PROSPERITY BANCSHARES INC

Previous wording

the timing, impact and other uncertainties of any future acquisitions, including the pending acquisition of American, and the Company’s ability to identify suitable future acquisition candidates, the success or failure in the integration of their operations, and the ability to enter new markets successfully and capitalize on growth opportunities;

Current wording

the timing, impact and other uncertainties of any future acquisitions, including the pending acquisitions of American and Southwest, and the Company’s ability to identify suitable future acquisition candidates, the success or failure in the integration of their operations, and the ability to enter new markets successfully and capitalize on growth opportunities;

Previous wording

Prosperity Bancshares, Inc., a Texas corporation (“Bancshares”), is a registered financial holding company that derives substantially all of its revenues and income from the operation of its bank subsidiary, Prosperity Bank (the “Bank,” and together with Bancshares, the “Company”). The Bank provides a wide array of financial products and services to businesses and consumers throughout Texas and Oklahoma. As of June 30, 2025, the Bank operated 283 full-service banking locations: 65 in the Houston area, including The Woodlands; 30 in the South Texas area including Corpus Christi and Victoria; 61 in the Dallas/Fort Worth area; 22 in the East Texas area; 31 in the Central Texas area including Austin and San Antonio; 45 in the West Texas area including Lubbock, Midland-Odessa, Abilene, Amarillo and Wichita Falls; 15 in the Bryan/College Station area; 6 in the Central Oklahoma area; and 8 in the Tulsa, Oklahoma area. The Company’s principal executive office is located at Prosperity Bank Plaza, 4295 San Felipe in Houston, Texas, and its telephone number is (281) 269-7199. The Company’s website address is www.prosperitybankusa.com. Information contained on the Company’s website is not incorporated by reference into this quarterly report on Form 10-Q and is not part of this or any other report.

Current wording

Prosperity Bancshares, Inc., a Texas corporation (“Bancshares”), is a registered financial holding company that derives substantially all of its revenues and income from the operation of its bank subsidiary, Prosperity Bank (the “Bank,” and together with Bancshares, the “Company”). The Bank provides a wide array of financial products and services to businesses and consumers throughout Texas and Oklahoma. As of September 30, 2025, the Bank operated 283 full-service banking locations: 62 in the Houston area, including The Woodlands; 33 in the South Texas area including Corpus Christi and Victoria; 61 in the Dallas/Fort Worth area; 22 in the East Texas area; 31 in the Central Texas area including Austin and San Antonio; 45 in the West Texas area including Lubbock, Midland-Odessa, Abilene, Amarillo and Wichita Falls; 15 in the Bryan/College Station area; 6 in the Central Oklahoma area; and 8 in the Tulsa, Oklahoma area. The Company’s principal executive office is located at Prosperity Bank Plaza, 4295 San Felipe in Houston, Texas, and its telephone number is (281) 269-7199. The Company’s website address is www.prosperitybankusa.com. Information contained on the Company’s website is not incorporated by reference into this quarterly report on Form 10-Q and is not part of this or any other report.

Previous wording

Total assets were $38.42 billion at June 30, 2025 compared with $39.57 billion at December 31, 2024. Total loans were $22.20 billion at June 30, 2025 compared with $22.15 billion at December 31, 2024, an increase of $48.2 million or 0.2%. Total deposits were $27.47 billion at June 30, 2025 compared with $28.38 billion at December 31, 2024, a decrease of $907.9 million or 3.2%. Total shareholders’ equity was $7.60 billion at June 30, 2025 compared with $7.44 billion at December 31, 2024, an increase of $161.2 million or 2.2%.

Current wording

Total assets were $38.33 billion at September 30, 2025, compared with $39.57 billion at December 31, 2024, a decrease of $1.24 billion or 3.1%. Total loans were $22.03 billion at September 30, 2025, compared with $22.15 billion at December 31, 2024, a decrease of $121.4 million or 0.5%. Total deposits were $27.78 billion at September 30, 2025, compared with $28.38 billion at December 31, 2024, a decrease of $599.2 million or 2.1%. Total shareholders’ equity was $7.66 billion at September 30, 2025, compared with $7.44 billion at December 31, 2024, an increase of $226.4 million or 3.0%.

Previous wording

Merger of Lone Star State Bancshares, Inc.— Effective April 1, 2024, the Company completed the merger of Lone Star State Bancshares, Inc. (“Lone Star”) into Bancshares and the subsequent merger of its wholly owned subsidiary, Lone Star State Bank of West Texas (“Lone Star Bank”), into the Bank (collectively, the “Lone Star Merger”). Lone Star operated five full-service banking offices in the West Texas area, including its main office in Lubbock, and one banking center in each of Brownfield, Midland, Odessa and Big Spring, Texas. As of March 31, 2024, Lone Star, on a consolidated basis, reported total assets of $1.38 billion, total loans of $1.08 billion and total deposits of $1.24 billion.

Current wording

Acquisition of Lone Star State Bancshares, Inc. — Effective April 1, 2024, the Company completed the merger of Lone Star State Bancshares, Inc. (“Lone Star”) into Bancshares and the subsequent merger of its wholly owned subsidiary, Lone Star State Bank of West Texas (“Lone Star Bank”), into the Bank (collectively, the “Lone Star Merger”). Lone Star operated five full-service banking offices in the West Texas area, including its main office in Lubbock, and one banking center in each of Brownfield, Midland, Odessa and Big Spring, Texas. As of March 31, 2024, Lone Star, on a consolidated basis, reported total assets of $1.38 billion, total loans of $1.08 billion and total deposits of $1.24 billion.

Previous wording

Pursuant to the terms of the definitive agreement, Bancshares issued 2,376,182 shares of its common stock plus approximately $64.1 million in cash for all outstanding shares of Lone Star. This resulted in goodwill of $106.7 million as of June 30, 2025, which reflected all final subsequent fair value adjustments. Goodwill represents the excess of the total purchase price paid over the fair value of the assets acquired, net of the fair value of liabilities assumed. Additionally, the Company recognized $17.7 million of core deposit intangibles as of June 30, 2025. In October 2024, the Company completed the operational conversion of Lone Star Bank.

Current wording

Pursuant to the terms of the definitive agreement, Bancshares issued 2,376,182 shares of its common stock plus approximately $64.1 million in cash for all outstanding shares of Lone Star. This resulted in goodwill of $106.7 million as of September 30, 2025, which reflected all final subsequent fair value adjustments. Goodwill represents the excess of the total purchase price paid over the fair value of the assets acquired, net of the fair value of liabilities assumed. Additionally, the Company recognized $17.7 million of core deposit intangibles related to the Lone Star Merger. In October 2024, the Company completed the operational conversion of Lone Star Bank.

Previous wording

Agreement to Acquire American Bank Holding Corporation — On July 18, 2025, Bancshares and American Bank Holding Corporation (“American”) jointly announced the signing of a definitive merger agreement (the “Merger Agreement”) whereby American, a Texas Corporation and bank holding company of American Bank, N.A. (“American Bank”), will merge with and into Bancshares and American Bank will merge with and into the Bank. American Bank operates 18 banking offices and 2 loan production offices in South and Central Texas including its main office in Corpus Christi, and banking offices in San Antonio, Austin, Victoria and the greater Corpus Christi area including Port Aransas and Rockport and a loan production office in Houston, Texas. As of March 31, 2025, American, on a consolidated basis, reported total assets of $2.52 billion, total loans of $1.75 billion and total deposits of $2.27 billion.

Current wording

Agreement to Acquire American Bank Holding Corporation — On July 18, 2025, Bancshares and American Bank Holding Corporation (“American”) jointly announced the signing of a definitive merger agreement (the “American Merger Agreement”) whereby American, a Texas Corporation and bank holding company of American Bank, N.A. (“American Bank”), will merge with and into Bancshares and American Bank will merge with and into the Bank (collectively, the “American Merger”). American Bank operates eighteen banking offices and two loan production offices in South and Central Texas including its main office in Corpus Christi, and banking offices in San Antonio, Austin, Victoria and the greater Corpus Christi area including Port Aransas and Rockport and a loan production office in Houston, Texas. As of June 30, 2025, American, on a consolidated basis, reported total assets of $2.55 billion, total loans of $1.80 billion and total deposits of $2.29 billion.

Previous wording

Under the terms of the Merger Agreement, Bancshares will issue 4,439,981 shares of its common stock for all outstanding shares of American common stock, subject to certain potential adjustments. Based on Bancshares’ closing price of $72.40 on July 16, 2025, the total consideration was valued at approximately $321.5 million. The transaction is subject to customary closing conditions, including the receipt of regulatory approvals and approval of the shareholders of American. The transaction is expected to close during the fourth quarter of 2025 or the first quarter of 2026.

Current wording

Pursuant to the terms of the American Merger Agreement, Bancshares will issue 4,439,981 shares of its common stock for all outstanding shares of American common stock, subject to certain potential adjustments. Based on Bancshares’ closing price of $72.40 on July 16, 2025, the total consideration was valued at approximately $321.5 million. Bancshares has received all necessary regulatory approvals for the acquisition of American, and the shareholders of American approved the transaction on November 3, 2025. The transaction is expected to be completed on January 1, 2026, subject to the satisfaction or waiver of the remaining customary closing conditions set forth in the Prosperity/American Merger Agreement.

Previous wording

The Company evaluates all restructurings, including restructurings for borrowers experiencing financial difficulty, to determine whether they result in a new loan or a continuation of an existing loan. In accordance with CECL, the Company only establishes a specific reserve for modifications of loans made to borrowers experiencing financial difficulty when the loan is identified as impaired. The effect of most modifications of loans made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance. The Company adjusts the terms of loans for certain borrowers when it believes such changes will help its customers manage their loan obligations and increase the collectability of the loans. Modifications of loans made to borrowers experiencing financial difficulty may include but are not limited to changes in committed loan amount, interest rate, amortization, note maturity, borrower, guarantor, collateral, forbearance, forgiveness of principal or interest, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. The approval of modifications of loans for borrowers experiencing financial difficulty are handled on a case-by-case basis. For further discussion of the methodology used in the determination of the allowance for credit losses on loans, see “Accounting for Acquired

Current wording

The Company evaluates all restructurings, including restructurings for borrowers experiencing financial difficulty, to determine whether they result in a new loan or a continuation of an existing loan. In accordance with CECL, the Company only establishes a specific reserve for modifications of loans made to borrowers experiencing financial difficulty when the loan is identified as impaired. The effect of most modifications of loans made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance. The Company adjusts the terms of loans for certain borrowers when it believes such changes will help its customers manage their loan obligations and increase the collectability of the loans. Modifications of loans made to borrowers experiencing financial difficulty may include but are not limited to changes in committed loan amount, interest rate, amortization, note maturity, borrower, guarantor, collateral, forbearance, forgiveness of principal or interest, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. The approval of modifications of loans for borrowers experiencing financial difficulty are handled on a case-by-case basis. For further discussion of the methodology used in the determination of the allowance for credit losses on loans, see “Accounting for Acquired Loans and the Allowance for Acquired Credit Losses” below and “Financial Condition—Allowance for Credit Losses on Loans” below.

Previous wording

For the quarter ended June 30, 2025, net income available to common shareholders was $135.2 million compared with $111.6 million for the same period in 2024, an increase of $23.6 million or 21.1%. Net income per diluted common share was $1.42 for the quarter ended June 30, 2025 compared with $1.17 for the same period in 2024, an increase of 21.4%. The changes were primarily due to an increase in net interest income, a decrease in merger related provision and expenses and lower regulatory assessments and FDIC insurance, partially offset by a decrease in net gain on sale or write-up of securities. The Company posted annualized returns on average common equity of 7.13% and 6.10%, annualized returns on average assets of 1.41% and 1.12% and efficiency ratios of 44.80% and 51.82% for the quarters ended June 30, 2025 and 2024, respectively. The efficiency ratio is calculated by dividing total noninterest expense (excluding net gains and losses on the sale, write down or write up of assets and securities) by the sum of net interest income and noninterest income. Because the ratio is a measure of revenues and expenses resulting from the Company’s lending activities and fee-based banking services, net gains and losses on the sale, write-up or write-down of assets and securities are not included. Additionally, taxes are not part of this calculation.

Current wording

For the quarter ended September 30, 2025, net income available to common shareholders was $137.6 million compared with $127.3 million for the same period in 2024, an increase of $10.3 million or 8.1%. Net income per diluted common share was $1.45 for the quarter ended September 30, 2025, compared with $1.34 for the same period in 2024, an increase of 8.2%. The changes were primarily due to an increase in net interest income, partially offset by an increase in provision for income taxes. The Company posted annualized returns on average common equity of 7.18% and 6.93%, annualized returns on average assets of 1.44% and 1.28% and efficiency ratios of 44.06% and 46.87% for the quarters ended September 30, 2025, and 2024, respectively. The efficiency ratio is calculated by dividing total noninterest expense (excluding net gains and losses on the sale, write down or write up of assets and securities) by the sum of net interest income and noninterest income. Because the ratio is a measure of revenues and expenses resulting from the Company’s lending activities and fee-based banking services, net gains and losses on the sale, write-up or write-down of assets and securities are not included. Additionally, taxes are not part of this calculation.

Previous wording

For the six months ended June 30, 2025, net income available to common shareholders was $265.4 million compared with $222.0 million for the six months ended June 30, 2024, an increase of $43.4 million or 19.5%. Net income per diluted common share was $2.79 for the six months ended June 30, 2025 compared with $2.34 for the six months ended June 30, 2024, an increase of 19.2%. The changes were primarily due to an increase in net interest income, lower merger related provision and expenses, and lower regulatory assessments and FDIC insurance, partially offset by a decrease on net gain on sale or write-up of securities. The Company posted annualized returns on average common equity of 7.03% and 6.15%, annualized returns on average assets of 1.37% and 1.13% and efficiency ratios of 45.26% and 50.49% for the six months ended June 30, 2025 and 2024, respectively.

Current wording

For the nine months ended September 30, 2025, net income available to common shareholders was $402.9 million compared with $349.3 million for the nine months ended September 30, 2024, an increase of $53.6 million or 15.4%. Net income per diluted common share was $4.23 for the nine months ended September 30, 2025, compared with $3.68 for the nine months ended September 30, 2024, an increase of 14.9%. The changes were primarily due to an increase in net interest income, lower merger related provision and expenses, and lower regulatory assessments and FDIC insurance, partially offset by a decrease on net gain on sale or write-up of securities. The Company posted annualized returns on average common equity of 7.08% and 6.40%, annualized returns on average assets of 1.40% and 1.16% and efficiency ratios of 44.85% and 49.25% for the nine months ended September 30, 2025, and 2024, respectively.

Previous wording

Net interest income before the provision for credit losses was $267.7 million for the quarter ended June 30, 2025, an increase of $8.9 million or 3.5% compared with $258.8 million for the same period in 2024. The change was primarily due to a decrease in the average balances and average rates on other borrowings and a decrease in the average rates on interest-bearing deposits, partially offset by a decrease in the average rates on loans, a decrease in the average balances on investment securities and a decrease in the average balances and average rates on federal funds sold and other earning assets.

Current wording

Net interest income before the provision for credit losses was $273.4 million for the quarter ended September 30, 2025, an increase of $11.7 million or 4.5% compared with $261.7 million for the same period in 2024. The change was primarily due to a decrease in the average balances and average rates on other borrowings and a decrease in the average rates on interest-bearing deposits, partially offset by a decrease in the average balances and average rates on federal funds sold and other earning assets, a decrease in the average balances and average rates on loans and a decrease in loan discount accretion of $2.0 million.

Previous wording

Interest income on securities was $57.8 million for the quarter ended June 30, 2025, a decrease of $4.6 million or 7.4% compared with $62.4 million for the same period in 2024, primarily due to a decrease in the average balances on investment securities.

Current wording

Interest income on securities was $58.2 million for the quarter ended September 30, 2025, a decrease of $1.4 million or 2.4% compared with $59.6 million for the same period in 2024, primarily due to a decrease in the average balances on investment securities, partially offset by an increase in average rates on investment securities.

Previous wording

Average interest-bearing liabilities were $21.03 billion for the quarter ended June 30, 2025, a decrease of $1.45 billion or 6.5% compared with $22.48 billion for the same period in 2024, primarily due to decreases in other borrowings and interest-earning deposits. The average rate on interest-bearing liabilities was 2.38% for the quarter ended June 30, 2025, a decrease of 38 basis points compared with 2.76% for the same period in 2024.

Current wording

Average interest-bearing liabilities were $20.72 billion for the quarter ended September 30, 2025, a decrease of $1.67 billion or 7.4% compared with $22.39 billion for the same period in 2024, primarily due to a decrease in the average balances on other borrowings. The average rate on interest-bearing liabilities was 2.39% for the quarter ended September 30, 2025, a decrease of 39 basis points compared with 2.78% for the same period in 2024.

Previous wording

The net interest margin on a tax-equivalent basis was 3.18% for the quarter ended June 30, 2025, an increase of 24 basis points compared with 2.94% for the same period in 2024. The change was primarily due to a decrease in the average balances and average rates on other borrowings and a decrease in the average rates on interest-bearing deposits, partially offset by a decrease in the average rates on loans and a decrease in the average balances on investment securities.

Current wording

The net interest margin on a tax-equivalent basis was 3.24% for the quarter ended September 30, 2025, an increase of 29 basis points compared with 2.95% for the same period in 2024. The change was primarily due to a decrease in the average balances and average rates on other borrowings and a decrease in the average rates on interest-bearing deposits, partially offset by a decrease in the average balances and average rates on federal funds sold and other earning assets, a decrease in the average balances and average rates on loans and a decrease in loan discount accretion of $2.0 million.

Previous wording

Net interest income before the provision for credit losses was $533.1 million for the six months ended June 30, 2025, an increase of $36.1 million or 7.3% compared with $497.0 million for the same period in 2024. The change was primarily due to a decrease in the average balances and average rates on other borrowings, a decrease in the average rates on interest-bearing deposits and an increase in the average balances on loans, partially offset by a decrease in the average balances on investment securities.

Current wording

Net interest income before the provision for credit losses was $806.5 million for the nine months ended September 30, 2025, an increase of $47.8 million or 6.3% compared with $758.7 million for the same period in 2024. The change was primarily due to a decrease in the average balances and average rates on other borrowings, a decrease in the average rates on interest-bearing deposits, partially offset by a decrease in the average balances on investment securities, a decrease in the average balances and average rates on federal funds sold and other earning assets, a decrease in loan discount accretion of $4.6 million and a decrease in the average balances on loans.

Previous wording

Interest income on securities was $115.7 million for the six months ended June 30, 2025, a decrease of $13.1 million or 10.2% compared with $128.8 million for the same period in 2024, primarily due to a decrease in the average balances on investment securities.

Current wording

Interest income on securities was $173.9 million for the nine months ended September 30, 2025, a decrease of $14.5 million or 7.7% compared with $188.5 million for the same period in 2024, primarily due to a decrease in the average balances on investment securities.

Previous wording

Average interest-bearing liabilities were $21.34 billion for the six months ended June 30, 2025, a decrease of $948.8 million or 4.3% compared with $22.29 billion for the same period in 2024, primarily due to a decrease in other borrowings partially offset by an increase in interest-bearing deposits. The average rate on interest-bearing liabilities was 2.39% for the six months ended June 30, 2025, a decrease of 30 basis points compared with 2.69% for the same period in 2024.

Current wording

Average interest-bearing liabilities were $21.13 billion for the nine months ended September 30, 2025, a decrease of $1.46 billion or 6.5% compared with $22.59 billion for the same period in 2024, primarily due to a decrease in the average balances on other borrowings. The average rate on interest-bearing liabilities was 2.39% for the nine months ended September 30, 2025, a decrease of 29 basis points compared with 2.68% for the same period in 2024.

Previous wording

The net interest margin on a tax-equivalent basis was 3.16% for the six months ended June 30, 2025, an increase of 29 basis points compared with 2.87% for the six months ended June 30, 2024. The change was primarily due to a decrease in the average balances and average rates on other borrowings, a decrease in the average rates on interest-bearing deposits, partially offset by a decrease in the average balances on investment securities.

Current wording

The net interest margin on a tax-equivalent basis was 3.19% for the nine months ended September 30, 2025, an increase of 33 basis points compared with 2.86% for the nine months ended September 30, 2024. The change was primarily due to a decrease in the average balances and average rates on other borrowings, a decrease in the average rates on interest-bearing deposits, partially offset by a decrease in the average balances on investment securities, a decrease in the average balances and average rates on federal funds sold and other earning assets, a decrease in loan discount accretion of $4.6 million and a decrease in the average balances on loans.

Previous wording

There was no provision for credit losses for the three and six months ended June 30, 2025 compared to $9.1 million provision for credit losses for the three and six months ended June 30, 2024. As a result of the loans acquired in the Lone Star Merger, the second quarter of 2024 included a $7.9 million provision for credit losses on loans and a $1.2 million provision for credit losses on off-balance sheet credit exposures.

Current wording

There was no provision for credit losses for the three and nine months ended September 30, 2025, compared with no provision for credit losses for the three months ended September 30, 2024 and a $9.1 million provision for credit losses for the nine months ended September 30, 2024. As a result of the loans acquired in the Lone Star Merger, the nine months ended September 30, 2024, included a $7.9 million provision for credit losses on loans and a $1.2 million provision for credit losses on off-balance sheet credit exposures.

Previous wording

Net charge-offs were $3.0 million for the quarter ended June 30, 2025 compared with net charge-offs of $4.4 million for the quarter ended June 30, 2024. For the three months ended June 30, 2025, $2.1 million of reserves on resolved PCD loans without any related charge-offs was released to the general reserve.

Current wording

Net charge-offs were $6.5 million for the quarter ended September 30, 2025, compared with net charge-offs of $5.5 million for the quarter ended September 30, 2024. For the three months ended September 30, 2025, $4.5 million of reserves on resolved PCD loans without any related charge-offs was released to the general reserve.

Previous wording

Net charge-offs were $5.7 million for the six months ended June 30, 2025 compared with $6.5 million for the six months ended June 30, 2024. For the six months ended June 30, 2025, $10.4 million of reserves on resolved PCD loans was released to the general reserve.

Current wording

Net charge-offs were $12.2 million for the nine months ended September 30, 2025, compared with $12.0 million for the nine months ended September 30, 2024. For the nine months ended September 30, 2025, $15.0 million of reserves on resolved PCD loans was released to the general reserve.

Previous wording

Noninterest expense totaled $138.6 million for the three months ended June 30, 2025 compared with $152.8 million for the same period in 2024, a decrease of $14.3 million or 9.3%, primarily due to decreases in regulatory assessments and FDIC insurance and decreases in merger related expenses, salaries and benefits and other noninterest expense, which were higher in the second quarter of 2024 due to the Lone Star Merger. Noninterest expense totaled $278.9 million for the six months ended June 30, 2025 compared with $288.7 million for the six months ended June 30, 2024, a decrease of $9.8 million or 3.4%, primarily due to decreases in regulatory assessment and FDIC insurance, merger related expenses and other noninterest expense.

Current wording

Noninterest expense totaled $138.6 million for the three months ended September 30, 2025, compared with $140.3 million for the same period in 2024, a decrease of $1.7 million or 1.2%, primarily due to a decrease in other noninterest expense. Noninterest expense totaled $417.5 million for the nine months ended September 30, 2025, compared with $429.0 million for the nine months ended September 30, 2024, a decrease of $11.5 million or 2.7%, primarily due to decreases in regulatory assessment and FDIC insurance, merger related expenses and other noninterest expense.

Previous wording

Includes stock-based compensation expense of $3.0 million and $3.1 million for the three months ended June 30, 2025 and 2024, respectively, and $6.1 million and $6.5 million for the six months ended June 30, 2025 and 2024, respectively.

Current wording

Includes stock-based compensation expense of $3.0 million and $3.1 million for the three months ended September 30, 2025, and 2024, respectively, and $9.0 million and $9.6 million for the nine months ended September 30, 2025, and 2024, respectively.

Previous wording

Net other real estate income is comprised of rental expense, rental income and gains and losses on sales of real estate.

Current wording

Net other real estate income consists of rental expense, rental income and gains and losses on sales of real estate.

Previous wording

The amount of federal and state income tax expense is influenced by the amount of pre-tax income, the amount of tax-exempt income and the amount of nondeductible expenses. Income tax expense totaled $37.0 million for the three months ended June 30, 2025 compared with $31.3 million for the same period in 2024, an increase of $5.7 million or 18.2%. Income tax expense totaled $73.1 million for the six months ended June 30, 2025 compared with $62.1 million for the same period in 2024, an increase of $11.0 million or 17.7%. The Company’s effective tax rate for the three months ended June 30, 2025 and 2024 was 21.5% and 21.9%, respectively. The Company’s effective tax rate for the six months ended June 30, 2025 and 2024 was 21.6% and 21.9%, respectively.

Current wording

The amount of federal and state income tax expense is influenced by the amount of pre-tax income, the amount of tax-exempt income and the amount of nondeductible expenses. Income tax expense totaled $38.5 million for the three months ended September 30, 2025, compared with $35.2 million for the same period in 2024, an increase of $3.3 million or 9.4%. Income tax expense totaled $111.6 million for the nine months ended September 30, 2025, compared with $97.3 million for the same period in 2024, an increase of $14.3 million or 14.7%. The Company’s effective tax rate for the three months ended September 30, 2025, and 2024 was 21.9% and 21.6%, respectively. The Company’s effective tax rate for the nine months ended September 30, 2025, and 2024 was 21.7% and 21.8%, respectively.

Previous wording

Enactment of the One Big Beautiful Bill Act — On July 4, 2025, the One Big Beautiful Bill Act (the “OBBB Act”), which included certain modifications to U.S. tax law, was enacted into law. The Company is currently evaluating the provisions of the OBBB Act but does not expect it to have a material impact on the Company’s Consolidated Financial Statements.

Current wording

Enactment of the One Big Beautiful Bill Act — On July 4, 2025, the One Big Beautiful Bill Act (the “OBBB Act”), which included certain modifications to U.S. tax law, was enacted into law. The OBBB Act did not have a material impact on the Company's income tax provision for the three and nine months ended September 30, 2025, and the Company is currently evaluating the potential impact of the OBBB Act on future periods.

Previous wording

At June 30, 2025, total loans were $22.20 billion, an increase of $48.2 million or 0.2% compared with $22.15 billion at December 31, 2024. Loans at June 30, 2025 included $6.0 million of loans held for sale and $1.29 billion of Warehouse Purchase Program loans compared with $10.7 million of loans held for sale and $1.08 billion of Warehouse Purchase Program loans at December 31, 2024. At June 30, 2025, loans represented 57.8% of total assets compared with 56.0% of total assets at December 31, 2024.

Current wording

At September 30, 2025, total loans were $22.03 billion, a decrease of $121.4 million or 0.5% compared with $22.15 billion at December 31, 2024. Loans at September 30, 2025, included $11.3 million of loans held for sale and $1.28 billion of Warehouse Purchase Program loans compared with $10.7 million of loans held for sale and $1.08 billion of Warehouse Purchase Program loans at December 31, 2024. At September 30, 2025, loans represented 57.5% of total assets compared with 56.0% of total assets at December 31, 2024.

Previous wording

Nonperforming assets increased $28.9 million to $110.5 million at June 30, 2025 compared with $81.5 million at December 31, 2024.

Current wording

Nonperforming assets increased $38.0 million to $119.6 million at September 30, 2025, compared with $81.5 million at December 31, 2024, with a significant portion of the balance for each period attributable to acquired loans.

Previous wording

Nonperforming assets were 0.50% of total loans and other real estate at June 30, 2025 and 0.37% of total loans and other real estate at December 31, 2024. The allowance for credit losses on loans as a percentage of total nonperforming loans was 337.3% at June 30, 2025 and 463.9% at December 31, 2024.

Current wording

Nonperforming assets were 0.54% of total loans and other real estate at September 30, 2025, and 0.37% of total loans and other real estate at December 31, 2024. The allowance for credit losses on loans as a percentage of total nonperforming loans was 321.0% at September 30, 2025, and 463.9% at December 31, 2024.

Previous wording

PCD loans are monitored individually or on a pooled basis quarterly to assess for changes in expected cash flows subsequent to acquisition. If a deterioration in cash flows is identified, an increase to the PCD reserves for that individual loan or pool of loans may be required. PCD loans were recorded at their acquisition date fair values, which were based on expected cash flows and considers estimates of expected future credit losses. The Company’s estimates of loan fair values at the acquisition date may be adjusted for a period of up to one year as the Company continues to evaluate its estimate of expected future cash flows at the acquisition date. If the Company determines that losses arose after the acquisition date, the additional losses will be reflected as a provision for credit losses.

Current wording

PCD loans are monitored individually or on a pooled basis quarterly to assess for changes in expected cash flows subsequent to acquisition. If a deterioration in cash flows is identified, an increase to the PCD reserves for that individual loan or pool of loans may be required. PCD loans were recorded at their acquisition date fair values, which were based on expected cash flows and considered estimates of expected future credit losses. The Company’s estimates of loan fair values at the acquisition date may be adjusted for a period of up to one year as the Company continues to evaluate its estimate of expected future cash flows at the acquisition date. If the Company determines that losses arose after the acquisition date, the additional losses will be reflected as a provision for credit losses.

Previous wording

The Company had gross charge-offs on originated loans of $7.4 million during the six months ended June 30, 2025. Partially offsetting these charge-offs were recoveries on originated loans of $1.3 million. Gross charge-offs on acquired loans were $795 thousand during the six months ended June 30, 2025. Offsetting these charge-offs were recoveries on acquired loans of $1.1 million. Total charge-offs for the six months ended June 30, 2025 were $8.2 million, partially offset by total recoveries of $2.4 million.

Current wording

The Company had gross charge-offs on originated loans of $12.7 million during the nine months ended September 30, 2025. Partially offsetting these charge-offs were recoveries on originated loans of $1.8 million. Gross charge-offs on acquired loans were $3.0 million during the nine months ended September 30, 2025. Offsetting these charge-offs were recoveries on acquired loans of $1.7 million. Total charge-offs for the nine months ended September 30, 2025, were $15.7 million, partially offset by total recoveries of $3.5 million.

Previous wording

The allowance for credit losses on loans totaled $346.1 million at June 30, 2025 compared with $351.8 million at December 31, 2024, a decrease of $5.7 million or 1.6%. The allowance for credit losses on loans totaled 1.56% of total loans at June 30, 2025 and 1.59% of total loans at December 31, 2024.

Current wording

The allowance for credit losses on loans totaled $339.6 million at September 30, 2025, compared with $351.8 million at December 31, 2024, a decrease of $12.2 million or 3.5%. The allowance for credit losses on loans totaled 1.54% of total loans at September 30, 2025, and 1.59% of total loans at December 31, 2024.

Previous wording

At June 30, 2025, $234.9 million of the allowance for credit losses on loans was attributable to originated loans, an increase of $7.7 million or 3.4% compared with $227.2 million of the allowance at December 31, 2024. At June 30, 2025, $31.9 million of the allowance for credit losses on loans was attributable to re-underwritten acquired loans compared with $32.3 million of the allowance at December 31, 2024, a decrease of $341 thousand or 1.1%. At June 30, 2025, $22.3 million of the allowance for credit losses on loans was attributable to Non-PCD loans compared with $25.0 million of the allowance at December 31, 2024, a decrease of $2.6 million or 10.5%. At June 30, 2025, $56.9 million of the allowance for credit losses on loans was attributable to PCD loans compared with $67.4 million of the allowance at December 31, 2024, a decrease of $10.5 million or 15.5%.

Current wording

At September 30, 2025, $233.2 million of the allowance for credit losses on loans was attributable to originated loans, an increase of $5.9 million or 2.6% compared with $227.2 million of the allowance at December 31, 2024. At September 30, 2025, $36.0 million of the allowance for credit losses on loans was attributable to re-underwritten acquired loans compared with $32.3 million of the allowance at December 31, 2024, an increase of $3.7 million or 11.6%. At September 30, 2025, $18.1 million of the allowance for credit losses on loans was attributable to Non-PCD loans compared with $25.0 million of the allowance at December 31, 2024, a decrease of $6.8 million or 27.3%. At September 30, 2025, $52.3 million of the allowance for credit losses on loans was attributable to PCD loans compared with $67.4 million of the allowance at December 31, 2024, a decrease of $15.0 million or 22.3%.

Previous wording

At June 30, 2025, the Company had $28.8 million of total outstanding accretable discounts on Non-PCD loans and PCD loans. The Company believes that the allowance for credit losses on loans at June 30, 2025 is adequate to cover expected losses that may be realized from the loan portfolio as of such date. Nevertheless, the Company could sustain losses in future periods which could be substantial in relation to the size of the allowance at June 30, 2025.

Current wording

At September 30, 2025, the Company had $25.9 million of total outstanding accretable discounts on Non-PCD loans and PCD loans. The Company believes that the allowance for credit losses on loans at September 30, 2025, is adequate to cover expected losses that may be realized from the loan portfolio as of such date. Nevertheless, the Company could sustain losses in future periods, which losses could be substantial in relation to the size of the allowance at September 30, 2025.

Previous wording

The carrying cost of securities totaled $10.61 billion at June 30, 2025 compared with $11.09 billion at December 31, 2024, a decrease of $486.3 million or 4.4%. At June 30, 2025, securities represented 27.6% of total assets compared with 28.0% of total assets at December 31, 2024.

Current wording

The carrying cost of securities totaled $10.23 billion at September 30, 2025, compared with $11.09 billion at December 31, 2024, a decrease of $862.0 million or 7.8%. At September 30, 2025, securities represented 26.7% of total assets compared with 28.0% of total assets at December 31, 2024.

Previous wording

Held to maturity securities. The Company’s held to maturity investments include mortgage-related bonds issued by either the Government National Mortgage Corporation (“Ginnie Mae”), Fannie Mae or Federal Home Loan Mortgage Corporation (“Freddie Mac”). Ginnie Mae-issued securities are explicitly guaranteed by the U.S. government, while Fannie Mae- and Freddie Mac-issued securities are fully guaranteed by those respective United States government-sponsored agencies, and conditionally guaranteed by the full faith and credit of the United States. The Company’s held to maturity securities also include taxable and tax-exempt municipal securities issued primarily by school districts, utility districts and municipalities located in Texas. The Company’s investment in municipal securities is exposed to credit risk. The securities are highly rated by major rating agencies and regularly reviewed by management. A significant portion are guaranteed or insured by either the Texas Permanent School Fund, Assured Guaranty or Build America Mutual. As of June 30, 2025 the Company’s municipal securities represent 0.8% of the securities portfolio. Management has the ability and intent to hold the securities classified as held to maturity until they mature, at which time the Company will receive full value for the securities. Accordingly, as of June 30, 2025, management believes that there is no potential for material credit losses on held to maturity securities.

Current wording

Held to maturity securities. The Company’s held to maturity investments include mortgage-related bonds issued by either the Government National Mortgage Corporation (“Ginnie Mae”), Fannie Mae or Federal Home Loan Mortgage Corporation (“Freddie Mac”). Ginnie Mae-issued securities are explicitly guaranteed by the U.S. government, while Fannie Mae- and Freddie Mac-issued securities are fully guaranteed by those respective United States government-sponsored agencies, and conditionally guaranteed by the full faith and credit of the United States. The Company’s held to maturity securities also include taxable and tax-exempt municipal securities issued primarily by school districts, utility districts and municipalities located in Texas. The Company’s investment in municipal securities is exposed to credit risk. The securities are highly rated by major rating agencies and regularly reviewed by management. A significant portion are guaranteed or insured by either the Texas Permanent School Fund, Assured Guaranty or Build America Mutual. As of September 30, 2025, the Company’s municipal securities represent 0.7% of the securities portfolio. Management has the ability and intent to hold the securities classified as held to maturity until they mature, at which time the Company will receive full value for the securities. Accordingly, as of September 30, 2025, management believes that there is no potential for material credit losses on held to maturity securities.

Previous wording

Total deposits were $27.47 billion at June 30, 2025 compared with $28.38 billion at December 31, 2024, a decrease of $907.9 million or 3.2%. Total noninterest-bearing deposits were $9.43 billion at June 30, 2025 compared with $9.80 billion at December 31, 2024, a decrease of $371.8 million or 3.8%. Interest-bearing deposits were $18.05 billion at June 30, 2025 compared with $18.58 billion at December 31, 2024, a decrease of $536.1 million or 2.9%.

Current wording

Total deposits were $27.78 billion at September 30, 2025, compared with $28.38 billion at December 31, 2024, a decrease of $599.2 million or 2.1%. Total noninterest-bearing deposits were $9.52 billion at September 30, 2025, compared with $9.80 billion at December 31, 2024, a decrease of $276.4 million or 2.8%. Interest-bearing deposits were $18.26 billion at September 30, 2025, compared with $18.58 billion at December 31, 2024, a decrease of $322.8 million or 1.7%.

Previous wording

Average deposits for the six months ended June 30, 2025 were $27.89 billion, an increase of $262.1 million or 0.9% compared with $27.63 billion for the six months ended June 30, 2024. The ratio of average interest-bearing deposits to total average deposits was 65.9% and 65.2% during the first six months of 2025 and 2024, respectively.

Current wording

Average deposits for the nine months ended September 30, 2025, were $27.76 billion, a decrease of $361.1 million or 1.3% compared with $28.13 billion for the nine months ended September 30, 2024. The ratio of average interest-bearing deposits to total average deposits was 65.8% and 65.3% during the first nine months of 2025 and 2024, respectively.

Previous wording

FHLB advances and long-term notes payable— The Company has an available line of credit with the Federal Home Loan Bank of Dallas (“FHLB”), which allows the Company to borrow on a collateralized basis. The Company’s FHLB advances are typically considered short-term borrowings and are used to manage liquidity as needed. Maturing advances are replaced by drawing on available cash, making additional borrowings or through increased customer deposits. At June 30, 2025, the Company had total borrowing capacity of $7.60 billion under this line. FHLB advances of $2.90 billion were outstanding at June 30, 2025, with a weighted average interest rate of 4.41%. At June 30, 2025, the Company had no FHLB long-term notes payable balance outstanding.

Current wording

FHLB advances and long-term notes payable— The Company has an available line of credit with the Federal Home Loan Bank of Dallas (“FHLB”), which allows the Company to borrow on a collateralized basis. The Company’s FHLB advances are typically considered short-term borrowings and are used to manage liquidity as needed. Maturing advances are replaced by drawing on available cash, making additional borrowings or through increased customer deposits. At September 30, 2025, the Company had total borrowing capacity of $7.57 billion under this line. FHLB advances of $2.40 billion were outstanding at September 30, 2025, with a weighted average interest rate of 4.22%. At September 30, 2025, the Company had no FHLB long-term notes payable balance outstanding.

Previous wording

Securities sold under repurchase agreements— At June 30, 2025, the Company had $183.6 million in securities sold under repurchase agreements with banking customers compared with $221.9 million at December 31, 2024, a decrease of $38.3 million or 17.3%. Repurchase agreements are generally settled on the following business day; however, approximately $375 thousand of the repurchase agreements outstanding at June 30, 2025 have a maturity term of 24 months. All securities sold under repurchase agreements are collateralized by certain pledged securities.

Current wording

Securities sold under repurchase agreements— At September 30, 2025, the Company had $185.8 million in securities sold under repurchase agreements with banking customers compared with $221.9 million at December 31, 2024, a decrease of $36.1 million or 16.3%. Repurchase agreements are generally settled on the following business day. All securities sold under repurchase agreements are collateralized by certain pledged securities.