Business Description

“Supervision and Regulation­—Dividend Payments.” We continually monitor our cash position and borrowing capacity as well as perform stress tests of contingency funding no less frequently than quarterly as part of our liquidity management process. Stress testing of liquidity for contingency funding purposes includes tests that outline scenarios for specifically identified liquidity risk events, which are then aggregated into a Bank-wide assessment of liquidity risk stress levels. The outcomes of these tests are reviewed by management monthly and our Board of Directors quarterly. Cash and cash equivalents at the end of 2025 totaled $124.0 million, compared to $99.3 million at December 31, 2024, and $100.1 million as of December 31, 2023. Additional funding sources at the end of 2025 include unused borrowing capacity available from the Federal Home Loan Bank of Chicago, Federal Reserve Bank and correspondent banks of $850.7 million and unencumbered securities available for sale of $410.3 million. The Bank possesses a strong liquidity profile in normal and stressed scenarios due to diverse funding sources, an outsized securities portfolio, and a stable core deposit base. Additional sources of funding include a $30.0 million undrawn line of credit held by the Company with a third-party financial institution. ​ Net cash inflows from operating activities were $122.3 million during 2025, compared with inflows of $131.5 million in 2024 and inflows of $116.4 million in 2023. Proceeds from sales of loans held-for-sale, net of funds used to originate loans held-for-sale, was a source of outflows for 2025, but a source of inflows for 2024 and 2023. Interest received, net of interest paid, combined with changes in other assets and liabilities were a source of inflows for 2025 and 2024, but a source of outflows for 2023. Management of investing and financing activities, as well as market conditions, determines the level and the stability of net interest cash flows. Management’s policy is to mitigate the impact of changes in market interest rates to the extent possible as part of our balance sheet management process. ​ Net cash inflows from investing activities were $159.8 million in 2025, compared to $322.7 million of inflows in 2024, and inflows of $161.6 million in 2023. The acquisition of Bancorp Financial resulted in net cash inflows of $10.5 million in 2025.The FRME five branch purchase transaction resulted in net cash inflows of $237.4 million in 2024. Loan growth resulted in $75.8 million of cash outflows for 2025, compared to $34.7 million of cash inflows in 2024, and $197.6 million of cash outflows in 2023. In 2025, security transactions resulted in net cash inflows of $213.9 million, and proceeds from the sales of OREO assets accounted for inflows of $24.7 million. In 2024, security transactions resulted in net cash inflows of $44.0 million, and proceeds from the sales of OREO assets accounted for inflows of $3.2 million. In 2023, securities transactions accounted for net inflows of $378.4 million, and proceeds from the sales of OREO assets accounted for inflows of $2.0 million. ​ ​ 65 ​ Table of Contents ​ Net cash outflows from financing activities in 2025 were $257.4 million, compared to $455.1 million of outflows in 2024, and $293.0 million of outflows in 2023. Significant cash inflows from financing activities in 2025 included increases in other short-term borrowings of $179.5 million as we utilized FHLBC advances based on liquidity needs. Deposits were a net outflow of $404.3 million in 2025, $69.8 million in 2024, and $538.8 million in 2023. Significant cash outflows from financing activities in 2024 included reductions in other short-term borrowings of $385.0 million as we paid down overnight FHLBC advances with funds received from the five branches acquired from FRME. Significant cash inflows from financing activities in 2023 included an increase in other short-term borrowings of $315.0 million as we obtained overnight FHLBC advances throughout 2023.…