CULLEN/FROST BANKERS, INC.

Previous wording

The following discussion should be read in conjunction with our consolidated financial statements, and notes thereto, for the year ended December 31, 2024, and the other information included in the 2024 Form 10-K. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results for the year ending December 31, 2025 or any future period.

Current wording

The following discussion should be read in conjunction with our consolidated financial statements, and notes thereto, for the year ended December 31, 2024, and the other information included in the 2024 Form 10-K. Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results for the year ending December 31, 2025 or any future period.

Previous wording

In addition, financial markets, international relations, and global supply chains have recently been significantly impacted by U.S. trade policies and practices including the implementation of targeted tariffs on imports and the subsequent 90-day pause on certain of those tariffs. Due to the rapidly evolving and changing state of U.S. trade policies, the amount and duration of any tariffs and their ultimate impact on us, our customers, financial markets, and the overall U.S. and global economies is currently uncertain. Nonetheless, prolonged uncertainty, elevated tariff levels or their wide-spread use in U.S. trade policy could weaken economic conditions and adversely impact the ability of borrowers to repay outstanding loans or the value of collateral securing these loans or adversely affect financial markets. To the extent that these risks may have a negative impact on the financial condition of borrowers or financial markets, it could also have a material adverse effect on our business, financial condition and results of operations.

Current wording

In addition, financial markets, international relations, and global supply chains have been significantly impacted by recent U.S. trade policies and practices. Due to the rapidly evolving and changing state of U.S. trade policies, the amount and duration of any tariffs and their ultimate impact on us, our customers, financial markets, and the overall U.S. and global economies is currently uncertain. Nonetheless, prolonged uncertainty, elevated tariff levels or their wide-spread use in U.S. trade policy could weaken economic conditions and adversely impact the ability of borrowers to repay outstanding loans or the value of collateral securing these loans or adversely affect financial markets. To the extent that these risks may have a negative impact on the financial condition of borrowers or financial markets, it could also have a material adverse effect on our business, financial condition and results of operations.

Previous wording

Net income available to common shareholders totaled $149.3 million, or $2.30 per diluted common share, for the three months ended March 31, 2025, compared to $134.0 million, or $2.06 per diluted common share for the three months ended March 31, 2024.

Current wording

Net income available to common shareholders totaled $155.3 million, or $2.39 per diluted common share, and $304.6 million, or $4.69 per diluted common share, for the three and six months ended June 30, 2025, compared to $143.8 million, or $2.21 per diluted common share, and $277.9 million, or $4.27 per diluted common share for the three and six months ended June 30, 2024.

Previous wording

Net income available to common shareholders increased $15.2 million, or 11.4%, for the three months ended March 31, 2025, compared to the same period in 2024. The increase during the three months ended March 31, 2025 was primarily the result of a $26.2 million increase in net interest income and a $12.6 million increase in non-interest income partly offset by a $21.8 million increase in non-interest expense and a $2.3 million increase in income tax expense.

Current wording

Net income available to common shareholders increased $11.5 million, or 8.0%, for the three months ended June 30, 2025 and increased $26.7 million, or 9.6%, for the six months ended June 30, 2025, compared to the same periods in 2024. The increase during the three months ended June 30, 2025 was primarily the result of a $32.9 million increase in net interest income, a $6.1 million increase in non-interest income, and a $2.7 million decrease in credit loss expense partly offset by a $30.2 million increase in non-interest expense. The increase during the six months ended June 30, 2025 was primarily the result of a $59.1 million increase in net interest income, a $18.7 million increase in non-interest income, and a $3.2 million decrease in credit loss expense partly offset by a $52.0 million increase in non-interest expense and a $2.3 million increase in income tax expense.

Previous wording

Net interest income is the difference between interest income on earning assets, such as loans and securities, and interest expense on liabilities, such as deposits and borrowings, which are used to fund those assets. Net interest income is our largest source of revenue, representing 77.0% of total revenue during the first three months of 2025. Net interest margin is the ratio of taxable-equivalent net interest income to average earning assets for the period. The level of interest rates and the volume and mix of earning assets and interest-bearing liabilities impact net interest income and net interest margin.

Current wording

Net interest income is the difference between interest income on earning assets, such as loans and securities, and interest expense on liabilities, such as deposits and borrowings, which are used to fund those assets. Net interest income is our largest source of revenue, representing 77.8% of total revenue during the first six months of 2025. Net interest margin is the ratio of taxable-equivalent net interest income to average earning assets for the period. The level of interest rates and the volume and mix of earning assets and interest-bearing liabilities impact net interest income and net interest margin.

Previous wording

The Federal Reserve influences the general market rates of interest, including the deposit and loan rates offered by many financial institutions. As of March 31, 2025, approximately 40.9% of our loans had a fixed interest rate, while the remaining loans had floating interest rates that were primarily tied to a benchmark developed by the American Financial Exchange, the Secured Overnight Financing Rate (“SOFR”) (approximately 33.8%); the prime interest rate (approximately 21.0%); or the American Interbank Offered Rate (“AMERIBOR”) (approximately 4.2%). Certain other loans are tied to other indices; however, such loans do not make up a significant portion of our loan portfolio as of March 31, 2025.

Current wording

The Federal Reserve influences the general market rates of interest, including the deposit and loan rates offered by many financial institutions. As of June 30, 2025, approximately 40.6% of our loans had a fixed interest rate, while the remaining loans had floating interest rates that were primarily tied to a benchmark developed by the American Financial Exchange, the Secured Overnight Financing Rate (“SOFR”) (approximately 34.6%); the prime interest rate (approximately 20.8%); or the American Interbank Offered Rate (“AMERIBOR”) (approximately 3.9%). Certain other loans are tied to other indices; however, such loans do not make up a significant portion of our loan portfolio as of June 30, 2025.

Previous wording

As of March 31, 2025, the target range for the federal funds rate was 4.25% to 4.50% In March 2025, the Federal Reserve released projections whereby the midpoint of the projected appropriate target range for the federal funds rate would fall to 3.9% by the end of 2025 and subsequently decrease to 3.4% by the end of 2026. While there can be no such assurance that any such decreases in the federal funds rate will occur, these projections imply up to a 50 basis point decrease in the federal funds rate during 2025, followed by a 50 basis point decrease in 2026.

Current wording

As of June 30, 2025, the target range for the federal funds rate was 4.25% to 4.50% In June 2025, the Federal Reserve released projections whereby the midpoint of the projected appropriate target range for the federal funds rate would fall to 3.9% by the end of 2025 and subsequently decrease to 3.6% by the end of 2026. While there can be no such assurance that any such decreases in the federal funds rate will occur, these projections imply up to a 50 basis point decrease in the federal funds rate during 2025, followed by a 25 basis point decrease in 2026.

Previous wording

Net interest income for the three months ended March 31, 2025 increased $25.7 million, or 6.6%, compared to the same period in 2024. The increase during the three months ended March 31, 2025 was primarily related to decreases in the average costs of interest-bearing deposit accounts and repurchase agreements combined with an increase in the average volume of loans and increases in the average yield on and volume of taxable securities, among other things. The impact of these items was partly offset by decreases in the average yields on loans and interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) combined with increases in the average volumes of interest-bearing deposit accounts and repurchase agreements, among other things. Net interest income for the first three months of 2024 included an additional day as a result of leap year. See the analysis of net interest income included in the section captioned “Net Interest Income” included elsewhere in this discussion.

Current wording

The increase in taxable-equivalent net interest income during the six months ended June 30, 2025 was primarily related to decreases in the average costs of interest-bearing deposit accounts and repurchase agreements combined with an increase in the average volume of loans, increases in the average yield on and volume of taxable securities, and an increase in the average yield on tax-exempt securities, among other things. The impact of these items was partly offset by decreases in the average yield on and volume of interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), a decrease in average yield on loans, and decreases in the average volumes of tax-exempt securities and resell agreements, among other things, combined with increases in the average volumes of interest-bearing deposit accounts and repurchase agreements, among other things.

Previous wording

The average volume of interest-earning assets for the three months ended March 31, 2025 increased $1.5 billion compared to the same period in 2024. The increase in the average volume of interest-earning assets during the three months ended March 31, 2025 was primarily related to a $1.7 billion increase in average loans and a $373.9 million increase in average taxable securities, partly offset by a $314.4 million decrease in average tax-exempt securities, a $118.0 million decrease in average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), and a $75.0 million decrease in average resell agreements. The average taxable-equivalent yield on interest-earning assets decreased 14 basis points from 5.13 during the three months ended March 31, 2024 to 4.99% during the three months ended March 31, 2025. The average taxable-equivalent yield on interest-earning assets was impacted by changes in market interest rates (as noted in the table above) and changes in the volume and relative mix of interest-earning assets.

Current wording

The increase in the average volume of interest-earning assets during the six months ended June 30, 2025 was primarily related to a $1.5 billion increase in average loans and a $1.1 billion increase in average taxable securities, partly offset by a $555.1 million decrease in average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), a $140.5 million decrease in average tax-exempt securities, and a $68.4 million decrease in average resell agreements. The average taxable-equivalent yield on interest-earning assets decreased 15 basis points from 5.18% during the six months ended June 30, 2024 to 5.03% during the six months ended June 30, 2025. The average taxable-equivalent yields on interest-earning assets during comparable periods were impacted by changes in market interest rates (as noted in the table above) and changes in the volumes and relative mixes of interest-earning assets.

Previous wording

The average taxable-equivalent yield on loans decreased 43 basis points from 7.00% during the three months ended March 31, 2024 to 6.57% during the three months ended March 31, 2025. The average taxable-equivalent yield on loans during the three months ended March 31, 2025 was impacted by decreases in market interest rates (as noted in the table above). The average volume of loans for the three months ended March 31, 2025 increased $1.7 billion, or 8.8%, compared to the same period in 2024. Loans made up approximately 43.8% of average interest-earning assets during the three months ended March 31, 2025, compared to 41.7% during the same respective period in 2024. The increase was primarily related to the use of available funds to originate loans.

Current wording

The average taxable-equivalent yield on loans decreased 48 basis points from 7.08% during the three months ended June 30, 2024 to 6.60% during the three months ended June 30, 2025 while the average taxable-equivalent yield on loans decreased 46 basis points from 7.04% during the six months ended June 30, 2024 to 6.58% during the six months ended June 30, 2025. The average taxable-equivalent yields on loans during the three and six months ended June 30, 2025 were impacted by decreases in market interest rates (as noted in the table above). The average volume of loans for the three months ended June 30, 2025 increased $1.4 billion, or 7.2%, while the average volume of loans for the six months ended June 30, 2025 increased $1.5 billion, or 8.0%, compared to the same period in 2024. Loans made up approximately 44.2% and 44.0% of average interest-earning assets during the three and six months ended June 30, 2025, compared to 43.2% and 42.4% during the same respective periods in 2024. The increases were primarily related to the use of available funds to originate loans.

Previous wording

Average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) for the three months ended March 31, 2025 decreased $118.0 million, or 1.6%, compared to the same period in 2024. The decrease during the three months ended March 31, 2025 was primarily related to the reinvestment of amounts held in an interest-bearing account at the Federal Reserve into loans. Interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) made up approximately 15.3% of average interest-earning assets during the three months ended March 31, 2025, compared to 16.0% during the same period in 2024. The average yield on interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) was 4.39% during the three months ended March 31, 2025, compared to 5.40% during the same period in 2024. The average yield on interest-bearing deposits during the three months ended March 31, 2025 was impacted by a lower average interest rate paid on reserves held at the Federal Reserve, compared to the same period in 2024.

Current wording

Average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) for the three months ended June 30, 2025 decreased $986.3 million, or 13.8%, compared to the same period in 2024 while average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) for the six months ended June 30, 2025 decreased $555.1 million, or 7.7%, compared to the same period in 2024. Interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) made up approximately 12.9% and 14.1% of average interest-earning assets during the three and six months ended June 30, 2025, compared to 15.7% and 15.9% during the same respective periods in 2024. The decreases during the three and six months ended June 30, 2025 were primarily related to the reinvestment of amounts held in an interest-bearing account at the Federal Reserve into securities and loans. The average yields on interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) were 4.41% and 4.40% during the three and six months ended June 30, 2025, compared to 5.40% during both the three and six months ended June 30, 2024. The average yields on interest-bearing deposits during the three and six months ended June 30, 2025 were impacted by lower average interest rates paid on reserves held at the Federal Reserve, compared to the same periods in 2024.

Previous wording

The average rate paid on interest-bearing liabilities was 2.12% during the three months ended March 31, 2025, decreasing 42 basis points from 2.54% during the same period in 2024. Average deposits increased $933.4 million, or 2.3%, during the three months ended March 31, 2025, compared to the same period in 2024 and included a $1.1 billion increase in average interest-bearing deposits partly offset by a $178.0 million decrease in average non-interest-bearing deposits. The ratio of average interest-bearing deposits to total average deposits was 66.9% during the three months ended March 31, 2025, compared to 65.7% during the same period in 2024. The average cost of deposits is primarily impacted by changes in market interest rates as well as changes in the volume and relative mix of interest-bearing deposits. The average cost of interest-bearing deposits and total deposits was 1.94% and 1.30%, respectively, during the three months ended March 31, 2025, compared to 2.34% and 1.54%, respectively, during the same period in 2024. The average cost of deposits was impacted by decreases in the interest rates we pay on our interest-bearing deposit products as a result of a decrease in market interest rates.

Current wording

The average rate paid on interest-bearing liabilities was 2.12% during the three months ended June 30, 2025, decreasing 47 basis points from 2.59% during the same period in 2024 while the average rate paid on interest-bearing liabilities was 2.12% during the six months ended June 30, 2025, decreasing 45 basis points from 2.57% during the same period in 2024. Average deposits increased $1.3 billion, or 3.1%, during the three months ended June 30, 2025, compared to the same period in 2024 and included a $1.1 billion increase in average interest-bearing deposits and a $109.6 million increase in average non-interest-bearing deposits. Average deposits increased $1.1 billion, or 2.7%, during the six months ended June 30, 2025, compared to the same period in 2024 and included a $1.1 billion increase in average interest-bearing deposits partly offset by a $34.2 million decrease in average non-interest-bearing deposits. The ratio of average interest-bearing deposits to total average deposits was 67.0% during both the three and six months ended June 30, 2025, compared to 66.2% and 66.0% during the same respective periods in 2024. The average cost of deposits is primarily impacted by changes in market interest rates as well as changes in the volume and relative mix of interest-bearing deposits. The average costs of interest-bearing deposits and total deposits were 1.93% and 1.29%, respectively, during the six months ended June 30, 2025, compared to 2.36% and 1.56%, respectively, during the same period in 2024. The average costs of deposits were impacted by decreases in the interest rates we pay on our interest-bearing deposit products as a result of decreases in market interest rates.

Previous wording

Our net interest spread, which represents the difference between the average rate earned on earning assets and the average rate paid on interest-bearing liabilities, was 2.87% during the three months ended March 31, 2025, compared to 2.59% during the same period in 2024. The net interest spread, as well as the net interest margin, will be impacted by future changes in short-term and long-term interest rate levels, as well as the impact from the competitive environment, including from new financial technology competitors, and the availability of alternative investment options. A discussion of the effects of changing interest rates on net interest income is set forth in Item 3. Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this report.

Current wording

Our net interest spreads, which represent the difference between the average rate earned on earning assets and the average rate paid on interest-bearing liabilities, were 2.95% and 2.91% during the three and six months ended June 30, 2025, compared to 2.64% and 2.61% during the same respective periods in 2024. Our net interest spreads, as well as our net interest margins, will be impacted by future changes in short-term and long-term interest rate levels, as well as the impact from the competitive environment, including from new financial technology competitors, and the availability of alternative investment options. A discussion of the effects of changing interest rates on net interest income is set forth in Item 3. Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this report.

Previous wording

Total non-interest income for the three months ended March 31, 2025 increased $12.6 million, or 11.3%, compared to the same period in 2024. Changes in the various components of non-interest income are discussed in more detail below.

Current wording

Total non-interest income for the three and six months ended June 30, 2025 increased $6.1 million, or 5.5%, and increased $18.7 million, or 8.4%, respectively, compared to the same periods in 2024. Changes in the various components of non-interest income are discussed in more detail below.

Previous wording

Trust and Investment Management Fees. Trust and investment management fees increased $3.8 million, or 9.8%, for the three months ended March 31, 2025, compared to the same period in 2024. Investment management fees are the most significant component of trust and investment management fees, making up approximately 81.8% and 82.3% of total trust and investment management fees for the first three months of 2025 and 2024, respectively. The increase in trust and investment management fees during the three months ended March 31, 2025 was primarily related to increases in investment management fees (up $2.9 million) and estate fees (up $429 thousand), among other things. Investment management fees are generally based on the market value of assets within an account and are thus impacted by volatility in the equity and bond markets. The increase in investment management fees during the three months ended March 31, 2025 was primarily related to an increase in the average value of assets maintained in accounts. The increase in the average value of assets was partly related to higher average equity valuations during 2025 relative to 2024 and growth in the number of accounts. The increase in estate fees was primarily related to increased transaction volumes relative to 2024.

Current wording

Trust and Investment Management Fees. Trust and investment management fees increased $2.3 million, or 5.5%, for the three months ended June 30, 2025 and increased $6.1 million, or 7.6%, for the six months ended June 30, 2025, compared to the same respective periods in 2024. Investment management fees are the most significant component of trust and investment management fees, making up approximately 80.9% and 80.6% of total trust and investment management fees for the first six months of 2025 and 2024, respectively. The increases in trust and investment management fees during the three and six months ended June 30, 2025 were primarily related to increases in investment management fees (up $2.2 million and $5.2 million, respectively) and, to a lesser extent during the six months ended June 30, 2025, estate fees (up $504 thousand), among other things. Investment management fees are generally based on the market value of assets within an account and are thus impacted by volatility in the equity and bond markets. The increases in investment management fees during the three and six months ended June 30, 2025 were primarily related to increases in the average values of assets maintained in accounts. The increases in the average values of assets were partly related to higher average equity valuations during 2025 relative to 2024 and growth in the number of accounts. The increase in estate fees during the six months ended June 30, 2025 was primarily related to an increase in transaction volumes relative to 2024.

Previous wording

At March 31, 2025, trust assets, including both managed assets and custody assets, were primarily composed of equity securities (42.3% of assets), fixed income securities (34.5% of assets), alternative investments (8.6% of assets) and cash equivalents (8.3% of assets). The estimated fair value of these assets was $50.7 billion (including managed assets of $25.3 billion and custody assets of $25.5 billion) at March 31, 2025, compared to $51.4 billion (including managed assets of $26.2 billion and custody assets of $25.2 billion) at December 31, 2024 and $48.8 billion (including managed assets of $24.6 billion and custody assets of $24.2 billion) at March 31, 2024.

Current wording

At June 30, 2025, trust assets, including both managed assets and custody assets, were primarily composed of equity securities (44.5% of assets), fixed income securities (33.5% of assets), alternative investments (8.7% of assets) and cash equivalents (7.2% of assets). The estimated fair value of these assets was $50.9 billion (including managed assets of $25.8 billion and custody assets of $25.1 billion) at June 30, 2025, compared to $51.4 billion (including managed assets of $26.2 billion and custody assets of $25.2 billion) at December 31, 2024 and $48.9 billion (including managed assets of $24.7 billion and custody assets of $24.3 billion) at June 30, 2024.

Previous wording

In December 2024, the Consumer Financial Protection Bureau (“CFPB”) issued a final rule that modified or eliminated several long-standing exclusions from requirements generally applicable to consumer credit that previously exempted certain overdraft practices from such requirements and required banks to restructure many overdraft fees, overdraft lines of credit, and other overdraft practices as separate consumer credit accounts that have become subject to those requirements. This rule applied to banks with over $10 billion in total assets, including Frost Bank, starting in October 2025. Compliance with the new requirements could result in Frost Bank, among other things, facing higher compliance costs in charging overdraft fees, experiencing a decreased ability to recover amounts extended as overdraft protection, reducing the availability of overdraft protection, and/or charging lower overdraft fees. Refer to our 2024 Form 10-K for additional information. In March and April 2025, the U.S. Senate and House of Representatives, respectively, each adopted a resolution that would nullify the CFPB's overdraft rule. The measure is expected to be signed by the President.

Current wording

As more fully discussed in our 2024 Form 10-K, in December 2024, the Consumer Financial Protection Bureau (“CFPB”) issued a final rule, which would have been applicable to Frost Bank in October 2025, that modified or eliminated several long-standing exclusions from requirements generally applicable to consumer credit that previously exempted certain overdraft practices from such requirements and required banks to restructure many overdraft fees, overdraft lines of credit, and other overdraft practices as separate consumer credit accounts that have become subject to those requirements. In March and April 2025, the U.S. Senate and House of Representatives, respectively, each adopted a resolution that would nullify the CFPB's overdraft rule. The measure was signed by the President in May 2025.

Previous wording

Service Charges on Deposit Accounts. Service charges on deposit accounts for the three months ended March 31, 2025 increased $3.8 million, or 15.4%, compared to the same period in 2024. The increase was primarily related to increases in overdraft charges on consumer and commercial accounts (up $1.9 million and $474 thousand, respectively) and commercial service charges (up $1.8 million). Overdraft charges totaled $14.2 million ($10.7 million consumer and $3.5 million commercial) during the three months ended March 31, 2025, compared to $11.9 million ($8.8 million consumer and $3.0 million commercial) during the same period in 2024. The increase in overdraft charges during the three months ended March 31, 2025 was impacted by an increase in the volume of fee assessed overdrafts relative to 2024, in part due to growth in the number of accounts. The increase in commercial service charges during the three months ended March 31, 2025 was partly related to increases in billable services related to analyzed treasury management accounts combined with the effect of a lower average earnings credit rate applied to deposits maintained by treasury management customers which resulted in customers paying for more of their services through fees rather than with earnings credits applied to their deposit balances. The increases in commercial service charges were also partly related, to a lesser extent, to increases in service fees on non-analyzed accounts.

Current wording

The increases in commercial service charges during the three and six months ended June 30, 2025 were partly related to increases in billable services related to analyzed treasury management accounts combined with the effect of a lower average earnings credit rate applied to deposits maintained by treasury management customers which resulted in customers paying for more of their services through fees rather than with earnings credits applied to their deposit balances. The increases in commercial service charges were also partly related to increases in service fees on non-analyzed accounts.

Previous wording

Insurance Commissions and Fees. Insurance commissions and fees for the three months ended March 31, 2025 increased $2.7 million, or 14.9%, compared to the same period in 2024. The increase during the three months ended March 31, 2025 was primarily the result of increases in benefit plan commissions (up $1.2 million), property and casualty commissions (up $675 thousand), life insurance commissions (up $456 thousand), and contingent income (up $416 thousand). The increase in benefit plan commissions was primarily related to an increase in business volumes as well as premium and exposure rate increases within the existing customer base. The increases in property and casualty commissions and life insurance commissions were primarily related to increases in business volumes.

Current wording

Insurance Commissions and Fees. Compared to the same respective periods in 2024, insurance commissions and fees for the three months ended June 30, 2025 did not significantly fluctuate while insurance commissions and fees for the six months ended June 30, 2025 increased $2.7 million, or 8.3%. The increase during the six months ended June 30, 2025 was primarily the result of increases in benefit plan commissions (up $1.4 million), life insurance commissions (up $598 thousand), and contingent income (up $469 thousand). The increase in benefit plan commissions was primarily due to an increase in business volumes as well as premium and exposure rate increases within the existing customer base. The increase in life insurance commissions was primarily related to an increase in business volumes.

Previous wording

Contingent income totaled $4.0 million during the three months ended March 31, 2025 compared to $3.6 million during the same period in 2024. Contingent income primarily consists of amounts received from various property and casualty insurance carriers related to portfolio growth and the loss performance of insurance policies previously placed. These performance related contingent payments are seasonal in nature and are mostly received during the first quarter of each year. This performance related contingent income totaled $3.5 million during the three months ended March 31, 2025 and $2.9 million during the three months ended March 31, 2024. Performance related contingent income related to commercial lines insurance policies increased due to improved loss performance of commercial lines insurance policies previously placed and growth within the commercial lines portfolio. Contingent income also includes amounts received from various benefit plan insurance companies related to the volume of business generated and/or the subsequent retention of such business. This benefit plan related contingent income totaled $517 thousand during the three months ended March 31, 2025 compared to $733 thousand during the same period in 2024.

Current wording

Contingent income totaled $4.6 million during the six months ended June 30, 2025 compared to $4.1 million during the six months ended June 30, 2024. Contingent income primarily consists of amounts received from various property and casualty insurance carriers related to portfolio growth and the loss performance of insurance policies previously placed. These performance related contingent payments are seasonal in nature and are mostly received during the first quarter of each year. This performance related contingent income totaled $3.6 million during the six months ended June 30, 2025 and $3.0 million during the six months ended June 30, 2024. Performance related contingent income related to commercial lines insurance policies increased due to improved loss performance of commercial lines insurance policies previously placed and growth within the commercial lines portfolio. Contingent income also includes amounts received from various benefit plan insurance companies related to the volume of business generated and/or the subsequent retention of such business. This benefit plan related contingent income totaled $1.0 million during the six months ended June 30, 2025, compared to $1.1 million during the six months ended June 30, 2024.

Previous wording

Net interchange and card transaction fees for the three months ended March 31, 2025 increased $928 thousand, or 20.7%, compared to the same period in 2024. A comparison of gross and net interchange and card transaction fees for the reported periods is presented in the table below.

Current wording

Net interchange and card transaction fees for the three and six months ended June 30, 2025 increased $268 thousand, or 5.0%, and increased $1.2 million, or 12.2%, respectively, compared to the same periods in 2024. The increases were primarily due to increases in income from card transactions partly offset by increases in network costs. A comparison of gross and net interchange and card transaction fees for the reported periods is presented in the table below.

Previous wording

Other Charges, Commissions, and Fees. Other charges, commissions, and fees for the three months ended March 31, 2025 increased $1.5 million, or 12.7%, compared to the same period in 2024. The increase was primarily related to increases in income from the placement of annuities (up $857 thousand) and commitment fees on unused lines of credit (up $301 thousand), among other things.

Current wording

Other Charges, Commissions, and Fees. Other charges, commissions, and fees for the three and six months ended June 30, 2025 increased $947 thousand, or 7.3%, and increased $2.5 million, or 9.9%, compared to the same respective periods in 2024. The increases during the three and six months ended June 30, 2025 were primarily related to increases in income from the placement of annuities (up $555 thousand and $1.4 million, respectively) and commitment fees on unused lines of credit (up $380 thousand and $681 thousand, respectively), among other things.

Previous wording

Net Gain/Loss on Securities Transactions. During the three months ended March 31, 2025, we sold certain available-for-sale securities with amortized costs totaling $38.6 million and realized a net loss of $14 thousand. These sales were primarily made in connection with a municipal tender offer. There were no sales of securities during the three months ended March 31, 2024.

Current wording

Net Gain/Loss on Securities Transactions. During the six months ended June 30, 2025, we sold certain available-for-sale securities with amortized costs totaling $40.1 million and realized a net loss of $14 thousand. These sales were primarily related to a municipal tender offer during the first quarter. There were no sales of securities during the six months ended June 30, 2024.

Previous wording

Other Non-Interest Income. Other non-interest income for the three months ended March 31, 2025 decreased $201 thousand, or 1.6%, compared to the same period in 2024. The decrease was primarily related to decreases in public finance underwriting fees (down $2.7 million) and sundry and other miscellaneous income (down $747 thousand), mostly offset by increases in gains on the sale of foreclosed and other assets (up $2.5 million) and income from customer derivatives trading activities (up $576 thousand). The fluctuations in public finance underwriting fees and income from customer derivative, foreign exchange and securities trading transactions were primarily related to variations in transaction volumes. Gains on the sale of foreclosed and other assets during 2025 included a $2.5 million gain related to the sale of a foreclosed real estate property.

Current wording

Other Non-Interest Income. Other non-interest income for the three and six months ended June 30, 2025 decreased $394 thousand, or 3.5%, and decreased $595 thousand, or 2.5%, compared to the same periods in 2024. The decrease during the three months ended June 30, 2025 was primarily related to decreases in sundry and other miscellaneous income (down $559 thousand) and public finance underwriting fees (down $339 thousand), among other things, partly offset by increases in income from customer securities trading and derivatives trading activities (up $378 thousand and $210 thousand, respectively), among other things. The decrease during the six months ended June 30, 2025 was primarily related to decreases in public finance underwriting fees (down $3.0 million) and sundry and other miscellaneous income (down $1.3 million), among other things, partly offset by increases in gains on the sale of foreclosed and other assets (up $2.6 million) and income from customer derivatives trading and securities trading activities (up $786 thousand and $478 thousand, respectively), among other things. The fluctuations in public finance underwriting fees and income from customer derivative and securities trading activities during the comparable periods were primarily related to variations in transaction volumes. Gains on the sale of foreclosed and other assets during the six months ended June 30, 2025 included a $2.5 million gain related to the sale of a foreclosed real estate property during the first quarter.

Previous wording

Total non-interest expense for the three months ended March 31, 2025 increased $21.8 million, or 6.7%, compared to the same period in 2024. Changes in the various components of non-interest expense are discussed below.

Current wording

Total non-interest expense for the three and six months ended June 30, 2025 increased $30.2 million, or 9.5%, and increased $52.0 million, or 8.1%, respectively, compared to the same periods in 2024. Changes in the various components of non-interest expense are discussed below.

Previous wording

Salaries and Wages. Salaries and wages for the three months ended March 31, 2025 increased $12.9 million, or 8.7%, compared to the same period in 2024. The increase in salaries and wages was primarily related to an increase in salaries due to annual merit and market increases and an increase in the number of employees. The increase in the number of employees was partly related to our investment in organic expansion in various markets. Salaries and wages during the three months ended March 31, 2025 were also impacted, to a lesser extent, by an increase in incentive compensation.

Current wording

Salaries and Wages. Salaries and wages for the three and six months ended June 30, 2025 increased $10.9 million, or 7.2%, and increased $23.8 million, or 7.9%, compared to the same periods in 2024. The increases in salaries and wages during the three and six months ended June 30, 2025 were primarily related to increases in salaries due to annual merit and market increases and increases in the number of employees. The increases in the number of employees were partly related to our investment in organic expansion in various markets. Salaries and wages during the three and six months ended June 30, 2025 were also impacted, to a lesser extent, by increases in incentive compensation.

Previous wording

Employee Benefits. Employee benefits expense for the three months ended March 31, 2025 increased $6.2 million, or 17.2%, compared to the same period in 2024. The increase was primarily related to increases in 401(k) plan expense (up $3.0 million), payroll taxes (up $1.8 million), and medical/dental benefits expense (up $1.5 million).

Current wording

Employee Benefits. Employee benefits expense for the three and six months ended June 30, 2025 increased $4.0 million, or 14.0%, and increased $10.2 million, or 15.8%, respectively, compared to the same periods in 2024. The increases during the three and six months ended June 30, 2025 were primarily related to increases in 401(k) plan expense (up $1.6 million and $4.6 million, respectively), medical/dental benefits expense (up $1.4 million and $2.9 million, respectively), and payroll taxes (up $635 thousand and $2.5 million, respectively).

Previous wording

Net Occupancy. Net occupancy expense for the three months ended March 31, 2025 increased $1.5 million, or 4.7%, compared to the same period in 2024. The increase was primarily related to increases in depreciation on buildings and leasehold improvements (together up $756 thousand); repairs/maintenance/service contracts expense (up $546 thousand); and lease expense (up $492 thousand), among other things, partly offset by an increase in tenant income (up $554 thousand). The increases in the aforementioned components of net occupancy expense were impacted, in part, by our expansion efforts.

Current wording

and property taxes (up $654 thousand and $854 thousand, respectively), among other things. The increases in the aforementioned components of net occupancy expense were impacted, in part, by our expansion efforts.

Previous wording

Technology, Furniture, and Equipment. Technology, furniture, and equipment expense for the three months ended March 31, 2025 increased $5.1 million, or 14.6%, compared to the same period in 2024. The increase was primarily related to increases in cloud services expense (up $2.5 million), software maintenance (up $1.3 million), and depreciation on furniture and equipment (up $616 thousand), among other things.

Current wording

Technology, Furniture, and Equipment. Technology, furniture, and equipment expense for the three and six months ended June 30, 2025 increased $4.6 million, or 12.9%, and increased $9.7 million, or 13.7%, compared to the same respective periods in 2024. The increases during the three and six months ended June 30, 2025 were primarily related to increases in cloud services expense (up $2.6 million and $5.1 million, respectively), software maintenance (up $1.3 million and $2.6 million, respectively), depreciation on furniture and equipment (up $732 thousand and $1.3 million, respectively), and service contracts expense (up $344 thousand and $731 thousand, respectively), among other things.

Previous wording

Deposit Insurance. Deposit insurance expense totaled $7.2 million for the three months ended March 31, 2025 compared to $14.7 million for the three months ended March 31, 2024, respectively. Deposit insurance expense during the three months ended March 31, 2024 included $7.7 million related to additional accruals related to a special deposit insurance assessment. Refer to our 2024 Form 10-K for additional information related to the special deposit insurance assessment. Excluding the assessment from 2024, deposit insurance expense would have increased $259 thousand primarily due to an increase in total assets as well as an increase in the assessment rate.

Current wording

Deposit Insurance. Deposit insurance expense totaled $6.6 million and $13.8 million for the three and six months ended June 30, 2025, respectively, compared to $8.4 million and $23.1 million for the three and six months ended June 30, 2024, respectively. Deposit insurance expense during the three and six months ended June 30, 2024 included $1.2 million and $9.0 million, respectively, related to additional accruals related to a special deposit insurance assessment. Refer to our 2024 Form 10-K for additional information related to the special deposit insurance assessment. Excluding these special assessments from 2024, deposit insurance expense did not significantly fluctuate during the comparable periods.

Previous wording

Net income for the three months ended March 31, 2025 increased $14.0 million, or 10.6%, compared to the same period in 2024. The increase during the three months ended March 31, 2025 was primarily the result of a $25.7 million increase in net interest income, a $7.4 million increase in non-interest income and a $580 thousand decrease in credit loss expense partly offset by a $17.9 million increase in non-interest expense and a $1.9 million increase in income tax expense.

Current wording

Net income for the three and six months ended June 30, 2025 increased $12.3 million, or 8.8%, and increased $26.3 million, or 9.7%, respectively, compared to the same periods in 2024. The increase during the three months ended June 30, 2025 was primarily the result of a $32.5 million increase in net interest income, a $3.5 million increase in non-interest income and a $2.7 million decrease in credit loss expense partly offset by a $26.2 million increase in non-interest expense. The increase during the six months ended June 30, 2025 was primarily the result of a $58.2 million increase in net interest income, a $10.9 million increase in non-interest income, and a $3.2 million decrease in credit loss expense partly offset by $44.1 million increase in non-interest expense and a $2.0 million increase in income tax expense.

Previous wording

Credit loss expense for the three months ended March 31, 2025 totaled $13.1 million compared to $13.7 million during the same period in 2024. See the sections captioned “Credit Loss Expense” and “Allowance for Credit Losses” elsewhere in this discussion for further analysis of credit loss expense related to loans and off-balance-sheet commitments.

Current wording

Credit loss expense for the three and six months ended June 30, 2025 totaled $13.1 million and $26.2 million compared to $15.8 million and $29.4 million during the same periods in 2024. See the sections captioned “Credit Loss Expense” and “Allowance for Credit Losses” elsewhere in this discussion for further analysis of credit loss expense related to loans and off-balance-sheet commitments.

Previous wording

Non-interest income for the three months ended March 31, 2025 increased $7.4 million, or 11.2%, compared to the same period in 2024. The increase during the three months ended March 31, 2025 was primarily related to increases in service charges on deposit accounts; insurance commissions and fees; and interchange and card transaction fees. The increase in service charges on deposit accounts was primarily related to increases in overdraft charges on consumer and commercial accounts and commercial service charges. The increase in insurance commissions and fees was primarily the result of increases in benefit plan commissions, commercial lines property and casualty commissions, life insurance commissions, and contingent commissions. The increase in interchange and card transaction fees was primarily related increased income from card transactions. See the analysis of these categories of non-interest income included in the section captioned “Non-Interest Income” included elsewhere in this discussion.

Current wording

Non-interest income for the three months ended June 30, 2025 increased $3.5 million, or 5.6%, compared to the same period in 2024 while non-interest income for the six months ended June 30, 2025 increased $10.9 million, or 8.5%, compared to the same period in 2024. The increase during the three months ended June 30, 2025 was primarily related to an increase in service charges on deposit accounts, and to a lesser extent, increases in other charges, commissions, and fees and interchange and card transaction fees. The increase during the six months ended June 30, 2025 was primarily related to increases in service charges on deposit accounts; insurance commissions and fees; interchange and card transaction fees; and other charges, commissions, and fees. The increases in service charges on deposit accounts were primarily related to increases in overdraft charges on consumer and commercial accounts and commercial service charges. The increase in insurance commissions and fees during the six months ended June 30, 2025, was primarily the result of increases in benefit plan commissions, life insurance commissions, and contingent income. The increases in interchange and card transaction fees were primarily related to increases in income from card transactions partly offset by increases in network costs. The increases in other charges, commissions, and fees were primarily related to increases in commitment fees on unused lines of credit, among other things. See the analysis of these categories of non-interest income included in the section captioned “Non-Interest Income” included elsewhere in this discussion.

Previous wording

Non-interest expense for the three months ended March 31, 2025 increased $17.9 million, or 6.2%, compared to the same period in 2024. The increase was primarily due to increases in salaries and wages; employee benefits expense; technology, furniture, and equipment expense; other non-interest expense; and net occupancy expense. These increases were partly offset by a decrease in deposit insurance expense. The increase in salaries and wages was primarily related to an increase in salaries due to annual merit and market increases and an increase in the number of employees. Salaries and wages were also impacted, to a lesser extent, by an increase in incentive compensation. The increase in employee benefits expense was primarily related increases in 401(k) plan expense, payroll taxes, and medical/dental benefits expense. The increase in technology, furniture, and equipment expense was primarily related to increases in cloud services expense, software maintenance, and depreciation on furniture and equipment, among other things. The increase in other non-interest expense included increases in professional services expense; donations expense; business development expense; sundry and other miscellaneous expense; and foreclosed assets expense; among other things, partly offset by decreases in advertising/promotions expense and check card expenses, among other things. The increase in net occupancy expense was primarily related to increases in depreciation on buildings and leasehold improvements; repairs/maintenance/service contracts expense; and lease expense, among other things, partly offset by an increase in tenant income. The decrease in deposit insurance expense was primarily due to a $7.7 million special deposit insurance assessment accrual during the three months ended March 31, 2024. See the analysis of these categories of non-interest expense included in the section captioned “Non-Interest Expense” included elsewhere in this discussion.

Current wording

Non-interest expense for the three and six months ended June 30, 2025 increased $26.2 million, or 9.5%, and increased $44.1 million, or 7.8%, respectively, compared to the same periods in 2024. The increases during the three and six months ended June 30, 2025 were primarily due to increases in salaries and wages; other non-interest expense; technology, furniture, and equipment expense; employee benefits expense; and net occupancy expense. These increases were partly offset by decreases in deposit insurance expense. The increases in salaries and wages were primarily related to increases in salaries due to annual merit and market increases and increases in the number of employees. Salaries and wages were also impacted, to a lesser extent, by increases in incentive compensation. The increases in other non-interest expense included increases in advertising/promotions expense; sundry and other miscellaneous expense; business development expense; fraud losses; and travel, meals and entertainment, among other things, partly offset by decreases in check card expenses, among other things. The increase in other non-interest expense during the six months ended June 30, 2025 also included an increase in donations expense, primarily related to a donation to the Frost Charitable Foundation; and an increase in professional services expense. The increases in employee benefits expense were primarily related increases in 401(k) plan expense, medical/dental benefits expense and payroll taxes. The increases in technology, furniture, and equipment expense were primarily related to increases in cloud services expense, software maintenance, and depreciation on furniture and equipment, among other things. The increases in net occupancy expense were primarily related to increases in depreciation on buildings and leasehold improvements; lease expense; property taxes; and repairs/maintenance/service contracts expense, among other things. The decreases in deposit insurance expense were primarily related to prior year accruals for a special deposit insurance assessment totaling $1.2 million and $9.0 million during the three and six months ended June 30, 2024, respectively. See the analysis of these categories of non-interest expense included in the section captioned “Non-Interest Expense” included elsewhere in this discussion.

Previous wording

Net income for the three months ended March 31, 2025 increased $1.2 million, or 17.0%, compared to the same period in 2024. The increase during the three months ended March 31, 2025 was primarily the result of a $5.3 million increase in non-interest income partly offset by a $3.9 million increase in non-interest expense, among other things.

Current wording

Net income for the three months ended June 30, 2025 decreased $1.2 million, or 11.6%, compared to the same period in 2024, while net income for the six months ended June 30, 2025 remained relatively flat compared to the same period in 2024. The decrease during the three months ended June 30, 2025 was primarily the result of a $3.9 million increase in non-interest expense partly offset by $2.2 million increase in non-interest income, among other things. Net income during the six months ended June 30, 2025 was negatively impacted by a $7.8 million increase in non-interest expense but was positively impacted by a $7.5 million increase in non-interest income, among other things.

Previous wording

Non-interest income for the three months ended March 31, 2025 increased $5.3 million, or 11.7%, compared to the same period in 2024. The increase during the three months ended March 31, 2025 was primarily due to increases in trust and investment management fees and other charges, commissions, and fees. The increase in trust and investment management fees was primarily related to increases in investment management fees and estate fees, among other things. The increase in investment management fees was primarily related to an increase in the average value of assets maintained in accounts. The increase in the average value of assets was partly related to higher average equity valuations during the first quarter of 2025 relative to the first quarter of 2024 and growth in the number of accounts. The increase in estate fees was primarily related to increased transaction volumes relative to 2024. The increase in other charges, commissions, and fees during the three months ended March 31, 2025 was primarily related to increases in income from the placement of annuities and mutual funds, and brokerage commission income, among other things. See the analysis of trust and investment management fees, other non-interest income and other charges, commissions, and fees included in the section captioned “Non-Interest Income” included elsewhere in this discussion.

Current wording

Non-interest income for the three and six months ended June 30, 2025 increased $2.2 million, or 4.5%, and increased $7.5 million, or 7.9%, respectively, compared to the same periods in 2024. The increases during the three and six months ended June 30, 2025 were primarily due to increases in trust and investment management fees and other charges, commissions, and fees. The increases in trust and investment management fees were primarily related to increases in investment management fees and, to a lesser extent during the six months ended June 30, 2025, estate fees, among other things. The increases in investment management fees were primarily related to increases in the average value of assets maintained in accounts. The increases in the average value of assets were partly related to higher average equity valuations during 2025 relative to 2024 and growth in the number of accounts. The increase in estate fees during the six months ended June 30, 2025 was primarily related to an increase in transaction volumes relative to 2024. The increases in other charges, commissions, and fees were primarily related to increases in income from the placement of annuities, among other things. See the analysis of trust and investment management fees, other non-interest income and other charges, commissions, and fees included in the section captioned “Non-Interest Income” included elsewhere in this discussion.

Previous wording

Non-interest expense for the three months ended March 31, 2025 increased $3.9 million, or 10.2%, compared to the same period in 2024. The increase was primarily related to increases in salaries and wages; other non-interest expense and employee benefits expense. The increase in salaries and wages was primarily due to an increase in salaries, due to annual merit and market increases, and an increase in incentive compensation. The increase in other non-interest expense was primarily related to increases in research and platform fees and corporate overhead expense allocations, among other things, partly offset by decreases in sundry and other miscellaneous expense and professional services expense, among other things. The increase in employee benefits was primarily related to increases in 401(k)/profit sharing plan expense, payroll taxes, and medical/dental benefits expense, among other things.

Current wording

Non-interest expense for the three and six months ended June 30, 2025 increased $3.9 million, or 10.2%, and increased $7.8 million, or 10.2%, respectively, compared to the same periods in 2024. The increases during the three and six months ended June 30, 2025 were primarily related to increases in salaries and wages; other non-interest expense; and employee benefits expense. The increases in salaries and wages were primarily due to increases in salaries, due to annual merit and market increases, and increases in incentive compensation. The increases in other non-interest expense were primarily related to increases in corporate overhead expense allocations and research and platform fees, among other things, partly offset by decreases in sundry and other miscellaneous expense and professional services expense, among other things. The increases in employee benefits were primarily related to increases in 401(k) plan expense, payroll taxes, and medical/dental benefits expense, among other things.

Previous wording

The Non-Banks operating segment had a net loss of $3.5 million during the three months ended March 31, 2025, compared to a net loss of $3.6 million during the same period in 2024. The three months ended March 31, 2025 was positively impacted by a decrease in net interest expense due to a decrease in the average rates paid on our long-term borrowings, and negatively impacted by an increase in non-interest expense and a decrease in the net income tax benefit.

Current wording

The Non-Banks operating segment had net losses of $4.4 million and $8.0 million during the three and six months ended June 30, 2025, compared to net losses of $4.8 million and $8.4 million during the same periods in 2024. The decreases in the net losses during three and six months ended June 30, 2025 were primarily due to decreases in net interest expense due to decreases in the average rates paid on our long-term borrowings, among other things.

Previous wording

During the three months ended March 31, 2025, we recognized income tax expense of $28.2 million, for an effective tax rate of 15.7%, compared to $25.9 million, for an effective tax rate of 16.0%, for the same period in 2024. The effective income tax rates differed from the U.S. statutory federal income tax rate of 21% during 2025 and 2024 primarily due to the effect of tax-exempt income from securities, loans and life insurance policies and the income tax effects associated with stock-based compensation, among other things, and their relative proportion to total pre-tax net income. The increase in income tax expense during the three months ended March 31, 2025 was primarily due to an increase in projected pre-tax net income. The decrease in the effective tax rate during the three months ended March 31, 2025 was primarily related to a decrease in projected disallowed deposit interest expense combined with an increase in tax benefits associated with stock compensation, among other things.

Current wording

During the three months ended June 30, 2025, we recognized income tax expense of $29.6 million, for an effective tax rate of 15.9%, compared to $29.7 million, for an effective tax rate of 16.9%, for the same period in 2024. During the six months ended June 30, 2025, we recognized income tax expense of $57.8 million, for an effective tax rate of 15.8%, compared to $55.5 million, for an effective tax rate of 16.5%, for the same period in 2024. The effective income tax rates differed from the U.S. statutory federal income tax rate of 21% during 2025 and 2024 primarily due to the effect of tax-exempt income from securities, loans and life insurance policies and the income tax effects associated with stock-based compensation, among other things, and their relative proportion to total pre-tax net income. The increase in income tax expense during the six months ended June 30, 2025 was primarily due to an increase in projected pre-tax net income. The decreases in the effective tax rate during the three and six months ended June 30, 2025 were primarily related to decreases in projected non-deductible deposit interest expense combined with increases in tax-exempt interest from securities and in tax benefits associated with stock compensation, among other things.

Previous wording

Average assets totaled $50.9 billion for the three months ended March 31, 2025 representing an increase of $1.6 billion, or 3.2%, compared to average assets for the same period in 2024. Earning assets increased $1.5 billion, or 3.4%, during the three months ended March 31, 2025, compared to the same period in 2024. The increase in earning assets was primarily related to a $1.7 billion increase in average loans and a $373.9 million increase in average taxable securities partly offset by a $314.4 million decrease in tax-exempt securities, a $118.0 million decrease in average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) and a $75.0 million decrease in average resell agreements. Average deposits increased $933.4 million, or 2.3%, during the three months ended March 31, 2025, compared to the same period in 2024. The increase included a $1.1 billion increase in interest-bearing deposits partly offset by a $178.0 million decrease in non-interest-bearing deposits. Average non-interest-bearing deposits made up 33.1% and 34.3% of average total deposits during the three months ended March 31, 2025 and 2024, respectively.

Current wording

Average assets totaled $51.1 billion for the six months ended June 30, 2025 representing an increase of $1.9 billion, or 3.9%, compared to average assets for the same period in 2024. Earning assets increased $1.8 billion, or 4.0%, during the six months ended June 30, 2025, compared to the same period in 2024. The increase in earning assets was primarily related to a $1.5 billion increase in average loans and a $1.1 billion increase in average taxable securities partly offset by a $555.1 million decrease in average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), a $140.5 million decrease in tax-exempt securities, and a $68.4 million decrease in average resell agreements. Average deposits increased $1.1 billion, or 2.7%, during the six months ended June 30, 2025, compared to the same period in 2024. The increase included a $1.1 billion increase in interest-bearing deposits partly offset by a $34.2 million decrease in non-interest-bearing deposits. Average non-interest-bearing deposits made up 33.1% and 34.0% of average total deposits during the six months ended June 30, 2025 and 2024, respectively.