SOUTHSIDE BANCSHARES INC

Previous wording

•risks related to fluctuations in the price per barrel of crude oil, including as a result of recent conflict in the Middle East;

Current wording

•risks related to fluctuations in the price per barrel of crude oil, including as a result of ongoing conflict in the Middle East;

Previous wording

•risks related to U.S. agency MBS prepayments increasing due to U.S. government programs designed to assist homeowners to refinance their mortgage that might not otherwise have qualified;

Current wording

•risks related to U.S. agency MBS prepayments increasing due to U.S. government programs designed to assist homeowners to refinance their mortgages that might not otherwise have qualified;

Previous 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.

Current wording

Our deposits were $6.01 billion at September 30, 2026, a decrease of $851.4 million, or 12.4%, from December 31, 2025. At September 30, 2026, we had 178,615 total deposit accounts with an average balance of $33,000. Our estimated uninsured deposits were 41.8% of total deposits as of September 30, 2026. When excluding affiliate deposits (Southside-owned deposits) and public fund deposits (all collateralized), our total estimated deposits without insurance or collateral was 26.8% of total deposits as of September 30, 2026.

Previous 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.

Current wording

Our noninterest bearing deposits represent approximately 23.3% of total deposits. During the three months ended September 30, 2026, our cost of interest bearing deposits decreased 37 basis points to 2.45% from 2.82% for the three months ended September 30, 2025. Our cost of total deposits for the third quarter of 2026 decreased 36 basis points to 1.89% from 2.25% for the three months ended September 30, 2025.

Previous wording

Our cost of interest bearing deposits decreased 26 basis points, from 2.83% for the six months ended June 30, 2025 to 2.57% for the six months ended June 30, 2026. Our cost of total deposits decreased 22 basis points, from 2.26% for the six months ended June 30, 2025 to 2.04% for the six months ended June 30, 2026.

Current wording

Our cost of interest bearing deposits decreased 30 basis points, from 2.83% for the nine months ended September 30, 2025 to 2.53% for the nine months ended September 30, 2026. Our cost of total deposits decreased 27 basis points, from 2.26% for the nine months ended September 30, 2025 to 1.99% for the nine months ended September 30, 2026.

Previous 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%.

Current wording

Net income was $28.0 million for the three months ended September 30, 2026, compared to $4.9 million for the same period in 2025, an increase of $23.1 million, or 469.4%. The increase in net income was largely driven by a $25.7 million increase in noninterest income and, to a lesser extent, a $4.6 million increase in net interest income and a $345,000 decrease in provision for credit losses, partially offset by a $6.1 million increase in income tax expense and a $1.5 million increase in noninterest expense. There were no sales of AFS securities during the three months ended September 30, 2026, compared to a net loss on sale of AFS securities, included in noninterest income, of $24.4 million for the same period in 2025. Earnings per diluted common share were $0.93 for the three months ended September 30, 2026, compared to $0.16 for the same period in 2025, an increase of $0.77, or 481.3%.

Previous wording

During the six months ended June 30, 2026, our net income increased $6.8 million, or 15.6%, to $50.1 million from $43.3 million for the same period in 2025. The increase in net income was due to a $6.9 million increase in net interest income and a $4.2 million increase in noninterest income, partially offset by a $2.9 million increase in noninterest expense, a $1.3 million increase in income tax expense and a $113,000 increase in provision for credit losses. Earnings per diluted common share increased $0.26, or 18.3%, to $1.68 for the six months ended June 30, 2026, compared to $1.42 for the same period in 2025.

Current wording

During the nine months ended September 30, 2026, our net income increased $29.8 million, or 61.9%, to $78.1 million from $48.2 million for the same period in 2025. The increase in net income was due to a $30.0 million increase in noninterest income and, to a lesser extent, $11.5 million increase in net interest income and a $232,000 decrease in provision for credit losses, partially offset by a $7.4 million increase in income tax expense and a $4.4 million increase in noninterest expense. There were no sales of AFS securities during the nine months ended September 30, 2026, compared to a net loss on sale of AFS securities, included in noninterest income, of $24.9 million for the same period in 2025. Earnings per diluted common share increased $1.02, or 64.2%, to $2.61 for the nine months ended September 30, 2026, compared to $1.59 for the same period in 2025.

Previous 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.

Current wording

Our total assets increased $350.5 million, or 4.1%, to $8.87 billion at September 30, 2026 from $8.51 billion at December 31, 2025. Our securities portfolio increased by $127.3 million, or 4.7%, to $2.83 billion at September 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 nine months ended September 30, 2026. Our FHLB stock increased $29.6 million, or 210.5%, to $43.7 million from $14.1 million at December 31, 2025, due to the increase in our FHLB borrowings during the nine months ended September 30, 2026.

Previous 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.

Current wording

Loans at September 30, 2026 were $4.96 billion, an increase of $140.7 million, or 2.9%, compared to $4.82 billion at December 31, 2025, due to increases of $65.3 million in commercial loans, $41.1 million in commercial owner-occupied loans, $23.1 million in commercial real estate loans, $21.0 million in municipal loans and $543,000 in 1-4 family residential loans. These increases were partially offset by decreases of $5.6 million in construction loans and $4.8 million in loans to individuals. Loans held for sale decreased $363,000, or 27.3%, to $969,000 at September 30, 2026 from $1.3 million at December 31, 2025.

Previous 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.

Current wording

Our nonperforming assets at September 30, 2026 decreased $22.4 million, or 58.6%, to $15.8 million and represented 0.18% 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, partially offset by a $5.2 million increase in accruing loans past due more than 90 days. The decrease in restructured loans was due to the payoff of a $27.5 million restructured commercial real estate loan in the first quarter of 2026 that was originally restructured with an extension of maturity in the first quarter of 2025 to allow for an extended lease up period. There was one $5.2 million commercial real estate loan past due more than 90 days as of September 30, 2026 that subsequently paid off in full on October 1, 2026. Nonaccruing loans decreased $182,000, or 1.7%, to $10.3 million, and the ratio of nonaccruing loans to total loans was 0.21% and 0.22% for September 30, 2026 and December 31, 2025, respectively. There were no repossessed assets at September 30, 2026 or December 31, 2025. There was $331,000 of OREO at September 30, 2026 and $248,000 at December 31, 2025.

Previous wording

Our deposits decreased $695.8 million, or 10.1%, to $6.17 billion at June 30, 2026, from $6.87 billion at December 31, 2025, due to decreases in brokered deposits of $667.2 million, or 99.2%, and public fund deposits of $40.1 million, or 3.5%, partially offset by an increase in retail deposits of $11.5 million, or 0.2%. The marginal increase in retail deposits of $11.5 million consists of a $36.0 million increase in interest bearing deposits, partially offset by a $24.5 million decrease in noninterest bearing deposits.

Current wording

Our deposits decreased $851.4 million, or 12.4%, to $6.01 billion at September 30, 2026, from $6.87 billion at December 31, 2025, due to decreases in brokered deposits of $617.8 million, or 91.9%, and public fund deposits of $240.4 million, or 20.8%, partially offset by an increase in retail deposits of $6.8 million, or 0.1%. The marginal increase in retail deposits of $6.8 million consists of a $32.3 million increase in interest bearing deposits, partially offset by a $25.6 million decrease in noninterest bearing deposits.

Previous 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.

Current wording

Total FHLB borrowings increased $589.6 million, or 279.3%, to $800.8 million at September 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 $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.

Current wording

Other borrowings increased $685.9 million, or 328.7%, to $894.6 million at September 30, 2026, from $208.7 million at December 31, 2025, due to a $725.0 million increase in FRDW borrowings, partially offset by a $39.1 million decrease in repurchase agreements.

Previous wording

Our subordinated notes, net of unamortized debt issuance costs, decreased $92.1 million, or 38.4%, to $147.6 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.

Current wording

Our subordinated notes, net of unamortized debt issuance costs, decreased $92.0 million, or 38.4%, to $147.6 million at September 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 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.

Current wording

Our total shareholders’ equity at September 30, 2026 decreased 0.6%, or $4.7 million, to $842.9 million, or 9.5% of total assets, compared to $847.6 million, or 10.0% of total assets, at December 31, 2025. The decrease in shareholders’ equity was the result of other comprehensive loss of $54.2 million, cash dividends paid of $32.5 million and net issuance of common stock under employee stock plans of $407,000, partially offset by net income of $78.1 million, stock compensation expense of $3.6 million and common stock issued under our dividend reinvestment plan of $676,000.

Previous 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.

Current wording

We ended the third quarter of 2026 with approximately $12.9 million in available liquidity from the FRDW, in addition to the approximately $1.77 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 September 30, 2026, the estimated deposits, without insurance or collateral, to total deposits, excluding affiliate deposits (Southside-owned deposits) was 26.8%, or $1.61 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 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.

Current wording

From time to time, we may enter into certain interest rate swap contracts with third parties using specific variable rates, as well as short-term (generally three months or less) fixed rate borrowings designated as cash flow hedges under ASC Topic 815. At September 30, 2026, we had swap contracts covering $340 million in FRDW borrowings and $275 million in FHLB 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 September 30, 2026, these contracts reflected a weighted average rate of 3.88% with a remaining average weighted maturity of 1.0 year. During the nine months ended September 30, 2026, $245 million cash flow hedge interest rate swap contracts matured. As of September 30, 2026, a pre-tax unrealized gain of $6.5 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 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.

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 due to 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 $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.

Current wording

Our securities portfolio increased $127.3 million, or 4.7%, from $2.70 billion at December 31, 2025 to $2.83 billion at September 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 31.9% of total assets at September 30, 2026, compared to 31.8% at December 31, 2025. The increase in the U.S. Agency MBS was due to the purchase of $504.6 million of low premium and discounted MBS with coupons ranging from 4.50% to 6.00%. The increase in corporate bonds was due to the purchase of $25.5 million in 6.25% to 7.00% coupon corporate bonds. The net increase in the total securities portfolio was due to securities purchased during the nine months ended September 30, 2026, which more than offset maturities, principal payments and net amortization.

Previous wording

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

Current wording

Cash and cash equivalents increased to 4.9% of total assets at September 30, 2026, compared to 4.6% at December 31, 2025.

Previous 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.

Current wording

Our FHLB borrowings increased $589.6 million, or 279.3%, to $800.8 million at September 30, 2026, from $211.1 million at December 31, 2025. As of September 30, 2026 and December 31, 2025, we had $835.0 million and $110.0 million, respectively, in borrowings from the FRDW.

Previous 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.

Current wording

As of September 30, 2026, our total wholesale funding as a percentage of deposits, not including brokered deposits, increased to 28.4% 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 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.

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 $39.3 million brokered CDs at September 30, 2026, compared to $19.8 million at December 31, 2025. At September 30, 2026, our brokered CDs had a weighted average cost of 403 basis points and remaining maturities of less than three months. Our brokered non-maturity deposits decreased to $15.1 million at September 30, 2026, from $652.4 million at December 31, 2025, with a weighted average cost of 408 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 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.

Current wording

At September 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 58% of the funding source, of which approximately 36% 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 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.

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 September 30, 2026, $24.1 million in hedging instruments were used to hedge municipal securities with a carrying amount of $18.6 million included in our AFS securities portfolio in our consolidated balance sheets, representing approximately 11.8% of the AFS municipal portfolio. As of September 30, 2026,$267.0 million in hedging instruments were used to hedge 88.4% of our AFS MBS portfolio with a carrying value of $1.26 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 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.

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 third quarter of 2026, the Federal Reserve raised the target federal funds rate by 25 basis points to 3.75% to 4.00%.

Previous 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.

Current wording

Net interest income for the three months ended September 30, 2026 increased $4.6 million, or 8.2%, compared to the same period in 2025. The increase in net interest income was primarily due to an increase in 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 of our interest bearing liabilities and a change in the mix of our interest earning assets. Total interest income increased $5.0 million, or 4.9%, to $106.9 million for the three months ended September 30, 2026, compared to $101.9 million during the same period in 2025. Total interest expense increased $396,000, or 0.9%, to $46.6 million for the three months ended September 30, 2026, compared to $46.2 million for the same period in 2025. Our net interest margin and our net interest margin (FTE), a non-GAAP measure, both increased to 2.92% and 3.02%, respectively, for the three months ended September 30, 2026, compared to 2.81% and 2.94%, respectively, for the same period in 2025. Our net interest spread and net interest spread (FTE), also a non-GAAP measure, was 2.26% and 2.36%, respectively, for the three months ended September 30, 2026, compared to 2.14% and 2.26%, respectively, for the same period in 2025. See “Non-GAAP Financial Measures” for more information and a reconciliation to GAAP.

Previous wording

Net interest income was $115.0 million for the six months ended June 30, 2026, compared to $108.1 million for the same period in 2025, an increase of $6.9 million, or 6.4%. The increase in net interest income for the six months ended June 30, 2026 was 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 a decrease in the yield on our interest earning assets and an increase the average balance and mix of our interest bearing liabilities. Total interest income increased $7.3 million, or 3.7%, to $206.2 million for the six months ended June 30, 2026, compared to $198.9 million for the same period in 2025. Total interest expense increased $421,000, or 0.5%, to $91.2 million for the six months ended June 30, 2026, compared to $90.7 million for the same period in 2025. Our net interest margin and net interest margin (FTE), a non-GAAP measure, increased to 2.86% and 2.95%, respectively, for the six months ended June 30, 2026, compared to 2.78% and 2.91%, respectively, for the same period in 2025, and our net interest spread and net interest spread (FTE), also a non-GAAP measure, increased to 2.22% and 2.31%, respectively, compared to 2.11% and 2.23%, respectively, for the same period in 2025. See “Non-GAAP Financial Measures” for more information and for a reconciliation to GAAP.

Current wording

Net interest income was $175.3 million for the nine months ended September 30, 2026, compared to $163.8 million for the same period in 2025, an increase of $11.5 million, or 7.0%. The increase in net interest income for the nine months ended September 30, 2026 was 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 of our interest bearing liabilities and a decrease in the yield on our interest earning assets. Total interest income increased $12.3 million, or 4.1%, to $313.0 million for the nine months ended September 30, 2026, compared to $300.7 million for the same period in 2025. Total interest expense increased $817,000, or 0.6%, to $137.7 million for the nine months ended September 30, 2026, compared to $136.9 million for the same period in 2025. Our net interest margin and net interest margin (FTE), a non-GAAP measure, increased to 2.88% and 2.97%, respectively, for the nine months ended September 30, 2026, compared to 2.79% and 2.92%, respectively, for the same period in 2025, and our net interest spread and net interest spread (FTE), also a non-GAAP measure, increased to 2.24% and 2.33%, respectively, compared to 2.12% and 2.24%, respectively, for the same period in 2025. See “Non-GAAP Financial Measures” for more information and for a reconciliation to GAAP.

Previous 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.

Current wording

The increase in total interest income for the three months ended September 30, 2026, was attributable to a $349.4 million, or 4.4%, increase in the average balance of our interest earning assets when compared to the same period in 2025, partially offset by a change in the mix of our interest earning assets. The increase in total interest expense for the three months ended September 30, 2026, was primarily attributable to an increase in the average balance of our interest bearing liabilities of $269.6 million, or 4.4%, 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 September 30, 2026, from 3.01% for the same period in 2025.

Previous wording

(2)For the purpose of calculating the average yield, the average balance of securities do not include unrealized gains and losses on AFS securities.

Current wording

(2)For the purpose of calculating the average yield, the average balance of securities does not include unrealized gains and losses on AFS securities.

Previous 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.

Current wording

Note: As of September 30, 2026 and 2025, loans totaling $10.3 million and $8.0 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 increase in total interest income was attributable to a $288.1 million, or 3.7%, increase in the average balance of our interest earning assets when compared to the same period in 2025, partially offset by the decrease in the average yield on earning assets to 5.21% for the six months ended June 30, 2026 from 5.24% for the same period in 2025. The increase in total interest expense for the six months ended June 30, 2026 was attributable to an increase in the average balance of our interest bearing liabilities of $260.6 million, or 4.3%, when compared to the same period in 2025, partially offset by a decrease in rate paid on interest bearing liabilities to 2.90% for the six months ended June 30, 2026, from 3.01% for the same period in 2025.

Current wording

The increase in total interest income was attributable to a $308.7 million, or 3.9%, increase in the average balance of our interest earning assets when compared to the same period in 2025, partially offset by the decrease in the average yield on earning assets to 5.23% for the nine months ended September 30, 2026, from 5.25% for the same period in 2025. The increase in total interest expense for the nine months ended September 30, 2026 was attributable to an increase in the average balance of our interest bearing liabilities of $263.6 million, or 4.3%, when compared to the same period in 2025, partially offset by a decrease in rate paid on interest bearing liabilities to 2.90% for the nine months ended September 30, 2026, from 3.01% for the same period in 2025.

Previous wording

The following table presents average earning assets and interest bearing liabilities together with the average yield on the earning assets and the average rate of the interest bearing liabilities (dollars in thousands) for the six months ended June 30, 2026 and 2025. The interest and related yields presented are on a fully taxable-equivalent basis and are therefore non-GAAP measures. See “Non-GAAP Financial Measures” for more information and for a reconciliation to GAAP.

Current wording

The following table presents average earning assets and interest bearing liabilities, together with the average yield on the earning assets and the average rate of the interest bearing liabilities (dollars in thousands) for the nine months ended September 30, 2026 and 2025. The interest and related yields presented are on a fully taxable-equivalent basis and are therefore non-GAAP measures. See “Non-GAAP Financial Measures” for more information and for a reconciliation to GAAP.

Previous wording

(2)For the purpose of calculating the average yield, the average balance of securities do not include unrealized gains and losses on AFS securities.

Current wording

(2)For the purpose of calculating the average yield, the average balance of securities does not include unrealized gains and losses on AFS securities.

Previous 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.

Current wording

Note: As of September 30, 2026 and 2025, loans totaling $10.3 million and $8.0 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 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.

Current wording

The 214.5% increase in noninterest income for the three months ended September 30, 2026, when compared to the same period in 2025, was due to a decrease in net loss on sale of securities AFS and increases in trust fees, deposit services and brokerage services income. The 288.6% increase in noninterest income for the nine months ended September 30, 2026, when compared to the same period in 2025, was due to a decrease in net loss on sale of securities AFS and increases in trust fees, other noninterest income, deposit services income, BOLI and brokerage services income.

Previous 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.

Current wording

During the three and nine months ended September 30, 2025, we sold MBS and municipal securities that resulted in a net loss on sale of AFS securities of $24.4 million and $24.9 million, respectively.

Previous 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.

Current wording

Gain on sale of loans decreased for the three and nine months ended September 30, 2026, when compared to the same periods in 2025, due to a decrease in the volume of loans sold.

Previous 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.

Current wording

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

Previous 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.

Current wording

The increase in BOLI income for the nine months ended September 30, 2026, when compared to the same period in 2025, was due to death benefits of $590,000 realized in the first six months of 2026 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.