First Internet Bancorp
For the period ended Sep 30, 2026. Filed Nov 4, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 4, 2026
INBK$25.37-1.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-05.
0001562463-26-000088
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-04.
0001562463-26-000106
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 103 previous paragraphs and 111 current paragraphs.
53 unchanged; 42 reworded; 16 added; 8 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 16 previous and 17 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
The $50.2 million increase in net income for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 was due primarily to increases of $38.1 million in noninterest income and $15.3 million, or 18.4%, in net interest income, as well as a decrease of $19.0 million, or 31.5%, in the provision for credit losses, partially offset by an increase of $7.6 million, or 10.7%, in noninterest expense and a decrease of $14.6 million in income tax benefit.
Current report
During the third quarter 2026, the Company recognized non-recurring pre-tax severance costs of $0.4 million, or $0.3 million after tax. Excluding these costs, adjusted net income for the third quarter 2026 was $5.1 million and adjusted diluted earnings per share was $0.57. Additionally, for the three months ended September 30, 2026, adjusted ROAA, adjusted ROAE and adjusted ROATCE were 0.35%, 5.51% and 5.58%, respectively.
Current report
Excluding the non-recurring severance costs, adjusted net income for the nine months ended September 30, 2026 was $10.0 million and adjusted diluted earnings per share was $1.13. Additionally, for the nine months ended September 30, 2026, adjusted ROAA, adjusted ROAE and adjusted ROATCE were 0.24%, 3.61% and 3.65%, respectively.
Current report
During the third quarter 2025, the Company closed on the sale of $836.9 million of single tenant lease financing loans recognizing a pre-tax loss of $37.8 million, or $29.1 million after tax. The transaction was executed as part of an initiative to strengthen the Company’s regulatory capital ratios and improve its interest rate risk position. While the loss on the transaction negatively impacted shareholders’ equity and regulatory capital, the transaction significantly reduced risk-weighted assets, resulting in a net positive effect on regulatory capital ratios. Furthermore, the loan sale reduced the Company’s interest rate risk profile by reducing exposure to longer-duration assets. Additionally, the Company has seen a beneficial impact on key profitability metrics, such as net interest margin and return on average assets.
Current report
Excluding the $29.1 million after-tax loss on the loan sale described above, adjusted net loss for the three months ended September 30, 2025 was $12.5 million and adjusted diluted loss per share was $1.43. Additionally, for the three months ended September 30, 2025, adjusted ROAA, adjusted ROAE and adjusted ROATCE were (0.81%), (12.63%) and (12.78%), respectively.
Current report
Excluding the same loss on the loan sale, adjusted net loss for the nine months ended September 30, 2025 was $11.3 million and adjusted diluted loss per share was $1.29. Additionally, for the nine months ended September 30, 2025, adjusted ROAA, adjusted ROAE and adjusted ROATCE were (0.25%), (3.86%) and (3.91%), respectively.
Current report
During the third quarter 2026, adjusted pre-provision net revenue (“PPNR”) was $17.1 million, a decrease of 5.6% from adjusted PPNR of $18.1 million for the third quarter 2025. The $1.0 million decrease was due to a decrease of $4.0 million, or 30.2%, in adjusted noninterest income and an increase of $1.4 million, or 5.6%, in adjusted noninterest expense, partially offset by an increase of $4.4 million, or 14.5%, in net interest income.
Current report
During the nine months ended September 30, 2026, adjusted PPNR was $50.1 million, an increase of 20.0% from adjusted PPNR of $41.8 million for the nine months ended September 30, 2025. The $8.4 million increase was due to increases of $15.3 million, or 18.4%, in net interest income and $0.2 million, or 0.8%, in adjusted noninterest income, partially offset by an increase of $7.2 million, or 10.2%, in adjusted noninterest expense.
Current report
Noninterest Income (Loss)
Current report
Noninterest expense for the third quarter 2026 was $27.3 million, representing an increase of $1.8 million, or 7.1%, compared to $25.5 million for the third quarter 2025. The increase in noninterest expense was due primarily to increases in loan expenses, other noninterest expense, salaries and employee benefits, and marketing, advertising, and promotion expenses. The increase of $0.5 million, or 29.3%, in loan expenses was due primarily to third party servicing and fintech program management fees, as well as collection expense. The increase of $0.4 million, or 21.8%, in other noninterest expense was due primarily to increased risk management costs and expenses associated with OREO. The increase of $0.4 million, or 2.6%, in salaries and employee benefits was due to non-recurring employee severance expense. The increase of $0.3 million, or 52.1%, in marketing, advertising, and promotion expenses was due primarily to increased marketing initiatives during the period.
Current report
Total assets increased $316.4 million, or 5.7%, to $5.9 billion at September 30, 2026 compared to $5.6 billion at December 31, 2025. Balance sheet growth was driven by increased fintech deposits throughout the year. The liquidity provided by the fintech deposit growth was used to replace higher-cost maturities of certificates of deposits and brokered deposits, as well as to fund net loan growth and securities purchases.
Current report
During the third quarter 2026, the Company purchased a portfolio of embedded finance loans which are included in the commercial and industrial loan category for approximately $16.3 million. Certain loans within the acquired portfolio were classified as purchased credit deteriorated (“PCD”); however, the PCD loans were not material to the Company’s overall loan portfolio or allowance for credit losses and therefore are not separately presented. The allowance associated with the PCD loans is separately identified in the allowance for credit losses rollforward because it was established through the initial gross-up of the acquired loans rather than through provision expense.
Current report
1 The allowance established on acquired PCD loans was recorded through the acquisition-date gross-up of the acquired loans rather than through provision expense and was not material to the Company's total allowance for credit losses.
Current report
The provision for credit losses - loans for the third quarter 2026 declined to $12.1 million, compared to $34.4 million for the third quarter 2025. The decrease was driven primarily by lower net charge-offs and lower reserves on collectively evaluated loans, partially reflecting the transition of certain loans to individual evaluation and the establishment of additional specific reserves.
Current report
Recent Debt Offerings
Current report
On September 10, 2026, the Company issued $20.5 million aggregate principal amount of 8.00% Fixed-to-Floating Rate Subordinated Notes due 2036 (the “2036 Notes”) in a private placement. The 2036 Notes initially bear a fixed interest rate of 8.00% per year to, but excluding, September 15, 2031, and thereafter at a floating rate equal to the then-current benchmark rate (initially three-month Term SOFR) plus 3.735%. The 2036 Notes are scheduled to mature on September 15, 2036. The 2036 Notes are unsecured subordinated obligations of the Company and may be repaid, without penalty, on any interest payment date on or after September 15, 2031. The 2036 Notes are intended to qualify as Tier 2 capital under regulatory guidelines. Under the terms of a Registration Rights Agreement between the Company and the initial purchasers of the 2036 Notes, the Company has agreed to take certain actions to provide for the exchange of the 2036 Notes for subordinated notes that are registered under the Securities Act of 1933, as amended, and have substantially the same terms as the 2036 Notes.
Removed paragraphs (8)
Previous report
The $3.7 million increase in net income for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was due primarily to increases of $11.0 million, or 20.6%, in net interest income and $4.2 million, or 26.4% in noninterest income, partially offset by increases of $5.8 million, or 12.8%, in noninterest expense and $4.2 million, or 16.4%, in the provision for credit losses, as well as a decrease of $1.5 million in income tax benefit.
Previous report
During the second quarter 2026, pre-provision net revenue (“PPNR”) was $15.0 million, an increase of 27.7% from PPNR of $11.7 million for the second quarter 2025. The $3.3 million increase was due to increases of $4.4 million, or 15.9%, in net interest income and $3.1 million, or 56.3%, in noninterest income, partially offset by an increase of $4.3 million, or 19.8%, in noninterest expense.
Previous report
During the six months ended June 30, 2026, PPNR was $33.1 million, an increase of 39.5% from PPNR of $23.7 million for the six months ended June 30, 2025. The $9.4 million increase was due to increases of $11.0 million, or 20.6%, in net interest income and $4.2 million, or 26.4%, in noninterest income, partially offset by an increase of $5.8 million, or 12.8%, in noninterest expense.
Previous report
1.89% for the six months ended June 30, 2025, an increase of 49 bps. FTE NIM was 2.46% for the six months ended June 30, 2026 compared to 1.97% for the six months ended June 30, 2025, an increase of 49 bps.
Previous report
Noninterest Income
Previous report
Noninterest expense for the six months ended June 30, 2026 was $51.1 million, an increase of $5.8 million, or 12.8%, compared to $45.4 million for the six months ended June 30, 2025. The increase was due primarily to increases in salaries and employee benefits, loan expenses, premises and equipment, consulting and professional services and data processing. The increase of $2.8 million, or 11.8%, in salaries and employee benefits was due primarily to an increase in incentive compensation, as well as an increase in staffing related to small business lending and risk management. The increase of $1.2 million, or 40.5%, in loan expenses was due primarily to collection expense, as well as third party servicing associated with small business lending and fintech lending. The increase of $1.0 million, or 15.6%, in premises and equipment was due primarily to continued investment in technology to enhance the user experience in consumer and small business banking. The increase of $0.3 million, or 13.3%, in consulting and professional services was due primarily to an increase in consulting fees. The increase of $0.3 million, or 20.0%, in data processing was the result of an increase in fees associated with the growth in fintech partnerships.
Previous report
Total assets decreased $15.3 million, or 0.3%, to $5.6 billion at June 30, 2026 compared to $5.6 billion at December 31, 2025. The modest decline in balance sheet size was driven by the continued mix shift in the funding base as growth in fintech deposits was used to pay down higher-cost certificates and brokered deposits as well as maturing FHLB advances. Additionally, cash balances and proceeds from loan sales were used to fund new loan originations, construction draws and securities purchases.
Previous report
The provision for credit losses - loans for the second quarter 2026 declined slightly to $13.5 million, compared to $13.6 million for the second quarter 2025. The decrease in the provision for credit losses - loans for the second quarter 2026 compared to the second quarter 2025 was driven primarily by decreases in specific reserves and loan provision, partially offset by increases in net charge-offs.
Reworded paragraphs (42)
Previous wording
We believe that we differentiate ourselves from larger financial institutions by providing a full suite of services to emerging small businesses and entrepreneurs on a nationwide basis. We are an active lender in the Small Business Administration (“SBA”) 7(a) program, closing $437.7 million in SBA 7(a) loans during the twelve months ended June 30,2026. We also offer a top-ranked small business checking account product to our country’s entrepreneurs.
Current wording
We believe that we differentiate ourselves from larger financial institutions by providing a full suite of services to emerging small businesses and entrepreneurs on a nationwide basis. We are an active lender in the Small Business Administration (“SBA”) 7(a) program, closing $211.7 million in SBA 7(a) loans during the nine months ended September 30, 2026. We also offer a top-ranked small business checking account product to our country’s entrepreneurs.
Previous wording
As of June 30, 2026, the Company had consolidated assets of $5.6 billion, consolidated deposits of $4.8 billion and shareholders’ equity of $363.5 million.
Current wording
As of September 30, 2026, the Company had consolidated assets of $5.9 billion, consolidated deposits of $5.2 billion and shareholders’ equity of $354.4 million.
Previous wording
During the second quarter 2026, net income was $2.4 million, or $0.27 diluted earnings per share, compared to net income of $0.2 million, or $0.02 diluted earnings per share, during the second quarter 2025, representing an increase in net income of $2.2 million, or 1,126.4%, and an increase in diluted earnings per share of $0.25, or 1,250.0%. During the six months ended June 30, 2026, net income was $4.9 million, or $0.55 diluted earnings per share, compared to the six months ended June 30, 2025 net income of $1.1 million, or $0.13 per diluted share, resulting in an increase in net income of $3.7 million, or 329.2%, and an increase in diluted earnings per share of $0.42, or 323.1%.
Current wording
During the third quarter 2026, net income was $4.8 million, or $0.54 diluted earnings per share, compared to a net loss of $41.6 million, or $4.76 diluted loss per share, during the third quarter 2025, representing an increase in net income of $46.4 million and an increase in diluted earnings per share of $5.30. During the nine months ended September 30, 2026, net income was $9.7 million, or $1.10 diluted earnings per share, compared to the nine months ended September 30, 2025 net loss of $40.5 million, or $4.63 diluted loss per share, resulting in an increase in net income of $50.2 million and an increase in diluted earnings per share of $5.73.
Previous wording
The $2.2 million increase in net income for the second quarter 2026 compared to the second quarter 2025 was due primarily to increases of $4.4 million, or 15.9%, in net interest income and $3.1 million, or 56.3%, in noninterest income, as well as a decrease of $0.2 million, or 1.4%, in the provision for credit losses, partially offset by an increase of $4.3 million, or 19.8%, in noninterest expense and a decrease of $1.3 million in income tax benefit.
Current wording
The $46.4 million increase in net income for the third quarter 2026 compared to the third quarter 2025 was due primarily to increases of $33.8 million in noninterest income and $4.4 million, or 14.5%, in net interest income, as well as a decrease of $23.2 million, or 66.6%, in the provision for credit losses, partially offset by an increase of $1.8 million, or 7.1%, in noninterest expense and a decrease of $13.2 million in income tax benefit.
Previous wording
During the second quarter 2026, return on average assets (“ROAA”), return on average shareholders’ equity (“ROAE”), and return on average tangible common equity (“ROATCE”) were 0.17%, 2.56% and 2.60%, respectively, compared to 0.01%, 0.20% and 0.20%, respectively, for the second quarter 2025. During the six months ended June 30, 2026, ROAA, ROAE and ROATCE were 0.17%, 2.64%, and 2.68%, respectively, compared to 0.04%, 0.58%, and 0.59%, respectively, for the six months ended June 30, 2025.
Current wording
During the third quarter 2026, return on average assets (“ROAA”), return on average shareholders’ equity (“ROAE”), and return on average tangible common equity (“ROATCE”) were 0.33%, 5.19% and 5.26%, respectively, compared to (2.71%), (42.11%) and (42.62%), respectively, for the third quarter 2025. During the nine months ended September 30, 2026, ROAA, ROAE and ROATCE were 0.23%, 3.50%, and 3.54%, respectively, compared to (0.91%), (13.80%), and (13.97%), respectively, for the nine months ended September 30, 2025.
Previous wording
Net interest income for the second quarter 2026 was $32.4 million, an increase of $4.4 million, or 15.9%, compared to $28.0 million for the second quarter 2025. The increase in net interest income was the result of a decrease of $8.7 million, or 16.4%, in total interest expense to $44.2 million for the second quarter 2026 from $52.9 million for the second quarter 2025, which was partially offset by a $4.3 million, or 5.3%, decrease in total interest income to $76.6 million for the second quarter 2026 from $80.9 million for the second quarter 2025.
Current wording
Net interest income for the third quarter 2026 was $34.7 million, an increase of $4.4 million, or 14.5%, compared to $30.4 million for the third quarter 2025. The increase in net interest income was the result of a decrease of $8.7 million, or 16.2%, in total interest expense to $45.3 million for the third quarter 2026 from $54.0 million for the third quarter 2025, which was partially offset by a $4.4 million, or 5.2%, decrease in total interest income to $80.0 million for the third quarter 2026 from $84.4 million for the third quarter 2025.
Previous wording
Net interest income for the six months ended June 30, 2026 was $64.0 million, an increase of $11.0 million, or 20.6%, compared to $53.1 million for the six months ended June 30, 2025. The increase in net interest income was the result of a decrease of $16.2 million, or 15.5%, in total interest expense to $88.4 million for the six months ended June 30, 2026 from $104.6 million for the six months ended June 30, 2025, which was partially offset by a $5.3 million, or 3.3%, decrease in total interest income to $152.4 million for the six months ended June 30, 2026 from $157.7 million for the six months ended June 30, 2025.
Current wording
Net interest income for the nine months ended September 30, 2026 was $98.8 million, an increase of $15.3 million, or 18.4%, compared to $83.4 million for the nine months ended September 30, 2025. The increase in net interest income was the result of a decrease of $25.0 million, or 15.7%, in total interest expense to $133.7 million for the nine months ended September 30, 2026 from $158.7 million for the nine months ended September 30, 2025, which was partially offset by a decrease of $9.6 million, or 4.0%, in total interest income to $232.5 million for the nine months ended September 30, 2026 from $242.1 million for the nine months ended September 30, 2025.
Previous wording
The decrease in total interest income for the second quarter 2026 compared to second quarter 2025 was due primarily to a decrease in interest earned on loans, resulting from a decrease of $568.8 million, or 12.9%, in the average balance of loans including loans held-for-sale, partially offset by an increase of 27 bps in the yield earned on loans, including loans held-for-sale. The decrease in the average balance of loans was driven primarily by the sale of $851.2 million in single tenant lease financing loans that occurred in the second half of 2025, partially offset by an increase in loan growth for other portfolio segments. The decrease in total interest earned on loans was partially offset by increases in interest income related to other earning assets and securities. The average balance of other earning assets increased $164.4 million, or 41.4%, but was partially offset by a decrease of 70 bps in the yield earned on other earning assets. The decrease in the yield earned on other earning assets was due mainly to the impact of decreases in the Fed Funds rates on cash balances held at the Federal Reserve. Additionally, the average balance of securities increased $113.7 million, or 12.2%, while the yield earned on securities decreased 12 bps for the second quarter 2026 compared to the second quarter 2025. The yield on funded portfolio loan originations was 7.26% for the second quarter 2026, a decrease of 29 bps compared to the second quarter 2025, but still higher than the overall yield on the loan portfolio.
Current wording
The decrease in total interest income for the third quarter 2026 compared to third quarter 2025 was due primarily to a decrease in interest earned on loans, resulting from a decrease of $552.3 million, or 12.5%, in the average balance of loans, including loans held-for-sale, partially offset by an increase of 24 bps in the yield earned on loan balances. The decrease in the average balance of loans was driven primarily by the aforementioned sale of single tenant lease financing loans, partially offset by loan growth in other portfolio segments. The yield on funded portfolio loan originations was 7.51% for the third quarter 2026, an increase of 1 bp compared to the third quarter 2025. Additionally, interest earned on other earning assets declined modestly due to a decrease of 46 bps in the yield on these assets, partially offset by an increase of $49.5 million, or 8.7%, in average balances. The decrease in the yield earned on other earning assets was due mainly to the impact of decreases in the Fed Funds rate on cash balances held at the Federal Reserve. These decreases were partially offset by an increase of $2.1 million, or 23.0%, in interest income earned on securities driven by an increase of $190.0 million, or 21.2%, in average balances and an increase of 6 bps in the yield earned on securities balances.
Previous wording
The decrease in total interest income for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was due primarily to a decrease in interest earned on loans, resulting from a decrease of $446.4 million, or 10.8%, in the average balance of loans, including loans held-for-sale, partially offset by an increase of 32 bps in the yield on loans, including loans held-for-sale. The decrease in the average balance of loans was driven primarily by the sale of $851.2 million in single tenant lease financing loans that occurred in the second half of 2025, partially offset by an increase in loan growth for other portfolio segments. The decrease in total interest income was partially offset by increases in interest income related to securities and other earning assets. The average balance of securities increased $117.3 million, or 12.8%, but was partially offset by a decrease of 10 bps in the yield earned on securities. Additionally, the average balance of other earning assets increased $120.7 million, or 28.7%; however, the yield on other earning assets decreased 77 bps for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease in the yield earned on other earning assets was due mainly to the impact of decreases in the Fed Funds rates on cash balances held at the Federal Reserve. The yield on funded portfolio loan originations was 6.88% for the six months ended June 30, 2026, a decrease of 60 bps compared to the six months ended June 30, 2025, but still higher than the overall yield on the loan portfolio.
Current wording
The decrease in total interest income for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 was due primarily to a decrease in interest earned on loans, resulting from a decrease of $495.3 million, or 11.4%, in the average balance of loans, including loans held-for-sale, partially offset by an increase of 29 bps in the yield on loan balances. The decrease in the average balance of loans was driven primarily by the aforementioned sale of single tenant lease financing loans, partially offset by loan growth in other portfolio segments. The yield on funded portfolio loan originations was 7.06% for the nine months ended September 30, 2026, a decrease of 52 bps compared to the nine months ended September 30, 2025. Additionally, interest earned on other earning assets declined modestly due to a decrease of 64 bps in the yield on these assets, partially offset by an increase of $96.7 million, or 20.5%, in average balances. The decrease in the yield earned on other earning assets was due mainly to the impact of decreases in the Fed Funds rate on cash balances held at the Federal Reserve. These decreases were partially offset by an increase of $4.9 million, or 14.6%, in interest income earned on securities driven by an increase of $141.8 million, or 15.6%, in average balances and an increase of 4 bps in the yield earned on securities balances.
Previous wording
The decrease in total interest expense for the second quarter 2026 compared to the second quarter 2025 was due primarily to decreases of $5.3 million, or 20.6%, in interest expense associated with certificates and brokered deposits, $2.2 million, or 36.5%, in interest expense related to other borrowed funds, $0.9 million, or 8.8%, in interest expense associated with interest-bearing demand deposits and $0.8 million or 6.8% in interest expense associated with money market accounts. The decrease in interest expense related to certificates and brokered deposits was driven by a decrease of 38 bps in the cost of these deposits, as well as a decrease in the average balance of these deposits of $310.0 million, or 13.2%. The decrease in interest expense related to other borrowed funds was driven by a decrease in the average balance of $219.2 million, or 38.6%, partially offset by an increase of 15 bps in the cost of these funds. The decrease in interest expense related to interest-bearing demand deposits was driven by a decrease of 56 bps in the cost of these deposits, partially offset by an increase in the average balance of $129.6 million, or 10.6%. The decrease in interest expense related to money market deposits was driven by a decrease of 56 bps in the cost of these deposits, partially offset by an increase in the average balance of these deposits of $116.8 million, or 9.8%. The decreases in the cost of funds related to deposits was due primarily to declines in short term interest rates as well as lower pricing on certificates of deposits across all maturities.
Current wording
The decrease in total interest expense for the third quarter 2026 compared to the third quarter 2025 was due primarily to decreases of $8.9 million, or 33.5%, in interest expense associated with certificates and brokered deposits, $1.9 million, or 16.2%, in interest expense related to money market accounts and $1.9 million, or 16.0%, in interest expense associated with interest-bearing demand deposits. These decreases were partially offset by an increase of $3.6 million in interest expense associated with fintech brokered deposits, which had no corresponding expense in the third quarter 2025, and a $0.3 million, or 7.9% increase in interest expense associated with other borrowed funds. The decrease in interest expense related to certificates and brokered deposits was driven by a decrease of 34 bps in the cost of these deposits, as well as a decrease in the average balance of these deposits of $684.9 million, or 27.8%. The decrease in interest expense related to money market deposits was driven by a decrease of 58 bps in the cost of these deposits, as well as a decrease of $10.5 million, or 0.8%, in the average balance of these deposits. The decrease in interest expense related to interest-bearing demand deposits was driven by a decrease of 61 bps in the cost of these deposits, partially offset by an increase in the average balance of these deposits of $38.3 million, or 2.7%. The increase in interest expense related to other borrowed funds was driven by an increase of 48 bps in the cost of these funds, partially offset by a decrease in the average balance of $11.1 million, or 3.1%. The decreases in the cost of funds related to deposits was due primarily to the replacement of higher-cost certificates of deposit and brokered deposit maturities with lower cost fintech deposits, which benefited from decreases in the Fed Funds rate.
Previous wording
The decrease in total interest expense for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was due primarily to decreases of $12.5 million, or 22.7%, in interest expense associated with certificates and brokered deposits, $2.5 million, or 24.3%, in interest expense associated with other borrowed funds and $2.0 million, or 9.0%, in interest expense related to money market deposits. The decrease in interest expense related to certificates and brokered deposits was driven by a decrease of 41 bps in the cost of these deposits, as well as a decrease of $368.8 million, or 14.8%, in the average balance of these deposits. The decrease in interest expense related to other borrowed funds was driven by a decrease in the average balance of $134.7 million, or 27.8%, partially offset by a 20 bp increase in the cost of these funds. The decrease in interest expense related to money market deposits was driven primarily by a decrease of 59 bps in the cost of these deposits, partially offset by an increase of $93.7 million, or 7.8%, in the average balance of these deposits. The decreases in the cost of funds related to deposits was due primarily to declines in short term interest rates as well as lower pricing on certificates of deposits across all maturities.
Current wording
The decrease in total interest expense for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 was due primarily to decreases of $21.4 million, or 26.2%, in interest expense associated with certificates and brokered deposits, $3.9 million, or 11.5%, in interest expense associated with money market deposits, $2.2 million, or 15.4%, in interest expense related to other borrowed funds and $1.6 million, or 5.4%, in interest expense associated with interest-bearing demand deposits. These decreases were partially offset by an increase of $4.1 million in interest expense associated with fintech brokered deposits, which had no corresponding expense in the prior-year period. The decrease in interest expense related to certificates and brokered deposits was driven by a decrease of 39 bps in the cost of these deposits, as well as a decrease of $475.3 million, or 19.2%, in the average balance of these deposits. The decrease in interest expense related to money market deposits was driven primarily by a decrease of 58 bps in the cost of these deposits, partially offset by an increase of $58.6 million, or 4.8%, in the average balance of these deposits. The decrease in interest expense related to other borrowed funds was driven by a decrease in the average balance of $93.0 million, or 20.9%, partially offset by a 30 bp increase in the cost of these funds. The decrease in interest expense related to interest-bearing demand deposits was driven primarily by a decrease of 52 bps in the cost of these deposits, partially offset by an increase of $150.8 million, or 12.6%, in the average balance of these deposits. The decrease in the cost of funds related to deposits was due primarily to the replacement of higher-cost certificates of deposit and brokered deposit maturities with lower cost fintech deposits, which benefited from decreases in the Fed Funds rate.
Previous wording
Overall, the cost of total interest-bearing liabilities for the second quarter 2026 decreased 51 bps to 3.45% from 3.96% for the second quarter 2025. The cost of total interest-bearing liabilities for the six months ended June 30, 2026 decreased 50 bps to 3.49% from 3.99% for the six months ended June 30, 2025.
Current wording
Overall, the cost of total interest-bearing liabilities for the third quarter 2026 decreased 48 bps to 3.42% from 3.90% for the third quarter 2025. The cost of total interest-bearing liabilities for the nine months ended September 30, 2026 decreased 50 bps to 3.46% from 3.96% for the nine months ended September 30, 2025.
Previous wording
Net interest margin (“NIM”) was 2.39% for the second quarter 2026 compared to 1.96% for the second quarter 2025, an increase of 43 bps. On a fully-taxable equivalent (“FTE”) basis, NIM was 2.47% for the second quarter 2026 compared to 2.04% for the second quarter 2025, an increase of 43 bps. NIM was 2.38% for the six months ended June 30, 2026 compared to
Current wording
Net interest margin (“NIM”) was 2.47% for the third quarter 2026 compared to 2.04% for the third quarter 2025, an increase of 43 bps. On a fully-taxable equivalent (“FTE”) basis, NIM was 2.55% for the third quarter 2026 compared to 2.12% for the third quarter 2025, an increase of 43 bps. NIM was 2.41% for the nine months ended September 30, 2026 compared to 1.94% for the nine months ended September 30, 2025, an increase of 47 bps. FTE NIM was 2.49% for the nine months ended September 30, 2026 compared to 2.02% for the nine months ended September 30, 2025, an increase of 47 bps.
Previous wording
The increase in the second quarter and six months ended June 30, 2026 NIM and FTE NIM compared to the second quarter and six months ended June 30, 2025 reflects the combination of higher yields on loans and continued improvement in the cost of funds related to deposits.
Current wording
The increase in the third quarter and nine months ended September 30, 2026 NIM and FTE NIM compared to the third quarter and nine months ended September 30, 2025 reflects the combination of higher yields on loans and continued improvement in the cost of funds related to deposits.
Previous wording
The following table shows noninterest income for each of the periods presented.
Current wording
The following table shows noninterest income (loss) for each of the periods presented.
Previous wording
During the second quarter 2026, noninterest income was $8.7 million, representing an increase of $3.1 million, or 56.3%, compared to $5.6 million of noninterest income for the second quarter 2025. The increase in noninterest income was driven primarily by increases in gain on sale of loans, service charges and fees and net loan servicing, partially offset by a decrease in other noninterest income. The increase of $3.0 million, or 180.3%, in gain on sale of loans was due primarily to higher volume of loan sales in the second quarter 2026 compared to the second quarter 2025 when the Company implemented a process change to hold SBA loans for a longer period of time before selling them in the secondary market. The increase of $0.8 million, or 300.0%, in service charges and fees reflects higher fees earned on fintech deposits moved off-balance sheet into deposit networks. The increase of $0.4 million, or 54.2% in net loan servicing was due primarily to growth in the balance of the Company’s single tenant lease financing servicing portfolio, partially offset by the fair value adjustment to the loan servicing asset. The decrease of $1.2 million, or 42.1%, in other noninterest income was due primarily to lower distributions from fund investments, partially offset by an increase in fintech partnership revenue.
Current wording
During the third quarter 2026, noninterest income was $9.2 million, representing an increase of $33.8 million, compared to a loss of $24.6 million for the third quarter 2025. The increase in noninterest income was driven primarily by increases in gain on sale of loans, net loan servicing and service charges and fees, partially offset by a decrease in other noninterest income. The increase of $31.9 million in gain on sale of loans was due primarily to the impact of the aforementioned sale of single tenant lease financing loans, which resulted in a pre-tax loss of $37.8 million. Adjusted for the loan sale, noninterest income totaled $13.2 million for the third quarter 2025. Compared to this adjusted noninterest income, third quarter 2026 noninterest income declined $4.0 million, or 30.2%. The decrease was driven primarily by a decrease of $5.9 million, or 55.3%, in gain on sale of loans due to a decrease in the volume of U.S. Small Business Administration (“SBA”) 7(a) guaranteed loan sales. The increase of $1.1 million, or 157.7%, in net loan servicing was due primarily to the increase in the Company’s loan servicing portfolio following the sale of the single tenant lease financing loans, as well as positive fair value adjustments to the loan servicing asset. The increase of $1.0 million, or 277.0%, in service charges and fees reflects higher fees earned on growth in fintech deposits held off-balance sheet in deposit networks. The decrease of $0.2 million, or 15.5%, in other noninterest income was due primarily to lower distributions from fund investments, partially offset by an increase in fintech partnership revenue for the third quarter 2026.
Previous wording
During the six months ended June 30, 2026, noninterest income was $20.2 million, an increase of $4.2 million, or 26.4%, compared to $16.0 million for the six months ended June 30, 2025. The increase in noninterest income was due primarily to increases in gain on sale of loans, net loan servicing and service charges and fees, partially offset by a decrease in other noninterest income. The increase of $1.7 million, or 16.9%, in gain on sale of loans was due primarily to higher volume of loan sales for the six months ended June 30, 2026 compared to the same period in 2025 when the Company implemented a process change to hold SBA loans for a longer period of time before selling them in the secondary market. The increase of $1.4 million, or 88.6%, in net loan servicing was due to growth in the balance of the Company’s single tenant lease financing servicing portfolio, partially offset by the fair value adjustment to the loan servicing asset. The increase of $1.4 million, or 260.2%, in service charges and fees reflect higher fees earned on fintech deposits moved off-balance sheet into deposit networks. The decrease of $0.4 million, or 11.0%, in other noninterest income was due primarily to a planned distribution from a fund investment that occurred during the six months ended June 30, 2025, partially offset by an increase in fintech partnership revenue.
Current wording
During the nine months ended September 30, 2026, noninterest income was $29.4 million, an increase of $38.1 million, compared to a loss of $8.7 million for the nine months ended September 30, 2025. The increase in noninterest income was due primarily to increases in gain on sale of loans, net loan servicing and service charges and fees, partially offset by a decrease in other noninterest income. The increase of $33.6 million in gain on sale of loans was due primarily to the impact of the aforementioned sale of single tenant lease financing loans, which resulted in a pre-tax loss of $37.8 million. Adjusted for the loan sale, noninterest income totaled $29.2 million for the nine months ended September 30, 2025. Compared to this adjusted noninterest income, year-to-date 2026 noninterest income increased $0.2 million, or 0.8%. Despite the overall slight increase, gain on sale of loans decreased by $4.2 million, or 20.0%, due primarily to a decrease in the volume of SBA 7(a) guaranteed loan sales. The increase of $2.6 million, or 109.8%, in net loan servicing was due primarily to the increase in the Company’s loan servicing portfolio following the sale of the single tenant lease financing loans, as well as positive fair value adjustments to the loan servicing asset. The increase of $2.4 million, or 267.0%, in service charges and fees reflect higher fees earned on growth in fintech deposits held off-balance sheet in deposit networks. The decrease of $0.6 million, or 12.2%, in other noninterest income was due primarily to a distribution from a fund investment that occurred during the nine months ended September 30, 2025, partially offset by an increase in fintech partnership revenue for the nine months ended September 30, 2026.
Previous wording
Noninterest expense for the second quarter 2026 was $26.1 million, representing an increase of $4.3 million, or 19.8%, compared to $21.8 million for the second quarter 2025. The increase in noninterest expense was due primarily to increases in salaries and employee benefits, loan expenses, premises and equipment, and consulting and professional services. The increase of $2.7 million, or 24.9%, in salaries and employee benefits was due primarily to an increase in incentive compensation, as well as an increase in staffing related to small business lending and risk management. The increase of $0.6 million, or 38.8%, in loan expenses was due primarily to collection expense, as well as third party servicing associated with small business lending and fintech lending. The increase of $0.4 million, or 13.3%, in premises and equipment was due primarily to continued investment in technology to enhance the user experience in consumer and small business banking. The increase of $0.4 million, or 46.6%, in consulting and professional services was due primarily to an increase in consulting and audit fees.
Current wording
Noninterest expense for the nine months ended September 30, 2026 was $78.4 million, an increase of $7.6 million, or 10.7%, compared to $70.8 million for the nine months ended September 30, 2025. The increase was due primarily to increases in salaries and employee benefits, loan expenses, and premises and equipment. The increase of $3.2 million, or 8.4%, in salaries and employee benefits was due primarily to an increase in incentive compensation, as well as an increase in staffing related to small business lending and risk management and non-recurring employee severance expense. The increase of $1.8 million, or 36.3%, in loan expenses was due primarily to collection expense, as well as third party servicing and fintech program management fees. The increase of $1.1 million, or 10.8%, in premises and equipment was due primarily to continued investment in technology to enhance the user experience in consumer and small business banking.
Previous wording
The Company recorded an income tax benefit of $0.8 million for the second quarter 2026, compared to an income tax benefit of $2.1 million for the second quarter 2025. The Company recorded an income tax benefit of $1.5 million for the six months ended June 30, 2026, compared to an income tax benefit of $3.0 million for the six months ended June 30, 2025. The income tax benefits recognized during the second quarter 2026 and 2025 as well as the six months ended June 30, 2026 and June 30, 2025 reflect lower pre-tax earnings, as well as the benefit of tax exempt income.
Current wording
The Company recorded an income tax provision of $0.2 million for the third quarter 2026, compared to an income tax benefit of $13.0 million for the third quarter 2025. The Company recorded an income tax benefit of $1.3 million for the nine months ended September 30, 2026, compared to an income tax benefit of $15.9 million for the nine months ended September 30, 2025. The income tax benefits recognized during the third quarter 2025 as well as the nine months ended September 30, 2025 reflect lower pre-tax earnings driven primarily by the loss on the loan sale, as well as the benefit of tax exempt income.
Previous wording
As of June 30, 2026, total shareholders’ equity was $363.5 million, an increase of $3.8 million, or 1.1%, compared to December 31, 2025. The increase in shareholders’ equity was due primarily to current period net income, partially offset by an increase in accumulated other comprehensive loss as unrealized losses on debt securities increased modestly during the quarter due to changes in market interest rates. Tangible common equity totaled $358.9 million as of June 30, 2026, representing an increase of $3.8 million, or 1.1%, compared to December 31, 2025. The ratio of total shareholders’ equity to total assets increased to 6.54% as of June 30, 2026 from 6.46% as of December 31, 2025, and the ratio of tangible common equity to tangible assets increased to 6.46% as of June 30, 2026 from 6.38% as of December 31, 2025.
Current wording
As of September 30, 2026, total shareholders’ equity was $354.4 million, a decrease of $5.4 million, or 1.5%, compared to December 31, 2025. The decrease in shareholders’ equity was due primarily to an increase in accumulated other comprehensive loss as unrealized losses on debt securities increased during the period due to an increase in interest rates throughout the year, partially offset by current period net income. Tangible common equity totaled $349.7 million as of September 30, 2026, representing a decrease of $5.4 million, or 1.5%, compared to December 31, 2025. The ratio of total shareholders’ equity to total assets decreased to 6.02% as of September 30, 2026 from 6.46% as of December 31, 2025, and the ratio of tangible common equity to tangible assets decreased to 5.94% as of September 30, 2026 from 6.38% as of December 31, 2025.
Previous wording
Book value per common share increased 0.5% to $41.63 as of June 30, 2026 from $41.41 as of December 31, 2025 and tangible book value per common share increased 0.5% to $41.09 as of June 30, 2026 from $40.87 as of December 31, 2025. The increase in total shareholders’ equity and tangible common equity was partially offset by a small increase in the number of shares outstanding. Refer to the “Reconciliation of Non-GAAP Financial Measures” section of Part I, Item 2 of this report, Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information.
Current wording
Book value per common share decreased 2.0% to $40.58 as of September 30, 2026 from $41.41 as of December 31, 2025 and tangible book value per common share decreased 2.0% to $40.04 as of September 30, 2026 from $40.87 as of December 31, 2025. The decrease in both book value per common share and tangible book value per common share was driven primarily by the decreases in total shareholders’ equity and tangible common equity. Refer to the “Reconciliation of Non-GAAP Financial Measures” section of Part I, Item 2 of this report, Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information.
Previous wording
1 Balances include $59.8 million and $52.2 million that are guaranteed by the U.S. government as of June 30, 2026 and December 31, 2025, respectively.
Current wording
1 Balances include $60.0 million and $52.2 million that are guaranteed by the U.S. government as of September 30, 2026 and December 31, 2025, respectively.
Previous wording
2 Includes carrying value adjustments of $17.3 million and $19.1 million related to terminated interest rate swaps associated with public finance loans as of June 30, 2026 and December 31, 2025, respectively.
Current wording
2 Includes carrying value adjustments of $16.4 million and $19.1 million related to terminated interest rate swaps associated with public finance loans as of September 30, 2026 and December 31, 2025, respectively.
Previous wording
Total loans were $3.8 billion as of June 30, 2026, an increase of $64.3 million, or 1.7%, compared to December 31, 2025. Total commercial loan balances were $3.0 billion as of June 30, 2026, an increase of $67.8 million, or 2.3%, from December 31, 2025. Total consumer loan balances were $782.1 million as of June 30, 2026, a decrease of $1.1 million, or 0.2%, compared to December 31, 2025. Compared to December 31, 2025, the increase in commercial loan balances was driven by single tenant lease financing, investor commercial real estate and construction loans, partially offset by planned run-off in the franchise finance and healthcare finance portfolios. The Company made the strategic decision to allow the franchise finance and healthcare finance portfolios to run off and is not originating new loans in these segments. The Company expects these portfolios to continue to decline over time and is replacing this loan production with focused growth in other commercial lending areas such as single tenant lease financing, investor commercial real estate, construction, and small business lending segments. The slight decrease in consumer loan balances was due primarily to early payoff and principal amortization in the residential mortgage portfolio, partially offset by new origination activity in the other consumer loans portfolio.
Current wording
Total loans were $3.9 billion as of September 30, 2026, an increase of $117.3 million, or 3.1%, compared to December 31, 2025. Total commercial loan balances were $3.1 billion as of September 30, 2026, an increase of $121.0 million, or 4.1%, from December 31, 2025. Total consumer loan balances were $782.5 million as of September 30, 2026, a decrease of $0.8 million, or 0.1%, compared to December 31, 2025. Compared to December 31, 2025, the increase in commercial loan balances was driven by investor commercial real estate, single tenant lease financing, construction and commercial and industrial loans, partially offset by planned run-off in the franchise finance and healthcare finance portfolios. The Company made the strategic decision to allow the franchise finance and healthcare finance portfolios to run off and is not originating new loans in these segments. The Company expects these portfolios to continue to decline over time and is redeploying cash flows from these portfolios to fund growth in core commercial lending areas such as single tenant lease financing, investor commercial real estate, construction, and small business lending. Additionally, the Company is funding growth in emerging lending verticals such as wealth advisory lending, embedded finance and equipment finance, which are included in commercial and industrial balances. The slight decrease in consumer loan balances was due primarily to early payoff and principal amortization in the residential mortgage portfolio, partially offset by new origination activity in the other consumer loans portfolio.
Previous wording
Total nonperforming loans increased $1.5 million, or 2.5%, to $60.1 million as of June 30, 2026 compared to $58.5 million as of December 31, 2025 due primarily to an increase in accruing loans past due 90 days or more and nonaccrual loans in the small business lending portfolio, which generally consisted of SBA 7(a) guaranteed balances. These partially offset by decreases in nonaccrual loans in the franchise finance and healthcare finance portfolios. Total nonperforming assets increased $3.2 million, or 5.1%, to $64.6 million as of June 30, 2026, compared to $61.4 million as of December 31, 2025, due primarily to the accruing loans past due 90 days or more mentioned above. As of June 30, 2026, the Company had three small business lending properties and one single tenant lease financing property in OREO with a carrying value of $4.1 million. As of December 31, 2025, the Company had three small business lending properties in OREO with a carrying value of $2.6 million.
Current wording
Total nonperforming loans increased $4.5 million, or 7.7%, to $63.1 million as of September 30, 2026 compared to $58.5 million as of December 31, 2025 due primarily to an increase in nonaccrual loans in the small business lending portfolio, which generally consisted of SBA 7(a) guaranteed balances and franchise finance. This was partially offset by decreases in accruing loans past due 90 days or more and in nonaccrual loans in the healthcare finance and single tenant lease financing portfolios. Total nonperforming assets increased $6.1 million, or 10.0%, to $67.5 million as of September 30, 2026, compared to $61.4 million as of December 31, 2025, due primarily to the increases mentioned above, as well as one single tenant lease financing loan that migrated to OREO during 2026. As of September 30, 2026, the Company had three small business lending properties, one single tenant lease financing property and one residential mortgage property in OREO with a carrying value of $4.1 million. As of December 31, 2025, the Company had three small business lending properties in OREO with a carrying value of $2.6 million.
Previous wording
The allowance for credit losses - loans (“ACL”) was $53.1 million as of June 30, 2026, compared to $55.7 million as of December 31, 2025. The ACL as a percentage of total loans was 1.39% at June 30, 2026, compared to 1.49% at December 31, 2025. The ACL as a percentage of nonperforming loans decreased to 88.4% as of June 30, 2026, compared to 95.1% as of December 31, 2025, due primarily to a decrease in the ACL related to franchise finance loans with specific reserves that were charged off. Excluding nonaccrual guaranteed balances, the ACL as a percentage of nonperforming loans increased to 129.8% as of June 30, 2026 compared to 124.0% as of December 31, 2025.
Current wording
The allowance for credit losses - loans (“ACL”) was $57.4 million as of September 30, 2026, compared to $55.7 million as of December 31, 2025. The ACL as a percentage of total loans was 1.48% at September 30, 2026, compared to 1.49% at December 31, 2025. The ACL as a percentage of nonperforming loans decreased to 91.5% as of September 30, 2026, compared to 95.1% as of December 31, 2025, due primarily to a decrease in the ACL related to franchise finance loans with specific reserves that were charged off during the year. Excluding nonaccrual guaranteed balances, the ACL as a percentage of nonperforming loans increased to 131.9% as of September 30, 2026 compared to 124.0% as of December 31, 2025.
Previous wording
Net charge-offs of $16.9 million were recognized during the second quarter 2026, resulting in net charge-offs to average loans of 1.77%, compared to net charge-offs of $14.3 million, or 1.31% of average loans, for the second quarter 2025. The increase in net charge-offs for the second quarter 2026 compared to the second quarter 2025 was driven primarily by an increase of $9.3 million in franchise finance net charge-offs, partially offset by a decrease of $6.5 million in small business lending net charge-offs.
Current wording
Net charge-offs of $8.0 million were recognized during the third quarter 2026, resulting in net charge-offs to average loans of 0.82%, compared to net charge-offs of $21.0 million, or 1.89% of average loans, for the third quarter 2025. The decrease in net charge-offs for the third quarter 2026 compared to the third quarter 2025 was driven primarily by decreases of $11.6 million in small business lending and $2.9 million in franchise finance net charge-offs.
Previous wording
During the six months ended June 30, 2026, the Company recorded net charge-offs of $32.7 million, resulting in net charge-offs to average loans of 1.71%, compared to net charge-offs of $24.0 million, or 1.12% of average loans, during the six months ended June 30, 2025. The increase in net charge-offs for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was driven primarily by an increase of $9.7 million in franchise finance net charge-offs, partially offset by a decrease of $1.1 million in small business lending net charge-offs. The elevated franchise finance charge-offs include a concentration of specific borrower credits that had been identified in prior periods and reserved for through specific reserves, as the franchise finance portfolio continues to run off in connection with the Company’s strategic focus on other commercial lending areas.
Current wording
During the nine months ended September 30, 2026, the Company recorded net charge-offs of $40.7 million, resulting in net charge-offs to average loans of 1.41%, compared to net charge-offs of $45.0 million, or 1.38% of average loans, during the nine months ended September 30, 2025. The decrease in net charge-offs for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 was driven primarily by a decrease of $13.1 million in small business lending net charge-offs, partially offset by an increase of $6.5 million in franchise finance net charge-offs.
Previous wording
The provision for credit losses - loans during the six months ended June 30, 2026 was $30.1 million, compared to $25.7 million for the six months ended June 30, 2025. The increase in the provision for credit losses - loans for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was driven primarily by the increase in net charge-offs, partially offset by decreases in specific reserves and loan provision.
Current wording
The provision for credit losses - loans during the nine months ended September 30, 2026 was $42.3 million, compared to $60.1 million for the nine months ended September 30, 2025. The decrease was driven primarily by decreases in net charge-offs, specific reserves and the reserve on collectively evaluated loans.
Previous wording
The approximate fair value of available-for-sale investment securities increased $8.0 million, or 1.0%, to $786.7 million as of June 30, 2026, compared to $778.7 million as of December 31, 2025. The increase was due primarily to increases of $26.7 million in agency mortgage-backed securities - residential and $5.1 million in corporate securities, partially offset by decreases of $9.5 million in U.S. Government-sponsored agencies, $7.4 million in municipal securities, $5.7 million in private label mortgage-backed securities - residential and $1.8 million in agency mortgage-backed securities - commercial. The Company deployed available liquidity during the first half of 2026 into new purchases of short-duration agency securities, asset-backed securities and investment grade corporate securities, which was partially offset by net pay down activity in other security types. As of June 30, 2026, the Company had securities with a net carrying value of $264.7 million designated as held-to-maturity, compared to $250.6 million as of December 31, 2025. The increase was due primarily to purchases of CRA-eligible agency mortgage-backed securities - residential made in the first half of 2026.
Current wording
The approximate fair value of available-for-sale investment securities increased $64.4 million, or 8.3%, to $843.1 million as of September 30, 2026, compared to $778.7 million as of December 31, 2025. The increase was due primarily to increases of $39.2 million in corporate securities, $38.7 million in asset-backed securities, $21.5 million in agency mortgage-backed securities - residential, partially offset by decreases of $14.0 million in U.S. Government-sponsored agencies, $12.8 million in municipal securities, $4.8 million in private label mortgage-backed securities - residential and $3.4 million in agency mortgage-backed securities - commercial. The Company deployed liquidity provided by fintech deposit growth during 2026 into new purchases of short-duration agency securities, asset-backed securities and investment grade corporate securities, which was partially offset by net pay down activity in other security types. As of September 30, 2026, the Company had securities with a net carrying value of $255.9 million designated as held-to-maturity, compared to $250.6 million as of December 31, 2025. The increase was due primarily to purchases of CRA-eligible agency mortgage-backed securities - residential made in 2026.
Previous wording
Accrued income and other assets increased $3.8 million, or 4.3%, to $92.9 million at June 30, 2026, compared to $89.1 million at December 31, 2025. The increase was due primarily to increases of $3.2 million in various receivables and $1.0 million in equity investments, partially offset by a decrease of $0.5 million in prepaid assets.
Current wording
Accrued income and other assets increased $8.8 million, or 9.8%, to $97.8 million at September 30, 2026, compared to $89.1 million at December 31, 2025. The increase was due primarily to increases of $5.4 million in various receivables, none of which were individually significant, and $3.5 million in deferred tax assets.
Previous wording
Accrued expenses and other liabilities decreased $0.6 million, or 4.1%, to $14.7 million at June 30, 2026, compared to $15.4 million at December 31, 2025. The decrease was due primarily to a decrease of $1.0 million in other liabilities, including unfunded loan commitment reserves, unfunded investment fund partnership commitments and lease liabilities, partially offset by an increase of $0.4 million in accrued salary and benefits.
Current wording
Accrued expenses and other liabilities increased $1.2 million, or 7.6%, to $16.5 million at September 30, 2026, compared to $15.4 million at December 31, 2025. The increase was due primarily to increases of $0.9 million in accrued salary and benefits and $0.3 million in derivative liability.
Previous wording
Total deposits of $4.8 billion at June 30, 2026 were virtually flat with December 31, 2025. However, there were increases of $372.3 million, or 33.2%, in interest-bearing demand deposits and $23.3 million in fintech - brokered deposits, more than offset by decreases of $321.5 million, or 16.0%, in certificates of deposits, $39.6 million, or 14.4%, in brokered deposits, $27.3 million, or 2.1%, in money market accounts and $15.5 million, or 10.6%, in noninterest-bearing deposits. The increase in interest-bearing demand deposits was driven by growth in fintech partnership deposits, which provided the ability to pay down certificates of deposits, higher-cost brokered deposits and money market accounts.
Current wording
Total deposits increased $313.0 million, or 6.5%, to $5.2 billion as of September 30, 2026, compared to $4.8 billion as of December 31, 2025. The increase was due primarily to increases of $592.9 million, or 52.9%, in interest-bearing demand deposits, $341.6 million in fintech - brokered deposits and $12.2 million, or 8.3%, in noninterest-bearing deposits, partially offset by decreases of $524.9 million, or 26.2%, in certificates of deposits, $67.1 million, or 24.4%, in brokered deposits and $40.3 million, or 3.2%, in money market accounts. Certain fintech partnership deposits previously included in interest-bearing demand deposits were reclassified to fintech-brokered deposits due to changes to program agreements during 2026. Continued growth in fintech partnership deposits provided the ability to pay down certificates of deposits, higher-cost brokered deposits and money market accounts.
Previous wording
Uninsured deposit balances represented 37% of total deposits at June 30, 2026, up from 33% at December 31, 2025. These balances include Indiana-based municipal deposits, which are insured by the Indiana Board for Depositories, as well as larger balance accounts under contractual agreements that only allow withdrawal under certain conditions. After subtracting these types of deposits, the adjusted uninsured deposit balance drops to 31% as of June 30, 2026, compared to 27% as of December 31, 2025. The increase in uninsured deposit balances was impacted by increases in fintech payment volumes experienced on the last day of the quarter.
Current wording
Uninsured deposit balances represented 32% of total deposits at September 30, 2026, down from 33% at December 31, 2025. These balances include Indiana-based municipal deposits, which are insured by the Indiana Board for Depositories, as well as larger balance accounts under contractual agreements that only allow withdrawal under certain conditions. After subtracting these types of deposits, the adjusted uninsured deposit balance remains at 27% for both September 30, 2026, and December 31, 2025. Additionally, the balance of uninsured deposits can be elevated at the end of the month due to increased payments activity by business customers of the Company’s fintech partners.
Previous wording
The Basel III Capital Rules became effective for the Company and the Bank on January 1, 2015, subject to a phase-in period for certain provisions. Quantitative measures established by the Basel III Capital Rules to ensure capital adequacy require the maintenance of minimum amounts and ratios of Common Equity Tier 1 capital, Tier 1 capital and Total capital, as defined in the regulations, to risk-weighted assets, and of Tier 1 capital to adjusted quarterly average assets (“Leverage Ratio”).
Current wording
Quantitative measures established by the Basel III Capital Rules to ensure capital adequacy require the maintenance of minimum amounts and ratios of Common Equity Tier 1 capital, Tier 1 capital and Total capital, as defined in the regulations, to risk-weighted assets, and of Tier 1 capital to adjusted quarterly average assets (“Leverage Ratio”).
Previous wording
The Basel III Capital Rules were fully phased in on January 1, 2019 and require the Company and the Bank to maintain: 1) a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of 4.5%, plus a 2.5% “capital conservation buffer” (resulting in a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of 7.0%); 2) a minimum ratio of Tier 1 capital to risk-weighted assets of 6.0%, plus the capital conservation buffer (resulting in a minimum Tier 1 capital ratio of 8.5%); 3) a minimum ratio of Total capital to risk-weighted assets of 8.0%, plus the capital conservation buffer (resulting in a minimum Total capital ratio of 10.5%); and 4) a minimum Leverage Ratio of 4.0%.
Current wording
The Basel III Capital Rules require the Company and the Bank to maintain: 1) a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of 4.5%, plus a 2.5% “capital conservation buffer” (resulting in a minimum ratio of Common Equity Tier 1 capital to risk-weighted assets of 7.0%); 2) a minimum ratio of Tier 1 capital to risk-weighted assets of 6.0%, plus the capital conservation buffer (resulting in a minimum Tier 1 capital ratio of 8.5%); 3) a minimum ratio of Total capital to risk-weighted assets of 8.0%, plus the capital conservation buffer (resulting in a minimum Total capital ratio of 10.5%); and 4) a minimum Leverage Ratio of 4.0%.
Previous wording
The following tables present actual and required capital ratios as of June 30, 2026 and December 31, 2025 for the Company and the Bank under the Basel III Capital Rules. The minimum required capital amounts presented include the minimum required capital levels as of June 30, 2026 and December 31, 2025, which are based on the Basel III Capital Rules. Capital levels required to be considered well capitalized are based upon prompt corrective action regulations, as amended to reflect the changes under the Basel III Capital Rules.
Current wording
The following tables present actual and required capital ratios as of September 30, 2026 and December 31, 2025 for the Company and the Bank under the Basel III Capital Rules.
Previous wording
As of June 30, 2026, the Company had $107.0 million principal amount of subordinated debt outstanding evidenced by the 2029 Notes, 2030 Note and 2031 Notes. The agreements that govern our outstanding subordinated debt prohibit the Company from paying any dividends on its common stock or making any other distributions to shareholders at any time when there shall have occurred, and be continuing to occur, an event of default under the applicable agreement. If an event of default were to occur and the Company did not cure it, the Company would be prohibited from paying any dividends or making any other distributions to shareholders or from redeeming or repurchasing any common stock.
Current wording
As of September 30, 2026, the Company had $125.5 million principal amount of subordinated debt outstanding evidenced by the 2029 Notes, 2030 Note, 2031 Notes and 2036 Notes. The agreements that govern our outstanding subordinated debt prohibit the Company from paying any dividends on its common stock or making any other distributions to shareholders at any time when there shall have occurred, and be continuing to occur, an event of default under the applicable agreement. If an event of default were to occur and the Company did not cure it, the Company would be prohibited from paying any dividends or making any other distributions to shareholders or from redeeming or repurchasing any common stock.
Previous wording
The Company holds cash and investment securities that qualify as liquid assets to maintain adequate liquidity to ensure safe and sound operations and meet its financial commitments. At June 30, 2026, on a consolidated basis, the Company had $1.2 billion in cash and cash equivalents and investment securities available-for-sale and $44.8 million in loans held-for-sale that were generally available for its cash needs. Additionally, the Company uses a custodial deposit arrangement for certain deposit programs whereby the Company, acting as custodian of account holder funds, places a portion of such account holder funds that are not needed to support near term liquidity needs at one or more third-party banks insured by the FDIC through the IntraFi One-Way Sell network. The Company remains the issuer of, and maintains the records for, all accounts under the applicable account holder agreements and, importantly, retains transactional authority to move funds on-and-off balance sheet as liquidity needs merit. Such off-balance sheet deposits totaled $2.4 billion at June 30, 2026 and $1.1 billion at December 31, 2025 and primarily consist of fintech partnership deposits. The Company can also generate funds from wholesale funding sources and collateralized borrowings. At June 30, 2026, the Bank had the ability to borrow an additional $1.5 billion from the FHLB, the Federal Reserve and correspondent bank Fed Funds lines of credit.
Current wording
The Company holds cash and investment securities that qualify as liquid assets to maintain adequate liquidity to ensure safe and sound operations and meet its financial commitments. At September 30, 2026, on a consolidated basis, the Company had $1.5 billion in cash and cash equivalents and investment securities available-for-sale and $34.9 million in loans held-for-sale that were generally available for its cash needs. Additionally, the Company uses a custodial deposit arrangement for certain deposit programs whereby the Company, acting as custodian of account holder funds, places a portion of such account holder funds that are not needed to support near term liquidity needs at one or more third-party banks insured by the FDIC through the IntraFi One-Way Sell network. The Company remains the issuer of, and maintains the records for, all accounts under the applicable account holder agreements and, importantly, retains transactional authority to move funds on-and-off balance sheet as liquidity needs merit. Such off-balance sheet deposits totaled $2.9 billion at September 30, 2026 and $1.1 billion at December 31, 2025 and primarily consist of fintech partnership deposits. The Company can also generate funds from wholesale funding sources and collateralized borrowings. At September 30, 2026, the Bank had the ability to borrow an additional $1.6 billion from the FHLB, the Federal Reserve and correspondent bank Fed Funds lines of credit.
Previous wording
The Company is a separate legal entity from the Bank and must provide for its own liquidity. In addition to its operating expenses, the Company is responsible for paying any dividends declared to its common shareholders and interest and principal on outstanding debt. The Company’s primary sources of funds are cash maintained at the holding company level and dividends from the Bank, the payment of which is subject to regulatory limits. At June 30, 2026, the Company, on an unconsolidated basis, had $5.9 million in cash for debt servicing and operating expenses.
Current wording
The Company is a separate legal entity from the Bank and must provide for its own liquidity. In addition to its operating expenses, the Company is responsible for paying any dividends declared to its common shareholders and interest and principal on outstanding debt. The Company’s primary sources of funds are cash maintained at the holding company level and dividends from the Bank, the payment of which is subject to regulatory limits. At September 30, 2026, the Company, on an unconsolidated basis, had $20.9 million in cash for debt servicing and operating expenses.
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