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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2024


x			Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

			For the fiscal year ended December 31, 2025

o			Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

			For the transition period from ______ to ______

			Commission File Number: 001-40999

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-40999

Finward Bancorp

(Exact name of registrant as specified in its charter)

Indiana (State or other jurisdiction of incorporation or organization)	35-1927981 (I.R.S. Employer Identification No.)
Indiana		35-1927981
9204 Columbia Avenue Munster, Indiana (Address of principal executive offices)	46321 (Zip Code)
(State or other jurisdiction of incorporationor organization)		(I.R.S. Employer Identification Number)
9204 Columbia AvenueMunster, Indiana		46321
(Address of principal executive offices)		(ZIP code)

Registrant's telephone number, including area code: (219) 836-‑4400

N/A (~~Registrant’s~~Former ~~telephone~~name, ~~number~~former address and former fiscal year, ~~including~~if ~~area~~changed ~~code~~since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered Common stock, no par value FNWD The ~~Nasdaq~~NASDAQ Stock Market, LLC

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐Yes ☐x No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐Yes ☐ x No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒x No ☐o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ x No ☐o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,”, “accelerated filer,”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer: ☐o Accelerated filer: ☐o Non-~~Accelerated~~accelerated filer: ~~☒ Smaller reporting company ☒ Emerging growth company ☐~~x

IfSmaller anReporting ~~emerging~~Company x Emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive- based compensation received by any of the registrant’'s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒x

Based on the average bid and ask prices for the registrant’s Common Stock at June 30, ~~2024~~2025, at that date, the aggregate market value of the registrant’s Common Stock held by nonaffiliates of the registrant (assuming solely for the purposes of this calculation that all directors and executive officers of the registrant are “affiliates”) was $~~101~~113,~~196~~818,~~455~~982.

There were 4,~~324~~330,~~485~~486 shares of the registrant’s Common Stock, without par value, outstanding at March 21 20, ~~2025~~2026.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents have been incorporated by reference into this Annual Report on Form 10-K:

1. Definitive Proxy Statement for the ~~2025~~2026 Annual Meeting of Shareholders. (Part III)

Finward Bancorp

Index

	Page Number
		PageNumber
PART I.
Item 1. Business	1	6
Item 1A. Risk Factors	28	30
Item 1B. Unresolved Staff Comments	40	40
Item 1C. Cybersecurity	41	40
Item 2. Properties	43	41
Item 3. Legal Proceedings	44	42
Item 4. Mine Safety Disclosures	44	42
Item 4.5 Information About Our Executive Officers	44	42
PART II.
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	46
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer of Purchases of Equity Securities		44
Item 6. [Reserved]	47	44
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations	47
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		45
Item 7A. Quantitative and Qualitative Disclosures about Market Risk	60	57
Item 8. Financial Statements	63
Item 8. Financial Statements and Supplementary Data		60
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	~~108~~	107
Item 9A. Controls and Procedures	~~108~~	107
Item 9B. Other Information	~~109~~	108
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	~~109~~	108
PART III.
Item 10. Directors, Executive Officers and Corporate Governance	~~110~~	109
Item 11. Executive Compensation	~~110~~	109
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~110~~	109
Item 13. Certain Relationships and Related Transactions, and Director Independence	~~110~~	109
Item 14. Principal Accountant Fees and Services	~~110~~	109
PART IV.
Item 15. Exhibits and Financial Statement Schedules	~~111~~	110
SIGNATURES	114
Item 16. Form 10-K Summary		112
EXHIBIT INDEX	111
SIGNATURES		113

Glossary of Defined Terms

ACL - Allowance for credit losses

AFS - Available-for-sale

Agencies - collectively, Fannie Mae, Freddie Mac, and Ginnie Mae

AI - Artificial intelligence and/or machine learning

ALCO - Asset Liability Committee

AOCI - Accumulated other comprehensive income (loss)

ARMs - Adjustable rate mortgage loans

ASC - Accounting Standards Codification

ASU - Accounting Standards Update

ATM - Automated teller machine

Bank - Peoples Bank

BHCA - Bank Holding Company Act of 1956, amended

Board - The Company's Board of Directors

BSA - Bank Secrecy Act

Buyer - MountainSeed Real Estate Services, LLC

CARES Act - Coronavirus Aid, Relief and Economic Security Act of 2021

CBCA - Change in Bank Control Act

CBCM - Certified Banking Cybersecurity Manager

CBLR - Community Bank Leverage Ratio

CBSM - Certified Banking Security Manager

CBSTP - Certified Banking Security Technology Professional

CECL - ASU 2016-13, Measurement of Credit Losses on Financial Instruments ("Current Expected Credit Losses")

CFPB - Consumer Financial Protection Bureau

CISM - Certified Information Security Manager

Code - Internal Revenue Code of 1986

CODM - Chief Operating Decision Maker

Company - Finward Bancorp

COSO - Committee of Sponsoring Organizations of the Treadway Commission

CRA - Community Reinvestment Act

CRE - Commercial real estate

CRE NOO - Commercial real estate owner-occupied

CRE OO - Commercial real estate non-owner-occupied

CRI - Cyber Risk Institute

DEI - Diversity, equity and inclusion

DFI - Indiana Department of Financial Institutions

DIF - Deposit Insurance Fund

Dodd-Frank Act - Dodd Frank Wall Street Reform and Consumer Protection Act of 2010

DOJ - Department of Justice

Economic Growth Act - Economic Growth, Regulatory Relief and Consumer Protection Act of 2018

EOLC - Executive officer's loan committee

ESG - Environmental, social, and governance

ERM - Enterprise Risk Management Committee

EVE at Risk - Economic value of equity at risk modeling sensitivity analysis

Exchange Act - Securities Exchange Act of 1934, amended

FASB - Financial Accounting Standards Board

FDIC - Federal Deposit Insurance Corporation

FDICIA - FDIC Improvement Act of 1991

FHA - Federal Housing Administration

FHLB - Federal Home Loan Bank

FHLBI - Federal Home Loan Bank of Indianapolis

Final Rule - Final regulation implementing Section 201

FinTech - Financial technology

FIT - Indiana's Financial Institutions Tax

FRB - Federal Reserve System

GAAP - Generally Accepted Accounting Principles in the US

Gramm-Leach - Gramm-Leach-Bliley Act

HTM - Held-to-maturity

IT - The Company's Information Technology

Lease Agreements - Triple net lease agreements

LGD - Loss given default

MOU - Memorandum of understanding

NOL - Net operating loss

OCC - Office of the Comptroller of the Currency

OBBBA - One Big Beautiful Bill Act

OLC - Loan officers' loan committee

OO - Owner-occupied

Order - Consent Order

PCD - Purchased credit deteriorated

PD - Probability of default

Plan - Finward Bancorp 2025 Omnibus Equity Incentive Plan

Properties - Five properties owned and operated as branch locations

REIT - Real estate investment trust

ROA - Return on average assets

ROE - Return on average shareholders' equity

RWA - Risk-weighted assets

SEC - Securities and Exchange Commission

SOLC - Senior officers' loan committee

TLM - Troubled loan modification

UDC Plan - Unqualified Deferred Compensation Plan

vCISO - virtual Chief Information Security Officer

PART I

Item 1. Business General

Finward Bancorp, an Indiana corporation ~~(the “Company”)~~, was incorporated on January 31, 1994, and is the holding company for Peoples Bank, an Indiana-chartered commercial bank ~~(the “Bank”)~~. The Bank is a wholly owned subsidiary of the Company. The Company has no other business activity other than being a holding company for the Bank and the Company’s earnings are primarily dependent upon the earnings of the Bank.

The Bank is primarily engaged in the business of attracting deposits from the general public and the origination of loans, mostly upon the security of single family residences and commercial real estate, as well as, construction loans and various types of consumer loans, commercial business loans and municipal loans, within its primary market areas of Lake and Porter Counties, in Northwest Indiana, and Cook County, Illinois. In addition, the Company's Wealth Management Group provides estate and retirement planning, guardianships, land trusts, profit sharing and 401(k) retirement plans, IRA and Keogh accounts, investment agency accounts, and serves as the personal representative of estates and acts as trustee for revocable and irrevocable trusts.

The Company monitors and evaluates financial performance on a Company-wide basis and the majority of the Company’s revenue is from the business of banking. Accordingly, all of the Company’s operations are considered by management to be aggregated in one reportable operating segment.

The Bank’s deposit accounts are insured up to applicable limits by the Deposit Insurance Fund ~~(“DIF”)~~, which is administered by the Federal Deposit Insurance Corporation ~~(“FDIC”)~~, an agency of the federal government. As the holding company for the Bank, the Company is subject to comprehensive examination, supervision and regulation by the Board of Governors of the Federal Reserve System ~~(“FRB”)~~, while the Bank is subject to comprehensive examination, supervision and regulation by both the FDIC and the Indiana Department of Financial Institutions ~~(“DFI”)~~. The Bank is also subject to regulation by the FRB governing reserves required to be maintained against certain deposits and other matters. The Bank is also a member of the Federal Home Loan Bank ~~(“FHLB”)~~ of Indianapolis, which is one of the eleven regional banks comprising the system of Federal Home Loan Banks.

The Company maintains its corporate office at 9204 Columbia Avenue, Munster, Indiana, from which it oversees the operation of its 26 branch locations. For further information, see “Properties.” The Company’s ~~Internet~~internet address is www.ibankpeoples.com.

Forward-Looking Statements

Certain of the statements made in this report are “forward-looking statements” within the meaning and protections of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. All statements other than statements of historical fact, including statements regarding our financial position, business strategy, and the plans and objectives of our management for future operations, are forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “will,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “plan,” “point to,” “project,” “could,” “intend,” “target,” and other similar words and expressions relating to the future.

1 Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially, and adversely or positively, from the expectations of the Company that are expressed or implied by any forward-looking statement. Risks, uncertainties, and factors that could cause the Company’s actual results to vary materially from those expressed or implied by any forward-looking statement include but are not limited to:

~~Although~~● ~~management~~changes ~~believes that the expectations reflected~~ in ~~such~~domestic ~~forward-looking~~and ~~statements~~international ~~are~~trade ~~reasonable~~policies, ~~actual~~including ~~results~~tariffs ~~may differ materially,~~ and ~~adversely~~other ornon-tariff ~~positively~~barriers, ~~from~~and the ~~expectations~~effects of ~~the~~such ~~Company~~changes ~~that~~on ~~are~~the ~~expressed~~Bank ~~or implied by any forward-looking statement. Risks, uncertainties,~~ and ~~factors~~its ~~that could cause the Company’s actual results to vary materially from those expressed or implied by any forward-looking statement include but are not limited to:~~customers;

● ~~The~~risks ~~Bank’s~~related ~~ability~~ to ~~demonstrate compliance with~~ the ~~terms~~development ~~of the previously disclosed consent order~~ and ~~memorandum~~use of understanding entered into between the Bank and the Federal Deposit Insurance Corporation (“FDIC”) and Indiana Department of Financial Institutions (“DFI”), or to demonstrate compliance to the satisfaction of the FDIC and/or DFI within prescribed time framesAI;

● The Bank’s ~~agreement~~ability ~~under~~to demonstrate compliance with the terms of the previously disclosed memorandum of understanding entered into between the Bank and the FDIC and DFI, or to ~~refrain~~demonstrate ~~from~~compliance ~~paying~~to ~~cash~~the ~~dividends~~satisfaction ~~without~~of ~~prior~~the ~~regulatory~~FDIC ~~approval~~and/or DFI within prescribed time frames;

● ~~changes~~The inBank’s ~~interest~~agreement ~~rates,~~under ~~market~~the ~~liquidity,~~memorandum ~~and~~of ~~capital~~understanding ~~markets,~~to asrefrain ~~well~~from aspaying ~~the~~cash ~~magnitude~~dividends ofwithout ~~such~~prior ~~changes,~~regulatory ~~which may reduce net interest margins~~approval;

● ~~the~~changes ~~aggregate~~in ~~effects~~interest ofrates, ~~inflation~~market ~~experienced~~liquidity, inand ~~recent~~capital ~~years~~markets, ~~and~~as well as the ~~potential~~magnitude ~~for~~of asuch ~~resurgence~~changes, inwhich ~~inflation~~may reduce net interest margins;

● current financial conditions within the banking industry, liquidity levels, concentrations in certain loan products or categories, net interest margin levels, and responses by the Federal Reserve, Department of the Treasury, and the Federal Deposit Insurance Corporation to address these issues;6

● the ~~use~~aggregate effects of ~~proceeds~~inflation ofexperienced ~~future~~in ~~offerings~~recent ofyears, ~~securities~~and the potential for a resurgence in inflation;

● ~~capital~~the ~~management~~use ~~activities,~~of ~~including~~proceeds ~~possible~~of future ~~sales~~offerings of ~~new~~ securities~~, or possible repurchases or redemptions by the Company of outstanding debt or equity securities~~;

● ~~changes~~capital inmanagement ~~asset~~activities, ~~quality~~including ~~and~~possible ~~credit~~future ~~risk~~sales of new securities, or possible repurchases or redemptions by the Company of outstanding debt or equity securities;

● ~~our~~changes ~~ability~~in toasset ~~sustain~~quality ~~revenue~~ and ~~earnings~~credit ~~growth~~risk;

● ~~customer~~our ~~acceptance~~ability ofto ~~the~~sustain ~~Company’s~~revenue ~~products~~ and ~~services~~earnings growth;

● customer ~~borrowing,~~acceptance ~~repayment,~~of ~~investment,~~the ~~and~~Company’s ~~deposit~~products ~~practices~~and services;

● customer ~~disintermediation~~borrowing, repayment, investment, and deposit practices;

● ~~the~~customer ~~introduction, withdrawal, success, and timing of asset/liability management strategies or of mergers and acquisitions and other business initiatives and strategies~~disintermediation;

● ~~competitive~~the ~~conditions~~introduction, withdrawal, success, and timing of asset/liability management strategies or of mergers and acquisitions and other business initiatives and strategies;

● ~~our~~competitive ~~ability to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, acquisitions, and divestitures~~conditions;

● ~~changes~~our inability ~~fiscal~~to realize cost savings or revenues or to implement integration plans and other consequences associated with mergers, ~~monetary~~acquisitions, and ~~tax policies~~divestitures;

● ~~factors~~changes ~~that~~in ~~may~~fiscal, ~~cause~~monetary, ~~the~~and ~~Company~~tax ~~to incur impairment charges on its investment securities~~policies;

● ~~electronic,~~factors ~~cyber,~~that ~~and~~may ~~physical~~cause ~~security~~the ~~breaches~~Company to incur impairment charges on its investment securities;

● ~~claims and litigation liabilities~~electronic, ~~including related costs~~cyber, ~~expenses, settlements,~~ and ~~judgments,~~physical orsecurity ~~the outcome of matters before regulatory agencies, whether pending or commencing in the future~~breaches;

● ~~changes~~claims inand ~~accounting~~litigation ~~principles~~liabilities, including related costs, expenses, settlements, and ~~interpretations~~judgments, or the outcome of matters before regulatory agencies, whether pending or commencing in the future;

● ~~economic~~changes ~~conditions~~in accounting principles and interpretations;

2 ● economic conditions;


			●			loss of key personnel;

● ~~continuing~~the ~~risks~~impact, extent, and ~~uncertainties~~timing ~~relating~~of totechnological changes, capital management activities, and other actions of the ~~COVID-19~~Federal ~~pandemic~~Reserve Board and ~~government~~legislative ~~responses~~and ~~thereto~~regulatory actions and reforms; and

● other factors and risks described under the ~~impact,~~heading ~~extent~~“Risk Factors” in Part I, ~~and~~Item ~~timing~~1A of ~~technological~~this ~~changes~~Form 10-K, ~~capital~~as ~~management~~may ~~activities,~~be ~~and~~updated from time to time in our other ~~actions~~filings ofwith the ~~Federal~~Securities ~~Reserve~~and ~~Board~~Exchange ~~and~~Commission ~~legislative~~under ~~and~~the ~~regulatory~~Securities ~~actions~~Exchange ~~and~~Act ~~reforms;~~of ~~and~~1934, as amended the Exchange Act.

●In ~~other~~addition to the above factors, ~~and~~we ~~risks~~also ~~described~~caution ~~under~~that the ~~heading~~actual ~~“Risk~~amounts ~~Factors”~~and intiming ~~Part~~of Iany future common stock dividends or share repurchases will be subject to various factors, ~~Item~~including 1Aour capital position, financial performance, capital impacts of ~~this~~strategic ~~Form~~initiatives, ~~10-K~~market conditions, and regulatory and accounting considerations, as ~~may~~well beas ~~updated~~any ~~from~~other ~~time~~factors tothat ~~time~~our Board of Directors deems relevant in ~~our~~making ~~other~~such ~~filings~~a ~~with~~determination. ~~the~~Therefore, ~~Securities~~there ~~and~~can ~~Exchange~~be ~~Commission~~no ~~(“SEC”)~~assurance ~~under~~that ~~the~~we ~~Securities~~will ~~Exchange~~repurchase ~~Act~~shares or pay any dividends to holders of ~~1934~~our common stock, or as ~~amended~~to (the ~~“Exchange~~amount ~~Act”)~~of any such repurchases or dividends.

InBecause ~~addition~~such forward-looking statements are subject to ~~the~~risks ~~above~~and ~~factors~~uncertainties, weactual ~~also~~results ~~caution~~may ~~that~~differ ~~the~~materially ~~actual~~from ~~amounts~~those ~~and~~expressed ~~timing~~or ofimplied ~~any~~by ~~future~~such ~~common~~statements. ~~stock~~The ~~dividends~~foregoing orlist ~~share~~of ~~repurchases~~important ~~will~~factors beis ~~subject~~not exclusive and you are cautioned not to ~~various~~place ~~factors,~~undue ~~including~~reliance ~~our~~on ~~capital~~these ~~position~~forward-looking statements, ~~financial~~which ~~performance,~~speak ~~capital~~only ~~impacts~~as of ~~strategic~~the ~~initiatives,~~date ~~market~~of ~~conditions~~this report or, ~~and~~in ~~regulatory~~the ~~and~~case ~~accounting~~of ~~considerations~~documents incorporated by reference, asthe ~~well~~dates asof those documents. We do not undertake to update any ~~other~~forward-looking ~~factors~~statements, whether written or oral, that ~~our~~may ~~Board~~be made from time to time by or on behalf of ~~Directors~~us. ~~deems~~The ~~relevant~~“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in ~~making~~Item ~~such~~7 aof ~~determination.~~this ~~Therefore,~~Form ~~there~~10-K ~~can~~lists besome noof ~~assurance~~the factors that wecould ~~will~~cause ~~repurchase~~the ~~shares~~Company’s actual results to vary materially from those expressed in or ~~pay~~implied by any ~~dividends~~forward-looking statements. We direct your attention to ~~holders~~this ofdiscussion. ~~our~~Other ~~common~~risks ~~stock,~~and oruncertainties asthat tocould affect the ~~amount~~Company’s offuture ~~any~~performance ~~such~~are ~~repurchases~~set orforth ~~dividends.~~below in Item 1A, “Risk Factors,"

Because such forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such statements. The foregoing list of important factors is not exclusive and you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report or, in the case of documents incorporated by reference, the dates of those documents. We do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by or on behalf of us. The “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Form 10-K lists some of the factors that could cause the Company’s actual results to vary materially from those expressed in or implied by any forward-looking statements. We direct your attention to this discussion. Other risks and uncertainties that could affect the Company’s future performance are set forth below in Item 1A, “Risk Factors.”

Lending Activities

General. The Company’s product offerings include residential mortgage loans, construction loans, commercial real estate loans, consumer loans, commercial business loans and loans to municipalities. The Company’s lending strategy stresses quality growth, product diversification, and competitive and profitable pricing. While lending efforts include both fixed and adjustable rate products, the focus has been on products with adjustable rates and/or shorter terms to maturity. It is management’s goal that all programs are marketed effectively to our primary market area.

The Company is primarily a portfolio lender. Mortgage banking activities are limited to the sale of fixed rate mortgage loans with contractual maturities generally exceeding fifteen years. These loans are sold, on a case-by-case basis, in the secondary market as part of the Company’s efforts to manage interest rate risk. All loan sales are made to Freddie Mac, US Bank or to the Federal Home Loan Bank of Indianapolis. All loans held -for -sale are recorded at the lower of cost or market value.

Under Indiana Law, an Indiana bank generally may not make any loan to a borrower or its related entities if the total of all such loans by the bank exceeds 15% of its unimpaired capital and unimpaired surplus (plus up to an additional 10% of unimpaired capital and unimpaired surplus, in the case of loans fully collateralized by readily marketable collateral); provided, however, that certain specified types of loans are exempted from these limitations or subject to different limitations. The maximum amount that the Bank could have loaned to one borrower and the borrower’s related entities at December 31, ~~2024~~2025, under the 15% of capital and surplus limitation, was approximately $2930.28 million. At December 31, ~~2024~~2025, the Bank had no loans that exceeded the regulatory limitations.

At December 31, ~~2024~~2025, there were no concentrations of loans in any type of industry that exceeded 10% of total loans that were not otherwise disclosed as a loan category.

3 Loan Portfolio. The following table sets forth selected data relating to the composition of the Company’s loan portfolio by type of loan at the end of each of the last two years. The amounts are stated in thousands (000’s).

Loan Portfolio. The following table sets forth selected data relating to the composition of the Company’s loan portfolio by type of loan at the end of each of the last two years. The amounts are stated in thousands (000’s).


(Dollars in thousands)	December 31, 2025		December 31, 2024
Loans secured by real estate:
Residential real estate	$	442,443	$	467,293
Home equity	53,497		49,758
Commercial real estate	555,594		551,674
Construction and land development	77,208		82,874
Multifamily	183,902		212,455
Total loans secured by real estate	1,312,644		1,364,054
Commercial business	99,304		104,246
Consumer	870		551
Manufactured homes	23,708		26,708
Government	12,298		11,024
Loans receivable	1,448,824		1,506,583
Add:
Net deferred loan origination costs	1,606		2,439
Loan clearing funds	(43)		(46)
Loans receivable, net of deferred fees and costs	$	1,450,387	$	1,508,976

(Dollars in thousands)
	December 31, 2024			December 31, 2023
Loans secured by real estate:
Residential real estate	$	467,293		$	484,948
Home equity		49,758			46,599
Commercial real estate		551,674			503,202
Construction and land development		82,874			115,227
Multifamily		212,455			219,917
Total loans secured by real estate		1,364,054			1,369,893
Commercial business		104,246			97,386
Consumer		551			610
Manufactured homes		26,708			30,845
Government		11,024			10,021
Loans receivable		1,506,583			1,508,755
Add:
Net deferred loan origination costs		2,439			3,705
Loan clearing funds		(46	)		135
Loans receivable, net of deferred fees and costs	$	1,508,976		$	1,512,595

Loan Maturity Schedule. The following table sets forth certain information at December 31, 2025, regarding the dollar amount of loans in the Company’s portfolio based on their contractual terms to maturity. Demand loans, loans having no schedule of repayments and no stated maturity, and overdrafts are reported as due in one year or less. Contractual principal repayments of loans do not necessarily reflect the actual term of the loan portfolio. The average life of mortgage loans is substantially less than their contractual terms because of loan prepayments and because of enforcement of due-on-sale clauses, which give the Company the right to declare a loan immediately due and payable in the event, among other things, that the borrower sells the property subject to the mortgage. The amounts are stated in thousands (000’s).

Loan Maturity Schedule. The following table sets forth certain information at December 31, 2024, regarding the dollar amount of loans in the Company’s portfolio based on their contractual terms to maturity. Demand loans, loans having no schedule of repayments and no stated maturity, and overdrafts are reported as due in one year or less. Contractual principal repayments of loans do not necessarily reflect the actual term of the loan portfolio. The average life of mortgage loans is substantially less than their contractual terms because of loan prepayments and because of enforcement of due-on-sale clauses, which give the Company the right to declare a loan immediately due and payable in the event, among other things, that the borrower sells the property subject to the mortgage. The amounts are stated in thousands (000’s).8

	Maturing			After one			After five
		Maturingwithinone year				After onebut withinfive years				After fivebut withinfifteen years				Afterfifteen years		Total
	within			but within			but within		After
Residential real estate		$	8,997			$	20,065			$	81,649			$	331,732	$	442,443
	one year			five years			fifteen years		fifteen years			Total
Home equity		2,005				333				10,726				40,433		53,497
Residential real estate	$	5,786		$	24,265		$	87,323	$	349,919		$	467,293
Commercial real estate		40,216				149,462				365,300				616		555,594
Home equity		8,953			216			5,211		35,378			49,758
Construction and land development		27,022				5,888				34,517				9,781		77,208
Commercial real estate		26,982			150,826			373,227		639			551,674
Multifamily		31,137				50,670				102,095				-		183,902
Construction and land development		32,241			18,055			27,212		5,366			82,874
Commercial business		49,337				34,297				15,670				-		99,304
Multifamily		32,898			64,455			115,102		-			212,455
Consumer		660				210				-				-		870
Commercial business		43,501			42,967			17,639		139			104,246
Manufactured homes		1				209				11,870				11,628		23,708
Consumer		237			314			-		-			551
Government		3,732				7,489				1,077				-		12,298
Manufactured Homes		1			117			8,567		18,023			26,708
Total loans receivable		$	163,107			$	268,623			$	622,904			$	394,190	$	1,448,824
Government		-			9,769			1,255		-			11,024
Total loans receivable	$	150,599		$	310,984		$	635,536	$	409,464		$	1,506,583

4 The following table sets forth the dollar amount of all loans due after one year from December 31, 2025, which have predetermined interest rates or have floating or adjustable interest rates. The amounts are stated in thousands (000’s).

The following table sets forth the dollar amount of all loans due after one year from December 31, 2024, which have predetermined interest rates or have floating or adjustable interest rates. The amounts are stated in thousands (000’s).


	Predetermined rates		Floating or adjustable rates		Total
Residential real estate	$	331,405	$	102,041	$	433,446
Home equity	45,300		6,191		51,491
Commercial real estate	46,956		468,422		515,378
Construction and land development	9,827		40,358		50,185
Multifamily	64,004		88,761		152,765
Commercial business	27,092		22,876		49,968
Consumer	210		-		210
Manufactured homes	23,708		-		23,708
Government	8,566		-		8,566
Total loans receivable	$	557,068	$	728,649	$	1,285,717

	Predetermined		Floating or
	rates		adjustable rates		Total
Residential real estate	$	355,155	$	106,352	$	461,507
Home equity		38,527		2,278		40,805
Commercial real estate		62,821		461,871		524,692
Construction and land development		13,200		37,433		50,633
Multifamily		93,028		86,529		179,557
Commercial business		34,042		26,703		60,745
Consumer		314		-		314
Manufactured Homes		26,707		-		26,707
Government		11,024		-		11,024
Total loans receivable	$	634,818	$	721,166	$	1,355,984

Lending Area. The primary lending area of the Company encompasses Lake County in northwest Indiana and Cook County in northeast Illinois, where collectively a majority of loan activity is concentrated. The Company is also an active lender in Porter County, and to a lesser extent, LaPorte, Newton and Jasper counties in Indiana; and DuPage, Lake, and Will counties in Illinois.

~~Lending~~Loan ~~Area~~Origination Fees. ~~The~~All ~~primary~~loan ~~lending~~origination ~~area of the Company encompasses Lake County in northwest Indiana~~ and ~~Cook~~commitment ~~County in northeast Illinois~~fees, ~~where~~as ~~collectively~~well aas ~~majority~~incremental ofdirect loan ~~activity~~origination ~~is concentrated. The Company is also an active lender in Porter County~~costs, ~~and~~are todeferred ~~a lesser extent, LaPorte, Newton~~ and ~~Jasper~~amortized ~~counties~~into inincome ~~Indiana;~~as ~~and~~yield ~~DuPage, Lake, and Will counties in Illinois~~adjustments.

Loan Origination ~~Fees~~Procedure. ~~All~~The primary sources for loan ~~origination~~originations ~~and~~are ~~commitment~~referrals ~~fees~~from commercial customers, asreal ~~well~~estate asbrokers ~~incremental~~and ~~direct~~builders, ~~loan~~solicitations ~~origination~~by ~~costs~~the Company’s lending and retail staff, and advertising of loan programs and rates. The Company employs no staff appraisers. All appraisals are ~~deferred~~performed by fee appraisers that have been approved by the Board of Directors and ~~amortized~~who ~~into~~meet ~~income~~all asfederal ~~yield~~guidelines ~~adjustments~~and state licensing and certification requirements.

~~Loan~~Designated ~~Origination~~officers ~~Procedure~~have authorities, established by the Board of Directors, to approve loans. ~~The~~Loans ~~primary~~from ~~sources~~$3.0 ~~for~~million to $4.5 million are approved by the loan ~~originations~~officers’ loan committee. Loans from $4.5 million to $7.0 million are ~~referrals~~approved by the senior officers’ loan committee. Loans from ~~commercial~~$7.0 ~~customers~~million to $15.0 million are approved by the executive officer’s loan committee. All loans in excess of $15.0 million, ~~real~~up ~~estate~~to ~~brokers~~the ~~and~~legal ~~builders~~lending limit of the Bank, ~~solicitations~~must be approved by the ~~Company~~Bank’s ~~lending~~Board of Directors or its Board Risk Management and ~~retail~~Compliance ~~staff,~~Committee (all members of the Bank’s Board of Directors and ~~advertising~~Board Risk Management and Compliance Committee are also members of ~~loan~~the ~~programs~~Company’s Board of Directors and ~~rates~~Board Risk Management and Compliance Committee, respectively). ~~The~~Certain ~~Company~~loan ~~employs~~renewals and extensions may not require approval by the Board of Directors or the Credit Committee as long as there is no ~~staff~~material ~~appraisers.~~change, ~~All~~credit ~~appraisals~~downgrade, ~~are~~significant ~~performed~~change in borrower or guarantor status, material release or change in collateral value or the eligible loan renewal or extension is not outside the current concentration limits set by ~~fee~~the ~~appraisers~~Board ~~that~~of ~~have~~Directors. ~~been~~The ~~approved~~maximum in-house legal lending limit as set by the Board of Directors ~~and~~is ~~who~~the ~~meet~~lower ~~all~~of ~~federal~~10% ~~guidelines~~of ~~and~~the ~~state~~Bank’s ~~licensing~~risk-based ~~and~~capital ~~certification~~or ~~requirements~~$15.0

Designated officers have authorities, established by the Board of Directors, to approve loans. Loans from $3.0 million to $4.5 million are approved by the loan officers’ loan committee (OLC). Loans from $4.5 million to $7.0 million are approved by the senior officers’ loan committee (SOLC). Loans from $7.0 million to $15.0 million are approved by the executive officer’s loan committee (EOLC). All loans in excess of $15.0 million, up to the legal lending limit of the Bank, must be approved by the Bank’s Board of Directors or its Board Risk Management and Compliance Committee (all members of the Bank’s Board of Directors and Board Risk Management and Compliance Committee are also members of the Company’s Board of Directors and Board Risk Management and Compliance Committee, respectively). Certain loan renewals and extensions may not require approval by the Board of Directors or the Credit Committee as long as there is no material change, credit downgrade, significant change in borrower or guarantor status, material release or change in collateral value or the eligible loan renewal or extension is not outside the current concentration limits set by the Board of Directors. The maximum in-house legal lending limit as set by the Board of Directors is the lower of 10% of the Bank’s risk-based capital or $15.0 million. Requests that exceed this amount will be considered on a case-by-case basis, after taking into consideration the legal lending limit, by specific Board or Board Committee action. The Bank will not extend credit to any of its executive officers, directors, or principal shareholders or to any related interest of that person, except in compliance with the insider lending restrictions of Regulation O under the Federal Reserve Act and in an amount that, when aggregated with all other extensions of credit to that person, exceeds $1.0 million unless: (1) the extension of credit has been approved in advance by a majority of the entire Board of Directors of the Bank, and (2) the interested party has abstained from participating directly or indirectly in the voting.9

~~All~~million. ~~loans~~Requests ~~secured~~that byexceed ~~personal~~this ~~property~~amount ~~must~~will be ~~covered~~considered byon ~~insurance~~a incase-by-case anbasis, ~~amount~~after ~~sufficient~~taking tointo ~~cover~~consideration the ~~full~~legal ~~amount~~lending oflimit, ~~the~~by ~~loan~~specific Board or Board Committee action. ~~All~~The ~~loans~~Bank ~~secured~~will bynot ~~real~~extend ~~estate~~credit ~~must~~to beany ~~covered~~of byits ~~insurance~~executive inofficers, andirectors, ~~amount~~or ~~sufficient~~principal shareholders or to ~~cover~~any related interest of that person, except in compliance with the ~~full~~insider ~~amount~~lending restrictions of Regulation O under the ~~loan~~Federal orReserve ~~restore~~Act ~~the~~and ~~property~~in an amount that, when aggregated with all other extensions of credit to ~~its~~that ~~original~~person, ~~state~~exceeds $1.0 ~~First~~million ~~mortgage~~unless: ~~loans~~(1) ~~must~~the beextension ~~covered~~of credit has been approved in advance by a ~~lender’s~~majority ~~title~~of ~~insurance~~the ~~policy~~entire inBoard ~~the~~of ~~amount~~Directors of the ~~loan~~Bank, and (2) the interested party has abstained from participating directly or indirectly in the voting.

5 All loans secured by personal property must be covered by insurance in an amount sufficient to cover the full amount of the loan. All loans secured by real estate must be covered by insurance in an amount sufficient to cover the full amount of the loan or restore the property to its original state. First mortgage loans must be covered by a lender’s title insurance policy in the amount of the loan.

The Current Lending Programs

Residential ~~Mortgage~~Real ~~Loans~~Estate. The primary lending activity of the Company has been the granting of conventional mortgage loans to enable borrowers to purchase existing homes, refinance existing homes, or construct new homes. Conventional loans are made up to a maximum of 97% of the purchase price or appraised value, whichever is less. For loans made in excess of 80% of value, private mortgage insurance is generally required in an amount sufficient to reduce the Company’s exposure to 80% or less of the appraised value of the property. Loans insured by private mortgage insurance companies can be made for up to 97% of value. During ~~2024~~2025, 7569.20% of mortgage loans closed were conventional loans with borrowers having 20% or more equity in the property. This type of loan does not require private mortgage insurance because of the borrower’s level of equity investment.

Fixed rate loans currently originated generally conform to Freddie Mac guidelines for loans purchased under the one-to-four family program. Loan interest rates are determined based on secondary market yield requirements and local market conditions. Fixed rate mortgage loans with contractual maturities generally exceeding fifteen years may be sold and/or classified as held -for -sale to control exposure to interest rate risk.

The Company’s ~~Adjustable Rate Mortgage Loans (“~~ARMs”) include offerings that reprice annually or are “Mini-Fixed.” The “Mini-Fixed” mortgage reprices annually after a three, five, seven or ten year period. ARM originations totaled $76.35 million for ~~2024~~2025 and $~~17.~~7.3 million for ~~2023~~2024. During ~~2024~~2025, ARMs represented 1412.85% of total mortgage loan originations. The ability of the Company to successfully market ~~ARM’s~~ARMs depends upon loan demand, prevailing interest rates, volatility of interest rates, public acceptance of such loans and terms offered by competitors.

~~Construction~~Home ~~Loans~~Equity Line of Credit. ~~Construction~~The ~~loans~~Company onoffers ~~residential~~a ~~properties~~fixed ~~are~~and ~~made~~variable ~~primarily~~rate torevolving ~~individuals~~line ~~and~~of ~~contractors~~credit ~~who~~secured ~~are~~by ~~under~~the ~~contract~~equity ~~with~~in ~~individual~~the ~~purchasers~~borrower’s home. ~~These~~Both ~~loans~~products ~~are~~offer ~~personally~~an ~~guaranteed~~interest byonly option where the borrower. ~~The~~pays ~~maximum~~interest ~~loan-to-value~~only ~~ratio~~on isthe ~~89%~~outstanding ofbalance ~~either~~each ~~the~~month. ~~current~~Equity ~~appraised~~lines ~~value~~will ortypically ~~the~~require ~~cost~~an ofappraisal ~~construction,~~and ~~whichever~~a issecond ~~less.~~mortgage ~~Residential~~lender’s ~~construction~~title ~~loans~~insurance policy. Loans are ~~typically~~generally made ~~for~~up ~~periods~~to a maximum of ~~one~~89% ~~year~~of the appraised value of the property less any outstanding liens.

~~Loans~~Fixed-term ~~are~~home ~~also~~improvement ~~made~~and ~~for~~equity ~~the construction of commercial properties. All such~~ loans are made inup ~~accordance~~to ~~with~~a ~~well-defined~~maximum ~~underwriting~~of ~~standards.~~85% ~~Generally~~of if the ~~properties~~appraised ~~are~~value ~~not~~of ~~owner~~the ~~occupied~~improved property, ~~these~~less ~~types~~any ofoutstanding ~~loans~~liens. ~~require~~These ~~proof~~loans ofare ~~intent~~offered toon ~~lease~~both ~~and~~ a ~~confirmed~~fixed ~~end-loan~~and ~~takeout.~~variable Inrate ~~general,~~basis ~~loans~~with ~~made~~a domaximum ~~not~~term ~~exceed 80%~~ of ~~the~~240 ~~appraised value of the property~~months. ~~Commercial~~All ~~construction~~home equity loans are ~~typically~~ made ~~for~~on ~~periods~~a ~~not~~direct basis to ~~exceed two years or date of occupancy, whichever is less~~borrowers.

Commercial Real Estate and Multifamily Loans. Commercial real estate loans are typically made to a maximum of 80% of the appraised value. Such loans are generally made on an adjustable rate basis. These loans are typically made for terms of 15 to 25 years. Loans with an amortizing term exceeding 15 years normally have a balloon feature calling for a full repayment within seven to ten years from the date of the loan. The balloon feature affords the Company the opportunity to restructure the loan if economic conditions so warrant. Commercial real estate loans include loans secured by commercial rental units, apartments, condominium developments, small shopping centers, owner occupied commercial/industrial properties, hospitality units and other retail and commercial developments.

While commercial real estate lending is generally considered to involve a higher degree of risk than single-family residential lending due to the concentration of principal in a limited number of loans and the effects of general economic conditions on real estate developers and managers, the Company has endeavored to reduce this risk in several ways. In originating commercial real estate loans, the Company considers the feasibility of the project, the financial strength of the borrowers and lessees, the managerial ability of the borrowers, the location of the project and the economic environment. Management evaluates the debt coverage ratio and analyzes the reliability of cash flows, as well as the quality of earnings. All such loans are made in accordance with well-defined underwriting standards and are generally supported by personal guarantees, which represent a secondary source of repayment.

Management evaluates the debt coverage ratio and analyzes the reliability of cash flows, as well as the quality of earnings. All such loans are made in accordance with well-defined underwriting standards and are generally supported by personal guarantees, which represent a secondary source of repayment.10

6 Loans for the construction of commercial properties are generally located within an area permitting physical inspection and regular review of business records. Projects financed outside of the Company’s primary lending area generally involve borrowers and guarantors who are or were previous customers of the Company or projects that are underwritten according to the Bank’s underwriting standards.

~~Loans~~Construction ~~for~~and ~~the~~Land ~~construction~~Development. ofConstruction ~~commercial~~loans on residential properties are ~~generally~~made ~~located~~primarily ~~within~~to anindividuals ~~area~~and ~~permitting~~contractors ~~physical~~who ~~inspection~~are ~~and~~under ~~regular~~contract ~~review~~with ofindividual ~~business records~~purchasers. ~~Projects~~These ~~financed~~loans ~~outside~~are ofpersonally guaranteed by the ~~Company’s~~borrower. ~~primary~~The ~~lending~~maximum ~~area~~loan-to-value ~~generally~~ratio ~~involve~~is ~~borrowers~~89% ~~and~~of ~~guarantors~~either ~~who~~the ~~are~~current orappraised ~~were~~value ~~previous~~or ~~customers~~the cost of ~~the~~construction, ~~Company~~whichever oris ~~projects~~less. ~~that~~Residential construction loans are ~~underwritten~~typically ~~according~~made tofor ~~the~~periods ~~Bank’s~~of ~~underwriting~~one ~~standards~~year.

~~Consumer~~ Loans. ~~The~~are ~~Company~~also ~~offers~~made ~~consumer~~for the construction of commercial properties. All such loans toare ~~individuals~~made ~~for~~in ~~personal,~~accordance ~~household~~with orwell-defined ~~family~~underwriting ~~purposes~~standards. ~~Consumer~~Generally ~~loans~~if ~~are~~the ~~either~~properties ~~secured~~are bynot ~~adequate~~owner ~~collateral~~occupied, orthese ~~unsecured~~types of loans require proof of intent to lease and a confirmed end-loan takeout. ~~Unsecured~~In general, loans ~~are~~made ~~based~~do onnot ~~the~~exceed ~~strength~~80% of the ~~applicant’s~~appraised ~~financial~~value ~~condition~~of the property. ~~All~~Commercial ~~borrowers~~construction ~~must~~loans ~~meet~~are ~~current~~typically ~~underwriting~~made ~~standards.~~for ~~The~~periods ~~consumer~~not ~~loan~~to ~~program~~exceed ~~includes~~two ~~both~~years ~~fixed~~or ~~and~~date ~~variable~~of ~~rate~~occupancy, ~~products~~whichever is less.

~~Home~~Commercial ~~Equity~~Business. ~~Line~~Although ofthe ~~Credit.~~Company’s ~~The~~priority ~~Company~~in ~~offers~~extending avarious ~~fixed~~types ~~and~~of ~~variable~~commercial ~~rate~~business ~~revolving~~loans ~~line~~changes offrom ~~credit~~time ~~secured~~to bytime, the ~~equity~~basic considerations in determining the ~~borrower’s~~makeup ~~home.~~of ~~Both~~the ~~products~~commercial ~~offer~~business anloan ~~interest~~portfolio ~~only~~are ~~option~~economic ~~where~~factors, regulatory requirements and money market conditions. The Company seeks commercial loan relationships from the ~~borrower~~local ~~pays~~business ~~interest~~community ~~only~~and onfrom its present customers. Conservative lending policies based upon sound credit analysis governs the ~~outstanding~~extension ~~balance~~of ~~each~~commercial ~~month~~credit. ~~Equity~~The ~~lines~~following ~~will~~loans, ~~typically~~although ~~require~~not aninclusive, ~~appraisal~~are ~~and~~considered apreferable ~~second~~for ~~mortgage~~the ~~lender~~Company’s ~~title~~commercial ~~insurance~~loan ~~policy.~~portfolio, ~~Loans~~loans ~~are~~collateralized ~~generally~~by ~~made~~liquid upassets; loans secured by general use machinery and equipment; secured short-term working capital loans to aestablished ~~maximum~~businesses ofsecured ~~89%~~by ofbusiness ~~the~~assets; ~~appraised~~short-term ~~value~~loans with established sources of ~~the~~repayment ~~property~~and ~~less~~secured ~~any~~by ~~outstanding~~sufficient ~~liens~~equity and real estate; and unsecured loans to customers whose character and capacity to repay are firmly established.

~~Home~~Consumer ~~Improvement~~ Loans ~~and Equity Loans—Fixed Term~~. ~~Home~~The ~~improvement~~Company ~~and~~offers ~~equity~~consumer loans ~~are~~to ~~made~~individuals upfor topersonal, ahousehold ~~maximum~~or offamily ~~85%~~purposes. ofConsumer ~~the~~loans ~~appraised~~are ~~value~~either ofsecured ~~the~~by ~~improved~~adequate ~~property~~collateral, ~~less~~or ~~any outstanding liens~~unsecured. ~~These~~Unsecured loans are ~~offered~~based on ~~both~~the astrength ~~fixed~~of ~~and~~the ~~variable~~applicant’s ~~rate~~financial ~~basis~~condition. ~~with~~All aborrowers ~~maximum~~must ~~term~~meet ofcurrent ~~240~~underwriting ~~months~~standards. ~~All~~The ~~home~~consumer ~~equity~~loan ~~loans~~program ~~are~~includes ~~made~~both onfixed aand ~~direct~~variable ~~basis~~rate ~~to borrowers~~products.

Manufactured Homes. The Company purchases fixed rate closed loans from a third party that are subject to Company’s underwriting requirements and secured by manufactured homes. The maturity date on these loans can range up to 25 years. In addition, these loans have a reserve account held at the Company; further detail regarding this reserve can be found in Note 3– Loans Receivable.

~~Commercial~~Government ~~Business~~ Loans. ~~Although~~The ~~the~~ Company’s ~~priority~~is inpermitted ~~extending~~to ~~various~~purchase ~~types~~non-rated ofmunicipal ~~commercial business loans changes from time to time~~securities, ~~the~~tax ~~basic~~anticipation ~~considerations in determining the makeup of the commercial business loan portfolio are economic factors~~notes, ~~regulatory requirements~~ and ~~money~~warrants ~~market~~within ~~conditions. The Company seeks commercial loan relationships from~~ the local ~~business~~market ~~community and from its present customers~~area. Conservative lending policies based upon sound credit analysis governs the extension of commercial credit. The following loans, although not inclusive, are considered preferable for the Company’s commercial loan portfolio, loans collateralized by liquid assets; loans secured by general use machinery and equipment; secured short-term working capital loans to established businesses secured by business assets; short-term loans with established sources of repayment and secured by sufficient equity and real estate; and unsecured loans to customers whose character and capacity to repay are firmly established.

~~Government~~Credit ~~Loans.~~Quality ~~The Company is permitted to purchase non-rated municipal securities, tax anticipation notes,~~ and ~~warrants~~Allowance ~~within~~for ~~the~~Credit ~~local market area.~~Losses

~~Non-Performing~~Loans ~~Assets~~are reviewed on a regular basis and are generally placed on a nonaccrual status when, ~~Asset~~in ~~Classification~~the opinion of management, serious doubt exists as to the collectability of a loan. Loans are generally placed on nonaccrual status when either principal or interest is 90 days or more past due. Consumer non-residential loans are generally charged off when the loan becomes over 120 days delinquent. Interest accrued and ~~Provision~~unpaid ~~for~~at ~~Credit~~the ~~Losses~~time a loan is placed on nonaccrual status is charged against interest income. Subsequent payments are either applied to the outstanding principal balance, tax and insurance reserve or recorded as interest income, depending on the assessment of the ultimate collectability of the loan.

~~Loans~~The ~~are~~Company’s ~~reviewed~~mortgage onloan acollection ~~regular~~procedures ~~basis~~provide ~~and~~that, ~~are~~when ~~generally~~a ~~placed~~mortgage onloan ais ~~non-accrual~~15 ~~status~~days ~~when,~~or inmore delinquent, the ~~opinion~~borrower ofwill ~~management~~be contacted by mail and payment requested. If the delinquency continues, ~~serious~~subsequent ~~doubt~~efforts ~~exists~~will asbe made to contact the ~~collectability~~delinquent ofborrower. aIn certain instances, the Company will recast the loan. ~~Loans~~or ~~are~~grant ~~generally~~a ~~placed~~limited moratorium on ~~non-accrual~~loan ~~status~~payments ~~when~~to ~~either~~enable ~~principal~~the orborrower ~~interest~~to isreorganize 90his, ~~days~~her, or ~~more~~its ~~past~~financial ~~due~~affairs. ~~Consumer~~If ~~non-residential~~the ~~loans~~loan ~~are~~continues in a delinquent status for 120 days, the Company will generally ~~charged~~initiate ~~off~~foreclosure proceedings. Collection procedures for consumer loans provide that when ~~the~~a consumer loan becomes ~~over~~ten ~~120~~ days delinquent., ~~Interest~~the ~~accrued~~borrower will be contacted by mail and ~~unpaid~~payment atrequested. If the ~~time~~delinquency continues, subsequent efforts will be made to contact the delinquent borrower. In certain instances, the Company may grant a payment deferral. If a loan iscontinues ~~placed~~to onbe ~~non-accrual~~delinquent ~~status~~after is60 ~~charged~~days ~~against~~and ~~interest~~all ~~income~~collection efforts have been exhausted, the Company will initiate legal proceedings. ~~Subsequent~~Collection ~~payments~~procedures ~~are~~for ~~either~~commercial ~~applied~~business toloans ~~the~~provide ~~outstanding~~that ~~principal~~when ~~balance~~a commercial loan becomes ten days delinquent, ~~tax~~the ~~and~~borrower ~~insurance~~will ~~reserve~~be orcontacted ~~recorded~~by asmail ~~interest~~and ~~income~~payment requested. If the delinquency continues, ~~depending~~subsequent onefforts will be made to contact the ~~assessment~~delinquent ofborrower pursuant to the ~~ultimate~~commercial ~~collectability~~loan ofcollection policy. In certain instances, the Company may grant a payment deferral or restructure the loan. Once it has been determined that collection efforts are unsuccessful, the Company will initiate legal proceedings.

The Company’s mortgage loan collection procedures provide that, when a mortgage loan is 15 days or more delinquent, the borrower will be contacted by mail and payment requested. If the delinquency continues, subsequent efforts will be made to contact the delinquent borrower. In certain instances, the Company will recast the loan or grant a limited moratorium on loan payments to enable the borrower to reorganize his, her, or its financial affairs. If the loan continues in a delinquent status for 120 days, the Company will generally initiate foreclosure proceedings. Collection procedures for consumer loans provide that when a consumer loan becomes ten days delinquent, the borrower will be contacted by mail and payment requested. If the delinquency continues, subsequent efforts will be made to contact the delinquent borrower. In certain instances, the Company may grant a payment deferral. If a loan continues to be delinquent after 60 days and all collection efforts have been exhausted, the Company will initiate legal proceedings. Collection procedures for commercial business loans provide that when a commercial loan becomes ten days delinquent, the borrower will be contacted by mail and payment requested. If the delinquency continues, subsequent efforts will be made to contact the delinquent borrower pursuant to the commercial loan collection policy. In certain instances, the Company may grant a payment deferral or restructure the loan. Once it has been determined that collection efforts are unsuccessful, the Company will initiate legal proceedings.11

Any property acquired as the result of foreclosure or by voluntary transfer of property made to avoid foreclosure is classified as foreclosed real estate until such time as it is sold or otherwise disposed of by the Company. Foreclosed real estate is recorded at fair value at the date of foreclosure. At foreclosure, any write-down of the property is charged to the ~~Allowance~~allowance for credit losses. Costs relating to improvement of property are capitalized, whereas holding costs are expensed. Valuations are periodically performed by management, and a valuation allowance is established by a charge to operations if the carrying value of a property exceeds its estimated fair value less selling costs.

Subsequent gains or losses on disposition, including expenses incurred in connection with the disposition, are charged to operations.

7 Loans accounted for on a nonaccrual basis (amounts are stated in thousands (000's):

The following table sets forth information regarding the Company’s non-performing assets as of December 31, for each period indicated. The amounts are stated in thousands (000’s).


	2025		2024
Residential real estate	$	5,932	$	4,665
Home equity	810		483
Commercial real estate	1,561		1,280
Construction and land development	653		658
Multifamily	696		3,362
Commercial business	1,439		3,290

Manufactured homes	71		-

Total	$	11,162	$	13,738

Loans that qualify as troubled loan modifications and accruing:


	2025			2024











Non-performing loans to total loans	0.77		%	0.91		%
Non-performing loans to total assets	0.55		%	0.74		%

Collateralized debt obligations	$	1,882		$	1,419
Ratio of collateralized debt obligations to total assets	0.09		%	0.07		%

Real estate:	2024		2023
Residential	$	1,113	$	868
Total	$	1,113	$	868

Federal regulations require banks to classify their own loans and to establish appropriate general and specific allowances, subject to regulatory review. These regulations are designed to encourage management to evaluate loans on a case-by-case basis and to discourage automatic classifications. Loans classified as substandard or doubtful must be evaluated by management to determine loan loss reserves. Loans classified as loss must either be written off or reserved for by a specific allowance. Amounts reported in the allowance for credit losses are included in the calculation of the Company’s total risk-based capital requirement (to the extent that the amount does not exceed 1.25% of total risk-based assets), but are not included in Tier 1 leverage ratio calculations and Tier 1 risk-based capital requirements.

~~Loans~~Substandard ~~accounted~~loans ~~for~~include ~~on a~~ non-~~accrual~~performing ~~basis:~~loans and potential problem loans, where information about possible credit issues or other conditions causes management to question the ability of such borrowers to comply with loan covenants or repayment terms. No loans were internally classified as doubtful or loss at December 31, 2025 or 2024.

	2024		2023
Real estate:
Residential	$	4,665	$	1,693
Home Equity		483		468
Commercial Real Estate		1,280		833
Construction and land development		658		-
Multifamily		3,362		3,715
Commercial business		3,290		2,897
Consumer		-		2
Total	$	13,738	$	9,608

~~Accruing~~The ~~loans~~Company's ~~which~~substandard loans are ~~contractually~~summarized ~~past due 90 days or more~~below:

	2024			2023
(Dollars in thousands)				December 31, 2025			December 31, 2024
Real estate:
Residential real estate				$	6,016		$	4,754
Commercial	$	-		$	712
Home equity				813			490
Residential		-			1,131
Commercial real estate				1,561			1,598
Total	$	-		$	1,843
Construction and land development				2,234			2,285
Ratio of non-performing loans to total assets (1)		0.74	%		0.61	%
Multifamily				696			3,550
Ratio of non-performing loans to total loans (1)		0.91	%		0.76	%
Commercial business				1,439			3,290
(1) Non-performing loans include non-accrual loans and accruing loans which are contractually past due 90 days or more
Manufactured homes				71			54
Collateralized debt obligations	$	1,419		$	1,357
Total				$	12,830		$	16,021
Ratio of collateralized debt obligations to total assets		0.07	%		0.06	%

~~During~~In ~~2024,~~addition ~~gross~~to ~~interest~~identifying ~~income~~and ofmonitoring ~~$656~~non-performing ~~thousand~~and ~~would~~other ~~have~~classified ~~been~~loans, ~~recorded~~management onmaintains ~~loans~~a ~~accounted~~list ~~for~~of onspecial amention ~~non-accrual~~loans. ~~basis~~Special ifmention ~~the~~ loans ~~had~~represent ~~been~~loans ~~current~~management ~~throughout~~is ~~the~~closely ~~period.~~monitoring ~~Interest~~due onto ~~such~~one ~~loans~~or ~~included~~more infactors ~~income~~that ~~during~~may cause the ~~period~~loan ~~amounted~~ to ~~$313~~become ~~thousand~~classified as substandard.

~~Federal~~The regulations require banks to classify their own loans and to establish appropriate general and specific allowances, subject to regulatory review. These regulations are designed to encourage management to evaluate loans on a case-by-case basis and to discourage automatic classifications. Loans classified as substandard or doubtful must be evaluated by management to determine loan loss reserves. Loans classified as loss must either be written off or reserved for by a specific allowance. Amounts reported in the allowance for credit losses are included in the calculation of the Company’'s ~~total~~special ~~risk-based~~mention ~~capital~~loans ~~requirement (to the extent that the amount does not exceed 1.25% of total risk-based assets), but~~ are ~~not~~summarized ~~included in Tier 1 leverage ratio calculations and Tier 1 risk-based capital requirements.~~below:


(Dollars in thousands)	December 31, 2025		December 31, 2024
Residential real estate	$	4,797	$	4,291
Home equity	305		459
Commercial real estate	13,200		8,008
Construction and land development	557		3,675
Multifamily	2,857		5,329
Commercial business	2,768		3,528

Manufactured homes	28		-

Total	$	24,512	$	25,290

~~Substandard~~Purchased loans ~~include~~acquired ~~non-performing~~in a business combination are recorded at estimated fair value on their purchase date. Purchased credit deteriorated loans ~~and~~have ~~potential~~experienced ~~problem~~more than insignificant credit deterioration since origination. PCD loans, ~~where~~are ~~information~~recorded ~~about~~at ~~possible~~the amount paid. An allowance for credit ~~issues~~losses oris determined using the same methodology as other ~~conditions~~loans ~~causes~~held ~~management~~for toinvestment. ~~question~~The sum of the ~~ability~~loan’s ofpurchase ~~such~~price ~~borrowers~~and toallowance ~~comply~~for ~~with~~credit ~~loan~~losses ~~covenants~~becomes orits ~~repayment~~initial ~~terms~~amortized cost basis. NoThe ~~loans~~difference ~~were~~between ~~internally~~the ~~classified~~initial asamortized ~~doubtful~~cost orbasis ~~loss~~and atthe ~~December~~par ~~31,~~value ~~2024~~of the loan is a noncredit discount or ~~2023~~premium, which is amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through credit loss expense.

~~The~~For ~~Bancorp's~~acquired ~~substandard~~non-credit-deteriorated loans and leases, the difference between the fair value and unpaid principal balance of the loan at the acquisition date is amortized or accreted to interest income over the life of the loan. While credit discounts are ~~summarized~~included ~~below:~~in the determination of the fair value for non-credit deteriorated loans, since these discounts are expected to be accreted over the life of the loans, they cannot be used to offset the allowance for credit losses that must be recorded at the acquisition date. As a result, an allowance for credit losses is determined at the acquisition date using the same methodology as other loans held for investment and is recognized as a provision for credit losses in the consolidated income statements. Any subsequent deterioration (improvement) in credit quality is recognized by recording a provision (recapture) for credit losses.

(Dollars in thousands)
Loan Segment	December 31, 2024		December 31, 2023
Residential real estate	$	4,754	$	2,098
Home equity		490		479
Commercial real estate		1,598		2,544
Construction and land development		2,285		-
Multifamily		3,550		4,245
Commercial business		3,290		2,896
Consumer		-		2
Manufactured homes		54		-
Total	$	16,021	$	12,264

A loan is individually evaluated for expected credit losses when, based on current information and events, it is probable that a borrower will be unable to pay all amounts due according to the contractual terms of the loan agreement. Typically, management does not individually evaluate smaller-balance homogeneous loans, such as residential mortgages or consumer loans, as impaired, unless they are troubled loan modifications.

InA ~~addition~~collateral todependent ~~identifying~~financial ~~and~~loan ~~monitoring~~relies ~~non-performing~~solely ~~and~~on ~~other~~the ~~classified~~operation ~~loans,~~or ~~management~~sale ~~maintains~~of athe ~~list~~collateral offor ~~special~~repayment. ~~mention~~In ~~loans.~~evaluating ~~Special~~the ~~mention~~overall ~~loans~~risk ~~represent~~associated ~~loans~~with ~~management~~the isloan, ~~closely~~the ~~monitoring~~Company ~~due~~considers tocharacter, ~~one~~overall orfinancial ~~more~~condition ~~factors~~and ~~that~~resources, ~~may~~and ~~cause~~payment record of the ~~loan~~borrower; tothe ~~become~~prospects ~~classified~~for assupport ~~substandard.~~from any financially responsible guarantors; and the nature and

~~The Bancorp's special mention loans are summarized below:~~13

(Dollars in thousands)
Loan Segment	December 31, 2024		December 31, 2023
Residential real estate	$	4,291	$	3,084
Home equity		459		168
Commercial real estate		8,008		7,434
Construction and land development		3,675		6,902
Multifamily		5,329		-
Commercial business		3,528		1,610
Total	$	25,290	$	19,198

degree of protection provided by the cash flow and value of any underlying collateral. However, as other sources of repayment become inadequate over time, the significance of the collateral's value increases and the loan may become collateral dependent.

Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date. Purchased credit deteriorated ("PCD") loans have experienced more than insignificant credit deterioration since origination. PCD loans are recorded at the amount paid. An allowance for credit losses is determined using the same methodology as other loans held for investment. The ~~sum~~table ofbelow ~~the~~presents ~~loan’s purchase price and allowance for credit losses becomes its initial amortized cost basis. The difference between~~ the ~~initial~~ amortized cost basis and ~~the~~ACL ~~par~~allocated ~~value~~for ofcollateral ~~the~~dependent ~~loan~~loans isin aaccordance ~~noncredit~~with ~~discount~~ASC ~~or premium~~326, which isare ~~amortized~~individually ~~into~~evaluated ~~interest income over the life of the loan. Subsequent changes~~ to ~~the~~determine ~~allowance~~expected ~~for~~ credit losses ~~are recorded through credit loss expense~~.

For acquired non-credit-deteriorated loans and leases, the difference between the fair value and unpaid principal balance of the loan at the acquisition date is amortized or accreted to interest income over the life of the loan. While credit discounts are included in the determination of the fair value for non-credit deteriorated loans, since these discounts are expected to be accreted over the life of the loans, they cannot be used to offset the allowance for credit losses that must be recorded at the acquisition date. As a result, an allowance for credit losses is determined at the acquisition date using the same methodology as other loans held for investment and is recognized as a provision for credit losses in the consolidated income statements. Any subsequent deterioration (improvement) in credit quality is recognized by recording a provision (recapture) for credit losses.


(Dollars in thousands)	December 31, 2025

	Real Estate		Equipment/Inventory		Accounts Receivable		Vehicles		Total		ACL Allocation
Residential real estate	$	2,185	$	-	$	-	$	-	$	2,185	$	39
Home equity	4		-		-		-		4		-
Commercial real estate	1,561		-		-		-		1,561		86

Construction and land development	2,234		-		-		-		2,234		-
Multifamily	696		-		-		-		696		-
Commercial business	-		1,267		130		42		1,439		138

Total	$	6,680	$	1,267	$	130	$	42	$	8,119	$	263

AAt ~~loan is considered impaired when~~times, ~~based~~the onCompany ~~current~~will ~~information~~modify ~~and~~the ~~events,~~terms itof ~~is probable that~~ a ~~borrower~~loan ~~will~~to beforego ~~unable~~a toportion ~~pay~~of ~~all~~interest ~~amounts~~or ~~due~~principal ~~according~~or toreduce the ~~contractual~~interest ~~terms~~rate ofon the loan ~~agreement.~~to ~~Typically,~~a ~~management~~rate ~~does~~materially ~~not~~less ~~individually~~that ~~classify~~market ~~smaller-balance~~rates, ~~homogeneous~~or ~~loans,~~materially ~~such~~extend asthe ~~residential~~maturity ~~mortgages~~date orof ~~consumer~~a ~~loans,~~loan as ~~impaired,~~part ~~unless~~of ~~they~~a ~~are~~ troubled loan ~~modifications~~modification.

9 Loan Modification Disclosures Pursuant to ASU 2022-02

AThe ~~collateral~~following ~~dependent~~tables ~~financial~~show ~~loan relies solely on~~ the ~~operation~~amortized orcost ~~sale~~ of ~~the~~loans ~~collateral~~at ~~for~~December 31, ~~repayment.~~2025 Inand ~~evaluating~~December 31, ~~the overall risk associated with the loan~~2024, ~~the~~that ~~Company~~were ~~considers~~both ~~character,~~experiencing ~~overall~~ financial ~~condition~~difficulty and ~~resources,~~modified ~~and~~during ~~payment record of~~ the ~~borrower;~~year ~~the~~ended ~~prospects~~December 31, ~~for~~2025 ~~support~~and ~~from~~December 31, ~~any~~2024, ~~financially~~segregated ~~responsible~~by ~~guarantors;~~portfolio ~~and~~segment ~~the nature~~ and ~~degree~~type of ~~protection~~modification. ~~provided~~The bypercentage of the ~~cash~~amortized ~~flow~~cost ~~and value~~ of ~~any~~loans ~~underlying~~that ~~collateral.~~were ~~However,~~modified asto ~~other~~borrowers ~~sources~~in offinancial ~~repayment~~distress ~~become~~as ~~inadequate~~compared ~~over~~to ~~time,~~ the ~~significance~~amortized cost of ~~the~~each ~~collateral's~~segment ~~value~~of ~~increases~~financial ~~and~~receivable ~~the~~is ~~loan~~also ~~may~~presented ~~become collateral dependent~~below.

The table below presents the amortized cost basis and allowance for credit losses (“ACL”) allocated for collateral dependent loans in accordance with ASC 326, which are individually evaluated to determine expected credit losses.


	For the year ended December 31, 2025
(Dollars in thousands)	Payment Delay		Term Extension		Interest Rate Reduction		Combination Term Extension and Interest Rate Reduction		% of Total Segment Financing Receivables
Residential real estate	$	-	$	601	$	-	$	-	0.14	%
Commercial real estate	131		390		-		-		0.09	%
Construction and land development	593		-		-		-		0.77	%
Commercial business	945		-		-		-		0.95	%
Total	$	1,669	$	991	$	-	$	-	0.18	%

(Dollars in thousands)	December 31, 2024
			For the year ended December 31, 2024
	Real Estate		Equipment/Inventory		Accounts Receivable				Vehicles		Total		ACL Allocation
(Dollars in thousands)			PaymentDelay				TermExtension				InterestRateReduction				CombinationTerm Extensionand Interest RateReduction		% of TotalSegmentFinancingReceivables
Residential real estate	$	~~3,012~~	$	-528	$	-	$	1,115	$	-	$	~~3,012~~-	$	50	$	-	0.35	%
Home equity		219		-		-				-		219		-
Home Equity			41				-				-				-		0.01	%
Commercial real estate		1,598		-		-				-		1,598		43
Total			$	569			$	1,115			$	-			$	-	0.11	%
Construction and land development		2,285		-		-				-		2,285		-
Multifamily		3,550		-		-				-		3,550		-
Commercial business		712		1,399		1,428				144		3,683		191
	$	11,376	$	1,399	$	1,428			$	144	$	14,347	$	284

At times, the Company will modify the terms of a loan to forego a portion of interest or principal or reduce the interest rate on the loan to a rate materially less than market rates, or materially extend the maturity date of a loan as part of a troubled loan modification.14

~~Loan~~There ~~Modification~~were ~~Disclosures~~no ~~Pursuant~~commitments to ~~ASU~~lend ~~2022-02~~additional amounts to the borrowers included in the previous table.

The ~~following~~Company ~~table~~closely ~~shows~~monitors the ~~amortized~~performance ~~cost~~ of loans atand ~~December~~leases ~~31,~~that ~~2024,~~have ~~that~~been ~~were~~modified ~~both~~for borrowers experiencing financial difficulty ~~and~~to ~~modified~~understand ~~during~~ the ~~year~~effectiveness ~~ended December 31, 2024, segregated by portfolio segment and type~~ of its modification efforts. The ~~percentage~~performance of ~~the~~such ~~amortized~~modified ~~cost of~~ loans ~~that were modified to borrowers in financial distress as compared to the amortized cost of each segment of financial receivable~~ is ~~also~~ presented below.

	For the year ended December 31, 2024
		December 31, 2025
(Dollars in thousands)	~~Payment Delay~~	Current		~~Term Extension~~		30-59 DaysPast Due	~~Interest Rate Reduction~~		~~Combination Term Extension and Interest Rate Reduction~~	60-89 Days Past Due		~~% of Total Segment Financing Receivables~~			Greater Than 90Days Past Due
Residential Real Estate	$	528		$	1,115		$	-	$	-			0.35	%
Residential real estate		$	582			$	19			$	-				$	-
Home Equity		41			-			-		-			0.01	%
Commercial real estate		390				-				-					131
Total	$	569		$	1,115		$	-	$	-			0.11	%
Construction and land development		-				-				-					593
Commercial business		-				-				-					945
Total		$	972			$	19			$	-				$	1,669

	For the year ended December 31, 2023
		December 31, 2024
(Dollars in thousands)	~~Payment Delay~~	Current		~~Term Extension~~		30-59 DaysPast Due	~~Interest Rate Reduction~~		~~Combination Term Extension and Interest Rate Reduction~~	60-89 Days Past Due		~~% of Total Segment Financing Receivables~~			Greater Than 90Days Past Due
Residential Real Estate	$	-		$	868		$	-	$	-			0.18	%
Residential real estate		$	545			$	570			$	-				$	528
Total	$	-		$	868		$	-	$	-			0.06	%
Home equity		-				-				-					41
Total		$	545			$	570			$	-				$	569

~~There~~The ~~were~~borrowers nowith ~~commitments~~term toextension ~~lend~~have ~~additional~~had ~~amounts~~their tomaturity ~~the~~dates ~~borrowers~~extended ~~included~~and inas ~~the~~a ~~previous~~result ~~table~~their monthly payments were reduced.


	For the year ended December 31, 2025
(Dollars in thousands)	Principal Forgiveness		Weighted average interest rate reduction		Weighted average term extension (months)	Payment delay (months)
Residential real estate	$	-	—	%	6	-
Commercial real estate	$	-	—	%	180	5
Construction and land development	$	-	—	%	-	5
Commercial business	$	-	—	%	-	5

The Company closely monitors the performance of loans and leases that have been modified for borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The performance of such modified loans is presented below.


	For the year ended December 31, 2024
(Dollars in thousands)	Principal Forgiveness		Weighted average interest rate reduction		Weighted average term extension (months)	Payment delay (months)
Residential real estate	$	-	—	%	7	6

	For the year ended December 31, 2024
(Dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due
Residential Real Estate	$	545	$	570	$	-	$	528
Home Equity		-		-		-		41
Total	$	545	$	570	$	-	$	569

Upon the Company’s determination that a modified loan has subsequently been deemed uncollectible, the loan or lease is written off. Therefore, the amortized cost of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

	For the year ended December 31, 2023
(Dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due
Residential Real Estate	$	868	$	-	$	-	$	-
Total	$	868	$	-	$	-	$	-

The table that follows sets forth the allowance for credit losses and related ratios for the periods indicated. The amounts are stated in thousands (000’s).

~~The borrowers with term extension have had their maturity dates extended and as a result their monthly payments were reduced.~~15

	For the year ended December 31, 2024
		2025						2024
(Dollars in thousands)	Principal forgiveness				Weighted average interest rate reduction				Weighted average term extention		Payment delay
Balance at beginning of year		$	16,911					$	18,768
Residential Real Estate	$	-				-	%		7 months			6 months
Loans charged-off:
Residential real estate		(13)						(28)
Multifamily		(201)						(125)
Commercial business		(495)						(2,249)
Consumer		(46)						(66)
Total charge-offs		(755)						(2,468)
Recoveries:
Residential real estate		66						44
Commercial real estate		4						5
Multifamily		29						31
Commercial business		460						310
Consumer		9						22
Total recoveries		568						412
Net charge-offs		(187)						(2,056)
Provision for credit losses		782						199
Balance at end of year		$	17,506					$	16,911
ACL to loans outstanding		1.21		%				1.12		%
ACL to nonperforming loans		156.84		%				123.10		%
Net charge-offs to average loans outstanding during the year		0.01		%				0.14		%
Nonaccruing loans to total loans		0.77		%				0.91		%

For the year ended December 31, 2023

(Dollars in thousands)

Principal forgiveness

Weighted average interest rate reduction

Weighted average term extention

Payment delay

Residential Real Estate

89 months

The following table shows the allocation of the allowance for credit losses at December 31, for the dates indicated. The dollar amounts are stated in thousands (000’s). The percent columns represent the percentage of loans in each category to total loans.


	2025				2024
Residential real estate	$	2,757	30.5	%	$	4,481	31.0	%
Home equity	688		3.7	%	835		3.3	%
Commercial real estate	9,152		38.3	%	6,444		36.6	%
Construction and land development	1,114		5.3	%	2,651		5.5	%
Multifamily	2,078		12.7	%	1,003		14.1	%
Commercial business	1,583		6.9	%	1,185		6.9	%
Consumer	2		0.1	%	5		—	%
Manufactured homes	116		1.6	%	252		1.8	%
Government	16		0.9	%	55		0.7	%
Total	$	17,506	100.0	%	$	16,911	100.0	%

~~The~~Investment ~~table that follows sets forth the allowance for credit losses and related ratios for the periods indicated. The amounts are stated in thousands (000’s).~~Activities

	2024			2023
Balance at beginning of year	$	18,768		$	19,084
Loans charged-off:
Real estate residential		(28	)		(998	)
Home Equity		-			(43	)
Commercial real estate		-			(372	)
Multifamily		(125	)		-
Commercial business		(2,249	)		(1,065	)
Consumer		(66	)		(93	)
Total charge-offs		(2,468	)		(2,571	)
Recoveries:
Residential real estate		44			149
Commercial real estate		5			3
Multifamily		31			131
Commercial business		310			264
Consumer		22			16
Total recoveries		412			563
Net charge-offs		(2,056	)		(2,008	)
Provision for credit losses		199			1,692
Balance at end of year	$	16,911		$	18,768
ACL to loans outstanding		1.12	%		1.24	%
ACL to nonperforming loans		123.10	%		163.90	%
Net charge-offs to average loans outstanding during the year		-0.14	%		-0.13	%
Nonaccruing loans to total loans		0.91	%		0.64	%

The primary objective of the investment portfolio is to provide for the liquidity needs of the Company and to contribute to profitability by providing a stable flow of dependable earnings. Securities can be classified as trading, held-to-maturity, or available-for-sale at the time of purchase. No securities are classified as trading or as held-to-maturity. AFS securities are those the Company may decide to sell if needed for liquidity, asset-liability management or other reasons. It has been the policy of the Company to invest its excess cash in U.S. government agency securities, mortgage-backed securities, collateralized mortgage obligations, municipal securities, and treasury securities. In addition, short-term funds are generally invested as interest bearing balances in financial institutions and federal funds. At December 31, 2025, the Company’s investment portfolio totaled $316.2 million. In addition, the Company had $6.5 million in FHLB stock.

11 16

The ~~following~~ table below shows the ~~allocation~~carrying values of the ~~allowance~~components of available for ~~credit~~sale ~~losses~~securities portfolio at December 31, ~~for~~on the dates indicated. The ~~dollar~~ amounts are stated in thousands (000’s). ~~The percent columns represent the percentage of loans in each category to total loans.~~

	2024						2023
(Dollars in thousands)		December 31, 2025				December 31, 2024
	$			%			$		%
U.S. government agency securities		$	8,466			$	8,061
Residential real estate		4,480			31.0			3,984		32.1
Collateralized mortgage obligations and residential mortgage-backed securities		104,665				109,325
Home equity		835			3.3			698		3.1
Municipal securities		201,214				214,749
Commercial real estate		6,445			36.7			6,928		33.4
Collateralized debt obligations		1,882				1,419
Construction and land development		2,651			5.5			4,366		7.6
Total securities available-for-sale		$	316,227			$	333,554
Multifamily		1,003			14.1			955		14.6
Commercial business		1,185			6.9			1,584		6.5
Consumer		5			-			7		-
Manufactured homes		252			1.8			181		2.0
Government		55			0.7			65		0.7
Total		16,911			100.0			18,768		100.0

~~Investment~~The ~~Activities~~contractual maturities and weighted average yields for the U.S. government agency securities, municipal securities, and collateralized debt obligations at December 31, 2025, are summarized in the table below. Securities not due at a single maturity date, such as mortgage-backed securities and collateralized mortgage obligations, are shown separately. The carrying values are stated in thousands (000’s).

The ~~primary~~weighted ~~objective~~average ofyields ~~the~~were ~~investment~~calculated ~~portfolio~~by ismultiplying toeach ~~provide~~carrying ~~for~~value ~~the~~by ~~liquidity~~its ~~needs~~yield ~~of the Company~~ and todividing ~~contribute~~the tosum ~~profitability by providing a stable flow~~ of ~~dependable~~these ~~earnings.~~results ~~Securities~~by ~~can be classified as trading, held-to-maturity (HTM), or available-for-sale (AFS) at~~ the ~~time~~total ofcarrying ~~purchase~~values. NoYields ~~securities~~presented are ~~classified~~not ason ~~trading~~a ~~or as held~~tax-~~to-maturity.~~equivalent ~~AFS securities are those the Company may decide to sell if needed for liquidity, asset-liability management or other reasons~~basis. It has been the policy of the Company to invest its excess cash in U.S. government agency securities, mortgage-backed securities, collateralized mortgage obligations, municipal securities, and treasury securities. In addition, short-term funds are generally invested as interest bearing balances in financial institutions and federal funds. At December 31, 2024, the Company’s investment portfolio totaled $333.6 million. In addition, the Company had $6.5 million in FHLB stock.

The table below shows the carrying values of the components of available for sale securities portfolio at December 31, on the dates indicated. The amounts are stated in thousands (000’s).


	Within 1 Year				1 - 5 Years				5 - 10 Years				After 10 Years				Total
	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount
U.S. government agency securities	$	-	—	%	$	8,466	1.00	%	$	-	—	%	$	-	—	%	$	8,466
Collateralized mortgage obligations and residential mortgage-backed securities	-		—	%	-		—	%	-		—	%	104,665		1.54	%	104,665
Municipal securities	-		—	%	3,901		2.45	%	35,800		2.96	%	161,513		2.97	%	201,214

Collateralized debt obligations	-		—	%	-		—	%	-		—	%	1,882		3.32	%	1,882
Totals	$	-	—	%	$	12,367	1.46	%	$	35,800	2.96	%	$	268,060	2.42	%	$	316,227

(Dollars in thousands)	2024		2023
U.S. government sponsored entities	$	8,061	$	7,883
Collateralized mortgage obligations and residential mortgage-backed securities		109,325		123,464
Municipal securities		214,749		238,670
Collateralized debt obligations		1,419		1,357
Total securities available-for-sale	$	333,554	$	371,374

The Company currently holds two collateralized debt obligations and the securities’ quarterly interest payments have been placed in “payment in kind” status. Payment in kind status results in a temporary delay in the payment of interest. As a result of a delay in the collection of the interest payments, management placed these securities in nonaccrual status. At December 31, 2025, the cost basis of the two collateralized debt obligations on nonaccrual status totaled $2.1 million.

~~The~~Unrealized ~~contractual~~losses ~~maturities~~on ~~and~~securities ~~weighted~~have ~~average~~not ~~yields~~been ~~for~~recognized ~~the~~into ~~U.S~~income ~~government~~because the securities, ~~collateralized~~are ~~mortgage~~of ~~obligations~~high credit quality, ~~residential~~have ~~mortgage-backed~~undisrupted ~~securities~~cash flows, ~~municipal~~or ~~securities,~~have ~~collateralized~~been ~~debit~~independently ~~obligations~~evaluated atfor ~~December~~credit ~~31,~~impairment ~~2024,~~and ~~are~~appropriate ~~summarized~~write indowns taken. Management has the ~~table~~intent ~~below.~~and ~~Securities~~ability ~~not~~to ~~due~~hold atthe asecurities ~~single~~for ~~maturity~~the ~~date~~foreseeable future, ~~such~~and asthe ~~mortgage-backed~~decline ~~securities~~in ~~and~~fair ~~collateralized~~value ~~mortgage~~is ~~obligations,~~largely ~~are~~due ~~shown~~to ~~separately~~changes in interest rates and volatility in the securities markets. The ~~carrying~~fair values are ~~stated~~expected into ~~thousands~~recover ~~(000’s)~~as the securities approach maturity.

~~The~~Sources ~~weighted average yields were calculated by multiplying each carrying value by its yield and dividing the sum~~ of ~~these results by the total carrying values. Yields presented are not on a tax-equivalent basis.~~Funds

	Within 1 Year				1 - 5 Years					5 - 10 Years					After 10 Years					Variable Maturities					Total
	Amount		Yield		Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield			Amount
U.S. government sponsored entities:	$	-		-	$	8,061		1.00	%	$	-		-		$	-		-		$	-		-		$	8,061
Collateralized mortgage obligations and residential mortgage- backed securities:		-		-		-		-			-		-			-		-			109,325		1.56	%		109,325
Municipal securities:		-		-		2,740		2.38	%		28,835		3.28	%		183,174		2.99	%		-		-			214,749
Collateralized debt obligations:		-		-		-		-			-		-			1,419		3.34	%		-		-			1,419
Totals	$	-		-	$	10,801		1.35	%	$	28,835		3.28	%	$	184,593		2.97	%	$	109,325		1.56	%	$	333,554

General. Deposits are the major source of the Company’s funds for lending and other investment purposes. In addition to deposits, the Company derives funds from maturing investment securities and certificates of deposit, dividend receipts from the investment portfolio, loan principal repayments, repurchase agreements, advances from the FHLBI and other borrowings. Loan repayments are a relatively stable source of funds, while deposit inflows and outflows are significantly influenced by general interest rates and money market conditions. Borrowings may be used on a short-term basis to compensate for reductions in the availability of other sources of funds. They may also be used on a longer-term basis for general business purposes. The Company uses repurchase agreements, federal funds purchased, as well as a line-of-credit and advances from the FHLB for borrowings.

~~The~~Deposits. ~~Company~~Retail ~~currently~~and ~~holds~~commercial ~~two~~deposits ~~collateralized~~are ~~debt~~attracted ~~obligations~~principally ~~and~~from within the ~~securities~~Company’s ~~quarterly~~primary market area. The Company offers a broad selection of deposit instruments including non-interest ~~payments~~bearing ~~have~~demand ~~been~~accounts, ~~placed~~interest inbearing ~~“payment~~demand inaccounts, ~~kind”~~savings ~~status.~~accounts, ~~Payment~~money inmarket ~~kind~~deposit ~~status~~accounts, ~~results~~certificate inaccounts aand ~~temporary~~retirement ~~delay~~savings inplans. Deposit accounts vary as to terms, with the ~~payment~~principal ofdifferences ~~interest.~~being Asthe aminimum ~~result~~balance ofrequired, athe ~~delay~~time inperiod the ~~collection~~funds ofmust remain on deposit and the interest ~~payments,~~rate. ~~management~~Certificate ~~placed~~account ~~these~~offerings ~~securities~~typically range in ~~non-accrual~~maturity ~~status.~~from Atten ~~December~~days ~~31,~~to ~~2024,~~42 ~~the~~months. ~~cost~~The ~~basis~~deregulation of ~~the~~federal ~~two~~controls ~~collateralized~~on ~~debt~~insured ~~obligations~~deposits onhas ~~non-accrual~~allowed ~~status~~the ~~totaled~~Company ~~$2.2~~to ~~million.~~be more

Unrealized losses on securities have not been recognized into income because the securities are of high credit quality, have undisrupted cash flows, or have been independently evaluated for credit impairment and appropriate write downs taken. Management has the intent and ability to hold the securities for the foreseeable future, and the decline in fair value is largely due to changes in interest rates and volatility in the securities markets. The fair values are expected to recover as the securities approach maturity.17

12 competitive in obtaining funds and to be flexible in meeting the threat of net deposit outflows. The Company had $245 thousand in brokered deposit balances at December 31, 2025, which were obtained through prior acquisitions. The Company did not obtain any deposit funds through brokers during the year ended 2025.

~~Sources~~The following table presents the average daily amount of ~~Funds~~deposits and average rates paid on such deposits for the years indicated. The amounts are stated in thousands (000’s).

General. Deposits are the major source of the Company’s funds for lending and other investment purposes. In addition to deposits, the Company derives funds from maturing investment securities and certificates of deposit, dividend receipts from the investment portfolio, loan principal repayments, repurchase agreements, advances from the Federal Home Loan Bank of Indianapolis (FHLB) and other borrowings. Loan repayments are a relatively stable source of funds, while deposit inflows and outflows are significantly influenced by general interest rates and money market conditions. Borrowings may be used on a short-term basis to compensate for reductions in the availability of other sources of funds. They may also be used on a longer-term basis for general business purposes. The Company uses repurchase agreements, as well as a line-of-credit and advances from the FHLB for borrowings. At December 31, 2024, the Company had $65.0 million in FHLB fixed rate advances $40.1 million in repurchase agreements. The Company had no other borrowed funds as of December 31, 2024.


	Year Ended December 31,
	2025				2024
	Amount		Rate %		Amount		Rate %
Non-interest bearing demand deposits	$	282,795	-	%	$	293,508	-	%
Interest bearing demand deposits	310,811		0.72	%	307,173		0.89	%
MMDA accounts	360,939		3.01	%	323,450		3.34	%
Savings accounts	265,828		0.05	%	288,708		0.05	%
Certificates of deposit	534,601		3.40	%	542,708		3.96	%
Total deposits	$	1,754,974	2.13	%	$	1,755,547	2.40	%

~~Deposits.~~As ~~Retail and commercial deposits are attracted principally from within the Company’s primary market area. The Company offers a broad selection~~ of ~~deposit instruments including non- interest bearing demand accounts~~December 31, ~~interest bearing demand accounts~~2025, ~~savings~~and ~~accounts~~2024, ~~money~~approximately ~~market~~$503.0 ~~deposit~~million ~~accounts, certificate accounts~~ and ~~retirement savings plans~~$498.0 ~~Deposit accounts vary as to terms~~million, ~~with the principal differences being the minimum balance required~~respectively, ~~the~~of ~~time period~~ the ~~funds~~Company's ~~must remain on~~ deposit ~~and~~portfolio ~~the~~was ~~interest rate~~uninsured. ~~Certificate account offerings typically range in maturity from ten days to 42 months.~~ The ~~deregulation~~uninsured ofamounts ~~federal~~are ~~controls~~estimates based on ~~insured deposits has allowed~~ the ~~Company~~methodologies ~~to be more competitive in obtaining funds~~ and toassumptions beused ~~flexible~~for ~~in meeting~~ the ~~threat~~Bank's ofregulatory ~~net~~reporting ~~deposit outflows~~requirements. The Company had $21.7 million in brokered deposit balances at December 31, 2024, which were obtained through prior acquisitions. The Company did not obtain any deposit funds through brokers during the year ended 2024.

The following table ~~presents~~sets forth the ~~average~~portion ~~daily~~of ~~amount~~the ofBank's time deposits, ~~and~~by ~~average~~account, ~~rates~~that ~~paid~~exceed onthe ~~such~~FDIC ~~deposits~~insurance ~~for~~limit, ~~the~~by ~~years~~remaining ~~indicated.~~time ~~The~~until ~~amounts~~maturity, ~~are~~as ~~stated~~of inDecember 31, ~~thousands~~2025 (~~000’s~~dollars in thousands).

	December 31, 2024					December 31, 2023
3 months or less		$	14,740
	Amount			Rate %		Amount		Rate %
Over 3 months through 6 months		12,094
Noninterest bearing demand deposits	$	293,508			-	$	323,694		-
Over 6 months through 12 months		10,356
Interest bearing demand deposits		307,173			0.89		344,449		0.96
Over 12 months		1,319
MMDA accounts		323,450			3.34		284,910		2.73
Total		$	38,509
Savings accounts		288,708			0.05		343,008		0.05
Certificates of deposit		542,708			3.96		488,025		2.91
Total deposits	$	1,755,547			2.40	$	1,784,086		1.43

AsBorrowings. Borrowed money is used on a short-term basis to compensate for reductions in the availability of ~~December~~other 31sources of funds and is generally accomplished through federal fund purchased and repurchase agreements, ~~2024~~as well as, through a line of credit and ~~2023,~~advances ~~approximately~~from ~~$498~~the FHLB.0 ~~million~~Federal ~~and~~funds ~~$530~~generally mature within one day.2 ~~million,~~Repurchase ~~respectively~~agreements generally mature within one year and are generally secured by municipal securities, ofcollateralized ~~our~~mortgage ~~deposit~~obligations ~~portfolio~~and ~~was~~residential ~~uninsured~~mortgage-backed securities, under the Company’s control. ~~The~~FHLB ~~uninsured~~advances ~~amounts~~with maturities ranging from one year to five years are ~~estimates~~used ~~based~~to fund securities and loans of comparable duration, as well as to reduce the impact that movements in short-term interest rates have on the ~~methodologies~~Company’s overall cost of funds. Fixed rate advances are payable at maturity, with a prepayment penalty and ~~assumptions~~FHLB ~~used~~may ~~for~~retain a puttable option to call these advances after a period of time. At December 31, 2025, the ~~Bank's~~Company ~~regulatory~~had ~~reporting~~$45.0 ~~requirements~~million in FHLB fixed rate advances, $39.7 million in federal funds purchased and repurchase agreements. The Company had no other borrowed funds as of December 31, 2025.

The ~~following~~FHLB ~~table~~advances ~~sets~~are ~~forth~~collateralized by mortgage loans with a carrying value totaling approximately $380.7 million at December 31, 2025. In addition to the ~~portion~~fixed ofrate advances, the Bank's ~~time~~maintains ~~deposits,~~a by$25.0 ~~account,~~million ~~that~~line ~~exceed~~of credit with the ~~FDIC~~Federal ~~insurance~~Home ~~limit,~~Loan byBank ~~remaining~~of ~~time~~Indianapolis. ~~until~~The ~~maturity,~~Bank asdid not have a balance on the line of credit at December 31, 2025 or December 31, 2024. ~~(dollars~~The inBank ~~thousands)~~did not have other borrowings at December 31, 2025, or December 31, 2024.

3 months or less	$	55,934
Over 3 months through 6 months		27,641
Over 6 months through 12 months		54,517
Over 12 months		3,308
Total	$	141,400

At December 31, 2025, the Bank had approximately $673.9 million available in credit lines with various money center banks, including the FHLB and Federal Reserve.

13 Repurchase agreements are secured by municipal securities and collateralized mortgage obligations and residential mortgage-backed securities, under the Bank’s control. At December 31, 2025, the Bank had investment securities with a carrying value of $47.2 million pledged as collateral for the repurchase agreements, and the fair value of the collateral approximated its carrying value.

Borrowings. Borrowed money is used on a short-term basis to compensate for reductions in the availability of other sources of funds and is generally accomplished through repurchase agreements, as well as, through a line of credit and advances from the FHLB. Repurchase agreements generally mature within one year and are generally secured by municipal securities, collateralized mortgage obligations and residential mortgage-backed securities, under the Company’s control. FHLB advances with maturities ranging from one year to five years are used to fund securities and loans of comparable duration, as well as to reduce the impact that movements in short-term interest rates have on the Company’s overall cost of funds. Fixed rate advances are payable at maturity, with a prepayment penalty.18

OnWealth ~~March~~Management 12, 2023, the Federal Reserve Board announced the creation of a new Bank Term Funding Program (the “BTFP”). The BTFP offered loans of up to one year to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasury securities, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets were valued at par for purposes of the collateral pledge under the BTFP. During the first quarter of 2023, the Company participated in the BTFP by accessing $80 million of low-cost capital under the program. As of December 31, 2023, the Company had pledged securities as collateral for the program with a par value of $105.3 million. During the quarter ending September 30, 2024, the Company terminated its involvement in the Bank Term Funding Program (the “BTFP”) and paid off its outstanding balance of $60 million, in full, through a utilization of excess liquidity and FHLB advances. The Company’s liquidity position remains strong with solid core deposit customer relationships, excess cash, debt securities, and access to diversified borrowing sources.Group

~~Fixed~~The ~~rate~~Company's ~~advances~~Wealth ~~are~~Management ~~payable~~Group atprovides ~~maturity,~~estate ~~with~~and aretirement ~~prepayment~~planning, ~~penalty.~~guardianships, ~~The~~special ~~advances~~needs ~~were~~trusts, ~~collateralized~~IRA byaccounts, ~~mortgage~~Investment ~~loans~~Agency ~~with~~accounts, aand ~~carrying~~serves ~~value~~as ~~totaling~~personal ~~approximately~~representative ~~$460.8~~of ~~million~~estates atand ~~December~~acts ~~31,~~as ~~2024.~~Trustee ~~The~~for ~~Bank~~Revocable ~~had~~and noIrrevocable ~~balance~~Trusts. atAt December 31, ~~2023~~2025, ~~and~~the amarket ~~balance~~value of ~~$65~~the ~~million~~Wealth atManagement ~~December~~Group’s ~~31,~~assets ~~2024.~~under Inmanagement ~~addition~~totaled to$416.9 ~~the fixed rate advances~~million, ~~the~~an ~~Bank~~increase ~~maintains~~of a $2524.0 million, ~~line~~compared ofto ~~credit~~December 31, ~~with~~2024. ~~the~~Property, ~~Federal~~other ~~Home~~than ~~Loan~~cash ~~Bank~~deposits, ofheld ~~Indianapolis.~~in ~~The Bank did not have~~ a ~~balance~~fiduciary onor ~~the~~agency ~~line~~capacity ofis ~~credit~~not atincluded ~~December~~in ~~31,~~the ~~2024~~consolidated orbalance ~~December~~sheets ~~31,~~since ~~2023.~~such ~~The~~property ~~Bank~~is ~~did~~ not ~~have~~owned ~~other~~by ~~borrowings~~the ~~at December 31, 2024, or December 31, 2023~~Company.

AtAnalysis ~~December~~of ~~31,~~Profitability ~~2024, the Bank had approximately $687.4 million available in credit lines with various money center banks, including the FHLB~~ and ~~Federal~~Key ~~Reserve.~~Operating Ratios

~~The~~Financial ~~following~~Ratios ~~tables set forth certain information regarding borrowing~~ and ~~repurchase agreements by~~ the ~~Company~~Analysis ~~at the end~~ of ~~and~~Changes ~~during~~in ~~the~~Net ~~periods~~Interest ~~indicated~~Income. ~~The amounts are stated in thousands (000’s).~~

	At December 31,
	2024			2023
Repurchase agreements:
Balance	$	40,116		$	38,124
Securities underlying the agreements:
Ending carrying amount		57,833			54,458
Ending fair value		57,833			54,458
Weighted average rate (1)		3.85	%		3.64	%

The tables below set forth certain financial ratios of the Company for the periods indicated:

	For year ended December 31,
		Year Ended December 31,
	2024				2023
		2025						2024
Highest month-end balance	$	44,058			$	48,947
Return on average assets		0.39		%				0.58	%
Average outstanding balance		41,506				35,543
Return on average equity		5.10		%				8.06	%
Weighted average rate on securities sold under agreements to repurchase (2)		3.51	%			3.83	%

~~(1)~~ The ~~weighted~~ average ~~rate~~balance ~~for~~sheet ~~each~~amounts, ~~period~~the isrelated ~~calculated~~interest byincome ~~weighing~~or ~~the~~expense, ~~principal~~and ~~balances~~average ~~outstanding~~rates ~~for~~earned or paid are presented in the ~~various~~following ~~interest~~table. ~~rates~~The amounts are stated in thousands (000's).

~~(2) The weighted average rate is calculated by dividing the interest expense for the period by the average daily balances of securities sold under agreements to repurchase for the period.~~19


	Average Balances, Interest, and Rates
	December 31, 2025							December 31, 2024
	Average Balance		Interest			Rate (%)		Average Balance		Interest			Rate (%)
ASSETS
Interest bearing deposits in other financial institutions	$	75,724	$	3,048		4.03	%	$	51,202	$	2,967		5.79	%
Federal funds sold	1,160		43			3.71	%	912		38			4.17	%
Securities available-for-sale	329,646		7,819			2.37	%	347,048		8,250			2.39	%
Loans receivable	1,478,271		80,337			5.43	%	1,504,206		77,515			5.15	%
Federal Home Loan Bank stock	6,547		516			7.88	%	6,547		408			6.23	%
Total interest earning assets	1,891,348		91,763			4.85	%	1,909,915		89,178			4.67	%
Cash and non-interest bearing deposits in other financial institutions	25,829							28,730
Allowance for credit losses	(17,821)							(18,529)
Other non-interest bearing assets	151,196							155,251
Total assets	$	2,050,552						$	2,075,367

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing deposits	$	1,472,179	$	31,426		2.13	%	$	1,462,039	$	35,162		2.40	%
Federal funds purchased and repurchase agreements	43,444		1,430			3.29	%	41,506		1,600			3.85	%
Borrowed funds	56,050		2,164			3.86	%	85,927		3,969			4.62	%
Total interest bearing liabilities	1,571,673		$	35,020		2.23	%	1,589,472		40,731			2.56	%
Non-interest bearing deposits	282,795							293,508
Other non-interest bearing liabilities	37,621							41,893
Total liabilities	1,892,089							1,924,873
Total stockholders' equity	158,463							150,494
Total liabilities and stockholders' equity	$	2,050,552						$	2,075,367
Net interest income			$	56,743						$	48,447



Net interest margin (average earning assets)			3.00		%					2.54		%

Net interest spread			2.62		%					2.11		%
Ratio of interest-earning assets to interest-bearing liabilities			1.20x							1.20x

	(Dollars in thousands)
	December 31,		December 31,
	2024		2023
Federal Reserve Fixed rate advance with outstanding rate of 4.38%, matured March 22, 2024	$	-	$	80,000
FHLB Fixed rate advance with outstanding rate of 4.85%, maturing May 16, 2025		10,000		-
FHLB Fixed rate advance with outstanding rate of 4.77%, maturing May 19, 2025		10,000		-
FHLB Fixed rate advance with outstanding rate of 3.38%, maturing August 7, 2028 (1)		10,000		-
FHLB Fixed rate advance with outstanding rate of 3.22%, maturing August 7, 2029 (1)		10,000		-
FHLB Fixed rate advance with outstanding rate of 3.84%, maturing February 28, 2029 (1)		15,000		-
FHLB Fixed rate advance with outstanding rate of 3.74%, maturing February 28, 2029 (1)		10,000		-
Total	$	65,000	$	80,000

The table below sets forth certain information regarding changes in interest income and interest expense of the Company for the periods indicated. For each category of interest-earning asset and interest-bearing liability, information is provided on changes attributable to: (1) changes in volume (change in volume multiplied by old rate) and (2) changes in rate (change in rate multiplied by old volume). Changes attributable to both rate and volume which cannot be segregated have been allocated proportionately to the change due to volume and the change due to rate. The amounts are stated in thousands (000's).

~~(1) FHLB retains puttable option to call these advances after a period of time.~~20

Wealth Management Group


	2025 Compared to 2024
	Increase/(Decrease) Due To
	Volume		Rate		Total
Interest income on:
Interest bearing deposits in other financial institutions	$	1,152	$	(1,071)	$	81
Federal funds sold	10		(5)		5
Securities available-for-sale	(369)		(62)		(431)
Loans receivable	(1,349)		4,171		2,822
Federal Home Loan Bank stock	-		108		108
Total interest earning assets	(556)		3,141		2,585

Interest expense on:
Interest-bearing deposits	242		(3,978)		(3,736)
Federal funds purchased and repurchase agreements	72		(242)		(170)
Borrowed funds	(1,226)		(579)		(1,805)
Total interest bearing liabilities	(912)		(4,799)		(5,711)
Net change in interest income	$	356	$	7,940	$	8,296

~~The~~Subsidiary Company's Wealth Management Group provides estate and retirement planning, guardianships, land trusts, profit sharing and 401(k) retirement plans, IRA and Keogh accounts, investment agency accounts, and serves as personal representative of estates and acts as trustee for revocable and irrevocable trusts. At December 31, 2024, the market value of the Wealth Management Group’s assets under management totaled $392.9 million, a increase of $5.8 million, compared to December 31, 2023. Property, other than cash deposits, held in a fiduciary or agency capacity is not included in the consolidated balance sheets since such property is not owned by the Company.Activities

~~Analysis~~Peoples Service Corporation, a wholly owned subsidiary of ~~Profitability~~the Bank was incorporated under the laws of the State of Indiana. The subsidiary currently provides insurance and ~~Key~~annuity ~~Operating~~investments ~~Ratios~~to the Bank’s wealth management customers.

~~Financial~~NWIN, ~~Ratios~~LLC ~~and~~is a wholly owned subsidiary of the ~~Analysis~~Bank. NWIN, LLC was incorporated under the laws of ~~Changes~~the State of Nevada as an investment subsidiary. The investment subsidiary currently holds security investments, which are managed by a professional portfolio manager. In addition, the investment subsidiary is the parent of a real estate investment trust, NWIN Funding, Inc., that invests in ~~Net~~real ~~Interest~~estate ~~Income~~loans originated by the Bank.

~~The~~NWIN ~~tables~~Funding, ~~below~~Inc. ~~set~~is ~~forth~~a ~~certain~~subsidiary ~~financial~~of ~~ratios~~NWIN, LLC, and was formed as an Indiana Real Estate Investment Trust (REIT). The formation of NWIN Funding, Inc. provides the Company ~~for~~with ~~the~~a ~~periods~~vehicle ~~indicated:~~that may be used to raise capital utilizing portfolio mortgages as collateral, without diluting stock ownership.

	Year ended December 31,
	2024			2023
Return on average assets		0.58	%		0.40	%
Return on average equity		8.06	%		6.28	%
Average equity-to-average assets ratio		7.25	%		6.41	%
Dividend payout ratio		16.86	%		53.55	%

Columbia Development Company, LLC is a wholly owned subsidiary of the Bank and was incorporated under the laws of the State of Indiana. The subsidiary holds real estate properties that the Bank has acquired through the foreclosure process.

	At December 31,
	2024			2023
Total stockholders’ equity to total assets		7.35	%		6.99	%

The consolidated financial statements include the Company, its wholly owned subsidiaries, the Bank and the Bank’s wholly owned subsidiaries, Peoples Service Corporation, NWIN, LLC and Columbia Development Company, LLC. The Company’s business activities include being a holding company for the Bank. The Company’s earnings are dependent upon the earnings of the Bank. All significant inter-company accounts and transactions have been eliminated in consolidation.

15 Competition

The ~~average~~Company’s ~~balance~~primary ~~sheet~~market ~~amounts~~area for deposits, ~~the~~loans ~~related~~and ~~interest~~financial ~~income~~services orencompasses ~~expense,~~Lake and ~~average~~Porter ~~rates~~Counties ~~earned~~in orIndiana ~~paid~~and Cook and DuPage Counties in Illinois. All of the Company’s banking centers and offices are ~~presented~~located in its primary market area. Approximately ninety-six percent of the ~~following~~Company’s ~~table~~business activities are within this area.

The ~~amounts~~Company ~~are~~faces ~~stated~~strong competition in ~~thousands~~its ~~(000'~~primary market area for the attraction and retention of deposits and in the origination of loans. The Company’s) most direct competition for deposits has historically come from commercial banks, savings associations, and credit unions located in its primary market area. Particularly in times of high interest rates, the Company has had significant competition from mutual funds and other firms offering financial services. The Company’s competition for loans comes principally from savings associations, commercial banks, mortgage banking companies, credit unions, insurance companies, and other institutional lenders.

	Year ended December 31, 2024								Year ended December 31, 2023
				Interest								Interest
	Average			Income/		Average			Average			Income/		Average
	Balance			Expense		Rate			Balance			Expense		Rate
Assets:
Interest bearing balances in financial institutions	$	51,202		$	2,967		5.79	%	$	37,615		$	1,846		4.91	%
Federal funds sold		912			38		4.17			1,341			58		4.33
Nontaxable Securities		214,939			5,587		2.60			226,896			6,117		2.70
Taxable Securities		138,656			3,071		2.21			142,594			3,000		2.10
Total investments		405,709			11,663		2.87			408,446			11,021		2.70
Loans:*
Real estate mortgage loans		1,378,572			69,342		5.03			1,389,048			66,870		4.81
Commercial business loans		96,224			7,068		7.35			96,302			6,419		6.67
Consumer loans		29,410			1,105		3.76			33,660			1,473		4.38
Total loans		1,504,206			77,515		5.15			1,519,010			74,762		4.92
Total interest-earning assets		1,909,915			89,178		4.67			1,927,456			85,783		4.45
Allowance for credit losses		(18,529	)							(18,106	)
Other assets		183,981								174,011
Total assets	$	2,075,367							$	2,083,361
Liabilities:
NOW accounts	$	307,173		$	2,738		0.89	%	$	344,449		$	3,294		0.96	%
Money market demand accounts		323,450			10,813		3.34			284,910			7,777		2.73
Savings accounts		288,708			146		0.05			343,008			175		0.05
Certificates of deposit		542,708			21,465		3.96			488,025			14,192		2.91
Total interest-bearing deposits		1,462,039			35,162		2.40			1,460,392			25,438		1.74
Repurchase Agreements		41,506			1,600		3.85			35,543			1,294		3.64
Borrowed funds		85,927			3,969		4.62			98,848			4,496		4.55
Total interest-bearing liabilities		1,589,472			40,731		2.56			1,594,783			31,228		1.96
Demand deposit accounts		293,508								323,694
Other liabilities		41,893								31,347
Total liabilities		1,924,873								1,949,824
Stockholders' equity		150,494								133,537
Total liabilities and stockholders' equity	$	2,075,367							$	2,083,361
Net interest income				$	48,447							$	54,555
Net interest spread							2.11	%							2.49	%
Net interest margin**							2.54	%							2.83	%
Ratio of interest-earning assets to interest-bearing liabilities							1.20	x							1.21	x

The Company competes for loans principally through the interest rates and loan fees it charges and the efficiency and quality of the services it provides borrowers and other third-party sources. It competes for deposits by offering depositors a wide variety of savings accounts, checking accounts, competitive interest rates, convenient banking center locations, drive-

* Non-accruing loans have been included in the average balances.21

**up ~~Net~~facilities, ~~interest~~automatic ~~income~~teller ~~divided~~machines, bytax ~~average~~deferred ~~interest-earning~~retirement ~~assets~~programs, digital banking, and other miscellaneous services.

16 The activities of the Company and the Bank in the geographic market served involve competition with other banks as well as with other financial institutions and enterprises, many of which have substantially greater resources than those available to the Company. In addition, non-bank financial services companies with which the Company and Bank compete, while subject to regulation by the CFPB, are generally not subject to the same type of extensive regulation by the federal and state banking agencies applicable to the Company and the Bank.

~~The~~Employees ~~table below sets forth certain information regarding changes in interest income~~ and ~~interest~~Human ~~expense~~Capital of the Company for the periods indicated. For each category of interest-earning asset and interest-bearing liability, information is provided on changes attributable to: (1) changes in volume (change in volume multiplied by old rate) and (2) changes in rate (change in rate multiplied by old volume). Changes attributable to both rate and volume which cannot be segregated have been allocated proportionately to the change due to volume and the change due to rate. The amounts are stated in thousands (000's).Resources

	Year Ended December 31,
	2024			vs.			2023
	Increase / (Decrease)
				Due To
	Volume			Rate			Total
Interest income:
Loans receivable	$	(734	)	$	3,487		$	2,753
Nontaxable securities		(315	)		(215	)		(530	)
Taxable securities		58			13			71
Interest bearing balances in other financial institutions		747			374			1,121
Federal funds sold		(18	)		(2	)		(20	)
Total interest-earning assets		(262	)		3,657			3,395
Interest Expense:
NOW accounts		(271	)		(286	)		(557	)
Money market accounts		1,141			1,895			3,036
Savings accounts		(8	)		(21	)		(29	)
Certificates of deposit		288			6,985			7,273
Repurchase agreements		227			79			306
Borrowed funds		(596	)		70			(526	)
Total interest-bearing liabilities		781			8,722			9,503
Net change in net interest income	$	(1,043	)	$	(5,065	)	$	(6,108	)

We believe that the foundation of our success in the banking business lies with the quality of our employees, the development of our employees’ skills and career goals, and our ability to provide a comprehensive rewarding experience and work environment for our employees. We encourage and support the development of our employees and, wherever possible, strive to fill positions from within the organization. As of December 31, 2025, the Bank had 296 full-time and 22 part-time employees. The employees are not represented by a collective bargaining agreement. Management believes its employee relations are good. The Company has four executive officers and has no other employees. The Company’s officers also are full-time employees of the Bank, and are compensated by the Bank.

17 Regulation and Supervision

~~Subsidiary~~Bank ~~Activities~~Holding Company Regulation. The Company is registered as a bank holding company for the Bank and has elected to be a financial holding company under the Gramm-Leach-Bliley Act of 1999. As a bank holding company and financial holding company, the Company is subject to the regulation and supervision of the FRB under the BHCA. Bank holding companies are required to file periodic reports with and are subject to periodic examination by the FRB.

~~Peoples~~Under ~~Service~~the ~~Corporation~~BHCA, awithout ~~wholly~~the ~~owned~~prior ~~subsidiary~~approval of the ~~Bank~~FRB, ~~was~~the ~~incorporated~~Company ~~under~~may not acquire direct or indirect control of more than 5% of the ~~laws~~voting stock or substantially all of the ~~State~~assets of ~~Indiana~~any company, including a bank, and may not merge or consolidate with another bank holding company. ~~The~~In ~~subsidiary~~addition, ~~currently~~the ~~provides~~Company ~~insurance~~is ~~and~~generally ~~annuity~~prohibited ~~investments~~by the BHCA from engaging in any nonbanking business unless such business is determined by the FRB to be so closely related to banking as to be a proper incident thereto. Under the ~~Bank’~~BHCA, the FRB has the authority to require a bank holding company to terminate any activity or relinquish control of a nonbank subsidiary (other than a nonbank subsidiary of a bank) upon the FRB's ~~wealth~~determination ~~management~~that ~~customers~~such activity or control constitutes a serious risk to the financial soundness and stability of any bank subsidiary of the bank holding company.

~~NWIN,~~The ~~LLC~~standards isby awhich ~~wholly~~bank ~~owned~~and ~~subsidiary~~financial ofinstitution ~~the~~acquisitions ~~Bank~~are evaluated may be subject to change. ~~NWIN~~In September 2024, ~~LLC~~the ~~was~~FDIC, ~~incorporated~~OCC, ~~under~~and the ~~laws~~DOJ ofannounced ~~the~~new ~~State~~rules ofand ~~Nevada~~policy asstatements animpacting ~~investment~~their ~~subsidiary~~bank merger review process. In ~~The~~May ~~investment~~2025, ~~subsidiary~~the ~~currently~~OCC ~~holds~~adopted ~~security~~a ~~investments~~final rule that restored the ability for Bank Merger Act applicants to file a streamlined application form for certain types of acquisitions and the expedited review process for Bank Merger Act applications, which ~~are~~had ~~managed~~been removed by athe ~~professional~~2024 ~~portfolio~~final ~~manager~~rule, and rescinded the 2024 policy statement. InThe ~~addition,~~FDIC similarly rescinded the ~~investment~~2024 ~~subsidiary~~statement isof policy in May 2025. Concurrent with the ~~parent~~FDIC and OCC issuances of arevised ~~real~~policy ~~estate~~statements ~~investment~~in ~~trust~~2024, ~~NWIN~~the ~~Funding~~DOJ withdrew from its 1995 Bank Merger Guidelines and announced that it would consider bank mergers under its 2023 Merger Guidelines, ~~Inc.~~which are not industry specific, ~~that~~as ~~invests~~well inas ~~real~~under ~~estate~~a ~~loans~~separate, ~~originated~~recently byadopted bank merger addendum. Unlike the ~~Bank~~FDIC and OCC, the DOJ has not reinstated the guidance that was in effect prior to 2024.

~~NWIN~~The ~~Funding,~~Change ~~Inc~~in Bank Control Act prohibits a person or group of persons from acquiring “control” of a bank holding company unless the FRB has been notified and has not objected to the transaction. isUnder a ~~subsidiary~~rebuttable presumption established by the FRB, the acquisition of ~~NWIN~~10% or more of a class of voting stock of a bank holding company with a class of securities registered under Section 12 of the Exchange Act, ~~LLC~~such as the Company, ~~and~~would, ~~was~~under ~~formed~~the ascircumstances anset ~~Indiana~~forth ~~Real~~in ~~Estate~~the ~~Investment~~presumption, ~~Trust~~constitute acquisition of control of the Company. In addition, the CBCA prohibits any entity from acquiring 25% (~~REIT~~the BHCA has a lower limit for acquirers that are existing bank holding companies). ~~The~~or ~~formation~~more of ~~NWIN~~a ~~Funding~~bank holding company’s or bank’s voting securities, ~~Inc~~or otherwise obtaining control or a controlling influence over a bank holding company or bank without the approval of the FRB. ~~provides~~On April 1, 2021, the ~~Company~~FRB’s ~~with~~final arule ~~vehicle~~clarifying the standards for determining whether one company has control over another became effective. The final rule establishes four categories of tiered presumptions of noncontrol that ~~may~~are bebased ~~used~~on tothe ~~raise~~percentage ~~capital~~of ~~utilizing~~voting ~~portfolio~~shares ~~mortgages~~held asby ~~collateral~~the investor (less than 5%, 5-9.9%, 10-14.9% and 15-24.9%) and the presence of other indicia of control. As the percentage of ownership increases, fewer indicia of control are permitted without ~~diluting~~falling ~~stock~~outside of the presumption of noncontrol. These indicia of control include nonvoting equity ownership, director representation, management interlocks, business relationship and restrictive contractual covenants. Under the final rule, investors can hold up to 24.9% of the voting securities and up to 33% of the total equity of a company without necessarily having a controlling influence. In addition, Indiana law requires DFI

~~The~~approval ~~consolidated~~for ~~financial~~changes ~~statements~~in ~~include~~control ~~the~~of ~~Company,~~companies ~~its~~controlling ~~wholly~~Indiana ~~owned subsidiaries~~banks, ~~the~~with ~~Bank~~“control” ~~and~~defined ~~the~~to ~~Bank’s~~mean ~~wholly~~the ~~owned~~power ~~subsidiaries,~~to ~~Peoples~~direct ~~Service~~the ~~Corporation,~~management ~~NWIN,~~or ~~LLC~~policies ~~and~~of ~~Columbia~~the ~~Development Company, LLC. The Company’s business activities include being a~~ holding company ~~for~~or the ~~Bank.~~power ~~The~~to ~~Company’s~~vote ~~earnings~~at ~~are~~least ~~dependent~~25% ~~upon the earnings~~ of the ~~Bank. All significant inter-~~company’s ~~accounts~~voting ~~and transactions have been eliminated in consolidation~~securities.

~~Competition~~Under the Dodd Frank Act, a bank holding company is expected to serve as a source of financial and managerial strength to its subsidiary bank(s). Pursuant to this requirement, a bank holding company should stand ready to use its resources to provide adequate capital funds to its subsidiary bank(s) during periods of financial stress or adversity. This support may be required by the FRB at times when the Company may not have the resources to provide it or, for other reasons, would not be inclined to provide it. Additionally, under the Federal Deposit Insurance Corporation Improvement Act of 1991, a bank holding company is required to provide limited guarantee of the compliance by any insured depository institution subsidiary that may become "undercapitalized" (as defined in the statute) with the terms of any capital restoration plan filed by such subsidiary with its appropriate federal banking agency.

~~The~~State ~~Company’s~~Bank ~~primary~~Regulation. ~~market~~As ~~area~~an ~~for~~Indiana ~~deposits~~commercial bank, ~~loans~~the ~~and~~Bank ~~financial~~is ~~services~~subject ~~encompasses~~to ~~Lake~~federal regulation and ~~Porter~~supervision ~~Counties~~by inthe ~~Indiana~~FDIC and ~~Cook~~to state regulation and ~~DuPage~~supervision ~~Counties~~by inthe ~~Illinois~~DFI. ~~All~~The ofBank's ~~the~~deposit ~~Company’s~~accounts ~~banking~~are ~~centers~~insured ~~and~~by ~~offices~~the ~~are~~DIF, ~~located~~which inis ~~its~~administered ~~primary~~by ~~market~~the ~~area~~FDIC. ~~Approximately~~The ~~ninety-four~~Bank ~~percent~~is ofnot ~~the~~a ~~Company’s~~member ~~business~~of ~~activities~~the ~~are~~Federal ~~within~~Reserve ~~this area~~System.

~~The~~Both ~~Company~~federal ~~faces~~and ~~strong~~Indiana ~~competition~~law inextensively ~~its~~regulate ~~primary~~various ~~market~~aspects ~~area~~of ~~for~~ the ~~attraction~~banking ~~and~~business ~~retention~~such ofas ~~deposits~~reserve ~~and~~requirements, truth-in-lending ~~the~~and ~~origination of loans. The Company’s most direct competition for deposits has historically come from commercial banks,~~ truth-in-savings ~~associations~~disclosures, ~~and~~equal credit ~~unions~~opportunity, ~~located~~fair incredit ~~its~~reporting, ~~primary~~trading ~~market area. Particularly~~ in ~~times~~securities ~~of high interest rates, the Company has had significant competition from mutual funds~~ and other ~~firms~~aspects ~~offering~~of ~~financial~~banking ~~services~~operations. ~~The~~Current ~~Company’s~~federal ~~competition~~law ~~for~~also ~~loans~~requires ~~comes principally from savings associations, commercial~~ banks, ~~mortgage~~among ~~banking~~other ~~companies~~things, ~~credit~~to ~~unions,~~make ~~insurance~~deposited ~~companies,~~funds ~~and~~available ~~other~~within ~~institutional~~specified ~~lenders~~time periods.

~~The~~Under ~~Company~~FDICIA, ~~competes~~insured ~~for~~state ~~loans~~chartered ~~principally~~banks ~~through~~are ~~the~~prohibited ~~interest~~from ~~rates~~engaging ~~and~~as ~~loan~~principal ~~fees~~in itactivities ~~charges~~that ~~and~~are ~~the~~not ~~efficiency~~permitted ~~and~~for ~~quality~~national ofbanks, ~~the~~unless: ~~services~~(i) itthe ~~provides~~FDIC ~~borrowers~~determines ~~and~~that ~~other~~the ~~third-party~~activity ~~sources.~~would Itpose ~~competes~~no ~~for~~significant ~~deposits~~risk byto ~~offering~~the ~~depositors~~appropriate adeposit ~~wide~~insurance ~~variety of savings accounts~~fund, ~~checking~~and ~~accounts,~~(ii) ~~competitive~~the ~~interest~~bank ~~rates~~is, ~~convenient~~and ~~banking~~continues ~~center~~to ~~locations~~be, ~~drive-up~~in ~~facilities,~~compliance ~~automatic~~with ~~teller~~all ~~machines,~~applicable ~~tax~~capital ~~deferred retirement programs, digital banking, and other miscellaneous services~~standards.

~~The~~Branches ~~activities~~and ofAcquisitions. Branching by the ~~Company~~Bank ~~and~~requires the ~~Bank~~approval inof the ~~geographic~~Federal ~~market~~Reserve ~~served~~and ~~involve~~the ~~competition~~DFI. ~~with~~Under ~~other~~current ~~banks~~law, asIndiana ~~well~~chartered asbanks ~~with~~may ~~other~~establish ~~financial~~branches ~~institutions~~throughout the state and ~~enterprises~~in other states, ~~many~~subject ofto ~~which~~certain ~~have~~limitations. ~~substantially~~Congress ~~greater~~authorized ~~resources~~interstate ~~than~~branching, ~~those~~with ~~available~~certain tolimitations, ~~the~~beginning ~~Company~~in 1997. InIndiana ~~addition,~~law ~~non-~~authorizes an Indiana bank ~~financial~~to ~~services~~establish ~~companies~~one ~~with~~or ~~which~~more ~~the~~branches ~~Company~~in ~~and~~states ~~Bank~~other ~~compete,~~than ~~while~~Indiana ~~subject~~through interstate merger transactions and to ~~regulation~~establish byone ~~the~~or ~~CFPB,~~more ~~are~~interstate ~~generally~~branches ~~not~~through ~~subject~~de tonovo ~~the~~branching ~~same~~or ~~type~~the acquisition of ~~extensive~~a ~~regulation~~branch. byThe Dodd-Frank Act permits the ~~federal~~establishment ~~and~~of de novo branches in states where such branches could be opened by a state ~~banking~~bank ~~agencies~~chartered ~~applicable~~by tothat ~~the~~state. ~~Company~~The ~~and~~consent of the ~~Bank~~state is no longer required.

18 Transactions with Affiliates. Under Indiana law, the Bank is subject to Sections 22(h), 23A and 23B of the Federal Reserve Act, which restrict financial transactions between banks and affiliated companies, such as the Company. The statute limits credit transactions between a bank and its executive officers and its affiliates, prescribes terms and conditions for bank affiliate transactions deemed to be consistent with safe and sound banking practices, and restricts the types of collateral security permitted in connection with a bank's extension of credit to an affiliate.

~~Employees~~Capital Requirements. Federal regulations require FDIC insured depository institutions to meet several minimum capital standards: (i) a common equity Tier 1 capital to risk-based assets ratio of 4.50%; (ii) a Tier 1 capital to risk-based assets ratio of 6.00%; (iii) a total capital to risk-based assets ratio of 8.00%; and ~~Human~~(iv) ~~Capital~~a ~~Resources~~4.00% Tier 1 capital to total assets leverage ratio.

WeCommon ~~believe~~equity ~~that~~Tier ~~the~~1 ~~foundation~~capital ofis ~~our~~generally ~~success~~defined inas ~~the~~common ~~banking~~shareholders’ ~~business~~equity ~~lies~~and ~~with~~retained ~~the~~earnings. ~~quality~~Tier of1 ~~our~~capital ~~employees,~~is ~~the~~generally ~~development~~defined ofas ~~our~~common ~~employees’~~equity ~~skills~~Tier 1 and ~~career~~Additional ~~goals,~~Tier ~~and~~1 ~~our~~capital. ~~ability~~Additional toTier ~~provide~~1 acapital ~~comprehensive~~generally ~~rewarding~~includes ~~experience~~certain noncumulative perpetual preferred stock and ~~work~~related ~~environment~~surplus ~~for~~and ~~our~~minority ~~employees~~interests in equity accounts of consolidated subsidiaries. WeTotal ~~encourage~~capital includes Tier 1 capital (common equity Tier 1 capital plus Additional Tier 1 capital) and ~~support~~Tier ~~the~~2 ~~development~~capital. Tier 2 capital is comprised of ~~our~~capital ~~employees~~instruments and, ~~wherever~~related ~~possible~~surplus meeting specified requirements, ~~strive~~and tomay ~~fill~~include ~~positions~~cumulative ~~from~~preferred ~~within~~stock ~~the~~and ~~organization.~~long-term Asperpetual ofpreferred ~~December~~stock, 31mandatory convertible securities, ~~2024~~intermediate preferred stock, and subordinated debt. Also included in Tier 2 capital is the ~~Bank~~ACL ~~had~~limited ~~293~~to ~~full~~a maximum of 1.25% of risk-~~time~~weighted assets and, 20for ~~part~~institutions that have exercised an opt-~~time~~out ~~employees.~~election ~~The~~regarding ~~employees~~the ~~are~~treatment ~~not~~of ~~represented~~AOCI, byup ato ~~collective~~45% ~~bargaining~~of ~~agreement.~~net ~~Management~~unrealized ~~believes~~gains ~~its~~on ~~employee~~available-for-sale ~~relations~~equity ~~are~~securities ~~good~~with readily determinable fair market values. ~~The~~Institutions ~~Company~~that ~~has~~have ~~four~~not ~~executive~~exercised ~~officers~~the ~~and~~AOCI ~~has~~opt-out nohave ~~other~~AOCI ~~employees.~~incorporated ~~The~~into ~~Company’s~~common ~~officers~~equity ~~also~~Tier ~~are~~1 ~~full~~capital (including unrealized gains and losses on available-~~time~~for-sale-securities). ~~employees~~Calculation of ~~the~~all ~~Bank,~~types of regulatory capital is subject to deductions and ~~are~~adjustments ~~compensated~~specified byin the ~~Bank~~regulations.

~~Regulation~~In determining the amount of risk-weighted assets for purposes of calculating risk-based capital ratios, assets, including certain off-balance sheet assets (e.g., recourse obligations, direct credit substitutes, and ~~Supervision~~residual interests) are multiplied by a risk weight factor assigned by the regulations based on the risks believed inherent in the type of asset. Higher levels of capital are required for asset categories believed to present greater risk. For example, a risk weight of 0%

Bank Holding Company Regulation. The Company is registered as a bank holding company for the Bank and has elected to be a financial holding company under the Gramm-Leach-Bliley Act of 1999. As a bank holding company and financial holding company, the Company is subject to the regulation and supervision of the FRB under the Bank Holding Company Act of 1956, as amended (the "BHCA"). Bank holding companies are required to file periodic reports with and are subject to periodic examination by the FRB.23

~~Under~~is ~~the~~assigned ~~BHCA,~~to ~~without~~cash ~~the~~and ~~prior~~U.S. ~~approval~~government ~~of the FRB~~securities, ~~the~~a ~~Company~~risk ~~may~~weight ~~not acquire direct or indirect control~~ of ~~more than 5~~50% ofis ~~the~~generally ~~voting~~assigned ~~stock~~to orprudently ~~substantially~~underwritten ~~all~~first oflien ~~the~~one ~~assets~~to offour-family ~~any~~residential ~~company~~mortgages, ~~including~~ a ~~bank,~~risk ~~and~~weight ~~may~~of ~~not~~100% ~~merge or consolidate with another bank holding company. In addition, the Company~~ is ~~generally~~assigned ~~prohibited by the BHCA from engaging in any nonbanking business unless such business is determined by the FRB~~ to becommercial soand ~~closely~~consumer ~~related~~loans, ~~to banking as to be~~ a ~~proper~~risk ~~incident~~weight ~~thereto.~~of ~~Under~~150% ~~the~~is ~~BHCA,~~assigned ~~the FRB has the authority~~ to ~~require~~certain apast ~~bank~~due ~~holding~~loans ~~company~~and ~~to terminate any activity or relinquish control of~~ a ~~nonbank~~risk ~~subsidiary~~weight ~~(other than a nonbank subsidiary~~ of abetween ~~bank)~~0% ~~upon~~to ~~the~~600% ~~FRB's~~is ~~determination~~assigned ~~that such activity or control constitutes a serious risk~~ to ~~the~~permissible ~~financial~~equity ~~soundness~~interests, ~~and~~depending ~~stability~~on ofcertain ~~any~~specified ~~bank subsidiary of the bank holding company~~factors.

OnIn ~~September~~addition ~~17,~~to ~~2024,~~establishing the ~~FDIC,~~minimum ~~Office~~regulatory ofcapital ~~the Comptroller of the Currency~~requirements, ~~and~~ the ~~Department~~regulations oflimit ~~Justice~~capital ~~(“DOJ”)~~distributions ~~announced~~by ~~new~~the ~~rules~~institution and ~~policy~~certain ~~statements~~discretionary ~~impacting~~bonus ~~their~~payments ~~bank~~to ~~merger~~management ~~review~~if ~~process.~~an ~~Among~~institution ~~these~~does ~~actions,~~not ~~the~~hold ~~FDIC~~a ~~approved~~“capital aconservation ~~final~~buffer” ~~statement~~consisting of ~~policy on bank merger transactions~~2.5% ~~The~~of ~~FDIC's~~common ~~statement~~equity ofTier ~~policy~~1 ~~adopts~~capital ato ~~principles~~risk-~~based~~weighted ~~approach~~assets ~~and~~above ~~clarifies its policies and expectations in~~ the ~~evaluation~~amount ofnecessary ~~bank merger transactions subject~~ to ~~FDIC~~meet approval under the Bank Merger Act. However, Acting FDIC Chairman Travis Hill has indicated the possibility of withdrawing the new statement of policy. Concurrent with the FDIC announcement, the DOJ withdrew from its ~~1995~~minimum ~~Bank~~risk-based ~~Merger~~capital ~~Guidelines and announced that it would consider bank mergers under its 2023 Merger Guidelines, which are not industry specific, as well as under a separate, recently adopted bank merger addendum~~requirements.

The ~~Change in Bank Control Act (“CBCA”) prohibits a person or group of persons from acquiring “control” of a bank holding company unless the~~ FRB ~~has been notified~~ and ~~has~~FDIC ~~not~~have ~~objected~~authority to ~~the~~establish ~~transaction.~~individual ~~Under~~minimum acapital ~~rebuttable~~requirements presumption established by the FRB, the acquisition of 10% or more of a class of voting stock of a bank holding company with a class of securities registered under Section 12 of the Exchange Act, such as the Company, would, under the circumstances set forth in ~~the~~appropriate ~~presumption,~~cases ~~constitute~~upon ~~acquisition of control of the Company. In addition, the CBCA prohibits any entity from acquiring 25% (the BHCA has~~ a ~~lower~~determination ~~limit for acquirers~~ that ~~are~~an ~~existing bank holding companies) or more of a bank holding company~~institution’s orcapital ~~bank’s~~level ~~voting~~is ~~securities,~~ or ~~otherwise~~may ~~obtaining~~become ~~control~~inadequate orin alight ~~controlling influence over a bank holding company or bank without the approval~~ of the ~~FRB.~~particular Onrisks ~~April~~or ~~1, 2021, the FRB’s final rule clarifying the standards for determining whether one company has control over another became effective~~circumstances. ~~The~~As ~~final rule establishes four categories~~ of ~~tiered presumptions of noncontrol that are based on the percentage of voting shares held by the investor (less than 5%~~December 31, ~~5-9.9%~~2025, ~~10- 14.9% and 15-24.9%) and~~ the ~~presence~~Bank ofmet ~~other~~all ~~indicia~~applicable ofcapital ~~control.~~adequacy Asrequirements ~~the~~as ~~percentage~~set offorth ~~ownership~~in ~~increases,~~12 ~~fewer indicia of control are permitted without falling outside of the presumption of noncontrol~~C. ~~These indicia of control include nonvoting equity ownership, director representation, management interlocks, business relationship and restrictive contractual covenants~~F. ~~Under the final rule, investors can hold up to 24~~R.9% of§ ~~the voting securities and up to 33% of the total equity of a company without necessarily having a controlling influence~~324. In addition, Indiana law requires DFI approval for changes in control of companies controlling Indiana banks, with “control” defined to mean the power to direct the management or policies of the holding company or the power to vote at least 25% of the company’s voting securities.

19 Bank holding companies are generally subject to consolidated capital requirements established by the FRB. The Dodd-Frank Act required the FRB to set minimum capital levels for bank holding companies that are as stringent as those required for insured depository subsidiaries. However, under the FRB’s “Small Bank Holding Company” exemption from consolidated bank holding company capital requirements, bank holding companies and savings and loan holding companies with less than $3 billion in consolidated assets, such as the Company, are exempt from consolidated regulatory capital requirements, unless the FRB determines otherwise in particular cases.

~~Under~~Federal law establishes a system of prompt corrective action to resolve the ~~Dodd~~problems ~~Frank~~of ~~Wall~~undercapitalized ~~Street~~institutions. ~~Reform~~The ~~and~~law ~~Consumer~~requires ~~Protection~~that ~~Act~~certain supervisory actions be taken against undercapitalized institutions, the severity of ~~2010~~which (depends on the degree of undercapitalization. The FDIC has adopted regulations to implement the prompt corrective action legislation as to insured state banks. An institution is deemed to be “~~Dodd-Frank~~well ~~Act~~capitalized”) if it has a total risk-based capital ratio of 10.00% or greater, a ~~bank~~Tier ~~holding~~1 ~~company~~risk-based iscapital ~~expected~~ratio toof ~~serve~~8.00% asor greater, a ~~source~~leverage ratio of ~~financial~~5.00% or greater, and ~~managerial~~a ~~strength~~common toequity ~~its~~Tier ~~subsidiary~~1 ~~bank(s)~~ratio of 6.50% ~~Pursuant~~or togreater. ~~this~~An ~~requirement,~~institution ais ~~bank~~“adequately ~~holding~~capitalized” ~~company~~if ~~should~~it ~~stand~~has ~~ready~~a tototal ~~use~~risk-based ~~its~~capital ~~resources~~ratio toof ~~provide~~8.00% ~~adequate~~or greater, a Tier 1 risk-based capital ~~funds~~ratio toof ~~its~~6.00% ~~subsidiary~~or ~~bank(s)~~greater, ~~during~~a ~~periods~~leverage ratio of ~~financial~~4.00% ~~stress~~or greater, and a common equity Tier 1 ratio of 4.50% or ~~adversity~~greater. ~~This~~An ~~support~~institution ~~may~~is be“undercapitalized” ~~required~~if byit ~~the~~has ~~FRB~~a attotal ~~times~~risk-based ~~when~~capital ~~the~~ratio ~~Company~~of ~~may~~less ~~not~~than ~~have~~8.00%, ~~the~~a ~~resources~~Tier to1 ~~provide~~risk-based itcapital orratio of less than 6.00%, ~~for~~a ~~other~~leverage ~~reasons~~ratio of less than 4.00%, ~~would~~or ~~not~~a becommon ~~inclined~~equity toTier ~~provide~~1 itratio of less than 4.50%. ~~Additionally,~~An ~~under~~institution ~~the~~is ~~Federal~~deemed ~~Deposit~~to ~~Insurance~~be ~~Corporation~~“significantly ~~Improvement~~undercapitalized” ~~Act~~if it has a total risk-based capital ratio of ~~1991~~less ~~("FDICIA")~~than 6.00%, a ~~bank~~Tier ~~holding~~1 ~~company~~risk-based iscapital ~~required~~ratio toof ~~provide~~less ~~limited~~than ~~guarantee~~4.00%, a leverage ratio of ~~the~~less ~~compliance~~than by3.00%, ~~any~~or ~~insured~~a ~~depository~~common equity Tier 1 ratio of less than 3.00%. An institution ~~subsidiary~~is ~~that~~considered ~~may~~to ~~become~~be "“critically undercapitalized"” ~~(as~~if ~~defined~~it inhas ~~the~~a ~~statute)~~ratio ~~with~~of ~~the~~tangible ~~terms~~equity of(as ~~any~~defined ~~capital~~in ~~restoration~~the ~~plan~~regulations) ~~filed~~to bytotal ~~such~~assets ~~subsidiary~~that ~~with~~is ~~its~~equal ~~appropriate~~to ~~federal~~or ~~banking~~less ~~agency~~than 2.00%.

~~State~~Subject ~~Bank~~to ~~Regulation.~~a Asnarrow anexception, ~~Indiana~~a ~~commercial~~receiver ~~bank,~~or ~~the~~conservator ~~Bank~~ is ~~subject~~required to ~~federal~~be ~~regulation~~appointed ~~and~~for ~~supervision~~an byinstitution that is “critically undercapitalized” within specified time frames. The regulations also provide that a capital restoration plan must be filed with the FDIC ~~and~~within 45 days of the date an institution is deemed to ~~state~~have ~~regulation~~received ~~and~~notice ~~supervision~~that it is “undercapitalized,” “significantly undercapitalized,” or “critically undercapitalized.” Compliance with the plan must be guaranteed by any parent holding company up to the ~~DFI.~~lesser ~~The~~of ~~Bank'~~5% of the institution’s ~~deposit~~total ~~accounts~~assets ~~are~~when ~~insured~~it bywas deemed to be undercapitalized or the ~~DIF~~amount necessary to achieve compliance with applicable capital requirements. In addition, ~~which~~numerous ismandatory ~~administered~~supervisory actions become immediately applicable to an undercapitalized institution including, but not limited to, increased monitoring by ~~the~~regulators ~~FDIC~~and restrictions on growth, capital distributions and expansion. The ~~Bank~~FDIC iscould ~~not~~also take any one of a ~~member~~number of discretionary supervisory actions, including the ~~Federal~~issuance ~~Reserve~~of ~~System~~a capital directive and the replacement of senior executive officers and directors. Significantly and critically undercapitalized institutions are subject to additional mandatory and discretionary measures.

~~Both~~Section 201 of the Economic Growth Act directed federal ~~and~~banking ~~Indiana~~agencies ~~law~~to ~~extensively~~draft ~~regulate~~regulations ~~various~~establishing ~~aspects~~a ofnew optional CBLR. The Economic Growth Act provides that the ~~banking~~CBLR ~~business~~will ~~such~~apply to a “qualifying community bank” which the Economic Growth Act defines as ~~reserve~~a ~~requirements~~bank with consolidated assets of less than $10 billion and satisfying additional criteria designed to disqualify institutions with a higher risk profile. Under the Economic Growth Act, ~~truth-in-lending~~qualifying community banks that meet or exceed the CBLR and ~~truth~~elect to follow the alternative regulatory capital structure will be deemed to have satisfied all generally applicable leverage capital and risk-~~in-savings~~based ~~disclosures~~capital requirements and will be considered “well capitalized” under the FDIC prompt corrective action provisions. The Economic Growth Act directed the FRB, ~~equal~~the ~~credit~~FDIC, ~~opportunity~~and the OCC to jointly determine a community bank leverage ratio percentage, ~~fair~~not ~~credit~~less ~~reporting~~than 8% nor more than 10%, ~~trading~~that inmust ~~securities~~be maintained to be deemed to have satisfied all generally applicable leverage capital and ~~other~~risk-based ~~aspects~~capital ofrequirements ~~banking~~and ~~operations~~be considered well capitalized. ~~Current~~The ~~federal~~Economic ~~law~~Growth Act also ~~requires~~directed ~~banks,~~agencies ~~among~~to ~~other~~establish ~~things,~~procedures tofor ~~make~~dealing ~~deposited~~with ~~funds~~a ~~available~~qualifying ~~within~~bank ~~specified~~that ~~time~~subsequently ~~periods~~falls below the new ratio.

~~Under~~The ~~FDICIA,~~final ~~insured~~regulation ~~state~~implementing ~~chartered~~Section ~~banks~~201 ~~are~~became ~~prohibited~~effective ~~from~~on ~~engaging~~January ~~as principal in activities that are not permitted for national banks~~1, ~~unless:~~2021. ~~(i)~~Under the ~~FDIC~~Final ~~determines~~Rule, ~~that~~to ~~the~~be ~~activity~~eligible ~~would pose no significant risk~~ to use the ~~appropriate~~CBLR ~~deposit insurance fund~~framework, ~~and~~a ~~(ii)~~banking ~~the~~organization ~~bank~~must ~~is,~~not ~~and continues to~~ be, inan ~~compliance~~advanced ~~with~~approaches ~~all~~organization ~~applicable~~and ~~capital~~must ~~standards.~~

Branches and Acquisitions. Branching by the Bank requires the approval of the Federal Reserve and the DFI. Under current law, Indiana chartered banks may establish branches throughout the state and in other states, subject to certain limitations. Congress authorized interstate branching, with certain limitations, beginning in 1997. Indiana law authorizes an Indiana bank to establish one or more branches in states other than Indiana through interstate merger transactions and to establish one or more interstate branches through de novo branching or the acquisition of a branch. The Dodd-Frank Act permits the establishment of de novo branches in states where such branches could be opened by a state bank chartered by that state. The consent of the state is no longer required.24

~~Transactions~~have ~~with~~(i) ~~Affiliates.~~a ~~Under~~leverage ~~Indiana~~ratio ~~law,~~of ~~the~~greater ~~Bank~~than is9%; ~~subject~~(ii) tototal ~~Sections~~consolidated 22assets of less than $10 billion; (hiii), ~~23A~~total ~~and~~off-balance ~~23B~~sheet exposures of ~~the~~25% ~~Federal~~or ~~Reserve~~less ~~Act,~~of ~~which~~total ~~restrict~~consolidated ~~financial~~assets; ~~transactions~~and ~~between~~(iv) ~~banks~~total ~~and~~trading ~~affiliated~~assets ~~companies,~~plus ~~such~~trading asliabilities ~~the~~of ~~Company.~~5% ~~The~~or ~~statute~~less ~~limits~~of ~~credit~~total ~~transactions~~consolidated ~~between~~assets. aA ~~bank~~qualifying ~~and~~institution ~~its~~may ~~executive~~opt ~~officers~~in and ~~its~~out ~~affiliates,~~of ~~prescribes~~the ~~terms~~CBLR ~~and~~framework ~~conditions~~on ~~for~~its ~~bank~~quarterly ~~affiliate~~call ~~transactions~~report. ~~deemed~~An institution that ceases to bemeet ~~consistent~~any ~~with~~qualifying ~~safe~~criteria ~~and~~is ~~sound~~provided ~~banking~~with ~~practices,~~a ~~and~~two-quarter ~~restricts~~grace ~~the~~period ~~types~~to ofeither ~~collateral~~comply ~~security~~with ~~permitted~~the inCBLR ~~connection~~requirements or comply with athe ~~bank's~~general ~~extension~~capital ofregulations, ~~credit~~including tothe anrisk-based ~~affiliate~~capital requirements.

~~Capital~~Section ~~Requirements.~~4012 ~~Federal~~of ~~regulations~~the ~~require~~CARES ~~FDIC~~Act ~~insured~~required ~~depository~~that ~~institutions~~the toCBLR ~~meet~~be ~~several~~temporarily ~~minimum~~lowered ~~capital~~to ~~standards:~~8%. ~~(i)~~The federal regulators issued a ~~common~~rule ~~equity~~implementing ~~Tier~~the 1lower ~~capital~~ratio toeffective ~~risk~~April 23, 2021. The rule also established a two-~~based~~quarter ~~assets~~grace period for a qualifying institution whose leverage ratio offalls ~~4.50~~below the 8%; ~~(ii)~~CBLR arequirement ~~Tier~~so 1long ~~capital~~as tothe ~~risk-based~~bank ~~assets~~maintains a leverage ratio of ~~6.00~~7%; ~~(iii)~~or agreater. ~~total~~Another ~~capital~~rule was issued to ~~risk-based~~transition ~~assets~~back to the 9% CBLR by increasing the ratio ofto 8.005%; ~~and~~for ~~(iv)~~calendar ayear ~~4.00~~2022 and 9% ~~Tier~~thereafter. 1The ~~capital~~Bank did not elect to ~~total~~opt ~~assets~~in ~~leverage~~to ~~ratio~~the CBLR framework.

~~Common~~The ~~equity~~following ~~Tier~~table 1shows capital is generally defined as common shareholders’ equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and Additional Tier 1 capital. Additional Tier 1 capital generally includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus Additional Tier 1 capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus meeting specified requirementsthat, ~~and~~at ~~may include cumulative preferred stock and long-term perpetual preferred stock~~December 31, ~~mandatory convertible securities~~2025, ~~intermediate preferred stock,~~ and ~~subordinated debt. Also included in Tier 2 capital is the ACL limited to a maximum of 1.25% of risk- weighted assets and~~December 31, ~~for institutions that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income (“AOCI”)~~2024, ~~up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values. Institutions that have not exercised~~ the ~~AOCI~~Bank’s ~~opt- out have AOCI incorporated into common equity Tier 1~~ capital ~~(including~~exceeded ~~unrealized gains and losses on available-for-sale-securities). Calculation of~~ all ~~types~~applicable of regulatory capital isrequirements ~~subject~~as toset ~~deductions~~forth ~~and~~in ~~adjustments~~12 ~~specified~~C.F.R. in§ ~~the regulations~~324.


(Dollars in thousands)	Actual				Minimum Required For Capital Adequacy Purposes				Minimum Required To Be Well Capitalized Under Prompt Corrective Action Regulations
December 31, 2025	Amount		Ratio		Amount		Ratio		Amount		Ratio
Common equity tier 1 capital to risk-weighted assets	$	186,214	11.86	%	$	70,626	4.50	%	$	102,016	6.50	%
Tier 1 capital to risk-weighted assets	$	186,214	11.86	%	$	94,168	6.00	%	$	125,558	8.00	%
Total capital to risk-weighted assets	$	205,472	13.09	%	$	125,558	8.00	%	$	156,947	10.00	%
Tier 1 leverage ratio	$	186,214	8.93	%	$	83,379	4.00	%	$	104,223	5.00	%

In determining the amount of risk-weighted assets for purposes of calculating risk-based capital ratios, assets, including certain off-balance sheet assets (e.g., recourse obligations, direct credit substitutes, and residual interests) are multiplied by a risk weight factor assigned by the regulations based on the risks believed inherent in the type of asset. Higher levels of capital are required for asset categories believed to present greater risk. For example, a risk weight of 0% is assigned to cash and U.S. government securities, a risk weight of 50% is generally assigned to prudently underwritten first lien one to four-family residential mortgages, a risk weight of 100% is assigned to commercial and consumer loans, a risk weight of 150% is assigned to certain past due loans and a risk weight of between 0% to 600% is assigned to permissible equity interests, depending on certain specified factors.


(Dollars in thousands)	Actual				Minimum Required For Capital Adequacy Purposes				Minimum Required To Be Well Capitalized Under Prompt Corrective Action Regulations
December 31, 2024	Amount		Ratio		Amount		Ratio		Amount		Ratio
Common equity tier 1 capital to risk-weighted assets	$	179,625	11.26	%	$	71,771	4.50	%	$	103,670	6.50	%
Tier 1 capital to risk-weighted assets	$	179,625	11.26	%	$	95,695	6.00	%	$	127,594	8.00	%
Total capital to risk-weighted assets	$	194,499	12.19	%	$	127,594	8.00	%	$	159,492	10.00	%
Tier 1 leverage ratio	$	179,625	8.47	%	$	84,854	4.00	%	$	106,068	5.00	%

In ~~addition~~December to2017, ~~establishing~~the Basel Committee on Banking Supervision published the ~~minimum~~last ~~regulatory~~version ~~capital~~of ~~requirements~~the Basel III accord, generally referred to as “Basel IV.” The Basel Committee stated that a key objective of the ~~regulations~~revisions ~~limit~~incorporated ~~capital~~into ~~distributions~~the framework is to reduce excessive variability of risk-weighted assets, which will be accomplished by enhancing the ~~institution~~robustness and ~~certain~~risk ~~discretionary~~sensitivity ~~bonus~~of ~~payments~~the tostandardized ~~management~~approaches iffor ancredit ~~institution~~risk ~~does~~and ~~not~~operational ~~hold~~risk, awhich “will facilitate the comparability of banks’ capital ~~conservation~~ratios; ~~buffer”~~constraining ~~consisting~~the use of 2internally modeled approaches; and complementing the risk-weighted capital ratio with a finalized leverage ratio and a revised and robust capital floor.5% The leadership of ~~common~~the ~~equity~~FRB, ~~Tier~~OCC, 1and FDIC, who are tasked with implementing Basel IV, supported the revisions. Under the current U.S. capital rules, operational risk capital requirements and a capital floor apply only to advanced approaches institutions, and not to the Company. In 2023, the federal banking agencies issued a proposed rule to implement the Basel IV standards. Among other things, the proposed rule would substantially change the existing calculation of risk-weighted assets and require banking organizations to use revised models for such calculations. The proposed rule, if adopted as proposed, would have been applicable to banking organizations with $100 billion or more in total consolidated assets, and therefore would not apply to the Bank directly. However, many of the principles included in this proposed rulemaking could have resulted in increased supervisory expectations and closer regulatory scrutiny for institutions that experience substantial growth. For example, the proposed rulemaking would add back the impact of accumulated other comprehensive income (loss) to the calculation of regulatory capital for institutions above $100 billion in assets. The federal banking agencies have discretion during the ~~amount~~examination ~~necessary~~process to ~~meet~~require ~~its~~institutions ~~minimum~~to ~~risk-based~~have higher capital ~~requirements~~cushions to address a variety of supervisory concerns, which may include a high level of accumulated other comprehensive loss. In light of the adverse reaction to the proposal, the Federal Reserve announced that it would publish a re-proposal of its regulations finalizing the Basel IV standards. On

The FRB and FDIC have authority to establish individual minimum capital requirements in appropriate cases upon a determination that an institution’s capital level is or may become inadequate in light of the particular risks or circumstances. As of December 31, 2024, the Bank met all applicable capital adequacy requirements as set forth in 12 C.F.R. § 324.25

~~Bank~~March ~~holding~~19, ~~companies~~2026, ~~are~~the ~~generally~~federal ~~subject~~banking regulators issued three proposals to ~~consolidated~~modernize the regulatory capital ~~requirements~~framework ~~established~~for bybanks ~~the~~of ~~FRB.~~all sizes. The ~~Dodd-Frank~~federal ~~Act~~banking ~~required~~agencies stated the ~~FRB~~proposals towould ~~set~~streamline ~~minimum~~ capital ~~levels~~requirements ~~for~~and ~~bank~~better ~~holding~~align ~~companies~~regulatory ~~that~~capital ~~are~~with asrisk ~~stringent~~while asmaintaining ~~those~~the ~~required~~safety ~~for~~and ~~insured~~soundness ~~depository~~of ~~subsidiaries.~~the ~~However,~~banking ~~under~~system. ~~the~~The ~~FRB’s~~proposals ~~“Small~~are ~~Bank~~intended ~~Holding~~to ~~Company”~~be ~~exemption~~the ~~from~~final ~~consolidated~~phase ~~bank~~of ~~holding~~the ~~company~~Basel capital ~~requirements,~~reforms. ~~bank~~Comments ~~holding~~on ~~companies~~the ~~and~~proposals ~~savings~~are ~~and~~due ~~loan~~by ~~holding~~June ~~companies~~18, ~~with~~2026. The ~~less~~Company's ~~than~~management $3continues ~~billion~~to inevaluate ~~consolidated~~the ~~assets,~~impact ~~such~~of asthese proposals on the Company, ~~are~~the ~~exempt~~Bank, ~~from~~and ~~consolidated~~its ~~regulatory~~business, ~~capital~~financial ~~requirements~~condition, ~~unless~~and ~~the~~results ~~FRB~~of ~~determines otherwise in particular cases~~operations.

~~Federal~~Banking ~~law~~regulators ~~establishes~~may achange ~~system~~these ofcapital ~~prompt~~requirements ~~corrective~~from ~~action~~time to ~~resolve the problems of undercapitalized institutions. The law requires that certain supervisory actions be taken against undercapitalized institutions~~time, ~~the~~depending ~~severity of which depends~~ on the ~~degree~~economic ofoutlook ~~undercapitalization.~~generally ~~The~~and ~~FDIC~~the ~~has~~outlook ~~adopted~~for ~~regulations to implement~~ the ~~prompt~~banking ~~corrective action legislation as to insured state banks~~industry. AnThe ~~institution~~Company is ~~deemed~~unable to bepredict ~~“well~~whether ~~capitalized” if it has a total risk-based capital ratio of 10.00% or greater, a Tier 1 risk-based capital ratio of 8.00% or greater, a leverage ratio of 5.00% or greater,~~ and awhen ~~common~~any ~~equity~~such ~~Tier~~further ~~1 ratio of 6.50% or greater. An institution is “adequately capitalized” if it has a total risk-based~~ capital ~~ratio~~requirements ofwould ~~8.00%~~be orimposed ~~greater, a Tier 1 risk-based capital ratio of 6.00% or greater, a leverage ratio of 4.00% or greater,~~ and ~~a common equity Tier 1 ratio of 4.50% or greater. An institution is “undercapitalized” if it has a total risk-based capital ratio of less than 8.00%~~, a Tier 1 risk-based capital ratio of less than 6.00%, a leverage ratio of less than 4.00%, or a common equity Tier 1 ratio of less than 4.50%. An institution is deemed to be “significantly undercapitalized” if ~~it has a total risk-based capital ratio of less than 6.00%~~so, ~~a Tier 1 risk-based capital ratio of less than 4.00%, a leverage ratio of less than 3.00%, or a common equity Tier 1 ratio of less than 3.00%. An institution is considered~~ to bewhat ~~“critically~~levels ~~undercapitalized”~~and ifon itwhat ~~has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2~~schedule.~~00%.~~

~~Subject~~Dividend toLimitations. aThe ~~narrow~~Company ~~exception,~~is a ~~receiver~~legal orentity ~~conservator~~separate isand ~~required~~distinct tofrom bethe ~~appointed~~Bank. ~~for~~The anprimary ~~institution~~source ~~that~~of isthe ~~“critically~~Company’s ~~undercapitalized”~~cash ~~within~~flow, ~~specified~~including ~~time~~cash ~~frames.~~flow ~~The~~to ~~regulations~~pay ~~also~~dividends ~~provide~~on ~~that~~the aCompany’s ~~capital~~Common ~~restoration~~Stock, ~~plan~~is ~~must~~generally bethe ~~filed~~payment ~~with~~of dividends to the ~~FDIC~~Company ~~within~~by 45the ~~days~~Bank. ofUnder Indiana law, the ~~date~~Bank anmay ~~institution~~pay isdividends ~~deemed~~of toso ~~have~~much ~~received~~of ~~notice~~its ~~that~~undivided itprofits is(generally, ~~“undercapitalized~~earnings less losses,” ~~“significantly~~bad ~~undercapitalized~~debts,” ortaxes ~~“critically~~and ~~undercapitalized.”~~other ~~Compliance~~operating ~~with~~expenses) as is considered expedient by the ~~plan~~Bank’s ~~must~~Board beof ~~guaranteed~~Directors. byHowever, ~~any~~the ~~parent~~Bank ~~holding~~must ~~company~~obtain upthe toapproval of the ~~lesser~~DFI for the payment of 5%a dividend if the total of all dividends declared by the ~~institution’s~~Bank ~~total~~during ~~assets~~the ~~when~~current ityear, ~~was~~including ~~deemed~~the toproposed bedividend, ~~undercapitalized~~would orexceed the ~~amount~~sum ~~necessary~~of toretained ~~achieve~~net ~~compliance~~income ~~with~~for ~~applicable~~the ~~capital~~year ~~requirements.~~to Indate ~~addition,~~plus ~~numerous~~its ~~mandatory~~retained ~~supervisory~~net ~~actions~~income ~~become~~for ~~immediately~~the ~~applicable~~previous totwo anyears. ~~undercapitalized~~For ~~institution~~this ~~including~~purpose, ~~but~~“retained ~~not~~net ~~limited~~income” ~~to,~~means ~~increased~~net ~~monitoring~~income byas ~~regulators~~calculated ~~and~~for ~~restrictions~~call onreport ~~growth~~purposes, ~~capital~~less ~~distributions~~all ~~and~~dividends ~~expansion~~declared for the applicable period. ~~The~~An ~~FDIC~~exemption ~~could~~from ~~also~~DFI ~~take~~approval ~~any~~would ~~one~~require ofthat the Bank have been assigned a ~~number~~composite uniform financial institutions rating of ~~discretionary~~1 ~~supervisory~~or ~~actions,~~2 ~~including~~as ~~the~~a ~~issuance~~result of athe ~~capital~~most ~~directive~~recent ~~and~~federal or state examination; the ~~replacement~~proposed ofdividend ~~senior~~would ~~executive~~not ~~officers~~result ~~and~~in ~~directors.~~a ~~Significantly~~Tier 1 leverage ratio below 7.5%; and ~~critically~~that ~~undercapitalized~~the ~~institutions~~Bank ~~are~~not be subject to ~~additional~~any ~~mandatory~~corrective ~~and~~action, ~~discretionary~~supervisory ~~measures~~order, supervisory agreement, or board approved operating agreement.

21 The FDIC has the authority to prohibit the Bank from paying dividends if, in its opinion, the payment of dividends would constitute an unsafe or unsound practice in light of the financial condition of the Bank. In addition, under FRB supervisory policy, a bank holding company generally should not maintain its existing rate of cash dividends on common shares unless (i) the organization’s net income available to common shareholders over the past year has been sufficient to fully fund the dividends and (ii) the prospective rate of earnings retention appears consistent with the organization’s capital needs, assets, quality, and overall financial condition. The FRB expects bank holding companies to consult with it in advance of declaring dividends that could raise safety and soundness concerns (i.e., such as when the dividend is not supported by earnings or involves a material increase in the dividend rate) and in advance of repurchasing shares of common or preferred stock.

~~Section~~Federal ~~201~~Deposit ofInsurance. Deposits in the ~~Economic~~Bank ~~Growth,~~are ~~Regulatory~~insured ~~Relief~~by ~~and~~the ~~Consumer~~Deposit ~~Protection~~Insurance ~~Act~~Fund of ~~2018 (~~the ~~“Economic~~FDIC ~~Growth~~up ~~Act”)~~to ~~directed~~a ~~federal~~maximum ~~banking~~amount, ~~agencies~~which is generally $250,000 per depositor, subject to ~~draft~~aggregation ~~regulations~~rules. ~~establishing~~There ais ~~new~~no ~~optional~~unlimited ~~Community~~insurance ~~Bank~~coverage ~~Leverage~~for ~~Ratio~~noninterest ~~(“CBLR”)~~bearing transaction accounts. ~~The~~Rather, ~~Economic~~deposits ~~Growth~~held ~~Act~~in ~~provides~~noninterest ~~that~~bearing transaction accounts are aggregated with interest bearing deposits the ~~CBLR~~owner ~~will~~may ~~apply~~hold toin athe ~~“qualifying~~same ~~community~~ownership ~~bank”~~category, ~~which~~and the ~~Economic~~combined ~~Growth~~are ~~Act~~insured ~~defines~~up asto aat ~~bank~~least ~~with~~$250,000. ~~consolidated~~The ~~assets~~Bank ofis ~~less~~subject ~~than~~to ~~$10~~deposit ~~billion~~insurance ~~and~~assessments ~~satisfying~~by ~~additional~~the ~~criteria~~FDIC ~~designed~~pursuant to ~~disqualify~~its ~~institutions~~regulations ~~with~~establishing a ~~higher~~risk-related deposit insurance assessment system, based on the institution’s capital levels and risk profile. Under the ~~Economic~~FDIC’s ~~Growth~~risk-based ~~Act~~assessment system, ~~qualifying~~insured ~~community~~institutions ~~banks~~are ~~that~~assigned ~~meet~~to orone ~~exceed~~of ~~the~~four ~~CBLR~~risk-weighted ~~and~~categories ~~elect~~based toon ~~follow~~supervisory ~~the~~evaluations, ~~alternative~~ regulatory capital ~~structure~~levels, ~~will~~and becertain ~~deemed~~other factors with less risky institutions paying lower assessments. An institution’s initial assessment rate depends upon the category to ~~have~~which ~~satisfied~~it ~~all~~is ~~generally~~assigned. ~~applicable~~There ~~leverage~~are ~~capital~~also ~~and~~adjustments ~~risk-based~~to ~~capital~~a ~~requirements~~bank’s ~~and~~initial ~~will~~assessment berates ~~considered~~based ~~“well~~on ~~capitalized”~~levels ~~under~~of ~~the~~long-term ~~FDIC~~unsecured ~~prompt~~debt, ~~corrective~~secured ~~action~~liabilities ~~provisions.~~in ~~The~~excess ~~Economic~~of ~~Growth~~25% ~~Act~~of ~~directed~~domestic ~~the~~deposits ~~FRB~~and, ~~the~~for ~~FDIC~~certain institutions, ~~and~~brokered ~~the~~deposit ~~Office~~levels. ofPursuant ~~the~~to ~~Comptroller~~FDIC ofrules adopted under the ~~Currency~~Dodd-Frank Act (~~“OCC”~~described below), toinitial ~~jointly~~assessments ~~determine~~ranged afrom ~~community~~5 ~~bank~~to ~~leverage~~35 ~~ratio~~basis ~~percentage,~~points ~~not~~of ~~less~~the ~~than~~institution’s 8%total ~~nor~~assets ~~more~~minus ~~than~~its ~~10%,~~tangible ~~that~~equity. ~~must~~The beBank ~~maintained~~paid tonet bedeposit ~~deemed~~insurance toassessments ~~have~~of ~~satisfied~~$1.7 ~~all~~million ~~generally~~during ~~applicable~~the ~~leverage~~year ~~capital~~ended ~~and~~December 31, ~~risk-based~~2025. ~~capital~~For ~~requirements~~2025, ~~and~~the bedeposit ~~considered~~insurance ~~well~~assessment ~~capitalized.~~rate ~~The~~before ~~Economic~~applying ~~Growth~~one-time ~~Act~~assessment ~~also~~credits ~~directed~~was ~~agencies~~approximately to0.087% ~~establish~~of ~~procedures~~insured ~~for~~deposits. ~~dealing~~No ~~with~~institution may pay a ~~qualifying~~dividend ~~bank~~if ~~that~~it ~~subsequently~~is ~~falls~~in ~~below~~default of the ~~new~~federal ~~ratio~~deposit insurance assessment.

~~The~~Under ~~final~~the ~~regulation~~Dodd-Frank ~~implementing~~Act, ~~Section~~the ~~201~~FDIC ~~became~~is ~~effective~~authorized onto ~~January~~set 1,the ~~2021~~reserve (ratio for the ~~“Final~~Deposit ~~Rule”)~~Insurance Fund at no less than 1.35% ~~Under~~of ~~the~~estimated ~~Final~~insured ~~Rule~~deposits, towhich beis ~~eligible~~increased tofrom ~~use~~ the ~~CBLR~~previous ~~framework,~~ratio aof ~~banking~~1.15%. ~~organization~~The FDIC must ~~not~~offset bethe aneffect ~~advanced~~of ~~approaches~~the ~~organization~~increase ~~and~~in ~~must~~the ~~have~~minimum ~~(i)~~designated areserve ~~leverage~~ ratio offrom ~~greater~~1.15% ~~than~~to 91.35%; ~~(ii)~~on ~~total~~insured ~~consolidated~~depository ~~assets~~institutions of less than $10 billion; ~~(iii)~~and ~~total~~may ~~off-balance~~declare ~~sheet~~dividends ~~exposures~~to ofdepository ~~25%~~institutions orwhen ~~less~~the ofreserve ~~total~~ratio ~~consolidated~~at ~~assets;~~the ~~and~~end ~~(iv)~~of ~~total~~a ~~trading~~calendar ~~assets~~quarter ~~plus~~is ~~trading~~at ~~liabilities~~least of 1.5%, oralthough ~~less~~the ofFDIC ~~total~~has ~~consolidated~~the ~~assets.~~authority Ato ~~qualifying~~suspend ~~institution~~or ~~may~~limit ~~opt~~such inpermitted ~~and~~dividend ~~out~~declarations. ofThe FDIC has set the ~~CBLR~~designated ~~framework~~reserve onratio ~~its~~for ~~quarterly~~the ~~call~~deposit ~~report.~~insurance Anfund ~~institution~~at ~~that~~2% ~~ceases~~of toestimated ~~meet~~insured ~~any~~deposits, ~~qualifying~~which ~~criteria~~the isFDIC ~~provided~~has ~~with~~established as a ~~two~~long-~~quarter~~term ~~grace~~goal. ~~period~~The toFDIC ~~either~~adopted ~~comply~~a ~~with~~plan ~~the~~to ~~CBLR~~restore ~~requirements~~the orfund ~~comply~~to ~~with~~ the ~~general~~1.35% ~~capital~~ratio ~~regulations~~by September 30, ~~including~~2028 ~~the~~but ~~risk-based~~did ~~capital~~not ~~requirements~~change its assessment schedule.

~~Section~~Under ~~4012 of~~ the ~~Coronavirus~~Dodd-Frank ~~Aid~~Act, ~~Relief and Economic Security Act of 2021 (~~the ~~“CARES~~assessment ~~Act”)~~base ~~required that the CBLR be temporarily lowered to 8%. The federal regulators issued a rule implementing the lower ratio effective April 23, 2021. The rule also established a two-quarter grace period~~ for adeposit ~~qualifying~~insurance ~~institution~~premiums ~~whose~~is ~~leverage~~calculated ~~ratio falls below the 8% CBLR requirement so long~~ as ~~the~~average ~~bank~~consolidated ~~maintains~~total aassets ~~leverage~~minus ~~ratio~~average oftangible ~~7% or greater~~equity. ~~Another~~Tangible ~~rule~~equity ~~was issued to transition back to the 9% CBLR by increasing the ratio to 8.5%~~ for ~~calendar~~this ~~year~~purpose ~~2022~~means ~~and~~Tier 9%1 ~~thereafter~~capital. ~~The~~Banks ~~Bank~~with ~~did~~less ~~not~~than ~~elect~~$10 ~~to opt in to the CBLR framework.~~

~~The following table shows that, at December 31, 2024, and December 31, 2023, the Bank’s capital exceeded all applicable regulatory capital requirements as set forth in 12 C.F.R. § 324.~~26

Bank Level Capital									Minimum Required To Be
(Dollars in thousands)					Minimum Required For				Well Capitalized Under Prompt
	Actual				Capital Adequacy Purposes				Corrective Action Regulations
December 31, 2024	Amount		Ratio		Amount		Ratio		Amount		Ratio
Common equity tier 1 capital to risk-weighted assets	$	179,625		11.26%	$	71,771		4.50%	$	103,670		6.50%
Tier 1 capital to risk-weighted assets	$	179,625		11.26%	$	95,695		6.00%	$	127,594		8.00%
Total capital to risk-weighted assets	$	194,499		12.19%	$	127,594		8.00%	$	159,492		10.00%
Tier 1 capital to adjusted average assets	$	179,625		8.47%	$	84,854		4.00%	$	106,068		5.00%

billion in assets (such as the Bank) are assigned an individual rate based on a formula using financial data and CAMELS (capital adequacy, asset quality, management, earnings, liquidity, and sensitivity) ratings. Beginning in June 2023, the initial base assessment rates range from 5 to 35 basis points. Adjustments are made to the initial assessment rates based on long-term unsecured debt, depository institution debt, and brokered deposits. Assessment rates (inclusive of possible adjustments) currently range from 2.5 to 32 basis points of an institution’s average total assets minus average tangible equity. The FDIC also provides for an assessment system for large depository institutions with over $10 billion in assets.

Bank Level Capital									Minimum Required To Be
(Dollars in thousands)					Minimum Required For				Well Capitalized Under Prompt
	Actual				Capital Adequacy Purposes				Corrective Action Regulations
December 31, 2023	Amount		Ratio		Amount		Ratio		Amount		Ratio
Common equity tier 1 capital to risk-weighted assets	$	168,263		10.43%	$	72,643		4.50%	$	104,928		6.50%
Tier 1 capital to risk-weighted assets	$	168,263		10.43%	$	96,857		6.00%	$	129,142		8.00%
Total capital to risk-weighted assets	$	183,315		11.36%	$	129,142		8.00%	$	161,428		10.00%
Tier 1 capital to adjusted average assets	$	168,260		7.78%	$	86,561		4.00%	$	108,201		5.00%

The FDIC has the authority to increase insurance assessments. A significant increase in insurance premiums would likely have an adverse effect on the operating expenses and results of operations of the Bank. Management cannot predict what insurance assessment rates will be in the future.

22 The FDIC may terminate the deposit insurance of any insured depository institution if the FDIC determines, after a hearing, that the institution has engaged or is engaging in unsafe or unsound practices, is in an unsafe and unsound condition to continue operations or has violated any applicable law, regulation, order or any condition imposed in writing by, or written agreement with, the FDIC. The FDIC may also suspend deposit insurance temporarily during the hearing process for a permanent termination of insurance if the institution has no tangible capital.

InFederal ~~December~~Home ~~2017,~~Loan ~~the~~Bank ~~Basel Committee on Banking Supervision published the last version of the Basel III accord, generally referred to as “Basel IV~~System.” The ~~Basel~~Bank ~~Committee~~is ~~stated that~~ a ~~key~~member ~~objective~~ of the ~~revisions~~Federal ~~incorporated~~Home ~~into~~Loan ~~the~~Bank ~~framework is to reduce excessive variability~~ of ~~risk-weighted assets (“RWA”)~~Indianapolis, which ~~will~~is beone ~~accomplished by enhancing the robustness and risk sensitivity~~ of ~~the~~eleven ~~standardized~~regional ~~approaches~~Federal ~~for~~Home ~~credit~~Loan ~~risk~~Banks. ~~and~~Each ~~operational~~Federal ~~risk,~~Home ~~which~~Loan ~~will~~Bank ~~facilitate~~serves ~~the~~as ~~comparability~~a ofreserve ~~banks’~~or ~~capital~~central ~~ratios;~~bank ~~constraining~~for ~~the~~its ~~use~~members ofwithin ~~internally~~its ~~modeled~~assigned ~~approaches;~~region. ~~and~~It ~~complementing~~is ~~the~~funded ~~risk-weighted~~primarily ~~capital~~from ~~ratio~~funds ~~with~~deposited aby ~~finalized~~member ~~leverage~~institutions ~~ratio~~ and aproceeds ~~revised~~from ~~and robust capital floor. The leadership of~~ the ~~FRB,~~sale ~~Office~~ of ~~the~~consolidated ~~Comptroller~~obligations of the ~~Currency~~Federal ~~(“OCC”),~~Home ~~and~~Loan ~~FDIC,~~Bank ~~who are tasked with implementing Basel IV, supported the revisions~~system. ~~Under~~It ~~the~~makes ~~current~~loans ~~U.S. capital rules, operational risk capital requirements and a capital floor apply only~~ to ~~advanced~~members ~~approaches institutions, and not to the Company~~(i. ~~In 2023, the federal banking agencies issued a proposed rule to implement the Basel IV standards~~e. ~~Among other things~~, ~~the~~advances) ~~proposed~~in ~~rule~~accordance would substantially change the existing calculation of risk-weighted assets and require banking organizations to use revised models for such calculations. The proposed rule, if adopted as proposed, would be applicable to banking organizations with ~~$100~~policies ~~billion or more in total consolidated assets,~~ and ~~therefore~~procedures ~~would~~established ~~not~~by ~~apply to~~ the ~~Bank~~board ~~directly.~~of ~~However,~~trustees ~~many~~ of the ~~principles~~Federal ~~included~~Home inLoan ~~this proposed rulemaking could result in increased supervisory expectations and closer regulatory scrutiny for institutions that experience substantial growth~~Bank. ~~For~~As ~~example~~a member, the ~~proposed~~Bank ~~rulemaking~~is ~~would~~required ~~add back the impact of accumulated other comprehensive income (loss)~~ to ~~the~~purchase ~~calculation~~and ofmaintain ~~regulatory~~stock ~~capital for institutions above $100 billion~~ in ~~assets. The federal banking agencies have discretion during~~ the ~~examination~~Federal ~~process~~Home toLoan ~~require~~Bank ~~institutions~~of toIndianapolis ~~have~~in ~~higher~~an ~~capital~~amount ~~cushions~~equal to ~~address~~the agreater ~~variety~~ of ~~supervisory~~ ~~concerns,~~1% ~~which may include a high level~~ of ~~accumulated~~its ~~other~~aggregate ~~comprehensive~~unpaid ~~loss.~~residential Onmortgage ~~September 10~~loans, ~~2024,~~home ~~Michael~~purchase ~~Barr,~~contracts ~~the~~or ~~Vice~~similar ~~Chair~~obligations ~~for~~at ~~Supervision of~~ the ~~Federal~~beginning ~~Reserve,~~of ~~stated~~each ~~his~~year ~~intention~~or to5% ~~recommend~~of toour ~~the~~outstanding ~~Federal~~advances ~~Reserve~~from ~~Board that~~ the Federal ~~Reserve~~Home ~~re-propose~~Loan aBank. ~~rule~~At ~~to implement the Basel IV standards; however~~December 31, ~~the federal banking agencies to date have not agreed on the issuance of a re-proposal and~~2025, ~~in consideration of~~ the ~~new~~Bank ~~Trump~~was ~~Administration and the expected changes~~ in ~~leadership~~compliance ofwith ~~the agencies, including a new Vice Chair for Supervision of the Federal Reserve, the prospects and timing for further rulemaking on these matters are uncertain at~~ this ~~time~~requirement. ~~The impact of Basel IV on the Company will depend on the manner in which it is implemented by the federal banking regulators.~~

~~Banking~~At ~~regulators~~both ~~may~~December 31, ~~change~~2025 ~~these~~and ~~capital~~December 31, ~~requirements~~2024, ~~from~~the ~~time~~Company toowned ~~time,~~$6.5 ~~depending~~million onof stock of the ~~economic~~FHLBI. ~~outlook~~The ~~generally~~FHLBI ~~and~~stock entitles the ~~outlook~~Company ~~for~~to ~~the~~dividends ~~banking~~from ~~industry~~the FHLBI. The Company isrecognized ~~unable~~dividend toincome ~~predict~~of ~~whether~~approximately $516 thousand in 2025 and ~~when~~$408 ~~any~~thousand ~~such~~in ~~further~~2024. ~~capital~~At ~~requirements~~December 31, ~~would~~2025 beand ~~imposed~~December 31, 2024, the Company’s excess borrowing capacity based on collateral from the FHLBI was $381 million and $461 million, ifrespe. soGenerally, tothe ~~what~~loan ~~levels~~terms ~~and~~from onthe ~~what~~FHLBI ~~schedule~~are better than the terms the Company can receive from other sources making it cheaper to borrow money from the FHLBI.

~~Dividend~~Federal ~~Limitations.~~Reserve ~~The Company is a legal entity separate and distinct from the Bank~~System. ~~The~~Under ~~primary~~regulations ~~source~~ of the ~~Company’s cash flow~~FRB, ~~including cash flow to pay dividends on~~ the ~~Company’s~~Bank ~~Common Stock,~~ is ~~generally~~required ~~the payment of dividends~~ to ~~the~~maintain ~~Company~~reserves byagainst ~~the Bank. Under Indiana law, the Bank may pay dividends of so much of~~ its ~~undivided~~transaction ~~profits~~accounts (~~generally,~~primarily ~~earnings~~checking ~~less~~accounts) ~~losses, bad debts, taxes~~ and ~~other~~non-personal ~~operating~~money ~~expenses)~~market asdeposit ~~is considered expedient by the Bank’s Board of Directors~~accounts. ~~However,~~The ~~the~~effect ~~Bank must obtain the approval~~ of ~~the~~these ~~DFI~~reserve ~~for~~requirements ~~the~~is ~~payment~~to ofincrease ~~a dividend if~~ the ~~total of all dividends declared by the~~ Bank’s ~~during~~cost ~~the current year, including the proposed dividend, would exceed the sum~~ of ~~retained net income for the year to date plus its retained net income for the previous two years~~funds. ~~For~~The this purpose, “retained net income” means net income as calculated for call report purposes, less all dividends declared for the applicable period. An exemption from DFI approval would require that the Bank ~~have~~is ~~been assigned a composite uniform financial institutions rating of 1 or 2 as a result of the most recent federal or state examination; the proposed dividend would not result~~ in acompliance ~~Tier~~with 1its ~~leverage~~reserve ~~ratio below 7~~requirements.~~5%; and that the Bank not be subject to any corrective action, supervisory order, supervisory agreement, or board approved operating agreement.~~

~~The~~Community ~~FDIC~~Reinvestment ~~has~~Act. Under the ~~authority~~Community toReinvestment ~~prohibit~~Act, the Bank ~~from~~has ~~paying~~a ~~dividends~~continuing ~~if,~~and inaffirmative ~~its~~obligation ~~opinion,~~consistent ~~the~~with ~~payment~~its ofsafe ~~dividends~~and ~~would~~sound ~~constitute~~operation anto ~~unsafe~~help ormeet ~~unsound~~the ~~practice~~credit inneeds ~~light~~ of ~~the~~its ~~financial~~entire ~~condition~~community, ofincluding ~~the~~low ~~Bank.~~and Inmoderate ~~addition,~~income ~~under~~neighborhoods. ~~FRB~~The ~~supervisory~~CRA ~~policy,~~does anot ~~bank~~establish ~~holding~~specific ~~company~~lending ~~generally~~requirements ~~should~~or ~~not~~programs ~~maintain~~for ~~its~~financial ~~existing~~institutions ~~rate~~nor ofdoes ~~cash~~it ~~dividends~~limit onan ~~common~~institution’s ~~shares~~discretion ~~unless~~to ~~(i)~~develop the ~~organization’s~~types ~~net~~of ~~income~~products ~~available~~and toservices ~~common~~that ~~shareholders~~it ~~over~~believes ~~the~~are ~~past~~best ~~year~~suited ~~has~~to ~~been~~its ~~sufficient~~particular tocommunity, ~~fully~~consistent ~~fund~~with the ~~dividends~~CRA. ~~and~~The ~~(ii)~~CRA requires the ~~prospective~~FDIC ~~rate~~in connection with its examination of ~~earnings~~the ~~retention~~Bank, ~~appears~~to ~~consistent~~assess ~~with~~its ~~the~~record ~~organization’s~~of ~~capital~~meeting the credit needs, ~~assets,~~of ~~quality,~~its community and ~~overall~~to ~~financial~~take ~~condition.~~that ~~The~~record ~~FRB~~into ~~expects~~account ~~bank~~in ~~holding~~its ~~companies~~evaluation toof ~~consult~~certain ~~with~~applications itby inthe ~~advance~~Bank. ofFor ~~declaring~~example, ~~dividends~~the regulations specify that ~~could~~a ~~raise~~bank’s ~~safety~~CRA ~~and~~performance ~~soundness~~will ~~concerns~~be considered in its expansion (i.e.g., ~~such~~branching) asproposals ~~when~~and ~~the~~may ~~dividend~~be isthe ~~not~~basis ~~supported~~for byapproving, ~~earnings~~denying or ~~involves~~conditioning athe ~~material~~approval ~~increase~~of inan ~~the~~application ~~dividend~~for ~~rate)~~a ~~and~~merger inor ~~advance~~acquisition. As of ~~repurchasing~~the ~~shares~~date of ~~common~~its ormost ~~preferred~~recent ~~stock~~regulatory examination, the Bank was rated “satisfactory” with respect to its CRA compliance.

23 On October 24, 2023, the federal banking agencies jointly issued a final rule to revise the existing CRA regulations. On March 29, 2024, a federal district court in Texas granted a preliminary injunction barring implementation of the final rule. The injunction remains in effect and implementation of the final rule is delayed indefinitely. In July 2025, the federal banking agencies issued a joint notice of proposed rulemaking to rescind the October 2023 final rule and restore the CRA framework that existed previously, which has remained in effect due to the aforementioned injunction.

~~Federal~~Gramm-Leach-Bliley ~~Deposit Insurance~~Act. ~~Deposits~~Under in the ~~Bank~~Gramm-Leach-Bliley ~~are insured by the Deposit Insurance Fund of the FDIC up to a maximum amount~~Act, ~~which~~bank isholding ~~generally~~companies ~~$250,000~~are ~~per~~permitted ~~depositor, subject~~ to ~~aggregation~~offer ~~rules.~~their ~~There~~customers isvirtually noany ~~unlimited~~type ~~insurance~~of ~~coverage~~financial ~~for noninterest bearing transaction accounts. Rather~~service, ~~deposits~~including ~~held in noninterest bearing transaction accounts are aggregated with interest bearing deposits the owner may hold in the same ownership category~~banking, ~~and~~securities ~~the combined are insured up to at least $250~~underwriting,~~000.~~ ~~The Bank is subject to deposit~~ insurance ~~assessments~~(both byagency ~~the~~and ~~FDIC~~underwriting) ~~pursuant to its regulations establishing a risk-related deposit insurance assessment system, based on the institution’s capital levels~~ and ~~risk~~merchant ~~profile~~banking. ~~Under~~In ~~the~~order ~~FDIC’s risk-based assessment system, insured institutions are assigned~~ to ~~one~~engage ofin ~~four~~these ~~risk-weighted~~new ~~categories~~financial ~~based~~activities, ona ~~supervisory~~bank ~~evaluations,~~holding ~~regulatory~~company ~~capital~~must ~~levels,~~qualify and ~~certain~~register ~~other factors~~ with ~~less risky institutions paying lower assessments. An institution’s initial assessment rate depends upon~~ the ~~category~~FRB toas ~~which~~a it"financial isholding ~~assigned.~~company" ~~There~~by ~~are~~demonstrating ~~also~~that ~~adjustments~~each toof aits bank’s ~~initial~~subsidiaries ~~assessment~~is ~~rates~~well ~~based on levels of long-term unsecured debt~~capitalized, ~~secured~~well ~~liabilities~~managed ~~in excess of 25% of domestic deposits~~ and, ~~for~~has ~~certain~~at ~~institutions,~~least ~~brokered~~a ~~deposit~~satisfactory ~~levels.~~rating ~~Pursuant to FDIC rules adopted~~ under the ~~Dodd-Frank Act (described below), initial assessments ranged from 5 to 35 basis points of the institution’s total assets minus its tangible equity~~CRA. ~~The~~As ~~Bank~~previously ~~paid net deposit insurance assessments of $1.8 million during the year ended December 31~~discussed, ~~2024. For 2024,~~ the ~~deposit~~Company ~~insurance~~has ~~assessment~~elected ~~rate~~to ~~before~~become ~~applying one-time assessment credits was approximately 0.093% of insured deposits. No institution may pay~~ a ~~dividend~~financial ifholding itcompany isunder ~~in default of the federal deposit insurance assessment~~Gramm-Leach.

Under the Dodd-Frank Act, the FDIC is authorized to set the reserve ratio for the Deposit Insurance Fund at no less than 1.35% of estimated insured deposits, which is increased from the previous ratio of 1.15%. The FDIC must offset the effect of the increase in the minimum designated reserve ratio from 1.15% to 1.35% on insured depository institutions of less than $10 billion and may declare dividends to depository institutions when the reserve ratio at the end of a calendar quarter is at least 1.5%, although the FDIC has the authority to suspend or limit such permitted dividend declarations. The FDIC has set the designated reserve ratio for the deposit insurance fund at 2% of estimated insured deposits, which the FDIC has established as a long-term goal. The FDIC adopted a plan to restore the fund to the 1.35% ratio by September 30, 2028 but did not change its assessment schedule.27

~~Under the Dodd~~Gramm-~~Frank~~Leach ~~Act,~~established the assessment base for deposit insurance premiums is calculated as average consolidated total assets minus average tangible equity. Tangible equity for this purpose means Tier 1 capital. Banks with less than $10 billion in assets (such as the Bank) are assigned an individual rate based on a ~~formula~~system ~~using~~of ~~financial~~functional ~~data and CAMELS (capital adequacy~~regulation, ~~asset~~under ~~quality,~~which ~~management, earnings, liquidity, and sensitivity) ratings. Beginning in June 2023,~~ the ~~initial~~federal ~~base~~banking ~~assessment~~agencies ~~rates~~regulate ~~range from 5 to 35 basis points. Adjustments are made to~~ the ~~initial~~banking ~~assessment~~activities ~~rates~~of ~~based~~financial onholding ~~long-term unsecured debt~~companies, ~~depository~~the ~~institution debt, and brokered deposits~~U. ~~Assessment rates (inclusive of possible adjustments) currently range from 2~~S.5 toSecurities 32and ~~basis~~Exchange ~~points~~Commission ofregulates antheir ~~institution’s~~securities ~~average~~activities ~~total~~and ~~assets~~state ~~minus~~insurance ~~average~~regulators ~~tangible~~regulate ~~equity.~~their ~~The~~insurance ~~FDIC also provides for an assessment system for large depository institutions with over $10 billion in assets~~activities.

~~The~~Under ~~FDIC~~Gramm-Leach, ~~has~~federal banking regulators adopted rules limiting the ~~authority~~ability of banks and other financial institutions to ~~increase~~disclose ~~insurance~~nonpublic ~~assessments~~information about consumers to nonaffiliated third parties. AThe ~~significant~~rules ~~increase~~require indisclosure ~~insurance~~of ~~premiums~~privacy ~~would~~policies ~~likely~~to ~~have~~consumers anand, ~~adverse~~in ~~effect~~some oncircumstances, ~~the~~allow ~~operating~~consumers ~~expenses~~to ~~and~~prevent ~~results~~disclosure of ~~operations~~certain ofpersonal ~~the~~information ~~Bank~~to nonaffiliated third parties. ~~Management~~The ~~cannot~~privacy ~~predict~~provisions ~~what~~of ~~insurance~~Gramm-Leach ~~assessment~~affect ~~rates~~how ~~will~~consumer beinformation inis ~~the~~transmitted ~~future~~through diversified financial services companies and conveyed to outside vendors.

The ~~FDIC~~Company ~~may~~does ~~terminate~~not ~~the~~disclose ~~deposit insurance of~~ any ~~insured~~nonpublic ~~depository~~information ~~institution~~about ifany ~~the~~current ~~FDIC determines, after a hearing, that the institution has engaged~~ or isformer ~~engaging~~customers into ~~unsafe~~anyone orexcept ~~unsound~~as ~~practices,~~permitted isby inlaw ~~an unsafe~~ and ~~unsound~~subject ~~condition~~ to ~~continue~~contractual ~~operations~~confidentiality orprovisions ~~has~~which ~~violated~~restrict ~~any applicable law, regulation, order or any condition imposed in writing by, or written agreement with,~~ the ~~FDIC.~~release ~~The~~and ~~FDIC~~use ~~may also suspend deposit insurance temporarily during the hearing process for a permanent termination~~ of ~~insurance~~such ~~if the institution has no tangible capital~~information.

~~Federal~~Cybersecurity ~~Home Loan Bank System~~Guidelines. The ~~Bank~~federal isbanking aagencies ~~member~~have ofadopted ~~the~~guidelines ~~Federal~~for ~~Home~~establishing ~~Loan~~information ~~Bank~~security ofstandards ~~Indianapolis,~~and ~~which~~cybersecurity isprograms ~~one~~for ofimplementing ~~eleven~~safeguards ~~regional~~under ~~Federal~~the ~~Home~~supervision ~~Loan~~of ~~Banks.~~the ~~Each~~board ~~Federal~~of ~~Home~~directors. ~~Loan~~These ~~Bank~~guidelines, ~~serves~~along aswith arelated ~~reserve~~regulatory ormaterials, ~~central~~increasingly ~~bank~~focus ~~for~~on ~~its~~risk ~~members~~management ~~within~~and ~~its~~processes ~~assigned~~related ~~region.~~to Itinformation istechnology ~~funded primarily from funds deposited by member institutions~~ and ~~proceeds from~~ the ~~sale~~use of ~~consolidated~~third ~~obligations~~parties ofin the ~~Federal~~provision ~~Home~~of ~~Loan~~financial ~~Bank system~~services. ItThe ~~makes~~federal ~~loans~~banking toagencies ~~members~~also ~~(i.e.,~~have ~~advances)~~issued ina ~~accordance~~rule ~~with~~imposing ~~policies~~cybersecurity ~~and~~notification ~~procedures~~requirements ~~established~~for bybanking ~~the~~organizations ~~board~~and oftheir ~~trustees~~service ofproviders. Specifically, the ~~Federal~~rule ~~Home~~requires ~~Loan~~banking ~~Bank.~~organizations Asto anotify ~~member,~~their ~~the~~primary ~~Bank~~federal isregulator ~~required~~as tosoon ~~purchase~~as possible and ~~maintain~~no ~~stock~~later inthan ~~the~~36 ~~Federal~~hours ~~Home~~after ~~Loan~~the ~~Bank~~discovery of ~~Indianapolis~~a in“computer-security anincident” ~~amount~~that ~~equal~~rises to the ~~greater~~level of 1%a of“notification ~~its~~incident,” ~~aggregate~~as ~~unpaid~~those ~~residential~~terms ~~mortgage~~are ~~loans,~~defined ~~home~~under ~~purchase~~the ~~contracts~~final orrules. ~~similar~~Additional ~~obligations~~standards atand/or ~~the~~regulations ~~beginning~~may ofbe ~~each~~adopted ~~year~~ or 5%implemented ofby ~~our~~federal ~~outstanding~~and ~~advances~~state ~~from~~banking ~~the~~agencies ~~Federal~~in ~~Home~~the ~~Loan~~future ~~Bank.~~which Atmay ~~December~~be ~~31,~~applicable ~~2024,~~to ~~the~~community ~~Bank~~banking ~~was~~organizations insuch ~~compliance~~as ~~with~~the ~~this requirement~~Company.

24 Recent cyberattacks against banks and other financial institutions that resulted in unauthorized access to confidential customer information have prompted the federal banking regulators to issue extensive guidance on cybersecurity. Among other things, financial institutions are expected to design multiple layers of security controls to establish lines of defense and ensure that their risk management processes address the risks posed by compromised customer credentials, including security measures to authenticate customers accessing internet- based services. A financial institution also should have a robust business continuity program to recover from a cyberattack and procedures for monitoring the security of third-party service providers that may have access to nonpublic data at the institution. During 2025, the Company did not discover any material cybersecurity incidents.

AtConsumer ~~December~~Financial 31Protection Bureau. The Dodd-Frank Act established the CFPB within the Federal Reserve, ~~2024~~which is granted broad rulemaking, supervisory and enforcement powers under various federal consumer financial protection laws, including the ~~Company~~Equal ~~owned~~Credit ~~$6.5~~Opportunity ~~million~~Act, Truth in Lending Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Act, the Consumer Financial Privacy provisions of ~~stock~~Gramm-Leach and certain other statutes. Many of the ~~Federal~~consumer ~~Home~~financial ~~Loan~~protection ~~Bank~~functions offormerly ~~Indianapolis~~assigned ~~(“FHLBI”)~~to the federal banking and other designated agencies are now performed by the CFPB. The ~~FHLBI~~CFPB ~~stock~~has ~~entitles~~a large budget and staff, and has the ~~Company~~authority to ~~dividends~~implement ~~from~~regulations ~~the~~under ~~FHLBI~~federal consumer protection laws and enforce those laws against, and examine, financial institutions. The ~~Company~~CFPB ~~recognized~~has ~~dividend~~examination ~~income~~and ofprimary ~~approximately~~enforcement authority with respect to depository institutions with $~~408~~10 ~~thousand~~billion or more in ~~2024~~assets. AtSmaller ~~December~~institutions ~~31,~~are ~~2024,~~subject to rules promulgated by the ~~Company’s~~CFPB ~~excess~~but ~~borrowing~~continue ~~capacity~~to ~~based~~be onexamined ~~collateral~~and ~~from~~supervised by the ~~FHLBI~~federal ~~was~~banking ~~$461~~regulators ~~million~~for consumer compliance purposes. ~~Generally,~~The CFPB has the ~~loan~~authority ~~terms~~to ~~from~~prevent ~~the~~unfair, ~~FHLBI~~deceptive ~~are~~or ~~better~~abusive ~~than~~practice ~~the~~in ~~terms~~connection with the ~~Company~~offering ~~can~~of ~~receive~~consumer ~~from~~financial ~~other~~products. ~~sources~~Additionally, ~~making~~this itbureau ~~cheaper~~is authorized to ~~borrow~~collect ~~money~~fines ~~from~~and provide consumer restitution in the ~~FHLBI~~event of violations, engage in consumer financial education, track consumer complaints, request data, and promote the availability of financial services to underserved consumers and communities.

~~Federal~~Moreover, ~~Reserve~~the ~~System.~~Dodd-Frank ~~Under~~Act ~~regulations~~authorized the CFPB to establish certain minimum standards for the origination of residential mortgages including a determination of the ~~FRB~~borrower’s ability to repay. In addition, the ~~Bank~~CFPB ishas ~~required~~published toseveral ~~maintain~~final ~~reserves~~regulations ~~against~~impacting ~~its~~the ~~transaction~~mortgage ~~accounts~~industry, ~~(primarily~~including ~~checking~~rules ~~accounts)~~related ~~and~~to ~~non~~ability-~~personal~~to-pay, ~~money~~mortgage ~~market~~servicing, ~~deposit~~and ~~accounts~~mortgage loan originator compensation. The ~~effect~~ability-to-repay ofrule ~~these~~makes ~~reserve~~lenders ~~requirements~~liable isif they fail to ~~increase~~assess ability to repay under a prescribed test, but also creates a safe harbor for so-called “qualified mortgages.” Failure to comply with the ~~Bank~~ability-to-repay rule may result in possible CFPB enforcement action and special statutory damages plus actual, class action, and attorneys’s ~~cost~~fees damages, all of ~~funds~~which a borrower may claim in defense of a foreclosure action at any time. The ~~Bank~~Dodd-Frank isAct also permits states to adopt consumer protection laws and standards that are more stringent than those adopted at the federal level and, in certain circumstances, permits state attorneys general to enforce compliance with ~~its~~both ~~reserve~~the state and federal laws and regulations. Federal preemption of state consumer protection law requirements, traditionally an attribute of the federal savings association charter, also was modified by the Dodd-Frank Act and requires a case- by-case determination of preemption by the OCC and eliminates preemption for subsidiaries of a bank. Depending on the

Community Reinvestment Act. Under the Community Reinvestment Act (“CRA”), the Bank has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low and moderate income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the CRA. The CRA requires the FDIC in connection with its examination of the Bank, to assess its record of meeting the credit needs of its community and to take that record into account in its evaluation of certain applications by the Bank. For example, the regulations specify that a bank’s CRA performance will be considered in its expansion (e.g., branching) proposals and may be the basis for approving, denying or conditioning the approval of an application for a merger or acquisition. As of the date of its most recent regulatory examination, the Bank was rated “satisfactory” with respect to its CRA compliance.28

Onimplementation ~~October~~of ~~24,~~this ~~2023,~~revised ~~the~~ federal ~~banking~~preemption ~~agencies~~standard, ~~jointly issued a final rule to strengthen and modernize~~ the ~~existing~~operations ~~CRA~~of ~~regulations. Under~~ the ~~final~~Bank ~~rule,~~could ~~the~~become ~~agencies~~subject ~~will~~to ~~evaluate~~additional acompliance ~~bank’s~~burdens ~~CRA~~in ~~performance based upon~~ the ~~varied~~states ~~activities that it conducts and the communities~~ in which it operates. CRA evaluations and data collection requirements will be tailored based on bank size and type. The final rule significantly expands the assessment area that financial institutions must consider when evaluating their lending practices by including areas associated with mobile and online banking and includes new metrics and benchmarks to assess retail lending performance. In addition, the final rule emphasizes smaller loans and investments that can have a high impact and be more responsive to the needs of low- or moderate-income communities.

OnMortgage ~~March~~Reform ~~29,~~and ~~2024,~~Anti-Predatory aLending. ~~federal~~Title ~~district~~XIV ~~court~~of inthe ~~Texas~~Dodd-Frank ~~granted~~Act, athe ~~preliminary~~Mortgage ~~injunction~~Reform ~~barring~~and ~~implementation~~Anti-Predatory Lending Act, includes a series of amendments to the ~~final~~Truth ~~rule.~~In ~~The~~Lending ~~injunction~~Act ~~extends~~with ~~the~~respect ~~effective~~to ~~date~~mortgage ofloan ~~April~~origination 1standards affecting, ~~2024~~among other things, originator compensation, minimum repayment standards and ~~all~~pre-payments. ~~other~~With ~~implementation~~respect ~~dates~~to mortgage loan originator compensation, onexcept ain ~~day-for-day~~limited ~~basis~~circumstances, ~~until~~an originator is prohibited from receiving compensation that varies based on the ~~injunction~~terms isof ~~lifted.~~the ~~While~~loan (other than the ~~federal~~principal ~~banking~~amount). ~~agencies~~The ~~are~~amendments ~~appealing~~to the ~~district~~Truth ~~court~~In Lending Act also prohibit a creditor from making a residential mortgage loan unless it determines, based on verified and documented information of the consumer’s ~~decision~~financial resources, that the consumer has a reasonable ability to ~~date~~repay the ~~injunction~~loan. ~~remains~~The inamendments ~~effect~~also ~~and~~prohibit ~~implementation~~certain ofpre-payment ~~the~~penalties ~~final~~and ~~rule~~require iscreditors ~~delayed~~offering ~~indefinitely.~~a ~~Compliance~~consumer a mortgage loan with a pre- payment penalty to offer the ~~majority~~consumer the option of a mortgage loan without such a penalty. In addition, the ~~final~~Dodd-Frank ~~rule's~~Act ~~provisions~~expands ~~otherwise~~the ~~would~~definition ~~not~~of ~~have~~a ~~been~~“high-cost ~~required~~mortgage” ~~until~~under ~~January~~the 1Truth In Lending Act, ~~2026~~and imposes new requirements on high-cost mortgages and ~~the~~new ~~data~~disclosure, reporting and notice requirements offor ~~the~~residential ~~final~~mortgage ~~rule~~loans, ~~would~~as ~~not~~well ~~have~~as ~~taken~~new ~~effect~~requirements ~~until~~with ~~January~~respect 1,to ~~2027~~escrows and appraisal practices.

~~Gramm-Leach-Bliley~~Interchange ~~Act~~Fees for Debit Cards. Under the ~~Gramm~~Dodd-~~Leach-Bliley~~Frank Act ~~("Gramm-Leach")~~, ~~bank~~interchange ~~holding~~fees ~~companies~~for ~~are~~debit ~~permitted~~card totransactions ~~offer~~must ~~their~~be ~~customers~~reasonable ~~virtually~~and ~~any~~proportional ~~type~~to ofthe ~~financial~~issuer’s ~~service,~~incremental ~~including~~cost ~~banking,~~incurred ~~securities~~with ~~underwriting,~~respect ~~insurance~~to ~~(both~~the ~~agency~~transaction ~~and~~plus ~~underwriting)~~certain ~~and~~fraud ~~merchant~~related ~~banking~~costs. InAlthough ~~order~~institutions ~~to engage in these new financial activities, a bank holding company must qualify and register~~ with ~~the~~total ~~FRB~~assets asof aless ~~"financial~~than ~~holding~~$10 ~~company"~~billion byare ~~demonstrating~~exempt ~~that~~from ~~each~~this ~~of its bank subsidiaries is well capitalized~~requirement, ~~well~~competitive ~~managed~~pressures ~~and~~have ~~has~~required atsmaller ~~least~~depository ainstitutions ~~satisfactory~~to ~~rating~~reduce ~~under~~fees ~~the~~with ~~CRA.~~respect ~~As previously discussed, the Company has elected~~ to ~~become~~these adebit ~~financial~~card ~~holding company under Gramm-Leach~~transactions.

~~Gramm-Leach~~Federal ~~established~~Securities aLaw ~~system~~and Nasdaq Listing. The shares of ~~functional~~Common ~~regulation,~~Stock ~~under~~of ~~which~~the Company have been registered with the ~~federal~~SEC ~~banking~~under ~~agencies~~the ~~regulate~~Exchange Act. The Company is subject to the ~~banking~~periodic ~~activities~~reporting, proxy solicitation, insider trading restrictions and other requirements of ~~financial~~the ~~holding~~Exchange ~~companies,~~Act and the Urules of the SEC promulgated there under.S. ~~Securities~~If ~~and~~the ~~Exchange~~Company ~~Commission~~has ~~regulates~~fewer ~~their~~than ~~securities~~1,200 ~~activities~~record shareholders, it may deregister its shares under the Exchange Act and ~~state~~cease ~~insurance~~to ~~regulators~~be ~~regulate~~subject ~~their~~to ~~insurance~~the ~~activities~~foregoing requirements.

~~Under~~Shares ~~Gramm-Leach,~~of ~~federal~~the ~~banking~~Company’s ~~regulators~~Common ~~adopted~~Stock ~~rules~~held ~~limiting~~by ~~the~~persons ~~ability~~who are affiliates of ~~banks~~the ~~and~~Company ~~other~~may ~~financial~~not ~~institutions~~be toresold ~~disclose~~without ~~nonpublic~~registration ~~information~~unless ~~about~~sold ~~consumers~~in toaccordance ~~nonaffiliated~~with ~~third~~the ~~parties.~~resale ~~The~~restrictions ~~rules~~of ~~require~~Rule ~~disclosure~~144 under the Securities Act of ~~privacy~~1933. ~~policies~~If tothe ~~consumers~~Company ~~and,~~meets inthe ~~some~~current ~~circumstances~~public information requirements under Rule 144, ~~allow~~each ~~consumers~~affiliate of the Company who complies with the other conditions of Rule 144 (including those that require the affiliate’s sale to ~~prevent~~be ~~disclosure~~aggregated with those of certain ~~personal~~other ~~information~~persons) would be able to ~~nonaffiliated~~sell ~~third~~in ~~parties.~~the ~~The~~public ~~privacy~~market, ~~provisions~~without registration, a number of ~~Gramm~~shares not to exceed, in any three-~~Leach~~month ~~affect~~period, ~~how~~the ~~consumer~~greater ~~information~~of is(i) ~~transmitted~~1% ~~through~~of ~~diversified~~the ~~financial~~outstanding ~~services~~shares ~~companies~~of ~~and~~the ~~conveyed~~Company toor ~~outside~~(ii) ~~vendors~~the average weekly volume of trading in such shares during the preceding four calendar weeks.

25 Under the Dodd-Frank Act, the Company is required to provide its shareholders an opportunity to vote on the executive compensation payable to its named executive officers and on golden parachute payments in connection with mergers and acquisitions. These votes are non-binding and advisory. At least once every six years, the Company must also permit shareholders to determine on an advisory basis whether such votes should be held every one, two, or three years.

~~The~~Shares ~~Company~~of ~~does~~the ~~not~~Company’s ~~disclose~~Common ~~any~~Stock ~~nonpublic~~are ~~information~~listed ~~about~~on ~~any~~the ~~current~~Nasdaq orCapital ~~former~~Market ~~customers~~under tothe ~~anyone~~trading ~~except~~symbol as“FNWD,” ~~permitted~~and bythe ~~law~~Company ~~and~~is subject to ~~contractual~~the ~~confidentiality~~rules ~~provisions~~of ~~which restrict~~ the ~~release~~Nasdaq ~~and~~for ~~use~~listed ~~of such information~~companies.

~~Cybersecurity~~Federal ~~Guidelines~~Reserve Monetary Policies. The ~~federal~~Company’s ~~banking~~earnings ~~agencies~~and ~~have~~growth, ~~adopted~~as ~~guidelines~~well ~~for~~as ~~establishing~~the ~~information~~earnings ~~security~~and ~~standards~~growth ~~and~~of ~~cybersecurity~~the ~~programs~~banking ~~for~~industry ~~implementing~~in ~~safeguards~~general, ~~under~~are affected by the ~~supervision~~monetary ofand ~~the~~credit ~~board~~policies of ~~directors.~~monetary ~~These guidelines~~authorities, ~~along~~including ~~with~~the ~~related~~FRB. ~~regulatory~~An ~~materials,~~important ~~increasingly~~function ~~focus~~of onthe ~~risk~~FRB ~~management~~is ~~and processes related~~ to ~~information~~regulate ~~technology and~~ the ~~use~~national supply of ~~third~~bank ~~parties~~credit in ~~the~~order ~~provision~~to ofcombat ~~financial~~recession ~~services~~and curb inflationary pressures. ~~The~~Among ~~federal~~the ~~banking~~instruments ~~agencies~~of ~~also~~monetary ~~have~~policy ~~issued~~used aby ~~rule~~the ~~imposing~~FRB ~~cybersecurity~~to ~~notification~~implement ~~requirements~~these ~~for~~objectives ~~banking~~are ~~organizations~~open ~~and~~market ~~their~~operations ~~service~~in ~~providers~~U.S. ~~Specifically~~government securities, ~~the~~changes ~~rule~~in ~~requires~~reserve ~~banking~~requirements ~~organizations~~against tomember ~~notify~~bank ~~their~~deposits, ~~primary~~and ~~federal~~changes ~~regulator~~in asthe ~~soon~~Federal asReserve ~~possible~~discount ~~and~~rate. noThese ~~later~~instruments ~~than~~are 36used ~~hours~~in ~~after~~varying ~~the~~combinations ~~discovery~~to ofinfluence aoverall ~~“computer-security~~growth ~~incident”~~of ~~that~~bank ~~rises~~loans, toinvestments, ~~the~~and ~~level~~deposits, ofand amay ~~“notification~~also ~~incident,”~~affect asinterest ~~those~~rates ~~terms~~charged ~~are~~on ~~defined~~loans ~~under~~or ~~the~~paid ~~final~~for ~~rules~~deposits. ~~Additional~~The ~~standards~~monetary ~~and/or~~policies ~~regulations~~of ~~may~~the beFRB ~~adopted~~have orhad ~~implemented~~a bysignificant ~~federal~~impact ~~and~~on ~~state~~the ~~banking~~operating ~~agencies~~results of financial institutions in the ~~future~~past ~~which~~and ~~may~~are beexpected ~~applicable~~ to ~~community~~continue ~~banking~~to ~~organizations~~have ~~such~~effects asin the ~~Company~~future.

~~Recent~~In ~~cyberattacks~~view ~~against~~of ~~banks~~continually ~~and~~changing ~~other~~conditions ~~financial institutions that resulted~~ in ~~unauthorized access to confidential customer information have prompted~~ the ~~federal~~national ~~banking~~economy ~~regulators~~and toin ~~issue~~money ~~extensive guidance on cybersecurity. Among other things~~markets, ~~financial~~as ~~institutions~~well ~~are~~as ~~expected~~the toeffect ~~design multiple layers~~ of ~~security~~credit ~~controls~~policies toby ~~establish~~monetary ~~lines of defense~~ and ~~ensure~~fiscal ~~that~~authorities, ~~their~~including ~~risk management processes address~~ the ~~risks posed by compromised customer credentials~~FRB, ~~including~~it ~~security~~is ~~measures~~difficult to ~~authenticate~~predict ~~customers~~the ~~accessing~~impact ~~internet-~~of ~~based~~possible ~~services.~~future Achanges ~~financial~~in ~~institution~~interest ~~also~~rates, ~~should~~deposit ~~have~~levels, aand ~~robust~~loan ~~business~~demand, ~~continuity~~or ~~program~~their toeffect ~~recover~~on ~~from~~the aCompany’s ~~cyberattack~~business and ~~procedures~~earnings ~~for~~or ~~monitoring~~on the ~~security~~financial condition of ~~third-party service providers that may have access to nonpublic data at~~ the ~~institution. During 2024, the~~ Company’s ~~did~~various ~~not discover any material cybersecurity incidents~~customers.

~~Consumer~~Artificial ~~Financial Protection Bureau~~Intelligence. ~~The~~State ~~Dodd-Frank~~and ~~Act~~federal ~~established~~regulatory ~~the~~agencies ~~Consumer~~have ~~Financial~~begun ~~Protection~~adopting ~~Bureau~~rules ~~(“CFPB”) within the Federal Reserve, which is granted broad rulemaking, supervisory~~ and ~~enforcement~~guidelines ~~powers~~regarding ~~under various federal consumer financial protection laws, including~~ the ~~Equal~~use ~~Credit~~of ~~Opportunity~~artificial ~~Act,~~intelligence ~~Truth~~technologies in ~~Lending~~connection ~~Act,~~with ~~Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Act,~~ the ~~Consumer~~provision ~~Financial Privacy provisions~~ of ~~Gramm-Leach and certain other statutes. Many of the consumer~~ financial ~~protection functions formerly assigned to the federal banking and other designated agencies are now performed by the CFPB~~services. ~~The~~For ~~CFPB has a large budget and staff~~example, ~~and has~~ the ~~authority to implement regulations under federal consumer protection laws and enforce those laws against, and examine, financial institutions. The~~ CFPB ~~has examination~~ and ~~primary~~other ~~enforcement~~federal ~~authority~~bank ~~with~~regulatory ~~respect~~agencies tohave ~~depository~~provided ~~institutions~~guidance ~~with~~that ~~$10~~creditors ~~billion~~may orbe ~~more in assets. Smaller institutions are~~ subject to ~~rules~~adverse ~~promulgated~~action bynotice ~~the~~requirements ~~CFPB~~under ~~but continue to be examined and supervised by~~ the ~~federal~~Equal ~~banking~~Credit ~~regulators~~Opportunity ~~for~~Act ~~consumer~~even ~~compliance~~if ~~purposes.~~they ~~The~~rely ~~CFPB~~on ~~has~~algorithmic ~~the~~underwriting ~~authority to prevent unfair, deceptive or abusive practice in connection with the offering of consumer financial products~~models. Additionally, this bureau is authorized to collect fines and provide consumer restitution in the event of violations, engage in consumer financial education, track consumer complaints, request data, and promote the availability of financial services to underserved consumers and communities.

Moreover, the Dodd-Frank Act authorized the CFPB to establish certain minimum standards for the origination of residential mortgages including a determination of the borrower’s ability to repay. In addition, the CFPB has published several final regulations impacting the mortgage industry, including rules related to ability-to- pay, mortgage servicing, and mortgage loan originator compensation. The ability-to-repay rule makes lenders liable if they fail to assess ability to repay under a prescribed test, but also creates a safe harbor for so-called “qualified mortgages.” Failure to comply with the ability-to-repay rule may result in possible CFPB enforcement action and special statutory damages plus actual, class action, and attorneys’ fees damages, all of which a borrower may claim in defense of a foreclosure action at any time. The Dodd-Frank Act also permits states to adopt consumer protection laws and standards that are more stringent than those adopted at the federal level and, in certain circumstances, permits state attorneys general to enforce compliance with both the state and federal laws and regulations. Federal preemption of state consumer protection law requirements, traditionally an attribute of the federal savings association charter, also was modified by the Dodd-Frank Act and requires a case- by-case determination of preemption by the OCC and eliminates preemption for subsidiaries of a bank. Depending on the implementation of this revised federal preemption standard, the operations of the Bank could become subject to additional compliance burdens in the states in which it operates.29

26 the California Privacy Protection Agency is currently in the process of finalizing regulations regarding the use of automated decision making. California also enacted new laws that further regulate the use of AI technologies and provide consumers with additional protections around companies’ use of AI technologies, such as requiring companies to disclose certain uses of generative AI, and other states have also passed AI-focused legislation. In addition, the New York State Department of Financial Services issued an industry letter on combating cybersecurity risks associated with AI. Additionally, on January 23, 2025, President Trump issued an executive order aimed at reducing barriers to AI innovation in the U.S. economy. The executive order requires relevant persons and bodies within the federal government to develop an AI action plan to carry out this objective and revokes an AI-related executive order issued in 2023 by President Biden, as well as all corresponding policies, regulations, orders, directives, and other actions taken in response to such order.

~~Mortgage~~Other ~~Reform~~Future Legislation and ~~Anti-Predatory~~Change ~~Lending~~in Regulations. ~~Title~~Various ~~XIV~~other ~~of the Dodd-Frank Act~~legislation, ~~the~~including ~~Mortgage~~proposals ~~Reform~~to ~~and~~expand ~~Anti-Predatory~~or ~~Lending~~contract ~~Act,~~the ~~includes~~powers ~~a series~~ of ~~amendments~~banking toinstitutions ~~the~~and ~~Truth~~bank Inholding ~~Lending~~companies, ~~Act~~is ~~with~~from ~~respect~~time to ~~mortgage~~time ~~loan~~introduced. ~~origination~~This ~~standards~~legislation ~~affecting,~~may ~~among~~change ~~other~~banking ~~things,~~statutes ~~originator compensation, minimum repayment standards~~ and ~~pre-payments.~~the ~~With~~operating ~~respect~~environment toof ~~mortgage~~the ~~loan~~Company ~~originator~~and ~~compensation,~~the ~~except~~Bank in ~~limited~~substantial ~~circumstances,~~and anunpredictable ~~originator~~ways. isIf ~~prohibited~~enacted, ~~from~~such ~~receiving~~legislation ~~compensation~~could ~~that~~increase ~~varies~~or ~~based~~decrease on the ~~terms~~cost of ~~the~~doing ~~loan~~business, ~~(other~~limit ~~than~~or ~~the~~expand ~~principal~~permissible ~~amount).~~activities ~~The~~or ~~amendments~~affect to the ~~Truth~~competitive Inbalance ~~Lending~~among ~~Act~~banks, ~~also~~savings ~~prohibit a creditor from making a residential mortgage loan unless it determines~~associations, ~~based~~credit onunions ~~verified~~ and ~~documented~~other ~~information of the consumer’s~~ financial ~~resources, that the consumer has a reasonable ability to repay the loan~~institutions. The ~~amendments~~Company ~~also~~cannot ~~prohibit~~accurately ~~certain~~predict ~~pre-payment~~whether ~~penalties~~any ~~and require creditors offering a consumer a mortgage loan with a pre- payment penalty to offer the consumer the option~~ of athis ~~mortgage~~potential ~~loan~~legislation ~~without~~will ~~such~~ultimately abe ~~penalty.~~enacted, ~~In addition~~and, ~~the~~if ~~Dodd-Frank~~enacted, ~~Act expands~~ the ~~definition~~ultimate ofeffect athat ~~“high-cost mortgage” under the Truth In Lending Act~~it, ~~and~~or ~~imposes~~implementing ~~new requirements on high-cost mortgages and new disclosure~~regulations, ~~reporting~~would ~~and~~have ~~notice~~upon ~~requirements~~the ~~for~~financial ~~residential~~condition ~~mortgage~~or ~~loans,~~results asof ~~well~~operations asof ~~new~~the ~~requirements~~Company ~~with~~or ~~respect~~the ~~to escrows and appraisal practices~~Bank.

~~Interchange~~Federal Fees for Debit Cards. Under the Dodd-Frank Act, interchange fees for debit card transactions must be reasonable and proportional to the issuer’s incremental cost incurred with respect to the transaction plus certain fraud related costs. Although institutions with total assets of less than $10 billion are exempt from this requirement, competitive pressures have required smaller depository institutions to reduce fees with respect to these debit card transactions.Taxation

~~Federal~~For ~~Securities~~federal ~~Law~~income ~~and~~tax ~~Nasdaq~~purposes, ~~Listing.~~the ~~The~~Bank ~~shares~~reports ofits ~~Common~~income ~~Stock~~and ofexpenses ~~the~~on ~~Company have been registered with~~ the ~~SEC~~accrual ~~under~~method ~~the~~of ~~Exchange Act~~accounting. The Company ~~is subject to the periodic reporting, proxy solicitation, insider trading restrictions~~ and ~~other requirements of~~ the ~~Exchange~~Bank ~~Act~~file ~~and~~a ~~the~~consolidated ~~rules~~federal ofincome ~~the~~tax ~~SEC~~return ~~promulgated~~for ~~there~~each ~~under.~~fiscal Ifyear ~~the~~ending ~~Company~~December ~~has fewer than 1,200 record shareholders, it may deregister its shares under the Exchange Act and cease to be subject to the foregoing requirements~~31.

~~Shares~~State of the Company’s Common Stock held by persons who are affiliates of the Company may not be resold without registration unless sold in accordance with the resale restrictions of Rule 144 under the Securities Act of 1933. If the Company meets the current public information requirements under Rule 144, each affiliate of the Company who complies with the other conditions of Rule 144 (including those that require the affiliate’s sale to be aggregated with those of certain other persons) would be able to sell in the public market, without registration, a number of shares not to exceed, in any three-month period, the greater of (i) 1% of the outstanding shares of the Company or (ii) the average weekly volume of trading in such shares during the preceding four calendar weeks.Taxation

~~Under~~The ~~the~~Bank ~~Dodd-Frank~~is ~~Act,~~subject ~~the~~to ~~Company~~Indiana’s Financial Institutions Tax, which is ~~required~~imposed toat ~~provide~~a ~~its~~flat ~~shareholders~~rate anon ~~opportunity~~“adjusted gross income,” subject to ~~vote~~scheduled ondecreases as described herein. For 2025, this rate was 4.9%. Additionally, the ~~executive~~Bank ~~compensation~~is ~~payable~~subject to ~~its~~Illinois ~~named~~state ~~executive~~tax ~~officers~~which ~~and~~is onimposed ~~golden~~at ~~parachute~~a ~~payments~~flat inrate ~~connection~~of 9.5%. “Adjusted gross income,” for purposes of the FIT begins with ~~mergers~~taxable ~~and~~income ~~acquisitions.~~as ~~These~~defined ~~votes~~by ~~are~~Section ~~non-binding~~63 ~~and~~of ~~advisory.~~the AtInternal ~~least~~Revenue ~~once~~Code ~~every~~of ~~six~~1986, ~~years~~as amended and, thus, incorporates federal tax law to the ~~Company~~extent ~~must~~that ~~also~~it ~~permit~~affects ~~shareholders~~the tocomputation ~~determine~~of ontaxable anincome. ~~advisory~~Federal ~~basis~~taxable ~~whether~~income ~~such~~is ~~votes~~then ~~should~~adjusted beby ~~held~~several ~~every~~Indiana ~~one,~~and ~~two,~~Illinois ormodifications. ~~three~~Other ~~years~~applicable state taxes include generally applicable sales and use taxes plus real and personal property taxes.

~~Shares~~Accounting ~~of the Company’s Common Stock are listed on the Nasdaq Capital Market under the trading symbol “FNWD,” and the Company is subject to the rules of the Nasdaq~~ for ~~listed~~Income ~~companies.~~Taxes

~~Federal~~At ~~Reserve Monetary Policies. The Company’s earnings and growth~~December 31, ~~as well as the earnings and growth of the banking industry in general~~2025, ~~are affected by~~ the ~~monetary~~Company ~~and~~has ~~credit~~consolidated ~~policies~~total ofdeferred ~~monetary~~tax ~~authorities,~~assets ~~including the FRB. An important function~~ of ~~the~~31 ~~FRB~~million ~~is to regulate the national supply of bank credit in order to combat recession~~ and ~~curb~~consolidated ~~inflationary~~total ~~pressures.~~deferred ~~Among~~tax ~~the~~liabilities ~~instruments~~ of ~~monetary~~6 ~~policy used by the FRB to implement these objectives are open market operations in U.S. government securities~~million, ~~changes~~resulting in reserve requirements against member bank deposits, and changes in the Federal Reserve discount rate. These instruments are used in varying combinations to influence overall growth of bank loans, investments, and deposits, and may also affect interest rates charged on loans or paid for deposits. The monetary policies of the FRB have had a ~~significant~~consolidated ~~impact~~net ondeferred ~~the~~tax ~~operating~~asset ~~results~~ of ~~financial~~25 ~~institutions in the past and are expected to continue to have effects in the future~~million.

27 Item 1A. Risk Factors

InAn ~~view~~investment ofin ~~continually~~our ~~changing~~common ~~conditions~~stock ininvolves ~~the~~risks. ~~national~~Before ~~economy~~making ~~and~~any decision whether to invest in ~~money~~our ~~markets~~common stock, asyou ~~well~~should ascarefully consider the ~~effect~~risks described below, together with all of ~~credit~~the ~~policies~~other byinformation ~~monetary~~included ~~and~~in ~~fiscal~~this ~~authorities,~~report. ~~including~~These risks are not the ~~FRB,~~only itones iswe ~~difficult~~will face. Additional risks not presently known to ~~predict~~us ~~the~~or ~~impact~~that ofwe ~~possible~~currently ~~future~~deem ~~changes~~immaterial inmay ~~interest~~also ~~rates~~affect our business operations, ~~deposit~~financial ~~levels~~condition, and ~~loan~~results ~~demand~~of operations. Our business, financial condition, or ~~their~~results ~~effect~~of onoperations ~~the~~could ~~Company’s~~be ~~business~~materially adversely affected by any of these risks. The trading price of our common stock could decline due to any of these risks, and ~~earnings~~you ormay onlose ~~the~~all ~~financial~~or ~~condition~~part of ~~the~~your ~~Company’s~~investment. ~~various~~Also, ~~customers~~please read “Cautionary Note Regarding Forward-Looking Statements.”

~~Artificial~~Risks ~~Intelligence.~~Related State and federal regulatory agencies have begun adopting rules and guidelines regarding the use of artificial intelligence (“AI”) technologies in connection with the provision of financial services. For example, the CFPB and other federal bank regulatory agencies have provided guidance that creditors may be subject to ~~adverse~~Our action notice requirements under the Equal Credit Opportunity Act even if they rely on algorithmic underwriting models. Additionally, the California Privacy Protection Agency is currently in the process of finalizing regulations regarding the use of automated decision making. California also enacted new laws that further regulate the use of AI technologies and provide consumers with additional protections around companies’ use of AI technologies, such as requiring companies to disclose certain uses of generative AI, and other states have also passed AI-focused legislation. In addition, the New York State Department of Financial Services issued an industry letter on combating cybersecurity risks associated with AI. Additionally, on January 23, 2025, President Trump issued an executive order aimed at reducing barriers to AI innovation in the U.S. economy. The executive order requires relevant persons and bodies within the federal government to develop an AI action plan to carry out this objective and revokes an AI-related executive order issued in 2023 by President Biden, as well as all corresponding policies, regulations, orders, directives, and other actions taken in response to such order.Business

~~Other~~As ~~Future~~a ~~Legislation~~financial ~~and Change in Regulations. Various other legislation~~institution, ~~including proposals to expand or contract~~ the ~~powers~~Company ~~of banking institutions and bank holding companies,~~ is ~~from~~subject ~~time~~ to ~~time~~a ~~introduced.~~number ~~This legislation may change banking statutes and the operating environment~~ of ~~the~~risks ~~Company~~relating ~~and~~to ~~the~~its ~~Bank~~daily ~~in substantial and unpredictable ways. If enacted, such legislation could increase or decrease the cost of doing~~ business~~, limit or expand permissible activities or affect the competitive balance among banks, savings associations, credit unions and other financial institutions~~. The Company cannot accurately predict whether any of this potential legislation will ultimately be enacted, and, if enacted, the ultimate effect that it, or implementing regulations, would have upon the financial condition or results of operations of the Company or the Bank.

~~Federal~~As ~~Taxation~~a financial institution, we are subject to a number of risks relating to our daily business. Although we undertake a variety of efforts to manage and control those risks, many of the risks are outside of our control. Among the risks we face are the following:

~~For~~● ~~federal~~Credit ~~income~~Risk ~~tax~~– ~~purposes,~~ the ~~Bank~~risk ~~reports~~that ~~its~~loan ~~income~~customers ~~and~~or ~~expenses~~other onparties ~~the~~will ~~accrual~~be ~~method~~unable ofto ~~accounting.~~perform ~~The~~their ~~Company~~contractual ~~and~~repayment ~~the Bank file a consolidated federal income tax return for each fiscal year ending December 31~~obligations.

~~State~~● ~~Taxation~~Market Risk – the risk that changes in market rates and prices will adversely affect our financial condition and results of operations.

~~The~~● ~~Bank~~Liquidity isRisk ~~subject~~– to Indiana’s Financial Institutions Tax (“FIT”), which is imposed at a flat rate on “adjusted gross income,” subject to scheduled decreases as described herein. For 2024, this rate was 4.9%. Additionally, the ~~Bank~~risk isthat ~~subject to Illinois state tax which is imposed at a flat rate of 9.5%. “Adjusted gross income,” for purposes of~~ the ~~FIT~~Company ~~begins~~or ~~with taxable income as defined by Section 63 of~~ the ~~Internal~~Bank ~~Revenue~~will ~~Code~~have ofinsufficient ~~1986,~~cash asor ~~amended~~access ~~(the~~to ~~“Code”)~~cash ~~and, thus, incorporates federal tax law~~ to ~~the~~meet ~~extent~~its ~~that~~operating ~~it affects the computation of taxable income~~needs. Federal taxable income is then adjusted by several Indiana and Illinois modifications. Other applicable state taxes include generally applicable sales and use taxes plus real and personal property taxes.

~~Accounting for Income Taxes~~30

At● ~~December~~Operational ~~31,~~Risk ~~2024,~~– the ~~Company~~risk ~~has consolidated total deferred tax assets~~ of ~~$36.5~~financial ~~million~~ and ~~consolidated~~reputational ~~total~~loss ~~deferred~~resulting ~~tax~~from ~~liabilities~~fraud, ofinadequate ~~$6.9~~or ~~million,~~failed ~~resulting~~internal inprocesses, acyber-security ~~consolidated~~breaches, ~~net~~people ~~deferred~~and ~~tax~~systems, ~~asset~~or ofexternal ~~$29~~events.~~5 million.~~

~~Item~~● ~~1A.~~Economic Risk ~~Factors~~– the risk that the economy in our markets could decline, resulting in increased unemployment, decreased real estate values, and increased loan charge-offs.

An● ~~investment~~Compliance inRisk ~~our~~– ~~common stock involves risks. Before making any decision whether to invest in our common stock, you should carefully consider~~ the ~~risks~~risk ~~described below, together with all~~ of ~~the~~additional ~~other~~action ~~information~~by ~~included in this report. These risks are not the only ones we will face. Additional risks not presently known to us or that we currently deem immaterial may also affect~~ our ~~business~~regulators ~~operations, financial condition, and results of operations. Our business, financial condition,~~ or ~~results~~additional ofregulation ~~operations~~that could behinder ~~materially adversely affected by any of these risks. The trading price of~~ our ~~common~~ability ~~stock could decline due~~ to ~~any~~do ofbusiness ~~these risks, and you may lose all or part of your investment~~profitably. ~~Also, please read “Cautionary Note Regarding Forward-Looking Statements.”~~

28 ● Regulatory Risk – the risk presented by the need to comply with all laws, rules, and regulations from multiple regulatory agencies, including but not limited to the FDIC, the Consumer Financial Protection Bureau, the IDFI, the FRB, the SEC, and the U.S. Department of Labor.

~~Risks~~● ~~Related~~Fiduciary Risk – the risk of failing to ~~Our~~act ~~Business~~in our fiduciary capacity in the best interests of the grantors and beneficiaries of trust accounts and benefit plans.

AsThe ~~a financial institution, the~~ Company is subject to aliquidity ~~number~~risk ofin ~~risks~~its ~~relating~~operations, which could adversely affect the ability to ~~its~~fund ~~daily~~various ~~business~~obligations.

AsLiquidity arisk ~~financial~~is ~~institution~~the possibility of being unable to meet obligations as they come due, wepay ~~are~~deposits ~~subject~~when withdrawn, capitalize on growth opportunities as they arise, or pay dividends because of an inability to liquidate assets or obtain adequate funding on a ~~number~~timely ofbasis, ~~risks~~at ~~relating~~a reasonable cost and within acceptable risk tolerances. Liquidity is derived primarily from retail deposit growth and retention, principal and interest payments on loans and investment securities, net cash provided from operation, and access to ~~our~~other ~~daily~~funding sources. Liquidity is essential to our business. ~~Although~~We wemust ~~undertake~~maintain asufficient ~~variety~~funds ofto ~~efforts~~respond to ~~manage~~the needs of depositors and ~~control~~borrowers. ~~those~~An ~~risks~~inability to raise funds through deposits, ~~many~~borrowings, the sale or pledging as collateral of loans and other assets could have a material adverse effect on our liquidity. Our access to funding sources in amounts adequate to finance our activities could be impaired by factors that affect us specifically or the ~~risks~~financial ~~are~~services ~~outside~~industry in general. Factors that could detrimentally impact our access to liquidity sources include a decrease in the level of our ~~control.~~business ~~Among~~activity due to a market downturn, failures of other financial institutions which reduces overall market confidence in the ~~risks~~banking weand ~~face~~financial services industry, or regulatory action that limits or eliminates our access to alternate funding sources. Our ability to borrow could also be impaired by factors that are nonspecific to us, such as severe disruption of the ~~following:~~financial markets or negative expectations about the prospects for the financial services industry, as evidenced by the recent failures of certain depository institutions and the resulting market turmoil and volatility stemming from such failures.

●Unrealized ~~Credit~~losses ~~Risk~~in – the ~~risk~~Company’s ~~that~~investment ~~loan~~portfolio ~~customers~~could oraffect ~~other parties will be unable to perform their contractual repayment obligations~~liquidity.

●As ~~Market~~market ~~Risk~~interest –rates increased during 2022 and continued into the ~~risk~~early ~~that~~months ~~changes~~of 2023, the Company experienced increased unrealized losses within its investment portfolio. The Company’s investment portfolio consists of federal funds, interest bearing balances in ~~market~~other ~~rates~~financial institutions, U.S. government securities, U.S. Treasury securities, federal agency obligations, obligations of state and ~~prices~~local ~~will~~municipalities, ~~adversely~~mortgage-backed ~~affect~~securities ~~our~~and ~~financial~~corporate ~~condition~~securities. All of the instruments held in the Company’s investment portfolio are designated as available-for-sale, and ~~results~~many of ~~operations~~these instruments are particularly sensitive to interest rate fluctuations, especially long-term fixed-income securities, including U.S. Treasury notes and bonds and corporate and municipal bonds. As of December 31, 2025, the Company held approximately $201.2 million of municipal securities within the investment portfolio, which comprised approximately 63.6% of the portfolio, and approximately $104.7 million of collateralized mortgage obligations and residential mortgage-backed securities within the portfolio, which comprised approximately 33.1% of the portfolio. From December 31, 2024 to December 31, 2025, the investment portfolio experienced a reduction in unrealized losses of approximately $21.6 million. The decrease in unrealized losses is reflected in AOCI on the Company’s balance sheet and increases the Company’s book capital and tangible common equity ratio. However, unrealized losses do not affect the Company’s regulatory capital ratios.

●Management ~~Liquidity~~continues ~~Risk~~to –actively monitor the ~~risk~~investment ~~that~~portfolio and may sell securities from the ~~Company~~portfolio before maturity in order to take advantage of restructuring opportunities, which would include reinvestment of sale proceeds at higher rates of return, improving duration or improving interest rate risk exposure. That said, it is unlikely the ~~Bank~~Company will ~~have~~be ~~insufficient~~required ~~cash~~to orsell the securities before recovery of their amortized cost bases, which may be at maturity. However, the Company’s access to ~~cash~~liquidity tosources ~~meet~~could ~~its~~be ~~operating~~affected ~~needs~~by unrealized losses if securities within the investment portfolio must be sold at a loss or tangible capital ratios decline from an increase in unrealized losses or realized credit losses.

●Above ~~Operational~~average ~~Risk~~interest –rate ~~the~~ risk ofassociated ~~financial~~with ~~and~~fixed-rate ~~reputational~~loans ~~loss~~may ~~resulting~~have ~~from~~an ~~fraud,~~adverse ~~inadequate~~effect oron ~~failed~~our ~~internal~~financial ~~processes,~~position ~~cyber-security breaches, people and systems,~~ or ~~external~~results ~~events~~of operations.

●Peoples ~~Economic~~Bank’s ~~Risk~~loan –portfolio ~~the~~includes ~~risk~~a ~~that~~significant ~~the~~amount ~~economy~~of inloans ~~our~~with ~~markets~~fixed ~~could~~rates ~~decline,~~of ~~resulting~~interest. inAt ~~increased~~December 31, ~~unemployment~~2025, ~~decreased~~$636.9 ~~real~~million, ~~estate~~or ~~values,~~44.0% ~~and~~of ~~increased~~the ~~loan~~Bank’s ~~charge-offs~~total loans receivable had fixed interest rates. The Bank offers ARM loans

~~● Compliance Risk – the risk of additional action by our regulators or additional regulation that could hinder our ability to do business profitably.~~31

●and ~~Regulatory~~fixed-rate ~~Risk~~loans. –Unlike ARM loans, fixed-rate loans carry the risk ~~presented~~that, bybecause ~~the~~they ~~need~~do tonot ~~comply~~reprice ~~with~~to ~~all~~market ~~laws~~interest rates, ~~rules~~their yield may be insufficient to offset increases in the Bank’s cost of funds during a rising interest rate environment. Accordingly, a material and ~~regulations~~prolonged ~~from~~increase ~~multiple~~in ~~regulatory~~market ~~agencies,~~interest ~~including~~rates ~~but~~could ~~not~~be ~~limited~~expected to ~~the~~have ~~FDIC,~~a greater adverse effect on the ~~Consumer~~Bank’s ~~Financial~~net ~~Protection~~interest ~~Bureau,~~income ~~the~~compared ~~IDFI,~~to ~~the~~other ~~FRB,~~institutions ~~the~~that ~~SEC,~~hold ~~and~~a ~~the~~materially ~~U.S.~~larger ~~Department~~portion of ~~Labor~~their assets in ARM loans or fixed-rate loans that are originated for committed sale in the secondary market.

●Higher ~~Fiduciary~~loan ~~Risk~~losses –could require the ~~risk~~Company ~~of failing~~ to ~~act~~increase inits ~~our~~allowance ~~fiduciary~~for ~~capacity~~credit inlosses ~~the~~through ~~best~~a ~~interests~~charge ofto ~~the grantors and beneficiaries of trust accounts and benefit plans~~earnings.

When we loan money, we incur the risk that our borrowers will not repay their loans. We reserve for loan losses by establishing an allowance through a charge to earnings. The ~~Company~~amount of this allowance is ~~subject~~based on our assessment of loan losses inherent in our loan portfolio. The process for determining the amount of the allowance is critical to ~~liquidity~~our ~~risk~~financial results and condition. It requires subjective and complex judgments about the future, including forecasts of economic or market conditions that might impair the ability of our borrowers to repay their loans. We might underestimate the loan losses inherent in ~~its~~our ~~operations~~loan portfolio and have loan losses in excess of the amount reserved. We might increase the allowance because of changing economic conditions. For example, ~~which~~in a rising interest rate environment, borrowers with adjustable rate loans could ~~adversely~~see ~~affect~~their payments increase. There may be a significant increase in the ~~ability~~number of borrowers who are unable or unwilling to ~~fund~~repay ~~various~~their ~~obligations~~loans, resulting in our charging off more loans and increasing our allowance. In addition, when real estate values decline, the potential severity of loss on a real estate-secured loan can increase significantly, especially in the case of loans with high combined loan-to-value ratios. Our Allowance for credit losses at any particular date may not be sufficient to cover future loan losses. We may be required to increase our Allowance for credit losses, thus reducing earnings.

~~Liquidity~~Commercial risk is the possibility of being unable to meet obligations as they come due, pay deposits when withdrawn, capitalize on growth opportunities as they arise, or pay dividends because of an inability to liquidate assets or obtain adequate funding on a timely basis, at a reasonable cost and within acceptable risk tolerances. Liquidity is derived primarily from retail deposit growth and retention, principal and interest payments on loans and investment securities, net cash provided from operation, and access to other funding sources. Liquidity is essential to our business. Welending ~~must~~may ~~maintain~~expose ~~sufficient funds to respond to~~ the ~~needs~~Company ~~of depositors and borrowers. An inability~~ to ~~raise~~increased ~~funds~~lending ~~through deposits, borrowings, the sale or pledging as collateral of loans and other assets could have a material adverse effect on our liquidity~~risks. Our access to funding sources in amounts adequate to finance our activities could be impaired by factors that affect us specifically or the financial services industry in general. Factors that could detrimentally impact our access to liquidity sources include a decrease in the level of our business activity due to a market downturn, failures of other financial institutions which reduces overall market confidence in the banking and financial services industry, or regulatory action that limits or eliminates our access to alternate funding sources. Our ability to borrow could also be impaired by factors that are nonspecific to us, such as severe disruption of the financial markets or negative expectations about the prospects for the financial services industry, as evidenced by the recent failures of certain depository institutions and the resulting market turmoil and volatility stemming from such failures.

29 At December 31, 2025, the Bank’s commercial business loan portfolio amounted to $99.3 million, or 6.9% of total loans. Subject to market conditions and other factors, the Bank intends to expand its commercial business lending activities within its primary market areas. Commercial business lending is inherently riskier than residential mortgage lending. Although commercial business loans are often collateralized by equipment, inventory, accounts receivable, or other business assets, the liquidation value of these assets in the event of a borrower default is often an insufficient source of repayment because accounts receivable may be uncollectible and inventories and equipment may be obsolete or of limited use, among other things.

~~Unrealized~~Commercial ~~losses~~real inestate lending may expose the Company’s ~~investment~~to ~~portfolio~~increased ~~could~~lending ~~affect liquidity~~risks.

AsAt ~~market~~December 31, ~~interest rates increased during 2022 and continued into the early months of 2023~~2025, the ~~Company experienced increased unrealized losses within its investment portfolio. The Company~~Bank’s ~~investment~~commercial ~~portfolio~~real ~~consists~~estate ofloan federal funds, interest bearing balances in other financial institutions, U.S. government securities, federal agency obligations, obligations of state and local municipalities, and corporate securities. All of the instruments held in the Company’s investment portfolio ~~are~~amounted ~~designated as available-for-sale, and many of these instruments are particularly sensitive~~ to interest rate fluctuations, especially long-term fixed-income securities, including U.S. Treasury notes and bonds and corporate and municipal bonds. As of December 31, 2024, the Company held approximately $~~214~~555.76 million ~~of municipal securities within the investment portfolio~~, ~~which~~or ~~comprised approximately 64~~38.43% of ~~the~~total ~~portfolio,~~loans. ~~and~~Commercial ~~approximately~~real ~~$109.3~~estate ~~million~~lending ofis ~~collateralized~~inherently ~~mortgage~~riskier ~~obligations~~than ~~and~~ residential mortgage~~-backed~~ ~~securities~~lending. ~~within~~Because ~~the~~payments ~~portfolio,~~on ~~which~~loans ~~comprised~~secured ~~approximately~~by ~~32.8%~~commercial ofproperties ~~the~~often ~~portfolio.~~depend ~~From~~upon ~~December~~the ~~31,~~successful ~~2023~~operation toand ~~December~~management ~~31,~~of ~~2024,~~ the ~~investment~~properties, ~~portfolio~~repayment ~~experienced unrealized losses~~ of ~~approximately~~such ~~$9.0~~loans ~~million.~~may ~~The~~be ~~increase~~affected inby ~~unrealized~~adverse ~~losses~~conditions ~~is reflected~~ in ~~Accumulated Other Comprehensive Income (Loss) (AOCI) on~~ the ~~Company’s~~real ~~balance~~estate ~~sheet~~market ~~and~~or ~~reduces~~ the ~~Company’s book capital and tangible common equity ratio. However~~economy, ~~unrealized~~among ~~losses~~other ~~do not affect the Company’s regulatory capital ratios~~things.

~~Management~~Our ~~continues~~mortgage tolending ~~actively~~profitability ~~monitor~~could ~~the~~be ~~investment~~significantly ~~portfolio~~reduced ~~and~~if ~~may~~we ~~sell~~are ~~securities~~not ~~from~~able ~~the portfolio before maturity in order~~ to ~~take~~resell ~~advantage~~mortgages ~~of restructuring opportunities. That said, it is unlikely the Company will be required to sell the securities before recovery of their amortized cost bases, which may be~~ at ~~maturity.~~a ~~However,~~reasonable ~~the~~gain ~~Company’s~~on ~~access~~sale toor ~~liquidity~~experience ~~sources~~other ~~could~~problems bewith ~~affected by unrealized losses if securities within~~ the ~~investment~~secondary ~~portfolio~~market ~~must~~process ~~be sold at a loss~~ or ~~tangible~~we ~~capital~~are ~~ratios~~unable ~~decline~~to ~~from~~retain anour ~~increase~~mortgage inloan ~~unrealized~~sales ~~losses~~force ordue ~~realized~~to ~~credit~~regulatory ~~losses~~changes.

~~Above~~Currently, ~~average~~we ~~interest~~sell ~~rate~~a ~~risk~~large ~~associated~~portion ~~with~~of ~~fixed-rate~~the mortgage loans ~~may~~we ~~have~~originate. anThe ~~adverse~~profitability ~~effect~~of onour mortgage banking operations depends in large part upon our ~~financial~~ability ~~position~~to oraggregate ~~results~~a high volume of ~~operations~~loans and to sell them in the secondary market at a gain. Thus, we are dependent upon the existence of an active secondary market and our ability to profitably sell loans into that market.

~~Peoples~~Our ~~Bank’s~~ability ~~loan~~to ~~portfolio~~sell ~~includes~~mortgage aloans ~~significant~~readily ~~amount~~is ofdependent ~~loans~~upon ~~with~~the ~~fixed~~availability ~~rates~~ of ~~interest.~~an Atactive ~~December~~secondary ~~31,~~market ~~2024,~~for ~~$712.7~~single-family ~~million~~mortgage loans, orwhich ~~47.3%~~in ofturn ~~the~~depends ~~Bank’s~~in ~~total~~part ~~loans~~upon ~~receivable~~the ~~had~~continuation ~~fixed~~of ~~interest~~programs ~~rates.~~currently ~~The~~offered ~~Bank~~by ~~offers~~the ~~adjustable~~Agencies ~~rate~~and ~~mortgage~~other ~~(ARM)~~institutional ~~loans~~ and ~~fixed~~non-~~rate~~institutional ~~loans~~investors. ~~Unlike~~These ~~ARM~~entities ~~loans,~~account ~~fixed-rate~~for ~~loans~~a ~~carry~~substantial ~~the~~portion ~~risk~~of ~~that,~~the ~~because~~secondary ~~they do not reprice to~~ market ~~interest~~in ~~rates,~~residential ~~their~~mortgage ~~yield~~loans. ~~may~~Some beof ~~insufficient~~the tolargest ~~offset~~participants ~~increases~~ in the ~~Bank’s~~secondary ~~cost~~market, ofincluding ~~funds~~the ~~during a rising interest rate environment. Accordingly~~Agencies, aare ~~material~~government-sponsored ~~and~~enterprises ~~prolonged~~whose ~~increase~~activities inare ~~market~~governed ~~interest~~by ~~rates~~federal ~~could~~law. beAny ~~expected~~future tochanges ~~have~~in alaws ~~greater~~that ~~adverse~~significantly ~~effect~~affect on the ~~Bank’s~~activity ~~net interest income compared to other institutions that hold a materially larger portion~~ of ~~their~~such ~~assets in ARM loans or fixed~~government-~~rate~~sponsored ~~loans~~enterprises ~~that~~could, ~~are~~in ~~originated~~turn, ~~for~~adversely ~~committed~~affect ~~sale~~our ~~in the secondary market~~operations.

~~Higher~~In ~~loan~~September ~~losses~~2008, ~~could~~Fannie ~~require~~Mae and Freddie Mac were placed into conservatorship by the ~~Company~~U.S. togovernment. ~~increase~~Although ~~its~~to ~~allowance~~date, ~~for~~the ~~credit~~conservatorship ~~losses~~has ~~through~~not had a ~~charge~~significant or adverse effect on our operations, and during 2010 and 2012 the Federal Housing Finance Agency indicated that the Treasury Department is committed to ~~earnings~~funding Fannie Mae and Freddie Mac to levels needed in order to sufficiently meet their funding needs, it is currently unclear whether further changes would significantly and adversely affect our operations. In addition, our ability to sell mortgage loans readily is dependent upon our ability to remain eligible for the programs offered by the Agencies and other institutional and non-institutional

When we loan money, we incur the risk that our borrowers will not repay their loans. We reserve for loan losses by establishing an allowance through a charge to earnings. The amount of this allowance is based on our assessment of loan losses inherent in our loan portfolio. The process for determining the amount of the allowance is critical to our financial results and condition. It requires subjective and complex judgments about the future, including forecasts of economic or market conditions that might impair the ability of our borrowers to repay their loans. We might underestimate the loan losses inherent in our loan portfolio and have loan losses in excess of the amount reserved. We might increase the allowance because of changing economic conditions. For example, in a rising interest rate environment, borrowers with adjustable rate loans could see their payments increase. There may be a significant increase in the number of borrowers who are unable or unwilling to repay their loans, resulting in our charging off more loans and increasing our allowance. In addition, when real estate values decline, the potential severity of loss on a real estate-secured loan can increase significantly, especially in the case of loans with high combined loan-to-value ratios. Our Allowance for credit losses at any particular date may not be sufficient to cover future loan losses. We may be required to increase our Allowance for credit losses, thus reducing earnings.32

30 investors. Our ability to remain eligible may also depend on having an acceptable peer-relative delinquency ratio for the FHA and maintaining a delinquency rate with respect to Ginnie Mae pools that are below Ginnie Mae guidelines.

~~Commercial~~Any ~~business~~significant ~~lending~~impairment ~~may~~of ~~expose~~our eligibility with any of the ~~Company~~Agencies could materially and adversely affect our operations. Further, the criteria for loans to ~~increased~~be ~~lending~~accepted ~~risks~~under such programs may be changed from time-to- time by the sponsoring entity which could result in a lower volume of corresponding loan originations. The profitability of participating in specific programs may vary depending on a number of factors, including our administrative costs of originating and purchasing qualifying loans and our costs of meeting such criteria.

AtOur December 31, 2024, the Bank’s commercial business loan portfolio amounted to $104.2 million, or 6.9% of total loans. Subject to market conditions and other factors, the Bank intends to expand its commercial business lending activities within its primary market areas. Commercial business lending is inherently riskier than residential mortgage lending. ~~Although~~profitability ~~commercial~~could ~~business~~be ~~loans~~significantly ~~are~~reduced ~~often~~as ~~collateralized~~changes ~~by equipment, inventory, accounts receivable, or other business assets, the liquidation value of these assets~~ in ~~the~~interest ~~event~~rates ofcould aaffect ~~borrower~~mortgage ~~default~~origination isvolume ~~often an insufficient source of repayment because accounts receivable may be uncollectible~~ and ~~inventories~~pricing ~~and~~for ~~equipment~~selling ~~may~~mortgages beon ~~obsolete~~the orsecondary ~~of limited use, among other things~~market.

~~Commercial~~Currently, ~~real~~we ~~estate~~sell ~~lending~~a ~~may~~large ~~expose~~portion of the ~~Company~~mortgage loans we originate. The profitability of our mortgage banking operations depends in large part upon our ability to ~~increased~~originate ~~lending~~and ~~risks~~sell mortgages to the secondary market at a gain. A higher interest rate environment can negatively affect the volume of loan originations and refinanced loans reducing the dollar amount of loans available to be sold to the secondary market. Higher interest rates can also negatively affect the premium received on loans sold to the secondary market as competitive pressures to originate loans can reduce pricing.

AtOur ~~December~~information ~~31,~~systems ~~2024,~~may ~~the~~experience ~~Bank’s~~an ~~commercial~~interruption ~~real estate loan portfolio amounted to $551.7 million,~~ or ~~36.6%~~breach of total loans. Commercial real estate lending is inherently riskier than residential mortgage lending. Because payments on loans secured by commercial properties often depend upon the successful operation and management of the properties, repayment of such loans may be affected by adverse conditions in ~~the real estate market or the economy, among other things~~security.

~~Our~~The ~~mortgage~~Bank ~~lending~~relies ~~profitability~~heavily ~~could~~on beinternal ~~significantly~~and ~~reduced~~outsourced ifdigital wetechnologies, ~~are~~communications, ~~not~~and ~~able~~information systems to ~~resell~~conduct ~~mortgages~~its atbusiness. aAs ~~reasonable~~our ~~gain~~reliance on ~~sale~~technology orsystems ~~experience~~increases, the potential risks of technology-related operation interruptions in our customer relationship management, general ledger, deposit, loan, or other ~~problems~~systems ~~with~~or the ~~secondary~~occurrence ~~market~~of ~~process~~cyber incidents increases within the industry. Cyber incidents can result from deliberate attacks or weunintentional ~~are~~events ~~unable~~including (i) unauthorized access to ~~retain~~digital systems for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruptions; (ii) denial-of-service attacks on websites; or (iii) intelligence gathering and social engineering aimed at obtaining information. The occurrence of operational interruption, cyber incidents, or a deficiency in the cyber security of our ~~mortgage~~technology ~~loan~~systems ~~sales~~(internal ~~force~~or ~~due~~outsourced) tocould ~~regulatory~~negatively ~~changes~~impact our financial condition or results of operations.

~~Currently,~~We wehave ~~sell~~policies aand ~~large~~procedures ~~portion~~expressly ofdesigned to prevent or limit the ~~mortgage~~effect ~~loans~~of wea ~~originate.~~failure, ~~The~~interruption, ~~profitability~~or security breach of our ~~mortgage~~systems ~~banking~~and ~~operations~~maintain ~~depends~~cyber insecurity ~~large~~insurance. ~~part~~However, ~~upon~~such ~~our~~policies, ~~ability~~procedures, or insurance may prove insufficient to ~~aggregate~~prevent, arepel, ~~high~~or ~~volume~~mitigate ofa ~~loans~~cyber ~~and~~incident. Significant interruptions to ~~sell~~our ~~them~~business from technology issues could result in ~~the~~expensive ~~secondary~~remediation ~~market~~efforts atand adistraction ~~gain~~of management. ~~Thus,~~Although we ~~are~~have ~~dependent~~not ~~upon~~experienced ~~the~~any ~~existence~~material oflosses anrelated ~~active~~to ~~secondary~~technology-related ~~market~~operational ~~and~~interruption ~~our~~or ~~ability~~cyber-attack, tothere ~~profitably~~can ~~sell~~be ~~loans~~no ~~into~~assurance that ~~market~~such failures, interruptions, or security breaches will not occur in the future or, if they do occur, that the impact will not be substantial.

~~Our~~The ~~ability~~occurrence toof ~~sell~~any ~~mortgage~~failures, ~~loans~~interruptions, ~~readily~~or issecurity ~~dependent~~breaches ~~upon the availability~~ of anour ~~active~~technology ~~secondary~~systems ~~market~~could ~~for~~damage ~~single-family~~our ~~mortgage loans~~reputation, ~~which~~result in ~~turn~~a ~~depends~~loss inof ~~part~~customer ~~upon~~business, ~~the~~result ~~continuation~~in ofthe ~~programs~~unauthorized ~~currently~~release, ~~offered~~gathering, bymonitoring, ~~Fannie~~misuse, ~~Mae~~loss, ~~Freddie~~or ~~Mac,~~destruction ~~and~~of ~~Ginnie~~proprietary ~~Mae~~information, ~~(the~~subject ~~“Agencies”)~~us ~~and~~to ~~other~~additional ~~institutional~~regulatory ~~and~~scrutiny, ~~non-institutional~~or ~~investors.~~expose ~~These~~us ~~entities~~to ~~account~~civil ~~for~~litigation aand ~~substantial~~possible ~~portion~~financial ofliability, ~~the~~any ~~secondary~~of ~~market~~which incould ~~residential~~have ~~mortgage~~a ~~loans.~~material ~~Some~~adverse ofeffect ~~the~~on ~~largest~~our ~~participants~~financial incondition, ~~the~~results ~~secondary~~of ~~market~~operations, ~~including~~or ~~the~~stock ~~Agencies,~~price. ~~are~~As ~~government-sponsored~~cyber ~~enterprises~~threats ~~whose~~continue ~~activities~~to ~~are~~evolve, ~~governed~~we bymay ~~federal~~also ~~law.~~be ~~Any~~required ~~future~~to ~~changes~~spend insignificant ~~laws~~additional ~~that~~resources ~~significantly~~to ~~affect~~continue ~~the~~to ~~activity~~modify ofor ~~such~~enhance ~~government-sponsored~~our ~~enterprises~~protective ~~could,~~measures inor ~~turn,~~to ~~adversely~~investigate ~~affect~~and ~~our~~remediate ~~operations~~any information security vulnerabilities.

InWe ~~September~~are ~~2008,~~subject ~~Fannie~~to ~~Mae~~certain ~~and~~operational ~~Freddie~~risks, ~~Mac were placed into conservatorship by the U.S. government. Although to date~~including, ~~the~~but ~~conservatorship has~~ not ~~had~~limited ~~a significant or adverse effect on our operations, and during 2010 and 2012 the Federal Housing Finance Agency indicated that the Treasury Department is committed~~ to ~~funding Fannie Mae and Freddie Mac to levels needed in order to sufficiently meet their funding needs~~, itcustomer isor ~~currently~~employee ~~unclear~~fraud ~~whether further changes would significantly~~ and ~~adversely~~data ~~affect~~processing ~~our~~system ~~operations.~~failures ~~In addition, our ability to sell mortgage loans readily is dependent upon our ability to remain eligible for the programs offered by the Agencies~~ and ~~other institutional and non-institutional investors~~errors. Our ability to remain eligible may also depend on having an acceptable peer-relative delinquency ratio for the Federal Housing Administration (“FHA”) and maintaining a delinquency rate with respect to Ginnie Mae pools that are below Ginnie Mae guidelines.

~~Any~~Employee ~~significant~~errors ~~impairment~~and ofemployee ~~our~~and/or ~~eligibility~~customer ~~with~~misconduct ~~any~~could ofsubject ~~the~~us ~~Agencies~~to ~~could~~financial ~~materially~~losses or regulatory sanctions and ~~adversely~~seriously ~~affect~~harm our ~~operations~~reputation or financial performance. ~~Further,~~Misconduct ~~the~~by ~~criteria~~our ~~for~~employees ~~loans~~could toinclude, bebut ~~accepted~~is ~~under~~not ~~such~~limited ~~programs~~to, ~~may~~hiding beunauthorized ~~changed~~activities from ~~time-to-~~us, ~~time~~improper byor ~~the~~unauthorized ~~sponsoring~~activities ~~entity~~on ~~which~~behalf ~~could~~of ~~result~~our incustomers, aor ~~lower~~improper ~~volume~~use of ~~corresponding~~confidential ~~loan originations~~information. ~~The~~It ~~profitability~~is ofnot ~~participating~~always inpossible ~~specific~~to ~~programs~~prevent ~~may~~employee ~~vary~~errors ~~depending~~and onmisconduct, aand ~~number~~the ofprecautions ~~factors,~~we ~~including~~take ~~our~~to ~~administrative~~prevent ~~costs~~and ofdetect ~~originating~~this ~~and~~activity ~~purchasing~~may ~~qualifying~~not ~~loans~~be ~~and~~effective ~~our~~in ~~costs~~all ofcases. ~~meeting~~Employee ~~such~~errors ~~criteria~~could also subject us to financial claims for negligence.

~~Our~~We ~~mortgage~~maintain ~~lending~~a ~~profitability~~system ~~could~~of beinternal ~~significantly~~controls ~~reduced~~and asinsurance ~~changes~~coverage into ~~interest~~mitigate ~~rates~~against ~~could~~operational ~~affect~~risks, ~~mortgage~~including ~~origination~~data ~~volume~~processing system failures and ~~pricing~~errors ~~for~~and ~~selling~~customer ~~mortgages~~or employee fraud. If our internal controls fail to prevent or detect an occurrence, or if any resulting loss is not insured or exceeds applicable insurance limits, it could have a material adverse effect on ~~the~~our ~~secondary~~business, ~~market~~financial condition, and results of operations.

~~Currently,~~We wedepend ~~sell~~on aoutside ~~large~~third ~~portion~~parties offor ~~the~~processing ~~mortgage~~and ~~loans~~handling ~~we originate. The profitability~~ of our ~~mortgage~~records ~~banking operations depends in large part upon our ability to originate~~ and ~~sell mortgages to the secondary market at a gain~~data. A higher interest rate environment can negatively affect the volume of loan originations and refinanced loans reducing the dollar amount of loans available to be sold to the secondary market. Higher interest rates can also negatively affect the premium received on loans sold to the secondary market as competitive pressures to originate loans can reduce pricing.

31 33

~~Our~~The ~~information~~Bank relies on software developed by third party vendors to process various transactions. In some cases, we have contracted with third parties to run their proprietary software on our behalf. These systems include, but are not limited to, general ledger, payroll, employee benefits, loan and deposit processing, and securities portfolio management. While we perform a review of controls instituted by the vendors over these programs in accordance with industry standards and perform our own testing of user controls, we must rely on the continued maintenance of these controls by the outside party, including safeguards over the security of customer data. In addition, we maintain backups of key processing output daily in the event of a failure on the part of any of these systems. Nonetheless, we may ~~experience~~incur ana ~~interruption~~temporary disruption in the ability to conduct our business or process our transactions or incur damage to our reputation if the third party vendor fails to adequately maintain internal controls or institute necessary changes to systems. Such disruption or breach inof security may have a material adverse effect on our financial condition and results of operations.

~~The~~We ~~Bank~~continually ~~relies~~encounter ~~heavily~~technological ~~on internal and outsourced digital technologies, communications, and information systems to conduct its business~~change. As our reliance on technology systems increases, the potential risks of technology-related operation interruptions in our customer relationship management, general ledger, deposit, loan, or other systems or the occurrence of cyber incidents also increases. Cyber incidents can result from deliberate attacks or unintentional events including (i) unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruptions; (ii) denial-of- service attacks on websites; or (iii) intelligence gathering and social engineering aimed at obtaining information. The occurrence of operational interruption, cyber incident, or a deficiency in the cyber security of our technology systems (internal or outsourced) could negatively impact our financial condition or results of operations.

WeThe ~~have~~banking ~~policies~~ and ~~procedures~~financial ~~expressly~~services ~~designed~~industry tocontinually ~~prevent~~undergoes ortechnological ~~limit~~changes, ~~the~~with ~~effect~~frequent introductions of anew ~~failure,~~technology-driven ~~interruption~~products and services. In addition to better meeting customer needs, orthe ~~security~~effective ~~breach~~use of ~~our~~technology ~~systems~~increases efficiency and ~~maintain~~enables ~~cyber~~financial ~~security~~institutions ~~insurance~~to reduce costs. ~~However,~~Our ~~such~~future ~~policies,~~success ~~procedures~~will depend, orin ~~insurance~~part, ~~may~~on ~~prove~~our ~~insufficient~~ability to ~~prevent,~~address ~~repel,~~the orneeds ~~mitigate~~of aour ~~cyber~~customers ~~incident.~~by ~~Significant~~using ~~interruptions~~technology to ~~our~~provide ~~business~~products ~~from~~and ~~technology~~services ~~issues~~that ~~could~~enhance ~~result~~customer inconvenience ~~expensive~~and ~~remediation~~that ~~efforts~~create ~~and~~additional ~~distraction~~efficiencies ofin ~~management~~our operations. ~~Although~~Many weof our competitors have ~~not~~greater ~~experienced~~resources ~~any~~to ~~material~~invest ~~losses~~in ~~related~~technological toimprovements, aand we may not effectively implement new technology-~~related~~driven ~~operational~~products ~~interruption~~and services or ~~cyber-attack~~do so as quickly as our competitors, ~~there~~which ~~can~~could bereduce noour ~~assurance~~ability ~~that~~to ~~such~~effectively ~~failures,~~compete. ~~interruptions,~~Failure orto ~~security~~successfully ~~breaches~~keep ~~will~~pace ~~not~~with ~~occur~~technological inchange affecting the ~~future~~financial ~~or,~~services ifindustry ~~they~~could dohave ~~occur,~~a ~~that~~material ~~the~~adverse ~~impact~~effect ~~will~~on ~~not~~our bebusiness, ~~substantial~~financial condition, and results of operations.

~~The~~We occurrence of any failures, interruptions, or security breaches of our technology systems could damage our reputation, result in a loss of customer business, result in the unauthorized release, gathering, monitoring, misuse, loss, or destruction of proprietary information, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our financial condition, results of operations, or stock price. As cyber threats continue to evolve, we may ~~also~~not be ~~required~~able to ~~spend~~attract ~~significant additional resources to continue to modify or enhance our protective measures or to investigate~~ and ~~remediate~~retain ~~any~~skilled ~~information security vulnerabilities~~people.

WeThe ~~are~~Bank’s ~~subject~~success depends on its ability to ~~certain~~attract ~~operational~~and ~~risks,~~retain ~~including~~skilled people. Competition for the best people in most activities in which we engage can be intense, ~~but~~and we may not ~~limited~~be able to, ~~customer~~hire people or ~~employee~~retain ~~fraud~~them. ~~and~~The ~~data~~unexpected ~~processing~~loss ~~system~~of ~~failures~~services of certain of our skilled personnel could have a material adverse impact on our business because of their skills, knowledge of our market, years of industry experience, customer relationships, and ~~errors~~the difficulty of promptly finding qualified replacement personnel.

~~Employee~~Loss ~~errors~~of ~~and~~key ~~employee and/or customer misconduct could subject us to financial losses or regulatory sanctions and seriously harm our reputation or financial performance. Misconduct by our~~ employees ~~could~~may ~~include,~~disrupt ~~but~~relationships iswith ~~not~~certain ~~limited to, hiding unauthorized activities from us, improper or unauthorized activities on behalf of our~~ customers~~, or improper use of confidential information~~. It is not always possible to prevent employee errors and misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases. Employee errors could also subject us to financial claims for negligence.

WeOur ~~maintain~~customer arelationships ~~system~~are critical to the success of ~~internal~~our ~~controls~~business, and ~~insurance~~loss ~~coverage~~of tokey ~~mitigate~~employees ~~against~~with ~~operational~~significant ~~risks,~~customer ~~including~~relationships ~~data~~may ~~processing~~lead ~~system~~to ~~failures~~the ~~and~~loss ~~errors~~of ~~and~~business ~~customer~~if orthe customers were to follow that employee ~~fraud.~~to Ifa ~~our~~competitor. ~~internal~~While ~~controls~~we ~~fail~~believe toour ~~prevent~~relationships orwith ~~detect~~key anpersonnel ~~occurrence~~are strong, orwe ifcannot ~~any~~guarantee ~~resulting~~that ~~loss~~all isof ~~not~~our ~~insured~~key orpersonnel ~~exceeds~~will ~~applicable~~remain ~~insurance~~with ~~limits~~the organization, itwhich could result in the loss of some of our customers and could have a ~~material~~negative ~~adverse~~impact ~~effect~~ on our business, financial condition, and results of operations.

We ~~depend~~may onneed ~~outside~~to ~~third~~raise ~~parties~~additional ~~for~~capital ~~processing~~in the future, and ~~handling~~such ofcapital ~~our~~may ~~records~~not ~~and~~be ~~data~~available when needed or at all.

~~The~~We ~~Bank~~may ~~relies~~need onto ~~software~~raise ~~developed~~additional bycapital ~~third~~in ~~party~~the ~~vendors~~future to ~~process~~fund ~~various~~acquisitions ~~transactions.~~and Into ~~some~~provide ~~cases,~~us wewith ~~have~~sufficient ~~contracted~~capital ~~with~~resources ~~third~~and ~~parties~~liquidity to ~~run~~meet ~~their proprietary software on~~ our ~~behalf. These systems include~~commitments, ~~but~~regulatory ~~are~~capital ~~not limited to~~requirements, ~~general ledger, payroll, employee benefits, loan~~ and ~~deposit~~business ~~processing~~needs, ~~and~~particularly ~~securities~~if ~~portfolio~~our ~~management.~~asset ~~While~~quality weor ~~perform~~earnings awere ~~review~~to ofdeteriorate ~~controls~~significantly. ~~instituted~~We byperiodically ~~the~~explore ~~vendors~~acquisition ~~over~~opportunities ~~these programs in accordance~~ with ~~industry~~other ~~standards~~financial ~~and perform our own testing of user controls~~institutions, wesome ~~must rely on the continued maintenance~~ of ~~these~~which ~~controls~~may bybe ~~the~~in ~~outside~~a ~~party,~~less ~~including~~favorable ~~safeguards~~financial ~~over~~condition ~~the~~than ~~security~~we ~~of customer data~~are. InAny ~~addition~~future acquisition, weparticularly ~~maintain backups of key processing output daily in~~ the ~~event~~acquisition of a ~~failure~~significantly ontroubled ~~the~~institution ~~part~~or ofan ~~any~~institution of ~~these~~comparable ~~systems.~~size ~~Nonetheless~~to us, we may ~~incur~~require aus ~~temporary disruption in the ability~~ to ~~conduct~~raise ~~our~~additional ~~business~~capital orin ~~process~~order ~~our transactions or incur damage~~ to ~~our~~obtain ~~reputation~~regulatory ifapproval ~~the third party vendor fails to adequately maintain internal controls~~ and/or ~~institute necessary changes~~ to ~~systems.~~remain ~~Such~~well ~~disruption or breach of security may have a material adverse effect on our financial condition and results of operations~~capitalized.

32 Our ability to raise additional capital, if needed, will depend on, among other things, conditions in the capital markets at that time, which are outside of our control, and our financial performance. Economic conditions and the loss of confidence in financial institutions may increase our cost of funding and limit access to certain customary sources of capital, including inter-bank borrowings, repurchase agreements, and borrowings from the discount window of the Federal Reserve.

We ~~continually~~cannot ~~encounter~~guarantee ~~technological~~that ~~change~~such capital will be available on acceptable terms or at all. Any occurrence that may limit our access to the capital markets, such as a decline in the confidence of debt purchasers, our depositors or counterparties participating in the capital markets, may adversely affect our capital costs and our ability to raise capital and, in turn, our liquidity. Moreover, 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 have to compete with those institutions for investors. An inability to raise additional capital on acceptable terms when needed could have a materially adverse effect on our business, financial condition, and results of operations and may restrict our ability to grow.

The banking and financial services industry continually undergoes technological changes, with frequent introductions of new technology-driven products and services. In addition to better meeting customer needs, the effective use of technology increases efficiency and enables financial institutions to reduce costs. Our future success will depend, in part, on our ability to address the needs of our customers by using technology to provide products and services that enhance customer convenience and that create additional efficiencies in our operations. Many of our competitors have greater resources to invest in technological improvements, and we may not effectively implement new technology-driven products and services or do so as quickly as our competitors, which could reduce our ability to effectively compete. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse effect on our business, financial condition, and results of operations.34

We may ~~not~~ be ~~able~~exposed to ~~attract~~risk ~~and~~of ~~retain~~environmental ~~skilled~~liabilities ~~people~~with respect to real property to which we take title.

~~The~~In ~~Bank’s~~the ~~success~~course ~~depends~~of onour ~~its~~business, ~~ability~~we tomay ~~attract~~own ~~and~~or ~~retain~~foreclose ~~skilled~~and ~~people.~~take ~~Competition~~title ~~for~~to ~~the~~real ~~best people in most activities in which we engage can be intense~~estate, and wecould ~~may not~~ be ~~able~~subject to ~~hire~~environmental ~~people~~liabilities orwith ~~retain~~respect ~~them.~~to ~~The~~these ~~unexpected~~properties ~~loss~~(including ofliabilities ~~services~~for ofproperty ~~certain~~damage, ofpersonal ~~our~~injury, ~~skilled~~investigation ~~personnel~~and ~~could~~clean-up ~~have~~costs aincurred ~~material~~by ~~adverse~~these ~~impact~~parties onin ~~our~~connection ~~business~~with ~~because~~environmental ~~of their skills~~contamination), ~~knowledge~~or ofmay ~~our~~be ~~market,~~required ~~years~~to ofinvestigate ~~industry~~or ~~experience,~~clean ~~customer~~up ~~relationships,~~hazardous ~~and~~or ~~the~~toxic ~~difficulty~~substances, ofor ~~promptly~~chemical ~~finding~~releases ~~qualified~~at ~~replacement~~a ~~personnel~~property.

~~Loss~~We ofare ~~key~~exposed ~~employees~~to ~~may~~intangible ~~disrupt~~asset ~~relationships~~risk ~~with~~in ~~certain~~that ~~customers~~our goodwill may become impaired.

~~Our~~As ~~customer~~of ~~relationships~~December 31, ~~are~~2025, ~~critical~~we tohad ~~the~~$23.6 ~~success~~million of ~~our~~goodwill ~~business,~~ and ~~loss~~other ofintangible ~~key~~assets. ~~employees~~A ~~with~~ significant ~~customer~~and ~~relationships~~sustained ~~may~~decline ~~lead~~in toour ~~the~~stock ~~loss~~price ofand ~~business~~market ifcapitalization, ~~the~~a ~~customers~~significant ~~were~~decline toin ~~follow~~our ~~that~~expected ~~employee~~future tocash flows, a ~~competitor.~~significant ~~While~~adverse wechange ~~believe~~in ~~our~~the ~~relationships~~business ~~with~~climate, ~~key~~or ~~personnel~~slower ~~are~~growth ~~strong,~~rates could result in impairment of goodwill. If we ~~cannot~~were ~~guarantee~~to conclude that ~~all~~a future write-down of our ~~key~~goodwill ~~personnel~~is ~~will~~necessary, ~~remain~~then ~~with~~we would record the ~~organization~~appropriate charge, which could ~~result~~be inmaterially ~~the~~adverse ~~loss~~to ofour ~~some~~operating ofresults ~~our~~and ~~customers~~financial ~~and~~position. ~~could~~For ~~have~~further adiscussion, ~~negative~~see ~~impact~~Notes on1 ~~our~~and ~~business~~5, ~~financial~~“Summary ~~condition,~~of Significant Accounting Policies” and ~~results~~“Goodwill ofand ~~operations~~Other Intangible Assets,” to the Consolidated Financial Statements included in Item 8 this report.

WeDamage ~~may need~~ to ~~raise~~our ~~additional~~reputation ~~capital~~could indamage ~~the~~our ~~future, and such capital may not be available when needed or at all~~business.

WeOur ~~may~~business ~~need~~depends toupon ~~raise~~earning ~~additional~~and ~~capital~~maintaining in the ~~future~~trust toand ~~fund~~confidence ~~acquisitions~~of our customers, investors, and employees. Damage to ~~provide~~our usreputation ~~with~~could ~~sufficient~~cause ~~capital~~significant ~~resources~~harm to our business and ~~liquidity~~prospects. Harm to ~~meet~~ our ~~commitments~~reputation can arise from numerous sources, ~~regulatory~~including, ~~capital~~among ~~requirements~~others, ~~and~~employee ~~business~~misconduct, ~~needs~~compliance failures, ~~particularly~~litigation, ifregulatory ~~our~~outcomes, ~~asset~~or governmental investigations. In addition, a failure to deliver appropriate standards of service and quality, or ~~earnings~~a ~~were~~failure or perceived failure to ~~deteriorate~~treat ~~significantly.~~customers Weand ~~periodically~~clients ~~explore~~fairly, ~~acquisition~~can ~~opportunities~~result ~~with~~in ~~other~~customer ~~financial~~dissatisfaction, ~~institutions~~litigation, ~~some~~privacy breach, and heightened regulatory scrutiny, all of which ~~may~~can belead into alost ~~less~~revenue, ~~favorable~~higher ~~financial~~operating ~~condition~~costs, ~~than~~and weharm ~~are~~to our reputation. ~~Any~~Adverse ~~future~~publicity ~~acquisition~~about the Company, ~~particularly~~whether ~~the~~or ~~acquisition~~not oftrue, amay ~~significantly~~result ~~troubled~~in ~~institution~~harm to our existing business, customer relationships and prospects. Should any events or anfactors ~~institution~~that ofcan ~~comparable~~undermine ~~size~~our toreputation usoccur, ~~may~~there ~~require~~is usno toassurance ~~raise~~that the additional ~~capital~~costs inand ~~order~~expenses that we may need to ~~obtain~~incur ~~regulatory~~to ~~approval~~address ~~and/or~~the issues giving rise to ~~remain~~the ~~well~~reputational ~~capitalized~~harm would not adversely affect our earnings and results of operations.

~~Our~~The ~~ability~~Company toand ~~raise~~Bank ~~additional capital, if needed, will depend on, among other things, conditions in the capital markets at that time, which~~ are ~~outside~~subject ofto ~~our~~extensive ~~control,~~regulation and ~~our financial performance. Economic conditions and the loss of confidence in financial institutions may increase our cost of funding and limit access to certain customary sources of capital~~oversight, including ~~inter-bank~~with ~~borrowings,~~respect ~~repurchase~~to ~~agreements, and borrowings from~~ the ~~discount window of the Federal Reserve~~MOU.

WeOn ~~cannot~~August ~~guarantee~~9, ~~that~~2024, ~~such~~the ~~capital~~Bank ~~will~~entered beinto ~~available~~the onMOU ~~acceptable~~with ~~terms~~the orFDIC atand ~~all~~DFI. ~~Any~~The ~~occurrence~~MOU ~~that~~is ~~may~~an ~~limit~~informal ~~our~~administrative ~~access~~agreement pursuant to which the ~~capital~~Bank ~~markets,~~has ~~such~~agreed asto atake ~~decline~~various inactions ~~the~~and ~~confidence~~comply ofwith ~~debt~~certain ~~purchasers,~~requirements ~~our~~to ~~depositors~~enhance orcertain ~~counterparties~~areas ~~participating~~of in the ~~capital~~Bank’s ~~markets,~~operations. See ~~may~~“Management’s ~~adversely~~Discussion ~~affect our capital costs~~ and ~~our~~Analysis ~~ability~~of toFinancial ~~raise~~Condition ~~capital~~ and, inResults ~~turn,~~of ~~our~~Operations ~~liquidity.~~– ~~Moreover,~~Recent ifDevelopments weRegarding ~~need to raise capital in~~ the ~~future,~~Bank” webelow ~~may~~for ~~have~~certain todisclosures doregarding sothe ~~when~~MOU. ~~many~~Our ~~other~~failure ~~financial~~to ~~institutions~~comply ~~are~~with ~~also~~the ~~seeking~~MOU tomay ~~raise~~result ~~capital~~in ~~and~~additional ~~would~~regulatory ~~have~~action, toincluding ~~compete~~civil ~~with~~money ~~those~~penalties ~~institutions~~against ~~for~~the ~~investors.~~Bank Anand ~~inability~~its toofficers ~~raise~~and ~~additional~~directors ~~capital~~or onenforcement ~~acceptable~~through ~~terms~~court ~~when~~proceedings, ~~needed~~which could have a ~~materially~~material and adverse effect on our business, ~~financial condition, and~~ results of operations, ~~and~~financial ~~may~~condition, ~~restrict~~cash ~~our~~flows, ~~ability~~and tostock ~~grow~~price.

33 Risks Related to the Banking Industry

WeOur business may be ~~exposed~~adversely toaffected ~~risk~~by ofconditions ~~environmental~~in ~~liabilities~~the ~~with~~financial ~~respect~~markets toand ~~real~~economic ~~property~~conditions ~~to which we take title~~generally.

InOur financial performance depends to a large extent on the ~~course~~business ofenvironment in our ~~business,~~geographically weconcentrated ~~may~~eight-county ~~own~~market orarea ~~foreclose~~of Lake, Porter, LaPorte, and ~~take~~Newton ~~title~~counties toin ~~real~~Indiana, ~~estate~~and Cook, DuPage, Lake, and ~~could~~Will becounties ~~subject~~in toIllinois, ~~environmental~~the ~~liabilities~~nearby ~~with~~suburban ~~respect~~metropolitan toChicagoland ~~these~~market, ~~properties~~the ~~(including~~states ~~liabilities~~of ~~for~~Indiana ~~property~~and ~~damage~~Illinois, ~~personal~~and ~~injury~~the U.S. as a whole. In particular, ~~investigation~~the current environment impacts the ability of borrowers to pay interest on and ~~clean-up~~repay ~~costs~~principal ~~incurred~~of outstanding loans as well as the value of collateral securing those loans. A favorable business environment is generally characterized by ~~these~~economic ~~parties~~growth, inlow ~~connection~~unemployment, ~~with~~efficient ~~environmental~~capital ~~contamination)~~markets, low inflation, high business and investor confidence, strong business earnings, and other factors. Unfavorable or ~~may~~uncertain economic and market conditions can be ~~required~~caused toby ~~investigate~~declines in economic growth, business activity, or ~~clean~~investor upor ~~hazardous~~business confidence; limitations on the availability or ~~toxic~~increases ~~substances,~~in the cost of credit and capital; increases in inflation or ~~chemical~~interest ~~releases~~rates; athigh unemployment; natural disasters; or a ~~property~~combination of these or other factors.

WeIn ~~are~~the ~~exposed~~recent past, our market area, the suburban metropolitan Chicagoland market, the states of Indiana and Illinois, and the U.S. as a whole experienced mixed economic conditions. While overall economic growth was favorable and unemployment rates remained low compared to ~~intangible~~past ~~asset~~economic ~~risk~~cycles, inthe ~~that~~aggregate ~~our~~effects ~~goodwill~~of ~~may~~inflation ~~become~~experienced ~~impaired~~from 2021 to 2023 coupled with continued elevated interest rate levels negatively impacted many sectors of the economy.

As of December 31, 2024, we had $24.3 million of goodwill and other intangible assets. A significant and sustained decline in our stock price and market capitalization, a significant decline in our expected future cash flows, a significant adverse change in the business climate, or slower growth rates could result in impairment of goodwill. If we were to conclude that a future write-down of our goodwill is necessary, then we would record the appropriate charge, which could be materially adverse to our operating results and financial position. For further discussion, see Notes 1 and 5, “Summary of Significant Accounting Policies” and “Goodwill and Other Intangible Assets,” to the Consolidated Financial Statements included in Item 8 this report.35

~~Damage~~While economic conditions have remained relatively stable in spite of these headwinds, significant challenges remain, including the continued aggregate effect of inflation levels experienced in recent years and uncertainty related to ~~our~~government ~~reputation~~spending levels and federal budget deficits, as well as the potential effect of changes in trade policy and tariffs under the Trump administration. As a result, there can be no assurance that economic conditions will continue on their current course. Market stress could ~~damage~~have a material adverse effect on the credit quality of our ~~business.~~loans, and therefore, our financial condition and results of operations as well as other potential adverse impacts including:

~~Our~~● ~~business~~There ~~depends~~could ~~upon~~be ~~earning~~an ~~and~~increased ~~maintaining~~level ~~the trust and confidence~~ of ~~our~~commercial ~~customers, investors,~~ and ~~employees.~~consumer ~~Damage to our reputation could cause significant harm to our business and prospects. Harm to our reputation can arise from numerous sources~~delinquencies, ~~including,~~lack ~~among others, employee misconduct, compliance failures, litigation, regulatory outcomes, or governmental investigations. In addition, a failure to deliver appropriate standards~~ of ~~service~~consumer ~~and quality~~confidence, orincreased amarket ~~failure or perceived failure to treat customers and clients fairly~~volatility, ~~can result in customer dissatisfaction, litigation, privacy breach,~~ and ~~heightened~~widespread ~~regulatory~~reduction ~~scrutiny, all~~ of ~~which can lead to lost revenue, higher operating costs, and harm to our reputation. Adverse publicity about the Company, whether or not true, may result in harm to our existing~~ business, ~~customer~~activity ~~relationships and prospects~~generally. Should any events or factors that can undermine our reputation occur, there is no assurance that the additional costs and expenses that we may need to incur to address the issues giving rise to the reputational harm would not adversely affect our earnings and results of operations.

~~Potential~~● ~~acquisitions~~There ~~may~~could ~~disrupt~~be ~~our~~an ~~business~~increase ~~and~~in ~~dilute~~write-downs ~~stockholder~~of ~~value~~asset values by financial institutions, such as the Bank.

We● ~~periodically~~There ~~evaluate~~could ~~merger~~be ~~and~~the ~~acquisition~~loss ~~opportunities~~of ~~and~~collateral ~~conduct~~value ~~due~~on ~~diligence~~commercial ~~activities~~and ~~related~~real toestate ~~possible~~loans ~~transactions~~that ~~with~~are ~~other~~secured ~~financial~~by ~~institutions~~real ~~and~~estate ~~financial~~located ~~services~~in ~~companies~~our market area. WeA ~~generally~~further ~~seek~~significant ~~merger~~decline orin ~~acquisition~~real ~~partners~~estate ~~that~~values ~~are~~in ~~culturally~~our ~~similar~~market ~~and~~would ~~possess~~mean ~~either~~that ~~significant~~the ~~market~~collateral ~~presence~~for ormany ~~have~~of ~~potential~~our ~~for~~loans ~~improved~~would ~~profitability~~provide ~~through~~less ~~financial~~security. ~~management~~As a result, ~~economies~~we ofwould ~~scale,~~be ormore ~~expanded~~likely ~~services.~~to ~~Acquiring~~suffer ~~other~~losses ~~banks,~~on ~~businesses,~~defaulted orloans ~~branches~~because ~~involves~~our ~~various~~ability ~~risks~~to ~~commonly~~fully ~~associated~~recover ~~with~~on ~~acquisitions,~~defaulted ~~including,~~loans ~~among~~by ~~other~~selling ~~things:~~the real estate collateral would be diminished.

● ~~potential~~Our ~~exposure~~ability to ~~unknown~~assess orthe ~~contingent~~creditworthiness ~~liabilities~~ of customers could be impaired if the ~~target~~models ~~company;~~and approaches they use to select, manage, and underwrite credits become less predictive of future performance.

● ~~exposure~~The process we use to ~~potential~~estimate ~~asset~~losses ~~quality~~inherent ~~issues~~in our loan portfolio requires difficult, subjective, and complex judgments. This process includes analysis of economic conditions and the ~~target~~impact ~~company;~~of these economic conditions on borrowers’ ability to repay their loans. The process could no longer be capable of accurate estimation and may, in turn, impact its reliability.

● ~~potential~~The ~~disruption~~Bank could be required to ~~our~~pay ~~business;~~significantly higher FDIC premiums in the future if losses further deplete the Deposit Insurance Fund.

● ~~potential~~We ~~diversion~~could face increased competition due to intensified consolidation of ~~our~~the ~~management’s~~financial ~~time~~services industry. If current levels of market disruption and ~~attention~~volatility ~~away~~continue ~~from~~or ~~day-~~worsen, there can be no assurance that we will not experience an adverse effect, which may be material, on our ability to~~-day~~ access capital and on our business, financial condition, and results of operations;.

●Future ~~the~~economic ~~possible~~conditions ~~loss~~in our market area will depend on factors outside of ~~key~~our ~~employees~~control, ~~business~~such as political and market conditions, broad trends in industry and ~~customers~~finance, oflegislative ~~the~~and ~~target~~regulatory ~~company;~~changes, changes in government, military, and fiscal policies, and inflation.

●We ~~difficulty~~face instrong ~~estimating~~competition ~~the~~in ~~value~~all phases of ~~the~~our ~~target~~business ~~company;~~from other banks, financial institutions, and non-banks.

●The ~~potential~~banking ~~problems~~and financial services business in ~~integrating~~our ~~the~~market ~~target~~areas ~~company’s~~is ~~data~~highly ~~processing~~competitive. Our competitors include large regional banks, local community banks, savings and ~~ancillary~~loan ~~systems~~associations, ~~customers~~securities and brokerage companies, mortgage companies, insurance companies, finance companies, money market mutual funds, credit unions, neo-banks (a digital or mobile-only bank that exists without any physical bank branches), and ~~employees~~other ~~with~~non-bank ~~ours~~financial and digital service providers, many of which have greater financial, marketing, and technological resources than us. Many of these competitors are not subject to the same regulatory restrictions that we are and may be able to compete more effectively as a result.

34 Also, technology and other changes have lowered barriers to entry and made it possible for customers to complete financial transactions using neo-banks, non-banks, and financial technology companies that historically have involved banks at one or both ends of the transaction. These entities now offer products and services traditionally provided by community banks and often at lower costs. The wide acceptance of Internet-based commerce has resulted in a number of alternative payment processing systems, deposit, and lending platforms in which banks play only minor roles. For example, consumers can maintain funds that would have historically been held as bank deposits in brokerage accounts or mutual funds. Consumers can also complete transactions such as paying bills and/or transferring funds directly without the assistance of banks. Use of emerging alternative payment platforms, such as Apple Pay or Bitcoin or other cryptocurrencies, can alter consumer credit card behavior and consequently impact our interchange fee income.

AsThe aprocess ~~result,~~of ~~merger~~eliminating orbanks ~~acquisition~~as ~~discussions and~~intermediaries, inknown ~~some~~as ~~cases~~“disintermediation,” ~~negotiations~~could ~~may~~result ~~take~~in ~~place and future mergers or acquisitions involving~~ the ~~payment~~loss of ~~cash~~fee orincome, ~~the~~as ~~issuance~~well ofas ~~our debt or equity securities may occur at any time. Acquisitions typically involve~~ the ~~payment~~loss of acustomer ~~premium~~deposits ~~over book,~~ and, ~~therefore,~~the ~~some~~related ~~dilution of our tangible book value and net~~ income ~~per~~generated ~~common~~from ~~share~~those ~~may~~deposits. ~~occur~~The ineffects ~~connection~~of ~~with~~disintermediation ~~any~~can ~~future~~also ~~transaction.~~impact To the ~~extent~~lending webusiness ~~were~~because toof ~~issue~~the ~~additional~~fast ~~shares~~growing body of ~~common~~FinTech ~~stock~~companies inthat ~~any~~use ~~such~~software ~~transaction,~~to ~~our~~deliver ~~current~~mortgage ~~shareholders~~lending ~~would~~and beother ~~diluted~~financial ~~and~~services. ~~such~~A anrelated ~~issuance~~risk ~~may~~is ~~have~~ the ~~effect~~migration of ~~decreasing~~bank ~~our~~personnel ~~stock~~away ~~price,~~from ~~perhaps significantly. Furthermore, failure to realize~~ the ~~expected~~traditional ~~revenue~~bank ~~increases,~~environments ~~cost~~into ~~savings~~neo-banks, ~~increases~~FinTech ~~in geographic or product presence~~companies, and~~/or~~ other ~~projected benefits from an acquisition could have a material adverse effect on our financial condition and results of operations~~non-banks. ~~In addition, merger and acquisition costs incurred by the Company may temporarily increase operating expenses.~~

~~The Company and Bank are subject to extensive regulation and oversight, including with respect to the Order and MOU.~~36

OnIncreased ~~November~~competition 7,in ~~2023,~~our ~~the~~market ~~Bank~~may ~~entered~~result ~~into~~in a ~~Stipulation~~decrease ~~and~~in ~~Consent to~~ the ~~Issuance~~amounts of aour ~~Consent~~loans ~~Order~~and ~~with~~deposits, ~~its~~reduced ~~bank~~spreads ~~regulatory~~between ~~agencies,~~loan ~~the~~rates ~~FDIC~~ and ~~DFI,~~deposit ~~consenting~~rates toor ~~the~~loan ~~issuance~~terms ofthat aare ~~consent~~more ~~order~~favorable ~~(the “Order”) relating~~ to the ~~Bank’s~~borrower. ~~compliance~~Any ~~with~~of ~~the~~these ~~Bank~~results ~~Secrecy~~could ~~Act~~have ~~and~~a ~~its~~material ~~implementing~~adverse ~~regulations~~effect ~~(collectively,~~on ~~the~~our ~~“BSA”).~~ability ~~In consenting~~ to ~~the~~maintain ~~issuance~~our ofearnings ~~the Order~~record, ~~the~~grow ~~Bank~~our ~~did~~loan ~~not~~portfolios, ~~admit~~and orobtain ~~deny~~low-cost ~~any~~funds. ~~charges~~If ofincreased ~~unsafe~~competition orcauses ~~unsound~~us ~~banking practices or violations of law or regulation relating~~ to ~~its~~significantly ~~BSA~~discount ~~compliance. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Regulatory Developments Regarding~~ the ~~Company~~interest ~~and~~rates ~~the~~we ~~Bank”~~offer ~~below~~on ~~for~~loans ~~certain~~or ~~disclosures~~increase ~~regarding~~ the ~~Order~~amount ~~and~~we ~~MOU.~~pay ~~The~~on ~~Order~~deposits, ~~has~~our ~~resulted~~net ~~and is expected to continue to result in additional non-~~interest ~~BSA~~income ~~compliance~~could ~~expenses~~be ~~for~~adversely ~~the Bank and the Company~~impacted. ItIf ~~also~~increased ~~may~~competition ~~have~~causes ~~the~~us ~~effect~~to ofrelax ~~limiting~~our orunderwriting ~~delaying~~standards, ~~the~~we ~~Bank’s~~could ~~and~~be ~~the~~exposed ~~Company’s ability~~ to ~~obtain~~higher ~~regulatory~~losses ~~approval~~from ~~for~~lending ~~certain expansionary~~ activities~~, to the extent desired by the Company~~. ~~Our~~Additionally, ~~failure~~many toof ~~comply~~our ~~with~~competitors ~~the~~are ~~Order~~larger ~~or MOU may result~~ in ~~additional~~total ~~regulatory~~assets ~~action, including civil money penalties against the Bank~~ and ~~its~~capitalization, ~~officers~~have ~~and~~greater ~~directors~~access orto ~~enforcement~~capital ~~through court proceedings~~markets, ~~which~~and ~~could~~offer ~~have~~ a ~~material~~broader ~~and~~range ~~adverse effect on our business, results~~ of ~~operations,~~ financial ~~condition,~~services ~~cash~~than ~~flows,~~we ~~and~~can ~~stock price~~offer.

~~Regulatory~~Due ~~changes~~ to ~~diversity,~~ ~~equity, and~~the ~~inclusion~~development ~~(“DEI”)~~of new technologies and ~~environmental,~~regulatory ~~social,~~actions ~~and~~encouraging ~~governance~~the ~~(“ESG”)~~use ~~practices~~of these technologies, consumers may ~~adversely~~decide ~~impact~~not ~~our~~to ~~reputation,~~use ~~compliance~~banks ~~costs,~~to ~~and~~complete ~~business~~their ~~operations~~financial transactions.

InTechnology ~~light~~and ofother ~~the~~changes ~~recent~~are ~~executive~~allowing ~~order~~parties ~~titled~~to ~~“Ending~~complete ~~Illegal~~financial ~~Discrimination~~transactions ~~and~~through ~~Restoring~~alternative ~~Merit-Based~~methods ~~Opportunity”~~that ~~which~~historically ~~revokes~~have ~~previous~~involved ~~mandates~~banks. ~~promoting~~For ~~DEI~~example, ~~and~~consumers ~~directs~~can ~~federal~~now ~~agencies~~maintain tofunds ~~combat~~that ~~“illegal~~would ~~DEI”~~have ~~practices~~historically been held as bank deposits in ~~the~~brokerage ~~private~~accounts, ~~sector~~mutual funds, ~~many~~or ~~companies~~general-purpose reloadable prepaid cards. Consumers can complete transactions, ~~including~~such as paying bills and/or transferring funds directly without the ~~Company~~assistance of banks. Transactions utilizing digital assets, ~~must~~including ~~reassess~~cryptocurrencies, ~~their~~stablecoins, ~~ESG~~and ~~strategies~~other tosimilar ~~ensure~~assets, ~~compliance~~have ~~with~~increased substantially over the ~~evolving~~course ~~regulatory~~of ~~environment~~the last several years. ~~The~~For ~~order~~example, ~~signals~~the enactment of the Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025 (GENIUS Act) provides a ~~shift~~legal framework for stablecoins to be issued in ~~federal~~the ~~oversight~~United States, which may allow new and ~~enforcement~~existing ~~priorities,~~competitors ~~potentially~~to ~~affecting~~compete ~~internal~~for ~~policies,~~funds ~~hiring~~that ~~practices,~~may ~~supplier~~have ~~diversity~~otherwise ~~programs~~been deposited with banks, ~~and~~such ~~corporate~~as ~~governance~~the ~~frameworks~~Bank.

~~The~~Certain ~~executive~~characteristics ~~order~~of ~~rescinds~~digital ~~prior~~asset ~~directives~~transactions, such as ~~Executive~~the ~~Order~~speed ~~11246,~~with which ~~required~~such ~~affirmative~~transactions ~~action~~can ~~and~~be ~~non-discriminatory~~conducted, ~~practices~~the byability ~~federal~~to ~~contractors.~~transact Aswithout athe ~~result,~~involvement ~~federal~~of ~~agencies~~regulated ~~may~~intermediaries, ~~reevaluate~~the ~~existing~~ability ~~contracts,~~to ~~scrutinize~~engage ~~hiring~~in ~~and~~transactions ~~promotion~~across ~~policies~~multiple jurisdictions, and ~~take~~the ~~enforcement~~anonymous ~~actions~~nature ~~against~~of ~~companies~~the ~~perceived~~transactions, are appealing to becertain ~~engaging~~consumers innotwithstanding ~~practices~~the ~~that~~various dorisks ~~not~~posed ~~align~~by ~~with~~such transactions as illustrated by the ~~revised~~current ~~federal~~and ~~standards~~ongoing market volatility. ~~Additionally~~Accordingly, ~~new~~digital ~~guidance~~asset orservice ~~rulemaking~~providers, ~~stemming~~which ~~from~~at ~~the~~present ~~executive~~are ~~order~~not ~~could~~subject ~~impose~~to ~~restrictions~~supervision onand ~~voluntary~~regulation ~~DEI~~comparable ~~initiatives,~~to ~~training~~that ~~programs,~~which oris ~~supplier~~faced ~~diversity~~by ~~efforts.~~banking ~~These~~organizations ~~developments~~and ~~may~~other ~~necessitate~~financial ~~changes~~institutions, tohave become active competitors for our ~~internal~~customers’ ~~policies,~~banking ~~reporting~~business. ~~obligations~~The Trump Administration, through executive actions and public ~~disclosures~~announcements, ~~creating~~has ~~operational~~established a more relaxed regulatory framework for cryptocurrencies, digital assets, and ~~compliance~~financial ~~challenges~~technology firms, and created a more favorable environment for those asset classes and firms.

~~Failure~~The toprocess ~~align~~of ~~our~~eliminating ~~DEI~~banks ~~and~~as ~~ESG~~intermediaries, ~~efforts~~known ~~with~~as ~~the~~disintermediation, ~~current legal framework~~ could result in ~~reputational~~the ~~damage,~~loss ~~legal~~of ~~challenges~~fee income, as well as the loss of customer deposits and ~~adverse~~the ~~impacts~~related onincome ~~our~~generated ~~operations~~from those deposits. ~~Government~~On ~~investigations~~October 22, ~~enforcement actions~~2024, orthe ~~private~~CFPB ~~litigation~~adopted ~~challenging~~a ~~our~~final ~~DEI-~~rule ~~and~~regarding ~~ESG-related~~personal ~~policies~~financial ~~could~~data ~~lead~~rights that is designed to promote “open banking.” The final rule requires, among other things, that data providers, including any financial ~~penalties~~institution, ~~increased~~make ~~legal~~available ~~costs~~to consumers and certain authorized third parties upon request certain covered transaction, account, and ~~potential~~payment ~~restrictions~~information. onHowever, ~~our~~in ~~ability~~August 2025, the CFPB issued an advanced notice of proposed rulemaking to ~~engage~~reconsider its final rule and, in ~~government~~October ~~contracting~~2025, a district court issued a preliminary injunction preventing the CFPB from enforcing the final rule until the CFPB has completed its reconsideration of the rule. ~~Moreover,~~A ~~various~~final ~~private~~rule, ~~third-party~~if ~~organizations~~implemented, ~~continue~~could lead to ~~evaluate~~greater ~~companies~~competition ~~based~~for onproducts ~~ESG~~and services among banks and ~~DEI~~nonbanks ~~practices~~alike. ~~Unfavorable~~The ~~ratings~~loss ~~from~~of these ~~entities~~revenue streams and the lower cost of deposits as a source of funds could ~~influence~~have ~~investor~~a ~~decisions,~~material ~~limit~~adverse ~~access~~effect toon ~~capital,~~our ~~and~~financial ~~generate~~condition ~~negative~~and ~~sentiment~~results ~~among~~of ~~stakeholders~~operations.

35 We are subject to federal regulations that seek to protect the Deposit Insurance Fund and the depositors and borrowers of the Bank, and our federal regulators may impose restrictions on our operations that are detrimental to holders of the Company’s common stock.

~~While~~We ~~the~~are ~~executive~~subject ~~order~~to ~~aims~~extensive toregulation, ~~eliminate~~supervision, ~~specific~~and ~~DEI~~examination ~~programs~~by the FRB, ~~investors~~IDFI, ~~customers~~and FDIC, our primary regulators. Such regulation and ~~other~~supervision ~~stakeholders~~governs ~~may~~the ~~still~~activities ~~expect~~in ~~transparency~~which an institution and ~~commitment~~its toholding ~~broader~~company ~~ESG~~may ~~goals,~~engage ~~including~~and ~~workforce~~are ~~diversity,~~intended ~~community~~primarily ~~engagement,~~for the protection of the insurance fund and ~~responsible~~the ~~corporate~~depositors ~~governance.~~and ~~Companies~~borrowers ~~that~~of ~~scale~~the ~~back~~Bank ~~DEI~~rather ~~initiatives~~than tofor ~~comply~~holders ~~with~~of ~~federal~~the ~~mandates~~Company’s common stock. Our regulators may ~~face~~subject ~~backlash~~us ~~from~~to ~~institutional~~supervisory ~~investors,~~and ~~advocacy~~enforcement ~~groups~~actions, ~~and~~such ~~employees~~as ~~who~~the ~~view~~imposition ~~such~~of ~~actions~~certain asrestrictions aon ~~retreat~~our ~~from~~operations, ~~social~~requirements ~~responsibility~~that ~~commitments.~~we ~~Additionally~~take remedial action, ~~inconsistencies~~the ~~between~~classification ~~federal~~of our assets and ~~state-~~the determination of the level ~~DEI~~of ~~policies~~our ~~may~~Allowance ~~create~~for ~~further~~credit ~~complexities~~losses, asthat ~~certain~~are ~~states~~aimed ~~continue~~at toprotecting ~~mandate~~the ~~affirmative~~insurance ~~action~~fund orand ~~corporate~~the ~~diversity~~depositors ~~disclosures.~~and ~~Moreover,~~borrowers of the ~~rapid~~Bank ~~pace~~but that are detrimental to holders of ~~change~~the inCompany’s ~~legal~~common ~~frameworks,~~stock. ~~regulatory~~Any ~~guidance,~~change ~~and~~in ~~enforcement~~our ~~priorities~~regulation ~~resulting~~or ~~from~~oversight, whether in the

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