 December 31, 2025 (Dollars in thousands) Balance % Loans Balance % Loans Residential real estate $ 445,097  30.6  % $ 442,443  30.5  % Home equity 53,855  3.7  % 53,497  3.7  % Commercial real estate 564,613  38.8  % 555,594  38.3  % Construction and land development 76,582  5.3  % 77,208  5.3  % Multifamily 185,824  12.8  % 183,902  12.7  % Commercial business 94,160  6.5  % 99,304  6.9  % Consumer 310  0.0  % 870  0.1  % Manufactured homes 22,981  1.6  % 23,708  1.6  % Government 9,998  0.7  % 12,298  0.9  % Loans receivable 1,453,420  100.0 % 1,448,824  100.0 % Plus: Net deferred loans origination costs 1,723  1,606  Loan clearing funds (25) (43) Loans receivable, net of deferred fees and costs $ 1,455,118  $ 1,450,387  Adjustable rate loans / loans receivable $ 817,446  56.2 % $ 811,901  56.0 % Our total commercial real estate portfolio (which includes but is not limited to loans secured by office space, medical office space, and mixed-use retail/office space) totaled $564.6 million as of March 31, 2026, compared to $555.6 million as of December 31, 2025. Given prevailing market conditions such as continued elevated interest rate levels, reduced occupancy as a result of the increase in hybrid work arrangements, we are carefully monitoring these loans for signs of deterioration in credit quality. 41 Commercial real estate loans remained our largest loan segment and accounted for 38.8% of the total loan portfolio at March 31, 2026 and 38.3% at December 31, 2025. A further breakdown of the composition of the commercial real estate loan portfolio as of March 31, 2026 and December 31, 2025 is shown in the table below: Commercial Real Estate (CRE) March 31, 2026 December 31, 2025 (Dollars in thousands) # Loans $ Amount % of Total Gross Loans # Loans $ Amount % of Total Gross Loans CRE OO Food services & drinking places 65 $ 35,602  2.4 % 65 $ 35,961  2.5 % Ambulatory health care services 32 32,326  2.2 % 32 31,262  2.2 % Gasoline stations and fuel dealers 32 29,803  2.1 % 31 29,848  2.1 % Repair and maintenance 35 17,957  1.2 % 37 18,333  1.3 % Specialty trade contractors 34 16,051  1.1 % 32 15,571  1.1 % Motor vehicles and parts dealers 19 11,006  0.8 % 17 6,319  0.4 % Merchant wholesalers, durable goods 11 10,719  0.7 % 12 10,888  0.8 % Personal and laundry services 36 12,049  0.8 % 33 10,248  0.7 % Professional, scientific, and technical services 23 9,334  0.6 % 22 8,680  0.6 % Other 178 86,894  6.1 % 191 86,344  5.7 % CRE OO 465 261,741 18.0 % 472 253,454 17.4 % CRE NOO Retail centers - lessors 166 $ 143,339  9.9 % 165 $ 138,425  9.5 % Industrial properties - lessors 68 51,514  3.5 % 65 49,502  3.4 % Office properties - lessors 61 41,575  2.9 % 62 42,139  2.9 % Hotels 16 39,517  2.7 % 16 40,047  2.8 % Special use - lessors 9 10,360  0.7 % 10 10,501  0.7 % Mini Warehouses - lessors 19 8,190  0.6 % 19 8,310  0.6 % Big box retail - lessors 2 7,753  0.5 % 2 7,845  0.5 % Other 5 624  — % 9 5,371  0.4 % Total CRE NOO 346 $ 302,872  20.8 % 348 $ 302,140  20.9 % Total CRE OO & NOO 811 $ 564,613  38.8 % 820 $ 555,594  38.3 % Total Gross Loans $ 1,453,420  $ 1,448,824  The Bank’s Appraisal Policy and Procedures is Board approved annually and reflects current regulatory guidelines and recommendations. As one of the primary factors in commercial loan underwriting is the quality of the asset being pledged as collateral, it is imperative that the appraisal process receive appropriate attention. Appraisals must be prepared in accordance with high professional standards, by appraisers who have the necessary training, experience and knowledge for them to provide an accurate estimate of value. With few exceptions, appraisals are assigned to fee appraisers named in the Board approved appraiser list, which includes the tracking of all required certifications, licenses and insurance. The Bank has engaged with one of the nation’s longest-standing third-party appraisal management companies for ordering, management, fulfillment and review of real estate appraisals and other valuation-related services for the properties securing the Bank’s commercial real estate loans. Criteria that may require the Bank to obtain a new appraisal or update the existing value for an existing credit include but are not limited to a change in the discount or capitalization rates for a particular location or property type; occupancy or absorption levels; market trends; and/or expense structure. Regarding the necessity of updated valuations for construction financing, factors considered are material changes in construction delays; cost overruns; or reductions in sales prices/rents. This may be done as a part of a renewal, loan workout or as a part of the usual and customary real estate review process that monitors the risks associated with the Bank’s loan portfolios. 42 The following table sets forth certain information at March 31, 2026, regarding the dollar amount of loans in the Company’s portfolio based on their contractual terms to maturity. Demand loans, loans having no schedule of repayment and no stated maturity, and overdrafts are reported as due in one year or less. Contractual principal repayments of loans do not necessarily reflect the actual term of the loan portfolio. The average life of mortgage loans is substantially less than their contractual terms because of loan prepayments and because of enforcement of due-on-sale clauses, which give the Company the right to declare a loan immediately due and payable in the event, among other things, that the borrower sells the property subject to the mortgage. The amounts are stated in thousands (000’s). Maturing within one year After one but within five years After five but within fifteen years After fifteen years Total Residential real estate $ 9,386  $ 20,515  $ 78,180  $ 337,016  $ 445,097  Home equity 2,016  314  9,846  41,679  53,855  Commercial real estate 41,935  149,872  372,277  529  564,613  Construction and land development 28,451  7,574  35,341  5,216  76,582  Multifamily 30,535  50,141  105,148  -  185,824  Commercial business 41,385  36,646  16,106  23  94,160  Consumer 10  300  -  -  310  Manufactured homes 1  205  11,624  11,151  22,981  Government 2,422  6,587  989  -  9,998  Total loans receivable $ 156,141  $ 272,154  $ 629,511  $ 395,614  $ 1,453,420  The Company is primarily a portfolio lender. Mortgage banking activities historically have been limited to the sale of fixed rate mortgage loans with contractual maturities greater than 15 years. These loans are identified as held for sale when originated and sold, on a loan-by-loan basis, in the secondary market. The Company will also retain fixed rate mortgage loans with a contractual maturity greater than 15 years on a limited basis. During the three months ended March 31, 2026, the Company originated $9.4 million in new fixed rate mortgage loans for sale, compared to $9.6 million during the quarter ended March 31, 2025. Net gains realized from the mortgage loan sales totaled $257 thousand for the three months ended March 31, 2026, compared to $230 thousand for the quarter ended March 31, 2025. At March 31, 2026, the Company had no loans that were classified as held for sale, compared to $1.1 million at December 31, 2025. Asset Quality Non-performing loans include those loans that are 90 days or more past due and those loans that have been placed on nonaccrual status. The Company will at times maintain certain loans on accrual status, despite being over 90 days past due, for short periods of time when management has reason to believe payments are in the process of being received. The Company's non-performing loans are summarized below: (Dollars in thousands) Loan Segment March 31, 2026 December 31, 2025 Residential real estate $ 6,797  $ 5,932  Home equity 761  810  Commercial real estate 2,234  1,561  Construction and land development 593  653  Multifamily 597  696  Commercial business 1,299  1,439  Manufactured homes 90  71  Total $ 12,371  $ 11,162  Non-performing loans to total loans 0.85 % 0.77 % Non-performing loans to total assets 0.61 % 0.55 % 43 Subs [Excerpt truncated for page length; source filing is linked above.] ## Latest 10-K MD&A Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations General Finward Bancorp is a financial holding company registered with the Board of Governors of the Federal Reserve System. Peoples Bank, an Indiana commercial bank, is a wholly-owned subsidiary of the Company. The Company has no other business activity other than being a holding company for the Bank. The Company's earnings are dependent upon the earnings of the Bank. The Bank's earnings are primarily dependent upon net interest margin. The net interest margin is the difference between interest income earned on loans and investments and interest expense paid on deposits and borrowings stated as a percentage of average interest earning assets. The net interest margin is perhaps the clearest indicator of a financial institution's ability to generate core earnings. Fees and service charges, wealth management operations income, gains and losses from the sale of assets, provisions for credit losses, income taxes and operating expenses also affect the Company's profitability. A summary of the Company’s significant accounting policies are detailed in Note 1 to the Company’s consolidated financial statements included in this report. Preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period, as well as the disclosures provided. Actual results could differ from those estimates. Estimates associated with the Allowance for credit losses are particularly susceptible to material change in the near term. The following management’s discussion and analysis presents information concerning our financial condition as of December 31, 2025 and December 31, 2024, and the results of operations for the years ended December 31, 2025 and December 31, 2024. At December 31, 2025, the Company had total assets of $2.0 billion, loans receivable, net of deferred fees and costs, of $1.4 billion and total deposits of $1.7 billion. The Company's deposit accounts are insured up to applicable limits by the DIF that is administered by the FDIC, an agency of the federal government. Stockholders' equity totaled $174.7 million or 8.6% of total assets, with a book value per share of $40.37. Net income for the year ended December 31, 2025, was $8.1 million, or $1.88 earnings per diluted common share. For the year ended December 31, 2025, the ROA was 0.39%, while the ROE was 5.10%. Recent Developments Regarding the Company and the Bank On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act, which is a sweeping federal reconciliation package that permanently extends and expands key provisions of the 2017 Tax Cuts and Jobs Act, introduces new tax benefits (including elevated standard deductions, higher state-and-local tax (SALT) caps, and no taxation on tips and overtime income for certain workers), and enacts broad reductions in government spending. The OBBBA is a complex revision to the U.S. federal income tax laws with potentially far-reaching consequences. The OBBBA will require subsequent rulemaking in a number of areas. The long-term impact of the OBBBA on the Company, the Bank, our shareholders, and the banking industry in general cannot be reliably predicted at this early stage of the new law’s implementation. Shareholders are urged to consult with their own tax advisors regarding the impact of the OBBBA to them and their acquisition, ownership, and disposition of the Company's common stock. The Company's management continues to evaluate the impact of the OBBBA on the Company, the Bank, and its business, financial condition, and results of operations. Termination of Consent Order On August 6, 2025, the FDIC and the DFI terminated the Consent Order issued to the Bank that was effective on November 7, 2023 relating to the Bank's compliance with the Bank Secrecy Act and its implementing regulations. The termination of the Consent Order follows the Bank's successful resolution of the deficiencies in the Bank's BSA compliance and anti-money laundering compliance program which was the subject of the Consent Order. Memorandum of Understanding On August 9, 2024, the Bank entered into a memorandum of understanding with the FDIC and DFI. The MOU is an informal administrative agreement pursuant to which the Bank has agreed to take various actions and comply with certain requirements to enhance certain areas of the Bank’s operations. The MOU documents an understanding among the Bank, the FDIC, and DFI that, among other things, the Bank will: refrain from paying cash dividends without prior regulatory approval and develop and implement certain plans regarding the Bank’s operations, capital, and strategy. The Bank will 45 submit written quarterly progress reports to the FDIC and DFI detailing compliance with the MOU. The MOU will remain in effect until modified or terminated by the FDIC and DFI. Management does not expect the actions called for by these regulatory actions to have a substantial impact on the Company’s or the Bank’s ongoing day-to-day operations, although they may have the effect of limiting or delaying the Bancorp’s or the Bank’s ability or plans to expand and engage in business acquisitions. Financial Condition General During the year ended December 31, 2025, total assets decreased by $39.5 million (1.9%), with interest-earning assets decreasing by $27.2 million (1.4%). At both December 31, 2025 and December 31, 2024, interest-earning assets totaled $1.9 billion. Earning assets represented 92.7% of total assets at December 31, 2025 and 92.3% December 31, 2024. Loan Portfolio Loans receivable, net of deferred fees and costs totaled $1.45 billion at December 31, 2025 and $1.51 billion at December 31, 2024. The loan portfolio, which is the Company’s largest asset, is the primary source of both interest and fee income. The Company’s lending strategy emphasizes quality loan growth, product diversification, and competitive and profitable pricing. The Company’s end-of-period loan balances were as follows: December 31, 2025 December 31, 2024 (Dollars in thousands) Balance % Loans Balance % Loans Residential real estate $ 442,443  30.5  % $ 467,293  31.0 % Home equity 53,497  3.7  % 49,758  3.3  % Commercial real estate 555,594  38.3  % 551,674  36.6  % Construction and land development 77,208  5.3  % 82,874  5.5  % Multifamily 183,902  12.7  % 212,455  14.1  % Commercial business 99,304  6.9  % 104,246  6.9  % Consumer 870  0.1  % 551  —  % Manufactured homes 23,708  1.6  % 26,708  1.8  % Government 12,298  0.9  % 11,024  0.7  % Loans receivable 1,448,824  100.0 % 1,506,583  100.0  % Plus: Net deferred loans origination costs 1,606  2,439  Loan clearing funds (43) (46) Loans receivable, net of deferred fees and costs $ 1,450,387  $ 1,508,976  Adjustable rate loans / loans receivable $ 811,901  56.0 % $ 793,920  52.7 % Our total commercial real estate portfolio (which includes but is not limited to loans secured by office space, medical office space, and mixed-use retail/office space) totaled $555.6 million as of December 31, 2025, compared to $551.7 million as of December 31, 2024. Given prevailing market conditions such as continued elevated interest rate levels and reduced occupancy as a result of the increase in hybrid work arrangements, we are carefully monitoring these loans for signs of deterioration in credit quality. 46 Commercial real estate loans remained our largest loan segment and accounted for 38.3% of the total loan portfolio at December 31, 2025 and 36.6% at December 31, 2024. A further breakdown of the composition of the commercial real estate loan portfolio as of December 31, 2025 and December 31, 2024 is shown in the table below: Commercial Real Estate (CRE) December 31, 2025 December 31, 2024 (Dollars in thousands) # Loans $ Amount % of Total Gross Loans # Loans $ Amount % of Total Gross Loans CRE OO Food services & drinking places 65 $ 35,961  2.5 % 65 $ 30,481  2.0 % Ambulatory health care services 32 31,262  2.2 % 33 28,891  1.9 % Gasoline stations and fuel dealers 31 29,848  2.1 % 28 28,957  1.9 % Repair and maintenance 37 18,333  1.3 % 34 16,050  1.1 % Specialty trade contractors 32 15,571  1.1 % 31 13,265  0.9 % Truck transportation 14 10,939  0.8 % 12 10,350  0.7 % Merchant wholesalers, durable goods 12 10,888  0.8 % 13 12,332  0.8 % Personal and laundry services 33 10,248  0.7 % 31 10,673  0.7 % Professional, scientific, and technical services 22 8,680  0.6 % 26 10,266  0.7 % Other 191 81,724  5.3 % 195 85,344  5.7 % CRE OO 469 $ 253,454  17.4 % 468 $ 246,609  16.4 % CRE NOO Retail centers - lessors 165 $ 138,425  9.6 % 165 $ 140,360  9.3 % Industrial properties - lessors 65 49,502  3.4 % 60 43,581  2.9 % Office properties - lessors 62 42,139  2.9 % 57 38,472  2.6 % Hotels 16 40,047  2.8 % 18 48,659  3.2 % Special use - lessors 10 10,501  0.7 % 10 11,527  0.8 % Mini Warehouses - lessors 19 8,310  0.6 % 17 8,011  0.5 % Big box retail - lessors 2 7,845  0.5 % 2 8,201  0.5 % Other 9 5,371  0.4 % 14 6,254  0.4 % Total CRE Non Owner Occupied (CRE NOO) 348 $ 302,140  20.9 % 343 $ 305,065  20.2 % Total Commercial Real Estate (OO & NOO) 817 $ 555,594  38.3 % 811 $ 551,674  36.6 % Total Gross Loans $ 1,448,824  $ 1,506,583  The Bank’s Appraisal Policy and Procedures is Board approved annually and reflects current regulatory guidelines and recommendations. As one of the primary factors in commercial loan underwriting is the quality of the asset being pledged as collateral, it is imperative that the appraisal process receive appropriate attention. Appraisals must be prepared in accordance with high professional standards, by appraisers who have the necessary training, experience and knowledge for them to provide an accurate estimate of value. With few exceptions, appraisals are assigned to fee appraisers named in the Board approved appraiser list, which includes the tracking of all required certifications, licenses and insurance. The Bank has engaged with one of the nation’s longest-standing third-party appraisal management companies for ordering, management, fulfillment and review of real estate appraisals and other valuation-related services for the properties securing the Bank’s commercial real estate loans. Criteria that may require the Bank to obtain a new appraisal or update the existing value for an existing credit include but are not limited to a change in the discount or capitalization rates for a particular location or property type; occupancy or absorption levels; market trends; and/or expense structure. Regarding the necessity of updated valuations for construction financing, factors considered are material changes in construction delays; cost overruns; or reductions in sales prices/rents. This may be done as a part of a renewal, loan workout or as a part of the usual and customary real estate review process that monitors the risks associated with the Bank’s loan portfolios. 47 The Company is primarily a portfolio lender. Mortgage banking activities historically have been limited to the sale of fixed rate mortgage loans with contractual maturities greater than 15 years. These loans are identified as held-for-sale when originated and sold, on a loan-by-loan basis, in the secondary market. The Company will also retain fixed rate mortgage loans with a contractual maturity greater than 15 years on a limited basis. During the year ended December 31, 2025, the Company originated $40.9 million in new fixed rate mortgage loans for sale, compared to $36.8 million during the year ended December 31, 2024. During the year ended December 31, 2025, the Bank originated $17.8 million in new 1-4 family loans retained in its portfolio, compared to $27.4 million during the year ended December 31, 2024. These retained loans are primarily construction loans and adjustable-rate loans with a fixed-rate period of 7 years or less, and the Bank continues to sell longer-duration fixed rate mortgages into the secondary market. Net gains realized from the mortgage loan sales totaled $1.2 million for the year ended December 31, 2025, compared to $1.1 million for the year ended December 31, 2024. At December 31, 2025, the Company had $1.1 million in loans that were classified as held-for-sale, compared to $1.3 million at December 31, 2024. Asset Quality Non-performing loans include those loans that are 90 days or more past due and those loans that have been placed on nonaccrual status. The Company will at times maintain certain loans on accrual status, despite being over 90 days past due, for short periods of time when management has reason to believe payments are in the process of being received. The Company's non-performing loans are summarized below: (Dollars in thousands) Loan Segment December 31, 2025 December 31, 2024 Residential real estate $ 5,932  $ 4,665  Home equity 810  483  Commercial real estate 1,561  1,280  Construction and land development 653  658  Multifamily 696  3,362  Commercial business 1,439  3,290  Manufactured homes 71  -  Total $ 11,162  $ 13,738  Non-performing loans to total loans 0.77 % 0.91 % Non-performing loans to total assets 0.55 % 0.67 % Substandard loans include potential problem loans, where information about possible credit issues or other conditions causes management to question the ability of such borrowers to comply with loan covenants or repayment terms. No loans were internally classified as doubtful or loss at December 31, 2025 or December 31, 2024. The Company's substandard loans are summarized below: (Dollars in thousands) Loan Segment December 31, 2025 December 31, 2024 Residential real estate $ 6,016  $ 4,754  Home equity 813  490  Commercial real estate 1,561  1,598  Construction and land development 2,234  2,285  Multifamily 696  3,550  Commercial business 1,439  3,290  Manufactured homes 71  54  Total $ 12,830  $ 16,021  48 In addition to identifying and monitoring non-performing and other classified loans, management maintains a list of special mention loans. Special mention loans represent loans management is closely monitoring due to one or more factors that may cause the loan to become classified as substandard. The Company's special mention loans are summarized below: (Dollars in thousands) Loan Segment December 31, 2025 December 31, 2024 Residential real estate $ 4,797  $ 4,291  Home equity 305  459  Commercial real estate 13,200  8,008  Construction and land development 557  3,675  Multifamily 2,857  5,329  Commercial business 2,768  3,528  Manufactured homes 28  -  Total $ 24,512  $ 25,290  At December 31, 2025, management is of the opinion that there are no loans where known information about possible credit problems of borrowers causes management to have serious doubts as to the ability of such borrowers to comply with the present loan repayment terms and which will imminently result in such loans being classified as past due or nonaccrual. Management does not presently anticipate that any of the non-performing loans or classified loans would materially affect future operations, liquidity or capital resources. The ACL is a valuation allowance for expected losses over the estimated life of loan portfolio, increased by the provision for credit losses, and decreased by charge-offs net of recoveries. A loan is charged off against the allowance by management as a loss when deemed uncollectible, although collection efforts continue and future recoveries may occur. The determination of the amounts of the ACL and provisions for credit losses is based on management’s current judgments about the credit quality of the loan portfolio with consideration given to all known relevant internal and external factors that affect loan collectability and reasonable and supportable forecasts as of the reporting date. The appropriateness of the current period provision and the overall adequacy of the ACL are determined through a disciplined and consistently applied quarterly process that reviews the Company’s current credit risk within the loan portfolio and identifies the required allowance for credit losses given the current risk estimates. The Company's provision for (benefit from) credit losses for the period ended are summarized below: (Dollars in thousands) Year Ended December 31, Loan Segment 2025 2024 Residential real estate $ (1,777) $ 481  Home equity (147) 137  Commercial real estate 2,704  (606) Construction and land development (1,537) (1,555) Multifamily 1,247  164  Commercial business 433  1,475  Consumer 34  42  Manufactured homes (136) 71  Government (39) (10) Total $ 782  $ 199  The Company's charge-off and recovery information is summarized below: 49 (Dollars in thousands) Year Ended December 31, 2025 Loan Segment Charge-offs Recoveries Net (Charge-offs) Recoveries Residential real estate $ (13) $ 66  $ 53  Commercial real estate -  4  4  Multifamily (201) 29  (172) Commercial business (495) 460  (35) Consumer (46) 9  (37) Total $ (755) $ 568  $ (187) (Dollars in thousands) Year Ended December 31, 2024 Loan Segment Charge-offs Recoveries Net (Charge-offs) Recoveries Residential real estate $ (28) $ 44  $ 16  Commercial real estate -  5  5  Multifamily (125) 31  (94) Commercial business (2,249) 310  (1,939) Consumer (66) 22  (44) Total $ (2,468) $ 412  $ (2,056) The ACL provisions take into consideration management’s current judgments about the credit quality of the loan portfolio, loan portfolio balances, changes in the portfolio mix, and local economic conditions. In determining the provision for credit losses for the current period, management has considered risks associated with the local economy, changes in loan balances and mix, and asset quality. The Company's allowance to total loans and non-performing loans are summarized below: (Dollars in thousands) December 31, 2025 December 31, 2024 Allowance for credit losses $ 17,506  $ 16,911  Total loans $ 1,450,387  $ 1,508,976  Non-performing loans $ 11,162  $ 13,738  ACL-to-total loans 1.21 % 1.12 % ACL-to-non-performing loans (coverage ratio) 156.8 % 123.1 % Investment Portfolio The primary objective of the Company’s investment portfolio is to provide for the liquidity needs of the Company and to contribute to profitability by providing a stable flow of dependable earnings. Funds are generally invested in federal funds, interest bearing balances in other financial institutions, U.S. government securities, U.S. treasury securities, federal agency obligations, obligations of state and local municipalities, mortgage-backed securities, and corporate securities. The securities portfolio, all of which is designated as available-for-sale, totaled $316.2 million at December 31, 2025, compared to $333.6 million at December 31, 2024, a decrease of $17.3 million or 5.2%. During the fourth quarter of 2025, the Bank incurred $1.6 million in securities losses, attributable to the execution of securities repositioning transactions. The Bank sold securities with a market value of $26.6 million and unadjusted book yield of 2.59%. The yield on the securities portfolio was 2.37% for the year ended December 31, 2025 and 2.39% for the year ended December 31, 2024. At December 31, 2025, the securities portfolio represented 16.9% of interest-earning assets and 15.6% of total assets compared to 17.5% of interest-earning assets and 16.2% of total assets at December 31, 2024. 50 The Company’s end-of-period investment portfolio and other short-term investments and stock balances were as follows: December 31, 2025 December 31, 2024 (Dollars in thousands) Balance % Securities Balance % Securities U.S. government agency securities $ 8,466  2.7 % $ 8,061  2.4 % Collateralized mortgage obligations and residential mortgage-backed securities 104,665  33.1  % 109,325  32.8  % Municipal securities 201,214  63.6  % 214,749  64.4  % Collateralized debt obligations 1,882  0.6  % 1,419  0.4  % Total securities available-for-sale $ 316,227  100.0 % $ 333,554  100.0 % (Dollars in thousands) December 31, 2025 December 31, 2024 $ Change % Change Interest bearing deposits in other financial institutions $ 101,382  $ 52,047  $ 49,335  94.8 % Fed funds sold -  654  (654) (100.0 %) Federal Home Loan Bank stock 6,547  6,547  -  - The increase in interest bearing deposits in other financial institutions is the result of the timing of loan fundings and payoffs, inflow and outflow of deposits, repurchase agreements and borrowed funds. Deposits Deposits are a fundamental and cost-effective source of funds for lending and other investment purposes. The Company offers a variety of products designed to attract and retain customers, with the primary focus on building and expanding relationships. The Company’s end-of-period deposit portfolio balances were as follows: (Dollars in thousands) December 31, 2025 December 31, 2024 $ Change % Change Checking $ 592,214  $ 591,487  $ 727  0.1 % Savings 254,055  275,121  (21,066) (7.7 %) Money market 381,111  333,705  47,406  14.2 % Certificates of deposit 499,591  560,253  (60,662) (10.8 %) Total deposits $ 1,726,971  $ 1,760,566  $ (33,595) (1.9 %) As of December 31, 2025, deposits totaled $1.7 billion, a decrease of $33.6 million or 1.9% compared to December 31, 2024. Core deposits totaled $1.2 billion at December 31, 2025 and on December 31, 2024. Core deposits include checking, savings, and money market accounts and represented 71.1% of the Company’s total deposits at December 31, 2025. On December 31, 2025, balances for certificates of deposit totaled $499.6 million, compared to $560.3 million on December 31, 2024, a decrease of $60.7 million or 10.8%. The decrease in deposits is primarily related to a reduction in certificate of deposit activity and planned adjustments to deposit pricing. Checking account balances increased $727 thousand and interest bearing savings account balances decreased $21.1 million from year end primarily due to decreases in personal statement savings account balances. Money market account balances increased by $47.4 million from year end due to business and retail consumer preferences. Certificates of deposits decreased by $60.7 million primarily reflecting customer prioritization of more liquid deposit products. We strive to maintain balances of personal and business checking and savings accounts through our focus on quality customer service, the desire of customers to deal with a local bank, the convenience of our branch network and the breadth and depth of our product line. Non-interest bearing demand accounts comprised 15.5% of total deposits at December 31, 2025 and 15.0% of total deposits at December 31, 2024. Interest bearing demand accounts, including money market and savings accounts, 51 comprised 55.6% of total deposits December 31, 2025 and 53.2% at December 31, 2024. Time accounts as a percentage of total deposits were 28.9% at December 31, 2025 and 31.8% at December 31, 2024. Borrowed Funds The Company’s borrowed funds are primarily used to fund asset growth not supported by deposit generation. The Company’s end-of-period borrowing balances were as follows: (Dollars in thousands) December 31, 2025 December 31, 2024 $ Change % Change Federal funds purchased and repurchase agreements $ 39,703  $ 40,116  $ (413) (1.0 %) FHLB advances 45,000  65,000 (20,000) (30.8 %) Total borrowed funds $ 84,703  $ 105,116  $ (20,413) (19.4 %) Total borrowed funds were $84.7 million at December 31, 2025 compared to $105.1 million at December 31, 2024, a decrease of $20.4 million or 19.4%. The decrease in borrowings from December 31, 2024, was the result of the maturity of FHLB advances. As of December 31, 2025, 72% of our deposits are fully FDIC insured, and another 7% are further backed by the Indiana Public Deposit Insurance Fund. The Company’s liquidity position remains strong with solid core deposit customer relationships, excess cash, debt securities, and access to diversified borrowing sources. As of December 31, 2025, the Company had available liquidity of $673.9 million including borrowing capacity from the FHLB and Federal Reserve facilities (excluding brokered deposit capacity). Other assets totaled $34.9 million at December 31, 2025, compared to $43.9 million at December 31, 2024. The decrease in other assets is primarily related to decreased fair value of the Company’s interest rate swap contract derivative and a reduction in the deferred tax asset. Accrued expenses and other liabilities totaled $34.8 million at December 31, 2025, compared to $43.6 million at December 31, 2024. The decrease in accrued expenses and other liabilities is primarily the result of a reduction in the fair value of the Company's interest rate swap liability and the related collateral received as well as lower wire transfer settlement balances at December 31, 2025. Liquidity and Capital Resources For the Company, liquidity management refers to the ability to generate sufficient cash to fund current loan demand, meet deposit withdrawals, and pay dividends and operating expenses. Because profit and liquidity are often conflicting objectives, management attempts to maximize the Bank’s net interest margin by making adequate, but not excessive, liquidity provisions. Furthermore, we seek to manage funds so that future profits will not be significantly impacted as funding costs increase. We seek to maintain diversified sources of liquidity that may be used during the ordinary course of business as well as on a contingency basis. Our primary sources of liquidity are deposits, principal and interest payments on loans and securities, and proceeds from calls, maturities, and sales of securities, subject to market conditions. While maturities and scheduled amortization of loans and securities are predictable sources of liquidity, deposit flows and loan and securities prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are unencumbered cash and due from banks and unpledged securities classified as available for sale, which could be liquidated, subject to market conditions. In the future, our liquidity position will be affected by the level of customer deposits and payments, as well as acquisitions, dividends, and share repurchases in which we may engage. For the next twelve months, we believe that our existing cash resources will be sufficient to meet the liquidity and capital requirements of our operations. Changes in the liquidity position result from operating, investing and financing activities. Cash flows from operating activities are generally the cash effects of transactions and other events that enter into the determination of net income. The primary investing activities include loan originations, loan repayments, investments in interest bearing balances in other financial institutions, and the purchase, sale, and maturity of investment securities. Financing activities focus almost entirely on the generation of customer deposits. In addition, the Company utilizes borrowings (i.e., repurchase agreements, FHLB advances and federal funds purchased) as a source of funds. Although customer deposits remain our preferred funding source, maintaining additional sources of liquidity is part of our prudent liquidity risk management practices. We have the ability to borrow from the FHLB. At December 31, 2025, we had four outstanding advances totaling $45 million and the ability to borrow up to $436.0 million from the FHLB. We also have the ability to borrow from the Federal Reserve Bank of Chicago. At December 31, 2025, we had no outstanding 52 balance from the Federal Reserve Bank of Chicago. At December 31, 2025, cash and cash equivalents were $119.6 million and secured borrowing capacity at the Federal Reserve Bank totaled $252.2 million, providing total additional liquidity sources of $673.9 million (excluding brokered deposit capacity). During the year ended December 31, 2025, cash and cash equivalents increased by $49.1 million compared to a $15.4 million decrease for the year ended December 31, 2024. The primary sources of cash and cash equivalents were sales of loans originated for sale and the net change in loans receivable. The primary uses of cash and cash equivalents were loan originations of loans held for sale and the net change in deposits. Cash provided by operating activities totaled $9.9 million for the year ended December 31, 2025, compared to cash provided of $10.0 million for the year ended December 31, 2024. Cash used in operating activities was primarily a result of net income and sale of loans originated for sale offset by loans originated for sale and net change in accrued expenses and other liabilities. Cash provided by investing activities totaled $94.9 million for the current period, compared to cash provided in investing activities of $43.0 million for the year ended December 31, 2024. Cash provided by investing activities for the current year period was primarily related to net change in loans receivable and proceeds from the sale of securities available-for-sale. Cash used in financing activities totaled $55.7 million during the current period compared to net cash used in financing activities of $68.0 million for the year ended December 31, 2024. The net cash used in financing activities was primarily the result of net change in deposits and proceeds and repayments of borrowed funds. On a cash basis, the Company paid dividends on common stock of $1.6 million for the year ended December 31, 2025, and $2.1 million for the year ended December 31, 2024. At December 31, 2025, outstanding commitments to fund loans totaled $269.2 million. Approximately 60.1% of the commitments were at variable rates. Standby letters of credit, which are conditional commitments issued by the Company to guarantee the performance of a customer to a third-party, totaled $15.2 million at December 31, 2025. Management believes that the Company has sufficient cash flow and borrowing capacity to fund all outstanding commitments and letters of credit, while maintaining proper levels of liquidity. Management strongly believes that maintaining a high level of capital enhances safety and soundness. During the year ended December 31, 2025, stockholders' equity increased by $23.2 million or 15.4%. During the year ended December 31, 2025, stockholders’ equity was primarily increased by net income of $8.1 million and other comprehensive income as the result of market value changes within the securities portfolio of $16.4 million offset by dividends declared of $1.6 million. On April 24, 2014, the Company’s Board of Directors authorized a stock repurchase program to repurchase up to 50,000 shares of the Company’s outstanding common stock, from time to time and subject to market conditions, on the open market or in privately negotiated transactions. The stock repurchase program does not expire and is only limited by the number of shares that can be purchased. The stock repurchase program will be reviewed annually by the Board of Directors. No shares were repurchased under the program during the year of 2025 or 2024. During 2025, 17,722 restricted stock shares vested under the Plan outlined in Note 10 of the consolidated financial statements, of which 5,439 of these shares were withheld in the form of a net surrender to cover the withholding tax obligations of the vesting employees. The repurchase of these surrendered shares is considered outside of the scope of the formal board approved stock repurchase program. In addition, the following table shows that, at December 31, 2025 and December 31, 2024, the Bank’s capital exceeded all applicable regulatory capital requirements as set forth in 12 C.F.R. § 324. (Dollars in thousands) Actual Minimum Required For Capital Adequacy Purposes Minimum Required To Be Well Capitalized Under Prompt Corrective Action Regulations December 31, 2025 Amount Ratio Amount Ratio Amount Ratio Common equity tier 1 capital to risk-weighted assets $ 186,214  11.86 % $ 70,626  4.50 % $ 102,016  6.50 % Tier 1 capital to risk-weighted assets $ 186,214  11.86 % $ 94,168  6.00 % $ 125,558  8.00 % Total capital to risk-weighted assets $ 205,472  13.09 % $ 125,558  8.00 % $ 156,947  10.00 % Tier 1 leverage ratio $ 186,214  8.93 % $ 83,379  4.00 % $ 104,223  5.00 % 53 (Dollars in thousands) Actual Minimum Required For Capital Adequacy Purposes Minimum Required To Be Well Capitalized Under Prompt Corrective Action Regulations December 31, 2024 Amount Ratio Amount Ratio Amount Ratio Common equity tier 1 capital to risk-weighted assets $ 179,625  11.26 % $ 71,771  4.50 % $ 103,670  6.50 % Tier 1 capital to risk-weighted assets $ 179,625  11.26 % $ 95,695  6.00 % $ 127,594  8.00 % Total capital to risk-weighted assets $ 194,499  12.19 % $ 127,594  8.00 % $ 159,492  10.00 % Tier 1 leverage ratio $ 179,625  8.47 % $ 84,854  4.00 % $ 106,068  5.00 % The Company’s ability to pay dividends to its shareholders is largely dependent upon the Bank’s ability to pay dividends to the Company. Under Indiana law, the Bank may pay dividends from its undivided profits (generally, earnings less losses, bad debts, taxes and other operating expenses) as is considered expedient by the Bank’s Board of Directors. However, the Bank must obtain the approval of the DFI if the total of all dividends declared by the Bank during the current year, including the proposed dividend, would exceed the sum of retained net income for the year to date plus its retained net income for the previous two years. For this purpose, “retained net income,” means net income as calculated for call report purposes, less all dividends declared for the applicable period. An exemption from DFI approval would require that the Bank have been assigned a composite uniform financial institutions rating of 1 or 2 as a result of the most recent federal or state examination; the proposed dividend would not result in a Tier 1 leverage ratio below 7.5%; and that the Bank not be subject to any corrective action, supervisory order, supervisory agreement, or board approved operating agreement. In addition, under the terms of the MOU, the Bank must seek regulatory approval prior to paying cash dividends. See “– Recent Developments Regarding the Company and the Bank – Memorandum of Understanding” above. Moreover, the FDIC and the Federal Reserve Board may prohibit the payment of dividends if it determines that the payment of dividends would constitute an unsafe or unsound practice in light of the financial condition of the Bank. Assuming receipt of regulatory approval for all cash dividends declared by the Bank under the terms of the MOU, the aggregate amount of dividends that the Bank was eligible to declare in 2025, without the need for qualifying for a further exemption or prior DFI approval under the terms of Indiana law described above, was its 2025 net income. On December 3, 2025, the Board of Directors of the Company declared the most recent quarterly dividend of $0.12 per share. The Company’s quarterly dividend was paid to shareholders on December 30, 2025 to shareholders of record on December 17, 2025. Results of Operations - Comparison of 2025 to 2024 For the year ended December 31, 2025, the Company reported net income of $8.1 million, a decrease of $4.0 million (33.3%) compared to $12.1 million for the year ended December 31, 2024. For the year ended December 31, 2025, the ROA was 0.39%, compared to 0.58% for the year ended December 31, 2024. The ROE was 5.10% for the year ended December 31, 2025, compared to 8.06% for the year ended December 31, 2024. The decrease in net income and rates of return as compared to 2024 was primarily due to a strategic initiative involving a sale-leaseback transaction completed in 2024 which resulted in a pre-tax non-interest income gain of approximately $11.8 million. Net interest income for the year ended December 31, 2025, was $56.7 million, an increase of $8.3 million (17.1%), compared to $48.4 million for the year ended December 31, 2024. The weighted-average yield on interest-earning assets was 4.85% for the year ended December 31, 2025 compared to 4.67% for the year ended December 31, 2024. The weighted-average cost of interest-bearing liabilities for the year ended December 31, 2025, was 2.23% compared to 2.56% for the year ended December 31, 2024. The impact of the 4.85% return on interest-earning assets and the 2.23% cost of interest-bearing liabilities resulted in an interest rate spread of 2.62% for the year ended December 31, 2025, an increase from the 2.11% spread for the year ended December 31, 2024. The Company’s net interest margin on a tax-equivalent basis was 3.14% for the year ended December 31, 2025, compared to 2.68% for the year ended December 31, 2024. The Company believes that it is a standard practice in the banking industry to present net interest margin and net interest income on a fully-taxable equivalent basis, as these measures provide useful information to make peer comparisons. Tax adjusted net interest margin represents a non-GAAP financial measure. See the non-GAAP reconciliation table immediately below and the section captioned “Non-GAAP Financial Measures” for further disclosure regarding non-GAAP financial measures. 54 Year Ended December 31, (Dollars in thousands) 2025 2024 Calculation of net interest margin, tax-equivalent basis Net interest income $ 56,743  $ 48,447  Tax-equivalent adjustment on securities and loans 2,636  2,728  Net interest income (tax-equivalent basis) $ 59,379  $ 51,175  Total average interest earning assets $ 1,891,348  $ 1,909,915  Net interest margin (tax-equivalent basis) 3.14  % 2.68 % The increased net interest income and net interest margin for the year ended December 31, 2025, was primarily the result of reduced deposit and borrowing costs as a result of the Federal Reserve's reduction of federal funds rates year over year and increased loan yields as commercial loans mature and/or reprice. The following table shows the change in non-interest income for the year ended December 31, 2025, and December 31, 2024. (Dollars in thousands) Year Ended December 31, 12/31/2025 vs. 12/31/2024 2025 2024 $ Change % Change Non-interest income: Fees and service charges $ 5,387  $ 5,312  $ 75  1.4  % Wealth management operations 2,733  2,855  (122) (4.3) % Gain (loss) on tax credit investment 90  1,236  (1,146) (92.7) % Gain (loss) on sale of loans held-for-sale, net 1,219  1,138  81  7.1  % Gain (loss) on sale of securities, net (1,577) (531) (1,046) 197.0  % Bank owned life insurance 1,379  812  567  69.8  % Gain (loss) on sale of property and equipment (55) 11,661  (11,716) (100.5) % Other 122  164  (42) (25.6) % Total non-interest income $ 9,298  $ 22,647  $ (13,349) (58.9 %) The decrease in non-interest income was primarily due to 2025 and 2024 strategic initiatives. On February 22, 2024, a sale-leaseback transaction was completed and resulted in a pre-tax non-interest income gain of approximately $11.8 million. In the fourth quarter of 2025, the Bank incurred $1.6 million in securities losses due to the sale of securities with a market value of $26.6 million to improve future profitability, deleverage the balance sheet through a reduction in borrowings outstanding, and further benefit regulatory capital ratios in subsequent periods. 55 The following table shows the change in non-interest expense for the year ended December 31, 2025, and December 31, 2024. (Dollars in thousands) Year Ended December 31, 12/31/2025 vs. 12/31/2024 2025 2024 $ Change % Change Non-interest expense: Compensation and benefits $ 29,588  $ 27,737  $ 1,851  6.7  % Occupancy and equipment 8,161  8,250  (89) (1.1) % Data processing 4,961  4,672  289  6.2  % Marketing 787  799  (12) (1.5) % Federal deposit insurance premiums 1,720  1,790  (70) (3.9) % Professional and outside services 4,226  5,405  (1,179) (21.8) % Technology 2,069  2,243  (174) (7.8) % Other 6,624  7,246  (622) (8.6) % Total non-interest expense $ 58,136  $ 58,142  $ (6) —  % Decreases in non-interest expenses during the year ended December 31, 2025, were primarily attributable to non-recurring professional and outside service expenses occurring during 2024 which were associated with the implementation of the corrective actions set forth in the now terminated Consent Order and sale leaseback transaction, as well as lower other costs in 2025 due to the decrease in core deposit intangible expense. This decrease in non-interest expense was primarily offset by increases in compensation and benefit expense driven by annual merit-based increases. The provision for income taxes was $23 thousand for the year ended December 31, 2025 as compared to the provision of $1.3 million for the year ended December 31, 2024. The effective tax rate was 0.3% for the year ended December 31, 2025, as compared to 9.8% for the year ended December 31, 2024. The Company's year-to-date effective tax rate for the year ended December 31, 2025 decreased primarily due to a decrease in pre-tax income. Critical Accounting Policies Critical accounting policies are those accounting policies that management believes are most important to the portrayal of the Company’s financial condition and that require management’s most difficult, subjective or complex judgments. The Company’s most critical accounting policies are summarized below. Other accounting policies, including those related to the fair values of financial instruments and the status of contingencies, are summarized in Note 1 to the Company’s consolidated financial statements. Allowance for credit losses – The Company maintains an allowance for credit losses to reflect management's estimate of expected credit losses over the contractural life of the loan portfolio. The ACL is increased by the provision for credit losses, and decreased by charge-offs net of recoveries. The determination of the ACL and provision for credit losses is based upon management’s evaluation of the credit quality of the loan portfolio, considering relevant internal and external information including past events, current conditions, and reasonable and supportable forecasts that affect collectibility. The methodology used to determine the ACL includes a disciplined and consistently applied quarterly process that combines a review of the current portfolio with a risk assessment analysis. Factors considered in the evaluation include national and local economic trends, current year loan portfolio growth and changes in portfolio mix, and trends in loan delinquencies and loan charge-off activity. Particular attention is given to non-accruing loans and accruing loans past due 90 days or more, and loans that have been classified as substandard, doubtful, or loss. Changes in the provision for credit losses are directionally consistent with changes in observable credit risk indicators. Commercial and industrial, and commercial real estate loans that exhibit credit weaknesses and loans that have been classified as impaired are subject to an individual review. Where appropriate, ACL allocations are made to these loans based on management’s assessment of financial position, current cash flows, collateral values, financial strength of guarantors, industry trends, and economic conditions. ACL allocations for homogeneous loans, such as residential mortgage loans and consumer loans, are based on historical charge-off activity and current delinquency trends. Management has allocated general reserves to both performing and non- performing loans based on historical data and current information available. Risk factors for non-performing and internally classified loans are based on an analysis of either the projected discounted cash flows or the estimated collateral liquidation value for individual loans defined as substandard or doubtful. 56 Estimated collateral liquidation values are based on established loan underwriting standards and adjusted for current mitigating factors on a loan-by-loan basis. Aggregate substandard loan collateral deficiencies are determined for residential, commercial real estate, commercial business, and consumer loan portfolios. These deficiencies are then stated as a percentage of the total substandard balances to determine the appropriate risk factors. Risk factors for performing and non-classified loans are based on a weighted average of net charge-offs for the most recent three years, which are then stated as a percentage of average loans for the same period. Historical risk factors are calculated for residential, commercial real estate, commercial business, and consumer loans. The three year weighted average historical factors are then adjusted for current subjective risks attributable to: regional and national economic factors; loan growth and changes in loan composition; organizational structure; composition of loan staff; loan concentrations; policy changes and out of market lending activity. The risk factors are applied to these types of loans to determine the appropriate level for the ACL. Adjustments may be made to these allocations that reflect management’s judgment on current conditions, delinquency trends, and charge-off activity. Based on the above discussion, management believes that the ACL is currently adequate, but not excessive, given the risk inherent in the loan portfolio. Non-GAAP Financial Measures This filing includes certain financial measures that are identified as non-GAAP, including adjusted net interest income and tax adjusted net interest margin. The Company's provides these non-GAAP performance measures because they are used by management to evaluate and measure the Company’s performance, which the Company believes also is useful to assist investors in assessing the Company’s operating performance. Where non-GAAP financial measures are used in this report, the most comparable GAAP measure, as well as the reconciliation to the most comparable GAAP measure, can be found in the tables referenced herein. The adjusted net interest income and tax-adjusted net interest margin measures recognize the income tax savings when comparing taxable and tax-exempt assets. Interest income and yields on tax-exempt securities and loans are presented using the current federal income tax rate of 21%. Management believes that it is standard practice in the banking industry to present net interest income and net interest margin on a fully tax-equivalent basis and that it may enhance comparability for peer comparison purposes. Although these non-GAAP financial measures are frequently used by investors to evaluate a financial institution’s business and performance, they have limitations as analytical tools and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. In addition, these non-GAAP financial measures may differ from those used by other financial institutions to assess their business operations and performance. Impact of Inflation and Changing Prices The financial statements and related data presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America, which require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money over time due to inflation. The primary assets and liabilities of the Company are monetary in nature. As a result, interest rates have a more significant impact on the Company’s performance than the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or magnitude as the prices of goods and services.