SOUTHSIDE BANCSHARES INC

Previous wording

•credit risks of borrowers, including any increase in those risks due to changing economic conditions, including inflation, tariffs and immigration policies;

Current wording

•credit risks of borrowers, including any increase in those risks due to changing economic conditions, including inflation, interest rates, tariffs and immigration policies;

Previous wording

Ongoing tariff negotiations and conflict in the Middle East have caused some uncertainty related to inflation levels, energy and gas prices, and their impact on interest rates and the overall economy. While it is too early to discern the likely outcome of these tariff negotiations and military conflicts, the current economic conditions and growth prospects for our markets continue to reflect a solid and overall positive outlook. Higher inflation levels, including higher energy and gas prices, and interest rate fluctuations could have a negative impact on both our consumer and commercial borrowers in the future. Overall, however, the Texas markets we serve remain healthy.

Current wording

Ongoing tariff negotiations and conflict in the Middle East have caused some uncertainty related to inflation levels, energy and gas prices, and their impact on interest rates and the overall economy, including the economy in the State of Texas. While it is too early to discern the likely outcome of these tariff negotiations and military conflicts, the current economic conditions and growth prospects for our markets continue to reflect a solid and overall positive outlook. Higher inflation levels, including higher energy and gas prices, and interest rate fluctuations could have a negative impact on both our consumer and commercial borrowers in the future. Overall, however, we believe that the Texas markets we serve remain healthy.

Previous wording

Our deposits were $6.87 billion at March 31, 2026, a slight increase of $9.3 million, or 0.1%, from December 31, 2025. At March 31, 2026, we had 178,823 total deposit accounts with an average balance of $34,000. Our estimated uninsured deposits were 38.4% of total deposits as of March 31, 2026. When excluding affiliate deposits (Southside-owned deposits) and public fund deposits (all collateralized), our total estimated deposits without insurance or collateral was 21.9% of total deposits as of March 31, 2026.

Current wording

Our deposits were $6.17 billion at June 30, 2026, a decrease of $695.8 million, or 10.1%, from December 31, 2025. At June 30, 2026, we had 178,853 total deposit accounts with an average balance of $34,000. Our estimated uninsured deposits were 42.8% of total deposits as of June 30, 2026. When excluding affiliate deposits (Southside-owned deposits) and public fund deposits (all collateralized), our total estimated deposits without insurance or collateral was 24.9% of total deposits as of June 30, 2026.

Previous wording

Our noninterest bearing deposits represent approximately 20.0% of total deposits. During the three months ended March 31, 2026, our cost of interest bearing deposits decreased 18 basis points to 2.65% from 2.83% for the three months ended March 31, 2025. Our cost of total deposits for the first quarter of 2026 decreased 13 basis points to 2.13% from 2.26% for the three months ended March 31, 2025.

Current wording

Our noninterest bearing deposits represent approximately 22.8% of total deposits. During the three months ended June 30, 2026, our cost of interest bearing deposits decreased 33 basis points to 2.49% from 2.82% for the three months ended June 30, 2025. Our cost of total deposits for the second quarter of 2026 decreased 32 basis points to 1.94% from 2.26% for the three months ended June 30, 2025.

Previous wording

Net income was $23.3 million for the three months ended March 31, 2026, compared to $21.5 million for the same period in 2025, an increase of $1.8 million, or 8.1%. The increase in net income was due to a $3.8 million increase in net interest income, and a $2.4 million increase in noninterest income, partially offset by a $3.5 million increase in noninterest expense, a $652,000 increase in provision for credit losses and a $319,000 increase in income tax expense. Earnings per diluted common share were $0.78 for the three months ended March 31, 2026, compared to $0.71 for the same period in 2025, an increase of $0.07, or 9.9%.

Current wording

Net income was $26.8 million for the three months ended June 30, 2026, compared to $21.8 million for the same period in 2025, an increase of $5.0 million, or 23.0%. The increase in net income was due to a $3.1 million increase in net interest income, a $1.9 million increase in noninterest income, a $581,000 decrease in noninterest expense and a $539,000 decrease in provision for credit losses, partially offset by a $1.0 million increase in income tax expense. Earnings per diluted common share were $0.90 for the three months ended June 30, 2026, compared to $0.72 for the same period in 2025, an increase of $0.18, or 25.0%.

Previous wording

Our total assets increased $287.6 million, or 3.4%, to $8.80 billion at March 31, 2026 from $8.51 billion at December 31, 2025. Our securities portfolio increased by $164.3 million, or 6.1%, to $2.87 billion at March 31, 2026, compared to $2.70 billion at December 31, 2025. The increase in the securities portfolio was primarily due to an increase in MBS during the three months ended March 31, 2026. Our FHLB stock increased $2.3 million, or 16.4%, to $16.4 million from $14.1 million at December 31, 2025, due to the increase in our FHLB borrowings during the three months ended March 31, 2026.

Current wording

Our total assets increased $249.1 million, or 2.9%, to $8.76 billion at June 30, 2026 from $8.51 billion at December 31, 2025. Our securities portfolio increased by $78.0 million, or 2.9%, to $2.78 billion at June 30, 2026, compared to $2.70 billion at December 31, 2025. The increase in the securities portfolio was due to an increase in MBS during the six months ended June 30, 2026. Our FHLB stock increased $31.2 million, or 222.0%, to $45.3 million from $14.1 million at December 31, 2025, due to the increase in our FHLB borrowings during the six months ended June 30, 2026.

Previous wording

Loans at March 31, 2026 were $4.95 billion, an increase of $128.2 million, or 2.7%, compared to $4.82 billion at December 31, 2025, due to increases of $93.2 million in construction loans, $40.6 million in commercial real estate loans and $12.2 million in commercial loans. These increases were partially offset by decreases of $9.6 million in municipal loans, $7.1 million in 1-4 family residential loans and $1.2 million in loans to individuals. Loans held for sale increased $146,000, or 11.0%, to $1.5 million at March 31, 2026 from $1.3 million at December 31, 2025.

Current wording

Loans at June 30, 2026 were $4.95 billion, an increase of $131.6 million, or 2.7%, compared to $4.82 billion at December 31, 2025, due to increases of $51.5 million in construction loans, $42.9 million in commercial owner-occupied loans, $22.8 million in commercial loans, $15.3 million in commercial real estate loans and $10.8 million in municipal loans. These increases were partially offset by decreases of $8.3 million in 1-4 family residential loans and $3.5 million in loans to individuals. Loans held for sale decreased $1.0 million, or 74.4%, to $341,000 at June 30, 2026 from $1.3 million at December 31, 2025.

Previous wording

Our nonperforming assets at March 31, 2026 decreased $28.5 million, or 74.6%, to $9.7 million and represented 0.11% of total assets, compared to $38.2 million, or 0.45% of total assets, at December 31, 2025, primarily due to a decrease of $27.5 million in restructured loans. The decrease in restructured loans was due to the payoff of a $27.5 million restructured commercial real estate loan in the first quarter that was originally restructured with an extension of maturity in the first quarter of 2025 to allow for an extended lease up period. Nonaccruing loans decreased $927,000, or 8.8%, to $9.6 million, and the ratio of nonaccruing loans to total loans was 0.19% and 0.22% for March 31, 2026 and December 31, 2025, respectively. Repossessed assets were $7,000 at March 31, 2026, compared to no repossessed assets at December 31, 2025. There was $128,000 of OREO at March 31, 2026 and $248,000 at December 31, 2025.

Current wording

Our nonperforming assets at June 30, 2026 decreased $28.4 million, or 74.4%, to $9.8 million and represented 0.11% of total assets, compared to $38.2 million, or 0.45% of total assets, at December 31, 2025, primarily due to a decrease of $27.5 million in restructured loans. The decrease in restructured loans was due to the payoff of a $27.5 million restructured commercial real estate loan in the first quarter that was originally restructured with an extension of maturity in the first quarter of 2025 to allow for an extended lease up period. Nonaccruing loans decreased $856,000, or 8.2%, to $9.6 million, and the ratio of nonaccruing loans to total loans was 0.19% and 0.22% for June 30, 2026 and December 31, 2025, respectively. Repossessed assets were $5,000 at June 30, 2026, compared to no repossessed assets at December 31, 2025. There was $116,000 of OREO at June 30, 2026 and $248,000 at December 31, 2025.

Previous wording

Total FHLB borrowings increased $104.8 million, or 49.6%, to $315.9 million at March 31, 2026 from $211.1 million at December 31, 2025.

Current wording

Total FHLB borrowings increased $784.7 million, or 371.7%, to $995.8 million at June 30, 2026 from $211.1 million at December 31, 2025, due to a shift from brokered deposits into FHLB borrowings.

Previous wording

Other borrowings increased $146.9 million, or 70.4%, to $355.5 million at March 31, 2026, from $208.7 million at December 31, 2025, due to a $155.0 million increase in FRDW borrowings.

Current wording

Other borrowings increased $211.1 million, or 101.2%, to $419.8 million at June 30, 2026, from $208.7 million at December 31, 2025, due to a $245.0 million increase in FRDW borrowings, partially offset by a $33.9 million decrease in repurchase agreements.

Previous wording

Our subordinated notes, net of unamortized debt issuance costs, decreased $92.1 million, or 38.4%, to $147.5 million at March 31, 2026 from $239.7 million at December 31, 2025, as a result of the full redemption of $100.0 million in aggregate principal amount of 3.875% fixed-to-floating rate subordinated notes during the first quarter of 2026. Refer to “Note 7 – Long-term Debt” in our consolidated financial statements included in this report for a detailed description of the terms of the redemption of the subordinated notes.

Current wording

Our subordinated notes, net of unamortized debt issuance costs, decreased $92.1 million, or 38.4%, to $147.6 million at June 30, 2026 from $239.7 million at December 31, 2025, as a result of the full redemption of $100.0 million in aggregate principal amount of 3.875% fixed-to-floating rate subordinated notes during the first quarter of 2026. Refer to “Note 7 – Long-term Debt” in our consolidated financial statements included in this report for a detailed description of the terms of the redemption of the subordinated notes.

Previous wording

Our total shareholders’ equity at March 31, 2026 increased 0.9%, or $7.2 million, to $854.9 million, or 9.7% of total assets, compared to $847.6 million, or 10.0% of total assets, at December 31, 2025. The increase in shareholders’ equity was the result of net income of $23.3 million, stock compensation expense of $1.6 million and common stock issued under our dividend reinvestment plan of $233,000, partially offset by cash dividends paid of $10.7 million, other comprehensive loss of $7.0 million and net issuance of common stock under employee stock plans of $172,000.

Current wording

Our total shareholders’ equity at June 30, 2026 increased 4.1%, or $34.8 million, to $882.5 million, or 10.1% of total assets, compared to $847.6 million, or 10.0% of total assets, at December 31, 2025. The increase in shareholders’ equity was the result of net income of $50.1 million, other comprehensive income of $3.6 million, stock compensation expense of $2.7 million and common stock issued under our dividend reinvestment plan of $466,000, partially offset by cash dividends paid of $21.4 million and net issuance of common stock under employee stock plans of $499,000.

Previous wording

We ended the first quarter of 2026 with approximately $384.4 million in available liquidity from the FRDW, in addition to the approximately $2.22 billion available from the credit line with FHLB due primarily to the blanket lien on our loan portfolio and to a lesser extent, securities available as collateral. At March 31, 2026, the estimated deposits, without insurance or collateral, to total deposits, excluding affiliate deposits (Southside-owned deposits) was 21.9%, or $1.51 billion.

Current wording

We ended the second quarter of 2026 with approximately $279.3 million in available liquidity from the FRDW, in addition to the approximately $1.63 billion available from the credit line with FHLB due primarily to the blanket lien on our loan portfolio and to a lesser extent, securities available as collateral. At June 30, 2026, the estimated deposits, without insurance or collateral, to total deposits, excluding affiliate deposits (Southside-owned deposits) was 24.9%, or $1.53 billion.

Previous wording

From time to time, we may enter into certain interest rate swap contracts with third parties using specific variable rate, as well as short-term (generally three months or less) fixed rate borrowings designated as cash flow hedges under ASC Topic 815. At March 31, 2026, we had swap contracts covering $385 million in brokered deposits and $230 million in FRDW borrowings for a total of $615 million of cash flow hedges. We expect the cash flows from swap contracts to be highly effective in hedging the variability in future cash flows attributable to fluctuations in the underlying SOFR rate. At March 31, 2026, these contracts reflected a weighted average of 3.78% with a remaining average weighted maturity of 1.5 years. During the three months ended March 31, 2026, $245 million cash flow hedge interest rate swap contracts matured. As of March 31, 2026, a pre-tax unrealized gain of $1.7 million was recognized in other comprehensive income, and there was no ineffective portion of these hedges. At December 31, 2025, the outstanding balance of cash flow hedges was $860 million. Refer to “Note 9 – Derivative Financial Instruments and Hedging Activities” in our consolidated financial statements included in this report for a detailed description of our hedging policy and methodology related to derivative instruments.

Current wording

From time to time, we may enter into certain interest rate swap contracts with third parties using specific variable rate, as well as short-term (generally three months or less) fixed rate borrowings designated as cash flow hedges under ASC Topic 815. At June 30, 2026, we had swap contracts covering $325 million in FHLB borrowings and $290 million in FRDW borrowings for a total of $615 million of cash flow hedges. We expect the cash flows from swap contracts to be highly effective in hedging the variability in future cash flows attributable to fluctuations in the underlying SOFR rate. At June 30, 2026, these contracts reflected a weighted average rate of 3.81% with a remaining average weighted maturity of 1.3 years. During the six months ended June 30, 2026, $245 million cash flow hedge interest rate swap contracts matured. As of June 30, 2026, a pre-tax unrealized gain of $3.8 million was recognized in other comprehensive income, and there was no ineffective portion of these hedges. At December 31, 2025, the outstanding balance of cash flow hedges was $860 million. Refer to “Note 9 – Derivative Financial Instruments and Hedging Activities” in our consolidated financial statements included in this report for a detailed description of our hedging policy and methodology related to derivative instruments.

Previous wording

We continue to evaluate the lowest cost wholesale funding sources and will utilize either brokered deposits, FHLB advances, FRDW borrowings, or any combination of the three funding sources to minimize interest expense while also utilizing cash flow hedges to mitigate the impacts of interest rate movements. Wholesale funding and securities are utilized to enhance overall profitability, to determine the appropriate leverage of our capital and to determine acceptable levels of credit, interest rate and liquidity risk consistent with prudent capital management. Wholesale funds are invested primarily in U.S. agency MBS and long-term municipal securities and to a lesser extent, corporate securities. Although the securities often carry lower yields than loans, these securities generally (i) increase the overall quality of our assets because of either the implicit or explicit guarantees of the U.S. Government and the guarantees of the municipalities, (ii) are more liquid than individual loans and (iii) may be used to collateralize our borrowings or other obligations.

Current wording

We continue to evaluate the lowest cost wholesale funding sources and will utilize either FHLB advances, FRDW borrowings, brokered deposits, or any combination of the three funding sources to minimize interest expense while also utilizing cash flow hedges to mitigate the impacts of interest rate movements. Wholesale funding and securities are utilized to enhance overall profitability, to determine the appropriate leverage of our capital and to determine acceptable levels of credit, interest rate and liquidity risk consistent with prudent capital management. Wholesale funds are invested primarily in U.S. agency MBS and long-term municipal securities and to a lesser extent, corporate securities. Although the securities often carry lower yields than loans, these securities generally (i) increase the overall quality of our assets because of either the implicit or explicit guarantees of the U.S. Government and the guarantees of the municipalities, (ii) are more liquid than individual loans and (iii) may be used to collateralize our borrowings or other obligations.

Previous wording

Our securities portfolio increased $164.3 million, or 6.1%, from $2.70 billion at December 31, 2025 to $2.87 billion at March 31, 2026, with an increase in U.S. Agency MBS, partially offset by decreases in corporate bonds and municipal securities. As a result, securities totaled 32.6% of assets at March 31, 2026, compared to 31.8% at December 31, 2025. The increase in the U.S. Agency MBS was due to the purchase of $313.5 million of low premium and discounted MBS with coupons ranging from 4.50% to 5.50%. The net increase in the total securities portfolio was due to securities purchased during the three months ended March 31, 2026, which more than offset maturities, principal payments, net amortization and the decrease in the fair value of the portfolio.

Current wording

Our securities portfolio increased $78.0 million, or 2.9%, from $2.70 billion at December 31, 2025 to $2.78 billion at June 30, 2026, with increases in U.S. Agency MBS, and to a lesser extent, corporate bonds, partially offset by a decrease in municipal securities. As a result, securities totaled 31.7% of assets at June 30, 2026, compared to 31.8% at December 31, 2025. The increase in the U.S. Agency MBS was due to the purchase of $332.4 million of low premium and discounted MBS with coupons ranging from 4.50% to 5.50%. The increase in corporate bonds was due to the purchase of $6.0 million in 6.25% coupon corporate bonds. The net increase in the total securities portfolio was due to securities purchased during the six months ended June 30, 2026, which more than offset maturities, principal payments and net amortization.

Previous wording

Cash and cash equivalents decreased to 4.4% of total assets at March 31, 2026, compared to 4.6% at December 31, 2025.

Current wording

Cash and cash equivalents decreased to 4.5% of total assets at June 30, 2026, compared to 4.6% at December 31, 2025.

Previous wording

Our FHLB borrowings increased $104.8 million, or 49.6%, to $315.9 million at March 31, 2026 from $211.1 million at December 31, 2025. As of March 31, 2026 and December 31, 2025, we had $265.0 million and $110.0 million, respectively, in borrowings from the FRDW.

Current wording

Our FHLB borrowings increased $784.7 million, or 371.7%, to $995.8 million at June 30, 2026, from $211.1 million at December 31, 2025. As of June 30, 2026 and December 31, 2025, we had $355.0 million and $110.0 million, respectively, in borrowings from the FRDW.

Previous wording

As of March 31, 2026, our total wholesale funding as a percentage of deposits, not including brokered deposits, increased to 22.4% from 16.0% at December 31, 2025.

Current wording

As of June 30, 2026, our total wholesale funding as a percentage of deposits, not including brokered deposits, increased to 22.0% from 16.0% at December 31, 2025.

Previous wording

Our brokered deposits may consist of CDs and non-maturity deposits which may be raised quickly with terms tailored to our funding needs. We had $24.1 million in brokered CDs at March 31, 2026, of which $10.0 million are related to our cash flow hedges, an increase from $19.8 million at December 31, 2025. At March 31, 2026, our brokered CDs had a weighted average cost of 368 basis points and remaining maturities of less than a month. Our brokered non-maturity deposits increased to $758.8 million at March 31, 2026, of which $375.0 million are related to our cash flow hedges, from $652.4 million at December 31, 2025, with a weighted average cost of 376 and 359 basis points, respectively. Our wholesale funding policy currently allows for maximum brokered deposits of the lesser of $1.05 billion, or 12% of total assets. Potential higher interest expense and lack of customer loyalty are risks associated with the use of brokered deposits.

Current wording

Our brokered deposits may consist of CDs and non-maturity deposits which may be raised quickly with terms tailored to our funding needs. We had no brokered CDs at June 30, 2026, compared to $19.8 million at December 31, 2025. Our brokered non-maturity deposits decreased to $5.0 million at June 30, 2026, from $652.4 million at December 31, 2025, with a weighted average cost of 373 and 359 basis points, respectively. Our wholesale funding policy currently allows for maximum brokered deposits of the lesser of $1.05 billion, or 12% of total assets. Potential higher interest expense and lack of customer loyalty are risks associated with the use of brokered deposits.

Previous wording

At March 31, 2026, the majority of the securities portfolio was funded by non-maturity deposits, some of which are included in wholesale funding that accounts for approximately 47% of the funding source, of which approximately 45% is swapped at a fixed rate, providing protection from rising interest rates.

Current wording

At June 30, 2026, a portion of the securities portfolio was funded by non-maturity deposits, some of which are included in wholesale funding that accounts for approximately 49% of the funding source, of which approximately 45% is swapped at a fixed rate, providing protection from rising interest rates.

Previous wording

We have partial term fair value hedges for certain of our fixed rate callable AFS municipal securities and partial term fair value hedges of fixed rate AFS MBS using the portfolio layer method. The instruments are designated as fair value hedges as the changes in the fair value of the interest rate swap are expected to partially offset changes in the fair value of the hedged item attributable to changes in the SOFR swap rate, the designated benchmark interest rate. As of March 31, 2026, $24.1 million in hedging instruments were used to hedge municipal securities with a carrying amount of $20.7 million included in our AFS securities portfolio in our consolidated balance sheets, representing approximately 12.0% of the AFS municipal portfolio. As of March 31, 2026,$234.0 million in hedging instruments were used to hedge a layer of the closed portfolio of AFS MBS with a carrying value of $980.8 million, or 67.3% of the AFS MBS portfolio. These derivative contracts involve the receipt of floating rate interest from a counterparty in exchange for us making fixed-rate payments over the life of the agreement, without the exchange of the underlying notional value.

Current wording

We have partial term fair value hedges for certain of our fixed rate callable AFS municipal securities and partial term fair value hedges of fixed rate AFS MBS using the portfolio layer method. The instruments are designated as fair value hedges as the changes in the fair value of the interest rate swap are expected to partially offset changes in the fair value of the hedged item attributable to changes in the SOFR swap rate, the designated benchmark interest rate. As of June 30, 2026, $24.1 million in hedging instruments were used to hedge municipal securities with a carrying amount of $21.7 million included in our AFS securities portfolio in our consolidated balance sheets, representing approximately 12.2% of the AFS municipal portfolio. As of June 30, 2026,$334.0 million in hedging instruments were used to hedge 100.0% of our AFS MBS portfolio with a carrying value of $1.37 billion. These derivative contracts involve the receipt of floating rate interest from a counterparty in exchange for us making fixed-rate payments over the life of the agreement, without the exchange of the underlying notional value.

Previous wording

Net interest income is one of the principal sources of a financial institution’s earnings stream and represents the difference or spread between interest and fee income generated from interest earning assets and the interest expense paid on interest bearing liabilities. Fluctuations in interest rates or interest rate yield curves, as well as repricing characteristics and volume and changes in the mix of interest earning assets and interest bearing liabilities, materially impact net interest income. During the last four months of 2025, the Federal Reserve reduced the target federal funds rate by 75 basis points to 3.50% to 3.75%. During the three months ended March 31, 2026, the Federal Reserve held the target federal funds rate steady. If the federal funds rate remains elevated or is not further reduced, it may negatively impact our net interest income.

Current wording

Net interest income is one of the principal sources of a financial institution’s earnings stream and represents the difference or spread between interest and fee income generated from interest earning assets and the interest expense paid on interest bearing liabilities. Fluctuations in interest rates or interest rate yield curves, as well as repricing characteristics and volume and changes in the mix of interest earning assets and interest bearing liabilities, materially impact net interest income. During the last four months of 2025, the Federal Reserve reduced the target federal funds rate by 75 basis points to 3.50% to 3.75%. During the six months ended June 30, 2026, the Federal Reserve held the target federal funds rate steady. If the federal funds rate remains elevated or is not further reduced, it could negatively impact our net interest income.

Previous wording

Net interest income for the three months ended March 31, 2026 increased $3.8 million, or 7.1%, compared to the same period in 2025. The increase in net interest income was primarily due to a decrease in the average rate paid on our interest bearing liabilities and an increase in the volume and change in the mix of our interest earning assets, partially offset by an increase in the average balance of our interest bearing liabilities. Total interest income increased $2.0 million, or 2.0%, to $102.3 million for the three months ended March 31, 2026, compared to $100.3 million during the same period in 2025. Total interest expense decreased $1.9 million, or 4.0%, to $44.6 million for the three months ended March 31, 2026, compared to $46.4 million for the same period in 2025. Our net interest margin and our net interest margin (FTE), a non-GAAP measure, both increased to 2.91% and 3.01%, respectively, for the three months ended March 31, 2026, compared to 2.74% and 2.86%, respectively, for the same period in 2025. Our net interest spread and net interest spread (FTE), also a non-GAAP measure, increased to 2.28% and 2.38%, respectively, for the three months ended March 31, 2026, compared to 2.08% and 2.20%, respectively, for the same period in 2025. See “Non-GAAP Financial Measures” for more information and a reconciliation to GAAP.

Current wording

Net interest income for the three months ended June 30, 2026 increased $3.1 million, or 5.7%, compared to the same period in 2025. The increase in net interest income was primarily due to an increase in the average balance of our interest earning assets and a decrease in the average rate paid on our interest bearing liabilities, partially offset by an increase in the average balance and mix of our interest bearing liabilities and a decrease in the average yield of our interest earning assets. Total interest income increased $5.4 million, or 5.4%, to $103.9 million for the three months ended June 30, 2026, compared to $98.6 million during the same period in 2025. Total interest expense increased $2.3 million, or 5.2%, to $46.6 million for the three months ended June 30, 2026, compared to $44.3 million for the same period in 2025. Our net interest margin and our net interest margin (FTE), a non-GAAP measure, both decreased to 2.80% and 2.90%, respectively, for the three months ended June 30, 2026, compared to 2.82% and 2.95%, respectively, for the same period in 2025. Our net interest spread and net interest spread (FTE), also a non-GAAP measure, was 2.17% and 2.26%, respectively, for the three months ended June 30, 2026, compared to 2.15% and 2.27%, respectively, for the same period in 2025. See “Non-GAAP Financial Measures” for more information and a reconciliation to GAAP.

Previous wording

The following table presents on a fully taxable-equivalent basis, a non-GAAP measure, the net change in net interest income and sets forth the dollar amount of increase (decrease) in the average volume of interest earning assets and interest bearing liabilities and changes in yields/rates. Volume/Yield/Rate variances (change in volume times change in yield/rate) have been allocated to amounts attributable to changes in volumes and to changes in yields/rates in proportion to the amounts directly attributable to those changes (in thousands). 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.

Current wording

The following table presents on a fully taxable-equivalent basis, a non-GAAP measure, the net change in net interest income and sets forth the dollar amount of increase (decrease) in the average volume of interest earning assets and interest bearing liabilities and changes in yields/rates. Volume/Yield/Rate variances (change in volume times change in yield/rate) have been allocated to amounts attributable to changes in volumes and to changes in yields/rates in proportion to the amounts directly attributable to those changes (in thousands).

Previous wording

The increase in total interest income for the three months ended March 31, 2026, was attributable to an increase in the average balance of and a change in the mix of our interest earning assets when compared to the same period in 2025. The decrease in total interest expense for the three months ended March 31, 2026, was primarily attributable to the decrease in interest rates on our interest bearing liabilities to 2.88% for the three months ended March 31, 2026 from 3.03% for the same period in 2025, partially offset by an increase in the average balance of our interest bearing liabilities of $69.8 million, or 1.1%, for the three months ended March 31, 2026, compared to the same period in 2025.

Current wording

The increase in total interest income for the three months ended June 30, 2026, was attributable to a $500.8 million, or 6.5%, increase in the average balance of our interest earning assets when compared to the same period in 2025, partially offset by a decrease in the average yield on interest earning assets to 5.17% when compared to 5.25% for the same period in 2025. The increase in total interest expense for the three months ended June 30, 2026, was primarily attributable to an increase in the average balance of our interest bearing liabilities of $449.3 million, or 7.5%, compared to the same period in 2025, partially offset by the decrease in the average rate paid on our interest bearing liabilities to 2.91% for the three months ended June 30, 2026 from 2.98% for the same period in 2025.

Previous wording

Note: As of March 31, 2026 and 2025, loans totaling $9.6 million and $4.3 million, respectively, were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.

Current wording

Note: As of June 30, 2026 and 2025, loans totaling $9.6 million and $5.0 million, respectively, were on nonaccrual status. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.

Previous wording

The 23.2% increase in noninterest income for the three months ended March 31, 2026, when compared to the same period in 2025, was due to increases in all noninterest income categories, however, the primary increases occurred in other noninterest income, trust fees and a decrease in net loss on sale of AFS securities.

Current wording

The 15.3% increase in noninterest income for the three months ended June 30, 2026, when compared to the same period in 2025, was due to increases in BOLI income, trust fees, other noninterest income, deposit services and brokerage services income. The 18.9% increase in noninterest income for the six months ended June 30, 2026, when compared to the same period in 2025, was due to increases in all noninterest income categories, however, the primary increases occurred in other noninterest income, trust fees, BOLI and a decrease in net loss on sale of AFS securities.

Previous wording

During the three months ended March 31, 2025, we sold MBS that resulted in a net loss on sale of AFS securities of $554,000.

Current wording

During the six months ended June 30, 2025, we sold MBS that resulted in a net loss on sale of AFS securities of $554,000.

Previous wording

Gain on sale of loans increased for the three months ended March 31, 2026, when compared to the same period in 2025, due to an increase in the volume of loans sold.

Current wording

Gain on sale of loans decreased for the three months ended June 30, 2026, when compared to the same period in 2025, due to a decrease in the volume of loans sold. During the six months ended June 30, 2026, gain on sale of loans increased when compared to the same period in 2025, due to an increase in the return on loans sold.

Previous wording

Trust fees increased for the three months ended March 31, 2026, when compared to the same periods in 2025, due to an increase in accounts under management and to a lesser extent, fee repricing.

Current wording

Trust fees increased for the three and six months ended June 30, 2026, when compared to the same periods in 2025, due to an increase in accounts under management, and to a lesser extent, fee repricing.

Previous wording

The increase in BOLI income for the three months ended March 31, 2026, when compared to the same period in 2025, was primarily due to the purchase of a new policy for $5.5 million late in the fourth quarter of 2025 and to a lesser extent, a death benefit of $47,000 realized in the first quarter of 2026 for a former covered officer.

Current wording

The increase in BOLI income for the three and six months ended June 30, 2026, when compared to the same periods in 2025, was due to death benefits of $47,000 and $543,000 realized in the first and second quarter of 2026, respectively, for former covered officers, and to a lesser extent, the purchase of a new policy for $5.5 million late in the fourth quarter of 2025.

Previous wording

Brokerage services income increased for the three months ended March 31, 2026, when compared to the same period in 2025, due to an increase in assets under management.

Current wording

Brokerage services income increased for the three and six months ended June 30, 2026, when compared to the same periods in 2025, due to an increase in assets under management.

Previous wording

Other noninterest income increased for the three months ended March 31, 2026, when compared to the same period in 2025, due to increases in swap fee income, mortgage servicing fee income, merchant services income and letter of credit fees, partially offset by a decrease in equity investment income.

Current wording

Other noninterest income increased for the three and six months ended June 30, 2026, when compared to the same periods in 2025, primarily due to increases in swap fee income, mortgage servicing fee income and letter of credit fee income.

Previous wording

The increase in noninterest expense for the three months ended March 31, 2026, when compared to the same period in 2025, was primarily due to increases in salaries and employee benefits expense, loss on redemption of subordinated notes, other noninterest expense and software and data processing expense.

Current wording

The decrease in noninterest expense for the three months ended June 30, 2026, when compared to the same period in 2025, was primarily due to a decrease in other noninterest expense, partially offset by increases in salaries and employee benefits and professional fees. The increase in noninterest expense for the six months ended June 30, 2026, when compared to the same period in 2025, was primarily due to increases in salaries and employee benefits expense and loss on redemption of subordinated notes, partially offset by a decrease in other noninterest expense.

Previous wording

Salaries and employee benefits expense increased during the three months ended March 31, 2026, compared to the same period in 2025, due to increases in direct salary expense, retirement expense and health insurance expense.

Current wording

Salaries and employee benefits expense increased during the three and six months ended June 30, 2026, compared to the same periods in 2025, due to increases in direct salary expense, retirement expense and health insurance expense.

Previous wording

For the three months ended March 31, 2026, direct salary expense increased $1.4 million, or 7.4%, when compared to the same period in 2025, primarily due to normal salary increases effective in the first quarter of 2026 and an increase in stock compensation expense.

Current wording

For the three and six months ended June 30, 2026, direct salary expense increased $652,000, or 3.4%, and $2.1 million, or 5.4%, respectively, when compared to the same periods in 2025, primarily due to normal salary increases effective in the first quarter of 2026 and an increase in stock compensation expense.

Previous wording

Retirement expense, included in salaries and employee benefits, increased $440,000, or 52.7%, for the three months ended March 31, 2026, when compared to the same period in 2025. This increase was primarily due to an increase in our split dollar expense related to the execution of a new split dollar agreement with an executive officer.

Current wording

Retirement expense, included in salaries and employee benefits, increased $21,000, or 2.3%, and $460,000, or 26.3%, for the three and six months ended June 30, 2026, respectively, when compared to the same periods in 2025. This increase during the six months ended June 30, 2026, was primarily due to an increase in our split dollar expense related to the execution of a new split dollar agreement with an executive officer.

Previous wording

Health and life insurance expense, included in salaries and employee benefits, increased $70,000, or 3.5%, for the three months ended March 31, 2026, when compared to the same period in 2025, primarily due to premiums for a new short-term disability policy. We have a self-insured health plan which is supplemented with a stop loss policy.

Current wording

Health and life insurance expense, included in salaries and employee benefits, increased $29,000, or 1.4%, and $99,000, or 2.4%, for the three and six months ended June 30, 2026, respectively, when compared to the same periods in 2025, primarily due to premiums for a new short-term disability policy. We have a self-insured health plan which is supplemented with a stop loss policy.

Previous wording

Communications expense decreased for the three months ended March 31, 2026, when compared to the same period in 2025, resulting from improved network management efficiency.

Current wording

Communications expense decreased for the three and six months ended June 30, 2026, when compared to the same periods in 2025, resulting from improved network management efficiency.