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 nine months ended September 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, 2025, and the other information included in the 2025 Form 10-K. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results for the year ending December 31, 2026 or any future period.

Previous wording

We follow accounting and reporting policies that conform, in all material respects, to accounting principles generally accepted in the United States and to general practices within the financial services industry. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. While we base estimates on historical experience, current information and other factors deemed to be relevant, actual results could differ from those estimates.

Current wording

We follow accounting and reporting policies that conform, in all material respects, to accounting principles generally accepted in the United States (“U.S. GAAP”) and general practices within the financial services industry. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. While we base estimates on historical experience, current information and other factors deemed to be relevant, actual results could differ from those estimates.

Previous wording

Accounting policies related to the allowance for credit losses on financial instruments including loans and off-balance-sheet credit exposures are considered to be critical as these policies involve considerable subjective judgment and estimation by management. In the case of loans, the allowance for credit losses is a contra-asset valuation account, calculated in accordance with Accounting Standards Codification (“ASC”) Topic 326 (“ASC 326”) Financial Instruments - Credit Losses, that is deducted from the amortized cost basis of loans to present the net amount expected to be collected. In the case of off-balance-sheet credit exposures, the allowance for credit losses is a liability account, calculated in accordance with ASC 326, reported as a component of accrued interest payable and other liabilities in our consolidated balance sheets. The amount of each allowance account represents management's best estimate of current expected credit losses on these financial instruments considering available information, from internal and external sources, relevant to assessing exposure to credit loss over the contractual term of the instrument. Relevant available information includes historical credit loss experience, current conditions, and reasonable and supportable forecasts. While historical credit loss experience provides the basis for the estimation of expected credit losses, adjustments to historical loss information may be made for differences in current portfolio-specific risk characteristics, environmental conditions, or other relevant factors. While management utilizes its best judgment and information available, the ultimate adequacy of our allowance accounts is dependent upon a variety of factors beyond our control, including the performance of our portfolios, the economy, changes in interest rates and the view of the regulatory authorities toward classification of assets. Refer to the 2024 Form 10-K for additional information regarding critical accounting policies.

Current wording

Accounting policies related to the allowance for credit losses on financial instruments including loans and off-balance-sheet credit exposures are considered to be critical as these policies involve considerable subjective judgment and estimation by management. In the case of loans, the allowance for credit losses is a contra-asset valuation account, calculated in accordance with Accounting Standards Codification (“ASC”) Topic 326 (“ASC 326”) Financial Instruments - Credit Losses, that is deducted from the amortized cost basis of loans to present the net amount expected to be collected. In the case of off-balance-sheet credit exposures, the allowance for credit losses is a liability account, calculated in accordance with ASC 326, reported as a component of accrued interest payable and other liabilities in our consolidated balance sheets. The amount of each allowance account represents management’s best estimate of lifetime expected credit losses on these financial instruments carried at amortized cost, based on available information from internal and external sources that is relevant to assessing exposure to credit loss over the expected lives of the instruments. Relevant information includes historical credit loss experience, current conditions, and reasonable and supportable forecasts. While historical credit loss experience provides a starting point for estimating credit losses, adjustments may be made to reflect differences in current portfolio‑specific risk characteristics, economic and environmental conditions, or other relevant factors. Although management utilizes its best judgment and the information available, the ultimate adequacy of our allowance accounts depends on a variety of factors beyond our control, including portfolio performance, macroeconomic conditions, changes in interest rates, the accuracy of forecasted assumptions, and regulatory interpretations and supervisory assessments related to credit quality and asset classification. Refer to our 2025 Form 10-K for additional information regarding critical accounting policies.

Previous wording

A discussion of our results of operations is presented below. Certain reclassifications have been made to make prior periods comparable. Taxable-equivalent adjustments are the result of increasing income from tax-free loans and investments by an amount equal to the taxes that would be paid if the income were fully taxable based on a 21% federal tax rate, thus making tax-exempt yields comparable to taxable asset yields.

Current wording

A discussion of our results of operations is presented below. Certain reclassifications have been made to conform prior‑period presentations and provide comparability. Taxable‑equivalent adjustments represent income from tax‑free loans and investments grossed up by the amount of federal income taxes that would have been incurred had such income been fully taxable, calculated using a 21% federal tax rate, thus making tax‑exempt yields comparable to taxable asset yields.

Previous 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.

Current wording

Net income available to common shareholders totaled $169.3 million, or $2.65 per diluted common share, for the three months ended March 31, 2026, compared to $149.3 million, or $2.30 per diluted common share, for the three months ended March 31, 2025.

Previous 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.

Current wording

Net income available to common shareholders increased $20.1 million, or 13.4%, for the three months ended March 31, 2026 compared to the same period in 2025. The increase during the three months ended March 31, 2026 was primarily the result of a $22.3 million increase in net interest income, a $12.3 million increase in non-interest income, and a $6.3 million decrease in credit loss expense partly offset by a $17.6 million increase in non-interest expense and a $3.2 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 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.

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 76.3% of total revenue during the first three months of 2026. 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 affect 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 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.

Current wording

The Federal Reserve influences market interest rates, including the deposit and loan rates offered by many financial institutions. As of March 31, 2026, approximately 40.0% 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 39.1%); the prime interest rate (approximately 18.9%); or the American Interbank Offered Rate (“AMERIBOR”) (approximately 2.0%). Certain other loans are tied to other indices; however, such loans represent an immaterial portion of our loan portfolio as of March 31, 2026.

Previous 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.

Current wording

As of March 31, 2026, the target range for the federal funds rate was 3.50% to 3.75%. In March 2026, the Federal Reserve released projections whereby the midpoint of the projected appropriate target range for the federal funds rate would fall to 3.4% by the end of 2026 and subsequently decrease to 3.1% by the end of 2027. While there can be no assurance that any decreases in the federal funds rate will occur, these projections imply up to a 25 basis point decrease in the federal funds rate during the remainder of 2026, followed by a 25 basis point decrease in 2027.

Previous wording

We are primarily funded by core deposits, with non-interest-bearing demand deposits historically being a significant source of funds. This lower-cost funding base is expected to have a positive impact on our net interest income and net interest margin, particularly in rising or high interest rate environments. Nonetheless, our access to and pricing of deposits may be negatively impacted by, among other factors, periods of higher interest rates which could promote increased competition for deposits, including from new financial technology competitors, or provide customers with alternative investment options. See Item 3. Quantitative and Qualitative Disclosures About Market Risk elsewhere in this report for information about our sensitivity to increases and decreases in interest rates. Further analysis of the components of our net interest margin is presented below.

Current wording

We are primarily funded by core deposits, with non-interest-bearing demand deposits historically being a significant source of funds. This lower-cost funding base is expected to have a positive impact on our net interest income and net interest margin, particularly in rising or high interest rate environments. Nonetheless, our access to and pricing of deposits may be negatively impacted by, among other factors, periods of higher interest rates which could promote increased competition for deposits, including from new financial technology competitors, or provide customers with alternative investment options. See Item 3. Quantitative and Qualitative Disclosures About Market Risk elsewhere in this report for information about our sensitivity to increases and decreases in interest rates. Additional analysis of the components of our net interest margin is presented below.

Previous wording

The following tables present an analysis of net interest income and net interest spread for the periods indicated, including average outstanding balances for each major category of interest-earning assets and interest-bearing liabilities, the interest earned or paid on such amounts, and the average rate earned or paid on such assets or liabilities, respectively. The tables also set forth the net interest margin on average total interest-earning assets for the same periods. For these computations: (i) average balances are presented on a daily average basis, (ii) information is shown on a taxable-equivalent basis assuming a 21% tax rate, (iii) average loans include loans on non-accrual status, and (iv) average securities include unrealized gains and losses on securities available for sale, while yields are based on average amortized cost.

Current wording

The following tables present an analysis of net interest income and net interest spread for the periods indicated, including average outstanding balances for each major category of interest‑earning assets and interest‑bearing liabilities, the interest earned or paid on those balances, and the related average rates. The tables also present net interest margin calculated on average total interest‑earning assets for the same periods. For these calculations: (i) average balances are based on daily averages; (ii) amounts are stated on a taxable‑equivalent basis assuming a 21% tax rate; (iii) average loans include loans on non‑accrual status; and (iv) average securities include unrealized gains and losses on available‑for‑sale securities, while yields are calculated based on average amortized cost.

Previous wording

The following table presents the changes in taxable-equivalent net interest income and identifies the changes due to differences in the average volume of earning assets and interest-bearing liabilities and the changes due to changes in the average interest rate on those assets and liabilities. The changes in net interest income due to changes in both average volume and average interest rate have been allocated to the average volume change or the average interest rate change in proportion to the absolute amounts of the change in each. The comparison between the quarters includes an additional change factor that shows the effect of the difference in the number of days in each period for assets and liabilities that accrue interest based upon the actual number of days in the period, as further discussed below.

Current wording

The following table presents the changes in taxable-equivalent net interest income and identifies the changes due to differences in the average volume of earning assets and interest-bearing liabilities and the changes due to changes in the average interest rate on those assets and liabilities. The changes in net interest income due to changes in both average volume and average interest rate have been allocated to the average volume change or the average interest rate change in proportion to the absolute amounts of the change attributable to each factor. The comparison between the quarters also includes, when applicable, an additional change factor that reflects the effect of the difference in the number of days in each period for assets and liabilities that accrue interest based upon the actual number of days in the period.

Previous 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.

Current wording

The increase in the average volume of interest-earning assets during the three months ended March 31, 2026 was primarily related to a $1.2 billion increase in average loans and a $608.2 million increase in average tax-exempt securities partly offset by a $486.0 million decrease in average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) and a $139.5 million decrease in average taxable securities. The average taxable-equivalent yield on interest-earning assets decreased 11 basis points from 4.99% during the three months ended March 31, 2025 to 4.88% during the three months ended March 31, 2026. 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 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.

Current wording

The average taxable-equivalent yield on loans decreased 34 basis points from 6.57% during the three months ended March 31, 2025 to 6.23% during the three months ended March 31, 2026. The average taxable-equivalent yield on loans during the three months ended March 31, 2026 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, 2026 increased $1.2 billion, or 5.9%, compared to the same period in 2025. Loans made up approximately 45.3% of average interest-earning assets during the three months ended March 31, 2026, compared to 43.8% during the same period in 2025. The increase was 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 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.

Current wording

Average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) for the three months ended March 31, 2026 decreased $486.0 million, or 6.7%, compared to the same period in 2025. Interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) made up approximately 13.9% of average interest-earning assets during the three months ended March 31, 2026, compared to 15.3% during the same period in 2025. The decrease during the three months ended March 31, 2026 was primarily related to the reinvestment of amounts held in an interest-bearing account at the Federal Reserve into loans and securities. The average yield on interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) was 3.64% during the three months ended March 31, 2026, compared to 4.39% during the same period in 2025. The average yield on interest-bearing deposits during the three months ended March 31, 2026 was impacted by lower average interest rates paid on reserves held at the Federal Reserve, compared to the same period in 2025.

Previous 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.

Current wording

The average rate paid on interest-bearing liabilities was 1.72% during the three months ended March 31, 2026, decreasing 40 basis points from 2.12% during the same period in 2025. Average deposits increased $567.9 million, or 1.4%, during the three months ended March 31, 2026, compared to the same period in 2025 and included a $422.1 million increase in average interest-bearing deposits and a $145.8 million increase in average non-interest-bearing deposits. The ratio of average interest-bearing deposits to total average deposits was 67.0% during the three months ended March 31, 2026, compared to 66.9% during the same period in 2025. 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 1.55% and 1.04%, respectively, during the three months ended March 31, 2026, compared to 1.94% and 1.30%, respectively, during the same period in 2025. 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 2.98% 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.

Current 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 3.16% during the three months ended March 31, 2026, compared to 2.87% during the same period in 2025. 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

Credit loss expense is determined by management as the amount to be added to the allowance for credit loss accounts for various types of financial instruments including loans, securities and off-balance-sheet credit exposures after net charge-offs have been deducted to bring the allowances to a level which, in management’s best estimate, is necessary to absorb expected credit losses over the lives of the respective financial instruments. The components of credit loss expense were as follows:

Current wording

Credit loss expense represents the amount added to the allowance for credit losses for various types of financial instruments, including loans, securities, and off‑balance‑sheet credit exposures, after net charge‑offs, to bring the allowances to a level that, in management’s best estimate, is sufficient to absorb current expected credit losses over the expected lives of the respective financial instruments measured at amortized cost, in accordance with ASC 326. The components of credit loss expense were as follows:

Previous 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.

Current wording

Total non-interest income for the three months ended March 31, 2026 increased $12.3 million, or 9.9%, compared to the same period in 2025. 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 9.3%, 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.

Current wording

Trust and Investment Management Fees. Trust and investment management fees increased $5.0 million, or 11.7%, for the three months ended March 31, 2026, compared to the same period in 2025. Investment management fees are the most significant component of trust and investment management fees, making up approximately 82.2% and 81.8% of total trust and investment management fees for the first three months of 2026 and 2025, respectively. The increase in trust and investment management fees was primarily related to an increase in investment management fees (up $4.3 million). Trust and investment management fees during the three months ended March 31, 2026 were also impacted by a one-time, $1.3 million administrative fee associated with a large trust account. Investment management fees are generally based on the market value of assets within an account and are therefore sensitive to volatility in the equity and bond markets. The increase in investment management fees during the three months ended March 31, 2026 was partly related to higher average equity valuations on managed accounts during 2026 relative to 2025 as well as growth in the number of accounts. The increase was also partly related to variation in the timing of certain court-approved fees associated with a large guardianship trust.

Previous 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.

Current wording

At March 31, 2026, trust assets, including both managed assets and custody assets, were primarily composed of equity securities (47.7% of assets), fixed income securities (30.5% of assets), alternative investments (8.9% of assets) and cash equivalents (7.5% of assets). The estimated fair value of these assets was $50.4 billion (including managed assets of $26.4 billion and custody assets of $24.1 billion) at March 31, 2026, compared to $51.0 billion (including managed assets of $26.7 billion and custody assets of $24.3 billion) at December 31, 2025 and $50.7 billion (including managed assets of $25.3 billion and custody assets of $25.5 billion) at March 31, 2025.

Previous 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.

Current wording

Service Charges on Deposit Accounts. Service charges on deposit accounts increased $3.5 million, or 12.4%, for the three months ended March 31, 2026, compared to the same period in 2025. The increase was primarily related to an increase in commercial service charges (up $2.2 million) and overdraft charges on consumer accounts (up $1.3 million). The increase in commercial service charges during the three months ended March 31, 2026 was partly related to an 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 increase in commercial service charges was also partly related to an increase in service fees on non-analyzed accounts. Overdraft charges totaled $15.6 million ($12.0 million consumer and $3.6 million commercial) during the three months ended March 31, 2026, compared to $14.2 million ($10.7 million consumer and $3.5 million commercial) during the same period in 2025. The increase in overdraft charges during the three months ended March 31, 2026 was impacted by higher volumes of fee-assessed overdrafts relative to 2025, in part due to growth in the number of accounts.

Previous 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.

Current wording

Insurance Commissions and Fees. Insurance commissions and fees increased $1.1 million, or 5.0%, for the three months ended March 31, 2026, compared to the same period in 2025. The increase was primarily the result of increases in benefit plan commissions (up $1.2 million) and contingent income (up $451 thousand), partly offset by a decrease in life insurance commissions (down $465 thousand). The increase in benefit plan commissions was primarily due to premium and exposure rate increases within the existing customer base and an increase in business volumes. The decrease in life insurance commissions was primarily related to a decrease in business volumes.

Previous 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.

Current wording

Contingent income totaled $4.5 million during the three months ended March 31, 2026 compared to $4.0 million during the three months ended March 31, 2025. 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. Performance-related contingent income totaled $3.8 million during the three months ended March 31, 2026 and $3.5 million during the three months ended March 31, 2025. 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 $643 thousand during the three months ended March 31, 2026, compared to $517 thousand during the three months ended March 31, 2025.

Previous 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.

Current wording

Net interchange and card transaction fees increased $1.1 million, or 20.9%, for the three months ended March 31, 2026, compared to the same period in 2025. The increase was primarily due to increased card transaction volumes. 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 August 2025, the U.S. District Court for the District of North Dakota ruled to vacate the Federal Reserve’s current interchange rules but simultaneously stayed its own vacatur pending appeal to the circuit court. The outcome of this litigation could significantly and adversely affect the fees banks can charge on debit card transactions.

Current 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 August 2025, the U.S. District Court for the District of North Dakota ruled to vacate the Federal Reserve’s current interchange rules but simultaneously stayed its own vacatur pending appeal to the circuit court. The outcome of this litigation could have a significant and adverse effect on the fees banks can charge on debit card transactions.

Previous 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.

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 cannot be determined at this time.

Previous 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.

Current wording

Net Gain/Loss on Securities Transactions. There were no sales of securities during the three months ended March 31, 2026. 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.

Previous 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.

Current wording

Other Non-Interest Income. Other non-interest income increased $1.9 million, or 14.9%, for the three months ended March 31, 2026, compared to the same period in 2025. The increase was primarily related to increases in sundry and other miscellaneous income (up $2.2 million); benefits received on life insurance policies (up $632 thousand); income from customer derivatives trading and securities trading activities (combined up $456 thousand); and public finance underwriting fees (up $341 thousand); among other things. The increase from these items was partly offset by a decrease in gains on the sale of foreclosed and other assets (down $2.1 million), among other things. Sundry and other miscellaneous income during the three months ended March 31, 2026 included a $2.7 million one-time fee associated with the termination of a customer lease. The increases in income from customer derivative and securities trading activities and public finance underwriting fees were primarily related to increased transaction volumes. Gains on the sale of foreclosed and other assets during the three months ended March 31, 2025 included a $2.5 million gain related to the sale of a foreclosed real estate property.

Previous 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.

Current wording

Total non-interest expense for the three months ended March 31, 2026 increased $17.6 million, or 5.1%, compared to the same period in 2025. Changes in the various components of non-interest expense are discussed below.

Previous 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.

Current wording

Salaries and Wages. Salaries and wages increased $5.3 million, or 3.3%, for the three months ended March 31, 2026, compared to the same period in 2025. 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, 2026 were also impacted, to a lesser extent, by increases in stock-based compensation and commissions.

Previous wording

Our defined benefit retirement and restoration plans were frozen in 2001 which has helped to reduce the volatility in retirement plan expense. We nonetheless still have funding obligations related to these plans and could recognize expense related to these plans in future years, which would be dependent on the return earned on plan assets, the level of interest rates and employee turnover. See Note 11 - Defined Benefit Plans for additional information related to our net periodic pension benefit/cost.

Current wording

Our defined benefit retirement and restoration plans were frozen in 2001 which has helped to reduce the volatility in retirement plan expense. We nonetheless still have funding obligations related to these plans and could recognize expense related to these plans in future years, which would be dependent on the return earned on plan assets, the level of interest rates and employee turnover. See Note 11 - Defined Benefit Plans for additional information related to our net periodic pension benefit/expense.

Previous 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.

Current wording

Technology, Furniture, and Equipment. Technology, furniture, and equipment expense increased $1.6 million, or 3.9%, for the three months ended March 31, 2026, compared to the same period in 2025. The increase during the three months ended March 31, 2026 was primarily related to increases in cloud services expense (up $1.8 million), equipment rental (up $189 thousand), and depreciation on furniture and equipment (up $147 thousand), among other things, partly offset by a decrease in software amortization (down $693 thousand).

Previous 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.

Current wording

Deposit Insurance. Deposit insurance expense totaled $7.2 million for the three months ended March 31, 2026, and did not significantly fluctuate compared to the same period in 2025.

Previous wording

We are managed under a matrix organizational structure whereby our two primary operating segments, Banking and Frost Wealth Advisors, overlap a regional reporting structure. A third operating segment, Non-Banks, is for the most part the parent holding company, as well as certain other insignificant non-bank subsidiaries of the parent that, for the most part, have little or no activity. A description of each segment, the methodologies used to measure segment financial performance and summarized operating results by segment are described in Note 14 - Operating Segments in the accompanying notes to consolidated financial statements included elsewhere in this report. Segment operating results are discussed in more detail below.

Current wording

We are managed under a matrix organizational structure whereby our two primary operating segments, Banking and Frost Wealth Advisors, overlap a regional reporting structure. A third operating segment, Non-Banks, is for the most part the parent holding company, as well as certain other immaterial non-bank subsidiaries of the parent that, for the most part, have little or no activity. A description of each segment, the methodologies used to measure segment financial performance and summarized operating results by segment are described in Note 14 - Operating Segments in the accompanying notes to consolidated financial statements included elsewhere in this report. Segment operating results are discussed in more detail below.

Previous wording

Net income for the three and nine months ended September 30, 2025 increased $25.5 million, or 17.9%, and increased $51.8 million, or 12.5%, respectively, compared to the same periods in 2024. The increase during the three months ended September 30, 2025 was primarily the result of a $37.1 million increase in net interest income, a $12.6 million decrease in credit loss expense, and a $6.7 million increase in non-interest income partly offset by a $26.7 million increase in non-interest expense and a $4.2 million increase in income tax expense. The increase during the nine months ended September 30, 2025 was primarily the result of a $95.3 million increase in net interest income, a $17.6 million increase in non-interest income, and a $15.8 million decrease in credit loss expense partly offset by $70.8 million increase in non-interest expense and a $6.2 million increase in income tax expense.

Current wording

Net income for the three months ended March 31, 2026 increased $17.9 million, or 12.2%, compared to the same period in 2025. The increase during the three months ended March 31, 2026 was primarily the result of a $22.3 million increase in net interest income, a $7.2 million increase in non-interest income, and a $6.3 million decrease in credit loss expense, partly offset by a $15.4 million increase in non-interest expense and a $2.6 million increase in income tax expense.

Previous 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.

Current wording

Net interest income for the three months ended March 31, 2026 increased $22.3 million, or 5.3%, compared to the same period in 2025. The increase during the three months ended March 31, 2026 was primarily related to decreases in the average costs of interest-bearing deposit accounts and repurchase agreements combined with increases in the average volumes of loans and tax-exempt securities and increases in the average tax-equivalent yields on tax-exempt and taxable securities. The impact of these items was partly offset by a decrease in the 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 taxable securities combined with an increase in the average volume of interest-bearing deposit accounts, among other things. 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 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.

Current wording

Credit loss expense for the three months ended March 31, 2026 totaled $6.7 million compared to $13.1 million during the same period in 2025. 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 September 30, 2025 increased $6.7 million, or 10.1%, compared to the same period in 2024 while non-interest income for the nine months ended September 30, 2025 increased $17.6 million, or 9.0%, compared to the same period in 2024. The increase during the three months ended September 30, 2025 was primarily related to an increase in service charges on deposit accounts, and to a lesser extent, increases in other non-interest income; insurance commissions and fees; and other charges, commissions, and fees. The increase during the nine months ended September 30, 2025 was primarily related to increases in service charges on deposit accounts; insurance commissions and fees; other charges, commissions, and fees; and interchange and card transaction 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 increases in insurance commissions and fees were primarily the result of increases in benefit plan commissions and life insurance commissions. The increases in other charges, commissions, and fees were primarily related to increases in commitment fees on unused lines of credit, merchant services rebates, and letter of credit fees, among other things. The increase in other non-interest income during the three months ended September 30, 2025 was primarily related to increases in public finance underwriting fees, and sundry and other miscellaneous income, among other things, partly offset by decreases in gains on the sale of foreclosed and other assets, income from customer derivatives trading activities, among other things. The increase in interchange and card transaction fees during the nine months ended September 30, 2025 was primarily related to increases in income from card transactions partly offset by increases in network costs. 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 March 31, 2026 increased $7.2 million, or 9.7%, compared to the same period in 2025. The increase during the three months ended March 31, 2026 was primarily related to increases in service charges on deposit accounts; other non-interest income; interchange and card transaction fees; and insurance commissions and fees. The increase in service charges on deposit accounts was primarily related to an increase in commercial service charges and overdraft charges on consumer accounts. The increase in other non-interest income was primarily related to increases in sundry and other miscellaneous income; benefits received on life insurance policies; income from customer derivatives trading activities; and public finance underwriting fees, among other things, partly offset by a decrease in gains on the sale of foreclosed and other assets, among other things. The increase in interchange and card transaction fees was primarily related to increased card transaction volumes. The increase in insurance commissions and fees was primarily the result of increases in benefit plan commissions and contingent income, partly offset by a decrease in life insurance commissions. 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 and nine months ended September 30, 2025 increased $2.7 million, or 6.5%, and increased $10.4 million, or 8.9%, respectively, compared to the same periods in 2024. The increase during the three months ended September 30, 2025 was primarily related to an increase in salaries and wages, and to a lesser extent, increases in employee benefits expense; technology, furniture, and equipment expense; and net occupancy expense. The increase during the nine months ended September 30, 2025 was 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 and commissions expense. The increases in employee benefits were primarily related to increases in 401(k) plan expense, medical/dental benefits expense, and payroll taxes, among other things. The increase in technology, furniture, and equipment expense during the three months ended September 30, 2025 was related to increases in cloud services expense and software maintenance. The increase in net occupancy expense during the three months ended September 30, 2025 was related to an increase in lease expense. The increase in other non-interest expense during the nine months ended September 30, 2025 was 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. 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 months ended March 31, 2026 increased $15.4 million, or 5.1%, compared to the same period in 2025. The increase during the three months ended March 31, 2026 was primarily due to increases in other non-interest expense; salaries and wages; employee benefits expense; technology, furniture, and equipment expense; and net occupancy expense. The increase in other non-interest expense included increases in fraud losses; advertising/promotions expense; amortization of deferred costs on loan commitments; professional services expense; travel, meals and entertainment; and guard service expense; among other things, partly offset by decreases in donations expense and foreclosed assets expense, among other things. The increase in salaries and wages was primarily related to an increase 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 an increase in stock-based compensation. The increase in employee benefits expense was primarily related to increases in medical/dental benefits expense, payroll taxes, and 401(k) plan expense, among other things, partly offset by an increase in the net periodic pension benefit related to our defined benefit retirement and restoration plans. The increase in technology, furniture, and equipment expense was primarily related to increases in cloud services expense, equipment rental, and depreciation on furniture and equipment, among other things, partly offset by a decrease in software amortization. The increase in net occupancy expense was primarily related to an increase in depreciation on buildings and leasehold improvements, a decrease in rental income from tenants, and an increase in lease expense, among other things. See the analysis of these categories of non-interest expense included in the section captioned “Non-Interest Expense” included elsewhere in this discussion.