Midland States Bancorp, Inc. (MSBI)

CIK: 0001466026. SIC: 6022 State Commercial Banks. Latest 10-K as of: 2026-03-02.

SIC breadcrumb: Finance, Insurance, And Real Estate > Depository Institutions > SIC 6022 State Commercial Banks

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1466026. Latest filing source: 0001466026-26-000020.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-02. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001466026.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

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.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-04-30. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001466026.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.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001466026-26-000049.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-04-30. Report date: 2026-03-31.

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is Management's discussion and analysis of certain significant factors which have affected the financial condition and results of operations of the Company as reflected in the unaudited consolidated balance sheet as of March 31, 2026, as compared to December 31, 2025, and unaudited consolidated operating results for the three months ended March 31, 2026 and 2025. This disclosure should be read in conjunction with the Company's unaudited consolidated financial statements and accompanying notes appearing elsewhere herein and the audited financial statements and accompanying notes provided in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 2, 2026.

In addition to the historical information contained herein, this Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of such term under the Private Securities Litigation Reform Act of 1995. These statements are subject to many risks and uncertainties, including interest rates and other general economic, business and political conditions; the impact of federal trade policy, inflation, deposit volatility and potential regulatory developments; the performance of our loan portfolio and our ability to manage credit risk; changes in the financial markets; the effects of armed conflict, including the scope and duration of disruptions in global energy markets relating to war in Iran; changes in the business environment resulting from the adoption of artificial intelligence, including fraud and cybersecurity risk; operational risks, including with respect to fraud and information technology; changes in business plans as circumstances warrant; risks related to legal proceedings; risks related to mergers and acquisitions and the integration of acquired businesses; changes to U.S. and state tax laws, regulations and guidance; and other risks detailed from time to time in filings made by the Company with the SEC. Readers should note that the forward-looking statements included herein are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “will,” “propose,” “may,” “plan,” “seek,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” or “continue,” or similar terminology. Any forward-looking statements presented herein are made only as of the date of this document, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our consolidated financial statements requires Management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates are based upon historical experience and on various other assumptions that management believes are reasonable under current circumstances. These estimates form the basis for making judgments about the carrying value of certain assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates under different assumptions or conditions. The estimates and judgments that management believes have the greatest effect on the Company’s reported financial position and results of operations are set forth in “Note 1 – Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements, included in our Annual Report on Form 10-K for the year ended December 31, 2025.

For additional information regarding critical accounting estimates, see the section titled “Critical Accounting Estimates” included in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes in the Company’s application of critical accounting estimates since December 31, 2025.

Allowance for Credit Losses on Loans

Management’s evaluation process used to determine the appropriateness of the allowance for credit losses on loans is subject to the use of estimates, assumptions, and judgments. The evaluation process combines many factors: Management’s ongoing review and grading of the loan portfolio leveraging probability of default and loss given default, consideration of historical loan loss and delinquency experience, trends in past due and nonaccrual loans, risk characteristics of the various classifications of loans, concentrations of loans to specific borrowers or industries, existing economic conditions and forecasts, the fair value of underlying collateral, and other qualitative and quantitative factors which could affect future credit losses. Because current economic conditions and forecasts can change and future events are inherently difficult to predict, the anticipated amount of estimated credit losses on loans, and therefore the appropriateness of the allowance for credit losses on loans, could change significantly. It is difficult to estimate how potential changes in any one economic factor or input might affect the overall allowance because a wide variety of factors and inputs are considered in estimating the allowance and changes in those factors and inputs considered may not occur at the same rate and may not be consistent across all product types. Additionally, changes in factors and inputs may be directionally inconsistent, such that improvement in one factor may offset deterioration in others. As an integral part of their examination process, various regulatory agencies also review the allowance for credit losses on loans. Such agencies may require additions to the allowance for credit losses on loans or may require that certain loan balances be charged-off or downgraded into criticized loan categories when their credit evaluations differ from

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those of management, based on their judgments about information available to them at the time of their examination. The Company believes the level of the allowance for credit losses on loans is appropriate.

Factors Affecting Comparability

Each factor listed below affects the comparability of our results of operations for the three months ended March 31, 2026 and 2025, and our financial condition as of March 31, 2026 and December 31, 2025, and may affect the comparability of financial information we report in future fiscal periods.

Sale of equipment finance portfolio. During the fourth quarter of 2025, we sold substantially all of our equipment finance portfolio resulting in a loss on sale of $21.4 million. As previously disclosed, we ceased originating new equipment finance loans and leases effective as of September 30, 2025.

Redemption of Subordinated Notes. On September 30, 2025, we redeemed all of our outstanding Fixed-to-Floating Rate Subordinated Notes due September 30, 2029, with an interest rate of 7.91%, which had an aggregate principal amount of $50.8 million. The aggregate redemption price was 100% of the aggregate principal amount of the subordinated notes, plus accrued and unpaid interest.

Goodwill impairment. During the first quarter of 2025, we determined that a triggering event had occurred at our Banking reporting unit as a result of further deteriorated credit quality coupled with trends in our stock price. We performed a quantitative impairment test on our Banking reporting unit as of March 31, 2025 and engaged a third-party service provider to assist Management with the determination of the fair value. The resulting calculation indicated that the carrying amount exceeded the fair value of our Banking reporting unit. As a result of the assessment, we recognized $154.0 million of goodwill impairment expense. The impairment expense did not impact our regulatory capital ratios, tangible common equity ratio or our liquidity position.

Results of Operations

Overview. The following table sets forth condensed income statement information of the Company for the three months ended March 31, 2026 and 2025:

Three Months Ended March 31,

(dollars in thousands, except per share data)

2026

2025

Income Statement Data:

Interest income

$

86,022 

$

99,355 

Interest expense

28,605 

41,065 

Net interest income

57,417 

58,290 

Provision for credit losses

5,003 

10,850 

Noninterest income

22,122 

17,763 

Noninterest expense

50,424 

203,005 

Income (loss) before income taxes

24,112 

(137,802)

Income tax expense

5,649 

3,172 

Net income (loss)

18,463 

(140,974)

Preferred dividends

2,228 

2,228 

Net income (loss) available to common shareholders

$

16,235 

$

(143,202)

Per Share Data:

Basic earnings (loss) per common share

$

0.74 

$

(6.58)

Diluted earnings (loss) per common share

$

0.74 

$

(6.58)

Performance Metrics:

Return on average assets

1.16 

%

(7.66)

%

Return on average shareholders' equity

13.15 

%

(79.89)

%

During the three months ended March 31, 2026, we generated net income of $18.5 million, or diluted earnings per common share of $0.74, compared to a net loss of $141.0 million, or diluted loss per common share of $6.58, in the three months ended March 31, 2025. Earnings for the first quarter of 2026 compared to the first quarter of 2025 increased primarily due to a $152.6 million decrease in noninterest expense (which included the prior year goodwill impairment charge), a $5.8

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million decrease in provision for credit losses and a $4.4 million increase in noninterest income. These results were partially offset by a $0.9 million decrease in net interest income and a $2.5 million increase in income tax expense.

Net Interest Income and Margin. Our primary source of revenue is net interest income, which is the difference between interest income from interest-earning assets (primarily loans and securities) and interest expense of funding sources (primarily interest-bearing deposits and borrowings). Net interest income is influenced by many factors, primarily the volume and mix of interest-earning assets, funding sources and interest rate fluctuations. Noninterest-bearing sources of funds, such as demand deposits and shareholders’ equity, also support interest-earning assets. Net interest margin is calculated as net interest income divided by average interest-earning assets. Net interest margin is presented on a tax-equivalent basis, which means that tax-free interest income has been adjusted to a pretax-equivalent income, assuming a federal income tax rate of 21% for both 2026 and 2025.

The FOMC concluded its April 2026 meeting by leaving interest rates unchanged, citing low average job gains, elevated inflation, and a high level of uncertainty about the economic outlook stemming from developments in the Middle East. Federal Reserve policymakers voted to leave the benchmark federal funds rate unchanged at its current range of 3.50% to 3.75%. The move follows the central bank's decision to hold rates steady in January and March 2026 after three successive 25-basis-point rate cuts in September, October and December 2025. Economic data showing a slowdown in the labor market, inflation continuing to run higher than the Federal Reserve's 2% target and the unrest in Iran prompted policymakers to continue to pause rate cuts.

During the three months ended March 31, 2026, net interest income, on a tax-equivalent basis, decreased to $57.6 million compared to $58.5 million for the three months ended March 31, 2025. The tax-equivalent net interest margin increased to 3.91% for the first quarter of 2026 compared to 3.49% in the first quarter of 2025.

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Average Balance Sheet, Interest and Yield/Rate Analysis. The following table presents average balance sheet information, interest income, interest expense a

[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. Filing date: 2026-03-02. Report date: 2025-12-31.

ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes thereto, included in Item 8 - "Financial Statements and Supplementary Data", and other financial data appearing elsewhere in this report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Certain risks, uncertainties and other factors, including but not limited to those set forth under “Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995,” Item 1A – "Risk Factors” and elsewhere in this report, may cause actual results to differ materially from those projected in the forward-looking statements. We assume no obligation to update any of these forward-looking statements. Readers of our Annual Report on Form 10-K should therefore consider these risks and uncertainties in evaluating forward-looking statements and should not place undue reliance on forward-looking statements.

Overview

Midland States Bancorp, Inc. is a diversified financial holding company headquartered in Effingham, Illinois. Its wholly owned banking subsidiary, Midland States Bank, has branches across Illinois and in Missouri, and provides a full range of commercial and consumer banking products and services, merchant credit card services, trust and investment management services and insurance and financial planning services. As of December 31, 2025, we had assets of $6.51 billion, deposits of $5.42 billion and shareholders’ equity of $565.5 million.

Our strategic plan focuses on delivering a superior customer experience through a high-tech, high-touch approach, while remaining committed to core community banking and relationship-driven growth. We continue to enhance our regional franchise approach that serves our core customers with a consistent, high-performance culture rooted in our One Midland values and with a strong foundation in Enterprise Risk Management.

Our principal lines of business include community banking and wealth management. Our community banking business primarily consists of commercial and retail lending and deposit taking. Our wealth management group provides a comprehensive suite of trust and wealth management products and services and had $4.48 billion of assets under administration as of December 31, 2025.

Our principal business activity has been lending to and accepting deposits from individuals, businesses, municipalities and other entities. We have derived income principally from interest charged on loans and leases and, to a lesser extent, from interest and dividends earned on investment securities. We have also derived income from noninterest sources, such as: fees received in connection with various lending and deposit services; wealth management services; residential mortgage loan originations and sales; and, from time to time, gains on sales of assets. Our principal expenses include interest expense on deposits and borrowings, operating expenses, such as salaries and employee benefits, occupancy and equipment expenses, data processing costs, professional fees, provisions for credit losses, income tax expense, and other noninterest expenses.

Factors Affecting Comparability

Each factor listed below affects the comparability of our results of operations and financial condition in 2025 and 2024, and may affect the comparability of financial information we report in future fiscal periods.

Sale of non-core consumer loan portfolios. During the fourth quarter of 2024, we sold our LendingPoint portfolio of $87.1 million, recognizing net charge-offs of $17.3 million on the sale. As of December 31, 2024, we also had committed to a plan to sell our GreenSky consumer loan portfolio and recognized net charge-offs of $35.0 million when these loans were transferred to held for sale. On April 9, 2025, we sold participation interests in $317.5 million of our GreenSky consumer loan portfolio, while retaining the remaining $53.6 million of the portfolio.

Sale of equipment finance portfolio. As a continuation of steps taken to address credit quality issues, including the sales of non-core loan portfolios, we sold substantially all of our equipment finance portfolio during the fourth quarter of 2025 resulting in a loss on sale of $21.4 million. As previously disclosed, we ceased originating new equipment finance loans and leases effective as of September 30, 2025. As a result of that decision, we recognized $1.0 million of severance expense in the third quarter of 2025.

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Goodwill impairment. During the first quarter of 2025, we determined that a triggering event had occurred at our Banking reporting unit as a result of further deteriorated credit quality coupled with trends in our stock price. We performed a quantitative impairment test on our Banking reporting unit as of March 31, 2025, and engaged a third-party service provider to assist Management with the determination of the fair value. The resulting calculation indicated that the carrying amount exceeded the fair value of our Banking reporting unit. As a result of the assessment, we recognized $154.0 million of goodwill impairment expense. The impairment expense did not impact our regulatory capital ratios, tangible common equity ratio or our liquidity position.

Redemption of Subordinated Notes. On September 30, 2025, we redeemed all of our outstanding Fixed-to-Floating Rate Subordinated Notes due September 30, 2029, with an interest rate of 7.91%, which had an aggregate principal amount of $50.8 million. The aggregate redemption price was 100% of the aggregate principal amount of the subordinated notes, plus accrued and unpaid interest.

In 2024, we redeemed $16.0 million of outstanding subordinated notes. The weighted average redemption price was 98.5% of the aggregate principal amount of the subordinated notes, plus accrued and unpaid interest. We recorded net gains totaling $0.2 million on these redemptions.

Results of Operations

Overview. The following table sets forth condensed income statement information of the Company for the years ended 2025, 2024, and 2023:

Years Ended December 31,

(dollars in thousands, except per share data)

2025

2024

2023

Income Statement Data:

Interest income

$

387,867 

$

426,128 

$

417,100 

Interest expense

151,063 

189,782 

168,279 

Net interest income

236,804 

236,346 

248,821 

Provision for credit losses

59,849 

120,332 

82,560 

Noninterest income

88,180 

138,741 

114,784 

Noninterest expense

380,003 

207,855 

193,083 

Income (loss) before income taxes

(114,868)

46,900 

87,962 

Income tax expense

9,413 

8,856 

26,807 

Net income (loss)

(124,281)

38,044 

61,155 

Preferred dividends

8,913 

8,913 

8,913 

Net income (loss) available to common shareholders

$

(133,194)

$

29,131 

$

52,242 

Per Share Data:

Basic earnings (loss) per common share

$

(6.12)

$

1.32 

$

2.33 

Diluted earnings (loss) per common share

$

(6.12)

$

1.32 

$

2.33 

Performance Metrics:

Return on average assets

(1.76)

%

0.49 

%

0.77 

%

Return on average shareholders' equity

(20.33)

%

4.79 

%

7.94 

%

During the year ended December 31, 2025, we generated a net loss of $124.3 million, or diluted loss per common share of $6.12, compared to net income of $38.0 million, or diluted earnings per common share of $1.32, in the year ended December 31, 2024. The results in 2025 included a $21.4 million loss on the sale of substantially all of our equipment finance portfolio during the fourth quarter of 2025. Earnings for the year ended December 31, 2025 compared to the year ended December 31, 2024 included a $0.5 million increase in net interest income, a $60.5 million decrease in provision for credit losses, a $50.6 million decrease in noninterest income, a $172.1 million increase in noninterest expense (primarily as a result of $154.0 million of goodwill impairment in the first quarter of 2025) and a $0.6 million increase in income tax expense.

Net Interest Income and Margin. Our primary source of revenue is net interest income, which is the difference between interest income from interest-earning assets (primarily loans and securities) and interest expense of funding sources (primarily interest-bearing deposits and borrowings). Net interest income is influenced by many factors, primarily the volume and mix of interest-earning assets, funding sources and interest rate fluctuations. Noninterest-bearing sources of funds, such as

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demand deposits and shareholders’ equity, also support interest-earning assets. Net interest margin is calculated as net interest income divided by average interest-earning assets. Net interest margin is presented on a tax-equivalent basis, which means that tax-free interest income has been adjusted to a pretax-equivalent income, assuming a federal income tax rate of 21% for 2025 and 2024.

At its December 2025 meeting, the Federal Open Market Committee (FOMC) cut its benchmark interest rate by 0.25 percentage points, marking the third such reduction in 2025. Following the rate cut, the borrowing rate was in a range between 3.50%-3.75%.

The FOMC concluded its January 2026 meeting by maintaining the federal funds target range at 3.50%-3.75%. FOMC upgraded its assessment of the economy, noting that activity is expanding at a solid pace, aided by resilient consumer spending and growing business investment. The assessment further reflected the committee's view that, while job gains remain low, the labor market has improved, showing signs of stabilization, though inflation remains elevated. This suggests the Federal Reserve is shifting toward a more patient stance after three consecutive rate cuts in late 2025.

The Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditure (PCE) price index, has moderated, aided by cooling services inflation. Partially offsetting that progress, goods inflation has risen, in part due to tariffs. Overall, inflation remains above the 2% target, and the pace of disinflation has slowed.

In 2024, the Federal Reserve cut its benchmark interest rate three times by a total of 1.00 percentage point, marking the first reductions in four years. These rate cuts lowered the federal funds rate into a range of 4.25% to 4.50%.

In 2025, net interest income, on a tax-equivalent basis, totaled $237.7 million with a tax-equivalent net interest margin of 3.64% compared to net interest income, on a tax-equivalent basis, of $237.2 million and a tax-equivalent net interest margin of 3.35% in 2024.

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Average Balance Sheet, Interest and Yield/Rate Analysis. The following table presents average balance sheet information, interest income, interest expense and the corresponding average yields earned and rates paid for the years ended December 31, 2025, 2024 and 2023. The average balances are principally daily averages and, for loans, include both performing and nonperforming balances. Interest income on loans includes the effects of discount accretion and net deferred loan origination costs accounted for as yield adjustments.

Years Ended December 31,

2025

2024

2023

(tax-equivalent basis, dollars in thousands)

Average

Balance

Interest

& Fees

Yield/

Rate

Average

Balance

Interest

& Fees

Yield/

Rate

Average

Balance

Interest

& Fees

Yield /

Rate

Interest-earning assets:

Federal funds sold and cash investments

$

73,958 

$

3,085 

4.17 

%

$

76,675 

$

3,958 

5.16 

%

$

77,046 

$

3,922 

5.09 

%

Investment securities:

Taxable investment securities

1,310,395 

63,248 

4.83 

1,060,514 

49,769 

4.69 

798,579 

28,653 

3.59 

Investment securities exempt from federal income tax (1)

58,883 

2,219 

3.77 

55,672 

1,913 

3.44 

55,997 

1,708 

3.05 

Total securities

1,369,278 

65,467 

4.78 

1,116,186 

51,682 

4.63 

854,576 

30,361 

3.55 

Loans:

Loans (2)

4,902,581 

310,169 

6.33 

5,794,141 

365,892 

6.31 

6,238,970 

378,333 

6.06 

Loans exempt from federal income tax (1)

46,316 

2,090 

4.51 

46,075 

1,944 

4.22 

53,290 

2,233 

4.19 

Total loans

4,948,897 

312,259 

6.31 

5,840,216 

367,836 

6.30 

6,292,260 

380,566 

6.05 

Loans held for sale

96,797 

5,232 

5.41 

7,185 

392 

5.45 

4,034 

260 

6.45 

Nonmarketable equity securities

37,262 

2,729 

7.32 

39,108 

3,070 

7.85 

43,318 

2,819 

6.51 

Total earning assets

6,526,192 

388,772 

5.96 

%

7,079,370 

426,938 

6.03 

%

7,271,234 

417,928 

5.75 

%

Noninterest-earning assets

541,093 

665,308 

635,490 

Total assets

$

7,067,285 

$

7,744,678 

$

7,906,724 

Interest-bearing liabilities:

Checking and money market deposits

$

3,322,844 

$

91,070 

2.74 

%

$

3,580,458 

$

118,682 

3.31 

%

$

3,738,818 

$

109,831 

2.94 

%

Savings deposits

504,157 

1,286 

0.26 

533,104 

1,744 

0.33 

612,243 

1,632 

0.27 

Time deposits

806,892 

26,451 

3.28 

846,512 

30,681 

3.62 

814,727 

21,840 

2.68 

Brokered deposits

131,167 

5,464 

4.17 

207,713 

9,569 

4.61 

75,935 

3,644 

4.80 

Total interest-bearing deposits

4,765,060 

124,271 

2.61 

5,167,787 

160,676 

3.11 

5,241,723 

136,947 

2.61 

Short-term borrowings

74,743 

2,807 

3.76 

45,251 

1,960 

4.33 

23,406 

68 

0.29 

FHLB advances and other borrowings

352,567 

14,621 

4.15 

381,525 

16,495 

4.32 

460,781 

20,709 

4.49 

Subordinated debt

64,828 

4,554 

7.02 

89,028 

5,271 

5.92 

95,986 

5,266 

5.49 

Trust preferred debentures

51,525 

4,810 

9.34 

50,938 

5,380 

10.56 

50,298 

5,289 

10.52 

Total interest-bearing liabilities

5,308,723 

151,063 

2.85 

%

5,734,529 

189,782 

3.31 

%

5,872,194 

168,279 

2.87 

%

Noninterest-bearing liabilities:

Noninterest-bearing deposits

1,040,227 

1,106,388 

1,173,873 

Other noninterest-bearing liabilities

107,066 

109,777 

90,562 

Total noninterest-bearing liabilities

1,147,293 

1,216,165 

1,264,435 

Shareholders’ equity

611,269 

793,984 

770,095 

Total liabilities and shareholders’ equity

$

7,067,285 

$

7,744,678 

$

7,906,724 

Net interest income / net interest margin (3)

$

237,709 

3.64 

%

$

237,156 

3.35 

%

$

249,649 

3.43 

%

(1)Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis, assuming a statutory federal income tax rate of 21%. Tax-equivalent adjustments totaled $0.9 million, $0.8 million and $0.8 million for the years ended December 31, 2025, 2024 and 2023, respectively.

(2)Average loan balances include nonaccrual loans. Interest income on loans includes amortization of deferred loan fees, net of deferred loan costs.

(3)Net interest margin during the periods presented represents: (i) the difference between interest income on interest-earning assets and the interest expense on interest-bearing liabilities, divided by (ii) average interest-earning assets for the period.

Interest Rates and Operating Interest Differential. Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates. The following table shows the effect that these factors had on the interest earned on our interest-earning assets and the interest incurred on our interest-bearing liabilities. The effect of changes in volume is determined by multiplying

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the change in volume by the previous period’s average rate. Similarly, the effect of rate changes is calculated by multiplying the change in average rate by the previous period’s volume. Changes which are not due solely to volume or rate have been allocated proportionally to the change due to volume and the change due to rate.

Year Ended December 31, 2025 compared with Year Ended December 31, 2024

Year Ended December 31, 2024 compared with Year Ended December 31, 2023

Change due to:

Interest

Variance

Change due to:

Interest

Variance

(tax-equivalent basis, dollars in thousands)

Volume

Rate

Volume

Rate

Earning assets:

Federal funds sold and cash investments

$

(127)

$

(746)

$

(873)

$

(19)

$

55 

$

36 

Investment securities:

Taxable investment securities

11,893 

1,586 

13,479 

10,845 

10,271 

21,116 

Investment securities exempt from federal income tax

116 

190 

306 

(11)

216 

205 

Total securities

12,009 

1,776 

13,785 

10,834 

10,487 

21,321 

Loans:

Loans

(56,353)

630 

(55,723)

(26,458)

14,017 

(12,441)

Loans exempt from federal income tax

11 

135 

146 

(303)

14 

(289)

Total loans

(56,342)

765 

(55,577)

(26,761)

14,031 

(12,730)

Loans held for sale

4,867 

(27)

4,840 

141 

(9)

132 

Nonmarketable equity securities

(140)

(201)

(341)

(302)

553 

251 

Total earning assets

(39,733)

1,567 

(38,166)

(16,107)

25,117 

9,010 

Interest-bearing liabilities:

Checking and money market deposits

(7,800)

(19,812)

(27,612)

(5,041)

13,892 

8,851 

Savings deposits

(84)

(374)

(458)

(235)

347 

112 

Time deposits

(1,367)

(2,863)

(4,230)

1,002 

7,839 

8,841 

Brokered deposits

(3,358)

(747)

(4,105)

6,198 

(273)

5,925 

Total interest-bearing deposits

(12,609)

(23,796)

(36,405)

1,924 

21,805 

23,729 

Short-term borrowings

1,192 

(345)

847 

505 

1,387 

1,892 

FHLB advances and other borrowings

(1,226)

(648)

(1,874)

(3,494)

(720)

(4,214)

Subordinated debt

(1,566)

849 

(717)

(397)

402 

5 

Trust preferred debentures

58 

(628)

(570)

68 

23 

91 

Total interest-bearing liabilities

(14,151)

(24,568)

(38,719)

(1,394)

22,897 

21,503 

Net interest income

$

(25,582)

$

26,135 

$

553 

$

(14,713)

$

2,220 

$

(12,493)

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Table of Contents

Interest Income. For the year ended December 31, 2025, interest income, on a tax-equivalent basis, decreased $38.2 million to $388.8 million as compared to the same period in 2024, primarily due to a decline in earning assets. The yield on earning assets decreased seven basis points to 5.96% from 6.03%.

Average earning assets decreased to $6.53 billion in 2025 from $7.08 billion in 2024. Average loans decreased $891.3 million. This decrease was partially offset by increases in investment securities and loans held for sale of $253.1 million and $89.6 million, respectively.

Average loans decreased $891.3 million in 2025 compared to 2024. Average consumer loans decreased $633.4 million due to the sale of non-core consumer loan portfolios in 2025. During the fourth quarter of 2025, the Company sold substantially all of its equipment finance portfolio. As a result, equipment finance loan and lease average balances decreased $249.7 million to $650.0 million by the end of 2025. Proceeds from the sale of the loan portfolios were used to purchase investment securities and reduce higher-cost funding for the Company.

Average loans held for sale in 2025 primarily reflected the GreenSky consumer loans, which were transferred to held for sale in December 2024. The Company completed the sale of this portfolio in April 2025.

Interest Expense. Interest expense decreased $38.7 million to $151.1 million in 2025 compared to 2024. The cost of interest-bearing liabilities decreased to 2.85% compared to 3.31% for the prior year primarily due to decreases in interest rates on deposits. Interest expense on deposits was $124.3 million in 2025 compared to $160.7 million in 2024, as a result of the rate cuts enacted by the Federal Reserve Bank beginning in late 2024.

Average balances of interest-bearing deposit accounts decreased $402.7 million, or 7.79%, to $4.77 billion for 2025 compared to the same period one year earlier. Servicing deposits decreased $433.7 million to $665.3 million due to the loss of a customer in July 2025. In addition, brokered deposits decreased $76.5 million.

Interest expense on FHLB advances and other borrowings decreased $1.9 million for the year ended December 31, 2025 from the prior year, due to decreases in both average balances and interest rates. The average balances decreased $29.0 million in 2025 compared to 2024, while the average borrowing rates decreased to 4.15% in 2025 compared to 4.32% in 2024.

Interest expense on subordinated debt decreased $0.7 million for the year ended December 31, 2025, from the prior year, due to a decrease in average balances. The average balance decreased $24.2 million in 2025 compared to 2024, due the redemption of $50.8 million of debt at September 30, 2025 and $16.0 million in 2024.

Provision for Credit Losses. The Company's provision for credit losses on loans totaled $60.5 million and $119.3 million in 2025 and 2024, respectively. The Company charged off $29.8 million of the allowance for credit losses related to its equipment finance portfolio in connection with the loan and lease sale during the fourth quarter of 2025. The provision for credit losses in 2025 was driven by the replenishment of reserve balances following higher charge offs and a modest reserve build related to loan growth in the community banking portfolio during the fourth quarter of 2025. The Company recognized charge-offs in its specialty finance and equipment financing units of $25.3 million and $28.8 million, respectively in 2024. These charge-offs, recognized to reduce future credit risk, resulted in the increase in provision expense in 2024. In addition, the Company recognized $0.7 million recapture of credit losses related to unfunded commitments in 2025 compared to provision expense of $1.1 million in 2024.

The provision for credit losses on loans recognized during the year ended December 31, 2025 was made at a level deemed necessary by Management to absorb estimated losses in the loan portfolio. A detailed evaluation of the adequacy of the allowance for credit losses is completed quarterly by Management, the results of which are used to determine provision for credit losses. Management estimates the allowance balance required using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions and reasonable and supportable forecasts along with other qualitative and quantitative factors.

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Table of Contents

Noninterest Income. The following table sets forth the major components of our noninterest income for the years ended December 31, 2025, 2024 and 2023:

For the years ended December 31,

2025 Compared to 2024

2024 Compared to 2023

(dollars in thousands)

2025

2024

2023

Increase (decrease)

Increase (decrease)

Noninterest income:

Wealth management revenue

$

31,019 

$

28,697 

$

25,572 

$

2,322 

8.1 

%

$

3,125 

12.2 

%

Service charges on deposit accounts

13,827 

13,154 

11,990 

673 

5.1 

1,164 

9.7 

Interchange revenue

13,496 

13,955 

14,302 

(459)

(3.3)

(347)

(2.4)

Residential mortgage banking revenue

2,857 

2,418 

1,903 

439 

18.2 

515 

27.1 

Income on company-owned life insurance

8,564 

7,683 

4,439 

881 

11.5 

3,244 

73.1 

Gain (loss) on sales of investment securities, net

14 

(230)

(9,372)

244 

(106.1)

9,142 

(97.5)

Credit enhancement income

9,904 

60,998 

48,194 

(51,094)

(83.8)

12,804 

26.6 

Other income

8,499 

12,066 

17,756 

(3,567)

(29.6)

(5,690)

(32.0)

Total noninterest income

$

88,180 

$

138,741 

$

114,784 

$

(50,561)

(36.4)

%

$

23,957 

20.9 

%

Wealth management revenue. Wealth management revenue increased $2.3 million, or 8.09%, in 2025 as compared to 2024, driven by the growth in assets under management. Assets under administration increased 7.85% to $4.48 billion at December 31, 2025 from $4.15 billion at December 31, 2024.

Credit enhancement income. Prior to 2025, the Company was party to three third-party loan origination programs. As part of these programs, the third-party providers offered various credit enhancements with respect to loans originated under the programs, including contributions to reserve accounts, yield maintenance and certain other payments. In 2025, the Company operated only one such program due to the previous sales of the LendingPoint and GreenSky portfolios. Effective December 31, 2025, the Company modified its third-party lending and servicing arrangements with its sole partner. The new agreements provide a credit enhancement by the partner which protects the Company by indemnifying or reimbursing incurred losses. We estimate and record a provision for expected losses and a corresponding credit enhancement asset on the balance sheet through credit enhancement income.

Credit enhancement income declined $51.1 million for the year ended December 31, 2025 compared to the same period of 2024 as a result of loan payoffs and a cessation in loans originated through the LendingPoint and GreenSky programs. The Company recognized $6.6 million of additional credit enhancement income during the fourth quarter of 2025, resulting from the contractual changes with its sole partner referenced above.

Other noninterest income. Other income decreased $3.6 million for the year ended December 31, 2025, as compared to the same period in 2024. The Company recognized incremental servicing revenues related to the GreenSky portfolio of $0.3 million in the 2025 compared to $3.7 million in 2024.

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Noninterest Expense. The following table sets forth the major components of noninterest expense for the years ended December 31, 2025, 2024 and 2023:

Years Ended December 31,

2025 Compared to 2024

2024 Compared to 2023

(dollars in thousands)

2025

2024

2023

Increase (decrease)

Increase (decrease)

Noninterest expense:

Salaries and employee benefits

$

104,400 

$

93,639 

$

93,438 

$

10,761 

11.5 

%

$

201 

0.2 

%

Occupancy and equipment

17,223 

16,785 

15,986 

438 

2.6 

799 

5.0 

Data processing

27,974 

28,160 

26,286 

(186)

(0.7)

1,874 

7.1 

FDIC insurance

8,136 

5,278 

4,779 

2,858 

54.1 

499 

10.4 

Professional services

9,871 

7,822 

7,049 

2,049 

26.2 

773 

11.0 

Marketing

5,861 

3,926 

3,158 

1,935 

49.3 

768 

24.3 

Communications

1,376 

1,364 

1,741 

12 

0.9 

(377)

(21.7)

Loan expense

6,992 

5,954 

4,206 

1,038 

17.4 

1,748 

41.6 

Loan servicing fees

4,578 

12,864 

19,181 

(8,286)

(64.4)

(6,317)

(32.9)

Impairment on goodwill

153,977 

— 

— 

153,977 

100.0 

— 

— 

Amortization of intangible assets

3,224 

4,008 

4,758 

(784)

(19.6)

(750)

(15.8)

Other real estate owned

281 

5,569 

333 

(5,288)

(95.0)

5,236 

1,572.4 

Loss on sale of loans

23,051 

— 

— 

23,051 

100.0 

— 

— 

Impairment on leased assets and surrendered assets

684 

7,858 

— 

(7,174)

100.0 

7,858 

N/A

Other expense

12,375 

14,628 

12,168 

(2,253)

(15.4)

2,460 

20.2 

Total noninterest expense

$

380,003 

$

207,855 

$

193,083 

$

172,148 

82.8 

%

$

14,772 

7.7 

%

    Salaries and employee benefits. Salaries and employee benefits expense increased $10.8 million in 2025 as compared to 2024, primarily due to increases of $3.2 million in severance expense, and $4.8 million in variable compensation expense, including commissions and annual bonuses. The Company employed 861 employees at December 31, 2025 compared to 896 employees at December 31, 2024.

FDIC insurance expense. The Company recognized $1.7 million in additional FDIC assessments in 2025 related to prior years’ amended call reports due to the restatements of prior years’ financial statements.

Professional services expense. The increase in professional services expense for the year ended December 31, 2025, as compared to 2024, was primarily the result of increased audit and consulting fees related to restatements of prior years' financial statements and the evaluation of the accounting and reporting of the Company's third-party lending and servicing programs.

Marketing expense. The increase in marketing expense for the year ended December 31, 2025, as compared to 2024, was primarily the result of increased brand marketing and program expenses related to deposit account acquisition.

Loan servicing fees. Loan servicing fees expense represents servicing fees paid to third parties associated with our third party lending programs. The decline in servicing fees was a result of loan payoffs and a cessation in loans originated through the GreenSky and LendingPoint programs.

Impairment on goodwill. As mentioned previously, the Company recognized $154.0 million of goodwill impairment expense during the first quarter of 2025 in its Banking reporting unit.

Other real estate owned. The Company recorded impairment expense of $4.9 million in 2024 related to a single assisted living facility. This asset was sold in 2025.

Loss on sale of loan portfolios. The Company recognized losses of $23.1 million on the sale of loan portfolios, including $21.4 million related to the sale of substantially all of its equipment finance portfolio.

Impairment on leased assets and surrendered assets. Impairment on leased assets and surrendered assets totaled $7.9 million in 2024, primarily related to assets associated with the trucking industry.

Other expense. The Company recognized $3.1 million in expenses related to various legal actions in 2024.

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Table of Contents

Income Tax Expense. The Company recognized income tax expense of $9.4 million in 2025 compared to $8.9 million in 2024. Effective tax rates for 2025 and 2024 were 24.1% and 18.9%, respectively. The effective tax rate calculation for the year ended December 31, 2025, excludes the goodwill impairment charge of $154.0 million, as this item is not deductible for tax purposes.

Financial Condition

Assets. Total assets were $6.51 billion at December 31, 2025, as compared to $7.51 billion at December 31, 2024.

Loans. The loan portfolio is the largest category of our assets. The principal segments of our loan portfolio are discussed below:

Commercial loans. We provide a mix of variable and fixed rate commercial loans. The loans are typically made to small and medium-sized manufacturing, wholesale, retail and service businesses for working capital needs, business expansions and farm operations. Commercial loans generally include lines of credit and loans with maturities of five years or less. The loans are generally made with business operations as the primary source of repayment, but may also include collateralization by inventory, accounts receivable and equipment, and generally include personal guarantees. The commercial loan category also includes loans originated by the equipment financing business that are secured by the underlying equipment, of which we sold substantially all of our equipment finance portfolio during the fourth quarter of 2025.

Commercial real estate loans. Our commercial real estate loans consist of both real estate occupied by the borrower for ongoing operations and non-owner occupied real estate properties. The real estate securing our existing commercial real estate loans includes a wide variety of property types, such as owner occupied offices, warehouses and production facilities, office buildings, hotels, mixed-use residential and commercial facilities, retail centers, multifamily properties, skilled nursing and assisted living facilities. Our commercial real estate loan portfolio also includes farmland loans. Farmland loans are generally made to a borrower actively involved in farming rather than to passive investors.

Construction and land development loans. Our construction and land development loans are comprised of residential construction, commercial construction and land acquisition and development loans. Interest reserves are generally established on real estate construction loans.

The following table presents the balance and associated percentage of the major property types within our commercial real estate and construction and land development loan portfolios at December 31, 2025 and December 31, 2024:

December 31, 2025

December 31, 2024

(dollars in thousands)

Balance

Percent

Balance

Percent

Multi-Family

$

430,397 

16.4 

%

$

547,016 

18.9 

%

Skilled Nursing

193,572 

7.4 

400,902 

13.8 

Retail

459,225 

17.5 

460,283 

15.9 

Industrial/Warehouse

275,922 

10.5 

235,674 

8.2 

Hotel/Motel

290,137 

11.0 

228,764 

7.9 

Office

140,076 

5.3 

146,295 

5.1 

All other

839,475 

31.9 

872,572 

30.2 

Total commercial real estate and construction and land development loans

$

2,628,804 

100.0 

%

$

2,891,506 

100.0 

%

Loans secured by office space totaled $140.1 million and $146.3 million at December 31, 2025 and December 31, 2024, respectively, are primarily located in suburban locations in Illinois and Missouri.

Residential real estate loans. Our residential real estate loans are loans secured by residential properties that generally do not qualify for secondary market sale.

Consumer loans. Our consumer loans include direct personal loans, indirect automobile loans, lines of credit and installment loans originated through home improvement specialty retailers and contractors. Personal loans are generally secured by automobiles, boats and other types of personal property and are made on an installment basis.

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Table of Contents

Lease financing. Our equipment leasing business provides financing leases to varying types of businesses nationwide for purchases of business equipment and software. The financing is secured by a first priority interest in the financed asset and generally requires monthly payments. The Company sold substantially all of our equipment finance portfolio during the fourth quarter of 2025.

The following table presents the balance and associated percentage of each major category in our loan portfolio at December 31, 2025 and December 31, 2024:

December 31, 2025

December 31, 2024

(dollars in thousands)

Book Value

%

Book Value

%

Loans:

Commercial

$

1,178,521 

27.1 

%

$

1,359,820 

26.3 

%

Commercial real estate

2,342,664 

53.8 

2,591,664 

50.1 

Construction and land development

286,140 

6.6 

299,842 

5.8 

Residential real estate

349,623 

8.0 

380,557 

7.4 

Consumer

144,075 

3.3 

144,301 

2.8 

Lease financing

50,981 

1.2 

$

391,390 

7.6 

Total loans, gross

4,352,004 

100.0 

%

5,167,574 

100.0 

%

Allowance for credit losses on loans

(69,219)

(111,204)

Total loans, net

$

4,282,785 

$

5,056,370 

Total loans decreased $815.6 million, or 15.8%, to $4.35 billion at December 31, 2025, as compared to December 31, 2024. In 2025, the Company sold participation interests of $317.5 million related to our GreenSky consumer loan portfolio, and we also completed the sale of substantially all of our equipment finance portfolio, which included $316.1 million of commercial loans and $239.7 million of leases.

The Company's loan portfolio is assigned to the following internal business sectors:

•Community bank represents predominately in-market loans originated through our banking center network.

•Specialty finance provides bridge loan financing for commercial real estate projects, primarily multi-family and healthcare. These projects can include construction and short term financing in anticipation of obtaining permanent secondary market financing. The loans are typically outside of the Company’s primary market areas.

•Equipment finance portfolio includes loans and leases originated to varying types of businesses throughout the United States for purchases of business equipment and software. The Company sold substantially all of our equipment finance portfolio during the fourth quarter of 2025.

•Non-core and other includes our third-party origination and servicing programs, and capital market credits, including loans to finance the sale of the GreenSky portfolio.

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Table of Contents

The following tables present our outstanding loans by business sector at December 31, 2025 and December 31, 2024:

December 31, 2025

(dollars in thousands)

Community bank

Specialty finance

Equipment finance

Non-core and other

Total

Commercial

$

688,277 

$

248,112 

$

8,781 

$

233,351 

$

1,178,521 

Commercial real estate

1,979,383 

358,457 

— 

4,824 

2,342,664 

Construction and land development

226,295 

59,832 

— 

13 

286,140 

Residential real estate

344,523 

1,782 

— 

3,318 

349,623 

Consumer

89,749 

— 

— 

54,326 

144,075 

Lease financing

— 

— 

50,981 

— 

50,981 

Total

$

3,328,227 

$

668,183 

$

59,762 

$

295,832 

$

4,352,004 

December 31, 2024

(dollars in thousands)

Community bank

Specialty finance

Equipment finance

Non-core and other

Total

Commercial

$

587,785 

$

269,620 

$

416,969 

$

85,446 

$

1,359,820 

Commercial real estate

1,950,498 

641,166 

— 

— 

2,591,664 

Construction and land development

184,185 

115,657 

— 

— 

299,842 

Residential real estate

374,062 

— 

— 

6,495 

380,557 

Consumer

81,380 

— 

— 

62,921 

144,301 

Lease financing

— 

— 

391,390 

— 

391,390 

Total

$

3,177,910 

$

1,026,443 

$

808,359 

$

154,862 

$

5,167,574 

Total loans decreased $815.6 million, or 15.8%, to $4.35 billion at December 31, 2025, as compared to December 31, 2024. Community bank portfolio increased $150.3 million, or 4.7%, in 2025. This growth partially offset the strategic declines in the Specialty finance and Equipment finance sectors of $358.3 million and $748.6 million, respectively, as of December 31, 2025. The increase in our Non-core and other business sector is primarily due to the financing we provided related to the sale of the GreenSky portfolio.

The following table shows the contractual maturities of our loan portfolio and the distribution between fixed and adjustable interest rate loans at December 31, 2025:

December 31, 2025

Within One Year

One Year to Five Years

Five Years to 15 Years

After 15 Years

(dollars in thousands)

Fixed Rate

Adjustable

Rate

Fixed Rate

Adjustable

Rate

Fixed Rate

Adjustable

Rate

Fixed Rate

Adjustable

Rate

Total

Commercial

$

9,964 

$

411,503 

$

202,735 

$

198,294 

$

221,882 

$

93,563 

$

— 

$

40,580 

$

1,178,521 

Commercial real estate

275,266 

134,705 

974,716 

326,725 

305,895 

303,566 

5,649 

16,142 

2,342,664 

Construction and land development

27,122 

90,139 

17,013 

89,956 

2,068 

59,797 

— 

45 

286,140 

Total commercial loans

312,352 

636,347 

1,194,464 

614,975 

529,845 

456,926 

5,649 

56,767 

3,807,325 

Residential real estate

4,452 

3,713 

6,966 

18,325 

18,223 

38,696 

172,679 

86,569 

349,623 

Consumer

3,047 

690 

86,282 

60 

47,298 

6,573 

125 

— 

144,075 

Lease financing

4,458 

— 

44,378 

— 

2,145 

— 

— 

— 

50,981 

Total loans

$

324,309 

$

640,750 

$

1,332,090 

$

633,360 

$

597,511 

$

502,195 

$

178,453 

$

143,336 

$

4,352,004 

Loan Quality

We use what we believe is a comprehensive methodology to monitor credit quality and prudently manage credit concentration within our loan portfolio. Our underwriting policies and practices govern the risk profile, credit and geographic concentration for our loan portfolio. We also have what we believe to be a comprehensive methodology to monitor these credit quality standards, including a risk classification system that identifies potential problem loans based on risk characteristics by loan type as well as the early identification of deterioration at the individual loan level.

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Analysis of the Allowance for Credit Losses on Loans. The allowance for credit losses on loans was $69.2 million, or 1.59% of total loans, at December 31, 2025, compared to $111.2 million, or 2.15% of total loans, at December 31, 2024. The following table allocates the allowance for credit losses on loans by loan category:

December 31, 2025

December 31, 2024

(dollars in thousands)

Allowance

Percent (1)

Allowance

Percent (1)

Commercial

$

23,676 

2.01 

%

$

42,776 

3.15 

%

Commercial real estate

28,284 

1.21 

36,837 

1.42 

Construction and land development

2,619 

0.92 

3,550 

1.18 

Total commercial loans

54,579 

1.43 

83,163 

1.96 

Residential real estate

6,652 

1.90 

8,002 

2.10 

Consumer

4,804 

3.33 

5,400 

3.74 

Lease financing

3,184 

6.25 

14,639 

3.74 

Total allowance for credit losses on loans

$

69,219 

1.59 

%

$

111,204 

2.15 

%

(1)Represents the percentage of the allowance to total loans in the respective category.

We measure expected credit losses over the life of each loan utilizing a combination of models which measure probability of default and loss given default, among other things. The measurement of expected credit losses is impacted by loan and borrower attributes and certain macroeconomic variables. Models are adjusted to reflect the impact of certain current macroeconomic variables as well as their expected changes over a reasonable and supportable forecast period.

In estimating expected credit losses as of December 31, 2025, we utilized certain forecasted macroeconomic variables from Oxford Economics in our models. The forecasted projections included, among other things, (i) U.S. gross domestic product ranging from 1.7% to 2.3% over the next four quarters; (ii) the 10-year treasury rate averaging 4.2% over the next four quarters; and (iii) Illinois unemployment rate averaging 4.9% through the fourth quarter of 2026.

We qualitatively adjust the model results based on this scenario for various risk factors that are not considered within our modeling processes but are nonetheless relevant in assessing the expected credit losses within our loan pools. These Q-Factor adjustments are based upon management judgment and current assessment as to the impact of risks related to changes in lending policies and procedures; economic and business conditions; loan portfolio attributes and credit concentrations; and external factors, among other things, that are not already fully captured within the modeling inputs, assumptions and other processes. Management assesses the potential impact of such items within a range of severely negative impact to positive impact and adjusts the modeled expected credit loss by an aggregate adjustment percentage based upon the assessment. The qualitative factor adjustment at December 31, 2025, was approximately 57 basis points of total loans, decreasing slightly from 67 basis points at December 31, 2024.

The allowance allocated to commercial loans totaled $23.7 million, or 2.01% of total commercial loans, at December 31, 2025, compared to $42.8 million, or 3.15%, at December 31, 2024. Outstanding loan balances decreased $181.3 million, or 13.3%, during 2025, primarily as a result of the sale of substantially all of our equipment finance portfolio. Charge-offs related to the non-core loan program of $11.1 million during the first quarter of 2025 coupled with charge-offs related to the sale of the equipment finance portfolio of $14.2 million during the fourth quarter of 2025 resulted in a significant decrease in the allowance allocated to commercial loans. Excluding these charge-offs, modeled expected credit losses increased $8.5 million. Qualitative factor adjustments decreased $2.3 million. There were no specific allocations for commercial loans that were evaluated for expected credit losses on an individual basis at December 31, 2025 or December 31, 2024.

The allowance allocated to commercial real estate loans totaled $28.3 million, or 1.21% of total commercial real estate loans, at December 31, 2025, decreasing $8.5 million, from $36.8 million, or 1.42% of total commercial real estate loans, at December 31, 2024. Outstanding loan balances decreased $249.0 million, or 9.6%, during 2025. Specific allocations for loans that were individually evaluated decreased $9.1 million as three relationships totaling $10.9 million were charged-off in the second quarter of 2025. Modeled expected credit losses increased $0.8 million and qualitative factor adjustments decreased $0.3 million. The commercial real estate portfolio does not include significant exposure to urban office properties.

The allowance allocated to construction and land development loans totaled $2.6 million, or 0.92% of total construction and land development loans, at December 31, 2025, decreasing $1.0 million from $3.6 million, or 1.18% of total constructions loans, at December 31, 2024. Modeled expected credit losses decreased $0.3 million and qualitative factor adjustments related to construction loans decreased $0.6 million. There were no specific allocations for construction loans that were evaluated for expected credit losses on an individual basis at December 31, 2025 or December 31, 2024.

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The allowance allocated to residential real estate loans totaled $6.7 million, or 1.90% of total residential real estate loans, at December 31, 2025, decreasing $1.3 million, from $8.0 million, or 2.10% of total residential real estate loans, at December 31, 2024. Modeled expected credit losses and qualitative factor adjustments decreased $1.2 million and $0.1 million, respectively. There were no specific allocations for residential real estate loans that were evaluated for expected credit losses on an individual basis at December 31, 2025, or December 31, 2024.

The allowance allocated to consumer loans totaled $4.8 million, or 3.33% of total consumer loans, at December 31, 2025, compared to $5.4 million, or 3.74%, at December 31, 2024. Modeled expected credit losses increased $1.4 million while qualitative factor adjustments decreased $2.0 million.

The allowance allocated to the lease portfolio totaled $3.2 million, or 6.25% of total commercial leases, at December 31, 2025, decreasing $11.4 million, from $14.6 million, or 3.74% of total commercial leases at December 31, 2024. Outstanding lease balances decreased $340.4 million, or 87.0%, during 2025 due to the sale of substantially all of our equipment finance portfolio.

The following table provides an analysis of the allowance for credit losses on loans, provision for credit losses on loans and net charge-offs for the years ended 2025, 2024, and 2023:

Years Ended December 31,

(dollars in thousands)

2025

2024

2023

Balance, beginning of period

$

111,204 

$

159,319 

$

128,889 

Charge-offs:

Commercial

42,123 

30,453 

13,703 

Commercial real estate

30,706 

9,998 

5,000 

Construction and land development

3,343 

17,991 

1,601 

Residential real estate

287 

817 

271 

Consumer

3,131 

98,051 

33,149 

Lease financing

31,334 

14,323 

5,026 

Total charge-offs

110,924 

171,633 

58,750 

Recoveries:

Commercial

2,642 

947 

1,785 

Commercial real estate

1,172 

2,240 

4,006 

Construction and land development

2,197 

3 

33 

Residential real estate

331 

238 

138 

Consumer

582 

274 

288 

Lease financing

1,466 

554 

370 

Total recoveries

8,390 

4,256 

6,620 

Net charge-offs

102,534 

167,377 

52,130 

Provision for credit losses on loans

60,549 

119,262 

82,560 

Balance, end of period

$

69,219 

$

111,204 

$

159,319 

Gross loans, end of period

$

4,352,004 

$

5,167,574 

$

6,103,592 

Average total loans

$

4,948,897 

$

5,840,216 

$

6,292,260 

Net charge-offs to average loans

2.07 

%

2.87 

%

0.83 

%

Allowance for credit losses to total loans

1.59 

%

2.15 

%

2.61 

%

Individual loans considered to be uncollectible are charged-off against the allowance. Factors used in determining the amount and timing of charge-offs on loans include consideration of the loan type, length of delinquency, sufficiency of collateral value, lien priority and the overall financial condition of the borrower. Collateral value is determined using updated appraisals and/or other market comparable information. Charge-offs are generally taken on loans when the collectability of a loan balance is unlikely. Recoveries on loans previously charged-off are added to the allowance.

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The following tables present charge-offs by business sector for the years ended 2025 and 2024:

2025

(dollars in thousands)

Community bank

Specialty finance

Equipment finance

Non-core and other

Total charge-offs

Commercial

$

1,048 

$

152 

$

21,284 

$

19,639 

$

42,123 

Commercial real estate

15,098 

15,608 

— 

— 

30,706 

Construction and land development

36 

3,307 

— 

— 

3,343 

Residential real estate

287 

— 

— 

— 

287 

Consumer

900 

— 

— 

2,231 

3,131 

Lease financing

— 

— 

31,334 

— 

31,334 

Total

$

17,369 

$

19,067 

$

52,618 

$

21,870 

$

110,924 

2024

(dollars in thousands)

Community bank

Specialty finance

Equipment finance

Non-core and other

Total charge-offs

Commercial

$

8,210 

$

121 

$

14,457 

$

7,665 

$

30,453 

Commercial real estate

2,846 

7,152 

— 

— 

9,998 

Construction and land development

— 

17,991 

— 

— 

17,991 

Residential real estate

817 

— 

— 

— 

817 

Consumer

927 

— 

— 

97,124 

98,051 

Lease financing

— 

— 

14,323 

— 

14,323 

Total

$

12,800 

$

25,264 

$

28,780 

$

104,789 

$

171,633 

Charge-offs in 2025 were $110.9 million compared to $171.6 million in 2024. Charge-offs in the equipment finance sector increased $23.8 million to $52.6 million in 2025 compared to 2024. The Company recognized charge-offs of $29.8 million as a result of the sale of substantially all of the portfolio in 2025. Consumer loan charge-offs totaled $3.1 million in 2025 compared to $98.1 million in 2024. In 2024, the Company recognized charge-offs of $17.3 million in connection with the sale of our LendingPoint portfolio and $35.0 million in connection with the planned sale and transfer of the GreenSky portfolio to held for sale. As of December 31, 2025, we had one active non-core loan program.

Nonperforming Loans. The following table presents the change in our nonperforming loans for the year ended December 31, 2025:

(dollars in thousands)

Year Ended December 31, 2025

Balance, beginning of period

$

150,907 

New nonperforming loans

39,788 

Return to performing status

(813)

Payments received

(40,815)

Transfer to OREO and other repossessed assets

(12)

Transfer to loans held for sale

(29,400)

Charge-offs

(54,172)

Balance, end of period

$

65,483 

Beginning in 2024 and continuing throughout 2025, the Company prioritized improving its credit quality by tightening its loan underwriting standards and pursuing opportunities to resolve nonperforming loans, which included the sale of specific loans or portfolios.

The Company ceased originations of new construction loans in the Specialty Finance Group in the fourth quarter of 2024. In the third quarter of 2025, the Company ceased originations in the equipment finance portfolio, selling substantially all of the portfolio during the fourth quarter of 2025.

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Table of Contents

Loan portfolios originated through our FinTech partners, LendingPoint and GreenSky, were sold in the fourth quarter of 2024 and in the second quarter of 2025, respectively.

These actions resulted in nonperforming loans decreasing to $65.5 million, or 1.50% of total loans, at December 31, 2025, compared to $150.9 million, or 2.92% of total loans at December 31, 2024.

The following table sets forth our nonperforming assets by asset category as of the dates presented. Nonperforming loans include nonaccrual loans and loans past due 90 days or more and still accruing interest. The balance of nonperforming loans reflect the net investment in these assets.

(dollars in thousands)

December 31, 2025

December 31, 2024

December 31, 2023

Nonperforming loans:

Commercial

$

14,925 

$

23,960 

$

9,282 

Commercial real estate

45,333 

106,919 

33,891 

Construction and land development

155 

8,438 

39 

Residential real estate

3,861 

3,438 

3,869 

Consumer

47 

20 

137 

Lease financing

1,162 

8,132 

9,133 

Total nonperforming loans

65,483 

150,907 

56,351 

Other real estate owned and other repossessed assets

606 

6,502 

11,350 

Nonperforming assets

$

66,089 

$

157,409 

$

67,701 

Nonperforming loans to total loans

1.50 

%

2.92 

%

0.92 

%

Nonperforming assets to total assets

1.01 

%

2.10 

%

0.87 

%

Allowance for credit losses to nonperforming loans

105.71 

%

73.69 

%

282.73 

%

We did not recognize interest income on nonaccrual loans during the years ended December 31, 2025 or 2024 while the loans were in nonaccrual status. Additional interest income that would have been recorded on nonaccrual loans had they been current in accordance with their original terms was $11.3 million and $9.6 million for the years ended December 31, 2025 and 2024, respectively.

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Table of Contents

Investment Securities. Our investment strategy aims to maximize earnings while maintaining liquidity in securities with minimal credit risk. The types and maturities of securities purchased are primarily based on our current and projected liquidity and interest rate sensitivity positions. In the periods presented, all investment securities of the Company are classified as available for sale and, therefore, the book value of investment securities is equal to the fair market value.

The following table sets forth the book value and percentage of each category of investment securities at December 31, 2025, 2024 and 2023.

December 31, 2025

December 31, 2024

December 31, 2023

(dollars in thousands)

Balance

Percent

Balance

Percent

Balance

Percent

Investment securities available for sale:

U.S. Treasury securities

$

— 

— 

%

$

— 

— 

%

$

1,097 

0.1 

%

U.S. government sponsored entities and U.S. agency securities

19,823 

1.3 

20,141 

1.7 

72,572 

7.9 

Mortgage-backed securities - agency

1,193,750 

78.4 

847,056 

70.1 

574,500 

62.7 

Mortgage-backed securities - non-agency

97,089 

6.4 

101,012 

8.4 

83,529 

9.1 

Asset-backed student loans

34,215 

2.2 

49,973 

4.1 

— 

— 

State and municipal securities

73,458 

4.8 

69,061 

5.7 

57,460 

6.3 

Collateralized loan obligations

46,854 

3.1 

40,450 

3.4 

27,565 

3.0 

Corporate securities

57,812 

3.8 

79,881 

6.6 

99,172 

10.9 

Total investment securities, available for sale, at fair value

$

1,523,001 

100.0 

%

$

1,207,574 

100.0 

%

$

915,895 

100.0 

%

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Table of Contents

The following table sets forth the book value, maturities and weighted average yields for our investment portfolio at December 31, 2025.

(dollars in thousands)

Balance

Percent

Weighted average yield

Investment securities available for sale:

U.S. government sponsored entities and U.S. agency securities:

Maturing within one year

$

— 

— 

%

— 

%

Maturing in one to five years

9,077 

0.6 

1.10 

Maturing in five to ten years

4,670 

0.3 

4.94 

Maturing after ten years

6,076 

0.4 

5.24 

Total U.S. government sponsored entities and U.S. agency securities

$

19,823 

1.3 

%

3.27 

%

Mortgage-backed securities - agency:

Maturing within one year

$

— 

— 

%

— 

%

Maturing in one to five years

33,546 

2.2 

1.96 

Maturing in five to ten years

12,827 

0.8 

3.53 

Maturing after ten years

1,147,377 

75.4 

4.46 

Total mortgage-backed securities - agency

$

1,193,750 

78.4 

%

4.38 

%

Mortgage-backed securities - non-agency:

Maturing within one year

$

— 

— 

%

— 

%

Maturing in one to five years

10,376 

0.7 

6.32 

Maturing in five to ten years

7,015 

0.5 

4.95 

Maturing after ten years

79,698 

5.2 

4.76 

Total mortgage-backed securities - non-agency

$

97,089 

6.4 

%

4.94 

%

Asset-backed student loans:

Maturing within one year

$

— 

— 

%

— 

%

Maturing in one to five years

— 

— 

— 

Maturing in five to ten years

684 

— 

4.74 

Maturing after ten years

33,531 

2.2 

4.65 

Total asset-backed student loans

$

34,215 

2.2 

%

4.65 

%

State and municipal securities (1):

Maturing within one year

$

978 

0.1 

%

2.59 

%

Maturing in one to five years

12,572 

0.8 

2.26 

Maturing in five to ten years

25,211 

1.7 

2.63 

Maturing after ten years

34,697 

2.2 

4.99 

Total state and municipal securities

$

73,458 

4.8 

%

3.68 

%

Collateralized loan obligations:

Maturing within one year

$

— 

— 

%

— 

%

Maturing in one to five years

— 

— 

— 

Maturing in five to ten years

13,800 

0.9 

5.57 

Maturing after ten years

33,054 

2.2 

5.70 

Total collateralized loan obligations

$

46,854 

3.1 

%

5.66 

%

Corporate securities:

Maturing within one year

$

— 

— 

%

— 

%

Maturing in one to five years

20,376 

1.3 

6.08 

Maturing in five to ten years

32,411 

2.2 

3.36 

Maturing after ten years

5,025 

0.3 

6.84 

Total corporate securities

$

57,812 

3.8 

%

4.62 

%

Total investment securities, available for sale

$

1,523,001 

100.0 

%

4.42 

%

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Table of Contents

(1)Weighted average yield for tax-exempt securities are presented on a tax-equivalent basis assuming a federal income tax rate of 21%.

The table below presents the credit ratings for our investment securities classified as available for sale, at fair value, at December 31, 2025.

Amortized

Fair

Average credit rating

(dollars in thousands)

cost

Value

AAA

AA+/-

A+/-

BBB+/-

BBB-

Not Rated

Investment securities available for sale:

U.S. government sponsored entities and U.S. agency securities

$

20,744 

$

19,823 

$

— 

$

19,823 

$

— 

$

— 

$

— 

$

— 

Mortgage-backed securities - agency

1,265,954 

1,193,750 

— 

1,193,750 

— 

— 

— 

— 

Mortgage-backed securities - non-agency

97,921 

97,089 

— 

97,089 

— 

— 

— 

— 

Asset-backed student loans

34,262 

34,215 

— 

34,215 

— 

— 

— 

— 

State and municipal securities

77,054 

73,458 

7,458 

62,330 

871 

— 

— 

2,799 

Collateralized loan obligations

46,800 

46,854 

46,854 

— 

— 

— 

— 

— 

Corporate securities

60,075 

57,812 

— 

— 

11,440 

41,434 

— 

4,938 

Total investment securities, available for sale

$

1,602,810 

$

1,523,001 

$

54,312 

$

1,407,207 

$

12,311 

$

41,434 

$

— 

$

7,737 

Loans Held for Sale. Loans held for sale totaled $7.8 million at December 31, 2025, comprised entirely of residential real estate loans. Loans held for sale totaled $344.9 million at December 31, 2024, comprised of $336.7 million of consumer loans and $8.2 million of residential real estate loans. At December 31, 2024, we committed to a plan to sell our GreenSky consumer loan portfolio and transferred these loans to held for sale. The sale was completed in the second quarter of 2025.

Liabilities. At December 31, 2025, liabilities totaled $5.95 billion compared to $6.80 billion at December 31, 2024.

Deposits. We emphasize developing total client relationships with our customers in order to increase our retail and commercial core deposit bases, which are our primary funding sources. Our deposits consist of noninterest-bearing and interest-bearing demand, savings and time deposit accounts.

Total deposits decreased $772.9 million to $5.42 billion at December 31, 2025, as compared to December 31, 2024. Interest-bearing checking account and time deposit account balances decreased $523.0 million and $290.4 million, respectively, during this period. Brokered time deposit account balances decreased to $43.1 million at December 31, 2025 from $259.5 million at December 31, 2024, accounting for the decrease in time deposit account balances.

(dollars in thousands)

December 31, 2025

December 31, 2024

December 31, 2023

Balance

Percent

Balance

Percent

Balance

Percent

Noninterest-bearing demand

$

1,040,411 

19.2 

%

$

1,055,564 

17.0 

%

$

1,145,395 

18.1 

%

Interest-bearing:

Checking

1,855,215 

34.2 

2,378,256 

38.4 

2,511,840 

39.8 

Money market

1,248,942 

23.0 

1,173,630 

18.9 

1,135,629 

18.0 

Savings

487,742 

9.0 

507,305 

8.2 

559,267 

8.9 

Time

792,069 

14.6 

1,082,488 

17.5 

957,398 

15.2 

Total deposits

$

5,424,379 

100.0 

%

$

6,197,243 

100.0 

%

$

6,309,529 

100.0 

%

The following table sets forth the maturity of uninsured time deposits as of December 31, 2025:

(dollars in thousands)

Amount

Three months or less

$

19,080 

Three to six months

26,010 

Six to 12 months

20,776 

After 12 months

3,700 

Total

$

69,566 

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Table of Contents

Subordinated Debt. Subordinated debt totaled $27.0 million and $77.7 million as of December 31, 2025 and December 31, 2024, respectively. On September 30, 2025, the Company redeemed the outstanding Fixed-to-Floating Rate Subordinated Notes due September 30, 2029, having an aggregate principal amount of $50.8 million. The interest rate on the subordinated notes was 7.91%, equating to approximately $4.0 million of annual interest expense.

Capital Resources and Liquidity Management

Capital Resources. Shareholders’ equity is influenced primarily by earnings, dividends, issuances and redemptions of common and preferred stock and changes in accumulated other comprehensive income caused primarily by fluctuations in unrealized holding gains or losses, net of taxes, on available-for-sale investment securities, fair value hedges and cash flow hedges.

Shareholders’ equity decreased $145.3 million to $565.5 million at December 31, 2025, as compared to December 31, 2024. The change in shareholders’ equity was the result of the net loss of $124.3 million, dividends to common shareholders of $27.7 million, dividends to preferred shareholders of $8.9 million and repurchases of common stock of $9.7 million, partially offset by an increase in accumulated other comprehensive losses of $21.6 million.

On November 3, 2025, the Company’s board of directors authorized a new share repurchase program, pursuant to which the Company is authorized to repurchase up to $25.0 million of common stock through November 2, 2026. The new stock repurchase program became effective on November 3, 2025. The Company’s previous stock repurchase program expired on December 31, 2024. As of December 31, 2025, $9.6 million, or 457,222 shares of the Company’s common stock, had been repurchased under the current program.

Liquidity Management. Liquidity refers to the measure of our ability to meet the cash flow requirements of depositors and borrowers, while at the same time meeting our operating, capital and strategic cash flow needs, all at a reasonable cost. We continuously monitor our liquidity position to ensure that assets and liabilities are managed in a manner that will meet all short-term and long-term cash requirements. We manage our liquidity position to meet the daily cash flow needs of customers, while maintaining an appropriate balance between assets and liabilities to meet the return on investment objectives of our shareholders.

Integral to our liquidity management is the administration of short-term borrowings. To the extent we are unable to obtain sufficient liquidity through core deposits, we seek to meet our liquidity needs through wholesale funding or other borrowings on either a short- or long-term basis.

Securities sold under agreements to repurchase, which are classified as secured borrowings, generally mature within one to four days from the transaction date. Securities sold under agreements to repurchase are reflected at the amount of cash received in connection with the transaction, which represents the amount of the Bank’s obligation. The Bank may be required to provide additional collateral based on the fair value of the underlying securities. Investment securities with a carrying amount of $12.2 million and $15.0 million at December 31, 2025 and December 31, 2024, respectively, were pledged for securities sold under agreements to repurchase.

The table below presents our sources of liquidity as of December 31, 2025 and December 31, 2024:

(dollars in thousands)

December 31, 2025

December 31, 2024

Cash and cash equivalents

$

127,811 

$

114,766 

Unpledged securities

812,587 

672,399 

FHLB committed liquidity

1,114,294 

1,290,246 

FRB discount window availability

349,026 

538,835 

Total Estimated Liquidity

$

2,403,718 

$

2,616,246 

Conditional Funding Based on Market Conditions

Additional credit facility

$

351,000 

$

360,000 

Brokered CDs (additional capacity)

450,000 

350,000 

ICS One Way Buy (additional capacity)

600,000 

— 

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The Company is a corporation separate and apart from the Bank and, therefore, must provide for its own liquidity. The Company’s main source of funding is dividends declared and paid to it by the Bank. There are statutory, regulatory and debt covenant limitations that affect the ability of the Bank to pay dividends to the Company. Management believed at December 31, 2025, that these limitations will not impact our ability to meet our ongoing short-term cash obligations.

Regulatory Capital Requirements

We are subject to various regulatory capital requirements administered by the federal and state banking regulators. Failure to meet regulatory capital requirements may result in certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for “prompt corrective action”, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting policies.

At December 31, 2025, the Company and the Bank exceeded the regulatory minimums and met the regulatory definition of well capitalized. The following table presents the Company's and the Bank’s capital ratios and the minimum requirements at December 31, 2025:

Ratio

Actual

Minimum

Regulatory

Requirements (1)

Well

Capitalized

Total risk-based capital ratio

Midland States Bancorp, Inc.

15.16 

%

10.50 

%

N/A

Midland States Bank

14.27 

10.50 

10.00 

%

Tier 1 risk-based capital ratio

Midland States Bancorp, Inc.

13.37 

8.50 

N/A

Midland States Bank

13.02 

8.50 

8.00 

Common equity tier 1 risk-based capital ratio

Midland States Bancorp, Inc.

9.89 

7.00 

N/A

Midland States Bank

13.02 

7.00 

6.50 

Tier 1 leverage ratio

Midland States Bancorp, Inc.

9.90 

4.00 

N/A

Midland States Bank

9.63 

4.00 

5.00 

(1)Total risk-based capital ratio, Tier 1 risk-based capital ratio and Common equity tier 1 risk-based capital ratio include the capital conservation buffer of 2.5%.

Off-Balance Sheet Arrangements

We have limited off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources.

In the normal course of business, we enter into various transactions, which, in accordance with GAAP, are not included in our consolidated balance sheets. We enter into these transactions to meet the financing needs of our customers. These transactions include commitments to extend credit and standby letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in our consolidated balance sheets. Most of these commitments mature within two years and are expected to expire without being drawn upon. Standby letters of credit are included in the determination of the amount of risk-based capital that the Company and the Bank are required to hold.

We enter into contractual loan commitments to extend credit, normally with fixed expiration dates or termination clauses, at specified rates and for specific purposes. Substantially all of our commitments to extend credit are contingent upon customers maintaining specific credit standards until the time of loan funding. We decrease our exposure to losses under these commitments by subjecting them to credit approval and monitoring procedures. We assess the credit risk associated with certain commitments to extend credit and establish a liability for probable credit losses.

Standby letters of credit are written conditional commitments issued by us to guarantee the performance of a customer to a third party. In the event that the customer does not perform in accordance with the terms of the agreement with the third party, we would be required to fund the commitment. The maximum potential amount of future payments we could be required to make is represented by the contractual amount of the commitment. If the commitment is funded, we would be entitled to seek

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recovery from the customer. Our policies generally require that standby letter of credit arrangements contain security and debt covenants similar to those contained in loan agreements.

We guarantee the distributions and payments for redemption or liquidation of the trust preferred securities issued by our wholly owned subsidiary business trusts to the extent of funds held by the trusts. Although this guarantee is not separately recorded, the obligation underlying the guarantee is fully reflected on our consolidated balance sheets as junior subordinated debentures held by subsidiary trusts. The junior subordinated debentures currently qualify as Tier 1 capital under the Federal Reserve capital adequacy guidelines.

Quantitative and Qualitative Disclosures About Market Risk

Market Risk. Market risk represents the risk of loss due to changes in market values of assets and liabilities. We incur market risk in the normal course of business through exposures to market interest rates, equity prices, and credit spreads. We are primarily exposed to interest rate risk as a result of offering a wide array of financial products to our customers and secondarily to price risk from investments in securities.

Interest Rate Risk. Interest rate risk is the risk to earnings arising from changes in market interest rates. Interest rate risk arises from timing differences in the repricings and maturities of interest-earning assets and interest-bearing liabilities (reprice risk), changes in the expected maturities of assets and liabilities arising from embedded options, such as borrowers’ ability to prepay residential mortgage loans at any time and depositors’ ability to redeem certificates of deposit before maturity (option risk), changes in the shape of the yield curve where interest rates increase or decrease in a nonparallel fashion (yield curve risk), and changes in spread relationships between different yield curves, such as U.S. Treasuries and SOFR (basis risk).

Interest rate risk management is an active process that encompasses monitoring loan and deposit flows complemented by investment, funding and hedging activities. Effective management of interest rate risk begins with understanding the dynamic characteristics of assets and liabilities and determining the appropriate interest rate risk posture given business forecasts, management objectives, market expectations, and policy constraints.

Changes in market interest rates may result in changes in the fair market value of our financial instruments, cash flows, and net interest income. We seek to achieve a stable net interest income profile while managing volatility arising from shifts in market interest rates. Our Board of Directors’ Risk Policy and Compliance Committee oversees interest rate risk, as well as the establishment of risk measures, limits, and policy guidelines for managing the amount of interest rate risk and its effect on net interest income. The Committee meets quarterly to monitor the level of interest rate risk sensitivity to ensure compliance with the board of directors’ approved risk limits.

An asset sensitive position refers to a balance sheet position in which an increase in short-term interest rates is expected to generate higher net interest income, as rates earned on our interest-earning assets would reprice upward more quickly than rates paid on our interest-bearing liabilities, thus expanding our net interest margin. Conversely, a liability sensitive position refers to a balance sheet position in which an increase in short-term interest rates is expected to generate lower net interest income, as rates paid on our interest-bearing liabilities would reprice upward more quickly than rates earned on our interest-earning assets, thus compressing our net interest margin.

Interest rate risk measurement is calculated and reported to the Risk Policy and Compliance Committee at least quarterly. The information reported includes period-end results and identifies any policy limits exceeded, along with an assessment of the policy limit breach and the action plan and timeline for resolution, mitigation, or assumption of the risk.

We use NII at Risk to model interest rate risk utilizing various assumptions for assets, liabilities, and derivatives. NII at Risk uses net interest income simulation analysis which involves forecasting net interest earnings under a variety of scenarios including changes in the level of interest rates, the shape of the yield curve, and spreads between market interest rates. The sensitivity of net interest income to changes in interest rates is measured using numerous interest rate scenarios including shocks, gradual ramps, curve flattening, curve steepening as well as forecasts of likely interest rates scenarios. Modeling the sensitivity of net interest earnings to changes in market interest rates is highly dependent on numerous assumptions incorporated into the modeling process. To the extent that actual performance is different than what was assumed, actual net interest earnings sensitivity may be different than projected. We use various ad-hoc reports to continuously refine, stress and validate these assumptions. Assumptions and methodologies regarding administered rate liabilities (e.g., savings accounts, money market accounts and interest-bearing checking accounts), balance trends, and repricing relationships reflect our best estimate of expected behavior and these assumptions are reviewed periodically.

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The following table shows NII at Risk at the dates indicated:

Net interest income sensitivity (Shocks)

Immediate change in rates

(dollars in thousands)

-200

-100

+100

+200

December 31, 2025:

Dollar change

$

921 

$

(517)

$

2,606 

$

5,458 

Percent change

0.4 

%

(0.2)

%

1.2 

%

2.5 

%

December 31, 2024:

Dollar change

$

2,395 

$

1,395 

$

(2,727)

$

(5,596)

Percent change

1.1 

%

0.6 

%

(1.2)

%

(2.5)

%

We report NII at Risk to isolate the change in income related solely to interest-earning assets and interest-bearing liabilities. The NII at Risk results included in the table above reflect the analysis used quarterly by management. It models -200, −100, +100 and +200 basis point parallel shifts in market interest rates. We were within board policy limits for all scenarios at December 31, 2025.

Tolerance levels for risk management require the continuing development of remedial plans to maintain residual risk within approved levels as we adjust the balance sheet. NII at Risk reported at December 31, 2025 projects that our earnings exhibit increasing profitability in a declining rate environment, consistent with our modeling at December 31, 2024. Throughout the course of 2025, the Bank has been holding to its non-maturity beta assumptions and lowering rates along with the industry overall. Coupled with market expectations, the Bank continued its strategy of layering on protection to lower short-term rates through deposit pricing, securities purchase selection and hedging. These aspects are reflective of the Bank becoming more biased to lower rates year over year.

Price Risk. Price risk represents the risk of loss arising from adverse movements in the prices of financial instruments that are carried at fair value and are subject to fair value accounting. We have price risk from investment securities, derivative instruments, and equity investments.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our most significant accounting policies are described in Note 1 to the consolidated financial statements. Certain of these accounting policies require management to use significant judgment and estimates, which can have a material impact on the carrying value of certain assets and liabilities, and we consider these policies to be our critical accounting estimates. The judgment and assumptions made are based upon historical experience, future forecasts, or other factors that management believes to be reasonable under the circumstances. Because of the nature of the judgment and assumptions, actual results could differ from estimates, which could have a material effect on our financial condition and results of operations.

The following accounting estimates materially affect our reported earnings and financial condition and requires significant judgments and assumptions. Management has reviewed these critical accounting estimates and related disclosures with our Audit Committee.

Allowance for Credit Losses on Loans

Management’s evaluation process used to determine the appropriateness of the allowance for credit losses on loans is subject to the use of estimates, assumptions, and judgments. The evaluation process combines many factors: Management’s ongoing review and grading of the loan portfolio leveraging probability of default and loss given default, consideration of historical loan loss and delinquency experience, trends in past due and nonaccrual loans, risk characteristics of the various classifications of loans, concentrations of loans to specific borrowers or industries, existing economic conditions and forecasts, the fair value of underlying collateral, and other qualitative and quantitative factors which could affect future credit losses. Because current economic conditions and forecasts can change and future events are inherently difficult to predict, the anticipated amount of estimated credit losses on loans, and therefore the appropriateness of the allowance for credit losses on loans, could change significantly. It is difficult to estimate how potential changes in any one economic factor or input might affect the overall allowance because a wide variety of factors and inputs are considered in estimating the allowance and changes in those factors and inputs considered may not occur at the same rate and may not be consistent across all product types. Additionally, changes in factors and inputs may be directionally inconsistent, such that improvement in one factor may offset deterioration in others. As an integral part of their examination process, various regulatory agencies also review the allowance for credit losses on loans. Such agencies may require additions to the allowance for credit losses on loans or may require that

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certain loan balances be charged-off or downgraded into criticized loan categories when their credit evaluations differ from those of management, based on their judgments about information available to them at the time of their examination. The Company believes the level of the allowance for credit losses on loans is appropriate.