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 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.

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 nine months ended September 30, 2025 are not necessarily indicative of the results for the year ending December 31, 2025 or any future period.

Previous 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.

Current wording

Net income available to common shareholders totaled $172.7 million, or $2.67 per diluted common share, and $477.3 million, or $7.36 per diluted common share, for the three and nine months ended September 30, 2025, compared to $144.8 million, or $2.24 per diluted common share, and $422.7 million, or $6.51 per diluted common share for the three and nine months ended September 30, 2024.

Previous 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.

Current wording

Net income available to common shareholders increased $27.9 million, or 19.2%, for the three months ended September 30, 2025 and increased $54.6 million, or 12.9%, for the nine months ended September 30, 2025, compared to the same periods in 2024. The increase during the three months ended September 30, 2025 was primarily the result of a $37.3 million increase in net interest income, a $12.6 million decrease in credit loss expense, and a $11.9 million increase in non-interest income partly offset by a $29.1 million increase in non-interest expense and a $4.9 million increase in income tax expense. The increase during the nine months ended September 30, 2025 was primarily the result of a $96.3 million increase in net interest income, a $30.7 million increase in non-interest income, and a $15.8 million decrease in credit loss expense partly offset by an $81.1 million increase in non-interest expense and a $7.2 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 77.8% 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.

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 nine 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 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.

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 September 30, 2025, approximately 40.5% 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 36.2%); the prime interest rate (approximately 20.6%); or the American Interbank Offered Rate (“AMERIBOR”) (approximately 2.7%). Certain other loans are tied to other indices; however, such loans do not make up a significant portion of our loan portfolio as of September 30, 2025.

Previous 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.

Current wording

As of September 30, 2025, the target range for the federal funds rate was 4.00% to 4.25%. In September 2025, the Federal Reserve released projections whereby the midpoint of the projected appropriate target range for the federal funds rate would fall to 3.6% 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 the remainder of 2025, followed by a 25 basis point decrease in 2026.

Previous wording

Taxable-equivalent net interest income for the three months ended June 30, 2025 increased $32.9 million, or 7.9%, while taxable-equivalent net interest income for the six months ended June 30, 2025, increased $58.0 million, or 7.0%, compared to the same periods in 2024. Taxable-equivalent net interest income for the six months ended June 30, 2025, included 181 days compared to 182 for the same period in 2024 as a result of the leap year. The additional day added approximately $3.0 million to taxable-equivalent net interest income during the six months ended June 30, 2024. Excluding the impact of the additional day in 2024 results in an effective increase in taxable-equivalent net interest income of approximately $60.9 million during the six months ended June 30, 2025.

Current wording

Taxable-equivalent net interest income for the three months ended September 30, 2025 increased $38.5 million, or 9.1%, while taxable-equivalent net interest income for the nine months ended September 30, 2025, increased $96.5 million, or 7.7%, compared to the same periods in 2024. Taxable-equivalent net interest income for the nine months ended September 30, 2025, included 273 days compared to 274 for the same period in 2024 as a result of the leap year. The additional day added approximately $3.0 million to taxable-equivalent net interest income during the nine months ended September 30, 2024. Excluding the impact of the additional day in 2024 results in an effective increase in taxable-equivalent net interest income of approximately $99.5 million during the nine months ended September 30, 2025.

Previous wording

The increase in taxable-equivalent net interest income during the three months ended June 30, 2025 was primarily related to decreases in the average costs of interest-bearing deposit accounts and repurchase agreements combined with increases in the average yields on and volumes of taxable and, to a lesser extent, tax-exempt securities and an increase in the average volume of loans, 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 increases in the average volumes of interest-bearing deposit accounts and repurchase agreements, among other things.

Current wording

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

Previous 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.

Current wording

The increase in taxable-equivalent net interest income during the nine months ended September 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, and increases in the average yield on and volume of taxable securities, and, to a lesser extent, tax-exempt securities, among other things. The impact of these items was partly offset by a decrease in average yield on loans, decreases in the average yield on and volume of interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), and a decrease in the average volume of 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

As a result of the aforementioned fluctuations, the taxable-equivalent net interest margin increased 13 basis points from 3.54% during the three months ended June 30, 2024 to 3.67% during the three months ended June 30, 2025 while the taxable-equivalent net interest margin increased 12 basis points from 3.51% during the six months ended June 30, 2024 to 3.63% during the six months ended June 30, 2025.

Current wording

As a result of the aforementioned fluctuations, the taxable-equivalent net interest margin increased 13 basis points from 3.56% during the three months ended September 30, 2024 to 3.69% during the three months ended September 30, 2025 while the taxable-equivalent net interest margin increased 13 basis points from 3.52% during the nine months ended September 30, 2024 to 3.65% during the nine months ended September 30, 2025.

Previous wording

The average volume of interest-earning assets for the three months ended June 30, 2025 increased $2.1 billion while the average volume of interest-earning assets for the six months ended June 30, 2025 increased $1.8 billion compared to the same periods in 2024. The increase in the average volume of interest-earning assets during the three months ended June 30, 2025 was primarily related to a $1.7 billion increase in average taxable securities, a $1.4 billion increase in average loans, and a $32.7 million increase in average tax-exempt securities, partly offset by a $986.3 million decrease in average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), and a $61.9 million decrease in average resell agreements. The average taxable-equivalent yield on interest-earning assets decreased 16 basis points from 5.23% during the three months ended June 30, 2024 to 5.07% during the three months ended June 30, 2025.

Current wording

The average volume of interest-earning assets for the three months ended September 30, 2025 increased $2.4 billion while the average volume of interest-earning assets for the nine months ended September 30, 2025 increased $2.0 billion compared to the same periods in 2024. The increase in the average volume of interest-earning assets during the three months ended September 30, 2025 was primarily related to a $1.4 billion increase in average loans, a $1.0 billion increase in average taxable securities, and a $290.4 million increase in average tax-exempt securities, partly offset by a $257.2 million decrease in average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), and a $31.8 million decrease in average resell agreements. The average taxable-equivalent yield on interest-earning assets decreased 15 basis points from 5.26% during the three months ended September 30, 2024 to 5.11% during the three months ended September 30, 2025.

Previous 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.

Current wording

The increase in the average volume of interest-earning assets during the nine months ended September 30, 2025 was primarily related to a $1.5 billion increase in average loans, a $1.0 billion increase in average taxable securities, and a $4.6 million increase in average tax-exempt securities partly offset by a $455.0 million decrease in average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), and a $56.1 million decrease in average resell agreements. The average taxable-equivalent yield on interest-earning assets decreased 15 basis points from 5.21% during the nine months ended September 30, 2024 to 5.06% during the nine months ended September 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 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.

Current wording

The average taxable-equivalent yield on loans decreased 51 basis points from 7.12% during the three months ended September 30, 2024 to 6.61% during the three months ended September 30, 2025 while the average taxable-equivalent yield on loans decreased 48 basis points from 7.07% during the nine months ended September 30, 2024 to 6.59% during the nine months ended September 30, 2025. The average taxable-equivalent yields on loans during the three and nine months ended September 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 September 30, 2025 increased $1.4 billion, or 6.8%, while the average volume of loans for the nine months ended September 30, 2025 increased $1.5 billion, or 7.6%, compared to the same periods in 2024. Loans made up approximately 44.2% and 44.1% of average interest-earning assets during the three and nine months ended September 30, 2025, compared to 43.6% and 42.8% during the same respective periods in 2024. The increases were primarily related to the use of available funds to originate loans.

Previous wording

The average taxable-equivalent yield on securities was 3.79% during the three months ended June 30, 2025, increasing 41 basis points from 3.38% during the three months ended June 30, 2024 while the average taxable-equivalent yield on securities was 3.71% during the six months ended June 30, 2025, increasing 36 basis points from 3.35% during the six months ended June 30, 2024. The average yield on taxable securities was 3.48% during the three months ended June 30, 2025, increasing 56 basis points from 2.92% during the same period in 2024 while the average yield on taxable securities was 3.38% during the six months ended June 30, 2025, increasing 50 basis points from 2.88% during the same period in 2024. The average taxable-equivalent yield on tax-exempt securities was 4.48% during the three months ended June 30, 2025, increasing 18 basis points from 4.30% during the same period in 2024 while the average taxable-equivalent yield on tax-exempt securities was 4.43% during the six months ended June 30, 2025, increasing 14 basis points from 4.29% during the same period in 2024.

Current wording

The average taxable-equivalent yield on securities was 3.85% during the three months ended September 30, 2025, increasing 45 basis points from 3.40% during the three months ended September 30, 2024 while the average taxable-equivalent yield on securities was 3.76% during the nine months ended September 30, 2025, increasing 40 basis points from 3.36% during the nine months ended September 30, 2024. The average yield on taxable securities was 3.48% during the three months ended September 30, 2025, increasing 54 basis points from 2.94% during the same period in 2024 while the average yield on taxable securities was 3.42% during the nine months ended September 30, 2025, increasing 52 basis points from 2.90% during the same period in 2024. The average taxable-equivalent yield on tax-exempt securities was 4.60% during the three months ended September 30, 2025, increasing 28 basis points from 4.32% during the same period in 2024 while the average taxable-equivalent yield on tax-exempt securities was 4.48% during the nine months ended September 30, 2025, increasing 18 basis points from 4.30% during the same period in 2024.

Previous wording

Tax-exempt securities made up approximately 32.5% and 33.0% of total average securities during the three and six months ended June 30, 2025, compared to 35.5% and 35.4% during the same respective periods in 2024. The average volume of total securities during the three months ended June 30, 2025 increased $1.8 billion, or 9.5%, compared to the same period in 2024 while the average volume of total securities during the six months ended June 30, 2025 increased $918.8 million, or 4.8%, compared to the same period in 2024. Securities made up approximately 42.8% and 41.9% of average interest-earning assets during the three and six months ended June 30, 2025, compared to 40.9% and 41.5% during the same respective periods in 2024.

Current wording

Tax-exempt securities made up approximately 34.2% and 33.4% of total average securities during the three and nine months ended September 30, 2025, compared to 35.0% and 35.2% during the same respective periods in 2024. The average volume of total securities during the three months ended September 30, 2025 increased $1.3 billion, or 7.0%, compared to the same period in 2024 while the average volume of total securities during the nine months ended September 30, 2025 increased $1.1 billion, or 5.6%, compared to the same period in 2024. Securities made up approximately 41.7% and 41.8% of average interest-earning assets during the three and nine months ended September 30, 2025, compared to 41.0% and 41.3% during the same respective periods in 2024.

Previous 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.

Current wording

Average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) for the three months ended September 30, 2025 decreased $257.2 million, or 3.6%, 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 nine months ended September 30, 2025 decreased $455.0 million, or 6.3%, 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 14.1% of average interest-earning assets during both the three and nine months ended September 30, 2025, compared to 15.3% and 15.7% during the same respective periods in 2024. The decreases during the three and nine months ended September 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 4.36% and 4.39% during the three and nine months ended September 30, 2025, compared to 5.32% and 5.37% during the same respective periods in 2024. The average yields on interest-bearing deposits during the three and nine months ended September 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 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.

Current wording

The average rate paid on interest-bearing liabilities was 2.13% during the three months ended September 30, 2025, decreasing 47 basis points from 2.60% during the same period in 2024 while the average rate paid on interest-bearing liabilities was 2.13% during the nine months ended September 30, 2025, decreasing 45 basis points from 2.58% during the same period in 2024. Average deposits increased $1.3 billion, or 3.3%, during the three months ended September 30, 2025, compared to the same period in 2024 and included a $1.2 billion increase in average interest-bearing deposits and a $180.6 million increase in average non-interest-bearing deposits. Average deposits increased $1.2 billion, or 2.9%, during the nine months ended September 30, 2025, compared to the same period in 2024 and included a $1.1 billion increase in average interest-bearing deposits and a $38.0 million increase in average non-interest-bearing deposits. The ratio of average interest-bearing deposits to total average deposits was 67.1% and 67.0% during the three and nine months ended September 30, 2025, compared to 66.5% and 66.1% 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 1.30%, respectively, during the nine months ended September 30, 2025, compared to 2.38% and 1.57%, 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 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.

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 2.98% and 2.93% during the three and nine months ended September 30, 2025, compared to 2.66% and 2.63% 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 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.

Current wording

Total non-interest income for the three and nine months ended September 30, 2025 increased $11.9 million, or 10.5%, and increased $30.7 million, or 9.1%, respectively, compared to the same respective 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 $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.

Current wording

Trust and Investment Management Fees. Trust and investment management fees increased $3.8 million, or 9.3%, for the three months ended September 30, 2025 and increased $9.9 million, or 8.2%, for the nine months ended September 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 81.4% of total trust and investment management fees for the first nine months of both 2025 and 2024. The increases in trust and investment management fees during the three and nine months ended September 30, 2025 were primarily related to increases in investment management fees (up $2.9 million and $8.1 million, respectively) and, to a lesser extent, estate fees (up $634 thousand and $1.1 million, respectively), 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 nine months ended September 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 nine months ended September 30, 2025 was primarily related to an increase in transaction volumes relative to 2024.

Previous 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.

Current wording

At September 30, 2025, trust assets, including both managed assets and custody assets, were primarily composed of equity securities (46.7% of assets), fixed income securities (31.5% of assets), alternative investments (8.7% of assets) and cash equivalents (7.2% of assets). The estimated fair value of these assets was $51.4 billion (including managed assets of $26.5 billion and custody assets of $24.8 billion) at September 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 $50.4 billion (including managed assets of $25.6 billion and custody assets of $24.9 billion) at September 30, 2024.

Previous wording

Service Charges on Deposit Accounts. Service charges on deposit accounts for the three and six months ended June 30, 2025 increased $3.0 million, or 11.6%, and increased $6.9 million, or 13.5%, respectively, compared to the same periods in 2024. The increase during the three months ended June 30, 2025 was primarily related to increases in overdraft charges on consumer and, to a lesser extent, commercial accounts (up $2.3 million and $285 thousand, respectively), and commercial service charges (up $859 thousand), partly offset by a decrease in consumer service charges (down $370 thousand). The increase during the six months ended June 30, 2025, was primarily related to increases in overdraft charges on consumer and, to a lesser extent, commercial accounts (up $4.1 million and $759 thousand, respectively), and commercial service charges (up $2.7 million), partly offset by a decrease in consumer service charges (down $706 thousand).

Current wording

Service Charges on Deposit Accounts. Service charges on deposit accounts increased $4.0 million, or 14.7%, for the three months ended September 30, 2025 and increased $10.9 million, or 13.9%, for the nine months ended September 30, 2025, compared to the same respective periods in 2024. The increase during the three months ended September 30, 2025 was primarily related to increases in commercial service charges (up $2.1 million) and overdraft charges on consumer accounts (up $1.9 million). The increase during the nine months ended September 30, 2025, was primarily related to increases in overdraft charges on consumer and, to a lesser extent, commercial accounts (up $6.0 million and $798 thousand, respectively), and commercial service charges (up $4.7 million), partly offset by a decrease in consumer service charges (down $671 thousand).

Previous wording

Overdraft charges totaled $14.7 million ($11.4 million consumer and $3.3 million commercial) during the three months ended June 30, 2025, compared to $12.1 million ($9.1 million consumer and $3.0 million commercial) during the same period in 2024. Overdraft charges totaled $28.9 million ($22.1 million consumer and $6.8 million commercial) during the six months ended June 30, 2025, compared to $24.0 million ($17.9 million consumer and $6.1 million commercial) during the same period in 2024. The increases in overdraft charges during the three and six months ended June 30, 2025 was impacted by increases in the volumes of fee assessed overdrafts relative to 2024, in part due to growth in the number of accounts.

Current wording

Overdraft charges totaled $15.7 million ($12.3 million consumer and $3.4 million commercial) during the three months ended September 30, 2025, compared to $13.8 million ($10.4 million consumer and $3.4 million commercial) during the same period in 2024. Overdraft charges totaled $44.6 million ($34.4 million consumer and $10.2 million commercial) during the nine months ended September 30, 2025, compared to $37.8 million ($28.4 million consumer and $9.4 million commercial) during the same period in 2024. The increases in overdraft charges during the three and nine months ended September 30, 2025 were impacted by increases in the volumes of fee assessed overdrafts relative to 2024, in part due to growth in the number of accounts.

Previous 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.

Current wording

The increases in commercial service charges during the three and nine months ended September 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. 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.

Current wording

Insurance Commissions and Fees. Insurance commissions and fees increased $585 thousand, or 3.94%, for the three months ended September 30, 2025 and increased $3.3 million, or 6.9%, for the nine months ended September 30, 2025, compared to the same respective periods in 2024. The increase during the three months ended September 30, 2025 was primarily due to increases in benefit plan commissions (up $380 thousand) and life insurance commissions (up $332 thousand), among other things, partly offset by a decrease in contingent commissions (down $251 thousand). The increase during the nine months ended September 30, 2025 was primarily the result of increases in benefit plan commissions (up $1.8 million) and life insurance commissions (up $930 thousand), among other things. The increases in benefit plan commissions were primarily due to premium and exposure rate increases within the existing customer base and, during the nine months ended September 30, 2025, an increase in business volume. The increases in life insurance commissions were primarily related to increases in business volumes.

Previous 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.

Current wording

Contingent income totaled $4.8 million during the nine months ended September 30, 2025 compared to $4.5 million during the nine months ended September 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 nine months ended September 30, 2025 and $3.2 million during the nine months ended September 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 $1.1 million during the nine months ended September 30, 2025, compared to $1.4 million during the nine months ended September 30, 2024.

Previous 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.

Current wording

Net interchange and card transaction fees increased $119 thousand, or 2.2%, for the three months ended September 30, 2025 and increased $1.3 million, or 8.6%, for the nine months ended September 30, 2025, compared to the same respective 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

Federal Reserve rules applicable to financial institutions that have assets of $10 billion or more provide that the maximum permissible interchange fee for an electronic debit transaction is the sum of 21 cents per transaction and 5 basis points multiplied by the value of the transaction. An upward adjustment of no more than 1 cent to an issuer's debit card interchange fee is allowed if the card issuer develops and implements policies and procedures reasonably designed to achieve certain fraud-prevention standards. The Federal Reserve also has rules governing routing and exclusivity that require issuers to offer two unaffiliated networks for routing transactions on each debit or prepaid product. In October 2023, the Federal Reserve issued a proposal under which the maximum permissible interchange fee for an electronic debit transaction would be the sum of 14.4 cents per transaction and 4 basis points multiplied by the value of the transaction. Furthermore, the fraud-prevention adjustment would increase from a maximum of 1 cent to 1.3 cents. The proposal would adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost data gathered by the Federal Reserve from large debit card issuers. Had the proposed maximum interchange fees been in effect during the reported periods, interchange and debit card transaction fees would have been approximately 30% lower. The comment period for this proposal ended in May 2024. The extent to which any such proposed changes in permissible interchange fees will impact our future revenues is currently uncertain.

Current wording

In October 2023, the Federal Reserve issued a proposal under which the maximum permissible interchange fee for an electronic debit transaction would be the sum of 14.4 cents per transaction and 4 basis points multiplied by the value of the transaction. Furthermore, the fraud-prevention adjustment would increase from a maximum of 1 cent to 1.3 cents. The proposal would adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost data gathered by the Federal Reserve from large debit card issuers. Had the proposed maximum interchange fees been in effect during the reported periods, interchange and debit card transaction fees would have been approximately 30% lower. The comment period for this proposal ended in May 2024. The extent to which any such proposed changes in permissible interchange fees will impact our future revenues is currently uncertain.

Previous 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.

Current wording

Other Charges, Commissions, and Fees. Other charges, commissions, and fees increased $1.7 million, or 12.8%, for the three months ended September 30, 2025 and increased $4.1 million, or 10.9%, for the nine months ended September 30, 2025, compared to the same respective periods in 2024. The increases during the three and nine months ended September 30, 2025 were primarily related to increases in income from the placement of annuities (up $470 thousand and $1.9 million, respectively), commitment fees on unused lines of credit (up $139 thousand and $820 thousand, respectively), merchant services rebates (up $166 thousand and $455 thousand, respectively), letter of credit fees (up $441 thousand and $409 thousand, respectively), and income from the placement of mutual funds (up $301 thousand and $309 thousand, respectively), among other things.

Previous 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.

Current wording

Net Gain/Loss on Securities Transactions. During the nine months ended September 30, 2025, we sold certain available-for-sale securities with amortized costs totaling $41.2 million and realized a net loss of $14 thousand. These sales were primarily related to a municipal tender offer during the first quarter. During the nine months ended September 30, 2024, we sold certain available-for-sale securities with amortized costs totaling $145.4 million and realized a net gain of $16 thousand.

Previous 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.

Current wording

Other Non-Interest Income. Other non-interest income increased $1.7 million, or 14.4%, for the three months ended September 30, 2025 and increased $1.1 million, or 3.1%, for the nine months ended September 30, 2025, compared to the same respective periods in 2024. The increase during the three months ended September 30, 2025 was primarily related to increases in sundry and other miscellaneous income (up $1.6 million) and public finance underwriting fees (up $998 thousand), among other things, partly offset by decreases in gains on the sale of foreclosed and other assets (down $473 thousand), income from customer derivatives trading activities (down $417 thousand), among other things. The increase during the nine months ended September 30, 2025 was primarily related to increases in gains on the sale of foreclosed and other assets (up $2.1 million) and income from customer securities trading and derivatives trading activities (up $564 thousand and $370 thousand, respectively), among other things, partly offset by decreases in public finance underwriting fees (down $2.0 million). 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 nine months ended September 30, 2025 included a $2.5 million gain related to the sale of a foreclosed real estate property during the first quarter. Sundry and other miscellaneous income during the three months ended September 30, 2025 included $1.2 million related to the recovery of prior write-offs, among other things.

Previous 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.

Current wording

Total non-interest expense for the three and nine months ended September 30, 2025 increased $29.1 million, or 9.0%, and increased $81.1 million, or 8.4%, 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 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.

Current wording

Salaries and Wages. Salaries and wages increased $12.5 million, or 8.0%, for the three months ended September 30, 2025 and increased $36.3 million, or 8.0%, for the nine months ended September 30, 2025, compared to the same respective periods in 2024. The increases in salaries and wages during the three and nine months ended September 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 nine months ended September 30, 2025 were also impacted, to a lesser extent, by increases in incentive compensation and stock-based compensation.

Previous 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).

Current wording

Employee Benefits. Employee benefits expense increased $5.4 million, or 18.6%, for the three months ended September 30, 2025 and increased $15.6 million, or 16.6%, for the nine months ended September 30, 2025, compared to the same respective periods in 2024. The increases during the three and nine months ended September 30, 2025 were primarily related to increases in medical/dental benefits expense (up $3.7 million and $6.5 million, respectively), primarily due to an increase in expected costs; 401(k) plan expense (up $1.4 million and $6.0 million, respectively); and payroll taxes (up $350 thousand and $2.8 million, respectively).

Previous wording

Net Occupancy. Net occupancy expense for the three and six months ended June 30, 2025 increased $2.3 million, or 7.0%, and increased $3.8 million, or 5.9%, 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 depreciation on buildings and leasehold improvements (together up $679 thousand and $1.4 million, respectively); lease expense (up $663 thousand and $1.2 million, respectively);

Current wording

Net Occupancy. Net occupancy expense increased $2.2 million, or 6.7%, for the three months ended September 30, 2025 and increased $6.0 million, or 6.2%, for the nine months ended September 30, 2025, compared to the same respective periods in 2024. The increases during the three and nine months ended September 30, 2025 were primarily related to increases in lease expense (up $1.2 million and $2.3 million, respectively); depreciation on buildings and leasehold improvements (together up $764 thousand and $2.2 million, respectively); and property taxes (up $654 thousand and $1.5 million, 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 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.

Current wording

Technology, Furniture, and Equipment. Technology, furniture, and equipment expense increased $5.7 million, or 15.1%, for the three months ended September 30, 2025 and increased $15.5 million, or 14.2%, for the nine months ended September 30, 2025, compared to the same respective periods in 2024. The increases during the three and nine months ended September 30, 2025 were primarily related to increases in cloud services expense (up $3.5 million and $8.6 million, respectively), software maintenance (up $1.9 million and $4.4 million, respectively), depreciation on furniture and equipment (up $840 thousand and $2.2 million, respectively), and, during the nine months ended September 30, 2025, service contracts expense (up $734 thousand), among other things.

Previous 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.

Current wording

Deposit Insurance. Deposit insurance expense totaled $6.3 million and $20.1 million for the three and nine months ended September 30, 2025, respectively, compared to $7.2 million and $30.3 million for the three and nine months ended September 30, 2024, respectively. Deposit insurance expense during the nine months ended September 30, 2024 included $9.0 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. During the nine months ended September 30, 2025, we reversed approximately $1.3 million of our special deposit insurance assessment accrual based upon a decrease in expected future payments related to the special deposit insurance assessment. Excluding these special assessments from 2024 and reversals in 2025, deposit insurance expense did not significantly fluctuate during the comparable periods.

Previous wording

Other Non-Interest Expense. Other non-interest expense for the three and six months ended June 30, 2025 increased $10.1 million, or 16.8%, and increased $13.9 million, or 11.5%, respectively, compared to the same periods in 2024. The increase during the three months ended June 30, 2025 included increases in advertising/promotions expense (up $4.2 million); sundry and other miscellaneous expense (up $2.1 million); fraud losses (up $1.1 million); business development expense (up $786 thousand); research and platform fees (up $644 thousand); and travel, meals and entertainment (up $602 thousand), among other things, partly offset by a decrease in check card expenses (down $492 thousand) and professional services expense (down, $315 thousand), among other things. The increase during the six months ended June 30, 2025 included increases in advertising/promotions expense (up $3.3 million); sundry and other miscellaneous expense (up $2.3 million); business development expense (up $1.3 million); fraud losses (up $1.3 million); donations expense (up $1.1 million), primarily related to a donation to the Frost Charitable Foundation; research and platform fees (up $1.1 million); professional services expense (up $734 thousand); and travel, meals and entertainment (up $710 thousand), among other things, partly offset by a decrease in check card expenses (down $908 thousand), among other things.

Current wording

Other Non-Interest Expense. Other non-interest expense increased $4.2 million, or 6.9%, for the three months ended September 30, 2025 and increased $18.0 million, or 9.9%, for the nine months ended September 30, 2025, compared to the same respective periods in 2024. The increase during the three months ended September 30, 2025 included increases in fraud losses (up $2.8 million); advertising/promotions expense (up $516 thousand); research and platform fees (up $511 thousand); outside computer service expense (up $381 thousand); donations expense (up $362 thousand); travel, meals and entertainment (up $337 thousand) and communications expense (up $331 thousand) among other things, partly offset by decreases in professional services expense (down $977 thousand) and check card expenses (down $404 thousand), among other things. The increase during the nine months ended September 30, 2025 included increases in fraud losses (up $4.1 million); advertising/promotions expense (up $3.8 million); sundry and other miscellaneous expense (up $2.6 million), of which $1.7 million related to increased operational losses and asset write-offs; research and platform fees (up $1.6 million); donations expense (up $1.5 million), primarily related to donations to the Frost Charitable Foundation; business development expense (up $1.1 million); travel, meals and entertainment (up $1.0 million); and communications expense (up $822 thousand); among other things, partly offset by a decrease in check card expenses (down $1.3 million), among other things.

Previous wording

Net interest income for the three and six months ended June 30, 2025 increased $32.5 million, or 8.1%, and increased $58.2 million, or 7.4%, respectively, compared to the same periods in 2024. The increase during the three months ended June 30, 2025 was primarily related decreases in the average costs of interest-bearing deposit accounts and repurchase agreements combined with increases in the average yields on and volumes of taxable and, to a lesser extent, tax-exempt securities and an increase in the average volume of loans, 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 increases in the average volumes of interest-bearing deposit accounts and repurchase agreements, among other things. The increase 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. Net interest income for the first six 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

Net interest income for the three and nine months ended September 30, 2025 increased $37.1 million, or 9.2%, and increased $95.3 million, or 8.0%, respectively, compared to the same periods in 2024. The increase during the three months ended September 30, 2025 was primarily related decreases in the average costs of interest-bearing deposit accounts and repurchase agreements combined with increases in the average yields on and volumes of taxable and, to a lesser extent, tax-exempt securities and an increase in the average volume of loans, among other things. The impact of these items was partly offset by a decrease in average yield on loans, decreases in the average yield on and volume of interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), and increases in the average volumes of interest-bearing deposit accounts and repurchase agreements, among other things. The increase during the nine months ended September 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, and increases in the average yield on and volume of taxable securities, and, to a lesser extent, tax-exempt securities, among other things. The impact of these items was partly offset by a decrease in average yield on loans, decreases in the average yield on and volume of interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), and a decrease in the average volume of resell agreements, among other things, combined with increases in the average volumes of interest-bearing deposit accounts and repurchase agreements, among other things. Net interest income for the first nine 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.

Previous 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.

Current wording

Credit loss expense for the three and nine months ended September 30, 2025 totaled $6.8 million and $33.0 million compared to $19.4 million and $48.8 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.