SOUTH PLAINS FINANCIAL, INC.

Previous wording

On April 1, 2026, SPFI acquired BOH Holdings, Inc., a Texas corporation (“BOH”), the bank holding company for Bank of Houston, in an all-stock transaction through the merger of BOH with and into SPFI, with SPFI surviving the merger (the “Merger”). Immediately after the Merger, Bank of Houston, a Texas state banking association and wholly-owned subsidiary of BOH, merged with and into City Bank, with City Bank surviving the merger. Pursuant to the terms of the Agreement and Plan of Reorganization, dated December 1, 2025 (the “Reorganization Agreement”), each share of BOH common stock held immediately prior to the effective time of the Merger was converted into the right to receive, without interest, 0.1925 shares of SPFI common stock, as adjusted pursuant to the Reorganization Agreement, plus cash, without interest, in lieu of any fractional shares (collectively, the “Per Share Merger Consideration”).

Current wording

On April 1, 2026, SPFI acquired BOH Holdings, Inc., a Texas corporation (“BOH”) in an all-stock transaction through the merger of BOH with and into SPFI, with SPFI surviving the merger (the “Merger”). Immediately after the Merger, Bank of Houston, a Texas state banking association and wholly-owned subsidiary of BOH, merged with and into City Bank, with City Bank surviving the merger. At March 31, 2026, BOH had approximately $685.0 million in assets, $631.9 million in total gross loans, and $595.6 million in deposits. The total aggregate consideration delivered to holders of BOH common stock was approximately 2.8 million shares of SPFI common stock.

Previous wording

We had net income of $14.5 million, or $0.85 per diluted common share, for the three months ended March 31, 2026, compared to net income of $12.3 million, or $0.72 per diluted common share, for the three months ended March 31, 2025. Return on average equity (annualized) was 11.81% and return on average assets (annualized) was 1.31% for the three months ended March 31, 2026, compared to 11.30% and 1.16%, respectively, for the three months ended March 31, 2025. The increase in net income of $2.3 million was primarily the result of an increase of $4.3 million in net interest income and $670 thousand in noninterest income, partially offset by an increase of $2.5 million in noninterest expense.

Current wording

We had net income of $19.0 million, or $0.96 per diluted common share, for the three months ended June 30, 2026, compared to net income of $14.6 million, or $0.86 per diluted common share for the three months ended June 30, 2025. Return on average equity (annualized) was 12.17% and return on average assets (annualized) was 1.44% for the three months ended June 30, 2026, compared to 13.05% and 1.34%, respectively, for the three months ended June 30, 2025. Details of the changes in the various components are further discussed below.

Previous wording

The following table presents, for the periods indicated, information about: (i) weighted average balances, the total dollar amount of interest income from interest-earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin. For purposes of this table, interest income, net interest margin and net interest spread are shown on a fully tax-equivalent basis.

Current wording

The following tables present, for the periods indicated, information about: (i) weighted average balances, the total dollar amount of interest income from interest-earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin. For purposes of this table, interest income, net interest margin and net interest spread are shown on a fully tax-equivalent basis.

Previous wording

Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates. The following table sets forth the effects of changing rates and volumes on our net interest income during the period shown. Information is provided with respect to (i) effects on interest income attributable to changes in volume (change in volume multiplied by prior rate) and (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume). Change applicable to both volume and rate have been allocated to volume.

Current wording

Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates. The following tables set forth the effects of changing rates and volumes on our net interest income during the period shown. Information is provided with respect to (i) effects on interest income attributable to changes in volume (change in volume multiplied by prior rate) and (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume). Change applicable to both volume and rate have been allocated to volume.

Previous wording

Net interest income for the three months ended March 31, 2026 was $42.9 million, compared to $38.5 million for the three months ended March 31, 2025, an increase of $4.3 million, or 11.2%. The increase in net interest income was comprised of an increase of $2.7 million, or 4.5%, in interest income and a decrease of $1.6 million, or 7.5%, in interest expense. The growth in interest income was predominately attributable to increases of $2.1 million in loan interest income and $1.0 million in interest on other interest-earning assets. The increase in loan interest income was mainly due to growth of $55.6 million in average loans outstanding and a 16 basis point increase in the yield on loans. The increase in interest income on other interest-earning assets was due to an increase of $170.0 million in the average balance of these assets, partially offset by a decline of 53 basis points in the related yield due to the decreases in the federal funds rate during the last four months of 2025.

Current wording

Net interest income for the three months ended June 30, 2026 was $50.3 million, compared to $42.5 million for the three months ended June 30, 2025, an increase of $7.8 million, or 18.5%, and was comprised of an increase of $10.9 million in interest income, partially offset by an increase of $3.0 million in interest expense. The growth in interest income was primarily attributable to an increase of $10.2 million in loan interest income, which was a result of growth of $683.0 million in average loans outstanding, partially offset by a decrease of 18 basis points in the yield on loans due to a decline in market interest rates. The $3.0 million increase in interest expense was primarily related to an increase of $709.2 million in average interest-bearing deposits, partially offset by a decrease of 17 basis points in the interest rate paid on these deposits over the same period in 2025. Additionally, average noninterest-bearing demand deposits increased $112.0 million for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The increase in loans and deposits was largely attributable to the BOH acquisition.

Previous wording

For the three months ended March 31, 2026, net interest margin and net interest spread were 4.04% and 3.18%, respectively, compared to 3.81% and 2.87%, respectively, for the same period in 2025, which reflects the changes in interest income and interest expense discussed above.

Current wording

For the three months ended June 30, 2026, net interest margin and net interest spread were 4.00% and 3.15%, respectively, compared to 4.07% and 3.11%, respectively, for the same period in 2025, which reflects the changes in interest income and interest expense discussed above.

Previous wording

The $1.6 million decrease in interest expense for the three months ended March 31, 2026 was primarily related to a 33 basis point decrease in the rate paid on interest-bearing liabilities over the same period in 2025 and a reduction of $592 thousand in interest expense as a result of the redemption of $50 million in subordinated debt securities on September 30, 2025, partially offset by growth of $159.9 million in interest-bearing deposits in the compared periods.

Current wording

Net interest income for the six months ended June 30, 2026 was $93.2 million, compared to $81.0 million for the six months ended June 30, 2025, an increase of $12.2 million, or 15.0%, and was comprised of an increase of $13.6 million in interest income, partially offset by an increase of $1.4 million in interest expense. The growth in interest income was attributable to increases of $12.3 million in loan interest income and $2.0 million in interest income on other interest-earning assets. The increase in loan interest income resulted from growth of $369.3 million in average loans outstanding as the yield on loans remained flat. The increase in interest income on other interest-earning assets was primarily due to an increase of $186.6 million in average other interest-bearing assets, partially offset by a decline of 59 basis points in the interest rate paid on those assets. The $1.4 million increase in interest expense was primarily related to an increase of $434.5 million in average interest-bearing deposits, partially offset by a 23 basis point decrease in the rate paid on these deposits over the same period in 2025. The increase in interest expense on deposits was partially offset by a reduction of $1.3 million in interest expense as a result of the redemption of $50 million in subordinated debt securities on September 30, 2025. The increase in loans and deposits was largely attributable to the BOH acquisition.

Previous wording

Noninterest income for the three months ended March 31, 2026 was $11.3 million, compared to $10.6 million for the three months ended March 31, 2025, an increase of $670 thousand, or 6.3%. Significant changes in the components of noninterest income are detailed below.

Current wording

Noninterest income for the three months ended June 30, 2026 was $14.1 million, compared to $12.2 million for the three months ended June 30, 2025, an increase of $2.0 million, or 16.3%. Significant changes in the components of noninterest income are detailed below.

Previous wording

Mortgage banking activities - Income from mortgage banking activities increased $1.8 million, or 85.4%, to $3.9 million for the three months ended March 31, 2026 from $2.1 million for the three months ended March 31, 2025. This increase was primarily due to a $250 thousand positive fair value adjustment to our mortgage servicing rights portfolio in the first quarter of 2026 compared to a negative fair value adjustment of $1.6 million in the first quarter of 2025. The fair value of the mortgage servicing rights portfolio is affected by movements in market interest rates, which increased during the first quarter of 2026 as compared to decreasing during the first quarter of 2025.

Current wording

Mortgage banking activities - Income from mortgage banking activities increased $1.2 million, or 34.4%, to $4.8 million for the three months ended June 30, 2026 from $3.6 million for the three months ended June 30, 2025. This increase was partially the result of a $515 thousand positive fair value adjustment to our mortgage servicing rights portfolio in the second quarter of 2026 compared to a negative fair value adjustment of $156 thousand in the second quarter of 2025. The fair value of the mortgage servicing rights portfolio is affected by movements in market interest rates, which increased during the second quarter of 2026 as compared to decreasing during the second quarter of 2025. Additionally, there was an increase in other mortgage income related to an increase in originations of loans held for sale in the second quarter of 2026 as compared to the same period of 2025.

Previous wording

Other income and fees - Other income and fees decreased $1.3 million, or 69.1%, for the three months ended March 31, 2026 as compared to the same period in 2025. The decrease was primarily the result of a loss of $801 thousand in a SBIC investment, due to negative performance of one of the companies in the fund, and a decrease of $125 thousand in gain on sales of fixed assets, all in the first quarter of 2026 as compared to the same period in 2025.

Current wording

Other income and fees - Other income and fees decreased $1.3 million, or 37.6%, for the six months ended June 30, 2026 as compared to the same period in 2025. The decrease was primarily the result of a decrease of $497 thousand in income from SBIC investments and a decrease of $224 thousand on gains on sales of fixed assets.

Previous wording

Noninterest expense for the three months ended March 31, 2026 was $35.5 million compared to $33.0 million for the three months ended March 31, 2025, an increase of $2.5 million, or 7.6%. Significant changes in the components of noninterest expense are detailed below. There was a total of $1.5 million in acquisition related expenses recorded in the first quarter of 2026.

Current wording

Noninterest expense for the three months ended June 30, 2026 was $39.9 million compared to $33.5 million for the three months ended June 30, 2025, an increase of $6.3 million, or 18.8%. Significant changes in the components of noninterest expense are detailed below. There was a total of $1.1 million of acquisition related expenses recorded in the three months ended June 30, 2026. This total was comprised of $708 thousand in personnel expenses and $343 thousand in data conversion expenses.

Previous wording

Salaries and employee benefits - Salaries and employee benefits increased $713 thousand, or 3.7%, from $19.4 million for the three months ended March 31, 2025 to $20.2 million for the three months ended March 31, 2026. This increase was primarily driven by annual salary adjustments, which became effective in January of 2026, and based on new lender hires during the last twelve months.

Current wording

Salaries and employee benefits - Salaries and employee benefits increased $3.8 million, or 19.3%, from $19.8 million for the three months ended June 30, 2025 to $23.5 million for the three months ended June 30, 2026. This increase was primarily driven by personnel expenses related to the BOH acquisition - both recurring core and one-time expenses, annual salary adjustments, and new lender hires during the last twelve months.

Previous wording

Professional services - Professional services increased $1.2 million, or 70.8% from $1.7 million for the three months ended March 31, 2025 to $3.0 million for the three months ended March 31, 2026. This increase was primarily driven by $1.2 million of acquisition related expenses in the first quarter of 2026.

Current wording

Professional services - Professional services increased $1.2 million, or 33.3% from $3.6 million for the three months ended June 30, 2025 to $4.8 million for the three months ended June 30, 2026. This increase was driven by the $1.2 million of acquisition related expenses in the first quarter of 2026.

Previous wording

Our total assets increased $165.9 million, or 3.7%, to $4.65 billion at March 31, 2026, compared to $4.48 billion at December 31, 2025. Our loans held for investment decreased $41.0 million, or 1.3%, to $3.10 billion at March 31, 2026, compared to $3.14 billion at December 31, 2025. Our securities portfolio increased $35.3 million, or 6.2%, to $602.9 million at March 31, 2026, compared to $567.5 million at December 31, 2025. Total deposits increased $153.5 million, or 4.0%, to $4.03 billion at March 31, 2026, compared to $3.87 billion at December 31, 2025.

Current wording

Our total assets increased $910.7 million, or 20.3%, to $5.39 billion at June 30, 2026, compared to $4.48 billion at December 31, 2025. Our loans held for investment increased $626.9 million, or 19.9%, to $3.77 billion at June 30, 2026, compared to $3.14 billion at December 31, 2025. Our securities portfolio decreased $12.1 million, or 2.1%, to $555.4 million at June 30, 2026, compared to $567.5 million at December 31, 2025. Total deposits increased $766.5 million, or 19.8%, to $4.64 billion at June 30, 2026, compared to $3.87 billion at December 31, 2025.

Previous wording

At March 31, 2026, there was $1.6 billion in adjustable rate loans, with $904.0 million of these loans that mature or reprice in the next twelve months. Of these loans that mature or reprice in the next twelve months, $632.2 million will reprice immediately upon changes in the underlying index rate, with the remaining $271.8 million being subject to rate ceilings, floors above the current index, or a future repricing date. The Wall Street Journal prime rate is the predominate index used by the Bank.

Current wording

At June 30, 2026, there was $1.94 billion in adjustable rate loans, with $1.23 billion of these loans that mature or reprice in the next twelve months. Of these loans that mature or reprice in the next twelve months, $695.8 million will reprice immediately upon changes in the underlying index rate, with the remaining $532.9 million being subject to rate ceilings, floors above the current index or a future repricing date. The Wall Street Journal prime rate is the predominate index used by the Bank.

Previous wording

The Bank is primarily involved in real estate, commercial, agricultural and consumer lending activities with customers throughout Texas and Eastern New Mexico. We have a collateral concentration, as 72.4% of our loans were secured by real property as of March 31, 2026, compared to 71.6% as of December 31, 2025. We believe that these loans are not concentrated in any one single property type and that they are geographically dispersed throughout the areas we serve. Although the Bank has diversified portfolios, its debtors’ ability to honor their contracts is substantially dependent upon the general economic conditions of the markets in which it operates, which consist primarily of agribusiness, wholesale/retail, oil and gas and related businesses, healthcare industries and institutions of higher education. Commercial real estate loans and residential construction loans represent 37.3% of loans held for investment as of March 31, 2026 and represented 37.0% as of December 31, 2025. Further, 96% of the total dollar amount of these loans are secured by collateral located in the state of Texas.

Current wording

The Bank is primarily involved in real estate, commercial, agricultural and consumer lending activities with customers throughout Texas and Eastern New Mexico. We have a collateral concentration, as 74.6% of our loans were secured by real property as of June 30, 2026, compared to 71.6% as of December 31, 2025. We believe that these loans are not concentrated in any one single property type and that they are geographically dispersed throughout the areas we serve. Although the Bank has diversified portfolios, its debtors’ ability to honor their contracts is substantially dependent upon the general economic conditions of the markets in which it operates, which consist primarily of agribusiness, wholesale/retail, oil and gas and related businesses, healthcare industries and institutions of higher education. Commercial real estate loans and residential construction loans represent 39.2% of loans held for investment as of June 30, 2026 and represented 37.0% of loans held for investment as of December 31, 2025. Further, 95% of the total dollar amount of these loans are secured by collateral located in the state of Texas.

Previous wording

Commercial specialized loans decreased $24.5 million, or 6.0%, to $384.9 million as of March 31, 2026 from $409.4 million as of December 31, 2025. This decrease was primarily due to net repayments of $24.4 million in seasonal agricultural-related loans.

Current wording

Commercial specialized loans increased $20.0 million, or 4.9%, to $429.4 million as of June 30, 2026 from $409.4 million as of December 31, 2025. The increase was primarily due to increases in loans to finance and investment companies as a result of the BOH acquisition, partially offset by net repayments of $14.0 million in seasonal agricultural-related loans.

Previous wording

Consumer and other loans decreased $3.5 million, or 0.4%, to $907.6 million as of March 31, 2026 from $911.1 million as of December 31, 2025. As of March 31, 2026, our consumer loan portfolio was comprised of $589.0 million in 1-4 family residential loans, $256.1 million in auto loans, and $62.6 million in other consumer loans.

Current wording

Consumer and other loans increased $127.8 million, or 14.0%, to $1.04 billion as of June 30, 2026, from $911.1 million as of December 31, 2025. The growth in these loans was primarily a result of an increase of $124.2 million in residential mortgage loans, mostly related to the BOH acquisition. As of June 30, 2026, our consumer loan portfolio was comprised of $714.0 million in 1-4 family residential loans, $263.8 million in auto loans, and $61.1 million in other consumer loans.

Previous wording

Construction loans increased $3.3 million, or 3.3%, to $103.4 million as of March 31, 2026 from $100.1 million as of December 31, 2025.

Current wording

Construction loans increased $43.1 million, or 43.1%, to $143.2 million as of June 30, 2026 from $100.1 million as of December 31, 2025. This increase was primarily due to the acquisition of BOH.

Previous wording

The commercial real estate and construction categories comprise the Company’s nonowner-occupied real estate loans. Total nonowner-occupied real estate loans were $1.16 billion at March 31, 2026 and $1.16 billion at December 31, 2025. Nonowner-occupied commercial real estate loans are made up of income-producing commercial real estate property loans and construction, acquisition, and development property loans. As of March 31, 2026, total income-producing commercial real estate property loans totaled $769.1 million and was comprised of $198.6 million of multi-family property loans, $181.8 million of retail property loans, $140.9 million of office property loans, $149.7 million in industrial and warehouse loans, $41.8 million in hospitality loans, and $56.3 million in other property loans. Other property loans include types such as mini-storage and convenience stores. As of March 31, 2026, total construction, acquisition, and development property loans totaled $387.3 million and was comprised of $103.4 million in residential construction property loans and $283.9 million of commercial construction and other land development loans. The weighted average loan-to-value of income-producing nonowner-occupied commercial real estate loans was approximately 58% at March 31, 2026. The weighted average loan-to-value of nonowner-occupied office commercial real estate loans was approximately 57% at March 31, 2026.

Current wording

The commercial real estate and construction categories comprise the Company’s nonowner-occupied real estate loans. Total nonowner-occupied real estate loans were $1.48 billion at June 30, 2026 and $1.16 billion at December 31, 2025. Nonowner-occupied commercial real estate loans are made up of income-producing commercial real estate property loans and construction, acquisition, and development property loans. As of June 30, 2026, total income-producing commercial real estate property loans totaled $993.6 million and was comprised of $229.8 million of multi-family property loans, $277.2 million of retail property loans, $182.9 million of office property loans, $160.4 in industrial and warehouse loans, $45.6 million in storage facilities loans, $41.5 million in hospitality loans, and $56.2 million in other property loans. Other property loans include types such as RV parks and convenience stores. As of June 30, 2026, total construction, acquisition, and development property loans totaled $482.2 million and was comprised of $143.8 million in residential construction property loans and $338.4 million of commercial construction and other land development loans. The weighted average loan-to-value of income-producing nonowner-occupied commercial real estate loans was approximately 57% at June 30, 2026. The weighted average loan-to-value of nonowner-occupied office commercial real estate loans was approximately 56% at June 30, 2026.

Previous wording

Owner occupied commercial real estate loans totaled $416.7 million at March 31, 2026 and $419.0 million at December 31, 2025.

Current wording

Owner-occupied commercial real estate loans totaled $538.9 million at June 30, 2026 and $419.0 million at December 31, 2025.

Previous wording

The ACL for loans was $44.8 million at March 31, 2026, compared to $45.1 million at December 31, 2025, a decrease of $309 thousand, or 0.7%. The decrease is the result of net charge-offs and no provision for credit losses on loans during the first quarter of 2026. The Company continues to closely monitor credit quality in light of the ongoing economic uncertainty caused by, among other factors, the uncertain impacts of tariffs, sanctions and other trade policies of the United States and its global trading counterparts, the prolonged elevated interest rate environment and the lingering inflationary pressures, and the risk of the resurgence of elevated levels of inflation, in the United States and our market areas. Accordingly, additional provisions for credit losses may be necessary in future periods.

Current wording

The ACL for loans was $53.1 million at June 30, 2026, compared to $45.1 million at December 31, 2025, an increase of $7.9 million, or 17.6%. The increase was largely driven by $8.5 million of ACL recorded for loans acquired in the BOH acquisition and a $350 thousand provision for ACL being recorded during the six months ended June 30, 2026, partially offset by net charge-offs of $878 thousand during the period. The Company continues to closely monitor credit quality in light of the ongoing economic uncertainty caused by, among other factors, the uncertain impacts of tariffs, sanctions and other trade policies of the United States and its global trading counterparts, the prolonged elevated interest rate environment and the lingering inflationary pressures, and the risk of the resurgence of elevated levels of inflation, in the United States and our market areas. Accordingly, additional provisions for credit losses may be necessary in future periods.

Previous wording

Net charge-offs totaled $309 thousand and were 0.04% (annualized) of average loans outstanding for the three months ended March 31, 2026, compared to $519 thousand and 0.07% (annualized) for the three months ended March 31, 2025. The decrease in net charge-offs in the first quarter of 2026 was primarily the result of a $283 thousand recovery on a 1-4 family residential loan in the first quarter of 2026. The ACL for loans as a percentage of loans held for investment was 1.44% at March 31, 2026 and 1.44% at December 31, 2025.

Current wording

Net charge-offs totaled $569 thousand and were 0.06% (annualized) of average loans outstanding for the three months ended June 30, 2026, which is comparable to $458 thousand and 0.06% (annualized) for the three months ended June 30, 2025. Net charge-offs totaled $878 thousand and were 0.05% (annualized) of average loans outstanding for the six months ended June 30, 2026, which is comparable to $977 thousand and 0.06% (annualized) for the six months ended June 30, 2025. The allowance for credit losses on loans as a percentage of loans held for investment was 1.41% at June 30, 2026 and 1.44% at December 31, 2025.

Previous wording

At March 31, 2026, our total nonaccrual loans were $3.7 million, or 0.12% of total loans held for investment, as compared to $7.1 million, or 0.22% of total loans held for investment, at December 31, 2025. These loans within this amount that exceeded $250 thousand were specifically analyzed and specific valuation allowances were established as necessary and included in the ACL for loans as of March 31, 2026 to cover any probable loss. The decrease of $3.4 million is primarily the result of a $3.9 million loan on nonaccrual status at December 31, 2025 being repaid in full during the first quarter of 2026. This decrease was partially offset by other loans being placed on nonaccrual status during the first quarter of 2026.

Current wording

At June 30, 2026, our total nonaccrual loans were $6.9 million, or 0.18% of total loans held for investment, which is comparable to $7.1 million, or 0.22% of total loans held for investment, at December 31, 2025. Any loans within this amount that exceeded $250 thousand were specifically analyzed and specific valuation allowances were established as necessary and included in the ACL for loans to cover any probable loss.

Previous wording

Total securities at March 31, 2026 were $602.9 million, representing an increase of $35.3 million, or 6.2%, compared to $567.5 million at December 31, 2025. The increase was primarily due to $37.0 million in purchases, net of maturities, prepayments and calls and a $1.1 million increase in the fair value of securities available for sale at March 31, 2026 as compared to December 31, 2025.

Current wording

Total securities at June 30, 2026 were $555.4 million, representing a decrease of $12.1 million, or 2.1%, compared to $567.5 million at December 31, 2025. The decrease was primarily due to $21.0 million in maturities, net of purchases, prepayments and calls, partially offset by $6.8 million in securities acquired from BOH, and a $3.2 million increase in the fair value of securities available for sale at June 30, 2026 as compared to December 31, 2025.

Previous wording

Certain securities have fair values less than amortized cost and, therefore, contain unrealized losses. At March 31, 2026, the fair value of the Company’s available for sale securities was $71.1 million lower than the amortized cost. At March 31, 2026, the Company evaluated whether the decline in fair value has resulted from credit losses or other factors. Within this evaluation, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by rating agency, and adverse conditions specifically related to the security, among other factors. Based on management’s evaluation no unrealized losses on securities were determined to be due to credit loss. Additionally, we anticipate full recovery of amortized cost with respect to these securities by maturity, or sooner in the event of a more favorable market interest rate environment. We do not intend to sell these securities and it is not probable that we will be required to sell them before recovery of the amortized cost basis, which may be at maturity, thus no ACL or losses have been recognized or realized in the consolidated financial statements for securities in the portfolio.

Current wording

Certain securities have fair values less than amortized cost and, therefore, contain unrealized losses. At June 30, 2026, the fair value of the Company’s securities available for sale was $66.9 million lower than the amortized cost. At June 30, 2026, the Company evaluated whether the decline in fair value has resulted from credit losses or other factors. Within this evaluation, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by rating agency, and adverse conditions specifically related to the security, among other factors. Based on management’s evaluation no unrealized losses on securities were determined to be due to credit loss. Additionally, we anticipate full recovery of amortized cost with respect to these securities by maturity, or sooner in the event of a more favorable market interest rate environment. We do not intend to sell these securities and it is not probable that we will be required to sell them before recovery of the amortized cost basis, which may be at maturity, thus no ACL or losses have been recognized or realized in the consolidated financial statements for securities in the portfolio.

Previous wording

The following table sets forth certain information regarding contractual maturities and the weighted average yields of our investment securities as of the date presented. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay an obligation with or without call or prepayment penalties.

Current wording

The following table sets forth certain information regarding contractual maturities and the weighted average yields of our investment securities as of the dates presented. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay an obligation with or without call or prepayment penalties.

Previous wording

Total deposits at March 31, 2026 were $4.03 billion, representing an increase of $153.5 million, or 4.0%, compared to $3.87 billion at December 31, 2025. The increase in deposits was mainly due to a seasonal increase in public fund deposits and organic growth occurring broadly across retail and commercial deposits, with growth in both noninterest-bearing and interest-bearing deposits. As of March 31, 2026, 25.6% of total deposits were comprised of noninterest-bearing demand accounts, 63.4% of interest-bearing non-maturity accounts and 11.0% of time deposits.

Current wording

Total deposits at June 30, 2026 were $4.64 billion, representing an increase of $766.5 million, or 19.8%, compared to $3.87 billion at December 31, 2025. The increase since December 31, 2025 was largely due to deposits acquired from BOH with additional organic growth and a seasonal increase in public fund deposits in both noninterest-bearing and interest-bearing deposits occurring broadly across retail and commercial deposits. As of June 30, 2026, 24.8% of total deposits were comprised of noninterest-bearing demand accounts, 62.2% of interest-bearing non-maturity accounts and 13.0% of time deposits.

Previous wording

The estimated amount of uninsured deposits as of March 31, 2026 was $1.5 billion. This represented approximately 37% of total deposits and excludes $400.7 million of collateralized public fund deposits.

Current wording

The estimated amount of uninsured deposits as of June 30, 2026 was $1.73 billion. This represented approximately 37% of total deposits and excludes $375.9 million of collateralized public fund deposits.

Previous wording

FHLB Advances. The FHLB allows us to borrow, both short and long-term, on a blanket floating lien status collateralized by first mortgage loans and commercial real estate loans as well as FHLB stock. At March 31, 2026 and December 31, 2025, we had total remaining borrowing capacity from the FHLB of $1.29 billion and $1.27 billion, respectively, with no outstanding balance. We had no FHLB borrowings during the three months ended March 31, 2026 or 2025.

Current wording

FHLB Advances. The FHLB allows us to borrow, both short and long-term, on a blanket floating lien status collateralized by first mortgage loans and commercial real estate loans as well as FHLB stock. At June 30, 2026 and December 31, 2025, we had total remaining borrowing capacity from the FHLB of $1.32 billion and $1.27 billion, respectively, with no outstanding balance. There were $15 million in FHLB advances assumed in the acquisition of BOH. These advances had a weighted-average interest rate of 3.89% and were repaid in May of 2026. We had no other FHLB borrowings during the three and six months ended June 30, 2026 or 2025.

Previous wording

Federal Reserve Bank of Dallas. The Bank has a line of credit with the Federal Reserve Bank of Dallas (the “FRB”). The amount of the line is determined on a monthly basis by the FRB. The line is collateralized by a blanket floating lien on all agriculture, commercial and consumer loans. The amount of the line was $701.8 million and $659.7 million at March 31, 2026 and December 31, 2025, respectively. There were no amounts outstanding on the FRB line of credit at March 31, 2026 and December 31, 2025. We had no long-term FRB borrowings during the three months ended March 31, 2026 or 2025.

Current wording

Federal Reserve Bank of Dallas. The Bank has a line of credit with the Federal Reserve Bank of Dallas (the “FRB”). The amount of the line is determined on a monthly basis by the FRB. The line is collateralized by a blanket floating lien on all agriculture, commercial and consumer loans. The amount of the line was $788.7 million and $659.7 million at June 30, 2026 and December 31, 2025, respectively, with no outstanding balance. We had no FRB borrowings during the three and six months ended June 30, 2026 or 2025.

Previous wording

Lines of Credit. The Bank has uncollateralized lines of credit with multiple banks as a source of funding for liquidity management. The total amount of the lines was $140.0 million as of March 31, 2026 and December 31, 2025. The lines were not used, other than testing during the three months ended March 31, 2026 or the three months ended March 31, 2025.

Current wording

Lines of Credit. The Bank has uncollateralized lines of credit with multiple banks as a source of funding for liquidity management. The total amount of the lines was $140.0 million as of June 30, 2026 and December 31, 2025, with no outstanding balance. The lines were not used, other than overnight testing, during the three and six months ended June 30, 2026 or 2025.

Previous wording

Subordinated Debt. In December 2018, the Company issued $14.1 million of subordinated notes that have a maturity date of December 2030 and an average fixed rate of 6.41% for the first seven years. After the fixed rate periods, these notes will float at the Wall Street Journal prime rate, with a floor of 4.0% and a ceiling of 7.5%. These notes pay interest quarterly, are unsecured, and may be called by the Company at any time after the remaining maturity is five years or less. Additionally, these notes are intended to qualify for Tier 2 capital treatment, subject to regulatory limitations. As of March 31, 2026, the total amount of subordinated debt outstanding was $14.1 million.

Current wording

Subordinated Debt. In December 2018, the Company issued $14.1 million of subordinated notes that have a maturity date of December 2030 and a weighted-average fixed rate of 6.41% for the first seven years. After the fixed rate period expired, these notes float at the Wall Street Journal prime rate, with a floor of 4.0% and a ceiling of 7.5%, resulting in a rate of 6.75% as of June 30, 2026. These notes pay interest quarterly, are unsecured, and may be called by the Company at any time after the remaining maturity is five years or less. Additionally, these notes are intended to qualify for Tier 2 capital treatment, subject to regulatory limitations. As of June 30, 2026, the total amount of subordinated debt outstanding was $14.1 million.

Previous wording

Junior Subordinated Deferrable Interest Debentures and Trust Preferred Securities. Between March 2004 and June 2007, the Company formed three wholly-owned statutory business trusts solely for the purpose of issuing trust preferred securities, the proceeds of which were invested in junior subordinated deferrable interest debentures. The trusts are not consolidated and the debentures issued by the Company to the trusts are reflected in the Company’s consolidated balance sheets. The Company records interest expense on the debentures in its consolidated financial statements. The amount of debentures outstanding was $46.4 million at March 31, 2026 and December 31, 2025. The Company has the right, as has been exercised in the past, to defer payments of interest on the securities for up to twenty consecutive quarters. During such time, corporate dividends may not be paid. The Company is current in its interest payments on the debentures.

Current wording

Junior Subordinated Deferrable Interest Debentures and Trust Preferred Securities. Between March 2004 and June 2007, the Company formed three wholly-owned statutory business trusts solely for the purpose of issuing trust preferred securities, the proceeds of which were invested in junior subordinated deferrable interest debentures. The trusts are not consolidated and the debentures issued by the Company to the trusts are reflected in the consolidated balance sheets. The Company records interest expense on the debentures in its consolidated financial statements. The amount of debentures outstanding was $46.4 million at June 30, 2026 and December 31, 2025. The Company has the right, as has been exercised in the past, to defer payments of interest on the securities for up to twenty consecutive quarters. During such time, corporate dividends may not be paid. The Company is current in its interest payments on the debentures.

Previous wording

Our liquidity position is supported by management of liquid assets and access to alternative sources of funds. Our liquid assets include cash, interest-bearing deposits in correspondent banks, federal funds sold, and fair value of unpledged investment securities. Other available sources of liquidity include wholesale deposits, and additional borrowings from correspondent banks, FHLB advances, and the FRB discount window. At March 31, 2026, the Bank had the capacity to borrow funds from the FHLB and the Federal Reserve discount window of up to approximately $1.29 billion and $701.8 million, respectively.

Current wording

Our liquidity position is supported by management of liquid assets and access to alternative sources of funds. Our liquid assets include cash, interest-bearing deposits in correspondent banks, federal funds sold, and fair value of unpledged investment securities. Other available sources of liquidity include wholesale deposits, and additional borrowings from correspondent banks, FHLB advances, and the Federal Reserve discount window. At June 30, 2026, the Bank had the capacity to borrow funds from the FHLB and the Federal Reserve discount window of up to approximately $1.3 billion and $788.7 million, respectively.

Previous wording

On September 17, 2019, the federal banking agencies jointly finalized a rule to be effective January 1, 2020 and intended to simplify the regulatory capital requirements described above for qualifying community banking organizations that opt into the Community Bank Leverage Ratio (“CBLR”) framework, as required by Section 201 of the EGRRCPA. The final rule became effective on January 1, 2020, and the CBLR framework became available for banks to use beginning with their March 31, 2020 Call Reports. Under the final rule, if a qualifying community banking organization opts into the CBLR framework and meets all requirements under the framework, it will be considered to have met the well-capitalized ratio requirements under the “prompt corrective action” regulations described above and will not be required to report or calculate risk-based capital. In order to qualify for the CBLR framework, a community banking organization must have a tier 1 leverage ratio of greater than 9%, less than $10 billion in total consolidated assets, and limited amounts of off-balance-sheet exposures and trading assets and liabilities. On November 25, 2025, the federal banking agencies jointly proposed changes to the CBLR framework intended to encourage broader adoption, including reducing the required leverage ratio from 9.0% to 8.0%; however, the proposed rule has not yet been finalized. Although the Company and the Bank are qualifying community banking organizations, the Company and the Bank have elected not to opt in to the CBLR framework at this time and will continue to follow the requirements of the Basel III capital framework as described above.

Current wording

On September 17, 2019, the federal banking agencies jointly finalized a rule to be effective January 1, 2020 and intended to simplify the regulatory capital requirements described above for qualifying community banking organizations that opt into the Community Bank Leverage Ratio (“CBLR”) framework, as required by Section 201 of the EGRRCPA. The final rule became effective on January 1, 2020, and the CBLR framework became available for banks to use beginning with their March 31, 2020 Call Reports. Under the final rule, if a qualifying community banking organization opts into the CBLR framework and meets all requirements under the framework, it will be considered to have met the well-capitalized ratio requirements under the “prompt corrective action” regulations described above and will not be required to report or calculate risk-based capital. In order to qualify for the CBLR framework, a community banking organization must have a tier 1 leverage ratio of greater than 9%, less than $10 billion in total consolidated assets, and limited amounts of off-balance-sheet exposures and trading assets and liabilities. On November 25, 2025, the federal banking agencies jointly proposed changes to the CBLR framework intended to encourage broader adoption, including reducing the required leverage ratio from 9.0% to 8.0%. Although the Company and the Bank are qualifying community banking organizations, the Company and the Bank have elected not to opt in to the CBLR framework at this time and will continue to follow the requirements of the Basel III capital framework as described above.

Previous wording

The Company did not repurchase any stock in accordance with its previously-announced stock repurchase programs during the three months ended March 31, 2026. See Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds,” of this Form 10-Q for further information.

Current wording

We repurchased stock in accordance with our previously-announced stock repurchase program and also in a privately negotiated transaction during the three and six months ended June 30, 2026. For the three and six months ended June 30, 2026, we repurchased 310,965 shares of common stock for a total of $12.8 million. For the three months ended June 30, 2025, we repurchased 9,046 shares of common stock for a total of $276 thousand. For the six months ended June 30, 2025, we repurchased 259,046 shares of common stock for a total of $8.5 million. These shares were retired immediately upon repurchase and not included in treasury stock. See Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds,” of this Form 10-Q for further information.

Previous wording

The Company’s asset and liability structure is substantially different from that of an industrial company in that virtually all assets and liabilities of the Company are monetary in nature. Management believes the impact of inflation on financial results depends upon the Company’s ability to react to changes in interest rates and by such reaction, reduce the inflationary impact on performance. Interest rates do not necessarily move in the same direction, or at the same magnitude, as the prices of other goods and services. However, other operating expenses do reflect general levels of inflation. Management seeks to manage the relationship between interest rate-sensitive assets and liabilities in order to protect against wide net interest income fluctuations, including those resulting from inflation.

Current wording

The Company’s asset and liability structure is substantially different from that of an industrial company in that virtually all assets and liabilities of the Company are monetary in nature. Management believes the impact of inflation on financial results depends upon the Company’s ability to react to changes in interest rates and by such reaction, reduce the inflationary impact on performance. Interest rates do not necessarily move in the same direction, or at the same magnitude, as the prices of other goods and services. However, other operating expenses do reflect general levels of inflation. Management seeks to manage the relationship between interest rate-sensitive assets and liabilities in order to protect against wide net interest income fluctuations, including those resulting from inflation. Various information shown elsewhere in this Report will assist in the understanding of how well the Company is positioned to react to changing interest rates and inflationary trends. In particular, additional information related to the Company’s interest rate-sensitive assets and liabilities is contained in this Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report under the heading “Interest Rate Sensitivity and Market Risk.”

Previous wording

The following is a discussion of the critical accounting policies and significant estimates that we believe require us to make the most complex or subjective decisions or assessments. Additional information about these policies can be found in Note 1 of the Company’s consolidated financial statements as of December 31, 2025.

Current wording

The following is a discussion of the critical accounting policies and significant estimates that we believe require us to make the most complex or subjective decisions or assessments. Additional information about these policies can be found in Note 1 of the consolidated financial statements as of December 31, 2025.