SIMMONS FIRST NATIONAL CORP

Previous wording

As permitted by SEC rules, management presents a sequential quarterly analysis of the Company’s performance as we believe that comparing current quarter results to those of the immediately preceding fiscal quarter is more useful in identifying current business trends and provides a more relevant analysis of our business results. Accordingly, we have compared our results of operations for the three months ended March 31, 2026 to our results of operations for the three months ended December 31, 2025 and March 31, 2025, as applicable, throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Current wording

As permitted by SEC rules, management presents a sequential quarterly analysis of the Company’s performance as we believe that comparing current quarter results to those of the immediately preceding fiscal quarter is more useful in identifying current business trends and provides a more relevant analysis of our business results. Accordingly, we have compared our results of operations for the three months ended June 30, 2026 to our results of operations for the three months ended March 31, 2026, as applicable, throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations. For additional information regarding the Company’s results for the three months ended March 31, 2026, please refer to our first quarter Form 10-Q filed with the SEC on May 6, 2026.

Previous wording

Our net income for the three months ended March 31, 2026 was $68.5 million, or $0.47 diluted earnings per share, compared to net income of $78.1 million, or $0.54 diluted earnings per share, and $32.4 million, or $0.26 diluted earnings per share, for the three months ended December 31, 2025 and March 31, 2025, respectively. Included in the results were certain items related to our branch right sizing initiative, early retirement program costs (for the three months ended March 31, 2026), professional services (for the three months ended March 31, 2026), a FDIC special assessment (for the three months ended March 31, 2026), termination of vendor and software services (for the three months ended December 31, 2025) and loss on sale of an equipment finance business (for the three months ended December 31, 2025). Excluding these certain items and the tax effect, adjusted earnings for the three months ended March 31, 2026 were $68.6 million, or $0.47 adjusted diluted earnings per share, compared to $79.0 million, or $0.54 adjusted diluted earnings per share, and $33.1 million, or $0.26 adjusted diluted earnings per share, for the three months ended December 31, 2025 and March 31, 2025, respectively.

Current wording

Our net income for the three months ended June 30, 2026 was $66.7 million, or $0.46 diluted earnings per share, compared to net income of $68.5 million, or $0.47 diluted earnings per share, for the three months ended March 31, 2026. Included in the results were certain items related to our branch/real estate rightsizing costs, severance/early retirement program costs, a FDIC special assessment (for the three months ended March 31, 2026) and certain professional services (for the three months ended March 31, 2026). Excluding these certain items and the tax effect, adjusted earnings for the three months ended June 30, 2026 were $72.2 million, or $0.50 adjusted diluted earnings per share, compared to $68.6 million, or $0.47 adjusted diluted earnings per share, for the three months ended March 31, 2026.

Previous wording

We believe the asset quality in our portfolio remains sound and reflects our conservative credit culture, as well as our focus on maintaining disciplined pricing and conservative underwriting standards given the current economic environment. Total nonperforming loans as of March 31, 2026, December 31, 2025, and March 31, 2025 were $141.9 million, $112.7 million, and $152.4 million, respectively. Nonperforming assets as a percent of total assets were 0.63% at March 31, 2026, compared to 0.51% at December 31, 2025 and 0.61% at March 31, 2025.

Current wording

We believe the asset quality in our portfolio remains sound and reflects our conservative credit culture, as well as our focus on maintaining disciplined pricing and conservative underwriting standards given the current economic environment. Total nonperforming loans as of June 30, 2026, December 31, 2025, and June 30, 2025 were $166.0 million, $112.7 million, and $157.2 million, respectively. Nonperforming assets as a percent of total assets were 0.72% at June 30, 2026, compared to 0.51% at December 31, 2025 and 0.62% at June 30, 2025.

Previous wording

As of March 31, 2026, stockholders’ equity was $3.44 billion, book value per share was $23.70 and tangible book value per share was $14.03.

Current wording

As of June 30, 2026, stockholders’ equity was $3.48 billion, book value per share was $24.11 and tangible book value per share was $14.42.

Previous wording

Total loans were $17.93 billion at March 31, 2026, compared to $17.49 billion at December 31, 2025. Our unfunded commitments were $4.07 billion and $3.87 billion as of March 31, 2026 and December 31, 2025, respectively. Our commercial loan pipeline totaled $1.56 billion as of March 31, 2026, compared to $1.54 billion at December 31, 2025.

Current wording

Total loans were $18.06 billion at June 30, 2026, compared to $17.49 billion at December 31, 2025. Our unfunded commitments were $4.38 billion and $3.87 billion as of June 30, 2026 and December 31, 2025, respectively. Our commercial loan pipeline totaled $1.43 billion as of June 30, 2026, compared to $1.54 billion at December 31, 2025.

Previous wording

Simmons First National Corporation is a Mid-South based financial holding company that, as of March 31, 2026, has approximately $24.7 billion in consolidated assets and, through its subsidiaries, conducts financial operations in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas.

Current wording

Simmons First National Corporation is a Mid-South based financial holding company that, as of June 30, 2026, has approximately $24.8 billion in consolidated assets and, through its subsidiaries, conducts financial operations in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas.

Previous wording

Our practice is to limit exposure to interest rate movements by maintaining a significant portion of earning assets and interest bearing liabilities in short-term repricing. In the last several years, on average, approximately 48% of our loan portfolio and approximately 94% of our time deposits have repriced in one year or less. As of March 31, 2026, our interest rate sensitivity shows that approximately 63% of our loans and 96% of our time deposits will reprice in the next year.

Current wording

Our practice is to limit exposure to interest rate movements by maintaining a significant portion of earning assets and interest bearing liabilities in short-term repricing. In the last several years, on average, approximately 48% of our loan portfolio and approximately 94% of our time deposits have repriced in one year or less. As of June 30, 2026, our interest rate sensitivity shows that approximately 67% of our loans and 96% of our time deposits will reprice in the next year.

Previous wording

The decrease in interest income on a fully taxable equivalent basis primarily resulted from a $3.5 million decrease in interest income on loans, coupled with a decrease of $2.0 million in interest income on investment securities. The decrease in interest income provided by loans reflects a $9.1 million decrease related to loan yield, partially offset by a $5.6 million increase attributable to loan volume. The loan yield for the first quarter of 2026 was 6.16% compared to 6.23% from the preceding sequential quarter, representing a 7 basis point decrease. The decrease in interest income on investment securities was primarily related to a $1.9 million decrease in interest income on taxable investment securities, which reflects a $913,000 decrease due to the decline in our investment portfolio average balances, coupled with a decrease of $1.0 million in interest income on taxable investment securities due to yield decreases over the period of 7 basis points.

Current wording

The increase in interest income on a fully taxable equivalent basis primarily resulted from a $7.0 million increase in interest income on loans, moderated by a decrease of $879,000 in interest income on investment securities. The increase in interest income provided by loans reflects a $2.5 million increase related to loan yield, coupled with a $4.6 million increase attributable to loan volume. While the loan yield for the second quarter of 2026 was 6.15% compared to 6.16% from the preceding sequential quarter, the increase during the three months ended June 30, 2026 was due to the additional day during the period. The decrease in interest income on investment securities was primarily related to a $839,000 decrease in interest income on taxable investment securities, which reflects a $1.2 million decrease due to the decline in our investment portfolio average balances related to planned maturities within the portfolio.

Previous wording

Net interest income on a fully taxable equivalent basis for the three month period ended March 31, 2026 increased $30.3 million, or 17.9%, over the same period in 2025. The increase in net interest income on a fully taxable equivalent basis was the result of a $9.4 million decrease in fully taxable equivalent interest income, more than offset by a $39.8 million decrease in interest expense.

Current wording

Net interest income on a fully taxable equivalent basis for the six month period ended June 30, 2026 increased $55.8 million, or 16.0%, over the same period in 2025. The increase in net interest income on a fully taxable equivalent basis was the result of a $20.2 million decrease in fully taxable equivalent interest income, more than offset by a $75.9 million decrease in interest expense.

Previous wording

Several factors contributed to the increase in net interest income on a fully taxable equivalent basis over the comparative period. During 2025, we completed a balance sheet repositioning that included the transfer of approximately $3.6 billion investment securities classified as held-to-maturity (“HTM”) to the available-for-sale (“AFS”) investment securities portfolio, with a subsequent sale of approximately $3.2 billion in amortized cost basis of low-yielding AFS securities (including certain of those previously classified as HTM). Proceeds from the sale of the investment securities were primarily used to deleverage the balance sheet through the pay-down of higher rate, non-relationship wholesale and public fund deposits, as well as higher rate other borrowings primarily consisting of FHLB advances. The pay-down of higher rate funding was completed in 2025.

Current wording

Several factors contributed to the increase in net interest income on a fully taxable equivalent basis over the comparative period. During 2025, we completed a balance sheet repositioning that included the transfer of approximately $3.6 billion investment securities classified as held-to-maturity (“HTM”) to the available-for-sale (“AFS”) investment securities portfolio, with a subsequent sale of approximately $3.2 billion in amortized cost basis of low-yielding AFS securities (including certain of those previously classified as HTM). Proceeds from the sale of the investment securities were primarily used to deleverage the balance sheet through the pay-down of higher rate, non-relationship wholesale and public fund deposits, as well as higher rate other borrowings primarily consisting of FHLB advances.

Previous wording

The decrease in interest income on a fully taxable equivalent basis primarily resulted from a $18.9 million decrease in interest income on investment securities, which reflects a $27.6 million decrease in interest income on investment securities due to the decline in our investment portfolio average balances, which decreased by $2.92 billion or 47.5%. The decrease was partially offset by an increase of $8.6 million in interest income on investment securities due to yield increases over the period of 81 basis points and 43 basis points for our taxable and non-taxable investment security portfolios, respectively. These changes were primarily due to the balance sheet repositioning previously discussed, coupled with pay downs and maturities over the period. A $9.7 million increase in interest income on loans reflects an increase attributable to loan volume of $11.2 million, partially offset by a $1.5 million decrease in interest income related to loan yield due to a 4 basis point decline in loan yield over the comparative period.

Current wording

The decrease in interest income on a fully taxable equivalent basis primarily resulted from a $38.4 million decrease in interest income on investment securities, which reflects a $55.8 million decrease in interest income on investment securities due to the decline in our investment portfolio average balances, which decreased by $2.93 billion or 48.1%. The decrease was partially offset by an increase of $17.4 million in interest income on investment securities due to yield increases over the period of 83 basis points and 43 basis points for our taxable and non-taxable investment security portfolios, respectively. These changes were primarily due to the balance sheet repositioning previously discussed, coupled with pay downs and maturities over the period. An $18.8 million increase in interest income on loans reflects an increase attributable to loan volume of $25.2 million, partially offset by a $6.4 million decrease in interest income related to loan yield due to a 7 basis point decline in loan yield over the comparative period.

Previous wording

The $39.8 million decrease in interest expense is mainly due to the decrease in our deposit account rates over the period. Interest expense decreased $20.1 million due to the decrease in rate of 58 basis points on interest-bearing deposit accounts. A $13.6 million decrease in interest expense was related to the decrease in time deposit volume over the period. Further, a decrease of $6.0 million in interest expense was related to reductions in the amounts outstanding under and rates on wholesale borrowings sources over the comparative period. The decline in wholesale borrowings volume, including brokered time deposits, is largely due to the balance sheet repositioning. We continually monitor and look for opportunities to fairly reprice our deposits while remaining competitive in this current challenging rate environment.

Current wording

The $75.9 million decrease in interest expense is mainly due to the decrease in our deposit account rates over the period. Interest expense decreased $38.2 million due to the decrease in rate of 55 basis points on interest-bearing deposit accounts. A $26.2 million decrease in interest expense was related to the decrease in time deposit volume over the period. Further, a decrease of $10.7 million in interest expense was related to reductions in the amounts outstanding under and rates on wholesale borrowings sources over the comparative period. The decline in wholesale borrowings volume, including brokered time deposits, is largely due to the balance sheet repositioning. We continually monitor and look for opportunities to fairly reprice our deposits while remaining competitive in this current challenging rate environment.

Previous wording

Our net interest margin on a fully taxable equivalent basis was 3.84% for the three month period ended March 31, 2026, as compared to 3.81% and 2.95% for the three months ended December 31, 2025 and the three months ended March 31, 2025, respectively. Net interest margin experienced a 3 basis point increase for the three months ended March 31, 2026 compared to the preceding sequential quarter, while net interest margin increased 89 basis points during the three months ended March 31, 2026 compared to the three months ended March 31, 2025. While net interest margin expanded slightly during the three months ended March 31, 2026 as compared to the prior sequential quarter, the increase on a year over year comparative basis was primarily driven by the balance sheet repositioning, as well as reduced deposit costs and use of wholesale funding over the comparative periods.

Current wording

Our net interest margin on a fully taxable equivalent basis was 3.84% for the three and six month periods ended June 30, 2026, as well as the three months ended March 31, 2026, 3.01% for the six months ended June 30, 2025. Net interest margin was consistent with the preceding sequential quarter, while net interest margin increased 83 basis points during the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase in net interest margin on a year over year comparative basis was primarily driven by the balance sheet repositioning, as well as reduced deposit costs and use of wholesale funding over the comparative periods.

Previous wording

Tables 1 and 2 reflect an analysis of net interest income on a fully taxable equivalent basis for the three months ended March 31, 2026, December 31, 2025 and March 31, 2025, respectively.

Current wording

Tables 1 and 2 reflect an analysis of net interest income on a fully taxable equivalent basis for the three months ended June 30, 2026 and March 31, 2026 and the six months ended June 30, 2026 and 2025, respectively.

Previous wording

Table 3 shows, for each major category of earning assets and interest bearing liabilities, the average (computed on a daily basis) amount outstanding, the interest earned or expensed on such amount and the average rate earned or expensed for the three months ended March 31, 2026, December 31, 2025 and March 31, 2025, respectively. The table also shows the average rate earned on all earning assets, the average rate expensed on all interest bearing liabilities, the net interest spread and the net interest margin for the same periods. The analysis is presented on a fully taxable equivalent basis. Nonaccrual loans were included in average loans for the purpose of calculating the rate earned on total loans.

Current wording

Table 3 shows, for each major category of earning assets and interest bearing liabilities, the average (computed on a daily basis) amount outstanding, the interest earned or expensed on such amount and the average rate earned or expensed for the three months ended June 30, 2026 and March 31, 2026 and the six months ended June 30, 2026 and 2025, respectively. The table also shows the average rate earned on all earning assets, the average rate expensed on all interest bearing liabilities, the net interest spread and the net interest margin for the same periods. The analysis is presented on a fully taxable equivalent basis. Nonaccrual loans were included in average loans for the purpose of calculating the rate earned on total loans.

Previous wording

Table 4 shows changes in interest income and interest expense resulting from changes in both volume and interest rates for the three months ended March 31, 2026 as compared to the three months ended December 31, 2025 and March 31, 2025, respectively. The changes in interest rate and volume have been allocated to changes in average volume and changes in average rates in proportion to the relationship of absolute dollar amounts of the changes in rates and volume.

Current wording

Table 4 shows changes in interest income and interest expense resulting from changes in both volume and interest rates for the three and six months ended June 30, 2026 as compared to the three months ended March 31, 2026 and the six months ended June 30, 2025, respectively. The changes in interest rate and volume have been allocated to changes in average volume and changes in average rates in proportion to the relationship of absolute dollar amounts of the changes in rates and volume.

Previous wording

The provision for credit losses for the three months ended March 31, 2026 was $14.6 million as compared to $15.1 million for the three months ended December 31, 2025 and $26.8 million for the same period ended March 31, 2025. Provision expense for each period was related to loans and reflected loan growth in the quarters, as well as the impact of updated economic assumptions. The provision expense for the three months ended March 31, 2025 also reflected a provision expense of $15.6 million related to two specific credit relationships which migrated to nonperforming during the period.

Current wording

For the six months ended June 30, 2026, our provision for credit losses was $32.1 million as compared to $38.7 million for the same period ended June 30, 2025. Provision expense for each period reflected loan growth in the period, as well as the impact of updated economic assumptions, while the provision expense for the six months ended June 30, 2025 also reflected a provision expense of $15.6 million related to two specific credit relationships which migrated to nonperforming during the period.

Previous wording

For the three month period ended March 31, 2026, total noninterest income was $44.2 million, a decrease of approximately $7.5 million or 14.5%, compared to the three month period ended December 31, 2025 and a decrease of $2.0 million or 4.2%, as compared to the three months ended March 31, 2025. The decrease for the three month period ended March 31, 2026 as compared to both prior comparative quarters is largely due to a $2.1 million Small Business Investment Company (“SBIC”) negative valuation adjustment recorded during the three months ended March 31, 2026. During the prior sequential quarter, proceeds of $3.3 million in bank owned life insurance death benefits were recorded, which further contributed to the decrease between comparative periods. These adjustments are included in “Other income” in the table below.

Current wording

For the three month period ended June 30, 2026, total noninterest income was $47.9 million, an increase of approximately $3.7 million or 8.5%, compared to the three month period ended March 31, 2026. The increase for the three month period ended June 30, 2026 as compared to the preceding sequential quarter is largely due to a $2.1 million Small Business Investment Company (“SBIC”) negative valuation adjustment recorded during the three months ended March 31, 2026, coupled with $1.1 million in net positive SBIC valuation adjustments recorded during the three months ended June 30, 2026. These adjustments are included in “Other income” in the table below.

Previous wording

Table 5 shows noninterest income for the three month periods ended March 31, 2026, December 31, 2025 and March 31, 2025, respectively, as well as changes between periods.

Current wording

Table 5 shows noninterest income for the three month periods ended June 30, 2026 and March 31, 2026 and the six months ended June 30, 2026 and 2025, respectively, as well as changes between periods.

Previous wording

Recurring fee income (total service charges, wealth management fees, debit and credit card fees) was $33.3 million, $33.2 million and $32.0 million for the three month periods ended March 31, 2026, December 31, 2025 and March 31, 2025, respectively.

Current wording

Recurring fee income (total service charges, wealth management fees, debit and credit card fees) was $33.1 million and $33.3 million for the three month periods ended June 30, 2026 and March 31, 2026, respectively, and was $66.4 million and $64.0 million for the six month periods ended June 30, 2026 and 2025, respectively.

Previous wording

Noninterest expense consists of salaries and employee benefits, occupancy, equipment, foreclosure losses and other expenses necessary for our operations. Management remains committed to controlling the level of noninterest expense through the continued use of expense control measures. We utilize an extensive profit planning and reporting system involving all subsidiaries. Based on a needs assessment of the business plan for the upcoming year, monthly and annual profit plans are developed, including manpower and capital expenditure budgets. These profit plans are subject to extensive initial reviews and monitored by management monthly. Variances from the plan are reviewed monthly and, when required, management takes corrective action intended to ensure financial goals are met. We also regularly monitor staffing levels at each subsidiary to ensure productivity and overhead are in line with existing workload requirements.

Current wording

Noninterest expense consists of salaries and employee benefits, occupancy, equipment, foreclosure losses and other expenses necessary for our operations. Management remains committed to controlling the level of noninterest expense through the continued use of expense control measures and efficiency initiatives. We utilize an extensive profit planning and reporting system involving all subsidiaries. Based on a needs assessment of the business plan for the upcoming year, monthly and annual profit plans are developed, including manpower and capital expenditure budgets. These profit plans are subject to extensive initial reviews and monitored by management monthly. Variances from the plan are reviewed monthly and, when required, management takes corrective action intended to ensure financial goals are met. We also regularly monitor staffing levels at each subsidiary to ensure productivity and overhead are in line with existing workload requirements.

Previous wording

Noninterest expense was $140.7 million for the three month period ended March 31, 2026, as compared to noninterest expense of $139.9 million for the three month period ended December 31, 2025, representing an increase of $811,000, or 0.6%, as compared to the preceding quarter. Adjusted noninterest expense, which excludes branch right sizing, early retirement program costs (for the three months ended March 31, 2026), FDIC special assessment (for the three months ended March 31, 2026), professional services (for the three months ended March 31, 2026), termination of vendor and software services (for the three months ended December 31, 2025), and loss on sale of an equipment finance business (for the three months ended December 31, 2025), for the three months ended March 31, 2026 was $140.6 million, an increase of $2.0 million as compared to the three months ended December 31, 2025.

Current wording

Noninterest expense was $147.7 million for the three month period ended June 30, 2026, as compared to noninterest expense of $140.7 million for the three month period ended March 31, 2026, representing an increase of $7.1 million, or 5.0%, as compared to the preceding quarter. Adjusted noninterest expense, which excludes branch/real estate right sizing costs, severance/early retirement program costs, FDIC special assessment (for the three months ended March 31, 2026) and certain professional services (for the three months ended March 31, 2026), for the three months ended June 30, 2026 was $140.3 million, a decrease of $323,000 as compared to the three months ended March 31, 2026.

Previous wording

Noninterest expense for the three months ended March 31, 2026 decreased by approximately $3.9 million or 2.7% as compared to the three months ended March 31, 2025. Adjusted noninterest expense, which excludes branch right sizing, early retirement program costs (for the three months ended March 31, 2026), FDIC special assessment (for the three months ended March 31, 2026) and professional services (for the three months ended March 31, 2026), decreased $2.9 million, or 2.0%, as compared to the three months ended March 31, 2025.

Current wording

Noninterest expense for the six months ended June 30, 2026 increased by approximately $5.2 million or 1.9% as compared to the six months ended June 30, 2025. Adjusted noninterest expense, which excludes branch/real estate right sizing costs, severance/early retirement program costs, FDIC special assessment (for the six months ended June 30, 2026) and certain professional services (for the six months ended June 30, 2026), increased $545,000, or 0.2%, as compared to the six months ended June 30, 2025.

Previous wording

Deposit insurance expense for the three months ended March 31, 2026 as compared to the three months ended December 31, 2025 and three months ended March 31, 2025 decreased by $2.4 million and $3.1 million, respectively. The decrease for the three months ended March 31, 2026 as compared to the prior periods is significantly attributable to a $2.0 million FDIC special assessment recapture recorded in the period.

Current wording

Deposit insurance expense for the three and six months ended June 30, 2026 as compared to the three months ended March 31, 2026 and six months ended June 30, 2025 increased by $2.2 million and decreased by $3.6 million, respectively. The variance for the three and six months ended June 30, 2026 as compared to the prior comparative periods is significantly attributable to a $2.0 million FDIC special assessment recapture recorded in the first quarter of 2026.

Previous wording

Other noninterest expense decreased $388,000 during the three month period ended March 31, 2026 as compared to the preceding sequential quarter and decreased $3.6 million during the three month period ended March 31, 2025 when compared to the same period in the prior year. While the variance in other noninterest expense on a sequential quarter basis is relatively flat, the decrease on a year over year basis for the three month period ended March 31, 2026 is primarily due to a $4.3 million charge related to a commercial customer deposit fraud event that was identified during the three month period ended March 31, 2025.

Current wording

Other noninterest expense increased $2.2 million during the three month period ended June 30, 2026 as compared to the preceding sequential quarter and decreased $885,000 during the six month period ended June 30, 2026 when compared to the same period in the prior year. The increase on a sequential quarter basis for the three month period ended June 30, 2026 is primarily due to a $2.3 million loss on sale of property related to branch/real estate right sizing costs during the three month period ended June 30, 2026, while a $4.3 million charge related to a commercial customer deposit fraud event that was identified during the six month period ended June 30, 2025 resulted in a negative variance during the comparative periods.

Previous wording

Table 6 below shows noninterest expense for the three month periods ended March 31, 2026, December 31, 2025 and March 31, 2025, respectively, as well as changes between periods.

Current wording

Table 6 below shows noninterest expense for the three month periods ended June 30, 2026 and March 31, 2026 and the six months ended June 30, 2026 and 2025, respectively, as well as changes between periods.

Previous wording

As of March 31, 2026, AFS investment securities and assets held in trading accounts were $3.15 billion and $14.5 million, respectively. As of December 31, 2025, AFS and assets held in trading accounts were $3.27 billion and $11.7 million, respectively. We continue to look for opportunities to maximize the value of the investment portfolio.

Current wording

As of June 30, 2026, AFS investment securities and assets held in trading accounts were $3.08 billion and $14.5 million, respectively. As of December 31, 2025, AFS and assets held in trading accounts were $3.27 billion and $11.7 million, respectively. We continue to look for opportunities to maximize the value of the investment portfolio.

Previous wording

During the third quarter of 2021, we began utilizing interest rate swaps designated as fair value hedges to mitigate the effect of changing interest rates on the fair values of $1.00 billion of fixed rate callable municipal securities held in the AFS portfolio. These swap agreements consist of a two year forward start date and involve the payment of fixed interest rates with a weighted average rate of 1.21% in exchange for variable interest rates based on federal funds rates, which became effective during late third quarter of 2023. Securities within these swap agreements have maturity dates varying between 2028 and 2029. For the three months ended March 31, 2026, the net amount included in interest income on investment securities in the consolidated statements of income related to these swap agreements was $6.2 million.

Current wording

During the third quarter of 2021, we began utilizing interest rate swaps designated as fair value hedges to mitigate the effect of changing interest rates on the fair values of $1.00 billion of fixed rate callable municipal securities held in the AFS portfolio. These swap agreements consist of a two year forward start date and involve the payment of fixed interest rates with a weighted average rate of 1.21% in exchange for variable interest rates based on federal funds rates, which became effective during late third quarter of 2023. Securities within these swap agreements have maturity dates varying between 2028 and 2029. For the six months ended June 30, 2026, the net amount included in interest income on investment securities in the consolidated statements of income related to these swap agreements was $12.6 million.

Previous wording

Our loan portfolio averaged $17.66 billion and $16.92 billion during the first three months of 2026 and 2025, respectively. As of March 31, 2026, total loans were $17.93 billion, an increase of $440.7 million from December 31, 2025. The increase in the loan balance during the first three months of 2026 when compared to December 31, 2025 is primarily due to growth in the commercial real estate, commercial and industrial and mortgage warehouse portfolios over the comparative period, while we continued to focus on maintaining prudent underwriting standards and pricing discipline. The most significant components of the loan portfolio were loans to businesses (commercial loans, commercial real estate loans and agricultural loans) and individuals (consumer loans, credit card loans and single-family residential real estate loans).

Current wording

Our loan portfolio averaged $17.81 billion and $16.98 billion during the first six months of 2026 and 2025, respectively. As of June 30, 2026, total loans were $18.06 billion, an increase of $570.2 million from December 31, 2025. The increase in the loan balance during the first six months of 2026 when compared to December 31, 2025 is primarily due to growth in the commercial real estate, commercial and industrial and mortgage warehouse portfolios over the comparative period, while we continued to focus on maintaining prudent underwriting standards and pricing discipline. The most significant components of the loan portfolio were loans to businesses (commercial loans, commercial real estate loans and agricultural loans) and individuals (consumer loans, credit card loans and single-family residential real estate loans).

Previous wording

Consumer loans consist of credit card loans and other consumer loans. Consumer loans were $269.0 million at March 31, 2026, or 1.5% of total loans, compared to $291.2 million, or 1.7% of total loans at December 31, 2025. The decrease in consumer loans from December 31, 2025, to March 31, 2026, was primarily due to loan payoffs and pay downs within both the credit card and other consumer portfolios during the period.

Current wording

Consumer loans consist of credit card loans and other consumer loans. Consumer loans were $273.3 million at June 30, 2026, or 1.5% of total loans, compared to $291.2 million, or 1.7% of total loans at December 31, 2025. The decrease in consumer loans from December 31, 2025, to June 30, 2026, was primarily due to loan payoffs and pay downs within both the credit card and other consumer portfolios during the period.

Previous wording

Real estate loans consist of construction and development loans (“C&D”) loans, single-family residential loans and commercial real estate (“CRE”) loans. Real estate loans were $13.95 billion at March 31, 2026, or 77.8% of total loans, compared to $13.77 billion, or 78.7%, of total loans at December 31, 2025, an increase of $181.4 million, or 1.3%. Our C&D loans decreased by $251.9 million, or 8.8%, while single family residential loans decreased by $41.3 million, or 1.6%, and CRE loans increased by $474.7 million, or 5.7%. The changes among our real estate portfolio reflected our focus on maintaining conservative underwriting standards and structure guidelines while emphasizing prudent pricing discipline during the first three months of 2026. We expect to continue to manage our C&D and CRE portfolio concentration by developing deeper relationships with our customers.

Current wording

Real estate loans consist of construction and development loans (“C&D”) loans, single-family residential loans and commercial real estate (“CRE”) loans. Real estate loans were $13.97 billion at June 30, 2026, or 77.3% of total loans, compared to $13.77 billion, or 78.7%, of total loans at December 31, 2025, an increase of $199.5 million, or 1.4%. Our C&D loans decreased by $296.2 million, or 10.3%, while single family residential loans decreased by $43.2 million, or 1.7%, and CRE loans increased by $538.8 million, or 6.5%. The changes among our real estate portfolio reflected our focus on maintaining conservative underwriting standards and structure guidelines while emphasizing prudent pricing discipline during the first six months of 2026. We expect to continue to manage our C&D and CRE portfolio concentration by developing deeper relationships with our customers.

Previous wording

Commercial loans consist of non-real estate loans related to business and agricultural loans. Total commercial loans were $2.85 billion at March 31, 2026, or 15.9% of total loans, compared to $2.69 billion, or 15.4% of total loans at December 31, 2025, an increase of $166.3 million, or 6.2%. The increase in commercial loans was largely related to the increase in commercial and industrial loans of $139.1 million, or 5.8%.

Current wording

Commercial loans consist of non-real estate loans related to business and agricultural loans. Total commercial loans were $2.94 billion at June 30, 2026, or 16.3% of total loans, compared to $2.69 billion, or 15.4% of total loans at December 31, 2025, an increase of $254.5 million, or 9.5%. The increase in commercial loans was related to both the increase in commercial and industrial loans of $134.3 million, or 5.6% and increase in agricultural loans of $120.2 million, or 39.2%, primarily due to seasonality of the portfolio, which normally peaks in the third quarter.

Previous wording

Other loans mainly consist of mortgage warehouse lending and municipal loans. Mortgage volume experienced an increase in demand during the first three months of 2026 as compared to December 31, 2025, leading to an increase of $115.2 million in other loans.

Current wording

Other loans mainly consist of mortgage warehouse lending and municipal loans. Mortgage volume experienced an increase in demand during the first six months of 2026 as compared to December 31, 2025, leading to an increase of $134.2 million in other loans.

Previous wording

Our commercial loan pipeline consisting of all commercial loan opportunities was $1.56 billion at March 31, 2026 compared to $1.54 billion at December 31, 2025. Commercial loans approved and ready to close at the end of the quarter totaled $651.4 million.

Current wording

Our commercial loan pipeline consisting of all commercial loan opportunities was $1.43 billion at June 30, 2026 compared to $1.54 billion at December 31, 2025. Commercial loans approved and ready to close at the end of the quarter totaled $373.9 million.

Previous wording

Total nonperforming assets increased $29.5 million from December 31, 2025 to March 31, 2026. Nonaccrual loans increased by $29.4 million from December 31, 2025 and foreclosed assets held for sale and other real estate owned increased $466,000 as compared to December 31, 2025. The increase in nonaccrual loans was primarily due to a single real estate construction relationship totaling $26.9 million that is well collateralized and that management believes has limited loss content.

Current wording

Total nonperforming assets increased $52.1 million from December 31, 2025 to June 30, 2026. Nonaccrual loans increased by $53.5 million from December 31, 2025 and foreclosed assets held for sale and other real estate owned decreased $929,000 as compared to December 31, 2025. The increase in nonaccrual loans was primarily due to a single real estate construction relationship totaling approximately $44.0 million.

Previous wording

There were four loan modifications granted to borrowers experiencing financial difficulty during the three month period ended March 31, 2026. Such modifications included interest rate reductions and/or term extensions and had a total period-end amortized cost basis of $2.5 million at March 31, 2026.

Current wording

There were five loan modifications granted to borrowers experiencing financial difficulty during the six month period ended June 30, 2026. Such modifications included interest rate reductions and/or term extensions and had a total period-end amortized cost basis of $2.6 million at June 30, 2026.

Previous wording

The allowance for credit losses as a percent of total loans was 1.28% as of March 31, 2026. Nonperforming loans equaled 0.79% of total loans. Nonperforming assets were 0.63% of total assets, a 12 basis point increase from December 31, 2025. The allowance for credit losses was 162% of nonperforming loans. Our annualized net charge-offs to average total loans ratio for the first three months of 2026 was 0.21%. Annualized net credit card charge-offs to average total credit card loans were 2.81% for the first three months of 2026, compared to 2.95% during the full year 2025, and 122 basis points better than the most recently published industry average charge-off ratio as reported by the Federal Reserve for all banks.

Current wording

The allowance for credit losses as a percent of total loans was 1.32% as of June 30, 2026. Nonperforming loans equaled 0.92% of total loans. Nonperforming assets were 0.72% of total assets, a 21 basis point increase from December 31, 2025. The allowance for credit losses was 143% of nonperforming loans. Our annualized net charge-offs to average total loans ratio for the first six months of 2026 was 0.21%. Annualized net credit card charge-offs to average total credit card loans were 2.69% for the first six months of 2026, compared to 2.95% during the full year 2025, and 132 basis points better than the most recently published industry average charge-off ratio as reported by the Federal Reserve for all banks.

Previous wording

(1)Includes nonaccrual FDMs of approximately $935,000 and $853,000 at March 31, 2026 and December 31, 2025, respectively.

Current wording

(1)Includes nonaccrual FDMs of approximately $908,000 and $853,000 at June 30, 2026 and December 31, 2025, respectively.

Previous wording

The interest income on nonaccrual loans is not considered material for the three month periods ended March 31, 2026 and 2025.

Current wording

The interest income on nonaccrual loans is not considered material for the three and six month periods ended June 30, 2026 and 2025.

Previous wording

The amount of provision added to or released from the allowance during the three months ended March 31, 2026 and 2025, and for the year ended December 31, 2025, was based on management’s judgment, with consideration given to the composition and asset quality of the portfolio, historical loan loss experience, and assessment of current and expected economic forecasts and conditions. It is management’s practice to review the allowance on a monthly basis, and after considering the factors previously noted, to determine the level of provision made to the allowance.

Current wording

The amount of provision added to or released from the allowance during the three and six months ended June 30, 2026 and 2025, and for the year ended December 31, 2025, was based on management’s judgment, with consideration given to the composition and asset quality of the portfolio, historical loan loss experience, and assessment of current and expected economic forecasts and conditions. It is management’s practice to review the allowance on a monthly basis, and after considering the factors previously noted, to determine the level of provision made to the allowance.