OLD SECOND BANCORP INC (OSBC)

CIK: 0000357173. SIC: 6022 State Commercial Banks. Latest 10-K as of: 2026-02-26.

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

SEC company page: https://www.sec.gov/edgar/browse/?CIK=357173. Latest filing source: 0001104659-26-020393.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-26. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000357173.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 2026-05-07. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000357173.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: 0000357173-26-000022.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-07. Report date: 2026-03-31.

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

​

Overview

​

The following discussion provides additional information regarding our operations for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, and our financial condition at March 31, 2026, compared to December 31, 2025. This discussion should be read in conjunction with our consolidated financial statements as well as the financial and statistical data appearing elsewhere in this report and our Form 10-K for the year ended December 31, 2025. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of future results. Dollar amounts presented in the following tables are in thousands, except per share data, and March 31, 2026 and 2025 amounts are unaudited. Certain items in prior periods have been reclassified to conform to the current presentation.

​

In this report, unless the context suggests otherwise, references to the “Company,” “we,” “us,” and “our” mean the combined business of Old Second Bancorp, Inc. and its subsidiary bank, Old Second National Bank (the “Bank”).

​

We have made, and will continue to make, various forward-looking statements with respect to financial and business matters. Comments regarding our business that are not historical facts are considered forward-looking statements that involve inherent risks and uncertainties. Actual results may differ materially from those contained in these forward-looking statements. For additional information regarding our cautionary disclosures, see the “Cautionary Note Regarding Forward-Looking Statements” on page 3 of this report.

​

Business Overview

​

The Company is a bank holding company headquartered in Aurora, Illinois. Through our wholly-owned subsidiary bank, Old Second National Bank, a national banking organization also headquartered in Aurora, Illinois (the “Bank”), we offer a wide range of financial services through our 55 banking centers located in Cook, DeKalb, DuPage, Kane, Kendall, LaSalle and Will counties in Illinois. These banking centers offer access to a full range of traditional retail and commercial banking services including treasury management operations as well as fiduciary and wealth management services. We focus our business on establishing and maintaining relationships with our clients while maintaining a commitment to provide for the financial services needs of the communities in which we operate. We emphasize relationships with individual customers as well as small to medium-sized businesses throughout our market area. We also have extensive wealth management services, which include a registered investment advisory platform in addition to trust administration and trust services related to personal and corporate trusts and employee benefit plan administration services.

​

On July 1, 2025, we completed our previously announced acquisition of Bancorp Financial, Inc. (“Bancorp Financial”), pursuant to the agreement and plan of merger dated February 24, 2025. At the effective time of the acquisition, Bancorp Financial merged with and into the Company, with the Company continuing as the surviving corporation. Immediately following the merger, Evergreen Bank Group (“Evergreen”), an Illinois-chartered banking corporation and wholly-owned subsidiary of Bancorp Financial, merged with and into Old Second National Bank, with the Bank continuing as the surviving bank. Under the terms of the merger agreement, each share of Bancorp Financial common stock outstanding immediately prior to the effective time was converted into the right to receive 2.5814 shares of Old Second common stock and $15.93 in cash, without interest, with cash paid in lieu of any fractional shares.

​

As of July 1, 2025, Bancorp Financial had approximately $1.43 billion of total assets, $1.20 billion of total loans, and $1.23 billion of total deposits. The consideration paid totaled $189.4 million and consisted of 7.9 million shares of Old Second common stock and $48.9 million in cash. The systems conversion was successfully completed in October 2025.

​

Our results of operations depend generally on net interest income, which is the difference between interest income from interest-earning assets and interest expense on interest-bearing liabilities. Net interest income is affected by regulatory, economic and competitive factors that influence interest rates, loan demand and deposit flows. In addition, we are subject to interest rate risk to the degree that our interest-earning assets mature or reprice at different times, or at different speeds, than our interest-bearing liabilities. Our results of operations are also affected by noninterest income, such as service charges, wealth management fees, loan fees, gains from the sale of newly originated loans, gains or losses on investments and certain other noninterest related items. Our principal operating expenses, aside from interest expense, consist of compensation and employee benefits, occupancy costs, professional fees, data processing expenses and provision for credit losses.

We are significantly impacted by prevailing economic conditions, including federal monetary and fiscal policies, and federal regulations of financial institutions. Deposit balances are influenced by numerous factors such as competing investments, the level of income and the personal rate of savings within our market areas. Factors influencing lending activities include the demand for housing and the interest rate pricing competition from other lending institutions.

42

Table of Contents

​

As of March 31, 2026, all of our capital ratios were in excess of all regulatory requirements. While we believe that we have sufficient capital to withstand an extended economic recession, our reported and regulatory capital ratios could be adversely impacted by credit losses.

​

Financial Overview

​

Net income for the first quarter of 2026 was $25.6 million, or $0.48 per diluted share, compared to $28.8 million, or $0.54 per diluted share, for the fourth quarter of 2025, and $19.8 million, or $0.43 per diluted share, for the first quarter of 2025. Net income increased compared to the prior year like quarter, primarily due to the Bancorp Financial acquisition and the resulting growth in net interest income. Variances included an increase of $24.8 million in interest and dividend income and a $2.4 million increase in noninterest income, partially offset by a $6.5 million increase in interest expense, a $7.1 million increase in provision for credit losses, a $5.7 million increase in noninterest expense, and a $2.1 million increase in provision for income taxes. Net income in the first quarter of 2026 was negatively impacted by provision for credit losses of $9.5 million, compared to $3.0 million and $2.4 million recorded in the fourth quarter of 2025 and first quarter of 2025, respectively. Adjusted net income, a non-GAAP financial measure that excludes mortgage servicing rights mark to market gains or losses, net securities gains or losses, and acquisition related costs, net of gains on branch sales, as applicable, was $26.0 million for the first quarter of 2026, compared to $30.8 million for the fourth quarter of 2025, and $20.6 million for the first quarter of 2025.

​

See the discussion entitled “Non-GAAP Financial Measures” on page 45, as well as the table below, which provides a reconciliation of this non-GAAP measure to the most comparable GAAP equivalents:

​

​

​

​

​

​

​

​

​

​

​

​

​

Net Income and Earnings Per Share - GAAP and Adjusted

​

Three Months Ended

​

​

​

​

March 31, 

​

December 31, 

​

March 31, 

​

​

​

  ​ ​ ​

2026

  ​ ​ ​

2025

​

2025

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Income before income taxes (GAAP)

​

$

34,064

​

$

39,270

​

$

26,200

​

​

Pre-tax income adjustments:

​

​

​

​

​

​

​

​

​

​

​

Securities gains, net

​

​

-

​

​

(8)

​

​

-

​

​

MSR losses

​

​

152

​

​

428

​

​

570

​

​

Acquisition related costs, net of (gains) losses on branch sales

​

​

349

​

​

2,296

​

​

454

​

​

Adjusted net income before taxes

​

​

34,565

​

​

41,986

​

​

27,224

​

​

Taxes on adjusted net income

​

​

8,604

​

​

11,208

​

​

6,619

​

​

Adjusted net income (non-GAAP)

​

$

25,961

​

$

30,778

​

$

20,605

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Basic earnings per share (GAAP)

​

$

0.49

​

$

0.55

​

$

0.44

​

​

Diluted earnings per share (GAAP)

​

​

0.48

​

​

0.54

​

​

0.43

​

​

Adjusted basic earnings per share (non-GAAP)

​

​

0.49

​

​

0.59

​

​

0.46

​

​

Adjusted diluted earnings per share (non-GAAP)

​

​

0.49

​

​

0.58

​

​

0.45

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total average assets

​

​

6,859,164

​

​

6,960,177

​

​

5,673,092

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Return on average assets (GAAP)

​

​

1.51

%

​

1.64

%

​

1.42

%

​

Adjusted return on average assets (non-GAAP)

​

​

1.53

​

​

1.75

​

​

1.47

​

​

​

The following provides an overview of some of the factors impacting our financial performance for the three-month period ended March 31, 2026, compared to the like period ended March 31, 2025:

​

●

Net interest and dividend income was $81.1 million for the first quarter of 2026, compared to $62.9 million for the first quarter of 2025. The increase in net interest and dividend income in the first quarter of 2026 was primarily driven by the acquisition of Bancorp Financial.

​

●

We recorded a net provision for credit losses on loans and leases of $9.5 million in the first quarter of 2026, driven by quarterly net charge-offs of $9.8 million. Partially offsetting this expense, we recorded a reversal of $101,000 in our allowance for unfunded commitments in the first quarter of 2026 based on an adjustment of historical benchmark assumptions, such as funding rates and the period used to forecast those rates, within the ACL calculation. We recorded a net provision for credit losses of $2.4 million in the first quarter of 2025.

43

Table of Contents

​

●

Noninterest income was $12.6 million for the first quarter of 2026, compared to $10.2 million for the first quarter of 2025, which is an increase of $2.4 million, or 23.8%. Contributing to the higher noninterest income was a $714,000 increase in other income as a result of powersport and other consumer fee income. Also contributing to the growth in noninterest income during the quarter, compared to the prior year like quarter, were increases in wealth management, residential mortgage banking revenue due to a decrease in MSR mark to market losses, and an increase in the cash surrender value of BOLI as a result of an increase in the market value of our insurance policies due primarily to more favorable market interest rates.

​

●

Noninterest expense was $50.2 million for the first quarter of 2026, compared to $44.5 million for the first quarter of 2025, an increase of $5.7 million, or 12.8%. The increase in noninterest expense in the first quarter of 2026, compared to the prior year like quarter, was primarily due to the Bancorp Financial acquisition and the corresponding growth in employees and operations, which resulted in higher salaries and employee benefits, and increases in occupancy, furniture and equipment, computer and data processing, consumer credit expense, and other expense.

​

●

We had a provision for income tax expense of $8.5 million for the first quarter of 2026, compared to a provision for income tax expense of $6.4 million for the first quarter of 2025. The effective tax rate for these two periods was 24.9% and 24.3%, respectively.

​

●

As of March 31, 2026, total loans decreased by $66.9 million compared to the year ended December 31, 2025, and increased $1.25 billion compared to March 31, 2025. The increase from the prior year like period is primarily driven by the $1.20 billi

[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: 2026-02-26. Report date: 2025-12-31.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

​

The following discussion provides additional information regarding our operations for the twelve-month periods ended December 31, 2025, 2024 and 2023, and financial condition at December 31, 2025 and 2024 and should be read in conjunction with our consolidated financial statements and the related notes.  Historical results of operations and the percentage relationships among any amounts included, and any trends that may appear, may not indicate trends in operations or results of operations for any future periods.

​

We have made, and will continue to make, various forward-looking statements with respect to financial and business matters.  Comments regarding our business that are not historical facts are considered forward-looking statements that involve inherent risks and uncertainties.  Actual results may differ materially from those contained in these forward-looking statements.  For additional information regarding our cautionary disclosures, see the “Cautionary Note Regarding Forward-Looking Statements” at the beginning of this annual report.

​

Business Overview

​

We provide a wide range of financial services through our 55 banking locations located in Cook, DeKalb, DuPage, Kane, Kendall, LaSalle and Will counties in Illinois.  These banking centers offer access to a full range of traditional retail and commercial banking services including treasury management operations as well as fiduciary and wealth management services.  We focus our business on establishing and maintaining relationships with our clients while maintaining a commitment to providing for the financial services needs of the communities in which we operate through our retail branch network.  We emphasize relationships with individual customers as well as small to medium-sized businesses throughout our market area.  Our market area includes a mix of commercial and industrial, real estate, and consumer related lending opportunities, and provides a stable, loyal core deposit base.  We also offer extensive wealth management services, which include a registered investment advisory platform in addition to trust administration and trust services related to personal and corporate trusts, including employee benefit plan administration services.

​

Our primary deposit products are checking, NOW, money market, savings, and certificate of deposit accounts, and our primary lending products are commercial mortgages, leases, construction lending, commercial loans, residential mortgages, powersport, and other consumer loans.  Many of our loans are secured by various forms of collateral including real estate, business assets, and consumer property although borrower cash flow is the primary source of repayment at the time of loan origination.

​

On July 1, 2025, we completed our previously announced acquisition of Bancorp Financial, Inc. (“Bancorp Financial”), pursuant to the agreement and plan of merger dated February 24, 2025. At the effective time of the acquisition, Bancorp Financial merged with and into the Company, with the Company continuing as the surviving corporation. Immediately following the merger, Evergreen Bank Group (“Evergreen”), an Illinois-chartered banking corporation and wholly owned subsidiary of Bancorp Financial, merged with and into Old Second National Bank, with the Bank continuing as the surviving bank. Under the terms of the merger agreement, each share of Bancorp Financial common stock outstanding immediately prior to the effective time was converted into the right to receive 2.5814 shares of Old Second common stock and $15.93 in cash, without interest, with cash paid in lieu of any fractional shares.

​

As of July 1, 2025,  Bancorp Financial had approximately $1.43 billion of total assets, $1.20 billion of total loans, and $1.23 billion of total deposits. The consideration paid totaled $189.4 million and consisted of 7.9 million shares of Old Second common stock and $48.9 million of cash. The systems conversion was successfully completed in October 2025.

​

On December 6, 2024, we closed on our branch purchase and assumption agreement with First Merchants Bank (“FRME”).  As a result of this transaction, we assumed approximately $268.0 million in deposits related to the branch locations and purchased approximately $7.1 million in branch-related loans along with the purchase of other branch-related assets.  The transaction resulted in increasing our presence in the south suburban Chicago area, as five branches were acquired with a retail and commercial client mix of loans and deposits. Historical periods before December 6, 2024, reflect results of our legacy operations. Subsequent to closing, results reflect all post-transaction activity.

43

​

Table of Contents

​

Summary Financial Data

​

Old Second Bancorp, Inc. and Subsidiaries

Financial Highlights

(Dollars in thousands, except per share data)

​

​

​

​

​

​

​

​

​

​

​

​

​

  ​

2025

  ​ ​

2024

  ​ ​

2023

Balance sheet items at year-end

​

​

​

​

​

​

​

​

​

​

Total assets

​

$

6,902,675

​

$

5,649,377

​

$

5,722,799

​

Total earning assets

​

6,450,684

​

5,211,188

​

5,315,070

​

Average assets

​

6,347,633

​

5,642,950

​

5,820,173

​

Loans, gross

​

5,252,131

​

3,981,336

​

4,042,953

​

Allowance for credit losses on loans

​

72,301

​

43,619

​

44,264

​

Deposits

​

5,596,069

​

4,768,731

​

4,570,746

​

Securities sold under agreement to repurchase

​

23,769

​

36,657

​

26,470

​

Other short-term borrowings

​

215,000

​

20,000

​

405,000

​

Junior subordinated debentures

​

25,774

​

25,773

​

25,773

​

Subordinated debentures

​

59,552

​

59,467

​

59,382

​

Notes payable and other borrowings

​

14,825

​

-

​

-

​

Stockholders’ equity

​

896,768

​

671,034

​

577,281

​

​

​

​

​

​

​

​

​

​

​

​

Results of operations for the year ended

​

​

​

​

​

​

​

​

​

​

Interest and dividend income

​

$

355,181

​

$

297,904

​

$

291,970

​

Interest expense

​

62,217

​

56,269

​

40,039

​

Net interest and dividend income

​

292,964

​

241,635

​

251,931

​

Provision for credit losses

​

27,553

​

12,750

​

16,501

​

Noninterest income

​

46,362

​

43,819

​

34,179

​

Noninterest expense

​

204,022

​

159,748

​

145,201

​

Income before taxes

​

107,751

​

112,956

​

124,408

​

Provision for income taxes

​

27,441

​

27,692

​

32,679

​

Net income available to common stockholders

​

$

80,310

​

$

85,264

​

$

91,729

​

​

​

​

​

​

​

​

​

​

​

​

Performance ratios

​

​

​

​

​

​

​

​

​

​

Return on average total assets

​

1.27

%  

​

1.51

%  

​

1.58

%  

Return on average equity

​

10.27

%  

​

13.63

%  

​

17.70

%  

Average equity to average assets

​

12.31

%  

​

11.08

%  

​

8.91

%  

Dividend payout ratio

​

15.24

%  

​

11.05

%  

​

9.76

%  

​

​

​

​

​

​

​

​

​

​

​

Per share data

​

​

​

​

​

​

​

​

​

​

Basic earnings

​

$

1.64

​

$

1.90

​

$

2.05

​

Diluted earnings

​

$

1.62

​

$

1.87

​

$

2.02

​

Common book value per share

​

$

17.03

​

$

14.95

​

$

12.92

​

Weighted average diluted shares outstanding

​

49,669,539

​

45,639,351

​

45,395,010

​

Weighted average basic shares outstanding

​

48,875,540

​

44,828,290

​

44,663,722

​

Shares outstanding at year-end

​

52,669,224

​

44,873,467

​

44,697,917

​

​

​

​

​

​

​

​

​

​

​

​

Loan quality ratios

​

​

​

​

​

​

​

​

​

​

Allowance for credit losses on loans to total loans at end of the year

​

1.38

%

1.10

%

1.09

%

Provision for credit losses on loans to total loans

​

0.52

%

0.32

%

0.41

%

Net loans charged-off to average total loans

​

0.35

%

0.36

%

0.58

%

Nonaccrual loans to total loans at end of the year

​

0.91

%

0.72

%

1.67

%

Nonperforming assets to total assets at end of the year

​

0.81

%

0.92

%

1.29

%

Allowance for credit losses on loans to nonaccrual loans

​

150.78

%

151.19

%

65.50

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

44

​

Table of Contents

Old Second Bancorp, Inc. and Subsidiaries

Quarterly Financial Information

(Dollars in thousands, except per share data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

2025

​

2024

​

  ​ ​ ​

4th

  ​ ​ ​

3rd

  ​ ​ ​

2nd

  ​ ​ ​

1st

  ​ ​ ​

4th

  ​ ​ ​

3rd

  ​ ​ ​

2nd

  ​ ​ ​

1st

Interest income

​

$

102,303

​

$

104,075

​

$

75,238

​

$

73,565

​

$

75,279

​

$

76,072

​

$

73,223

​

$

73,330

​

Interest expense

​

19,252

​

21,300

​

11,004

​

10,661

​

13,695

​

15,494

​

13,533

​

13,547

​

Net interest income

​

83,051

​

82,775

​

64,234

​

62,904

​

61,584

​

60,578

​

59,690

​

59,783

​

Provision for credit losses

​

3,000

​

19,653

​

2,500

​

2,400

​

3,500

​

2,000

​

3,750

​

3,500

​

Securities gains (losses), net

​

8

​

(1)

​

-

​

-

​

-

​

(1)

​

-

​

1

​

Income before taxes

​

39,270

​

13,068

​

29,213

​

26,200

​

25,372

​

29,851

​

29,190

​

28,543

​

Net income

​

28,787

​

9,871

​

21,822

​

19,830

​

19,110

​

22,951

​

21,891

​

21,312

​

Basic earnings per share

​

0.55

​

0.19

​

0.49

​

0.44

​

0.42

​

0.52

​

0.48

​

0.48

​

Diluted earnings per share

​

0.54

​

0.18

​

0.48

​

0.43

​

0.42

​

0.50

​

0.48

​

0.47

​

Dividends paid per share

​

0.07

​

0.06

​

0.06

​

0.06

​

0.06

​

0.05

​

0.05

​

0.05

​

​

2025 Financial Overview

​

In 2025, we recorded net income of $80.3 million, or $1.62 per fully diluted share, compared to $85.3 million, or $1.87 per fully diluted share, in 2024, and $91.7 million, or $2.02 per fully diluted share, in 2023.  Our basic earnings per share for the periods presented were $1.64 in 2025, $1.90 in 2024 and $2.05 in 2023.

​

Our 2025 net income, as compared to the prior year, decreased primarily as a result of additional costs incurred with the Bancorp Financial acquisition. Adjusted net income, a non-GAAP financial measure that excludes acquisition-related costs, Day Two provision for credit losses, MSR mark to market (gains)/losses, net securities (gains)/losses, death benefits realized on BOLI, litigation expense, and net gains on branch sales was $102.6 million in 2025. See the discussion entitled “Non-GAAP Financial Measures” on page 48 and the table below, which provides a reconciliation of this non-GAAP measure and related items, to the most comparable GAAP equivalents.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Year Ended

​

​

​

December 31, 

​

​

  ​ ​ ​

2025

​

2024

​

2023

​

Net Income

​

​

​

​

​

​

​

​

​

​

Income before income taxes (GAAP)

​

$

107,751

​

$

112,956

​

$

124,408

​

Pre-tax income adjustments:

​

​

​

​

​

​

​

​

​

​

Provision for credit losses - Day Two

​

​

13,153

​

​

-

​

​

-

​

Litigation related expenses

​

​

-

​

​

-

​

​

1,200

​

Securities (gains) losses, net

​

​

(7)

​

​

-

​

​

4,148

​

Death benefit related to BOLI

​

​

(430)

​

​

(905)

​

​

-

​

MSR losses

​

​

1,918

​

​

723

​

​

1,425

​

Acquisition related costs, net of (gains) losses on branch sales

​

​

15,068

​

​

1,992

​

​

(258)

​

Liquidation and deconversion costs on Visa credit card portfolio

​

​

-

​

​

-

​

​

629

​

Adjusted net income before taxes

​

​

137,453

​

​

114,766

​

​

131,552

​

Taxes on adjusted net income

​

​

34,883

​

​

28,340

​

​

34,566

​

Adjusted net income (non-GAAP)

​

$

102,570

​

$

86,426

​

$

96,986

​

​

​

​

​

​

​

​

​

​

​

​

Basic earnings per share (GAAP)

​

$

1.64

​

$

1.90

​

$

2.05

​

Diluted earnings per share (GAAP)

​

​

1.62

​

​

1.87

​

​

2.02

​

Adjusted basic earnings per share (non-GAAP)

​

​

2.10

​

​

1.93

​

​

2.17

​

Adjusted diluted earnings per share (non-GAAP)

​

​

2.07

​

​

1.89

​

​

2.14

​

​

​

​

​

​

​

​

​

​

​

​

Total average assets

​

​

6,347,633

​

​

5,642,950

​

​

5,820,173

​

​

​

​

​

​

​

​

​

​

​

​

Return on average assets (GAAP)

​

​

1.27

%

​

1.51

%

​

1.58

%

Adjusted return on average assets (non-GAAP)

​

​

1.62

​

​

1.53

​

​

1.67

​

​

Adjusted net income provides a comparative analysis of our performance excluding those one-time matters, such as transaction-related costs for our acquisition of Bancorp Financial and our purchase of five FRME branches, Day Two provision for credit losses from our acquisition of Bancorp Financial, net securities (gains)/losses, death benefits realized on BOLI, litigation expense related to a claim regarding prior years’ overdraft fee compliance, and net gains or net losses stemming from branch sales completed to eliminate duplicative geographic locations due to past acquisitions.

​

​

45

​

Table of Contents

​

Net interest and dividend income increased $51.3 million, or 21.2% for 2025 compared to 2024, due primarily to increased interest and dividend income stemming from our acquisition of Bancorp Financial as well as decreased borrowing costs on the lower average balances on FHLBC advances. Partially offsetting the increase in interest and dividend income from the prior year was an increase in interest expense due to higher deposit costs from the additional deposits assumed with the acquisition of Bancorp Financial. Average loans, including loans held-for-sale, increased $622.3 million, or 15.6%, in 2025 compared to 2024 due to the loan portfolio included in the acquisition of Bancorp Financial. Total interest and dividend income growth in 2025, compared to 2024, resulted in a 32 basis point increase in average rates earned on interest earning assets.  Average interest bearing deposits increased $768.2 million, or 27.3%, for 2025 compared to 2024, and average deposit rates increased 22 basis points over the same period.  The increase in deposit rates was primarily due to exception priced deposits incurred in the Bancorp Financial acquisition, which we are allowing to run off over time.  Average noninterest bearing deposits increased by $1.5 million, or 0.1%, from 2024 to 2025.

​

We continued to reposition our balance sheet in 2025 to ensure adequate liquidity, reduce asset quality risk, and to manage interest rate risk on our cost of funds.  In 2025, our available-for-sale securities portfolio decreased $71.2 million, compared to year-end 2024, due primarily to $279.6 million of paydowns, maturities, and calls and $7.5 million of strategic sales.  These decreases in 2025 were partially offset by security purchases of $191.6 million. The change in activity in 2025, compared to year end 2024, excludes the sale of Bancorp Financial’s $117.6 million available-for-sale securities portfolio shortly after the acquisition closed. The unrealized mark to market adjustment on securities was a $43.1 million unrealized loss as of December 31, 2025, compared to a $68.6 million unrealized loss at December 31, 2024, due primarily to changes in market interest rates and the portfolio holdings mix year over year.  Average interest bearing liabilities increased $545.1 million, to $3.75 billion in 2025 from $3.21 billion in 2024.  Total average borrowings decreased $223.2 million to $171.5 million compared to $394.7 million in 2024. The decrease in average borrowings was primarily due to a $224.1 million decrease in other short-term borrowings due to a reduction in overnight FHLBC advances throughout 2025.

​

Management also continued to emphasize credit quality and maintained our capital ratios with continued strong liquidity.  In 2025, we had loan growth of $1.27 billion, or 31.9%, over 2024 primarily due to the acquired loan portfolio of Bancorp Financial.  Nonperforming assets relative to total assets decreased slightly in 2025 and 2024, with nonperforming assets of $55.6 million, or 0.81%, of total assets for 2025, compared to $52.4 million, or 0.92% of total assets for 2024, and $73.9 million, or 1.29% of total assets, for 2023.  The total dollar increase in 2025, compared to 2024, was primarily due to an increase in nonaccrual loans of $19.1 million and an increase in loans past due 90 days and accruing of $3.4 million, partially offset by a $20.2 million decrease in OREO. We continue to take steps to control operating expenses and increase noninterest income.

​

As we focused on reducing noninterest expenses, exclusive of acquisition-related activity, we were also able to maintain our profitable wealth management business, and continue profitability, though to a lesser extent, with the mortgage banking business as originations and sales are negatively impacted by elevated interest rates.

​

For information comparing our financial condition and results of operations for the year ended December 31, 2024, to year ended December 31, 2023, see “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 6, 2025.

​

Critical Accounting Estimates

​

Our consolidated financial statements are prepared based on the application of accounting policies in accordance with GAAP and follow general practices within the banking industry.  These policies require the reliance on estimates, assumptions and judgments, which may prove inaccurate or are subject to variations.  Changes in underlying factors, estimates, assumptions or judgments could have a material impact on our future financial condition and results of operations.  

​

Certain policies inherently have a greater reliance on the use of estimates, assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different from originally reported.  We have identified the determination of the allowance for credit losses and fair value measurements to be the accounting areas that require the most subjective or complex judgments and, as such, could be most subject to revision as new or additional information becomes available or circumstances change, including overall changes in the economic climate and/or market interest rates.  Therefore, we consider these policies, discussed below, to be critical accounting estimates and discuss them directly with the Audit Committee of our board of directors.

​

Significant accounting policies are presented in Note 1 of the financial statements included in this annual report.  These policies, along with the disclosures presented in the other financial statement notes and in this discussion, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined.  Recent accounting pronouncements and standards that have impacted or could potentially affect us are also discussed in Note 1 of the consolidated financial statements.

​

​

46

​

Table of Contents

​

Allowance for credit losses for loans

​

The allowance for credit losses (“ACL”) for loans represents management’s estimate of all expected credit losses over the expected contractual life of our loan portfolio.  Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain.  Subsequent evaluations of the then-existing loan portfolio, in light of the factors then prevailing, may result in significant changes in the allowance for credit losses in those future periods.

​

The ACL involves critical accounting estimates because:

​

●

changes in the provision for credit losses can materially affect our financial results;

●

estimates relating to the ACL require us to project future borrower performance, including cash flows, delinquencies and charge-offs, along with, when applicable, collateral values, based on a reasonable and supportable forecast period utilizing forward-looking economic scenarios in order to estimate probability of default and loss given default;

●

the ACL is influenced by factors outside of our control such as industry and business trends, geopolitical events and the effects of laws and regulations as well as economic conditions such as trends in housing prices, interest rates, GDP, inflation, energy prices and unemployment; and

●

considerable judgment is required to determine whether the models used to generate the ACL produce an estimate that is sufficient to encompass the current view of lifetime expected credit losses.

​

Because our estimates of the ACL involve judgments and are influenced by factors outside of our control, there is uncertainty inherent in these estimates. Changes in such estimates could significantly impact our ACL and provision for credit losses. See Note 1 –Summary of Significant Accounting Policies in the accompanying notes to the consolidated financial statements included elsewhere in this annual report for a discussion of our ACL.

​

As a result of management’s modeling, we increased our ACL on loans to $72.3 million as of December 31, 2025; in addition, we increased our ACL on unfunded commitments to $2.1 million as of December 31, 2025, included within other liabilities.  We recorded provision for credit losses of $27.6 million in 2025, comprised of $14.2 million of provision for credit loss expense on loans, a Day Two non-PCD provision expense of $13.2 million, and a $185,000 of provision expense on unfunded commitments.  Additionally, we recorded a Day One purchase accounting credit mark of $17.5 million to the ACL in relation to the acquisition of Bancorp Financial. In 2024, we recorded a provision for credit losses of $12.8 million, comprised of a $13.6 million provision for credit loss expense on loans, and a $834,000 release of provision for credit losses on unfunded commitments. In 2023, we recorded a provision for credit losses of $16.5 million, comprised of a $18.1 million provision for credit loss expense on loans, and a $1.6 million release of provision for credit losses on unfunded commitments.  In addition, a discussion of the factors driving changes in the amount of the ACL is included in the “Allowances for Credit Losses” section below.

​

Fair Value Measurements

​

The use of fair values is required in determining the carrying values of certain assets and liabilities, as well as for specific disclosures. Fair value is an estimate of the exchange price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction (i.e., not a forced transaction, such as a liquidation or distressed sale) between market participants at the measurement date and is based on the assumptions market participants would use when pricing an asset or liability.

​

In determining the fair value of financial instruments, market prices of the same or similar instruments are used whenever such prices are available.  If observable market prices are unavailable or impracticable to obtain, we are required to make judgments about assumptions market participants would use in estimating the fair value of the financial instrument.  Fair value is estimated using modeling techniques and incorporates assumptions about interest rates, duration, prepayment speeds, risks inherent in a particular valuation technique and the risk of nonperformance. These assumptions are inherently subjective as they require material estimates, all of which may be susceptible to significant change.  See Note 16 “Fair Value Measurements” and Note 17 “Fair Values of Financial Instruments,” to the consolidated financial statements which include information about the extent to which fair value is used to measure assets and liabilities, and the valuation methodologies and key inputs used for further information regarding the valuation processes.

​

​

47

​

Table of Contents

​

Non-GAAP Financial Measures

​

This annual report contains references to financial measures that are not defined in GAAP. Such non-GAAP financial measures include the presentation of adjusted net income, net interest income and net interest income to interest earning assets on a tax equivalent (“TE”) basis and our tangible common equity to tangible assets ratio.  Management believes that the presentation of these non-GAAP financial measures (a) provides important supplemental information that contributes to a proper understanding of our operating performance, (b) enables a more complete understanding of factors and trends affecting our business, and (c) allows investors to evaluate our performance in a manner similar to management, the financial services industry, bank stock analysts, and bank regulators. Management uses non-GAAP measures as follows: in the preparation of our operating budgets, monthly financial performance reporting, and in our presentation to investors of our performance.  However, we acknowledge that these non-GAAP financial measures have a number of limitations. Limitations associated with non-GAAP financial measures include the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might calculate these measures differently.  These disclosures should not be considered an alternative to our GAAP results.  A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is presented below or alongside the first instance where each non-GAAP financial measure is used.

​

Results of Operations

​

Net interest income

​

Net interest income, which is our primary source of earnings, is the difference between interest income and fees earned on interest-earning assets, such as loans and investment securities, as well as accretion income on purchased loans, and interest incurred on interest-bearing liabilities, such as deposits and borrowings.  Net interest income depends upon the relative mix of interest-earning assets and interest-bearing liabilities, the ratio of interest-earning assets to total assets and of interest-bearing liabilities to total funding sources, and movements in market interest rates.  Our net interest income can be significantly influenced by a variety of factors, including overall loan demand, economic conditions, credit risk, the amount of nonearning assets including nonperforming loans, the amounts of and rates at which assets and liabilities reprice, variances in prepayment of loans and securities, early withdrawal of deposits, exercise of call options on borrowings or securities, a general rise or decline in interest rates, changes in the slope of the yield-curve, and balance sheet growth or contraction.  Our asset and liability committee (“ALCO”) seeks to manage interest rate risk under a variety of rate environments by structuring our balance sheet and off-balance sheet positions.  This process is discussed in more detail in the section entitled “Interest Rate Risk” in “Quantitative and Qualitative Disclosures about Market Risk.”

​

Our net interest income increased $51.3 million, or 21.2%, to $293.0 million for 2025, from $241.6 million for 2024.  The increase in 2025 was primarily driven by the higher interest rate environment through much of 2025 as well as the acquisition of Bancorp Financial, which resulted in increased loan income from the acquired loan portfolio.  Our net interest margin, which is net interest income divided by total interest-earning assets, was 4.96% for the year ended 2025, compared to 4.61% for the year ended 2024, an increase of 35 basis points.  Our net interest margin on a taxable equivalent (TE) basis was 4.98% for the year ended 2025, compared to 4.63% for the year ended 2024, an increase of 35 basis points.  Average interest earning assets increased $667.5 million during 2025 as volume increased from the loan portfolio acquired from Bancorp Financial and rates reflected significant growth, impacting net interest income.  The increase in interest expense in 2025 compared to 2024 was due primarily to an expense increase in all interest bearing deposit categories due to higher rates and the interest bearing deposits assumed from the Bancorp Financial acquisition, partially offset by lower average balances in our short-term funding (overnight FHLBC advances) throughout 2025.

​

Our average earning assets increased $667.5 million, or 12.7%, to $5.91 billion in 2025, from $5.24 billion in 2024.  The increase was primarily attributable to an increase in our loan portfolio due to the acquisition of Bancorp Financial. Our average earning assets decreased $185.4 million, or 3.4%, to $5.24 billion in 2024, from $5.43 billion in 2023.  The decrease was primarily attributable to a decrease in our securities portfolio.

​

Our average interest bearing liabilities increased $545.1 million, or 17.0%, to $3.75 billion for 2025, from $3.21 billion in 2024, due primarily to an increase in all deposit categories, partially offset by a significant decrease to other short term borrowings.  The increase in average interest bearing deposits is a result of the deposits assumed from the Bancorp Financial acquisition. Average interest bearing deposits increased by $768.2 million, or 27.3%, to $3.58 billion in 2025, compared to $2.81 billion in 2024.  Our average borrowings decreased $223.2 million to $171.5 million in 2025 from $394.7 million in 2024, driven by a decrease of $224.1 million in average other short-term borrowings due to a reduction in overnight FHLBC advances throughout 2025. Partially offsetting the decrease in our average borrowings was an increase of $7.5 million in notes payable due to FHLB long-term putable advances that were assumed in the Bancorp Financial acquisition.

​

The following table sets forth certain information relating to our average Consolidated Balance Sheets and reflects the yield on average interest earning assets and cost of average interest bearing liabilities for the years indicated obtained by dividing the related interest by the average balance of assets or liabilities.  Average balances are derived from daily balances.

​

48

​

Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Analysis of Average Balances,

Tax Equivalent Income / Expense and Rates

(Dollars in thousands - unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Year Ended December 31, 

​

2025

​

2024

​

2023

​

Average

​

Income /

​

Rate

​

Average

​

Income /

​

Rate

​

Average

Income /

​

Rate

​

Balance

​

Expense

​

%

​

Balance

​

Expense

​

%

​

Balance

Expense

​

%

Assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest earning deposits with financial institutions

$

112,449

​

$

4,625

​

4.11

​

$

49,202

​

$

2,393

​

4.86

​

$

49,303

​

$

2,503

​

5.08

Securities:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Taxable

​

1,015,384

​

​

38,194

​

3.76

​

​

1,015,046

​

​

34,656

​

3.41

​

​

1,177,860

​

​

37,940

​

3.22

Non-taxable (TE)1

​

151,201

​

​

6,257

​

4.14

​

​

164,015

​

​

6,537

​

3.99

​

​

170,018

​

​

6,746

​

3.97

Total securities (TE)1

​

1,166,585

​

​

44,451

​

3.81

​

​

1,179,061

​

​

41,193

​

3.49

​

​

1,347,878

​

​

44,686

​

3.32

Dividends from FHLBC and FRBC

​

23,707

​

​

1,517

​

6.40

​

​

29,282

​

​

2,278

​

7.78

​

​

32,351

​

​

1,920

​

5.93

Loans and loans held-for-sale 1, 2

​

4,609,225

​

​

305,939

​

6.64

​

​

3,986,900

​

​

253,456

​

6.36

​

​

4,000,269

​

​

244,317

​

6.11

Total interest earning assets

​

5,911,966

​

​

356,532

​

6.03

​

​

5,244,445

​

​

299,320

​

5.71

​

​

5,429,801

​

​

293,426

​

5.40

Cash and due from banks

​

50,955

​

​

-

​

-

​

​

54,359

​

​

-

​

-

​

​

56,592

​

​

-

​

-

Allowance for credit losses on loans

​

(57,913)

​

​

-

​

-

​

​

(43,872)

​

​

-

​

-

​

​

(51,880)

​

​

-

​

-

Other noninterest earning assets

​

442,625

​

​

-

​

-

​

​

388,018

​

​

-

​

-

​

​

385,660

​

​

-

​

-

Total assets

$

6,347,633

​

​

​

​

​

​

$

5,642,950

​

​

​

​

​

​

$

5,820,173

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Liabilities and Stockholders' Equity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

NOW accounts

$

658,387

​

$

2,951

​

0.45

​

$

562,890

​

$

2,826

​

0.50

​

$

585,304

​

$

1,591

​

0.27

Money market accounts

​

887,516

​

​

16,853

​

1.90

​

​

699,302

​

​

11,878

​

1.70

​

​

752,025

​

​

6,039

​

0.80

Savings accounts

​

1,045,344

​

​

7,664

​

0.73

​

​

921,801

​

​

3,162

​

0.34

​

​

1,052,750

​

​

1,131

​

0.11

Time deposits

​

989,403

​

​

28,898

​

2.92

​

​

628,446

​

​

20,147

​

3.21

​

​

458,918

​

​

6,636

​

1.45

Interest bearing deposits

​

3,580,650

​

​

56,366

​

1.57

​

​

2,812,439

​

​

38,013

​

1.35

​

​

2,848,997

​

​

15,397

​

0.54

Securities sold under repurchase agreements

​

31,673

​

​

229

​

0.72

​

​

38,248

​

​

337

​

0.88

​

​

27,518

​

​

93

​

0.34

Other short-term borrowings

​

47,123

​

​

1,969

​

4.18

​

​

271,257

​

​

14,607

​

5.38

​

​

356,014

​

​

18,774

​

5.27

Junior subordinated debentures

​

25,774

​

​

1,152

​

4.47

​

​

25,773

​

​

1,127

​

4.37

​

​

25,773

​

​

1,095

​

4.25

Subordinated debentures

​

59,510

​

​

2,185

​

3.67

​

​

59,425

​

​

2,185

​

3.68

​

​

59,340

​

​

2,185

​

3.68

Senior notes

​

-

​

​

-

​

-

​

​

-

​

​

-

​

-

​

​

22,000

​

​

2,408

​

10.95

Notes payable and other borrowings

​

7,467

​

​

316

​

4.23

​

​

-

​

​

-

​

-

​

​

1,332

​

​

87

​

6.53

Total interest bearing liabilities

​

3,752,197

​

​

62,217

​

1.66

​

​

3,207,142

​

​

56,269

​

1.75

​

​

3,340,974

​

​

40,039

​

1.20

Noninterest bearing deposits

​

1,749,363

​

​

-

​

-

​

​

1,747,890

​

​

-

​

-

​

​

1,906,633

​

​

-

​

-

Other liabilities

​

64,381

​

​

-

​

-

​

​

62,480

​

​

-

​

-

​

​

54,243

​

​

-

​

-

Stockholders' equity

​

781,692

​

​

-

​

-

​

​

625,438

​

​

-

​

-

​

​

518,323

​

​

-

​

-

Total liabilities and stockholders' equity

$

6,347,633

​

​

​

​

​

​

$

5,642,950

​

​

​

​

​

​

$

5,820,173

​

​

​

​

​

Net interest income (GAAP)

​

​

​

$

292,964

​

​

​

​

​

​

$

241,635

​

​

​

​

​

​

$

251,931

​

​

Net interest margin (GAAP)

​

​

​

​

​

​

4.96

​

​

​

​

​

​

​

4.61

​

​

​

​

​

​

​

4.64

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net interest income (TE)1

​

​

​

$

294,315

​

​

​

​

​

​

$

243,051

​

​

​

​

​

​

$

253,387

​

​

Net interest margin (TE)1

​

​

​

​

​

​

4.98

​

​

​

​

​

​

​

4.63

​

​

​

​

​

​

​

4.67

Interest bearing liabilities to earning assets

​

63.47

%

​

​

​

​

​

​

61.15

%

​

​

​

​

​

​

61.53

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

1 Tax equivalent basis is calculated using a marginal tax rate of 21% in 2025, 2024 and 2023.  See the discussion entitled “Non-GAAP Financial Measures” on page 48 and the table on page 50 that provides a reconciliation of each non-GAAP measure to the most comparable GAAP equivalent.

​

2  Interest income from loans is shown on a tax equivalent basis, which is a non-GAAP financial measure, discussed below, and includes net fees of $4.0 million for 2025, net costs of $1.8 million for 2024, and net costs of $2.7 million for 2023.  Nonaccrual loans are included in the above stated average balances.  

​

​

49

​

Table of Contents

​

For purposes of discussion, net interest income and net interest income to interest earning assets have been adjusted to a non-GAAP (TE) basis to more appropriately compare returns on tax-exempt loans and securities to other earning assets.  The table below provides a reconciliation of each non-GAAP (TE) measure to the GAAP equivalent:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Effect of Tax Equivalent Adjustment

(In thousands)

  ​ ​ ​

2025

​

  ​ ​ ​

2024

  ​ ​ ​

  ​ ​ ​

2023

Interest income (GAAP)

​

$

355,181

​

​

$

297,904

​

​

$

291,970

​

Taxable equivalent adjustment - loans

​

37

​

​

43

​

​

39

​

Taxable equivalent adjustment - securities

​

1,314

​

​

1,373

​

​

1,417

​

Interest income (TE)

​

356,532

​

​

299,320

​

​

293,426

​

Less: interest expense (GAAP)

​

62,217

​

​

56,269

​

​

40,039

​

Net interest income (TE)

​

$

294,315

​

​

$

243,051

​

​

$

253,387

​

Net interest income (GAAP)

​

$

292,964

​

​

$

241,635

​

​

$

251,931

​

Average interest earning assets

​

$

5,911,966

​

​

$

5,244,445

​

​

$

5,429,801

​

Net interest margin (GAAP)

​

4.96

%

​

4.61

%

​

4.64

%

Net interest margin (TE)

​

4.98

%

​

4.63

%

​

4.67

%

​

The following table allocates the changes in net interest income to changes in either average balances or average rates for interest earning assets and interest bearing liabilities.  Interest income is measured on a tax-equivalent basis using a 21% marginal rate for all periods presented.  Interest income not yet received on nonaccrual loans is reversed upon transfer to nonaccrual status; future receipt of interest income is a reduction to principal while in nonaccrual status.

​

Analysis of Year-to-Year Changes in Net Interest Income1

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

2025 Compared to 2024

​

2024 Compared to 2023

​

​

Change Due to

​

​

​

​

Change Due to

​

​

​

​

Average

  ​

Average

  ​

Total

  ​

Average

  ​

Average

  ​

Total

(In thousands)

​

Volume

​

Rate

​

Change

​

Volume

​

Rate

​

Change

Interest and dividend income

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest earning deposits

​

$

2,537

​

$

(305)

​

$

2,232

​

$

(5)

​

$

(105)

​

$

(110)

​

Securities:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Taxable

​

12

​

3,526

​

3,538

​

(5,800)

​

2,516

​

(3,284)

​

Tax-exempt

​

(549)

​

269

​

(280)

​

(239)

​

30

​

(209)

​

Dividends from FHLBC and FRBC

​

(394)

​

(367)

​

(761)

​

(157)

​

515

​

358

​

Loans and loans held-for-sale

​

40,923

​

11,560

​

52,483

​

(814)

​

9,953

​

9,139

​

Total interest and dividend income

​

42,529

​

14,683

​

57,212

​

(7,015)

​

12,909

​

5,894

​

Interest expense

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

NOW accounts

​

340

​

(215)

​

125

​

(58)

​

1,293

​

1,235

​

Money market accounts

​

3,459

​

1,516

​

4,975

​

(392)

​

6,231

​

5,839

​

Savings accounts

​

475

​

4,027

​

4,502

​

(122)

​

2,153

​

2,031

​

Time deposits

​

10,354

​

(1,603)

​

8,751

​

3,146

​

10,365

​

13,511

​

Securities sold under repurchase agreements

​

(53)

​

(55)

​

(108)

​

48

​

196

​

244

​

Other short-term borrowings

​

(9,942)

​

(2,696)

​

(12,638)

​

(4,573)

​

406

​

(4,167)

​

Junior subordinated debentures

​

-

​

25

​

25

​

-

​

32

​

32

​

Subordinated debt

​

-

​

-

​

-

​

-

​

-

​

-

​

Senior notes

​

​

-

​

​

-

​

​

-

​

​

(1,204)

​

​

(1,204)

​

​

(2,408)

​

Notes payable and other borrowings

​

316

​

-

​

316

​

(44)

​

(43)

​

(87)

​

Total interest expense

​

4,949

​

999

​

5,948

​

(3,199)

​

19,429

​

16,230

​

Net interest and dividend income

​

$

37,580

​

$

13,684

​

$

51,264

​

$

(3,816)

​

$

(6,520)

​

$

(10,336)

​

​

1  The changes in net interest income are created by changes in both interest rates and volumes.  In the table above, volume variances are computed using the change in volume multiplied by previous year’s rate. Rate variances are computed using the change in rate multiplied by the previous year’s volume.  The change in interest due to both rate and volume has been allocated between factors in proportion to the relationship of absolute dollar amounts of the change in each.

​

Provision for credit losses

​

The provision for credit losses is the expense necessary to maintain the ACL at levels appropriate to absorb our estimate of credit losses expected over the life of our loan portfolio and unfunded lending commitments.

​

​

50

​

Table of Contents

​

We recorded a $27.6 million provision for credit losses in 2025, an increase of $14.8 million from 2024. The increase in provision expense over the prior year was primarily due to the $13.2 million of Day Two non-PCD provision expense in relation to the Bancorp Financial acquisition and increased current year charge offs within the newly acquired powersport loan segment.  The 2024 provision for credit losses of $12.8 million compared to $16.5 million in 2023 was primarily due to the decrease in loans of $61.6 million in 2024, and lower current-year net charge offs, as well as improved asset quality and economic factors.

​

For additional discussion of the credit provision and allowance for credit losses, see the section below “Allowance for Credit Losses” in this Item 7. Management’s Discussion and Analysis of Financial Condition.

​

Noninterest income

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Noninterest Income for the Twelve Months ending December 31,

​

Percent Change From

(Dollars in thousands)

2025

​

2024

​

2023

​

2025-2024

​

2024-2023

Wealth management

$

13,244

​

$

11,426

​

$

9,803

​

15.9

​

16.6

Service charges on deposits

​

11,282

​

​

10,226

​

​

9,817

​

10.3

​

4.2

Residential mortgage banking revenue

​

​

​

​

​

​

​

​

​

​

​

​

Secondary mortgage fees

​

372

​

​

287

​

​

259

​

29.6

​

10.8

Mortgage servicing rights mark to market loss

​

(1,918)

​

​

(723)

​

​

(1,425)

​

(165.3)

​

49.3

Mortgage servicing income

​

1,865

​

​

1,942

​

​

2,029

​

(4.0)

​

(4.3)

Net gain on sales of mortgage loans

​

2,291

​

​

1,805

​

​

1,477

​

26.9

​

22.2

Total residential mortgage banking revenue

​

2,610

​

​

3,311

​

​

2,340

​

(21.2)

​

41.5

Securities gains (losses), net

​

7

​

​

-

​

​

(4,148)

​

N/M

​

100.0

Increase in cash surrender value of BOLI

​

3,197

​

​

3,619

​

​

2,120

​

(11.7)

​

70.7

Death benefit realized on BOLI

​

430

​

​

905

​

​

-

​

(52.5)

​

N/M

Card related income

​

10,619

​

​

10,114

​

​

10,051

​

5.0

​

0.6

Other income

​

4,973

​

​

4,218

​

​

4,196

​

17.9

​

0.5

Total noninterest income

$

46,362

​

$

43,819

​

$

34,179

​

5.8

​

28.2

​

​

​

​

​

​

​

​

​

​

​

​

​

​

N/M - Not meaningful

​

Our total noninterest income increased $2.5 million, or 5.8%, to $46.4 million for 2025, compared to $43.8 million for 2024.  The increase in 2025 from 2024 was primarily due to:

​

●

A $1.8 million, or 15.9%, increase in wealth management income due to growth in advisory, personal trust, and estate fees.

●

A $1.1 million, or 10.3%, increase in service charges on deposits primarily due to additional income from the deposits assumed in the acquisition of First Merchants and Bancorp Financial.

●

A $505,000, or 5.0%, increase in card related income, compared to 2024, due to card related income acquired in our acquisition of Bancorp Financial.

●

A $755,000 increase in other income primarily due to powersport loan servicing fees.

​

Partially offsetting the increase in noninterest income for 2025, compared to 2024, was lower mortgage banking earnings of $701,000. The decrease in mortgage banking revenue was driven by mark to market losses of $1.9 million in 2025, compared to mark to market losses of $723,000 recorded in 2024, primarily due to change in market interest rates and prepayment speeds. Also offsetting the increase in noninterest income in 2025, compared to 2024, was a $422,000 decrease in the cash surrender value of BOLI due to changes in market interest rates on Corporate-Owned Life Insurance (“COLI”) investments and a $475,000 reduction in death benefit proceeds realized on BOLI in 2025 compared to 2024.

​

​

51

​

Table of Contents

​

Noninterest expense

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Noninterest Expense for the Twelve Months ending December 31,

​

Percent Change From

(Dollars in thousands)

2025

​

2024

​

2023

​

2025-2024

​

2024-2023

Salaries

$

91,709

​

$

71,439

​

$

66,414

​

28.4

​

7.6

Officers incentive

​

12,034

​

​

9,712

​

​

8,447

​

23.9

​

15.0

Benefits and other

​

20,919

​

​

16,874

​

​

13,705

​

24.0

​

23.1

Total salaries and employee benefits

​

124,662

​

​

98,025

​

​

88,566

​

27.2

​

10.7

Occupancy, furniture and equipment

​

19,054

​

​

16,159

​

​

14,437

​

17.9

​

11.9

Computer and data processing

​

13,840

​

​

9,473

​

​

7,277

​

46.1

​

30.2

FDIC insurance

​

2,844

​

​

2,543

​

​

2,705

​

11.8

​

(6.0)

Net teller & bill paying

​

2,720

​

​

2,244

​

​

2,115

​

21.2

​

6.1

General bank insurance

​

1,449

​

​

1,268

​

​

1,212

​

14.3

​

4.6

Amortization of core deposit intangible

​

4,545

​

​

2,440

​

​

2,461

​

86.3

​

(0.9)

Advertising expense

​

1,331

​

​

1,243

​

​

721

​

7.1

​

72.4

Card related expense

​

6,229

​

​

5,555

​

​

5,123

​

12.1

​

8.4

Legal fees

​

1,724

​

​

1,326

​

​

927

​

30.0

​

43.0

Consulting & management fees

​

3,942

​

​

2,496

​

​

2,415

​

57.9

​

3.4

Other real estate owned expense, net

​

2,117

​

​

2,220

​

​

399

​

(4.6)

​

456.4

Other expense

​

19,565

​

​

14,756

​

​

16,843

​

32.6

​

(12.4)

Total noninterest expense

$

204,022

​

$

159,748

​

$

145,201

​

27.7

​

10.0

Efficiency ratio (GAAP)

​

57.91

%

​

54.36

%

​

48.80

%

​

​

​

Adjusted efficiency ratio (non-GAAP)

​

53.15

%

​

53.22

%

​

47.93

%

​

​

​

​

Our total noninterest expense increased by $44.3 million, or 27.7%, in 2025 compared to 2024.  The increase was primarily due to:

​

●

A $26.6 million, or 27.2%, increase in salaries and employee benefits primarily due to $8.4 million of change in control, retention, and severance payouts as a result of the acquisition of Bancorp Financial.  In addition, increases were noted in officers’ incentives, restricted stock comp expense, and salaries based on additional employees from the Bancorp Financial acquisition as well as growth in base salary rates for legacy Bank employees. Our number of full-time equivalent employees was 1,062 as of December 31, 2025, compared to 877 as of December 31, 2024.

●

A $2.9 million, or 17.9%, increase in occupancy, furniture and equipment expense primarily due to the acquisition of Bancorp Financial related assets and the costs incurred.

●

A $4.4 million, or 46.1%, increase in computer and data processing expense, primarily due to costs incurred related to our acquisition of Bancorp Financial as systems conversion was performed in October 2025, and certain acquired ancillary system contracts that were terminated.

●

A $2.1 million, or 86.3%, increase in the amortization of core deposits intangibles, primarily due to our acquisition of Bancorp Financial as well as a full year of amortization from the branch transaction with FRME in December 2024.

●

A $1.4 million, or 57.9%, increase in consulting & management fees, primarily due to consulting fees incurred from our acquisition of Bancorp Financial.

●

A $4.8 million, or 32.6%, increase in other expense in 2025, compared to 2024, primarily attributable to acquisition-related costs incurred related to our acquisition of Bancorp Financial, which include audit, printing, supplies, and consumer credit expenses.

​

Efficiency Ratio

​

The efficiency ratio presented above and reconciled below measures how much it costs an institution to generate one dollar of revenue. We utilize this measure in evaluating employee performance incentives as well as in comparison against peer performance, to set and assess operational standards. The following table provides a reconciliation of the non-GAAP efficiency ratio to the most comparable GAAP equivalent.

​

​

52

​

Table of Contents

​

Reconciliation of Adjusted Efficiency Ratio Non-GAAP Financial Measures

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

GAAP

​

​

Non-GAAP

​

​

​

​

Year Ended

​

​

​

Year Ended

​

​

​

December 31, 

​

December 31, 

​

December 31, 

​

​

December 31, 

​

December 31, 

​

December 31, 

​

​

​

2025

​

2024

​

2023

​

​

2025

​

2024

​

2023

​

Efficiency Ratio / Adjusted Efficiency Ratio 1

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(Dollars in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Noninterest expense

​

$

204,022

​

$

159,748

​

​

145,201

​

​

$

204,022

​

$

159,748

​

​

145,201

​

Less amortization of core deposit intangible

​

​

4,545

​

​

2,440

​

​

2,461

​

​

​

4,545

​

​

2,440

​

​

2,461

​

Less other real estate expense, net

​

​

2,117

​

​

2,220

​

​

399

​

​

​

2,117

​

​

2,220

​

​

399

​

Less litigation related expense

​

​

N/A

​

​

N/A

​

​

N/A

​

​

​

-

​

​

-

​

​

1,200

​

Less acquisition related costs, net of losses on branch sales

​

​

N/A

​

​

N/A

​

​

N/A

​

​

​

15,068

​

​

1,992

​

​

(258)

​

Less liquidation and deconversion costs on Visa credit card portfolio

​

​

N/A

​

​

N/A

​

​

N/A

​

​

​

-

​

​

-

​

​

629

​

Noninterest expense less adjustments

​

$

197,360

​

$

155,088

​

$

142,341

​

​

$

182,292

​

$

153,096

​

​

140,770

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net interest income

​

$

292,964

​

$

241,635

​

​

251,931

​

​

$

292,964

​

$

241,635

​

​

251,931

​

Taxable-equivalent adjustment:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Loans

​

​

N/A

​

​

N/A

​

​

N/A

​

​

​

37

​

​

43

​

​

39

​

Securities

​

​

N/A

​

​

N/A

​

​

N/A

​

​

​

1,314

​

​

1,373

​

​

1,417

​

Net interest income including adjustments

​

​

292,964

​

​

241,635

​

​

251,931

​

​

​

294,315

​

​

243,051

​

​

253,387

​

Noninterest income

​

​

46,362

​

​

43,819

​

​

34,179

​

​

​

46,362

​

​

43,819

​

​

34,179

​

Less death benefit related to BOLI

​

​

430

​

​

905

​

​

-

​

​

​

430

​

​

905

​

​

-

​

Less securities gains (losses), net

​

​

7

​

​

-

​

​

(4,148)

​

​

​

7

​

​

-

​

​

(4,148)

​

Less MSRs mark to market losses

​

​

(1,918)

​

​

(723)

​

​

(1,425)

​

​

​

(1,918)

​

​

(723)

​

​

(1,425)

​

Taxable-equivalent adjustment:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Change in cash surrender value of BOLI

​

​

N/A

​

​

N/A

​

​

N/A

​

​

​

850

​

​

962

​

​

564

​

Noninterest income including adjustments

​

​

47,843

​

​

43,637

​

​

39,752

​

​

​

48,693

​

​

44,599

​

​

40,316

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net interest income including adjustments plus noninterest income including adjustments

​

$

340,807

​

$

285,272

​

​

291,683

​

​

$

343,008

​

$

287,650

​

​

293,703

​

Efficiency ratio / Adjusted efficiency ratio 1

​

​

57.91

%

​

54.36

%

​

48.80

%

​

​

53.15

%

​

53.22

%

​

47.93

%

​

1  See discussion entitled “Non-GAAP Financial Measures” on page 48.

​

Income taxes

​

Our provision for income taxes includes both federal and state income tax expense (benefit).  An analysis of the provision for income taxes for the three years ended December 31, 2025, is detailed in Note 11 of the consolidated financial statements and our income tax accounting policies are described in Note 1 to the consolidated financial statements.

​

Our income tax expense totaled $27.4 million for the year ended December 31, 2025, compared to an income tax expense of $27.7 million in 2024 and $32.7 million for 2023.  The decrease in income tax expense in 2025, compared to 2024, is commensurate with the decrease in our pretax income.  Income tax expense reflected all relevant statutory tax rates and GAAP accounting.  Our effective tax rate was 25.5% for 2025, 24.5% for 2024, and 26.3% for 2023.  Any changes in tax rates will be recorded in the period enacted.

​

The determination of whether we will be able to realize our deferred tax assets is highly subjective and dependent upon judgment concerning management’s evaluation of both positive and negative evidence, including forecasts of future income, available tax planning strategies, and assessments of both current and future economic and business conditions.  Management considered both positive and negative evidence regarding our ability to ultimately realize the deferred tax assets, which is largely dependent on our ability to derive benefits based on future taxable income.  For all periods presented, management determined that the realization of the deferred tax asset was “more likely than not” as required by GAAP.

​

53

​

Table of Contents

Financial condition

​

General

​

Our total assets were $6.90 billion at December 31, 2025, an increase of $1.25 billion, or 22.2%, from December 31, 2024.  Our total cash and cash equivalents increased $24.7 million, driven by cash received from securities activity and the increase in other short term borrowings, as well as net cash received with the Bancorp Financial acquisition.

​

Our loans increased by $1.27 billion, or 31.9%, to $5.25 billion for the year ended December 31, 2025, compared to 2024.  This increase is primarily due to the $1.20 billion of loans acquired in our acquisition of Bancorp Financial and $76.1 million of net organic loan growth.

​

Our total securities decreased by $71.2 million, or 6.1%, for the year ended December 31, 2025, compared to 2024, primarily due to $279.6 million of paydowns, maturities, and calls and $7.5 million of strategic sales, excluding the sale of Bancorp Financial’s $117.6 million available-for-sale securities portfolio after the acquisition closed.  These decreases in 2025 were partially offset by security purchases of $191.6 million as well as the $25.6 million reduction of unrealized losses recorded in 2025. We recorded pretax net security gains of $7,000 in 2025 compared to no pretax net gains or losses in 2024.  

​

Our total liabilities were $6.01 billion at December 31, 2025, an increase of $1.03 billion, or 20.6%, from December 31, 2024.  Total deposits increased by $827.3 million, or 17.3%, to $5.60 billion for the year ended December 31, 2025, compared to $4.77 billion for the year ended December 31, 2024, primarily due to the deposits assumed from the acquisition of Bancorp Financial.

​

At December 31, 2025, total stockholders’ equity was $896.8 million, compared to $671.0 million at December 31, 2024. The increase in stockholders’ equity primarily stems from the acquisition of Bancorp Financial, which resulted in $7.9 million of additional common stock outstanding and $132.6 million of additional paid in capital, as well as net income of $80.3 million recorded in 2025, and the $18.4 million decrease in accumulated other comprehensive losses due to the reduction in unrealized losses in the available for sale securities portfolio.

​

Investments

​

As shown below, the overall composition of our securities portfolio was largely consistent in 2025 compared to 2024, as well as in 2024 compared to 2023.

​

Securities Available-for-Sale Portfolio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

2025

​

​

​

2024

​

​

​

2023

​

​

​

  ​

Amortized

  ​ ​

Fair

​

% of

  ​ ​

Amortized

  ​ ​

Fair

​

% of

  ​ ​

Amortized

  ​ ​

Fair

​

% of

(Dollars in thousands)

​

Cost

​

Value

​

Total

​

Cost

​

Value

​

Total

​

Cost

​

Value

​

Total

U.S. Treasury

​

$

164,296

​

$

165,860

​

15.2

​

$

193,902

​

$

194,143

​

16.7

​

$

174,602

​

$

169,574

​

14.2

​

U.S. government agencies

​

29,421

​

29,176

​

2.7

​

39,202

​

37,814

​

3.3

​

60,011

​

56,959

​

4.8

​

U.S. government agency mortgage-backed

​

95,899

​

88,780

​

8.1

​

112,241

​

100,277

​

8.6

​

118,492

​

106,370

​

8.9

​

States and political subdivisions

​

213,366

​

206,375

​

18.9

​

226,969

​

215,456

​

18.5

​

236,072

​

227,065

​

19.0

​

Collateralized mortgage obligations

​

388,774

​

359,305

​

32.9

​

411,170

​

368,616

​

31.7

​

442,987

​

392,544

​

33.0

​

Asset-backed securities

​

46,600

​

45,816

​

4.2

​

64,215

​

62,303

​

5.4

​

71,616

​

68,436

​

5.7

​

Collateralized loan obligations

​

​

194,552

​

​

194,464

​

17.9

​

​

182,629

​

​

183,092

​

15.8

​

​

173,201

​

​

171,881

​

14.4

​

Equity securities

​

684

​

747

​

0.1

​

-

​

-

​

-

​

-

​

-

​

-

​

Total securities available-for-sale

​

$

1,133,592

​

$

1,090,523

​

100.0

​

$

1,230,328

​

$

1,161,701

​

100.0

​

$

1,276,981

​

$

1,192,829

​

100.0

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Our investment portfolio serves as both an important source of liquidity and as a source of income.  Accordingly, the size and composition of the portfolio reflects our liquidity needs, loan demand and interest income objectives.  We will adjust the size and composition of the portfolio from time to time.  While a significant portion of the portfolio consists of readily marketable securities to address future liquidity needs, other parts of the portfolio may reflect funds invested pending future loan demand or to maximize interest income without undue interest rate risk.

​

Some of our holdings of U.S. government agency mortgage-backed securities (“MBS”) and collateralized mortgage obligations (“CMOs”) are issuances of government-sponsored enterprises, such as Fannie Mae and Freddie Mac, which are not backed by the full faith and credit of the U.S. government.  Some holdings of MBS and CMOs are issued by Ginnie Mae, which do carry the full faith and credit of the U.S. government. We also hold some MBS and CMOs that were not issued by U.S. government agencies and are typically credit-enhanced via over-collateralization and/or subordination.  Holdings of ABS also includes securities backed by student loans issued under the U.S. Department of Education’s (“DOE”) FFEL program, which generally provides a minimum 97% U.S. DOE guarantee of principal.  These ABS securities also have added credit enhancement through over-collateralization and/or subordination.  The majority of holdings issued by states and political subdivisions are general obligation or revenue bonds that have S&P or Moody’s ratings of AA- or higher.  Other state and political subdivision issuances are unrated and generally consist of smaller investment amounts that involve issuers in our markets.  The credit quality of these issuers is monitored, and none have been identified as posing a material risk of loss.  We also hold collateralized loan obligation (“CLOs”) securities that are generally backed by a pool of debt issued by multiple middle-sized and large businesses.  Our CLO S&P or Moody’s ratings distribution consists of 100% rated AAA or AA. CLO credit enhancement is achieved through over-collateralization and/or subordination.

54

​

Table of Contents

​

The following table presents the expected maturities or call dates and weighted average yield (nontax equivalent) of securities by major category as of December 31, 2025.  Weighted average yield is based on amortized costs and not calculated on a tax equivalent basis. Securities not due at a single maturity date are shown only in the total column.

​

Securities Portfolio Maturity and Yields

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

After One But

​

After Five But

​

​

​

​

​

​

​

​

Within One Year

​

Through Five Years

​

Through Ten Years

​

After Ten Years

​

Total

​

​

(Dollars in thousands)

Amount

  ​ ​

Yield

  ​ ​

Amount

  ​ ​

Yield

  ​ ​

Amount

  ​ ​

Yield

  ​ ​ ​

Amount

  ​ ​

Yield

  ​ ​

Amount

  ​ ​

Yield

Securities available-for-sale

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

U.S. Treasury

$

65,191

4.47

%

$

100,669

4.20

%  

$

-

-

%

$

-

-

%

$

165,860

4.32

%

U.S. government agencies

28,084

2.00

​

1,092

5.36

​

-

-

​

​

-

-

​

29,176

2.13

​

States and political subdivisions

​

1,204

4.40

​

​

31,745

3.31

​

​

88,875

2.94

​

​

84,551

3.15

​

​

206,375

3.09

​

​

94,479

3.73

​

133,506

4.00

​

88,875

2.94

​

84,551

3.15

​

401,411

3.51

​

Mortgage-backed securities and collateralized mortgage obligations

​

-

​

-

​

​

-

​

-

​

​

-

​

-

​

​

-

​

-

​

448,085

​

2.75

​

Asset-backed securities

​

-

​

-

​

​

-

​

-

​

​

-

​

-

​

​

-

​

-

​

​

45,816

​

3.71

​

Collateralized loan obligations

​

-

​

-

​

​

-

​

-

​

​

-

​

-

​

​

-

​

-

​

194,464

​

5.46

​

Equity securities

​

-

​

-

​

​

-

​

-

​

​

-

​

-

​

​

-

​

-

​

747

​

-

​

Total securities available-for-sale

$

94,479

3.73

%  

$

133,506

4.00

%  

$

88,875

2.94

%  

$

84,551

3.15

%  

$

1,090,523

3.53

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

As of December 31, 2025, net unrealized losses on available-for-sale securities totaled $43.1 million, which, after the impact of the related deferred income taxes, resulted in an overall decrease to equity capital of $31.0 million.  As of December 31, 2024, net unrealized losses on available-for-sale securities totaled $68.6 million, which after the impact of the related deferred income taxes, resulted in an overall decrease to equity capital of $49.4 million.

​

Loans

​

The following table presents the composition of the loan portfolio at December 31 for the year indicated:

​

Loan Portfolio

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

  ​ ​ ​

​

  ​ ​ ​

% of

​

​

  ​ ​ ​

% of

​

​

  ​ ​ ​

% of

(Dollars in thousands)

​

2025

​

Total

​

2024

​

Total

​

2023

​

Total

Commercial

​

$

842,130

​

16.0

​

$

800,476

​

20.1

​

$

841,697

​

20.8

Leases

​

548,256

​

10.4

​

491,748

​

12.4

​

398,223

​

9.8

Commercial real estate – investor

​

1,212,384

​

23.1

​

1,078,829

​

27.1

​

1,034,424

​

25.6

Commercial real estate – owner occupied

​

706,567

​

13.5

​

683,283

​

17.2

​

796,538

​

19.7

Construction

​

173,630

​

3.3

​

201,716

​

5.1

​

165,380

​

4.1

Residential real estate – investor

​

70,225

​

1.3

​

49,598

​

1.2

​

52,595

​

1.3

Residential real estate – owner occupied

​

​

230,432

​

4.4

​

​

206,949

​

5.2

​

​

226,248

​

5.6

Multifamily

​

​

339,131

​

6.5

​

​

351,325

​

8.8

​

​

401,696

​

9.9

HELOC

​

​

235,293

​

4.5

​

​

103,388

​

2.6

​

​

103,237

​

2.6

Powersport

​

​

696,959

​

13.3

​

​

-

​

-

​

​

-

​

-

Other 1

​

197,124

​

3.7

​

14,024

​

0.3

​

22,915

​

0.6

Total loans

​

$

5,252,131

​

100.0

​

$

3,981,336

​

100.0

​

$

4,042,953

​

100.0

​

1 The “Other” class includes consumer loans, such as collector cars, manufactured homes, and solar loans, as well as overdrafts.

​

Our total loans were $5.25 billion as of December 31, 2025, an increase of $1.27 billion from $3.98 billion as of December 31, 2024. This increase was primarily due to the $1.20 billion portfolio acquired from Bancorp Financial, which significantly expanded our consumer lending and added the powersport loan segment. Excluding the acquisition, the Bank achieved organic loan growth, net of paydowns, of $76.1 million from 2024. The largest organic loan increases, net originations, were in leases for $56.5 million and commercial real estate – investor for $27.2 million. Partially offsetting these organic increases, we experienced net reductions in construction of $32.4 million and multifamily of $40.8 million.  We recorded total loan originations, excluding renewals, of $1.36 billion in 2025.  

​

We strive to serve customers in and around our geographic locations and continue to seek opportunities in our primary lending markets; however, our markets remain very competitive for new loan business.

​

Management continues to emphasize loan portfolio quality, and credit remediation continued in 2025. The increase of nonaccrual and classified loans as of December 31, 2025, compared to the prior year end, is due to larger relationships with mixed use commercial real estate that have been downgraded in 2025, discussed in the “Asset Quality” section below.  We recorded net loan charge-offs of $16.2 million in 2025, $14.2 million in 2024, and $23.3 million in 2023.

55

​

Table of Contents

​

The quality of our loan portfolio is in large part a reflection of the economic health of the communities in which we operate.  Our local communities have been relatively stable in the past five years.  While there are no significant concentrations of loans where the customers’ ability to honor loan terms is dependent upon a single economic sector, the real estate categories represented 56.5% and 67.2% of the portfolio at December 31, 2025 and 2024, respectively.  Our lending exposure is diversified across each of our segments presented above. In 2025, excluding the Bancorp Financial acquisition, we experienced a net increase in the overall portfolio, and leases and commercial real estate – investor continue to be the largest segments of growth. We had no concentration of loans exceeding 10% of total loans that were not otherwise disclosed as a category of loans at December 31, 2025.  We remain committed to overseeing and managing our loan portfolio to avoid unnecessarily high credit concentrations in accordance with the general interagency guidance on risk management.  Consistent with those commitments, management monitors our asset diversification and anticipates that the percentage of real estate lending in relation to the overall portfolio will decrease in the future.

​

The following table sets forth the remaining contractual maturities for loan categories at December 31, 2025:

​

Maturity and Rate Sensitivity of Loans to Changes in Interest Rate

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

After One Year

​

After Five Years

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Through Five Years

​

Through 15 Years

​

After 15 Years

​

​

​

​

  ​

One Year

  ​ ​

Fixed

  ​ ​

Floating

  ​ ​

Fixed

  ​ ​

Floating

  ​ ​

Fixed

  ​ ​

Floating

  ​ ​

  ​

​

(In thousands)

​

or Less

​

Rate

​

Rate

​

Rate

​

Rate

​

Rate

​

Rate

​

Total

Commercial

​

$

751,023

​

$

76,520

​

$

405

​

$

12,109

​

$

-

​

$

2,073

​

$

-

​

$

842,130

​

Leases

​

27,160

​

473,105

​

​

-

​

​

47,991

​

​

-

​

​

-

​

​

-

​

548,256

​

Commercial real estate – investor

​

581,089

​

535,218

​

​

-

​

​

95,882

​

​

195

​

​

-

​

​

-

​

1,212,384

​

Commercial real estate – owner occupied

​

​

247,739

​

​

254,259

​

​

118,178

​

​

9,631

​

​

76,760

​

​

-

​

​

-

​

​

706,567

​

Construction

​

153,751

​

17,967

​

​

1,192

​

​

-

​

​

720

​

​

-

​

​

-

​

173,630

​

Residential real estate – investor

​

29,198

​

34,437

​

​

2,532

​

​

1,558

​

​

711

​

​

1,789

​

​

-

​

70,225

​

Residential real estate – owner occupied

​

​

42,715

​

​

7,079

​

​

97,215

​

​

34,721

​

​

20,721

​

​

27,981

​

​

-

​

​

230,432

​

Multifamily

​

​

107,184

​

​

220,314

​

​

-

​

​

11,633

​

​

-

​

​

-

​

​

-

​

​

339,131

​

HELOC

​

171,239

​

4,926

​

​

-

​

​

9,476

​

​

10,266

​

​

39,386

​

​

-

​

235,293

​

Powersport

​

​

12,546

​

​

537,636

​

​

-

​

​

146,777

​

​

-

​

​

-

​

​

-

​

​

696,959

​

Other1

​

13,750

​

44,421

​

​

-

​

​

97,519

​

​

-

​

​

41,434

​

​

-

​

197,124

​

Total

​

$

2,137,394

​

$

2,205,882

​

$

219,522

​

$

467,297

​

$

109,373

​

$

112,663

​

$

-

​

$

5,252,131

​

​

1 The “Other” class includes consumer loans, such as collector cars, manufactured homes, and solar loans, as well as overdrafts; the “One Year or Less” column includes demand notes.

​

Asset Quality

​

Nonperforming loans consist of nonaccrual loans and loans 90 days or more past due and accruing. Remediation work is ongoing in all relevant segments. Nonperforming loans increased year over year by $22.5 million, or 74.4%, to $52.8 million at December 31, 2025, but decreased by $38.5 million to $30.3 million at December 31, 2024, compared to December 31, 2023. Nonperforming assets, which includes nonperforming loans plus other real estate owned and repossessed assets, totaled $55.6 million as of December 31, 2025, compared to $52.4 million as of December 31, 2024, and $73.9 million as of December 31, 2023.  Nonperforming credit metrics increased in 2025, largely due to increased nonaccrual loans, and management continues to work these loans. Nonperforming loans as a percent of total loans increased to 1.0% as of December 31, 2025, from 0.8% as of December 31, 2024, and 1.7% December 31, 2023. Our nonperforming loans by performance metric is shown in the following table.

​

Risk Elements

​

The following table sets forth the amounts of nonperforming assets by performance metric at December 31 for the years indicated:

​

​

​

​

​

​

​

​

​

​

​

​

(Dollars in thousands)

  ​

2025

  ​

2024

  ​

2023

  ​

Nonaccrual loans

​

$

47,952

​

$

28,851

​

$

67,583

​

Loans past due 90 days or more and still accruing interest

​

4,879

​

1,436

​

1,196

​

Total nonperforming loans

​

52,831

​

30,287

​

68,779

​

Other real estate owned

​

1,427

​

21,617

​

5,123

​

Repossessed Assets

​

1,363

​

484

​

-

​

Total nonperforming assets

​

$

55,621

​

$

52,388

​

$

73,902

​

​

​

​

​

​

​

​

​

​

​

​

Nonaccrual loans to total loans outstanding

​

​

0.9

%

​

0.7

%

​

1.7

%

Nonperforming loans to total loans outstanding

​

​

1.0

%

​

0.8

%

​

1.7

%

Nonperforming assets to total loans plus OREO and repossessed assets

​

​

1.1

%

​

1.3

%

​

1.8

%

56

​

Table of Contents

​

​

Accrual of interest is discontinued on a loan when principal or interest is 90 days or more past due, unless the loan is well secured and in the process of collection.  Powersport loans are placed on nonaccrual when principal or interest payments become 120 days past due and in the process of restructuring. When a loan is placed on nonaccrual status, interest previously accrued but not collected in the current period is reversed against current period interest income.  Interest income of approximately $1.0 million, $815,000 and $1.9 million was recorded and collected during 2025, 2024 and 2023, respectively, on loans that subsequently went to nonaccrual status by year-end.  Interest income, which would have been recognized during 2025, 2024 and 2023, had these loans been on an accrual basis throughout the year, was approximately $3.8 million, $4.2 million and $7.3 million, respectively.  

​

Total past due loans, including accruing and nonaccrual loans, totaled $85.7 million at year-end 2025, a $58.4 million increase from year end 2024, resulting in the rate of past due loans to total loans increasing to 1.6% at year-end 2025 compared to 0.7% at year-end 2024, and 1.2% at year-end 2023. As of December 31, 2025, $42.9 million of delinquent loans are past due 30-59 days and accruing. Refer to Note 5, “Loans and Allowance for Credit Losses on Loans”, in our Consolidated Financial Statements, below, for further detail of past due loans by classification for 2025 and 2024.

​

Classified Assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Classified assets as of December 31,

​

Percent Change From

(Dollars in thousands)

2025

​

2024

​

2023

​

2025-2024

​

2024-2023

Commercial

$

51,587

​

$

24,748

​

$

8,414

​

108.4

​

194.1

Leases

​

2,428

​

​

523

​

​

818

​

364.2

​

(36.1)

Commercial real estate – investor

​

14,245

​

​

14,489

​

​

43,798

​

(1.7)

​

(66.9)

Commercial real estate – owner occupied

​

64,081

​

​

27,619

​

​

54,613

​

132.0

​

(49.4)

Construction

​

11,421

​

​

19,351

​

​

17,155

​

(41.0)

​

12.8

Residential real estate – investor

​

1,142

​

​

1,690

​

​

1,331

​

(32.4)

​

27.0

Residential real estate – owner occupied

​

1,897

​

​

1,851

​

​

3,216

​

2.5

​

(42.4)

Multifamily

​

1,494

​

​

1,165

​

​

1,775

​

28.2

​

(34.4)

HELOC

​

1,466

​

​

547

​

​

1,664

​

168.0

​

(67.1)

Powersport

​

68

​

​

-

​

​

-

​

N/M

​

N/M

Other 1

​

270

​

​

10

​

​

-

​

N/M

​

N/M

Total classified loans

​

150,099

​

​

91,993

​

​

132,784

​

63.2

​

(30.7)

Other real estate owned

​

1,427

​

​

21,617

​

​

5,123

​

(93.4)

​

322.0

Repossessed assets

​

1,363

​

​

484

​

​

-

​

181.6

​

N/M

Total classified assets

$

152,889

​

$

114,094

​

$

137,907

​

34.0

​

(17.3)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

N/M - Not meaningful

​

1 The “Other” class includes consumer loans, such as collector cars, manufactured homes, and solar loans, as well as overdrafts.

​

Classified loans include nonaccrual and all other loans considered substandard.  Classified assets include both classified loans, OREO and repossessed assets.  Loans classified as substandard are inadequately protected by either the current net worth and ability to meet payment obligations of the obligor, or by the collateral pledged to secure the loan, if any.  These loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt and carry the distinct possibility that we will sustain some loss if deficiencies remain uncorrected.

​

57

​

Table of Contents

​

Total classified loans increased in 2025 by $58.1 million compared to 2024, and decreased in 2024 by $40.8 million compared to 2023. The increase in 2025 is primarily due to an increase of $36.5 million of commercial real estate – owner occupied loans and $26.8 million of commercial loans, and partially offset by a decrease of $7.9 million of construction, compared to 2024. In 2025, the increase to classified commercial real estate – owner occupied and commercial loans were driven by downgrades of $52.9 million for commercial real estate – owner occupied and $45.8 million downgrades for commercial. The decrease in 2024, compared to 2023, is primarily due to a decrease of $29.3 million of commercial real estate – investor loans and $27.0 million of commercial real estate – owner occupied, and partially offset by an increase of $16.3 million of commercial, compared to 2023. In 2024, the decrease to classified commercial real estate – owner occupied and commercial real estate – investor loans were driven by loan risk rating upgrades of $20.1 million for commercial real estate – owner occupied and $8.8 million for commercial real estate – investor, primarily in the healthcare industry.

​

Total classified assets, which includes OREO and repossessed assets, increased $38.8 million in 2025 compared to 2024. The increase in classified assets year over year was mostly due to the increases to classified loans but were offset by a $20.2 decrease to OREO in 2025 compared to 2024, primarily due to the sales of five OREO properties for a net fair value of $24.7 million. Our OREO portfolio increased $16.5 million in 2024 from 2023, primarily due to the transfer of five properties with a net fair value of $19.4 million, net of participations and valuation adjustments.  Management monitors a metric of classified assets to the sum of Bank Tier 1 capital and the ACL, which is referred to as the “classified assets ratio.”  Our classified assets ratio increased to 17.82% at December 31, 2025, compared to 17.45% at December 31, 2024, and 21.66% at December 31, 2023.

​

Problem Loans

​

We utilize an internal asset classification system as a means of reporting problem and potential problem assets.  At the scheduled directors loan committee meetings of the Bank, loan listings are presented, which show significant loan relationships listed as “Special Mention,” “Substandard,” and “Doubtful.”  Loans classified as Substandard include those that have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.  They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected.  Assets classified as Doubtful have all the weaknesses inherent as those classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.  Assets that do not currently expose us to sufficient risk to warrant classification in one of the aforementioned categories, but possess weaknesses that deserve management’s close attention, are deemed to be Special Mention.  Management defines problem loans as performing loans rated Substandard that do not meet the definition of a nonperforming loan, and those loans that have been placed on nonaccrual, which are classified as Doubtful.  These problem loans carry a higher probability of default and require additional attention by management.  A more detailed description of these loans can be found in Note 5 to the Consolidated Financial Statements, as listed in the credit quality indicators discussion.

​

Allowance for Credit Losses

​

At December 31, 2025, the ACL on loans totaled $72.3 million, and the ACL on unfunded commitments, included in other liabilities, totaled $2.1 million, compared to the ACL on loans of $43.6 million and ACL on unfunded commitments of $1.9 million at December 31, 2024. The increase in the ACL on loans was primarily due to a Day One PCD allocation of $17.5 million and a Day Two non-PCD provision of $13.2 million in relation to the Bancorp Financial acquisition.

​

One measure of the adequacy of the ACL is the ratio of the ACL on loans to total loans. The ACL as a percentage of total loans was 1.4% as of December 31, 2025, and 1.1% as of December 31, 2024. In management’s judgment, an adequate allowance for estimated losses has been established; however, there can be no assurance that losses will not exceed the estimated amounts in the future.

​

See Note 1 – Summary of Significant Accounting Policies in the accompanying notes to the consolidated financial statements in this annual report for discussion of our ACL methodology on loans.  

​

The provision for credit losses, which includes a provision for losses on unfunded commitments, is a charge to earnings to maintain the ACL at a level consistent with management’s assessment of expected losses over the expected life of the loan portfolio as well as considering changes in macroeconomic conditions. During 2025, we recorded a $14.2 million of provision for credit losses expense on loans, a $13.2 million Day Two non-PCD provision for credit loss and a $185,000 of provision for credit losses on unfunded commitments. During 2024, we recorded a $13.6 million of provision for credit losses expense on loans and a $834,000 release of provision for credit losses on unfunded commitments.

​

​

58

​

Table of Contents

​

Summary of Loan Loss Experience

​

The following table summarizes, for the years indicated, activity in the ACL, including amounts charged-off, amounts of recoveries, additions to the allowance charged to operating expense, and the ratio of net charge-offs to loans outstanding:

​

Analysis of Allowance for Credit Losses

​

​

​

​

​

​

​

​

​

​

​

​

​

(Dollars in thousands)

  ​

2025

  ​

2024

  ​

2023

  ​

  ​

Total average loans (exclusive of loans held–for–sale)

​

$

4,606,984

​

$

3,985,552

​

$

3,998,937

​

​

Allowance at beginning of year

​

43,619

​

44,264

​

49,480

​

​

Charge–offs:

​

​

​

​

​

​

​

​

​

​

​

Commercial

​

5,051

​

8,686

​

885

​

​

Leases

​

​

970

​

​

149

​

​

882

​

​

Commercial real estate – investor

​

-

​

4,596

​

11,816

​

​

Commercial real estate – owner occupied

​

1,173

​

5,154

​

10,691

​

​

Construction

​

834

​

-

​

-

​

​

Real estate – investor

​

​

-

​

​

-

​

​

-

​

​

Real estate – owner occupied

​

-

​

242

​

-

​

​

Multifamily

​

​

181

​

​

-

​

​

-

​

​

HELOC

​

​

-

​

​

-

​

​

-

​

​

Powersport

​

​

8,821

​

​

-

​

​

-

​

​

Other1

​

​

1,633

​

​

284

​

​

368

​

​

Total charge–offs

​

18,663

​

19,111

​

24,642

​

​

Recoveries:

​

​

​

​

​

​

​

​

​

​

​

Commercial

​

203

​

149

​

632

​

​

Leases

​

​

17

​

​

103

​

​

119

​

​

Commercial real estate – investor

​

57

​

425

​

77

​

​

Commercial real estate – owner occupied

​

12

​

3,907

​

29

​

​

Construction

​

396

​

-

​

100

​

​

Real estate – investor

​

​

7

​

​

25

​

​

30

​

​

Real estate – owner occupied

​

56

​

36

​

79

​

​

Multifamily

​

​

-

​

​

-

​

​

-

​

​

HELOC

​

​

90

​

​

91

​

​

105

​

​

Powersport

​

​

1,375

​

​

-

​

​

-

​

​

Other1

​

​

223

​

​

146

​

​

169

​

​

Total recoveries

​

2,436

​

4,882

​

1,340

​

​

Net charge-offs

​

16,227

​

14,229

​

23,302

​

​

Day 1 PCD credit evaluation

​

​

17,540

​

​

-

​

​

-

​

​

Provision for credit losses on loans

​

27,369

​

13,584

​

18,086

​

​

Allowance at end of year

​

$

72,301

​

$

43,619

​

$

44,264

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net charge-offs to total average loans

​

0.4

%

0.4

%

0.6

%

​

ACL on loans at year end to total loans

​

1.4

%

1.1

%

1.1

%

​

ACL on loans at year end to nonaccrual loans

​

​

150.8

%

​

151.2

%

​

65.5

%

​

​

1 The “Other” class includes consumer loans, such as collector cars, manufactured homes, and solar loans, as well as overdrafts.

​

​

59

​

Table of Contents

​

The following table summarizes, for the years indicated, net charge-offs per loan class and the percentage of total average loans per class:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

% of Total

​

​

​

% of Total

​

​

​

% of Total

​

​

​

​

Average

​

​

​

​

Average

​

​

​

​

Average

​

​

​

​

Loans Per

​

​

​

​

Loans Per

​

​

​

​

Loans Per

​

2025

​

Class

​

2024

​

Class

​

2023

​

Class

Commercial

$

4,848

​

0.7

​

$

8,537

​

1.1

​

$

253

​

-

Leases

​

953

​

0.2

​

​

46

​

0.0

​

​

763

​

0.2

Commercial real estate – investor

​

(57)

​

(0.0)

​

​

4,171

​

0.4

​

​

11,739

​

1.1

Commercial real estate – owner occupied

​

1,161

​

0.2

​

​

1,247

​

0.2

​

​

10,662

​

1.4

Construction

​

438

​

0.3

​

​

-

​

-

​

​

(100)

​

(0.1)

Residential real estate – investor

​

(7)

​

(0.0)

​

​

(25)

​

(0.1)

​

​

(30)

​

(0.1)

Residential real estate – owner occupied

​

(56)

​

(0.0)

​

​

206

​

0.1

​

​

(79)

​

(0.0)

Multifamily

​

181

​

0.1

​

​

-

​

-

​

​

-

​

-

HELOC

​

(90)

​

(0.0)

​

​

(91)

​

(0.1)

​

​

(105)

​

(0.1)

Powersport

​

7,446

​

1.2

​

​

-

​

-

​

​

-

​

-

Other 1

​

1,410

​

0.8

​

​

138

​

1.2

​

​

199

​

0.8

Net charge–offs

$

16,227

​

0.4

​

$

14,229

​

0.4

​

$

23,302

​

0.6

​

1 The “Other” class includes consumer loans, such as collector cars, manufactured homes, and solar loans, as well as overdrafts.

​

The provision for credit losses on loans is based upon management’s estimate of future expected credit losses in the loan and lease portfolio and its evaluation of the adequacy of the ACL.  Our provision for credit losses in 2025 totaled $27.6 million, compared to $12.8 million in 2024, and $16.5 million in 2023.  Net charge-offs recorded in 2025 totaled $16.2 million, compared to net charge-offs of $14.2 million recorded in 2024, and net charge-offs of $23.3 million in 2023. The significant charge offs in 2025 were comprised of multiple  powersport loans, three commercial credits, and one commercial real estate credit. Our ACL on loans to total loans was 1.4% at December 31, 2025, and 1.1% at December 31, 2024 and 2023.  

​

The following table shows our allocation of the ACL by loan type at December 31 for the years indicated, and, for each category of loans, the percent of total loans represented by that category:

​

Allocation of the Allowance for Credit Losses

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

2025

​

2024

​

2023

​

​

​

​

​

  ​

% of Loans

​

​

​

  ​ ​

% of Loans

​

​

​

  ​ ​ ​

% of Loans

​

​

​

​

​

​

in Each

​

​

​

​

in Each

​

​

​

​

in Each

​

​

​

​

​

​

Category to

​

​

​

​

Category to

​

​

​

​

Category to

​

(Dollars in thousands)

​

 Amount 

​

Total Loans

​

 Amount 

​

Total Loans

​

 Amount

​

Total Loans

​

Commercial

​

$

11,183

16.0

​

$

7,813

20.1

​

$

3,998

20.8

​

Leases

​

​

2,370

​

10.4

​

​

2,136

​

12.4

​

​

2,952

​

9.8

​

Commercial real estate – investor

​

21,672

23.1

​

14,528

27.1

​

17,105

25.6

​

Commercial real estate – owner occupied

​

4,583

13.5

​

10,036

17.2

​

12,280

19.7

​

Construction

​

1,527

3.3

​

3,581

5.1

​

1,038

4.1

​

Real estate – investor

​

759

1.3

​

553

1.2

​

669

1.3

​

Real estate – owner occupied

​

​

1,879

​

4.4

​

​

1,509

​

5.2

​

​

1,821

​

5.6

​

Multifamily

​

​

1,493

​

6.5

​

​

1,876

​

8.8

​

​

2,728

​

9.9

​

HELOC

​

​

3,628

​

4.5

​

​

1,578

​

2.6

​

​

1,656

​

2.6

​

Powersport

​

​

17,449

​

13.3

​

​

-

​

-

​

​

-

​

-

​

Other1

​

5,758

3.7

​

9

0.3

​

17

0.6

​

Total

​

$

72,301

100.0

​

$

43,619

100.0

​

$

44,264

100.0

​

​

1 The “Other” class includes consumer loans, such as collector cars, manufactured homes, and solar loans, as well as overdrafts for each year presented.

​

Allocations of the allowance may be made for specific loans, but the entire allowance is available for losses in the loan portfolio.  In addition, the OCC, as part of their examination process, periodically reviews the ACL.  Regulators can require management to record adjustments to the allowance level based upon their assessment of the information available to them at the time of examination.  The OCC, in conjunction with the other federal banking agencies, has adopted an interagency policy statement on the ACL.  The policy statement provides guidance for financial institutions on both the responsibilities of management for the assessment and establishment of adequate allowances and guidance for banking agency examiners to use in determining the adequacy of general valuation guidelines.  Generally, the policy statement recommends that (1) institutions have effective systems and controls to identify, monitor and address asset quality problems; (2) management has analyzed all significant factors that affect the collectability of the portfolio in a reasonable manner; and (3) management has established acceptable allowance evaluation processes that meet the objectives set forth in the policy statement.  Management believes it has established an adequate estimated allowance for expected credit losses over the estimated life of our loan portfolio.  Management reviews its process quarterly using an extensive and detailed loan review process, makes changes as needed, and reports those results at meetings of our Board of Directors and Audit Committee.  

60

​

Table of Contents

​

Although management believes the ACL is sufficient to cover expected losses over the estimated life of our loan portfolio, there can be no assurance that the allowance will prove sufficient to cover actual loan and lease losses or that regulators, in reviewing the loan portfolio, would not request us to materially adjust our ACL at the time of their examination. Continued loan growth in future periods, a decline in our current level of recoveries, or an increase in charge-offs could result in an increase in provision expense. Additionally, provision expense may be more volatile due to changes in CECL model assumptions of credit quality, macroeconomic factors and conditions, and loan composition, which drive the allowance for credit losses balance.

​

During 2025, the provision of credit losses on unfunded commitments totaled $185,000, and the allowance for unfunded commitments totaled $2.1 million as of December 31, 2025.  During 2024, the release of credit losses on unfunded commitments totaled $834,000, and allowance for unfunded commitments totaled $1.9 million as of December 31, 2024. Management reviewed the securities portfolio for credit loss exposure and determined that no allowance for credit losses on securities was required for 2025 or 2024.  See Note 4 to the Consolidated Financial Statements for more detail on the ACL for securities analysis performed.

​

Other Real Estate Owned

​

Other real estate owned (“OREO”) decreased to $1.4 million as of December 31, 2025, compared to $21.6 million as of December 31, 2024, reflecting a $20.2 million decrease. During 2025, we transferred one OREO property from loans with a fair value of $5.0 million and we sold five properties which had a total net book value of $25.2 million. Net gains on the sale of OREO properties during 2025 totaled $201,000, compared to net gains on sale of OREO properties of $390,000 in 2024 and $256,000 in 2023.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

OREO Properties by Type as of December 31,

​

Percent Change From

(Dollars in thousands)

​

2025

​

​

2024

​

​

2023

​

2025-2024

​

2024-2023

Single family residence

$

-

​

$

-

​

$

-

​

-

​

-

Lots (single family and commercial)

​

-

​

​

-

​

​

-

​

-

​

-

Vacant land

​

-

​

​

197

​

​

197

​

(100.0)

​

-

Multi-family

​

-

​

​

-

​

​

-

​

-

​

-

Commercial property

​

1,427

​

​

21,420

​

​

4,926

​

(93.3)

​

334.8

Total OREO properties

$

1,427

​

$

21,617

​

$

5,123

​

(93.4)

​

322.0

​

Other real estate assets transferred from loans are recorded at the fair value of the property when transferred, less estimated costs to sell, establishing a new cost basis. The OREO valuation reserve for the year ended 2025 was $632,000, which was 30.7% of gross OREO at year-end 2025. This compares to $1.9 million, or 7.9%, of gross OREO, net of participations and purchase accounting adjustments, at year-end 2024.

​

​

Deposits

​

Our total deposits increased by $827.3 million, or 17.3%, to a total of $5.60 billion at year-end 2025, compared to year-end 2024, with the bulk of the increase driven by the Bancorp Financial acquisition. Significant increases included: non-interest bearing demand deposits of $34.2 million, savings accounts of $189.7 million, NOW accounts of $72.1 million, money market accounts of $168.6 million, and time deposits of $362.7 million. Total deposits increased by $198.0 million, or 4.3%, to a total of $4.77 billion at year-end 2024 compared to year-end 2023; this increase included the branch acquisition of FRME in 2024. We had brokered certificates of deposit of $59.3 million as of December 31, 2025, compared to none as of December 31, 2024. Brokered deposits were assumed in the Bancorp Financial acquisition and are expected to run off by the first quarter of 2028.

​

Average Balances and Interest Rates

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

2025

​

2024

​

2023

​

​

  ​

  ​ ​ ​ ​ ​Average      

  ​ ​ ​

  ​Rate  

  ​ ​ ​

  ​ ​ ​ ​ ​Average      

  ​ ​ ​

  ​Rate  

  ​ ​ ​

  ​ ​ ​ ​ ​Average      

  ​ ​ ​

  ​Rate  

  ​ ​ ​

(Dollars in thousands)

​

Balance

​

%

​

Balance

​

%

​

Balance

​

%

​

Noninterest bearing demand

​

$

1,749,363

-

​

$

1,747,890

-

​

$

1,906,633

-

​

Interest bearing:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

NOW and money market

​

1,545,903

1.28

​

1,262,192

1.16

​

1,337,329

0.57

​

Savings

​

1,045,344

0.73

​

921,801

0.34

​

1,052,750

0.11

​

Time

​

989,403

2.92

​

628,446

3.21

​

458,918

1.45

​

Total deposits

​

$

5,330,013

​

​

$

4,560,329

​

​

​

$

4,755,630

​

​

​

​

​

61

​

Table of Contents

​

The following table sets forth the amounts and maturities of time deposits of $250,000 or more at December 31 of the year indicated:

​

Maturities of Time Deposits of $250,000 or More

​

​

​

​

​

​

​

​

(Dollars in thousands)

  ​ ​ ​

2025

  ​ ​ ​

2024

3 months or less

​

$

97,639

​

$

63,441

Over 3 months through 6 months

​

70,923

​

46,899

Over 6 months through 12 months

​

40,216

​

15,081

Over 12 months

​

5,350

​

3,393

​

​

$

214,128

​

$

128,814

​

The following table presents estimated insured and uninsured deposits at December 31, 2025, and December 31, 2024 by deposit type, as well as the weighted average rates for each year to date ending period:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(Dollars in thousands)

December 31, 2025

​

​

December 31, 2024

​

Total Deposits

​

Insured Deposits

​

Uninsured Deposits

​

Average Rate Paid

​

Total Deposits

​

Insured Deposits

​

Uninsured Deposits

​

Average Rate Paid

Noninterest bearing demand   

$

1,739,117

​

$

1,141,542

​

$

597,575

​

-

%

​

$

1,704,920

​

$

1,128,877

​

$

576,043

​

-

%

Savings

​

1,121,888

​

​

1,025,941

​

​

95,947

​

0.73

​

​

​

932,201

​

​

873,668

​

​

58,533

​

0.34

​

NOW accounts

​

693,573

​

​

495,397

​

​

198,176

​

0.45

​

​

​

621,434

​

​

468,781

​

​

152,653

​

0.50

​

Money market accounts

​

930,079

​

​

548,289

​

​

381,790

​

1.90

​

​

​

761,499

​

​

496,293

​

​

265,206

​

1.70

​

Time deposits

​

1,111,412

​

​

937,045

​

​

174,367

​

2.92

​

​

​

748,677

​

​

638,140

​

​

110,537

​

3.21

​

Total

$

5,596,069

​

$

4,148,214

​

$

1,447,855

​

1.06

%

​

$

4,768,731

​

$

3,605,759

​

$

1,162,972

​

0.83

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Collateralized public funds

$

219,939

​

$

15,832

​

$

204,107

​

​

​

​

$

217,358

​

$

16,557

​

$

200,801

​

​

​

​

As of December 31, 2025, 14.1% of our uninsured deposits were secured by collateralized public funds.

​

Borrowings

​

In addition to deposits, we used other liquidity sources for our funding needs in 2025, such as repurchase agreements and other short-term borrowings with the FHLBC. Our borrowings at the FHLBC require the Bank to be a member and invest in the stock of the FHLBC, and total borrowings are generally limited to the lower of 35% of total assets or 60% of the book value of certain mortgage-backed loans. We primarily use these borrowings as a source of short-term funding. The outstanding balance of our short-term FHLBC borrowing was $215.0 million and $20.0 million as of December 31, 2025, and December 31, 2024, respectively. In addition, the Company had assumed $14.8 million in long-term borrowings from the FHLB with the acquisition of Bancorp Financial in 2025.

​

In addition, we have an unused line of credit of $30.0 million available with a third-party bank, which can be used for the Company’s operating needs at the holding company level.  This line of credit renews every February and must be repaid within 360 days, if drawn.  

​

There were no other categories of short-term borrowings that had an average balance greater than 30% of our stockholders’ equity as of December 31, 2025 or 2024.

​

The average junior subordinated debentures included one issuance of trust preferred securities, Old Second Capital Trust II (“Trust II”), which totals $25.0 million as of December 31, 2025 and 2024.  See Note 10 to the Consolidated Financial Statements Junior Subordinated Debentures for further discussion of Trust II.  The junior subordinated debentures outstanding at December 31, 2025, consist of $25.8 million of the Trust II issuance, including both the preferred and common stock components related to this trust preferred issuance.  

​

In the second quarter of 2021, we entered into Subordinated Note Purchase Agreements with certain qualified institutional buyers pursuant to which we sold and issued $60.0 million in aggregate principal amount of our 3.50% Fixed-to-Floating Rate Subordinated Notes due April 15, 2031 (the “Notes”).  We sold the Notes in a private offering, and the proceeds of this issuance are intended to be used for general corporate purposes, which may include, without limitation, common stock repurchases and strategic acquisitions.  The Notes bear interest at a fixed annual rate of 3.50% through April 14, 2026, payable semi-annually in arrears.  From April 15, 2026, forward, the interest rate on the Notes will generally reset quarterly to a rate equal to Three-Month Term SOFR (as defined by the Note) plus 273 basis points, payable quarterly in arrears.  The Notes have a stated maturity of April 15, 2031, and are redeemable, in whole or in part, on April 15, 2026, or any interest payment date thereafter, and at any time upon the occurrence of certain events.  As of December 31, 2025, we had $59.6 million of subordinated debentures outstanding, net of deferred issuance costs.

​

​

62

​

Table of Contents

Capital

​

As of December 31, 2025, we had total stockholders’ equity of $896.8 million, an increase of $225.7 million, or 33.6%, from $671.0 million as of December 31, 2024.  This increase was largely attributable to the Bancorp Financial acquisition, which resulted in consideration paid to Bancorp Financial shareholders of $140.5 million, or 7.9 million shares of our common stock. In addition, we had net income of $80.3 million in 2025.  The increase in total stockholders’ equity from 2024 to 2025 was also attributable to a $19.0 million increase in the fair value adjustments on securities and swaps available for sale, within accumulated other comprehensive loss, due to changes in market interest rates.  At December 31, 2025, accumulated other comprehensive loss, net of deferred taxes, was $28.7 million, compared to $47.7 million as of year-end 2024.  Equity in 2025 was reduced for the payment of dividends to common stockholders, which totaled $12.2 million for the year.  Our total stockholders’ equity also increased in 2024, ending at $671.0 million, compared to $577.3 million at year-end 2023, primarily attributable to net income of $85.3 million.  The change in total stockholders’ equity from 2023 to 2024 was also increased by a $15.0 million increase in the fair value adjustments on securities and swaps available for sale, within accumulated other comprehensive loss, net of tax.  At December 31, 2024, accumulated other comprehensive loss, net of deferred taxes, was $47.7 million, compared to $62.8 million as of year-end 2023.

​

We issued $25.8 million of cumulative trust preferred securities through a private placement completed by a second unconsolidated subsidiary, Trust II, in April 2007.  These trust preferred securities mature in 30 years, but subject to prior regulatory approval, can now be called in whole or in part.  The quarterly cash distributions on the securities were fixed at 6.77% through June 15, 2017, and converted to a floating rate at 150 basis points over the three-month LIBOR rate thereafter, which were subject to a SOFR fallback in 2023 with the cessation of LIBOR.  We entered into a forward starting interest rate swap on August 18, 2015, with an effective date of June 15, 2017.  This transaction had a notional amount totaling $25.8 million as of December 31, 2015, and was designated as a cash flow hedge of certain junior subordinated debentures and continues to be fully effective during the period presented.  As such, no amount of ineffectiveness has been included in net income.  Therefore, the aggregate fair value of the swap is recorded in other liabilities with changes in fair value recorded in other comprehensive income, net of tax.  The amount included in other comprehensive income would be reclassified to current earnings should all or a portion of the hedge no longer be considered effective.  We expect the hedge to remain fully effective during the remaining term of the swap.  We pay the counterparty a fixed rate and receive a floating rate based on three-month SOFR.  Management concluded that it would be advantageous to enter into this transaction given that our trust preferred securities issued in 2007 changed from a fixed to floating rate on June 15, 2017.  The cash flow hedge has a maturity date of June 15, 2037.

​

We are currently paying interest on the Trust II preferred securities as that interest comes due.  As of December 31, 2025, and December 31, 2024, total trust preferred proceeds of $25.0 million qualified as Tier 1 regulatory capital at the bank holding company level.

​

In the fourth quarter of 2024, our Board of Directors authorized the repurchase of up to 2,234,896 shares (or approximately 5%) of our outstanding common stock, which authorization expired on December 31, 2025.  In January 2026, our Board of Directors authorized the repurchase of up to 1,908,042 shares of our common stock, based  upon receipt of the non-objection letter from the FRB, which authorization expires on December 31, 2026. We may engage in repurchases under the Repurchase Program from time to time through open market purchases, trading plans established in accordance with SEC rules, privately negotiated transactions, or by other means.  The actual means and timing of any repurchases, quantity of purchased shares and prices will be, subject to certain limitations, at the discretion of management and will depend on a number of factors, including, without limitation, market prices of our common stock, general market and economic conditions, and applicable legal and regulatory requirements.  Repurchases under the Repurchase Program may be initiated, discontinued, suspended or restarted at any time; provided that repurchases under the Repurchase Program after December 31, 2026, would require Federal Reserve non-objection or approval. We are not obligated to repurchase any shares under the Repurchase Program, and we did not engage in any repurchases under the Repurchase Program in 2024. During 2025, we repurchased 326,854 shares of our common stock at $18.00 per share, pursuant to our stock repurchase program.

​

We withheld 84,841 shares for $1.5 million to satisfy RSU vesting tax withholding obligations in 2025, and repurchased 326,854 shares for $5.9 million under our stock repurchase program, which increased treasury stock.  This increase was offset by issuance of 99,575 shares for RSU vestings, which totaled $1.8 million. The net impact was an increase to treasury stock of 312,120 shares, totaling $5.6 million as of December 31, 2025.  The net increase in treasury stock decreased stockholders’ equity, and also increased earnings per share by decreasing the number of shares outstanding.

​

We withheld 72,836 shares for $1.0 million to satisfy RSU vesting tax withholding obligations in 2024, which increased treasury stock.  This increase was offset by issuance of 45,917 shares for RSU vestings, which totaled $650,000. The net impact was an increase to treasury stock of 26,919 shares, totaling $398,000 as of December 31, 2024.  The net increase in treasury stock decreased stockholders’ equity, and also increased earnings per share by decreasing the number of shares outstanding.

​

We withheld 34,858 shares for $605,000 to satisfy RSU vesting tax withholding obligations in 2023, which increased treasury stock.  This increase was offset by issuance of 150,464 shares for RSU vestings, which totaled $3.7 million. The net impact was a decrease to treasury stock of 115,606 shares, totaling $3.1 million as of December 31, 2023.  The net decrease in treasury stock increased stockholders’ equity, and also decreased earnings per share by increasing the number of shares outstanding.

​

​

63

​

Table of Contents

The Basel III rules impose minimum capital requirements for bank holding companies and banks.  See Item 1, Business “Supervision  and Regulation - Basel III Capital Standards.”  The Basel III rules apply to all national and state banks and savings associations regardless of size and bank holding companies and savings and loan holding companies other than “small bank holding companies” which are generally holding companies with consolidated assets of less than $3 billion.  In order to avoid restrictions on capital distributions or discretionary bonus payments to executives, a covered banking organization must maintain a “capital conservation buffer” on top of our minimum risk-based capital requirements. This buffer must consist solely of CET1, but the buffer applies to all three measurements (CET1, Tier 1 capital and total capital). The capital conservation buffer consists of an additional amount of common equity equal to 2.5% of risk-weighted assets.  Additionally, the Bank’s board of directors has established internal capital guidelines, which are more conservative than applicable regulatory minimums, under which the Bank generally seeks to maintain a Tier 1 leverage capital ratio of at least eight percent (8%) and a total risk-based capital ratio of at least twelve percent (12%). These internal guidelines are subject to change from time to time based on the Bank’s risk profile, strategic objectives and regulatory considerations.

​

The following table shows the regulatory capital ratios and the current minimum and well capitalized regulatory requirements at the dates indicated:

​

Risk Based Capital Ratios

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Minimum Capital

​

Well Capitalized

​

​

​

​

​

​

​

​

​

​

​

Adequacy with

​

Under Prompt

​

​

​

​

​

​

​

​

​

​

​

Capital Conservation

​

​

Corrective Action

​

December 31, 

​

December 31, 

​

December 31, 

​

​

Buffer, if applicable1

​

Provisions2

​

2025

​

2024

​

2023

The Company

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Common equity tier 1 capital ratio

​

7.00

%

​

N/A

​

​

12.99

%

​

12.82

%

​

11.37

%

Total risk-based capital ratio

​

10.50

​

​

N/A

​

​

15.46

​

​

15.54

​

​

14.06

​

Tier 1 risk-based capital ratio

​

8.50

​

​

N/A

​

​

13.41

​

​

13.34

​

​

11.89

​

Tier 1 leverage ratio

​

4.00

​

​

N/A

​

​

11.70

​

​

11.30

​

​

10.06

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

The Bank

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Common equity tier 1 capital ratio

​

7.00

%

​

6.50

%

​

13.17

%

​

12.89

%

​

12.32

%

Total risk-based capital ratio

​

10.50

​

​

10.00

​

​

14.22

​

​

13.82

​

​

13.24

​

Tier 1 risk-based capital ratio

​

8.50

​

​

8.00

​

​

13.17

​

​

12.89

​

​

12.32

​

Tier 1 leverage ratio

​

4.00

​

​

5.00

​

​

11.49

​

​

10.90

​

​

10.41

​

​

1  Amounts are shown inclusive of a capital conservation buffer of 2.50%.

2  Prompt corrective action provisions are only applicable at the Bank level.

​

The Company, on a consolidated basis, exceeded the applicable minimum regulatory capital requirements (including the capital conservation buffer, as applicable) at December 31, 2025, 2024 and 2023. The Bank exceeded the ‘well capitalized’ thresholds under the prompt corrective action framework at December 31, 2025, 2024 and 2023.

​

In addition to the above regulatory ratios, our common equity to total assets ratio increased from 11.88% at December 31, 2024, to 12.99% at December 31, 2025, while our tangible common equity to tangible assets ratio (non-GAAP) increased from 10.11% at December 31, 2024, to 11.08% at December 31, 2025. The reduction in accumulated other comprehensive loss on available-for-sale securities in 2025 contributed to the growth of these ratios, as the numerator was increased.  Management considers this non-GAAP measure a valuable performance measurement for capital analysis.  

​

​

64

​

Table of Contents

​

The following table provides a reconciliation of the GAAP tangible common equity to tangible assets ratio to the non-GAAP ratio for the periods indicated:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2025

​

​

December 31, 2024

​

Tangible common equity

GAAP

​

​

Non-GAAP

​

​

GAAP

​

​

Non-GAAP

​

(Dollars in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total Equity

$

896,768

​

​

$

896,768

​

​

$

671,034

​

​

$

671,034

​

Less: Goodwill and intangible assets

​

152,888

​

​

​

152,888

​

​

​

115,291

​

​

​

115,291

​

Add: Limitation of exclusion of core deposit intangible (80%)

​

N/A

​

​

​

4,738

​

​

​

N/A

​

​

​

4,406

​

Adjusted goodwill and intangible assets

​

152,888

​

​

​

148,150

​

​

​

115,291

​

​

​

110,885

​

Tangible common equity

$

743,880

​

​

$

748,618

​

​

$

555,743

​

​

$

560,149

​

Tangible assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total assets

$

6,902,675

​

​

$

6,902,675

​

​

$

5,649,377

​

​

$

5,649,377

​

Less: Adjusted goodwill and intangible assets

​

152,888

​

​

​

148,150

​

​

​

115,291

​

​

​

110,885

​

Tangible assets

$

6,749,787

​

​

$

6,754,525

​

​

$

5,534,086

​

​

$

5,538,492

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Common equity to total assets

​

12.99

%

​

​

12.99

%

​

​

11.88

%

​

​

11.88

%

Tangible common equity to tangible assets

​

11.02

%

​

​

11.08

%

​

​

10.04

%

​

​

10.11

%

​

The non-GAAP intangible asset exclusion reflects the 80% core deposit limitation per Basel III guidelines within risk based capital calculations, and is useful for the Company when reviewing risk based capital ratios and equity performance metrics.

​

Liquidity

​

Liquidity is our ability to fund operations, to meet depositor withdrawals, to provide for customers’ credit needs, and to meet maturing obligations and existing commitments.  Our liquidity principally depends on cash flows from net operating activities, including pledging requirements, investment in assets, and both maturity and repayment of assets, changes in balances of deposits and borrowings, and our ability to borrow funds. In addition, the Company’s liquidity depends on the Bank’s ability to pay dividends, which is subject to certain regulatory requirements. See Item 1. Business “Supervision and Regulation­—Dividend Payments.”  We continually monitor our cash position and borrowing capacity as well as perform stress tests of contingency funding no less frequently than quarterly as part of our liquidity management process.  Stress testing of liquidity for contingency funding purposes includes tests that outline scenarios for specifically identified liquidity risk events, which are then aggregated into a Bank-wide assessment of liquidity risk stress levels.  The outcomes of these tests are reviewed by management monthly and our Board of Directors quarterly.  Cash and cash equivalents at the end of 2025 totaled $124.0 million, compared to $99.3 million at December 31, 2024, and $100.1 million as of December 31, 2023. Additional funding sources at the end of 2025 include unused borrowing capacity available from the Federal Home Loan Bank of Chicago, Federal Reserve Bank and correspondent banks of $850.7 million and unencumbered securities available for sale of $410.3 million. The Bank possesses a strong liquidity profile in normal and stressed scenarios due to diverse funding sources, an outsized securities portfolio, and a stable core deposit base.  Additional sources of funding include a $30.0 million undrawn line of credit held by the Company with a third-party financial institution.

​

Net cash inflows from operating activities were $122.3 million during 2025, compared with inflows of $131.5 million in 2024 and inflows of $116.4 million in 2023.  Proceeds from sales of loans held-for-sale, net of funds used to originate loans held-for-sale, was a source of outflows for 2025, but a source of inflows for 2024 and 2023.  Interest received, net of interest paid, combined with changes in other assets and liabilities were a source of inflows for 2025 and 2024, but a source of outflows for 2023.  Management of investing and financing activities, as well as market conditions, determines the level and the stability of net interest cash flows.  Management’s policy is to mitigate the impact of changes in market interest rates to the extent possible as part of our balance sheet management process.

​

Net cash inflows from investing activities were $159.8 million in 2025, compared to $322.7 million of inflows in 2024, and inflows of $161.6 million in 2023. The acquisition of Bancorp Financial resulted in net cash inflows of $10.5 million in 2025.The FRME five branch purchase transaction resulted in net cash inflows of $237.4 million in 2024. Loan growth resulted in $75.8 million of cash outflows for 2025, compared to $34.7 million of cash inflows in 2024, and $197.6 million of cash outflows in 2023. In 2025, security transactions resulted in net cash inflows of $213.9 million, and proceeds from the sales of OREO assets accounted for inflows of $24.7 million.  In 2024, security transactions resulted in net cash inflows of $44.0 million, and proceeds from the sales of OREO assets accounted for inflows of $3.2 million. In 2023, securities transactions accounted for net inflows of $378.4 million, and proceeds from the sales of OREO assets accounted for inflows of $2.0 million.  

​

​

65

​

Table of Contents

​

Net cash outflows from financing activities in 2025 were $257.4 million, compared to $455.1 million of outflows in 2024, and $293.0 million of outflows in 2023. Significant cash inflows from financing activities in 2025 included increases in other short-term borrowings of $179.5 million as we utilized FHLBC advances based on liquidity needs. Deposits were a net outflow of $404.3 million in 2025, $69.8 million in 2024, and $538.8 million in 2023. Significant cash outflows from financing activities in 2024 included reductions in other short-term borrowings of $385.0 million as we paid down overnight FHLBC advances with funds received from the five branches acquired from FRME. Significant cash inflows from financing activities in 2023 included an increase in other short-term borrowings of $315.0 million as we obtained overnight FHLBC advances throughout 2023. Significant cash outflows from financing activities in 2023 included the $9.0 million repayment of the term note in February 2023 and the $45.0 million repayment of senior notes in June 2023.

​

Commitments and Off-balance sheet arrangements

​

Derivative contracts, which include contracts under which we either receive cash from, or pay cash to, counterparties reflecting changes in interest rates are carried at fair value on our Consolidated Balance Sheets as disclosed in Note 18 of the Notes to the Consolidated Financial Statements provided in Part II, Item 8, “Financial Statements and Supplementary Data.”  Because the fair value of derivative contracts changes daily as market interest rates change, the derivative assets and liabilities recorded on the balance sheet at December 31, 2025, do not necessarily represent the amounts that may ultimately be paid.

​

Assets under management and assets under custody are held in fiduciary or custodial capacity for clients.  In accordance with GAAP, these assets are not included on our balance sheet.

​

Financial instruments with off-balance sheet risk address the financing needs of our clients.  These instruments include commitments to extend credit as well as performance, standby and commercial letters of credit.  Further discussion of these commitments is included in Note 14 – Commitments in the accompanying notes to the Consolidated Financial Statements.

​

The following table details the amounts and expected maturities of significant commitments to extend credit as of December 31, 2025:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

  ​ ​ ​

Within

  ​ ​ ​

One to

  ​ ​ ​

Three to

  ​ ​ ​

Over

  ​ ​ ​

  ​ ​ ​

​

(In thousands)

​

One Year

​

Three Years

​

Five Years

​

Five Years

​

Total

Commercial secured by real estate

​

$

7,002

​

$

18,994

​

$

7,376

​

$

251

​

$

33,623

​

Revolving open end residential

​

5,046

​

6,167

​

67

​

319,374

​

330,654

​

Other unused loan commitments, including commercial and industrial

​

298,985

​

95,257

​

4,124

​

4,494

​

402,860

​

Financial standby letters of credit (borrowers)

​

26,147

​

740

​

-

​

-

​

26,887

​

Performance standby letters of credit (borrowers)

​

9,168

​

10

​

-

​

-

​

9,178

​

Performance standby letters of credit (others)

​

-

​

-

​

-

​

-

​

-

​

Total

​

$

346,348

​

$

121,168

​

$

11,567

​

$

324,119

​

$

803,202

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

66

​

Table of Contents

​