INBK 10-K & 10-Q changes, risk factors and insider trading

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

Our commercial loans totaled $3.3$2.9 billion, or 80.2%78.4% of our total loan portfolio as of December 31, 2024.2025. These loans generally involve higher credit risks than residential real estate loans and are dependent upon our lenders and service providers maintaining close relationships with the borrowers. Payments on these loans are often dependent upon the successful operation and management of the underlying business or assets, and repayment of such loans may be influenced to a great extent by conditions in the market or the economy. Commercial loans typically involve larger loan balances than residential real estate loans and could lead to concentration risks within our commercial loan portfolio. In addition, our C&I, healthcare finance, franchisespecialty finance and small business loans have primarily been extended to small to medium-sized businesses that generally have fewer financial resources in terms of capital or borrowing capacity than larger entities. Our failure to manage this commercial loan growth and the related risks could have a material adverse effect on our business, financial condition and results of operations.

At December 31, 2024,2025, approximately 49.8% of our loans held for investment portfolio was comprised of commercial, residential mortgage and home equity loans with real estate as the primary component of collateral. Our real estate lending activities, and our exposure to fluctuations in real estate collateral values, are significant and may increase as our assets increase. The market value of real estate can fluctuate significantly in a relatively short period of time as a result of market conditions in the geographic area in which the real estate is located; in response to factors such as economic downturns and changes in the economic health of industries heavily concentrated in a particular area; and in response to changes in market interest rates, which influence capitalization rates used to value revenue-generating commercial real estate. If the value of real estate serving as collateral for our loans declines materially, a significant part of our loan portfolio could become under-collateralized and losses incurred upon borrower defaults would increase. Conditions in certain segments of the real estate industry, including homebuilding, lot development and mortgage lending, may have an effect on values of real estate pledged as collateral for our loans. The inability of purchasers of real estate, including residential real estate, to obtain financing may weaken the financial condition of our borrowers who are dependent on the sale or refinancing of property to repay their loans. Changes in the economic health of certain industries can have a significant impact on other sectors or industries which are directly or indirectly associated with those industries, and may impact the value of real estate in areas where such industries are concentrated.

The Company’s earnings depend substantially on the Company’s interest rate spread, which is the difference between (i) the rates the Bank earns on loans, securities, and other earning assets and (ii) the interest rates the Bank pays on deposits and other borrowings, and its costs of capital. These rates are highly sensitive to many factors beyond the Company’s control, including general economic conditions and the policies of various governmental and regulatory authorities. If market interest rates rise, especially at the pace they did in 2022 and 2023, the Company will face competitive pressure to increase the rates the Bank pays on deposits, which could negatively affect net interest margin. In addition, the interest rate on the Company’s other subordinated debt have, and are scheduled to change in 2025 and 2026, from fixed to floating rates. These changes could result in a decrease of net interest income. If market interest rates decline, the Bank could experience fixed-rate loan prepayments and higher investment portfolio cash flows, resulting in a lower reinvestment yield on earning assets. Earnings can also be impacted by the spread between short-term and long-term market interest rates.

As a part of our liquidity management, we use a number of funding sources in addition to core deposit growth and repayments and maturities of loans and investments. These sources include brokered deposits and FHLB advances. Further, in the past, we have raised additional capital in the public debt and equity markets to support balance sheet growth, refinance existing debt obligations, or explore strategic alternatives which may include additional asset, deposit or revenue generation channels. Our ability to source deposits and raise future capital, if needed, will depend upon our financial performance and conditions in the capital markets, as well as economic conditions generally. Further, if we need to raise capital in the future, we may have to do so when many other financial institutions are also seeking to raise capital and would then have to compete with those institutions for investors. Accordingly, such financing may not be available to us on acceptable terms or at all. If we cannot raise additional capital when needed, it could have a material adverse effect on our business, financial condition and results of operations.

The Bank conducts its deposit gathering activities and a significant portion of its lending activities through digital channels. The financial services industry is undergoing rapid technological change, and we face constant evolution of customer demand for technology-driven financial and banking products and services. Many of our competitors have substantially greater resources to invest in technological improvement and product development, marketing and implementation. Any failure to successfully keep pace with and fund technological innovation could have a material adverse effect on our business, financial condition and results of operations.

As a financial institution, we are inherently exposed to risk in the form of theft and other fraudulent activities by customers, employees, or other third parties targeting us or our customers or data. Such activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering, spoofing, and other dishonest acts. Although we devote substantial resources to maintaining effective policies and internal controls to identify and prevent such incidents, given the increasing sophistication of possible perpetrators, we may experience financial losses or reputational harm as a result of fraud. Further, as a result of the increased sophistication of fraud activity, we continue to invest in systems, resources, and controls to detect and prevent fraud. This will result in continued ongoing investments inand the future.costs.

Federal and state regulators periodically examine our businessbusiness, and we may be required to remediate adverse examination findings.

The BSA, the USA PATRIOT Act and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports as appropriate. The federal Financial Crimes Enforcement Network is authorized to impose significant civil money penalties for violations of those requirements and has engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S. Department of Justice, Drug Enforcement Administration and Internal Revenue Service. We are also subject to increased scrutiny of compliance with the rules enforced by the OFAC. If our policies, procedures and systems are deemed deficient, we would be subject to liability, including fines and regulatory actions, which may include restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan, including our acquisition plans. Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us. Any of these results could have a material adverse effect on our business, financial condition and results of operations.

During the twelve months ended December 31, 2024,2025, net loss was $35.2 million, or $4.03 diluted loss per share, compared to net income wasof $25.3 million, or $2.88 per diluted share, comparedfor tothe twelve months ended December 31, 2024 and net income of $8.4 million, or $0.95 per diluted share, for the twelve months ended December 31, 2023 and net income of $35.5 million, or $3.70 per diluted share, for the twelve months ended December 31, 2022.2023.

The $16.9$60.4 million increasedecrease in net income for the twelve months ended December 31, 20242025 compared to the twelve months ended December 31, 20232024 was due primarily to an increase of $21.2$55.2 million, or 81.2%,323.6%, in provision for credit losses, a decrease of $44.6 million, or 94.3%, in noninterest income,income and an increase of $12.5$4.9 million, or 16.7%,5.5%, in netnoninterest interest income,expense, partially offset by an increase of $10.7$26.4 million, or 13.4%,30.2%, in noninterestnet expense,interest anincome increaseand a decrease of $5.7$18.0 million,million in income tax expense and an increase of $0.4 million, or 2.5%, in provision for credit losses.expense.

During the twelve months ended December 31, 2023,2025, ROAA,return on average assets (“ROAA”), return on average equity (“ROAE”) and return on average tangible common equity (“ROATCE”) were 0.17%,(0.60%), 2.35%(9.15%) and 2.38%,(9.26%), respectively. Excluding the impactafter tax net loss on the sale of exiting consumer mortgage and the partialsingle charge-off,tenant lease financing loans, adjusted net incomeloss for the twelve months ended December 31, 20232025, was $16.2$5.7 millionmillion, and adjusted diluted earningsloss per share was $1.83.$0.66. Additionally, for the twelve months ended December 31, 2023,2025, adjusted ROAA, adjusted ROAE and adjusted ROATCE were 0.33%,(0.10%), 4.54%(1.49%) and 4.60%,(1.51%), respectively.

The growth in total interest income was due primarily to an increase in interest earned on loansloans, resulting from an increase of 6330 bps in the yield earned on loans, as well as an increase of $311.7$225.7 million, or 8.5%,5.6%, in the average balance of loans, including loans held-for-sale. Additionally, the average balance of securities increased $146.7$149.0 million, or 23.5%,19.3%, and the yield earned on the securities portfolio increased 6413 bps. The increase in total interest income was partially offset by a 95 bp decrease in the yield on other earning assets. The increase in the yield earned on loans and securities was duedriven toby new originations throughout the impactyear ofas the continued elevated interest rate environment on both existing and newly-originated interest-earning assets. The yield on funded portfolio originations was 8.29%7.31%, forwell above the twelveoverall monthsloan endedportfolio Decemberyield. 31,Additionally, 2024,the yield earned on the loan portfolio benefitted from the sale of the single tenant lease financing loans, which had interest rates below the overall loan portfolio yield. The increase in the yield earned on securities was primarily driven by new securities purchases during the year, partially offset by the maturity of an increaseinterest ofrate 5swap bpsdesigned comparedto enhance the yield on certain municipal securities. The decrease in the yield earned on other earning assets was due mainly to the twelveimpact monthsof endeddecreases Decemberin 31,the 2023.Fed Funds rates on cash balances held at the Federal Reserve.

Net interest margin (“NIM”) was 2.01% for the twelve months ended December 31, 2025 compared to 1.65% for the twelve months ended December 31, 20242024, comparedan toincrease 1.56%of for36 the twelve months ended December 31, 2023.bps. On a fully-taxable equivalent (“FTE”) basis, NIM was 2.09% for the twelve months ended December 31, 2025 compared to 1.74% for the twelve months ended December 31, 2024 compared to 1.67% for the twelve months ended December 31, 2023,2024, an increase of 735 bps. The increase in NIM and FTE NIM compared to the twelve months ended December 31, 20232024 reflects the decelerating pacecombination of increasehigher yields on loans and securities and continued improvement in the cost of interest-bearingfunds depositsrelated andto the Company’s focus on shifting the loan composition towards variable rate and higher-yielding products.deposits.

The following table reconciles reported income tax provision tax (benefit) to that computed at the statutory federal tax rate for the threeyears mostended recentDecember years.31, 2024 and 2023, in accordance with the guidance prior to the adoption of ASU 2023-09.

We recognized an income tax benefit of $15.7 million in 2025, compared to an income tax provision of $2.3 million and an effective tax rate of 8.2% in 2024,2024 comparedand to an income taxa benefit of $3.5 million in 2023. Our federal statutory tax rate was 21% in 20242024. and 2023. In 2024 and 2023, theThe variance from the federal statutory rate was due primarily to tax-exempt income. Interest income on certain loans or securities issued by governmental, municipal and not-for-profit entities, and earnings from bank-owned life insurance were the primary components of tax-exempt income. The income tax benefitsbenefit recognized during 20232025 also reflect the benefit of tax exempt income relative to stated pre-tax income, as well asreflects the impact on pre-tax income from mortgage exit costs and the partial charge-off of a commercialpre-tax andloss industrialof participation$38.2 loanmillion infrom 2023.the loss on the sale of the single tenant lease financing loans.

As of December 31, 2024,2025, total shareholders’ equity was $384.1$359.8 million, ana increasedecrease of $21.3$24.3 million, or 5.9%,6.3%, compared to December 31, 2023.2024. The increasedecrease in shareholders’ equity was due primarily to the net income earnedloss during 2024,2025, partially offset by ana increasedecrease in accumulated other comprehensive loss.loss as unrealized losses on securities declined during the year. Tangible common equity totaled $379.4$355.1 million as of December 31, 2024,2025, representing ana increasedecrease of $21.3$24.3 million, or 5.9%,6.4%, compared to December 31, 2023.2024. The ratio of total shareholders’ equity to total assets decreased to 6.46% as of December 31, 2025 from 6.69% as of December 31, 2024 from 7.02% as of December 31, 2023 and the ratio of tangible common equity to tangible assets decreased to 6.38% as of December 31, 2025 from 6.62% as of December 31, 2024 from 6.94% as of December 31, 2023.2024.

Book value per common share increaseddecreased 5.6%6.5% to $41.41 as of December 31, 2025 from $44.31 as of December 31, 2024 from $41.97 as of December 31, 2023.2024. Tangible book value per share increaseddecreased 5.6%6.6% to $40.87 as of December 31, 2025 from $43.77 as of December 31, 2024 from $41.43 as of December 31, 2023.2024. The increasedecrease in both book value per common share and tangible book value per common share was driven primarily by the increasesdecreases in total shareholders’ equity and tangible common equity. Refer to the “Reconciliation of Non-GAAP Financial Measures” section of Item 7 of Part II of this report, Management's Discussion and Analysis of Financial Condition and Results of Operations for additional information.

Total loans were $4.2$3.7 billion as of December 31, 2024,2025, ana increasedecrease of $330.4$423.9 million, or 8.6%,10.2%, compared to December 31, 2023.2024. Total commercial loan balances were $3.3$2.9 billion, as of December 31, 2024,2025, ana increasedecrease of $336.7$400.5 million, or 11.2%,12.0%, from December 31, 2023.2024. Total consumer loan balances were $801.4$783.3 million as of December 31, 2024,2025, ana increasedecrease of $4.5$18.1 million, or 0.6%,2.3%, compared to December 31, 2023.2024. Compared to December 31, 2023, in connection with2024, the Company’s focus on variable rate products, the increasedecrease in commercial loan balances was driven by growththe sale of the single tenant lease financing loans, planned run-off in the construction,franchise finance and healthcare finance portfolios and a decline in the fixed rate public finance portfolio. The decreases were partially offset by increases in investor commercial real estate, which was driven by completed construction projects that were moved to investor commercial real estate upon entering their stabilization period, as well as growth in the commercial and industrial and small business lending portfolios. The increase was partially offset by continued runoff in the healthcare finance portfolio and aslight decrease in the fixed-rate public finance portfolio. Additionally, commercial and industrial balances declined due primarily to early payoffs. The slight increase in consumer loan balances was due primarily to newexpected run-off in the residential mortgage portfolio, partially offset by origination activity in the other consumer loans portfolios, partially offset by a decrease in the residential mortgage portfolio.

Individually evaluated loans include nonperforming loans and may also include loans where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance, or other actions intended to maximize collection.

Total nonperforming loans increased $18.5$30.1 million, or 185.3%,106.0%, to $58.5 million as of December 31, 2025 compared to $28.4 million as of December 31, 20242024, compareddue primarily to $10.0an increase in nonperforming loans in the franchise finance and small business lending portfolios during the year. Total nonperforming assets increased $32.5 million, or 112.3%, to $61.4 million as of December 31, 2023,2025, due primarily to increases in nonperforming loans related to the small business lending, franchise finance and residential mortgage portfolios, as well as an increase in accruing loans past due 90 days or more. Total nonperforming assets increased $18.6 million, or 179.2%,compared to $28.9 million as of December 31, 2024, compared to $10.4 million as of December 31, 2023, due primarily to the increasesaforementioned increase in nonperforming loans mentioned above, as well asand an increase in loanOREO repossessionsrelated (“REPO”),to partiallysmall offsetbusiness bylending. As of December 31, 2025, the Company had three small business lending properties in OREO with a decreasecarrying invalue otherof real$2.6 estate owned (“OREO”).million. As of December 31, 2024, the Company had one residential mortgage property in OREO with a carrying value of $0.3 million. As of December 31, 2023, the Company had two residential mortgage properties in OREO with a carrying value of $0.4 million.

The determination of the ACL and the related provision for credit losses are components of our significant accounting policies as discussed within Note 1 to our consolidated financial statements. The adequacy of the allowance for credit lossesACL and the provision are based on the review and evaluation of the loan portfolio and reflect management’s assessment of the risks and potential losses within the portfolio. This evaluation uses a discounted cash flow analysis based on historical loss data, reasonable and supportable forecasts and prepayment rates, as well as qualitative factors such as economic and business conditions, portfolio growth, concentrations of credit in the portfolio, trends in risk grades, delinquencies within the portfolio and changes in our lending policies and practices.

The ACL was $55.7 million as of December 31, 2025, compared to $44.8 million as of December 31, 2024, compared to an ACL of $38.8 million as of December 31, 2023.2024. The increase in the ACL reflects growthupdated andassumptions higherto coveragethe ratiosCompany’s inCECL certainmodel, portfolios,including updates that significantly increased the ACL related to small business lending, as well as additional specific reserves related to franchise finance loans that were placed on nonaccrual during the year, partially offset by the removal of specific reserves for nonperforming small business lending and franchise finance loans,loans partiallythat offsetwere charged off. Furthermore, the ACL as a percentage of total loans was impacted by lower total loan balances following the impactsale of economicthe datasingle ontenant forecastedlease lossfinancing rates and qualitative factors for other portfolios.loans. The ACL as a percentage of total loans was 1.07%1.49% as of December 31, 2024,2025, compared to 1.01%1.07% at December 31, 2023.2024. The ACL as a percentage of nonperforming loans decreased to 95.1% as of December 31, 2025, compared to 157.5% as of December 31, 2024, compared to 389.2% as ofthe Decemberincrease 31,in 2023.nonperforming loans outweighed the increase in the ACL.

The provision for credit losses - loans was $71.9 million for the twelve months ended December 31, 2025 compared to $18.8 million for the twelve months ended December 31, 2024 compared to $15.5 million for the twelve months ended December 31, 2023.2024. The increase in the provision for credit losses - loans for the twelve months ended December 31, 20242025 was driven primarily by increases inthe net charge-offs and the increase in the ACL related to small business lending and the additional specific reserves related to franchise finance discussed above, partially offset by the decrease in the ACL resulting from the sale of the single tenant lease financing loans mentioned above and by the decrease in specific reserves related to small business lending and franchise finance portfolios,loans asthat wellwere ascharged growth in ACL discussed above, partially offset by lower net charge-offs in the commercial and industrial portfolio.off.

In managing our investment securities portfolio, management focuses on providing an adequate level of liquidity and managing long-term interest rate risk, while earning an adequate level of investment income without taking undue credit risk. Investment securities that are acquired and held principally for the purpose of selling them in the near term with the objective of generating economic profits on short-term differences in market characteristics are classified as “trading securities.” We did not classify any securities as trading securities as of December 31, 20242025 and 2023.2024. Securities that we intend to hold until maturity are classified as “held-to-maturity” securities, and all other investment securities are classified as “available-for-sale.” The carrying values of available-for-sale investment securities are adjusted for unrealized gains or losses as a valuation allowance and any gain or loss is reported on an after-tax basis as a component of other comprehensive income (loss). income.

We periodically evaluate each security in an unrealized loss position to determine if there is an impairment. As of December 31, 2024,2025, the unrealized losses in our investment securities portfolio were due primarily to interest rate changes. We have the ability and intent to hold all investment securities in an unrealized loss position resulting from interest rate changes to the earlier of the forecasted recovery or the maturity of the underlying investment security. As of December 31, 2025, and 2024, we did not have any investment securities of a single issuer that exceeded 10% of shareholders’ equity. The term “issuer” excludes the U.S. Government and its sponsored agencies and corporations.

The approximate fair value of investment securities available-for-sale increased $112.5$191.3 million, or 23.7%,32.6%, to $778.7 million as of December 31, 2025 compared to $587.4 million as of December 31, 2024 compared to $474.9 million as of December 31, 2023.2024. The increase was due primarily to increases of $63.0$119.8 million in agency mortgage-backed securities - residential, $25.0$77.9 million in private label mortgage-backed securities - residential, $24.4 million in agency mortgage-backed securities - commercial,residential and $15.7$18.7 million in asset-backed securities, partially offset by decreases of $12.4$19.1 million in U.S. Government-sponsored agencies securities and $4.8$4.9 million in municipalagency securities.mortgage-backed securities - commercial. The increaseCompany wasdeployed liquidity during 2025 primarily attributable tointo new purchasepurchases activity within theof available-for-sale portfolios,variable-rate mortgage-backed and asset-backed securities, which was partially offset by net paydownpay activity.down activity in other security types. As of December 31, 2024,2025, the Company had securities with a net carrying value of $249.8$250.6 million designated as held-to-maturity compared to $227.2$249.8 million as of December 31, 2023.2024. The slight increase was due primarily to purchases of CRA-eligible agency mortgage-backed securities - residential.residential made in the first quarter 2025, which was partially offset by net paydown activity of corporate and municipal securities.

Accrued income and other assets increased $11.9$26.1 million, or 23.3%,41.4%, to $89.1 million at December 31, 2025 compared to $63.0 million at December 31, 2024 compared to $51.1 million at December 31, 2023.2024. The increase was due primarily to increases of $12.9$14.5 million in deferred tax assets and $10.4 million in equity investments, $3.0 million related to a bond that was called on December 30, 2024 and $2.3 million in income tax receivable, partially offset by a decrease of $5.6 million in derivative assets.investments.

Uninsured deposit balances represented 25%33% of total deposits as ofat December 31, 20242025, andup 2023.from 25% at December 31, 2024. These balances include Indiana-based municipal deposits, which are insured by the Indiana Board for Depositories, as well as larger balance accounts under contractual agreements that only allow withdrawal under certain conditions. After subtracting these types of deposits, the adjusted uninsured deposit balance drops to 27% as of December 31, 2025, compared to 20% as of December 31, 2024, compared to 19% as of December 31, 2023.2024.

The following tables present contractual interest rates paid on time deposits and brokered deposits, their scheduled maturities, and the scheduled maturities for time deposits greater than $250,000.

Accrued expenses and other liabilities increaseddecreased $3.8$2.6 million, or 26.5%,14.4%, to $15.4 million at December 31, 2025, compared to $17.9 million at December 31, 2024, compared to $14.2 million at December 31, 2023.2024. The increasedecrease was due primarily to increasesdecreases of $2.3$3.0 million in accrued salary and benefits and $3.1$1.1 million in variousother expensesaccrued and liabilities,expenses, partially offset by a decreaseincreases of $1.6$1.1 million in unfunded commitments and $0.4 million in the reserve for unfunded commitments.loan commitments

Liquidity management is the process used by the Company to manage the continuing flow of funds necessary to meet its financial commitments on a timely basis and at a reasonable cost while also maintaining safe and sound operations. Liquidity, represented by cash and investment securities, is a product of the Company’s operating, investing and financing activities. The primary sources of funds are deposits, principal and interest payments on loans and investment securities, maturing loans and investment securities, access to wholesale funding sources and collateralized borrowings. While scheduled payments and maturities of loans and investment securities are relatively predictable sources of funds, deposit flows are greatly influenced by interest rates, general economic conditions and competition. Therefore, the Company supplementsmay supplement deposit growth and enhancesenhance interest rate risk management through borrowings and wholesale funding, which are generally advances from the Federal Home Loan Bank and brokered deposits.

The Company holds cash and investment securities that qualify as liquid assets to maintain adequate liquidity to ensure safe and sound operations and meet its financial commitments. At December 31, 2024,2025, on a consolidated basis, the Company had $1.1$1.2 billion in cash and cash equivalents and investment securities available-for-sale, and $54.7$108.6 million in loans held-for-sale that were generally available for our cash needs. TheImportantly, the Company also had access to an additional $1.1 billion in the form of off-balance sheet deposits sold into the IntraFi deposit network. In addition, the Company can also generate funds from wholesale funding sources and collateralized borrowings. At December 31, 2024,2025, the BankCompany had the ability to borrow an additional $1.7 billion from the FHLB,Federal theHome Loan Bank, Federal Reserve and correspondent bank Fed Funds lines of credit.

On December 19, 2022, the Company's Board of Directors approved a new stock repurchase program to replace the prior program. The new programthat authorized the repurchase of up to $25.0 million of our outstanding common stock from time to time on the open market or in privately negotiated transactions. The stock repurchase authorization expired as ofon December 31, 2024. Under thisthe program, the Company repurchased 10,500559,522 shares of common stockstock, at an average price of $26.95$19.06, perfor sharea duringtotal 2024, 502,525 sharesinvestment of common$10.7 stock at an average price of $18.40 per share during 2023, and 46,497 shares of common stock at an average price of $24.42 per share during 2022.million.

This Management's Discussion and Analysis contains financial information determined by methods other than in accordance with GAAP. Non-GAAP financial measures, specifically tangible common equity, tangible assets, tangible book value per common share, tangible common equity to tangible assets, average tangible common equity, return on average tangible common equity, total interest income - FTE, net interest income - FTE, net interest margin - FTE, adjusted total revenue, pre-provision net revenue, adjusted pre-provision net revenue, adjusted noninterest income, adjusted noninterest expense, adjusted (loss) income before income taxes, adjusted income tax provision (benefit), provision, adjusted net (loss) income, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average shareholders’ equity and adjusted return on average tangible common equity are used by the Company's management to measure the strength of its capital and analyze profitability, including its ability to generate earnings on tangible capital invested by its shareholders. The Company also believes that it is standard practice in the banking industry to present total interest income, net interest income and net interest margin on a fully-taxable equivalent basis, as those measures provide useful information for peer comparisons. Although the Company believes these non-GAAP financial measures provide a greater understanding of its business, they should not be considered a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP financial measures that may be presented by other companies. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the following tables for the last three completed fiscal years ended on December 31.

In the ordinary course of business, we may enter into financial transactions to extend credit, engage in interest rate swaps or other forms of commitments that may be considered off-balance sheet arrangements. Interest rate swaps were arranged to receive hedge accounting treatment and were classified as either fair value or cash flow hedges. Fair value hedges were purchased to convert certain fixed rate assets to floating rate. Cash flow hedges were used to convert certain variable rate liabilities into fixed rate liabilities. At December 31, 2025 and 2024, we had no interest rate swaps that were classified as either fair value or cash flow hedges. At December 31, 2023, we had interest rate swaps with a notional amount of $200.0 million. Refer to Note 18 to our consolidated financial statements for additional information about derivative financial instruments.

We believe that we differentiate ourselves from larger financial institutions by providing a full suite of services to emerging small businesses and entrepreneurs on a nationwide basis. We are an active lender in the Small Business Administration (“SBA”) 7(a) program, closing $72.5$437.7 million in SBA 7(a) loans during the threetwelve months ended MarchJune 31,2026.30,2026. We also offer a top-ranked small business checking account product to our country’s entrepreneurs.

As of MarchJune 31,30, 2026, the Company had consolidated assets of $5.7$5.6 billion, consolidated deposits of $5.0$4.8 billion and stockholders’shareholders’ equity of $361.0$363.5 million.

During the firstsecond quarter 2026, net income was $2.5$2.4 million, or $0.29$0.27 diluted earnings per share, compared to net income of $0.9$0.2 million, or $0.11$0.02 diluted earnings per share, during the firstsecond quarter 2025, representing an increase in net income of $1.6$2.2 million, or 166.1%,1,126.4%, and an increase in diluted earnings per share of $0.18,$0.25, or 163.6%.1,250.0%. During the six months ended June 30, 2026, net income was $4.9 million, or $0.55 diluted earnings per share, compared to the six months ended June 30, 2025 net income of $1.1 million, or $0.13 per diluted share, resulting in an increase in net income of $3.7 million, or 329.2%, and an increase in diluted earnings per share of $0.42, or 323.1%.

The $1.6$2.2 million increase in net income for the firstsecond quarter 2026 compared to the firstsecond quarter 2025 was due primarily to increases of $6.5$4.4 million, or 25.9%,15.9%, in net interest income and $1.1$3.1 million, or 10.5%,56.3%, in noninterest income, partially offset by increases of $4.4 million, or 36.6%, in the provision for credit losses and $1.5 million, or 6.2%, in noninterest expense, as well as a decrease of $0.2 million, or 1.4%, in the provision for credit losses, partially offset by an increase of $4.3 million, or 19.8%, in noninterest expense and a decrease of $1.3 million in income tax benefit.

During the firstsecond quarter 2026, return on average assets (“ROAA”), return on average shareholders’ equity (“ROAE”), and return on average tangible common equity (“ROATCE”) were 0.18%,0.17%, 2.72%2.56% and 2.75%,2.60%, respectively, compared to 0.07%,0.01%, 0.98%0.20% and 0.99%,0.20%, respectively, for the firstsecond quarter 2025. During the six months ended June 30, 2026, ROAA, ROAE and ROATCE were 0.17%, 2.64%, and 2.68%, respectively, compared to 0.04%, 0.58%, and 0.59%, respectively, for the six months ended June 30, 2025.

During the firstsecond quarter 2026, pre-provision net revenue (“PPNR”) was $18.1$15.0 million, an increase of 51.2%27.7% from PPNR of $12.0$11.7 million for the firstsecond quarter 2025. The $6.1$3.3 million increase was due to an increaseincreases of $6.5$4.4 million, or 25.9%,15.9%, in net interest income and an increase of $1.1$3.1 million, or 10.5%,56.3%, in noninterest income, partially offset by an increase of $1.5$4.3 million, or 6.2%,19.8%, in noninterest expense.

Net interest income for the firstsecond quarter 2026 was $31.6$32.4 million, an increase of $6.5$4.4 million, or 25.9%,15.9%, compared to $25.1$28.0 million for the firstsecond quarter 2025. The increase in net interest income was the result of a decrease of $7.5$8.7 million, or 14.5%,16.4%, in total interest expense to $44.2 million for the firstsecond quarter 2026 from $51.7$52.9 million for the firstsecond quarter 2025, which was partially offset by a $1.0$4.3 million, or 1.3%,5.3%, decrease in total interest income to $75.8$76.6 million for the firstsecond quarter 2026 from $76.8$80.9 million for the firstsecond quarter 2025.

The decrease in total interest income for the firstsecond quarter 2026 compared to firstsecond quarter 2025 was due primarily to a decrease in interest earned on loans, resulting from a decrease of $362.8$568.8 million, or 8.6%,12.9%, in the average balance of loans including loans held-for-sale, partially offset by an increase of 3727 bps in the yield earned on loans, including loans held-for-sale. Additionally,The decrease in the average balance of loans was driven primarily by the sale of $851.2 million in single tenant lease financing loans that occurred in the second half of 2025, partially offset by an increase in loan growth for other portfolio segments. The decrease in total interest earned on loans was partially offset by increases in interest income related to other earning assets and securities. The average balance of other earning assets increased $76.4$164.4 million, or 17.2%,41.4%, whilebut was partially offset by a decrease of 70 bps in the yield earned on other earning assets decreased 84 bps.assets. The decrease in the yield earned on other earning assets was due mainly to the impact of decreases in the Fed Funds rates on cash balances held at the Federal Reserve. TheAdditionally, decrease in total interest income was partially offset by increases in interest income related to securities. Thethe average balance of securities increased $121.0$113.7 million, or 13.4%,12.2%, but was partially offset by a decrease of 8 bps inwhile the yield earned on securities decreased 12 bps for the firstsecond quarter 2026 compared to the firstsecond quarter 2025. The yield on funded portfolio loan originations was 6.58%7.26% for the firstsecond quarter 2026, a decrease of 12029 bps compared to the firstsecond quarter 2025, but still higher than the overall yield on the loan portfolio.

The decrease in total interest expense for the firstsecond quarter 2026 compared to the firstsecond quarter 2025 was due primarily to decreases of $7.2$5.3 million, or 24.6%,20.6%, in interest expense associated with certificates and brokered deposits, $1.2$2.2 million, or 11.1%,36.5%, in interest expense related to other borrowed funds, $0.9 million, or 8.8%, in interest expense associated with interest-bearing demand deposits and $0.8 million or 6.8% in interest expense associated with money market accounts and $0.3 million, or 6.2%, in other borrowed funds, partially offset by an increase of $1.2 million, or 17.1%, in interest expense associated with interest-bearing demand deposits.accounts. The decrease in interest expense related to certificates and brokered deposits was driven by a decrease of 4538 bps in the cost of these deposits, as well as a decrease in the average balance of these deposits of $428.3$310.0 million, or 16.4%. The decrease in interest expense related to money market accounts was driven by a 60 bp decrease in the cost of these deposits, partially offset by an increase in the average balance of these deposits of $70.3 million, or 5.8%.13.2%. The decrease in interest expense related to other borrowed funds was driven by a decrease in the average balance of $49.2$219.2 million, or 12.3%,38.6%, partially offset by a 29 bpan increase of 15 bps in the cost of these funds. The increasedecrease in interest expense related to interest-bearing demand deposits was driven by a decrease of 56 bps in the cost of these deposits, partially offset by an increase in the average balance of $287.2$129.6 million, or 30%,10.6%. partiallyThe offsetdecrease in interest expense related to money market deposits was driven by 30 bpa decrease of 56 bps in the cost of these deposits.deposits, partially offset by an increase in the average balance of these deposits of $116.8 million, or 9.8%. The decreases in the cost of funds related to deposits was due primarily to declines in short term interest rates as well as lower pricing on certificates of deposits across all maturities.

Overall, the cost of total interest-bearing liabilities for the firstsecond quarter 2026 decreased 51 bps to 3.45% from 3.96% for the second quarter 2025. The cost of total interest-bearing liabilities for the six months ended June 30, 2026 decreased 50 bps to 3.52%3.49% from 4.02%3.99% for the firstsix quartermonths ended June 30, 2025.

Net interest margin (“NIM”) was 2.36%2.39% for the firstsecond quarter 2026 compared to 1.82%1.96% for the firstsecond quarter 2025, an increase of 5443 bps. On a fully-taxable equivalent (“FTE”) basis, NIM was 2.45%2.47% for the firstsecond quarter 2026 compared to 1.91%2.04% for the firstsecond quarter 2025, an increase of 5443 bps. TheNIM was 2.38% for the six months ended June 30, 2026 compared to 1.89% for the six months ended June 30, 2025, an increase inof the49 first quarter 2026 NIM andbps. FTE NIM was 2.46% for the six months ended June 30, 2026 compared to the1.97% first quarter 2025 reflectsfor the combinationsix months ended June 30, 2025, an increase of higher49 yields on loans and continued improvement in the cost of funds related to deposits.bps.

During the firstsecond quarter 2026, noninterest income was $11.5$8.7 million, representing an increase of $1.1$3.1 million, or 10.5%,56.3%, compared to $10.4$5.6 million of noninterest income for the firstsecond quarter 2025. The increase in noninterest income was driven primarily by increases in netgain loanon servicing,sale otherof noninterest income andloans, service charges and fees,fees and net loan servicing, partially offset by a decrease in other noninterest income. The increase of $3.0 million, or 180.3%, in gain on sale of loans. The increase of $1.0 million, or 123.9%, in net loan servicingloans was due primarily to growthhigher volume of loan sales in the balancesecond quarter 2026 compared to the second quarter 2025 when the Company implemented a process change to hold SBA loans for a longer period of time before selling them in the Company’ssecondary SBA 7(a) and single tenant lease financing servicing portfolios.market. The increase of $0.8 million, or 110.5%, in other noninterest income was due primarily to an increase in fintech partnership revenue. The increase of $0.6 million, or 218.5%,300.0%, in service charges and fees reflects higher fees earned on fintech deposits moved off-balance sheet into deposit networks, which increased substantially from the prior year.networks. The decrease in gain on saleincrease of loans of $1.3$0.4 million, or 14.7%,54.2% in net loan servicing was due primarily to a lower volume of SBA loans soldgrowth in the firstbalance quarter 2026 compared toof the firstCompany’s quartersingle 2025,tenant lease financing servicing portfolio, partially offset by athe 27fair bpvalue adjustment to the loan servicing asset. The decrease of $1.2 million, or 42.1%, in other noninterest income was due primarily to lower distributions from fund investments, partially offset by an increase in netfintech premiums.partnership revenue.

Noninterest expense for the firstsecond quarter 2026 was $25.0$26.1 million, representing an increase of $1.5$4.3 million, or 6.2%,19.8%, compared to $23.6$21.8 million for the firstsecond quarter 2025. The increase in noninterest expense was due primarily to increases in salaries and employee benefits, loan expenses andexpenses, premises and equipment.equipment, and consulting and professional services. The increase of $2.7 million, or 24.9%, in salaries and employee benefits was due primarily to an increase in incentive compensation, as well as an increase in staffing related to small business lending and risk management. The increase of $0.6 million, or 42.3%,38.8%, in loan expenses was due primarily to collection expense, as well as third party servicing associated with SBAsmall business lending and fintech lending. The increase of $0.6$0.4 million, or 18.0%,13.3%, in premises and equipment was due primarily to continued investment in technology to enhance the user experience in consumer and small business banking. The increase of $0.4 million, or 46.6%, in consulting and professional services was due primarily to an increase in consulting and audit fees.

As of MarchJune 31,30, 2026, total shareholders’ equity was $361.0$363.5 million, an increase of $1.2$3.8 million, or 0.3%,1.1%, compared to December 31, 2025. The increase in shareholders’ equity was due primarily to current period net income and wasincome, partially offset by an increase in accumulated other comprehensive loss as unrealized losses on debt securities increased modestly during the quarter due to changes in market interest rates. Tangible common equity totaled $356.3$358.9 million as of MarchJune 31,30, 2026, representing an increase of $1.2$3.8 million, or 0.3%,1.1%, compared to December 31, 2025. The ratio of total shareholders’ equity to total assets decreasedincreased to 6.32%6.54% as of MarchJune 31,30, 2026 from 6.46% as of December 31, 2025, and the ratio of tangible common equity to tangible assets decreasedincreased to 6.24%6.46% as of MarchJune 31,30, 2026 from 6.38% as of December 31, 2025.

Book value per common share wasincreased 0.5% to $41.63 as of June 30, 2026 from $41.41 foras both March 31, 2026 andof December 31, 2025 and tangible book value per common share wasincreased 0.5% to $41.09 as of June 30, 2026 from $40.87 foras both March 31, 2026 andof December 31, 2025. The slight increase in total shareholders’ equity and tangible common equity was partially offset by a highersmall increase in the number of shares outstanding. Refer to the “Reconciliation of Non-GAAP Financial Measures” section of Part I, Item 2 of this report, Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information.

1 Balances include $59.5$59.8 million and $52.2 million that are guaranteed by the U.S. government as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

2 Includes carrying value adjustments of $18.1$17.3 million and $19.1 million related to terminated interest rate swaps associated with public finance loans as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

Total loans were $3.8 billion as of MarchJune 31,30, 2026, an increase of $29.1$64.3 million, or 0.8%,1.7%, compared to December 31, 2025. Total commercial loan balances were $3.0 billion as of MarchJune 31,30, 2026, an increase of $30.5$67.8 million, or 1.0%,2.3%, from December 31, 2025. Total consumer loan balances were $783.6$782.1 million as of MarchJune 31,30, 2026, ana increasedecrease of $0.3$1.1 million, or less than 0.1%,0.2%, compared to December 31, 2025. Compared to December 31, 2025, the increase in commercial loan balances was driven by construction and single tenant lease financing loans, partially offset by early payoffs infinancing, investor commercial real estate and construction loans, partially offset by planned run-off in the franchise finance and healthcare finance portfolios. The Company made the strategic decision to allow the franchise finance and healthcare finance portfolios to run off and is not originating new loans in these segments. The Company expects these portfolios to continue to decline over time and is replacing this loan production with focused growth in other commercial lending areas such as single tenant lease financing, investor commercial real estate, construction, and small business lending segments. The slight increasedecrease in consumer loan balances was due primarily to early payoff and principal amortization in the residential mortgage portfolio, partially offset by new origination activity in the other consumer loans portfolio.

Nonperforming loans are comprised of nonaccrual loans and loans 90 days past due and accruing. Nonperforming assets include nonperforming loans, other real estate owned (“OREO”) and other nonperforming assets, which generally consist of repossessed assets. The following table provides a summary of the Company’s nonperforming assets for each of the periods presented.

1 Balances include $15.5$19.2 million and $13.6 million that are guaranteed by the U.S. government as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

Total nonperforming loans increased $3.1$1.5 million, or 5.2%,2.5%, to $61.6$60.1 million as of MarchJune 31,30, 2026 compared to $58.5 million as of December 31, 2025 due primarily to an increase in accruing loans past due 90 days or more and nonperformingnonaccrual loans in the small business lending portfolio, which generally consisted of SBA 7(a) guaranteed balances. These partially offset by decreases in nonperformingnonaccrual loans in the franchise finance and healthcare finance portfolios. Total nonperforming assets increased $2.3$3.2 million, or 3.8%,5.1%, to $63.7$64.6 million as of MarchJune 31,30, 2026, compared to $61.4 million as of December 31, 2025, due primarily to the accruing loans past due 90 days or more mentioned above. As of MarchJune 31,30, 2026, the Company had twothree small business lending properties and one single tenant lease financing property in OREO with a carrying valuesvalue of $1.9$4.1 million. As of December 31, 2025, the Company had three small business lending properties in OREO with a carrying value of $2.6 million.

The allowance for credit losses - loans (“ACL”) was $56.5$53.1 million as of MarchJune 31,30, 2026, compared to $55.7 million as of December 31, 2025. The ACL as a percentage of total loans was 1.50%1.39% at MarchJune 31,30, 2026, compared to 1.49% at December 31, 2025. The ACL as a percentage of nonperforming loans decreased to 91.7%88.4% as of MarchJune 31,30, 2026, compared to 95.1% as of December 31, 2025, asdue primarily to a decrease in the increaseACL inrelated to franchise finance loans with specific reserves that were charged off. Excluding nonaccrual guaranteed balances, the ACL as a percentage of nonperforming loans outweighedincreased theto increase129.8% inas theof ACL.June 30, 2026 compared to 124.0% as of December 31, 2025.

Net charge-offs of $15.8$16.9 million were recognized during the firstsecond quarter 2026, resulting in net charge-offs to average loans of 1.65%,1.77%, compared to net charge-offs of $9.7$14.3 million, or 0.92%1.31% of average loans, for the firstsecond quarter 2025. NetThe increase in net charge-offs infor the firstsecond quarter 2026 werecompared elevated asto the Companysecond continuedquarter to2025 takewas actiondriven toprimarily resolveby probleman loansincrease of $9.3 million in thefranchise finance net charge-offs, partially offset by a decrease of $6.5 million in small business lending andnet franchise finance portfolios.charge-offs.

The provision for credit losses - loans infor the firstsecond quarter 2026 wasdeclined $16.6slightly to $13.5 million, compared to $12.1$13.6 million for the firstsecond quarter 2025. The increasedecrease in the provision for credit losses - loans for the firstsecond quarter 2026 compared to the second quarter 2025 was driven primarily by thedecreases net charge-offs mentioned above and additionalin specific reserves relatedand toloan franchiseprovision, financepartially loans.offset by increases in net charge-offs.

The approximate fair value of available-for-sale investment securities decreasedincreased $6.7$8.0 million, or 0.9%,1.0%, to $772.0$786.7 million as of MarchJune 31,30, 2026, compared to $778.7 million as of December 31, 2025. The decreaseincrease was due primarily to decreases of $7.9 million in private label mortgage-backed securities - residential, $6.3 million in municipal securities, $4.6 million in U.S. Government-sponsored agencies and $3.3 million in asset-backed securities, partially offset by increases of $12.6$26.7 million in agency mortgage-backed securities - residential and $2.7$5.1 million in corporate securities, partially offset by decreases of $9.5 million in U.S. Government-sponsored agencies, $7.4 million in municipal securities, $5.7 million in private label mortgage-backed securities - residential and $1.8 million in agency mortgage-backed securities - commercial. The Company deployed available liquidity during the first quarterhalf of 2026 into new purchases of available-for-sale short-duration agency mortgage-backedsecurities, asset-backed securities - residential and agencyinvestment mortgage-backedgrade securitiescorporate - commercial,securities, which was partially offset by net pay down activity in other security types. As of MarchJune 31,30, 2026, the Company had securities with a net carrying value of $276.0$264.7 million designated as held-to-maturity, compared to $250.6 million as of December 31, 2025. The increase was due primarily to purchases of CRA-eligible agency mortgage-backed securities - residential made in the first quarterhalf of 2026.

Accrued income and other assets increased $1.5$3.8 million, or 1.7%,4.3%, to $90.5$92.9 million at MarchJune 31,30, 2026, compared to $89.1 million at December 31, 2025. The increase was due primarily to increases of $1.3$3.2 million in various receivables,receivables $0.5and $1.0 million in deferredequity tax assets and $0.4 million in investments in fund partnerships,investments, partially offset by a decrease of $0.6$0.5 million in prepaid assets.

Accrued expenses and other liabilities increaseddecreased $7.4$0.6 million, or 48.5%,4.1%, to $22.8$14.7 million at MarchJune 31,30, 2026, compared to $15.4 million at December 31, 2025. The increasedecrease was due primarily to ana increase related to securities purchased at the enddecrease of March$1.0 thatmillion didin notother settleliabilities, untilincluding Aprilunfunded loan commitment reserves, unfunded investment fund partnership commitments and accruedlease interest,liabilities, partially offset by decreasesan increase of $0.3$0.4 million in bothaccrued unfunded commitmentssalary and the reserve for unfunded loan commitments.benefits.

Total deposits increased $141.8 million, or 2.9%, to $5.0 billion as of March 31, 2026, compared to $4.8 billion asat ofJune 30, 2026 were virtually flat with December 31, 2025. TheHowever, increasethere was due primarily towere increases of $237.2$372.3 million, or 21.2%,33.2%, in interest-bearing demand deposits and $52.5$23.3 million, or 4.1%,million in moneyfintech market- accounts,brokered partiallydeposits, more than offset by decreases of $135.8$321.5 million, or 6.8%,16.0%, in certificates of depositsdeposits, and $16.1$39.6 million, or 5.9%,14.4%, in brokered deposits, $27.3 million, or 2.1%, in money market accounts and $15.5 million, or 10.6%, in noninterest-bearing deposits. The increase in interest-bearing demand deposits was driven by growth in fintech partnership deposits, which provided the ability to pay down certificates of deposits, higher-cost brokered deposits and certificatesmoney ofmarket deposits.accounts.

Uninsured deposit balances represented 39%37% of total deposits at MarchJune 31,30, 2026, up from 33% at December 31, 2025. These balances include Indiana-based municipal deposits, which are insured by the Indiana Board for Depositories, as well as larger balance accounts under contractual agreements that only allow withdrawal under certain conditions. After subtracting these types of deposits, the adjusted uninsured deposit balance drops to 34%31% as of MarchJune 31,30, 2026, compared to 27% as of December 31, 2025. The increase in uninsured deposit balances was impacted by increases in fintech payment volumes experienced on the last day of the quarter.

The following tables present actual and required capital ratios as of MarchJune 31,30, 2026 and December 31, 2025 for the Company and the Bank under the Basel III Capital Rules. The minimum required capital amounts presented include the minimum required capital levels as of MarchJune 31,30, 2026 and December 31, 2025, which are based on the Basel III Capital Rules. Capital levels required to be considered well capitalized are based upon prompt corrective action regulations, as amended to reflect the changes under the Basel III Capital Rules.

The Company’s Board of Directors declared a cash dividend of $0.06 per share of common stock payable AprilJuly 15, 2026 to shareholders of record as of MarchJune 31,30, 2026. The Company expects to continue to pay cash dividends on a quarterly basis; however, the declaration and amount of any future cash dividends will be subject to the sole discretion of the Board of Directors and will depend upon many factors, including the Company’s results of operations, financial condition, capital requirements, regulatory and contractual restrictions (including with respect to the Company’s outstanding subordinated debt), business strategy and other factors deemed relevant by the Board of Directors.

As of MarchJune 31,30, 2026, the Company had $107.0 million principal amount of subordinated debt outstanding evidenced by the 2029 Notes, 2030 Note and 2031 Notes. The agreements that govern our outstanding subordinated debt prohibit the Company from paying any dividends on its common stock or making any other distributions to shareholders at any time when there shall have occurred, and be continuing to occur, an event of default under the applicable agreement. If an event of default were to occur and the Company did not cure it, the Company would be prohibited from paying any dividends or making any other distributions to shareholders or from redeeming or repurchasing any common stock.

On October 20, 2025, the Board of Directors of the Company authorized the repurchase of up to $25.0 million of the Company's outstanding common stock from time to time on the open market or in privately negotiated transactions. Under the program, the Company repurchased 27,998 shares of common stock, at an average price of $18.64, for a total investment of $0.5 million as of MarchJune 31,30, 2026. The stock repurchase authorization is scheduled to expire on September 30, 2027.

Liquidity management is the process used by the Company to manage the continuing flow of funds necessary to meet its financial commitments on a timely basis and at a reasonable cost while also maintaining safe and sound operations. Liquidity, represented by cash and investment securities, is a product of the Company’s operating, investing and financing activities. The primary sources of funds are deposits, principal and interest payments on loans and investment securities, maturing loans and investment securities, access to wholesale funding sources and collateralized borrowings. In addition, the Company may elect to hold certain deposit balances off-balance sheet, with optionality to bring them back onto the balance sheet as funding needs evolve. While scheduled payments and maturities of loans and investment securities are relatively predictable sources of funds, deposit flows are greatly influenced by interest rates, general economic conditions and competition. Therefore, the Company may supplement deposit growth and enhancesenhance interest rate risk management through borrowings and wholesale funding, which are generally advances from the Federal Home Loan Bank (“FHLB”) and brokered deposits.

The Company holds cash and investment securities that qualify as liquid assets to maintain adequate liquidity to ensure safe and sound operations and meet its financial commitments. At MarchJune 31,30, 2026, on a consolidated basis, the Company had $1.4$1.2 billion in cash and cash equivalents and investment securities available-for-sale and $55.2$44.8 million in loans held-for-sale that were generally available for its cash needs. Additionally, the Company uses a custodial deposit arrangement for certain deposit programs whereby the Company, acting as custodian of account holder funds, places a portion of such account holder funds that are not needed to support near term liquidity needs at one or more third-party banks insured by the FDIC through the IntraFi One-Way Sell network. The Company remains the issuer of, and maintains the records for, all accounts under the applicable account holder agreements and, importantly, retains transactional authority to move funds on-and-off balance sheet as liquidity needs merit. Such off-balance sheet deposits totaled $1.5$2.4 billion at MarchJune 31,30, 2026 and $1.1 billion at December 31, 2025 and primarily consist of fintech partnership deposits. The Company can also generate funds from wholesale funding sources and collateralized borrowings. At MarchJune 31,30, 2026, the Bank had the ability to borrow an additional $1.7$1.5 billion from the FHLB, the Federal Reserve and correspondent bank Fed Funds lines of credit.

The Company is a separate legal entity from the Bank and must provide for its own liquidity. In addition to its operating expenses, the Company is responsible for paying any dividends declared to its common shareholders and interest and principal on outstanding debt. The Company’s primary sources of funds are cash maintained at the holding company level and dividends from the Bank, the payment of which is subject to regulatory limits. At MarchJune 31,30, 2026, the Company, on an unconsolidated basis, had $9.0$5.9 million in cash for debt servicing and operating expenses.

The Company uses its sources of funds primarily to meet ongoing financial commitments, including withdrawals by depositors, credit commitments to borrowers, operating expenses and capital expenditures. At MarchJune 31,30, 2026, approved outstanding loan commitments, including unused lines of credit and standby letters of credit, amounted to $610.6$579.7 million. Certificates of deposits and brokered deposits scheduled to mature in one year or less at MarchJune 31,30, 2026 totaled $1.4$1.3 billion.

There have been no material changes in the Company’s critical accounting policies or estimates from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2025, except as described below.2025.