PROSPERITY BANCSHARES INC

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, 2026, the Bank operated 311 full-service banking locations: 62 in the Houston area, including The Woodlands; 36 in the South Texas area including Corpus Christi and Victoria; 61 in the Dallas/Fort Worth area; 21 in the East Texas area; 28 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; 8 in the Tulsa, Oklahoma area; 18 in the Central, South Texas and San Antonio areas doing business as American Bank and 11 in the San Antonio area doing business as Texas Partners Bank. 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, 2026, the Bank operated 352 full-service banking locations: 62 in the Houston area, including The Woodlands; 40 in the South Texas area including Corpus Christi and Victoria; 60 in the Dallas/Fort Worth area; 20 in the East Texas area; 26 in the Central Texas area including Austin; 7 in the San Antonio area; 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; 8 in the Tulsa, Oklahoma area; 11 in the Central Texas area and San Antonio area doing business as Texas Partners Bank; and 52 in the Houston and Dallas areas doing business as Stellar Bank. 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 $43.87 billion at June 30, 2026, compared with $38.46 billion at December 31, 2025, an increase of $5.41 billion or 14.1%. Total loans were $25.03 billion at June 30, 2026, compared with $21.81 billion at December 31, 2025, an increase of $3.22 billion or 14.8%. Total deposits were $32.60 billion at June 30, 2026, compared with $28.48 billion at December 31, 2025, an increase of $4.12 billion or 14.5%. Total shareholders’ equity was $8.31 billion at June 30, 2026, compared with $7.62 billion at December 31, 2025, an increase of $689.1 million or 9.0%.

Current wording

Total assets were $54.10 billion at September 30, 2026 compared with $38.46 billion at December 31, 2025, an increase of $15.64 billion or 40.7%. Total loans were $32.06 billion at September 30, 2026 compared with $21.81 billion at December 31, 2025, an increase of $10.26 billion or 47.0%. Total deposits were $41.23 billion at September 30, 2026 compared with $28.48 billion at December 31, 2025, an increase of $12.75 billion or 44.8%. Total shareholders’ equity was $9.76 billion at September 30, 2026 compared with $7.62 billion at December 31, 2025, an increase of $2.14 billion or 28.1%.

Previous wording

Pursuant to the terms of the definitive agreement, Bancshares issued 4,439,938 shares of its common stock for all outstanding shares of American common stock. This resulted in goodwill of $185.9 million as of June 30, 2026, which does not include all the subsequent fair value adjustments that have not yet been finalized. 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 $31.1 million of core deposit intangibles as of June 30, 2026.

Current wording

Pursuant to the terms of the definitive agreement, Bancshares issued 4,439,938 shares of its common stock for all outstanding shares of American common stock. This resulted in goodwill of $185.7 million as of September 30, 2026 which does not include all the subsequent fair value adjustments that have not yet been finalized. 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 $31.1 million of core deposit intangibles as of September 30, 2026. During the third quarter of 2026, the Company completed the operational integration of American Bank.

Previous wording

Pursuant to the terms of the definitive agreement, Bancshares issued 4,094,974 shares of its common stock for all outstanding shares of Southwest common stock. This resulted in goodwill of $134.9 million as of June 30, 2026, which does not include all the subsequent fair value adjustments that have not yet been finalized. Additionally, the Company recognized $33.8 million of core deposit intangibles as of June 30, 2026.

Current wording

Pursuant to the terms of the definitive agreement, Bancshares issued 4,094,974 shares of its common stock for all outstanding shares of Southwest common stock. This resulted in goodwill of $141.5 million as of September 30, 2026, which does not include all the subsequent fair value adjustments that have not yet been finalized. Additionally, the Company recognized $33.8 million of core deposit intangibles as of September 30, 2026.

Previous wording

Acquisition of Stellar Bancorp, Inc.— On July 1, 2026, the Company completed the merger of Stellar Bancorp, Inc. (“Stellar”) into Bancshares and the subsequent merger of Stellar’s wholly owned subsidiary Stellar Bank (“Stellar Bank”) into the Bank (collectively, the “Stellar Merger”). Stellar Bank operated 52 banking offices including its main office in Houston and banking offices in the Houston, Beaumont and East Texas areas and in Dallas, Texas.

Current wording

Acquisition of Stellar Bancorp, Inc.— On July 1, 2026, the Company completed the merger of Stellar Bancorp, Inc. (“Stellar”) into Bancshares and the subsequent merger of Stellar’s wholly owned subsidiary Stellar Bank (“Stellar Bank”) into the Bank (collectively, the “Stellar Merger”, and together with the American Merger and the Southwest Merger, the “Mergers”). Stellar Bank operated 52 banking offices including its main office in Houston and banking offices in the Houston, Beaumont and East Texas areas and in Dallas, Texas. As of June 30, 2026, Stellar, on a consolidated basis, reported total assets of $10.413 billion, total loans of $7.510 billion and total deposits of $8.716 billion.

Previous wording

Pursuant to the terms of the definitive agreement, Bancshares issued 19,371,499 shares of its common stock and paid approximately $578.66 million in cash for all outstanding shares of Stellar common stock.

Current wording

Pursuant to the terms of the definitive agreement, Bancshares issued 19,371,499 shares of its common stock and paid approximately $578.70 million in cash for all outstanding shares of Stellar common stock. This resulted in goodwill of $898.2 million as of September 30, 2026 which does not include all the subsequent fair value adjustments that have not yet been finalized. Additionally, the Company recognized $184.0 million of core deposit intangibles as of September 30, 2026.

Previous wording

The Company’s allowance for credit losses consists of two elements: (1) specific valuation allowances based on expected losses on impaired loans and certain purchased credit deteriorated loans (“PCD”) loans; and (2) a general valuation allowance based on historical lifetime loan loss experience, current economic conditions, two-year reasonable and supportable forecasted economic conditions and other qualitative risk factors both internal and external to the Company. Based on an evaluation of the portfolio, management presents a quarterly review of the allowance for credit losses to the Bank’s Board of Directors, indicating any change in the allowance since the last review and any recommendations as to adjustments in the allowance. In making its evaluation, management considers factors such as historical lifetime loan loss experience, the amount of nonperforming assets and related collateral, the volume, growth and composition of the portfolio, current economic conditions and reasonable and supportable forecasted economic conditions that may affect borrower ability to pay and the value of collateral, the evaluation of the portfolio through its internal loan review process and other relevant factors. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, should be charged off. Charge-offs occur when loans are deemed to be uncollectible. Based on this evaluation, management has established an allowance for credit losses that it believes is management’s best estimate of current expected credit losses in the Company’s loan portfolio.

Current wording

The Company’s allowance for credit losses consists of two elements: (1) specific valuation allowances based on expected losses on impaired loans and certain purchased credit deteriorated (“PCD”) loans; and (2) a general valuation allowance based on historical lifetime loan loss experience, current economic conditions, two-year reasonable and supportable forecasted economic conditions and other qualitative risk factors both internal and external to the Company. Based on an evaluation of the portfolio, management presents a quarterly review of the allowance for credit losses to the Bank’s Board of Directors, indicating any change in the allowance since the last review and any recommendations as to adjustments in the allowance. In making its evaluation, management considers factors such as historical lifetime loan loss experience, the amount of nonperforming assets and related collateral, the volume, growth and composition of the portfolio, current economic conditions and reasonable and supportable forecasted economic conditions that may affect borrower ability to pay and the value of collateral, the evaluation of the portfolio through its internal loan review process and other relevant factors. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, should be charged off. Charge-offs occur when loans are deemed to be uncollectible. Based on this evaluation, management has established an allowance for credit losses that it believes is management’s best estimate of current expected credit losses in the Company’s loan portfolio.

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 Loans and the Allowance for Acquired Credit Losses” below and “Financial Condition—Allowance for Credit Losses on Loans” below.

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 is 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, 2026, net income available to common shareholders was $168.6 million or $1.67 per diluted common share compared with $135.2 million or $1.42 for the same period in 2025. Net income and net income per diluted common share for the second quarter of 2026 was primarily impacted by an increase in net interest income and a gain on Visa Class B-2 stock exchange net of investment securities sales of $8.2 million, partially offset by an increase in noninterest expenses related to the American and Southwest operations and an increase in provision for income taxes. The Company posted annualized returns on average common equity of 8.14% and 7.13%, annualized returns on average assets of 1.55% and 1.41% and efficiency ratios of 45.99% and 44.80% for the quarters ended June 30, 2026, and 2025, 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, 2026, net income available to common shareholders was $141.5 million or $1.18 per diluted common share compared with $137.6 million or $1.45 for the same period in 2025. Net income and net income per diluted common share for the third quarter of 2026 were primarily impacted by an increase in net interest income due to the Mergers, partially offset by an increase in merger related expenses, an increase in noninterest expenses related to the Mergers and an increase in provision for income taxes due to an increase in nondeductible merger related expenses and an out of state tax settlement. The $5.0 million tax settlement resulted in a higher than normal effective tax rate of 24.4%. The Company posted annualized returns on average common equity of 5.77% and 7.18%, annualized returns on average assets of 1.06% and 1.44% and efficiency ratios of 62.05% and 44.06% for the quarters ended September 30, 2026 and 2025, 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, 2026, net income available to common shareholders was $284.9 million or $2.84 per diluted common share compared with $265.4 million or $2.79 for the six months ended June 30, 2025. Net income and net income per diluted common share for the six months ended June 30, 2026, were impacted by the American Merger and the Southwest Merger, merger related expenses of $43.3 million and a gain on Visa Class B-2 stock exchange net of investment securities sales of $8.2 million. The Company posted annualized returns on average common equity of 6.93% and 7.03%, annualized returns on average assets of 1.33% and 1.37% and efficiency ratios of 52.44% and 45.26% for the six months ended June 30, 2026, and 2025, respectively.

Current wording

For the nine months ended September 30, 2026, net income available to common shareholders was $426.3 million or $3.99 per diluted common share compared with $402.9 million or $4.23 for the nine months ended September 30, 2025. Net income and net income per diluted common share for the nine months ended September 30, 2026 were impacted by the Mergers, merger related expenses of $113.0 million, a gain on the Visa Class B-2 stock exchange net of investment securities sales of $9.2 million and an increase in provision for income taxes due to an increase in nondeductible merger related expenses and an out of state tax settlement. The Company posted annualized returns on average common equity of 6.49% and 7.08%, annualized returns on average assets of 1.22% and 1.40% and efficiency ratios of 56.27% and 44.85% for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

Net interest income before the provision for credit losses was $330.6 million for the quarter ended June 30, 2026, an increase of $62.8 million or 23.5% compared with $267.7 million for the same period in 2025. The net interest margin on a tax-equivalent basis was 3.47% for the quarter ended June 30, 2026, an increase of 29 basis points compared with 3.18% for the same period in 2025. The changes to both measures were primarily due to the repricing of assets, a decrease in the average balance and average rate on other borrowings and the impact of the American Merger and the Southwest Merger.

Current wording

Net interest income before the provision for credit losses was $443.0 million for the quarter ended September 30, 2026 an increase of $169.5 million or 62.0% compared with $273.4 million for the same period in 2025. The net interest margin on a tax-equivalent basis was 3.73% for the quarter ended September 30, 2026 an increase of 49 basis points compared with 3.24% for the same period in 2025. The changes to both measures were primarily due to the impact of the Mergers, the repricing of assets, and a decrease in the average balance and average rate on other borrowings.

Previous wording

Interest income on loans was $369.6 million for the quarter ended June 30, 2026, an increase of $44.1 million or 13.5% compared with $325.5 million for the same period in 2025. Interest income on securities was $81.2 million for the quarter ended June 30, 2026, an increase of $23.4 million or 40.4% compared with $57.8 million for the same period in 2025. The changes for both were primarily due to the repricing of assets and the impact of the American Merger and the Southwest Merger.

Current wording

Interest income on loans was $495.6 million for the quarter ended September 30, 2026 an increase of $166.1 million or 50.4% compared with $329.4 million for the same period in 2025. Interest income on securities was $98.4 million for the quarter ended September 30, 2026 an increase of $40.2 million or 69.0% compared with $58.2 million for the same period in 2025. The changes for both were primarily due to the repricing of assets and the impact of the Mergers.

Previous wording

Average interest-bearing liabilities were $24.29 billion for the quarter ended June 30, 2026, an increase of $3.26 billion or 15.5% compared with $21.03 billion for the same period in 2025. The increase was primarily due to the American Merger and the Southwest Merger, partially offset by the decrease in other borrowings. The average rate on interest-bearing liabilities was 2.13% for the quarter ended June 30, 2026, a decrease of 25 basis points compared with 2.38% for the same period in 2025.

Current wording

Average interest-bearing liabilities were $29.58 billion for the quarter ended September 30, 2026 an increase of $8.85 billion or 42.7% compared with $20.72 billion for the same period in 2025. The increase was primarily due to the Mergers, partially offset by the decrease in other borrowings. The average rate on interest-bearing liabilities was 2.20% for the quarter ended September 30, 2026 a decrease of 19 basis points compared with 2.39% for the same period in 2025.

Previous wording

Net interest income before the provision for credit losses was $651.7 million for the six months ended June 30, 2026, an increase of $118.6 million or 22.2% compared with $533.1 million for the same period in 2025. The net interest margin on a tax-equivalent basis was 3.49% for the six months ended June 30, 2026, an increase of 33 basis points compared with 3.16% for the six months ended June 30, 2025. The changes for both measures were primarily due to the repricing of assets, the impact of the American Merger and the Southwest Merger and a decrease in the average balance and average rate on other borrowings.

Current wording

Net interest income before the provision for credit losses was $1.09 billion for the nine months ended September 30, 2026 an increase of $288.1 million or 35.7% compared with $806.5 million for the same period in 2025. The net interest margin on a tax-equivalent basis was 3.58% for the nine months ended September 30, 2026 an increase of 39 basis points compared with 3.19% for the nine months ended September 30, 2025. The changes to both measures were primarily due to the repricing of assets, the impact of the Mergers and a decrease in the average balance and average rate on other borrowings.

Previous wording

Interest income on loans was $731.3 million for the six months ended June 30, 2026, an increase of $86.8 million or 13.5% compared with $644.5 million for the same period in 2025. Interest income on securities was $151.7 million for the six months ended June 30, 2026, an increase of $36.0 million or 31.1% compared with $115.7 million for the same period in 2025. The changes for both were primarily due to the repricing of assets and the impact of the American Merger and the Southwest Merger.

Current wording

Interest income on loans was $1.23 billion for the nine months ended September 30, 2026 an increase of $252.9 million or 26.0% compared with $974.0 million for the same period in 2025. Interest income on securities was $250.1 million for the nine months ended September 30, 2026 an increase of $76.2 million or 43.8% compared with $173.9 million for the same period in 2025. The changes for both were primarily due to the repricing of assets and the impact of the Mergers.

Previous wording

Average interest-bearing liabilities were $23.92 billion for the six months ended June 30, 2026, an increase of $2.58 billion or 12.1% compared with $21.34 billion for the same period in 2025. The increase was primarily due to the American Merger and the Southwest Merger, partially offset by a decrease in other borrowings. The average rate on interest-bearing liabilities was 2.10% for the six months ended June 30, 2026, a decrease of 29 basis points compared with 2.39% for the same period in 2025.

Current wording

Average interest-bearing liabilities were $25.82 billion for the nine months ended September 30, 2026 an increase of $4.69 billion or 22.2% compared with $21.13 billion for the same period in 2025. The increase was primarily due to the Mergers, partially offset by a decrease in other borrowings. The average rate on interest-bearing liabilities was 2.14% for the nine months ended September 30, 2026 a decrease of 25 basis points compared with 2.39% for the same period in 2025.

Previous wording

There was no provision for credit losses for the three and six months ended June 30, 2026 and 2025.

Current wording

There was no provision for credit losses for the three and nine months ended September 30, 2026 and 2025.

Previous wording

Net charge-offs were $2.2 million for the quarter ended June 30, 2026, compared with net charge-offs of $3.0 million for the quarter ended June 30, 2025. For the three months ended June 30, 2026, net charge-offs included $962 thousand related to resolved PCD loans, which had specific reserves that were allocated to the charge-offs. For the three months ended June 30, 2026, $10.3 million of reserves on resolved PCD loans without any related charge-offs were released to the general reserve.

Current wording

Net charge-offs were $4.4 million for the quarter ended September 30, 2026 compared with net charge-offs of $6.5 million for the quarter ended September 30, 2025. For the three months ended September 30, 2026, net charge-offs included $1.7 million related to resolved PCD loans, which had specific reserves that were allocated to the charge-offs. Additionally, reserves increased by Day One accounting for PCD loans of $146.1 million and Day One accounting for PSLs of $67.4 million due to the Stellar Merger. For the three months ended September 30, 2026, $7.6 million of reserves on resolved PCD loans without any related charge-offs were released to the general reserve.

Previous wording

Net charge-offs were $43.5 million for the six months ended June 30, 2026, compared with $5.7 million for the six months ended June 30, 2025. For the six months ended June 30, 2026, net charge-offs included a $39.2 million increase in net charge-offs for commercial and industrial loans. Additionally, due to the American Merger and the Southwest Merger, reserves increased by Day One accounting for PCD loans of $53.3 million and Day One accounting for PSLs of $39.3 million. Further, $12.3 million of reserves on resolved PCD loans without any related charge-offs were released to the general reserve.

Current wording

Net charge-offs were $47.9 million for the nine months ended September 30, 2026 compared with $12.2 million for the nine months ended September 30, 2025. For the nine months ended September 30, 2026, net charge-offs included a $37.7 million increase in net charge-offs for commercial and industrial loans. Additionally, reserves increased by Day One accounting for PCD loans of $27.5 million and Day One accounting for PSLs of $20.0 million due to the American Merger, increased by Day One accounting for PCD loans of $25.8 million and Day One accounting for PSLs of $19.3 million due to the Southwest Merger, and increased by Day One accounting for PCD loans of $146.1 million and Day One accounting for PSLs of $67.4 million due to the Stellar Merger. Further, $20.1 million of reserves on resolved PCD loans without any related charge-offs were released to the general reserve.

Previous wording

Noninterest expense totaled $176.2 million for the three months ended June 30, 2026, compared with $138.6 million for the same period in 2025, an increase of $37.6 million or 27.1%, which was primarily due to an increase in salaries and benefits and an increase in additional expenses related to three months of American and Southwest operations. Noninterest expense totaled $393.5 million for the six months ended June 30, 2026, compared with $278.9 million for the six months ended June 30, 2025, an increase of $114.6 million or 41.1%, primarily due to an increase in merger related expenses of $43.3 million, an increase in salaries and benefits and an increase in additional expenses related to six months of American operations and five months of Southwest operations.

Current wording

Noninterest expense totaled $308.6 million for the three months ended September 30, 2026 compared with $138.6 million for the same period in 2025, an increase of $170.0 million or 122.6%, primarily due to increases in merger related expenses, salaries and benefits and additional expenses related to the Mergers. Noninterest expense totaled $702.1 million for the nine months ended September 30, 2026 compared with $417.5 million for the nine months ended September 30, 2025, an increase of $284.6 million or 68.2%, primarily due to an increase in merger related expenses of $113.0 million, an increase in salaries and benefits and an increase in additional expenses related to nine months of American operations, eight months of Southwest operations and three months of Stellar operations.

Previous wording

Includes stock-based compensation expense of $3.2 million and $3.0 million for the three months ended June 30, 2026, and 2025, respectively, and $6.6 million and $6.1 million for the six months ended June 30, 2026, and 2025, respectively.

Current wording

Includes stock-based compensation expense of $4.3 million and $3.0 million for the three months ended September 30, 2026 and 2025, respectively, and $10.9 million and $9.0 million for the nine months ended September 30, 2026, and 2025, respectively.

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 $46.5 million for the three months ended June 30, 2026, compared with $37.0 million for the same period in 2025, an increase of $9.5 million or 25.7%. Income tax expense totaled $80.6 million for the six months ended June 30, 2026, compared with $73.1 million for the same period in 2025, an increase of $7.4 million or 10.2%. The Company’s effective tax rate for the three months ended June 30, 2026, and 2025 was 21.6% and 21.5%, respectively. The Company’s effective tax rate for the six months ended June 30, 2026, and 2025 was 22.0% and 21.6%, 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 $45.6 million for the three months ended September 30, 2026 compared with $38.5 million for the same period in 2025, an increase of $7.1 million or 18.6%. Income tax expense totaled $126.2 million for the nine months ended September 30, 2026 compared with $111.6 million for the same period in 2025, an increase of $14.6 million or 13.1%. The Company’s effective tax rate for the three months ended September 30, 2026 and 2025 was 24.4% and 21.9%, respectively. The Company’s effective tax rate for the nine months ended September 30, 2026, and 2025 was 22.8% and 21.7%, respectively. The increase in provision for income taxes and effective tax rate was primarily due to an increase in nondeductible merger related expenses for the Mergers and an out of state tax settlement.

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. The Company has completed its initial evaluation of the provisions of the OBBB Act and has concluded that it did not have a material impact on the Company's income tax provision for the six months ended June 30, 2026 and year ended December 31, 2025.

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. The Company has completed its initial evaluation of the provisions of the OBBB Act and has concluded that it did not have a material impact on the Company's income tax provision for the nine months ended September 30, 2026 and year ended December 31, 2025.

Previous wording

At June 30, 2026, total loans were $25.03 billion, an increase of $3.22 billion or 14.8% compared with $21.81 billion at December 31, 2025. Loans at June 30, 2026, included $18.7 million of loans held for sale and $1.29 billion of Warehouse Purchase Program loans compared with $14.2 million of loans held for sale and $1.30 billion of Warehouse Purchase Program loans at December 31, 2025. At June 30, 2026, loans represented 57.0% of total assets compared with 56.7% of total assets at December 31, 2025.

Current wording

At September 30, 2026, total loans were $32.06 billion, an increase of $10.26 billion or 47.0% compared with $21.81 billion at December 31, 2025, primarily due to the Mergers. Loans at September 30, 2026, included $8.4 million of loans held for sale and $1.13 billion of Warehouse Purchase Program loans compared with $14.2 million of loans held for sale and $1.30 billion of Warehouse Purchase Program loans at December 31, 2025. At September 30, 2026, loans represented 59.3% of total assets compared with 56.7% of total assets at December 31, 2025.

Previous wording

Nonperforming assets were 0.52% of total loans and other real estate at June 30, 2026, and 0.69% of total loans and other real estate at December 31, 2025. The allowance for credit losses on loans as a percentage of total nonperforming loans was 321.0% at June 30, 2026, and 242.7% at December 31, 2025.

Current wording

Nonperforming assets were 0.60% of total loans and other real estate at September 30, 2026 and 0.69% of total loans and other real estate at December 31, 2025. The allowance for credit losses on loans as a percentage of total nonperforming loans was 346.1% at September 30, 2026 and 242.7% at December 31, 2025.

Previous wording

On January 1, 2026, the Company adopted ASU 2025-08 that updates the accounting for purchased loans under ASC 326. Under ASU 2025-08, Non-PCD loans deemed “seasoned” will now be considered PSLs and accounted for using the gross-up approach at acquisition, which was formerly applicable only to PCD loans. PSLs include all loans acquired in a business combination that do not have “more-than-insignificant” deterioration of credit quality since origination. Under ASU 2025-08, an allowance for expected credit losses is recognized at acquisition, offsetting the loan’s amortized costs basis, thereby eliminating the immediate recognition of day-one credit loss expense previously required for Non-PCD loans. Accordingly, the initial estimate of expected credit losses recognized in the allowance for credit losses on loans on the American Merger and the Southwest Merger included both PCD loans and PSLs. For the American Merger, the Company recorded an allowance for credit losses on loans of $47.5 million, which included a $27.5 million allowance on PCD loans and a $20.0 million allowance on PSLs. For the Southwest Merger, the Company recorded an allowance for credit losses on loans of $45.1 million, which included a $25.8 million allowance on PCD loans and a $19.3 million allowance on PSLs.

Current wording

On January 1, 2026, the Company adopted ASU 2025-08 that updates the accounting for purchased loans under ASC 326. Under ASU 2025-08, Non-PCD loans deemed “seasoned” will now be considered PSLs and accounted for using the gross-up approach at acquisition, which was formerly applicable only to PCD loans. PSLs include all loans acquired in a business combination that do not have “more-than-insignificant” deterioration of credit quality since origination. Under ASU 2025-08, an allowance for expected credit losses is recognized at acquisition, offsetting the loan’s amortized costs basis, thereby eliminating the immediate recognition of day-one credit loss expense previously required for Non-PCD loans. Accordingly, the initial estimate of expected credit losses recognized in the allowance for credit losses on loans in the Mergers included both PCD loans and PSLs. For the American Merger, the Company recorded an allowance for credit losses on loans of $47.5 million, which included a $27.5 million allowance on PCD loans and a $20.0 million allowance on PSLs. For the Southwest Merger, the Company recorded an allowance for credit losses on loans of $45.1 million, which included a $25.8 million allowance on PCD loans and a $19.3 million allowance on PSLs. For the Stellar Merger, the Company recorded an allowance for credit losses on loans of $213.5 million, which included a $146.1 million allowance on PCD loans and a $67.4 million allowance on PSLs.

Previous wording

The Company had gross charge-offs on originated loans of $36.1 million during the six months ended June 30, 2026. Partially offsetting these charge-offs were recoveries on originated loans of $2.1 million. Gross charge-offs on acquired loans were $11.7 million during the six months ended June 30, 2026. Offsetting these charge-offs were recoveries on acquired loans of $2.2 million. Total charge-offs for the six months ended June 30, 2026, were $47.8 million, partially offset by total recoveries of $4.3 million.

Current wording

The Company had gross charge-offs on originated loans of $39.0 million during the nine months ended September 30, 2026. Partially offsetting these charge-offs were recoveries on originated loans of $2.6 million. Gross charge-offs on acquired loans were $15.8 million during the nine months ended September 30, 2026. Offsetting these charge-offs were recoveries on acquired loans of $4.3 million. Total charge-offs for the nine months ended September 30, 2026, were $54.8 million, partially offset by total recoveries of $6.8 million.

Previous wording

At June 30, 2026, $213.7 million of the allowance for credit losses on loans was attributable to originated loans, a decrease of $17.6 million or 7.6% compared with $231.3 million of the allowance at December 31, 2025. At June 30, 2026, $30.2 million of the allowance for credit losses on loans was attributable to re-underwritten acquired loans compared with $38.4 million of the allowance at December 31, 2025, a decrease of $8.2 million or 21.3%. At June 30, 2026, $54.9 million of the allowance for credit losses on loans was attributable to PSLs compared with $15.7 million of the allowance at December 31, 2025, an increase of $39.2 million or 249.4%. At June 30, 2026, $84.1 million of the allowance for credit losses on loans was attributable to PCD loans compared with $48.4 million of the allowance at December 31, 2025, an increase of $35.7 million or 73.8%.

Current wording

At September 30, 2026, $209.2 million of the allowance for credit losses on loans was attributable to originated loans, a decrease of $22.1 million or 9.5% compared with $231.3 million of the allowance at December 31, 2025. At September 30, 2026, $37.8 million of the allowance for credit losses on loans was attributable to re-underwritten acquired loans compared with $38.4 million of the allowance at December 31, 2025, a decrease of $602 thousand or 1.6%. At September 30, 2026, $123.7 million of the allowance for credit losses on loans was attributable to PSLs compared with $15.7 million of the allowance at December 31, 2025, an increase of $108.0 million or 687.6%. At September 30, 2026, $221.3 million of the allowance for credit losses on loans was attributable to PCD loans compared with $48.4 million of the allowance at December 31, 2025, an increase of $172.9 million or 357.4%.

Previous wording

At June 30, 2026, the Company had $73.2 million of total outstanding accretable discounts on PSLs and PCD loans. The Company believes that the allowance for credit losses on loans at June 30, 2026, 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 June 30, 2026.

Current wording

At September 30, 2026, the Company had $146.3 million of total outstanding accretable discounts on PSLs and PCD loans. The Company believes that the allowance for credit losses on loans at September 30, 2026 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, 2026.

Previous wording

The carrying cost of securities totaled $12.34 billion at June 30, 2026, compared with $10.61 billion at December 31, 2025, an increase of $1.73 billion or 16.3%. At June 30, 2026, securities represented 28.1% of total assets compared with 27.6% of total assets at December 31, 2025.

Current wording

The carrying cost of securities totaled $13.63 billion at September 30, 2026 compared with $10.61 billion at December 31, 2025, an increase of $3.02 billion or 28.5%. At September 30, 2026, securities represented 25.2% of total assets compared with 27.6% of total assets at December 31, 2025.

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, 2026, the Company’s municipal securities represent 1.0% 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, 2026, 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 or Build America Mutual. As of September 30, 2026, the Company’s municipal securities represent 1.3% 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, 2026, management believes that there is no potential for material credit losses on held to maturity securities.

Previous wording

Total deposits were $32.60 billion at June 30, 2026, compared with $28.48 billion at December 31, 2025, an increase of $4.12 billion or 14.5%. Total noninterest-bearing deposits were $10.74 billion at June 30, 2026, compared with $9.47 billion at December 31, 2025, an increase of $1.27 billion or 13.4%. Interest-bearing deposits were $21.86 billion at June 30, 2026, compared with $19.01 billion at December 31, 2025, an increase of $2.85 billion or 15.0%.

Current wording

Total deposits were $41.23 billion at September 30, 2026 compared with $28.48 billion at December 31, 2025, an increase of $12.75 billion or 44.8%, primarily due to the Mergers. Total noninterest-bearing deposits were $13.84 billion at September 30, 2026 compared with $9.47 billion at December 31, 2025, an increase of $4.37 billion or 46.2%. Interest-bearing deposits were $27.39 billion at September 30, 2026 compared with $19.01 billion at December 31, 2025, an increase of $8.38 billion or 44.0%.

Previous wording

Average deposits for the six months ended June 30, 2026, were $32.18 billion, an increase of $4.28 billion or 15.4% compared with $27.89 billion for the six months ended June 30, 2025. The ratio of average interest-bearing deposits to total average deposits was 67.6% and 65.9% during the first six months of 2026 and 2025, respectively.

Current wording

Average deposits for the nine months ended September 30, 2026 were $35.21 billion, an increase of $7.44 billion or 26.8% compared with $27.76 billion for the nine months ended September 30, 2025. The ratio of average interest-bearing deposits to total average deposits was 67.2% and 65.8% during the first nine months of 2026 and 2025, respectively.

Previous wording

The following table presents the Company’s borrowings as of the dates indicated:

Current wording

The following table presents the Company’s borrowings and subordinated debt as of the dates indicated:

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, 2026, the Company had total borrowing capacity of $7.62 billion under this line. FHLB advances of $2.40 billion were outstanding at June 30, 2026, with a weighted average interest rate of 3.76%. At June 30, 2026, the Company had no FHLB long-term notes payable balance outstanding.

Current wording

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, 2026, the Company had total borrowing capacity of $8.81 billion under this line. FHLB advances of $2.40 billion were outstanding at September 30, 2026 with a weighted average interest rate of 4.01%. At September 30, 2026, the Company had no FHLB long-term notes payable balance outstanding.

Previous wording

Securities sold under repurchase agreements— At June 30, 2026, the Company had $199.6 million in securities sold under repurchase agreements with banking customers compared with $201.2 million at December 31, 2025, a decrease of $1.6 million or 0.8%. Repurchase agreements are generally settled on the following business day. All securities sold under repurchase agreements are collateralized by certain pledged securities.

Current wording

At September 30, 2026, the Company had $204.8 million in securities sold under repurchase agreements with banking customers compared with $201.2 million at December 31, 2025, an increase of $3.5 million or 1.8%. Repurchase agreements are generally settled on the following business day. All securities sold under repurchase agreements are collateralized by certain pledged securities.

Previous wording

Subordinated notes—On January 1, 2026, in connection with the American Merger, the Company assumed the obligations related to $35.0 million of Fixed-to-Floating Rate Subordinated Notes that mature on December 29, 2031. The subordinated notes, which qualify as Tier 2 capital for regulatory purposes, are payable quarterly in arrears at an annual floating rate equal to three-month term SOFR as determined for the applicable period, plus 2.50%. The Company may, at its option, beginning on the first repricing date and on any scheduled interest payment date thereafter, redeem the subordinated notes, in whole or in part, at a redemption price equal to 100% of the outstanding principal amount being redeemed plus accrued and unpaid interest to, but excluding, the date of redemption. Any partial redemption will be made pro rata among all of the holders. The subordinated notes are subordinated in right of payment to all of the Company’s existing and future senior indebtedness and effectively subordinated to all existing and future debt and all other liabilities of the Company’s subsidiaries.

Current wording

On January 1, 2026, in connection with the American Merger, the Company assumed the obligations related to $35.0 million of Fixed-to-Floating Rate Subordinated Notes that mature on December 29, 2031. The subordinated notes, which qualify as Tier 2 capital for regulatory purposes, are payable quarterly in arrears at an annual floating rate equal to three-month term SOFR as determined for the applicable period, plus 2.50%. The Company may, at its option, beginning on the first repricing date and on any scheduled interest payment date thereafter, redeem the subordinated notes, in whole or in part, at a redemption price equal to 100% of the outstanding principal amount being redeemed plus accrued and unpaid interest to, but excluding, the date of redemption. Any partial redemption will be made pro rata among all of the holders. The subordinated notes are subordinated in right of payment to all of the Company’s existing and future senior indebtedness and effectively subordinated to all existing and future debt and all other liabilities of the Company’s subsidiaries. At September 30, 2026, the balance includes a $4.0 million elimination related to the Company’s portion of investment in American subordinated notes which was acquired in the Stellar Merger.

Previous wording

On February 1, 2026, in connection with the Southwest Merger, the Company assumed the obligations related to $35.0 million of Fixed-to-Floating Rate Subordinated Notes that mature on June 15, 2032. The subordinated notes, which qualify as Tier 2 capital for regulatory purposes, have a fixed rate of interest of 5.00% until 2027 followed by a floating rate interest based on three-month term SOFR plus 255 basis points. The Company may, at its option, beginning on June 15, 2027, and on any scheduled interest payment date thereafter, redeem the subordinated notes, in whole or in part, at a redemption price equal to 100% of the outstanding principal amount being redeemed plus accrued and unpaid interest to, but excluding, the date of redemption. Any partial redemption will be made pro rata among all of the holders. In addition, the Company may redeem all or portion of the subordinated notes at any time upon occurrence of a Tier 2 capital event, tax event or investment company event as defined in the agreement. The subordinated notes are subordinated in right of payment to all of the Company’s senior indebtedness and effectively subordinated to all existing and future debt and all other liabilities of the Company’s subsidiaries.

Current wording

On February 1, 2026, in connection with the Southwest Merger, the Company assumed the obligations related to $35.0 million of Fixed-to-Floating Rate Subordinated Notes that mature on June 15, 2032. The subordinated notes, which qualify as Tier 2 capital for regulatory purposes, have a fixed rate of interest of 5.00% until 2027 followed by a floating rate interest based on three-month term SOFR plus 255 basis points. The Company may, at its option, beginning on June 15, 2027, and on any scheduled interest payment date thereafter, redeem the subordinated notes, in whole or in part, at a redemption price equal to 100% of the outstanding principal amount being redeemed plus accrued and unpaid interest to, but excluding, the date of redemption. Any partial redemption will be made pro rata among all of the holders. In addition, the Company may redeem all or a portion of the subordinated notes at any time upon the occurrence of a Tier 2 capital event, tax event or investment company event as defined in the agreement. The subordinated notes are subordinated in right of payment to all of the Company’s senior indebtedness and effectively subordinated to all existing and future debt and all other liabilities of the Company’s subsidiaries. At September 30, 2026, the balance includes a $5.0 million elimination related to the Company’s portion of investment in Southwest subordinated notes which was acquired in the Stellar Merger.

Previous wording

Junior Subordinated Debentures—On January 1, 2026, in connection with the American Merger, the Company assumed the obligation related to $6.2 million in Floating Rate Junior Subordinated Debentures and trust preferred securities (the “Debentures”) that mature in April 7, 2034. The Debentures, which qualify as Tier 2 capital for regulatory purposes, have a floating rate based on the three-month Term Secured Overnight Financing Rate (“SOFR”) plus 2.85%. In March 2026, the Company gave irrevocable notice of its intent to redeem the Debentures and they were redeemed on April 7, 2026.

Current wording

On January 1, 2026, in connection with the American Merger, the Company assumed the obligation related to $6.2 million in floating rate junior subordinated debentures and trust preferred securities that mature on April 7, 2034. The junior subordinated debentures, which qualify as Tier 2 capital for regulatory purposes, have a floating rate based on the three-month Term Secured Overnight Financing Rate (“SOFR”) plus 2.85%. In March 2026, the Company gave irrevocable notice of its intent to redeem the junior subordinated debentures and trust preferred securities and they were redeemed on April 7, 2026.

Previous wording

The Company has an available line of credit with the 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, 2026, the Company had total borrowing capacity of $7.62 billion under this line. FHLB advances of $2.40 billion were outstanding at June 30, 2026, with a weighted average interest rate of 3.76%. At June 30, 2026, the Company had no FHLB long-term notes payable balance outstanding.

Current wording

The Company has an available line of credit with the 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, 2026, the Company had total borrowing capacity of $8.81 billion under this line. FHLB advances of $2.40 billion were outstanding at September 30, 2026 with a weighted average interest rate of 4.01%. At September 30, 2026, the Company had no FHLB long-term notes payable balance outstanding.