Atlantic Union Bankshares Corp (AUB)

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis provides information about the major components of our results of operations, financial condition, liquidity, and capital resources. This discussion and analysis should be read in conjunction with our “Consolidated Financial Statements,” our “Notes to the Consolidated Financial Statements,” and the other financial data included in this report, as well as our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”), including the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section therein. Our results of operations for the interim periods are not necessarily indicative of results that may be expected for the full year or for any other period. Amounts are rounded for presentation purposes; however, some of the percentages presented are computed based on unrounded amounts.

In the following discussion and analysis, we provide certain financial information determined by methods other than in accordance with GAAP. These non-GAAP financial measures are a supplement to GAAP, which we use to prepare our financial statements, and should not be considered in isolation or as a substitute for comparable measures calculated in accordance with GAAP. In addition, our non-GAAP financial measures may not be comparable to non-GAAP financial measures of other companies. We use the non-GAAP financial measures discussed herein in our analysis of our performance. Management believes that these non-GAAP financial measures provide additional understanding of our ongoing operations, enhance the comparability of our results of operations with prior periods and show the effects of significant gains and charges in the periods presented without the impact of items or events that may obscure trends in our underlying performance. Non-GAAP financial measures may be identified with the symbol (+) and may be labeled as adjusted. Refer to the “Non-GAAP Financial Measures” section within this Item 2 for more information about these non-GAAP financial measures, including a reconciliation of these measures to the most directly comparable GAAP financial measures.

FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include, without limitation, statements regarding the acquisition of Sandy Spring, including expectations with regard to the benefits of the Sandy Spring acquisition; statements regarding our strategic expansion into North Carolina; statements regarding our future ability to recognize the benefits of certain tax assets; statements regarding our business, financial and operating results, including our deposit base and funding; the impact of changes in economic conditions, anticipated changes in the interest rate environment and the related impacts on our net interest margin, changes in economic, fiscal or trade policy and the potential impacts on our business, loan demand and economic conditions in our markets and nationally; management’s beliefs regarding our liquidity, capital resources, asset quality, CRE loan portfolio and our customer relationships; and statements that include other projections, predictions, expectations, or beliefs about future events or results or otherwise are not statements of historical fact. Such forward-looking statements are based on certain assumptions as of the time they are made, and are inherently subject to known and unknown risks, uncertainties, and other factors, some of which cannot be predicted or quantified, that may cause actual results, performance, or achievements to be materially different from those expressed or implied by such forward-looking statements. Forward-looking statements are often characterized by the use of qualified words (and their derivatives) such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” “may,” “view,” “opportunity,” “seek to,” “potential,” “continue,” “confidence,” or words of similar meaning or other statements concerning opinions or judgment of the Company and our management about future events. Although we believe that our expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of our existing knowledge of our business and operations, there can be no assurance that actual future results, performance, or achievements of, or trends affecting, us will not differ materially from any projected future results, performance, achievements or trends expressed or implied by such forward-looking statements. Actual future results, performance, achievements or trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the effects of or changes in

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ITEM 7. - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis provides information about the major components of our results of operations, financial condition, liquidity, and capital resources. This discussion and analysis should be read in conjunction with our “Consolidated Financial Statements,” our “Notes to the Consolidated Financial Statements,” and the other financial data included in this report, which include our significant accounting policies, presented in Item 8 “Financial Statements and Supplementary Data” contained in this Form 10-K. Amounts are rounded for presentation purposes; however, some of the percentages presented are computed based on unrounded amounts.

In the following discussion and analysis, we provide certain financial information determined by methods other than in accordance with GAAP. These non-GAAP financial measures are a supplement to GAAP, which we use to prepare our financial statements, and should not be considered in isolation or as a substitute for comparable measures calculated in accordance with GAAP. In addition, our non-GAAP financial measures may not be comparable to non-GAAP financial measures of other companies. We use the non-GAAP financial measures discussed herein in our analysis of our performance. Management believes that these non-GAAP financial measures provide additional understanding of our ongoing operations, enhance the comparability of our results of operations with prior periods and show the effects of significant gains and charges in the periods presented without the impact of items or events that may obscure trends in our underlying performance. Non-GAAP financial measures may be identified with the symbol (+) and may be labeled as adjusted. Refer to the “Non-GAAP Financial Measures” section within this Item 7 for more information about these non-GAAP financial measures, including a reconciliation of these measures to the most directly comparable GAAP financial measures.

CRITICAL ACCOUNTING ESTIMATES

We prepare our consolidated financial statements based on the application of accounting and reporting policies in accordance with GAAP and general practices within the banking industry. Our financial position and results of operations are affected by management’s application of accounting policies, which require the use of estimates, assumptions, and judgments, which may prove inaccurate or are subject to variations. Changes in underlying factors, estimates, assumptions, or judgements could result in material changes in our consolidated financial position and/or results of operations.

Certain accounting policies inherently have a greater reliance on the use of estimates, assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. We have identified the allowance for loan and lease losses, fair value measurements, valuation of deferred tax assets, and valuation of acquired assets and liabilities as accounting policies that require the most difficult, subjective or complex judgments and, as such, could be most subject to revision as new or additional information becomes available or circumstances change. Therefore, we evaluate these accounting policies and related critical accounting estimates on an ongoing basis and update them as needed. Management has discussed these accounting policies and the critical accounting estimates summarized below with the Audit Committee of the Board of Directors.

We provide additional information about our critical accounting estimates below in “Critical Accounting Estimates” in this Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K.

Our significant accounting policies are discussed in detail in Note 1 “Summary of Significant Accounting Policies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K.

Allowance for Loan and Lease Losses

The ALLL represents the estimated balance that we consider adequate to absorb expected credit losses over the expected contractual life of the loan portfolio. We estimate our ALLL using a loan-level probability of default/loss given default methodology for all loans and also consider the need to qualitatively adjust the expected credit losses for information not already captured in the loan-level probability of default/loss given default methodology based on a qualitative framework that adheres to the Interagency Policy Statement on Allowances for Credit Losses.

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Determining the appropriateness of the ALLL is complex and requires judgment by management about the effect of matters that are inherently uncertain. Subsequent evaluations of the then-existing loan portfolio, in light of the factors then prevailing, may result in significant changes in the ALLL in future periods. There are both internal factors (i.e., loan balances, credit quality, and the contractual lives of loans) and external factors (i.e., economic conditions such as trends in housing prices, interest rates, gross domestic product, inflation, and unemployment) that can impact the ALLL estimate.

We consider a number of external economic variables in developing the ALLL. We consider various national economic variables in developing the ALLL, including the national unemployment rate, national gross domestic product, the national commercial real estate pricing index, the national home price index, and national retail sales. We use the national unemployment rate in all of our models regardless of the loan portfolio type, and we use a second economic variable in each cohort model depending on the loan portfolio type. The ALLL quantitative estimate is sensitive to changes in the economic variable forecasts during the two-year reasonable and supportable forecast period with a straight-line reversion over the next two years to long-term average loss factors. In determining forecasted expected losses, we use Moody’s economic variable forecasts and apply probability weights to the related economic scenarios. Because current economic conditions and forecasts can change and future events are inherently difficult to predict, the anticipated amount of estimated credit losses on loans, and therefore the appropriateness of the ALLL, could change significantly. It is difficult to estimate how potential changes in any one economic factor or input might affect the overall ALLL because we consider a wide variety of factors and inputs in estimating the ALLL and changes in those factors and inputs may not occur at the same rate and may not be consistent across all loan types. Additionally, changes in factors and inputs may be directionally inconsistent, such that an improvement in one factor may offset deterioration in others.

We review the ALLL estimation process regularly for appropriateness as the economic and internal environment are constantly changing. While the ALLL estimate represents our current estimate of expected credit losses, due to uncertainty surrounding internal and external factors, there is potential that the estimate may not be adequate over time to cover credit losses in the portfolio. While we use available information to estimate expected losses on loans, future changes in the ALLL may be necessary based on changes in portfolio composition, portfolio credit quality, economic conditions and/or other factors.

Fair Value Measurements

We measure certain assets and liabilities at fair value on a recurring basis, including securities and derivative instruments. Fair value estimates are inherently subjective and involve significant assumptions, adjustments, and judgment including, among others, discount rates, rates of return on assets, cash flows, default rates, loss rates, terminal values and liquidation values. A significant change in assumptions may result in a significant change in fair value, which in turn, may result in a higher degree of financial statement volatility and could result in a significant impact on our results of operations, financial condition or disclosures of fair value information.

Under ASC 820, Fair Value Measurements, there is a three-level fair value hierarchy that requires the use of inputs that are observable or unobservable, when observable inputs are not available. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. As such, fair value measurements, particularly in level 2 and level 3 of the hierarchy, may require us to use significant assumptions that are subject to change. A change in one assumption could have a significant impact on the fair value estimate and certain assumptions may have offsetting impacts to one another. We prepare a supportable estimate in accordance with ASC 820 but changes in significant assumptions could have a significant impact on our Balance Sheet, Statements of Income, and/or fair value disclosures. For more information on our financial instruments and fair value assessment, refer to Note 1 “Summary of Significant Accounting Policies” and Note 14 “Fair Value Measurements” in the “Notes to Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K.

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Valuation of Deferred Tax Assets

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We account for income taxes in accordance with income tax accounting guidance (ASC 740, Income Taxes). Deferred income tax assets and liabilities are determined using the asset and liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax basis of the various balance sheet assets and liabilities. Deferred income tax assets are also recorded for any tax attributes, such as net operating loss and tax credit carryforwards. Any changes in tax rates and laws are reflected

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in the period of the enactment date. A valuation allowance against the deferred tax assets is recorded when evidence supports it is more likely than not that some or all of the deferred tax assets will not be realized.

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We determine the realization of deferred tax assets by considering all relevant information, including the impact of recent operating results, future reversals of taxable temporary differences, future taxable income exclusive of reversing temporary differences and carryforwards and tax planning strategies. Determining whether deferred tax assets are realizable is subjective and requires the use of significant judgment.

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For more information on our income taxes, refer to Note 16 “Income Taxes” in the “Notes to Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K.

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Valuation of Acquired Assets and Liabilities

We account for mergers and acquisitions that qualify as a business combination under ASC 805, Business Combinations, which requires the use of the acquisition method of accounting. Under the acquisition method, we record all identifiable assets acquired, including intangible assets and the liabilities assumed at their fair values as of the acquisition date. Determining fair values of net assets acquired often involves estimates based on third-party valuations, such as appraisals or internal valuations based on discounted cash flow analysis or other valuation techniques. These methodologies are inherently subjective and involve significant assumptions, adjustments, and judgement around the selection of assumptions including, among others, discount rates, future expected cash flows, market conditions, and other future events that are highly subjective in nature and subject to change. The determination of the useful lives over which an intangible asset will be amortized is also subjective. While the selected fair values represented our best estimate of fair value as of the acquisition date, these estimates are inherently uncertain. In addition, the acquisition method of accounting allows for a measurement period to adjust acquisition accounting for up to one year after the acquisition date, for new information that existed at the acquisition date but may not have been known or available at that time.

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Goodwill is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets determined to have an indefinite useful life are not amortized and are tested for impairment at least annually or more frequently if events and circumstances exist that indicate that a goodwill impairment test should be performed. Goodwill is the only intangible asset with an indefinite life included on the Company’s Consolidated Balance Sheets.

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The Company performs its goodwill impairment analysis annually on April 30th at the reporting unit level whereby the Company compares the estimated fair value of the reporting unit to its carrying value. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is not considered impaired. To determine the fair value of a reporting unit, the Company utilizes a combination of two separate quantitative methods, the market value approach, which considers comparable publicly-traded companies, and the income approach which estimates future cash flows. Critical assumptions that are used as part of these calculations include: the selection of comparable publicly-traded companies and selection of market comparable acquisition transactions, the discount rate, the forecast of future earnings and cash flows of the reporting unit, economic conditions, which impact the assumptions related to interest, growth rates, loss rates, the cost savings expected to be realized by a market participant, the control premium associated with the reporting unit and a relative weight given to the valuations derived by the two valuation methods. In the normal course of business, the Company routinely monitors the impact of the changes in the financial markets and includes these assessments in our impairment process.

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Acquired intangible assets represent purchased assets that lack physical substance but can be differentiated from goodwill. Acquired intangible assets are primarily comprised of customer deposit intangibles and customer relationship intangibles, which are amortized over their useful lives. Core deposit intangibles are amortized using an accelerated method and other amortizable intangible assets are amortized using various methods. Long-lived assets, including intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

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Acquired loans are recorded at their fair value at the acquisition date without carryover of the acquiree’s previously established ALLL. The fair value for acquired loans is determined using a discounted cash flow analysis that considers factors including loan type, interest rate type, prepayment speeds, duration and current discount rates. During evaluation

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upon acquisition, acquired loans are also classified as either – (1) loans that have experienced a more-than insignificant amount of credit deterioration since origination (“PCD” loans) or (2) loans that have not experienced a more-than insignificant amount of credit deterioration since origination (“non-PCD” loans). Acquired loans are subject to the Company’s ALLL policy upon acquisition.

For loans that have not experienced a more-than an insignificant amount of credit deterioration since origination, the difference between the fair value and unpaid principal balance of the loans at the acquisition date (premium or discount) is amortized or accreted into interest income over the life of the loans in accordance with ASC 310-20, Receivables – Nonrefundable Fees and Other Costs. If the acquired performing loan has revolving privileges, the discount/premium is accounted for using the straight-line method; otherwise, the Company uses the effective interest rate method.

The Company records PCD loans at the amount paid and establishes an initial ALLL using the same methodology as other LHFI. The sum of the PCD loan’s purchase price and initial ALLL becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan under ASC 310-20, Receivables – Nonrefundable Fees and Other Costs. If the loan has revolving privileges, the discount/premium is amortized/accreted using the straight-line method; otherwise, the effective interest method is used. Subsequent changes to the ALLL are recorded through provision expense.

When determining the initial ALLL on PCD loans, the Company considers charge offs necessary at acquisition to comply with the Company’s charge off policy. For PCD loans that are subject to write-off under the Company’s charge-off policy at acquisition, the initial ALLL on PCD loans is included as part of the loan balance at the time of acquisition and is immediately written off with no impact on net income. See also Note 4 “Loans and Allowance for Loan and Lease Losses” in the “Notes to Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K for additional detail regarding the ALLL on PCD loans.

See also Note 2 “Acquisitions” in the “Notes to Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K for additional discussion of the Company’s acquisitions.

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RECENT ACCOUNTING PRONOUNCEMENTS (ISSUED BUT NOT FULLY ADOPTED)

In November 2024, the FASB issued ASU No. 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures. This guidance requires enhanced disclosure of income statement expenses. The amendments are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. ASU No. 2024-03 is not expected to have an impact on our financial condition or results of operations but could change certain disclosures in our SEC filings.

In September 2025, the FASB issued ASU No. 2025-06 Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which outlined targeted improvements to Subtopic 350-40 to increase the operability of the recognition guidance considering different methods of software development. The amendments are effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. We are evaluating the impact of ASU No. 2025-06 on our consolidated financial statements.

In September 2025, the FASB issued ASU No. 2025-07 Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract. The update to Topic 815 outlined the addition of derivative scope exceptions with underlyings that are based on the operations or activities of one of the parties to the contract. The update to Topic 606 clarified the applicability of Topic 606 and its interaction with other Topics. The amendments are effective for fiscal years beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. ASU No. 2025-07 is not expected to have an impact on our financial condition or results of operations.

In November 2025, the FASB issued ASU No. 2025-08 Financial Instruments – Credit Losses (Topic 326): Purchased Loans. This update expanded the population of acquired financial assets subject to the gross-up approach in Topic 326. The amendments are effective for fiscal years beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. We are evaluating the impact of ASU No. 2025-08 on our consolidated financial statements.

In November 2025, the FASB issued ASU No. 2025-09 Derivatives and Hedging (Topic 815): Hedge Accounting Improvements. This update clarified certain aspects of the guidance on hedge accounting. The amendments are effective for fiscal years beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. We are evaluating the impact of ASU No. 2025-09 on our consolidated financial statements.

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In December 2025, the FASB issued ASU No. 2025-10 Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. This update established authoritative guidance on the accounting for government grants received by business entities. The amendments are effective for fiscal years beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. We are evaluating the impact of ASU No. 2025-10 on our consolidated financial statements.

In December 2025, the FASB issued ASU No. 2025-11 Interim Reporting (Topic 270): Narrow Scope Improvements. This update improved the navigability of the required interim disclosures and clarified when that guidance is applicable. The amendments are effective for fiscal years beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. ASU No. 2025-11 is not expected to have an impact on our financial condition or results of operations but could have an impact on interim disclosures.

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RESULTS OF OPERATIONS

Economic Environment and Industry Events

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We are continually monitoring the impact of various global and national events on our results of operations and financial condition, including changes in economic conditions, such as inflation and recessionary conditions, changes in the unemployment rate, changes in market interest rates, geopolitical conflicts, deposit competition, liquidity strains, changes in government policy, including changes in, or the imposition of, tariffs and/or trade barriers, and changes in legislative or regulatory requirements. The timing and impact of such events on our results of operation and financial condition will depend on future developments, which are highly uncertain and difficult to predict.

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In 2025, financial markets were impacted by increased and prolonged economic uncertainty, including due to changes and developments in U.S. trade policies and practices, including tariffs, changes in the unemployment rate, and international relations. These factors could adversely affect the U.S. and global economies and financial markets, including by increasing inflation and leading to a slowdown of future economic growth and ultimately recessionary conditions.

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In late 2024, the Federal Reserve’s interest rate policy shifted as inflationary pressure began to ease and economic growth moderated. The FOMC reduced the target range for the Federal Funds rate by a total of 100 bps from September 2024 to December 2024 and by another 75 bps from September 2025 to December 2025, resulting in a target range of 3.50% to 3.75%. In January 2026, the FOMC held the target range for the Federal Funds rate at 3.50% to 3.75%, but noted that uncertainty about the economic outlook remains elevated. With continued uncertainty over the potential impacts of changes in U.S. and global trade and other economic policies and international tensions, it is difficult to predict how the Federal Reserve will balance possible inflationary pressure with the potential of slower economic growth and rising risks in employment.

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We will continue to deploy various asset liability management strategies to seek to manage our risk related to interest rate fluctuations and monitor balance sheet trends, deposit flows, and liquidity needs to enable us to meet the needs of our customers and maintain financial flexibility. Refer to “Liquidity” within this Item 7 for additional information about our liquidity and “Quantitative and Qualitative Disclosures about Market Risk” in Part II, Item 7A of this Form 10-K for additional information about our interest rate sensitivity.

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In 2024, the higher interest rate environment heightened competition for deposits and led to a shift within deposit composition toward higher cost products. At December 31, 2025, our LHFI and total deposits increased from December 31, 2024 by $9.3 billion and $10.1 billion, respectively, primarily due to our acquisition of Sandy Spring. At December 31, 2025, non-interest-bearing deposits comprised 22.5% of total deposits, compared to 21.0% at December 31, 2024. As of December 31, 2025, we estimate that approximately 68.7% of our deposits were insured or collateralized and that we maintained available liquidity sources to cover approximately 151.7% of uninsured and uncollateralized deposits. At December 31, 2025, our brokered deposits decreased by $89.6 million to $1.1 billion from December 31, 2024.

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Our regulatory capital ratios continued to exceed the standards to be considered well-capitalized under regulatory requirements. See “Capital Resources” within this Item 7 for additional information about our regulatory capital.

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Strategic Initiatives

Acquisition of Sandy Spring Bancorp, Inc.

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On April 1, 2025, we completed our acquisition of Sandy Spring, the bank holding company for Sandy Spring Bank, and we successfully completed the integration of Sandy Spring branches and operations on October 14, 2025. Sandy Spring’s results of operations are included in our consolidated results since the date of acquisition, and therefore, our fourth quarter and full year 2025 results reflect increased levels of average balances, net interest income, and expenses compared to our results for the corresponding period in 2024. For more information, reference Note 2 “Acquisitions” in “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K.

CRE Loan Sale

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On June 26, 2025, we completed the sale of performing CRE loans acquired in the Sandy Spring acquisition with an unpaid principal balance of $2.0 billion, which we marked to fair value at $1.8 billion and classified as held for sale as of the April 1, 2025 acquisition date. The CRE loan sale transaction generated a $10.9 million pre-tax gain, net of transaction expenses, for the year ended 2025. Under the terms of the loan purchase agreement, we sold the loans without recourse and retained customer-facing servicing responsibilities.

Forward Sale Agreements

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On October 21, 2024, in connection with the execution of the Sandy Spring merger agreement, we entered into an initial forward sale agreement with Morgan Stanley & Co. LLC (the “Forward Purchaser”) relating to an aggregate of 9,859,155 shares of our common stock. On October 21, 2024, we priced the public offering of shares of our common stock in connection with such forward sale agreement and entered into an underwriting agreement with Morgan Stanley & Co. LLC, as representative for the underwriters named therein, the Forward Purchaser and Morgan Stanley & Co. LLC as forward seller (the “Forward Seller”), relating to the registered public offering and sale of 9,859,155 shares of our common stock at a public offering price of $35.50 per share (before underwriting discounts and commissions). The underwriters were granted a 30-day option to purchase up to an additional 1,478,873 shares of our common stock. On October 21, 2024, the underwriters exercised in full their option to purchase the additional 1,478,873 shares of our common stock pursuant to the underwriting agreement and, in connection therewith, we entered into an additional forward sale agreement with the Forward Purchaser relating to 1,478,873 shares of our common stock, on terms substantially similar to those contained in the initial forward sale agreement (such additional forward sale agreement together with the initial forward sale agreement, the “Forward Sale Agreements”).

On April 1, 2025, we physically settled in full the Forward Sale Agreements by delivering 11,338,028 shares of our common stock to the Forward Purchaser. We received net proceeds from such sale of shares of our common stock and full physical settlement of the Forward Sale Agreements, before expenses, of approximately $385.0 million.

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SUMMARY OF 2025 FINANCIAL RESULTS

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Executive Overview

Net Income & Performance Metrics

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Balance Sheet

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NET INCOME

Years Ended December 31, 2025 and 2024

Net income available to common shareholders was $261.8 million for 2025, an increase of $64.5 million or 32.7% and represented both basic and diluted EPS of $2.03, compared to net income of $197.3 million and basic and diluted EPS of $2.29 and $2.24, respectively, for 2024. The increase in net income was primarily related to the Sandy Spring acquisition. Adjusted operating earnings available to common shareholders(+) totaled $444.8 million for 2025, compared to $252.8 million for 2024, and adjusted diluted operating EPS(+) was $3.44 for 2025, compared to $2.88 for 2024.

Net interest income for 2025 totaled $1.2 billion, an increase of $456.4 million or 65.3%, compared to 2024. The increase in net interest income was primarily the result of an increase in average interest-earning assets and higher accretion income, partially offset by an increase in average interest-bearing liabilities, in each case primarily related to the Sandy Spring acquisition. The increase in net interest income was also impacted by organic loan growth and lower cost of funds, driven by lower deposit costs, reflecting the impact of the Federal Reserve lowering the Federal Funds target rate by 100 bps from September 2024 to December 2024 and by another 75 bps from September 2025 to December 2025. For additional details on net interest income, refer to the section “Net Interest Income” included within this Item 7 of this Form 10-K.

Noninterest income for 2025 increased $100.6 million or 84.6% to $219.4 million, compared to 2024, primarily due to the impact of the Sandy Spring acquisition that resulted in increases in most categories of noninterest income and an increase in other operating income, primarily driven by a pre-tax gain on the sale of our equity interest in CSP and a pre-tax gain on the CRE loan sale. In addition, pre-tax losses incurred on the sale of AFS securities decreased from the prior year due to our restructuring of the American National securities portfolio in 2024. For additional details on noninterest income, refer to the section “Noninterest Income” included within this Item 7 of this Form 10-K.

Noninterest expense for 2025 increased $388.0 million or 76.5% to $895.6 million, compared to 2024, primarily due to the impact of the Sandy Spring acquisition, which drove the increases in salaries and benefits expense, merger-related costs, and amortization of intangible assets, as well as increases in most other categories of noninterest expense. For additional details on noninterest expense, refer to the section “Noninterest Expense” included within this Item 7 of this Form 10-K.

Years Ended December 31, 2024 and 2023

Net income available to common shareholders was $197.3 million for 2024, an increase of $7.3 million or 3.8% and represented basic and diluted EPS of $2.29 and $2.24, respectively, compared to net income of $190.0 million and basic and diluted EPS of $2.53 for 2023. The increase in net income was primarily related to the American National acquisition. Adjusted operating earnings available to common shareholders(+) totaled $252.8 million for 2024, compared to $221.2 million for 2023, and adjusted diluted operating EPS(+) was $2.88 for 2024, compared to $2.95 for 2023.

Net interest income for 2024 totaled $698.5 million, an increase of $87.5 million or 14.3%, compared to 2023. The increase in net interest income was primarily the result of an increase in interest-earning assets, higher yield on interest-earning assets, and higher net accretion income, partially offset by the impact of higher interest-bearing liabilities and higher cost of funds. The increase in interest-earning assets and interest-bearing deposits was primarily related to the acquisition of American National. The increased asset yield and cost of funds reflect the impact of the FOMC rate increases throughout 2022 and 2023 prior to the Federal Reserve lowering the Federal Funds target rate 100 bps between September and December 2024.

Noninterest income for 2024 increased $28.0 million or 30.8% to $118.9 million, compared to 2023, primarily driven by a decrease in loss on the sale of AFS securities, as well as the impact of the American National acquisition, partially offset by a decrease in other operating income primarily driven by a gain recognized in 2023 related to our sale-leaseback transactions.

Noninterest expense for 2024 increased $77.1 million or 17.9% to $507.5 million, compared to 2023, primarily driven by an increase in merger-related costs due to the American National and Sandy Spring acquisitions, as well as an increase in salaries and benefits and other increases in various categories of noninterest expense, most of which were due to the impact of the American National acquisition. These increases were partially offset by a decrease in other expenses,

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due primarily to higher expenses in the prior year associated with strategic cost saving initiatives and a legal reserve related to our previously disclosed settlement with the CFPB.

NET INTEREST INCOME

Net interest income, which represents our principal source of revenue, is the amount by which interest income exceeds interest expense. Our net interest margin represents net interest income expressed as a percentage of average earning assets. Changes in the volume and mix of interest-earning assets and interest-bearing liabilities, as well as their respective yields and rates, have a significant impact on our net interest income, net interest margin, and net income. In addition, our net interest income includes the accretion of discounts on our acquired loans, as well as amortization of deposits and borrowings, which will also affect our net interest income and net interest margin.

We seek to fund increased loan volumes by growing our core deposits, but, subject to internal policy limits on the amount of wholesale funding, we may use other wholesale funding sources to fund shortfalls, if any, or provide additional liquidity.

The following tables show interest income on earning assets and related average yields, as well as interest expense on interest-bearing liabilities and related average rates paid for the years ended December 31,:

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For 2025, our net interest income and net interest income (FTE)(+) was $1.2 billion, an increase of $456.4 million and $458.3 million, respectively, from 2024. The increases in both net interest income and net interest income (FTE)(+) were primarily the result of a $9.5 billion increase in average interest-earning assets, as well as an increase in the yield on interest-bearing assets and higher accretion income, partially offset by a $6.9 billion increase in average interest-bearing liabilities, in each case primarily related to the Sandy Spring acquisition, as well as organic loan growth and lower cost of funds, driven by lower deposit costs, reflecting the impact of the Federal Reserve lowering the Federal Funds rates by 100 bps from September 2024 to December 2024 and by another 75 bps from September 2025 to December 2025.

In 2025, our net interest margin increased 47 bps to 3.74% from 3.27% in 2024, and our net interest margin (FTE)(+) increased 46 bps to 3.80% in 2025 from 3.34% in 2024. The increases in net interest margin and net interest margin (FTE)(+) were primarily driven by lower cost of funds, reflecting the impact of the Federal Reserve lowering the Federal Funds rates as discussed above, and higher earning asset yields, which increased due to higher loan accretion, primarily driven by the Sandy Spring acquisition. Our cost of funds decreased 33 bps to 2.15% in 2025 from 2.48% in 2024, due to lower cost of deposits, primarily due to the Federal Funds rate cuts discussed above, partially offset by an increase in net amortization related to acquisition accounting and an increase in long-term subordinated debt with higher borrowing costs, both related to the Sandy Spring acquisition.

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For 2024, net interest income was $698.5 million, an increase of $87.5 million from 2023. Net interest income (FTE)(+) for 2024 was $713.8 million, an increase of $87.8 million from the prior year. The increases in both net interest income and net interest income (FTE)(+) were primarily the result of a $3.0 billion increase in average interest-earning assets, higher yields on interest-earning assets, and higher net accretion income, partially offset by a $2.8 billion increase in average interest-bearing liabilities and higher cost of funds. The increase in average interest-earning assets and interest-bearing liabilities were primarily related to the acquisition of American National. In 2024, our net interest margin decreased 6 bps to 3.27% from 3.33% in 2023, and our net interest margin (FTE)(+) decreased 7 bps to 3.34% in 2024 from 3.41% in 2023. The decreases in net interest margin and net interest margin (FTE)(+) were primarily driven by the increase in the cost of funds, reflecting higher deposit rates and changes in deposit mix as depositors moved to higher yielding deposit products, partially offset by an increase in yield on interest-earning assets, primarily due to the increase in loan balances and accretion income, primarily due to the acquisition of American National, as well as the impact of higher market interest rates.

Our net interest margin and net interest margin (FTE)(+) includes the impact of acquisition accounting fair value adjustments. Net accretion income related to acquisition accounting was approximately $146.1 million for 2025 compared to approximately $40.3 million for 2024, an increase of $105.8 million due to the Sandy Spring acquisition. The impact of accretion and amortization related to acquisition accounting fair value adjustments for the years ended December 31, are reflected in the following table (dollars in thousands):

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The following table shows interest income on earning assets and related average yields as well as interest expense on interest-bearing liabilities and related average rates paid for the years ended December 31, (dollars in thousands):

AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)

(1) Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 21%.

(2) Rates and yields are annualized and calculated from actual, not rounded amounts in thousands, which appear above.

(3) Nonaccrual loans are included in average loans outstanding.

(4) Interest income on loans includes accretion of the fair market value adjustments related to acquisitions, as disclosed above.

(5) Interest expense on time deposits includes accretion (amortization) of the fair market value adjustments related to acquisitions, as disclosed above.

(6) Interest expense on borrowings includes accretion (amortization) of the fair market value adjustments related to acquisitions, as disclosed above.

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The Volume Rate Analysis table below presents changes in our net interest income (FTE)(+) and interest expense and distinguishes between the changes related to increases or decreases in our average outstanding balances of interest-earning assets and interest-bearing liabilities (volume), and the changes related to increases or decreases in average interest rates on such assets and liabilities (rate). Changes attributable to both volume and rate have been allocated proportionally. Results, on a taxable equivalent basis, are as follows for the years ended December 31, (dollars in thousands):

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(1) The rate-related changes in interest income on loans includes the impact of higher accretion of the acquisition-related fair market value adjustments, as disclosed above.

(2) The rate-related changes in interest expense on deposits includes the impact of higher accretion (amortization) of the acquisition-related fair market value adjustments, as disclosed above.

(3) The rate-related changes in interest expense on other borrowings include the impact of higher amortization of the acquisition-related fair market value adjustments, as disclosed above.

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NONINTEREST INCOME

Years Ended December 31, 2025 and 2024

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For 2025, our noninterest income increased $100.6 million or 84.6% to $219.4 million, compared to 2024, primarily due to the impact of the Sandy Spring acquisition and a $25.8 million increase in other operating income, primarily driven by a $14.8 million pre-tax gain on the sale of our equity interest in CSP and a $10.9 million pre-tax gain on the CRE loan sale. In addition, pre-tax losses incurred on the sale of AFS securities decreased by $6.4 million from the prior year due to our restructuring of the American National securities portfolio in 2024.

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Our adjusted operating noninterest income(+) for 2025, which excludes the pre-tax gain on sale of our equity interest in CSP ($14.8 million in 2025), pre-tax gain on CRE loan sale ($10.9 million in 2025), and pre-tax losses on sale of securities ($81,000 in 2025 and $6.5 million in 2024), increased $68.4 million or 54.5% to $193.8 million, compared to $125.4 million for 2024. The increase in adjusted operating noninterest income(+) was primarily due to the impact of the Sandy Spring acquisition, which drove the majority of the $37.3 million increase in fiduciary and asset management fees, due to assets under management increasing approximately 123%, the $9.2 million increase in service charges on deposit accounts, the $5.4 million increase in BOLI income, the $4.5 million increase in mortgage banking income, and the $2.3 million increase in interchange fees. In addition to the acquisition impacts, loan-related interest rate swap fees increased $9.0 million, primarily due to higher transaction volumes.

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Years Ended December 31, 2024 and 2023

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For 2024, our noninterest income increased $28.0 million or 30.8% to $118.9 million, compared to 2023, primarily driven by a $34.5 million decrease in loss on the sale of securities, which included $41.0 million of losses resulting from our balance sheet repositioning strategy executed in 2023, compared to $6.5 million of losses in 2024 due to our restructuring of the American National securities portfolio, as well as increases in various other categories of noninterest income, due primarily to the impact of the American National acquisition discussed below. These increases were partially offset by a $25.2 million decrease in other operating income primarily driven by a $29.6 million gain recognized in 2023 related to our sale-leaseback transactions.

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Our adjusted operating noninterest income(+) for 2024, which excludes losses on sale of securities ($6.5 million in 2024 and $41.0 million in 2023) and the gain on sale-leaseback transactions ($29.6 million in 2023), increased $23.1 million or 22.6%, to $125.4 million, compared to $102.3 million for 2023. The increase in adjusted operating noninterest income(+) was primarily due to the impact of the American National acquisition, which drove the majority of the $7.8 million increase in fiduciary and asset management fees, the $4.0 million increase in service charges on deposit accounts, and the $2.5 million increase in interchange fees. Outside of the American National acquisition, other operating income increased $4.4 million primarily due to an increase in equity method investment income. BOLI income increased $3.9 million primarily due to death benefits received in 2024, and mortgage banking income increased $1.5 million due to an increase in mortgage loan origination volumes and gain on sale margins. These increases were partially offset by a $602,000 decrease in loan-related interest rate swap fees due to lower transaction volumes.

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NONINTEREST EXPENSE

Years Ended December 31, 2025 and 2024

NM = Not Meaningful

For 2025, our noninterest expense increased $388.0 million or 76.5% to $895.6 million, compared to 2024, primarily due to the impact of the Sandy Spring acquisition, which drove the increases of $130.9 million in salaries and benefits expense, $117.3 million in merger-related costs, $40.4 million in amortization of intangible assets, as well as the other increases in most other categories of noninterest expense noted below.

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Our adjusted operating noninterest expense(+) for 2025, which excludes merger-related costs ($157.3 million in 2025 and $40.0 million in 2024), amortization of intangible assets ($59.7 million in 2025 and $19.3 million in 2024), and a FDIC special assessment ($840,000 in 2024) increased $231.2 million or 51.7% to $678.6 million, compared to $447.4 million for 2024. The increase in adjusted operating noninterest expense(+) was primarily due to the impact of the Sandy Spring acquisition, which drove the majority of the $130.9 million increase in salaries and benefits expense, the $24.4 million increase in technology and data processing, the $18.9 million increase in other expenses, the $17.9 million increase in occupancy expenses, the $12.5 million increase in professional services, the $10.6 million increase in FDIC assessment premiums and other insurance, the $7.5 million increase in furniture and equipment expenses, and the $6.7 million increase in marketing and advertising expense.

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Years Ended December 31, 2024 and 2023

NM = Not Meaningful

For 2024, our noninterest expense increased $77.1 million or 17.9% to $507.5 million, compared to 2023, primarily driven by a $37.0 million increase in merger-related costs due to the American National and Sandy Spring acquisitions, as well as the increase in salaries and benefits and increases in various other categories of noninterest expense, most of which were due to the impact of the American National acquisition discussed below. These increases were partially offset by a $19.0 million decrease in other expenses primarily due to expenses in 2023 associated with strategic cost saving initiatives and a legal reserve related to our previously disclosed settlement with the CFPB.

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Our adjusted operating noninterest expense(+) for 2024, which excludes merger-related costs ($40.0 million in 2024 and $3.0 million in 2023), amortization of intangible assets ($19.3 million in 2024 and $8.8 million in 2023), expenses associated with strategic cost saving initiatives principally composed of severance charges related to headcount reductions and charges for exiting leases ($12.6 million in 2023), a legal reserve related to our previously disclosed settlement with the CFPB ($8.3 million in 2023), and FDIC special assessments ($840,000 in 2024 and $3.4 million in 2023), increased $53.1 million or 13.5% to $447.4 million, compared to $394.3 million for 2023. The increase in adjusted operating noninterest expense(+) was primarily due to the impact of the American National acquisition, which drove the majority of the $37.3 million increase in salaries and benefits, the $5.1 million increase in occupancy expenses, the $5.0 million increase in technology and data processing, and the $2.9 million increase in FDIC assessment premiums and other insurance. Outside of the American National acquisition, marketing and advertising expense increased $1.7 million and professional services increased $1.3 million related to projects that occurred in 2024. These increases were partially offset by a $903,000 decrease in other expenses primarily due to a decrease in non-credit related losses on customer transactions.

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SEGMENT RESULTS

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The Company has two reportable operating segments, Wholesale Banking and Consumer Banking, with corporate support functions and intercompany eliminations being presented within Corporate Other. For more information about our operating segments, see Note 18, “Segment Reporting and Revenue” within Item 8 “Financial Statements and Supplementary Data” of this Form 10-K.

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Wholesale Banking

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Our Wholesale Banking segment provides loan, leasing, deposit, treasury management, and capital market services to wholesale customers primarily throughout Virginia, Maryland, Washington, D.C., North Carolina, and South Carolina. These customers include CRE and commercial and industrial customers. This segment also includes our equipment finance subsidiary, which has nationwide exposure. The wealth management business also resides in the Wholesale Banking segment, which provides a wide variety of financial planning, wealth management and trust services to individuals and corporations.

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The following table presents operating results for the years ended December 31, for the Wholesale Banking segment (dollars in thousands):

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Years Ended December 31, 2025 and 2024

Wholesale Banking income before income taxes increased $58.0 million to $245.7 million for 2025, compared to $187.7 million for 2024. The increase was primarily due to an increase in net interest income, primarily driven by the impact of the Sandy Spring acquisition. Wholesale Banking’s noninterest income also increased in 2025 compared to 2024, primarily due to the impact of the Sandy Spring acquisition, which drove the majority of the increases in fiduciary and asset management fees and service charges on deposit accounts. In addition to the acquisition impacts, the increase in noninterest income was driven by an increase in loan-related interest rate swap fees due to higher transaction volumes.

The increases in net interest income and noninterest income were partially offset by an increase in noninterest expense, primarily due to the impact of the Sandy Spring acquisition, which drove the majority of the increase in salaries and benefits expense. In addition, Wholesale Banking’s provision for credit losses increased in 2025 compared to 2024, primarily driven by the CECL Day 1 initial provision expense on non-PCD loans and unfunded commitments acquired from Sandy Spring, and an increase in net charge-offs, primarily driven by the charge-off of two individually assessed commercial and industrial loans.

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Years Ended December 31, 2024 and 2023

Wholesale Banking income before income taxes increased $78.4 million to $187.7 million for 2024, compared to $109.3 million for 2023. The increase was primarily due to an increase in net interest income, primarily driven by the impact of the American National acquisition and favorable spreads on both the loan and deposit portfolios, partially offset by an increase in the provision for credit losses, which includes initial provision expense on non-PCD loans and unfunded commitments acquired from American National, as well as a specific reserve on an impaired loan in the commercial and industrial portfolio recorded in the fourth quarter. Wholesale Banking’s noninterest income also increased in 2024 compared to 2023, primarily due to the impact of the American National acquisition, which drove the majority of the increases in fiduciary and asset management fees and service charges on deposit accounts.

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The increases discussed above were partially offset by an increase in noninterest expense primarily due to the impact of the American National acquisition, which drove the majority of the increase in salaries and benefits expense.

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The following table presents the key balance sheet metrics as of December 31, for the Wholesale Banking segment (dollars in thousands):

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LHFI for the Wholesale Banking segment increased $7.7 billion to $23.2 billion at December 31, 2025 compared to December 31, 2024, primarily driven by the Sandy Spring acquisition, as well as organic loan growth.

Wholesale Banking deposits increased $4.1 billion to $11.3 billion at December 31, 2025 compared to December 31, 2024, primarily due to increases in interest-bearing customer deposits and demand deposits, primarily related to the addition of the Sandy Spring acquired deposits.

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Consumer Banking

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Our Consumer Banking segment provides loan and deposit services and retail brokerage services to consumers and small businesses throughout Virginia, Maryland, Washington, D.C., and North Carolina. Consumer Banking includes the home loan division and investment management and advisory services businesses.

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The following table presents operating results for the years ended December 31, for the Consumer Banking segment (dollars in thousands):

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Years Ended December 31, 2025 and 2024

Consumer Banking income before income taxes decreased $26.2 million to $74.0 million for 2025 compared to $100.2 million for 2024. The decrease was due to an increase in noninterest expense, primarily due to the impact of the Sandy Spring acquisition, which drove the majority of the increase in salaries and benefits expense. In addition, the Consumer Banking provision for credit losses increased in 2025 compared to 2024, primarily driven by the CECL Day 1 initial provision expense on non-PCD loans and unfunded commitments acquired from Sandy Spring.

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The increases in noninterest expense and the provision for credit losses were partially offset by increases in net interest income and noninterest income, primarily driven by the impact of the Sandy Spring acquisition.

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Years Ended December 31, 2024 and 2023

Consumer Banking income before income taxes increased $20.8 million to $100.2 million for 2024 compared to $79.4 million for 2023. The increase was primarily driven by an increase in net interest income, primarily driven by the impact of the American National acquisition and favorable funding credits on deposits, partially offset by an increase in the provision for credit losses, which includes initial provision expense on non-PCD loans and unfunded commitments acquired from American National. Consumer Banking’s noninterest income also increased in 2024 compared to 2023, primarily due to the impact of the American National acquisition, which drove the majority of the increases in interchange fee income, fiduciary and asset management fees, and service charges on deposit accounts.

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The increases discussed above were partially offset by an increase in noninterest expense primarily due to the impact of the American National acquisition, which drove the majority of the increase in salaries and benefits expense and occupancy expense.

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The following table presents the key balance sheet metrics as of December 31, for the Consumer Banking segment (dollars in thousands):

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LHFI for the Consumer Banking segment increased $2.2 billion to $5.3 billion at December 31, 2025 compared to December 31, 2024, primarily driven by the Sandy Spring acquisition, as well as organic loan growth.

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Consumer Banking deposits increased $5.9 billion to $17.8 billion at December 31, 2025 compared to December 31, 2024, primarily due to increases across all deposit categories, primarily related to the addition of the Sandy Spring acquired deposits.

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INCOME TAXES

Our provision for income taxes is based on our results of operations, adjusted for the effect of certain tax-exempt income and non-deductible expenses. In addition, we report certain items of income and expense in different periods for financial reporting and tax return purposes. We recognize the tax effects of these temporary differences in the deferred income tax provision or benefit. Deferred tax assets or liabilities are computed based on the difference between the financial statements and income tax bases of assets and liabilities using the applicable enacted marginal tax rate.

On July 4, 2025 the One Big Beautiful Bill Act was enacted into law by the federal government. In accordance with ASC 740, Income Taxes, we recognized the total effect of the tax law changes in the third quarter of 2025, the interim period in which the law was enacted. The tax provisions of the One Big Beautiful Act did not have a material impact on our income tax balances

Our effective tax rate for the years ended December 31, 2025, 2024, and 2023 was 18.8%, 19.5%, and 15.9%, respectively. The effective tax rate for 2025 includes a $7.7 million tax benefit in the second quarter of 2025 related to revaluation of our state net deferred tax assets as a result of the Sandy Spring acquisition. The effective tax rate for 2024 included a $4.8 million state deferred valuation allowance established during the second quarter of 2024 due to the American National acquisition and other business changes. Other than the aforementioned items, we experienced higher state income tax expense during 2025 due to the Sandy Spring acquisition and an overall increase in the proportion of taxable income to tax-exempt income.

As of each reporting date, we consider existing evidence, both positive and negative, that could impact our view regarding our future realization of deferred tax assets. Our bank subsidiary, Atlantic Union Bank, is subject to a bank franchise tax but not a state income tax in Virginia, its primary place of business. We, our subsidiaries, and Atlantic Union Bank’s non-bank subsidiaries are subject to Virginia income taxes and may be able to utilize existing state deferred tax assets, depending on a number of factors including those entities’ financial results. The valuation allowance totaled $7.8 million and $4.4 million at December 31, 2025 and December 31, 2024, respectively. The increase in the valuation allowance was primarily due to the Sandy Spring acquisition and its historical valuation allowance related to net operating losses in certain state filing jurisdictions.

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BALANCE SHEET

At December 31, 2025, our consolidated balance sheet includes the impact of the Sandy Spring acquisition, which closed April 1, 2025. Preliminary goodwill associated with the Sandy Spring acquisition totaled $519.2 million at December 31, 2025, inclusive of $22.4 million measurement period adjustment increases during the third and fourth quarters of 2025, primarily related to fair values of certain loans, other assets, and other liabilities. See Note 2 “Acquisitions” in the “Notes to Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K for more information on the Sandy Spring acquisition.

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Assets

At December 31, 2025, we had total assets of $37.6 billion, an increase of $13.0 billion or 52.9% from December 31, 2024. The increase in total assets was primarily driven by the Sandy Spring acquisition, as well as organic growth in LHFI.

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LHFI were $27.8 billion at December 31, 2025, an increase of $9.3 billion or 50.5% from December 31, 2024, primarily due to the Sandy Spring acquisition, as well as organic loan growth. At December 31, 2025, average LHFI increased $7.5 billion or 42.3% from the same period in the prior year. For additional information on our loan activity, please refer to the section “Loan Portfolio” included within this Item 7 and Note 4 “Loans and Allowance for Loan and Lease Losses” in the “Notes to Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K.

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Total investments at December 31, 2025 were $5.3 billion, an increase of $1.9 billion or 57.3% from December 31, 2024. The increase in total investments was primarily due to the Sandy Spring acquisition, as well as purchases of AFS agency mortgage-backed securities and HTM municipal bonds using a portion of the proceeds from the CRE loan sale that occurred in the second quarter of 2025. AFS securities totaled $4.2 billion at December 31, 2025 compared to $2.4 billion at December 31, 2024. At December 31, 2025, total net unrealized losses on the AFS securities portfolio were $295.7 million, compared to $402.6 million at December 31, 2024. HTM securities totaled $884.2 million at December 31, 2025, compared to $803.9 million at December 31, 2024, with net unrealized losses of $27.4 million at December 31, 2025, compared to $44.5 million at December 31, 2024.

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Liabilities and Stockholders’ Equity

At December 31, 2025, we had total liabilities of $32.6 billion, an increase of $11.1 billion or 51.9% from December 31, 2024, which was primarily driven by growth in deposits, primarily due to the Sandy Spring acquisition.

Total deposits at December 31, 2025 were $30.5 billion, an increase of $10.1 billion or 49.4% from December 31, 2024. Average deposits at December 31, 2025 increased $8.9 billion or 45.6% from December 31, 2024. The increases were primarily due to increases in interest-bearing customer deposits and demand deposits, primarily related to the addition of the Sandy Spring acquired deposits. For additional information on deposits, refer to the section “Deposits” included within this Item 7 of this Form 10-K.

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Total borrowings at December 31, 2025 were $1.5 billion, an increase of $962.7 million from December 31, 2024. The increase in borrowings was primarily due to $358.0 million of long-term subordinated debt assumed in connection with the Sandy Spring acquisition and an increase in FHLB advances in the fourth quarter of 2025. For additional information on our borrowing activity, refer to Note 9 “Borrowings” in the “Notes to Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K.

At December 31, 2025, our stockholders’ equity was $5.0 billion, an increase of $1.9 billion from December 31, 2024, primarily driven by the issuance of common stock in connection with the Sandy Spring acquisition. In addition, on April 1, 2025, we physically settled in full the Forward Sale Agreements and received net proceeds, before expenses, of approximately $385.0 million. Our consolidated regulatory capital ratios continue to exceed the minimum capital requirements and are considered “well-capitalized” for regulatory purposes. Refer to “Capital Resources” included within this Item 7 as well as Note 12 "Stockholders’ Equity" contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K for additional information on our capital resources and the Forward Sale Agreements.

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During 2025, we declared and paid dividends on our outstanding shares of Series A Preferred Stock of $687.52 per share (equivalent to $1.72 per outstanding depositary share). During 2025, we also declared and paid cash dividends of $1.39 per common share, an increase of $0.09 per share or 6.9% over 2024.

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SECURITIES

At December 31, 2025, we had total investments of $5.3 billion or 14.0% of total assets, compared to $3.3 billion or 13.6% of total assets at December 31, 2024. This increase was primarily due to the Sandy Spring acquisition and purchases of AFS agency mortgage-backed securities and HTM municipal bonds using a portion of the proceeds from the CRE loan sale that occurred in the second quarter of 2025. We seek to diversify our investment portfolio to minimize risk, and we focus on purchasing MBS for cash flow and reinvestment opportunities and securities issued by states and political subdivisions due to the tax benefits and the higher tax-equivalent yield offered from these securities. The majority of our MBS are agency-backed securities, which have a government guarantee. For information regarding the hedge transaction related to AFS securities, see Note 11 “Derivatives” in “Notes to the Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K.

The table below sets forth a summary of the AFS securities, HTM securities, and restricted stock as of December 31, (dollars in thousands):

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The following table summarizes the weighted average yields(1) for AFS securities by contractual maturity date of the underlying securities as of December 31, 2025:

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(1) Yields on tax-exempt securities have been computed on an estimated tax-equivalent basis.

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The following table summarizes the weighted average yields(1) for HTM securities by contractual maturity date of the underlying securities as of December 31, 2025:

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(1) Yields on tax-exempt securities have been computed on an estimated tax-equivalent basis.

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Weighted average yield is calculated as the tax-equivalent yield on a pro rata basis for each security based on its relative amortized cost.

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As of December 31, 2025, we maintained a diversified municipal bond portfolio with approximately 64% of our holdings in general obligation issues and the remainder primarily backed by revenue bonds. Issuances within the State of Texas represented 19% of the total municipal portfolio; no other state had a concentration above 10%. Substantially all of our municipal holdings are considered investment grade. When purchasing municipal securities, we focus on strong underlying ratings for general obligation issuers or bonds backed by essential service revenues.

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LOAN PORTFOLIO

LHFI were $27.8 billion and $18.5 billion at December 31, 2025 and 2024, respectively, primarily driven by the increase in LHFI of $8.6 billion from the acquisition of Sandy Spring, as well as organic loan growth. Total CRE and commercial and industrial loans represented our largest loan categories at both December 31, 2025 and 2024. We remain committed to originating soundly underwritten loans to qualifying borrowers within our markets.

The following table presents the total and remaining maturities, based on contractual maturity, by loan type, and by rate type (variable or fixed), net of unearned income, as of December 31, 2025 (dollars in thousands):

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Our highest concentration of credit by loan type is in CRE. CRE loans consist of term loans secured by a mortgage lien on the real property and include both non-owner occupied and owner occupied CRE loans, as well as construction and land development, multifamily real estate, and residential 1-4 family-commercial loans. CRE loans are generally viewed as having more risk of default than residential real estate loans and depend on cash flows from the owner’s business or the property’s tenants to service the debt. The borrower’s cash flows may be affected significantly by general economic conditions, a downturn in the local economy, or in occupancy rates in the market where the property is located, any of which could increase the likelihood of default.

We perform risk assessments to identify the CRE concentration ratio based on the two-tiered guidelines issued by the federal banking regulators. The loan balances used to determine the CRE concentration ratio are as defined in the Call Report instructions, which is comprised of loans secured by 1-4 family residential construction loans, loans secured by other construction loans and all land development and other land loans, loans secured by multi-family residential properties, loans secured by other nonfarm non-residential properties, and loans to finance commercial real estate, construction, and land development activities, and do not necessarily match the balances displayed in Note 4 “Loans and Allowance for Loan and Lease Losses” in the “Notes to Consolidated Financial Statements” contained in Item 8 “Financial Statements and Supplementary Data” of this Form 10-K.

The two-tiered guidelines include (i) total reported loans for construction, land development, and other land represent 100 percent or more of the institution’s total capital; or (ii) total CRE loans as defined in the guidance represent 300 percent or more of the institution’s total capital, and the outstanding balance of the institution’s CRE loan portfolio as defined in the guidance has increased by 50 percent or more during the prior 36 months.

At December 31, 2025 and 2024, our construction and land development concentration as a percentage of capital totaled 39.2% and 63.2%, respectively, and our CRE concentration as defined in the guidance as a percentage of capital totaled 275.3% and 292.7%, respectively. The decreases in the concentration ratios are primarily driven by the impacts of the Sandy Spring acquisition and the related $2.0 billion sale of performing CRE loans that occurred in the second quarter of 2025, as well as other loan portfolio mix changes in the third and fourth quarters of 2025, primarily due to updated regulatory reporting classifications for certain loans. Total CRE exposure as defined in the guidance increased 93.4% for the 36-month period ended December 31, 2025, primarily due to the Sandy Spring and American National acquisitions, partially offset by the CRE loan sale.

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We seek to mitigate risks attributable to our most highly concentrated portfolios and our portfolios that pose unique risks to our balance sheet through our credit underwriting and monitoring processes, including oversight by a centralized credit administration function, approval process, credit policy, and risk management committee, as well as through our seasoned bankers that focus on lending to borrowers with proven track records in markets that we are familiar with. All construction lending risk is controlled by a centralized construction loan servicing department that independently reviews and approves each draw request, including assessing on-going budget adequacy, and monitors project completion milestones. When underwriting CRE loans, we require collateral values in excess of the loan amounts, cash flows in excess of expected debt service requirements, and equity investment in the project. As part of the CRE loan origination process, we also stress test loan interest rates and occupancy rates to determine the impact of different economic conditions on the borrower’s ability to maintain adequate debt service.

We also manage our CRE exposure through product type limits, individual loan-size limits for CRE product types, client relationship limits, and transactional risk acceptance criteria, as well as other techniques, including but not limited to, loan syndications/participations, collateral, guarantees, structure, covenants, and other risk reduction techniques. Our CRE loan policies are specific to individual product types and underwriting parameters vary depending on the risk profile of each asset class. We evaluate risk concentrations regularly in our CRE portfolio on both an aggregate portfolio level and on an individual client basis, and regularly review and adjust as appropriate our lending strategies and CRE product-specific approach to underwriting in light of market conditions and our overall corporate strategy and initiatives.

The average loan size of our CRE portfolio was approximately $1.2 million and $1.1 million, as of December 31, 2025 and 2024, respectively, and the median loan size in our CRE portfolio was approximately $311,000 as of December 31, 2025 and approximately $242,000 as of December 31, 2024.

The following table presents the composition of our CRE loan categories, including the industry classification for CRE non-owner occupied loans, and CRE loans as a percentage of total loans for the years ended December 31, (dollars in thousands):

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Because payments on loans secured by commercial and multifamily properties are often dependent on the successful operation or management of the properties, repayment of these loans may be subject to adverse conditions in the real estate market or the economy. In particular, the repayment of loans secured by non-owner occupied commercial properties depend primarily on the tenant’s continuing ability to pay rent to the property owner, who is our borrower, or, if the property owner is unable to find a tenant, the property owner’s ability to repay the loan without the benefit of a rental income stream. If the cash flow from the project is reduced, or if leases are not obtained or renewed, the borrower’s ability to repay the loan may be impaired. Due to these risks, we proactively monitor our non-owner occupied CRE and multifamily real estate exposures and evaluate these portfolios against our established lending policies, and we believe this monitoring and evaluation helps ensure that these portfolios are geographically diverse and granular. We do not currently monitor owner-occupied CRE loans based on geographical markets as the primary source of repayment for these loans is predicated on the cash flow from the underlying operating entity, which is generally less

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dependent on conditions in the relevant CRE market. These loans are generally located within our geographical footprint and are generally distributed across industries.

The following table presents the distribution of our CRE non-owner occupied, multifamily real estate, and office portfolio loans by market location based on the underlying loan collateral for the years ended December 31, (dollars in thousands):

(1) The office portfolio is a subset of our CRE non-owner occupied loans included in the column to the left.

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We continue to monitor our exposure to office space, within our non-owner occupied CRE portfolio, including periodic credit risk assessment of expiring office leases for most of the office portfolio. We do not currently finance large, high-rise, or major metropolitan central business district office buildings, and the office portfolio is generally in suburban markets with stronger occupancy levels than downtown office markets. The average loan size in our office portfolio was $2.1 million and $1.7 million as of December 31, 2025 and 2024, respectively, and the median loan size in our office portfolio was $720,000 and $571,000 as of December 31, 2025 and 2024, respectively. The average loan size in our multifamily portfolio was $3.6 million and $2.5 million as of December 31, 2025 and 2024, respectively, and the median loan size in our multifamily portfolio was $843,000 and $646,000 as of December 31, 2025 and 2024, respectively.

ASSET QUALITY

Overview

At December 31, 2025, NPAs as a percentage of total LHFI were 0.42%, an increase of 10 bps from the prior year, and included nonaccrual loans of $115.1 million. The increase in NPAs as a percentage of LHFI was primarily due to PCD loans acquired from Sandy Spring in the second quarter of 2025. Our net charge-offs were $42.5 million for the year ended 2025, compared to net charge-offs of $8.8 million for the prior year, primarily due to the charge-off of two individually assessed commercial and industrial loans.

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Our ACL at December 31, 2025 increased $127.6 million from the prior year, primarily reflecting the impacts of the Sandy Spring acquisition for which we recorded an initial ACL of $129.2 million that consisted of an ALLL of $117.8 million and RUC of $11.4 million.

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We continue to refrain from originating or purchasing loans from foreign entities, and we selectively originate loans to higher risk borrowers. Our loan portfolio generally does not include exposure to option adjustable-rate mortgage products, high loan-to-value ratio mortgages, interest only mortgage loans, subprime mortgage loans, or mortgage loans with initial teaser rates, which are all considered higher risk instruments.

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Nonperforming Assets

At December 31, 2025, NPAs totaled $116.9 million, an increase of $58.5 million or 100.2% from December 31, 2024. Our NPAs as a percentage of total LHFI at December 31, 2025 and 2024 were 0.42%, and 0.32%, respectively. The increase in NPAs was primarily due to PCD loans acquired from Sandy Spring in the second quarter of 2025.

The following table shows a summary of asset quality balances and related ratios as of and for the years ended December 31, (dollars in thousands):

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NPAs include non-accrual LHFI, which totaled $115.1 million and $58.0 million at December 31, 2025 and 2024, respectively. The following table shows the activity in nonaccrual LHFI for the years ended December 31, (dollars in thousands):

(1) The Company recorded measurement period adjustments in the third and fourth quarters of 2025 related to the fair values of certain loans, which impacted the nonaccrual activity for the year ended December 31, 2025. The increase in additions during the year ended December 31, 2025 was primarily due to PCD loans acquired from Sandy Spring.

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The following table presents the composition of nonaccrual LHFI and the coverage ratio, which is the ALLL expressed as a percentage of nonaccrual LHFI, as of December 31, (dollars in thousands):

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Past Due Loans

At December 31, 2025, past due LHFI still accruing interest totaled $113.0 million or 0.41% of total LHFI, compared to $57.7 million or 0.31% of total LHFI at December 31, 2024. The increase in past due LHFI was primarily driven by increases of $29.4 million and $21.4 million within LHFI 30-59 days past due and LHFI 90 days or more past due and still accruing, respectively. Of the total past due LHFI still accruing interest, $35.6 million or 0.13% of total LHFI were loans past due 90 days or more at December 31, 2025, compared to $14.1 million or 0.08% of total LHFI at December 31, 2024.

Troubled Loan Modifications

For the years ended December 31, 2025 and 2024, we had TLMs with an amortized cost basis of $45.4 million and $35.2 million, respectively. As of December 31, 2025 and 2024, there were no material unfunded commitments on loans modified and designated as TLMs.

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Net Charge-offs

For the year ended December 31, 2025, net charge-offs were $42.5 million or 0.17% of total average LHFI, compared to $8.8 million or 0.05%, respectively, for the year ended December 31, 2024. The increase in net charge-offs was primarily due to the charge-off of two commercial and industrial loans.

Provision for Credit Losses

We recorded a provision for credit losses of $141.8 million for the year ended December 31, 2025, an increase of $91.7 million or 183.1% from the prior year. The provision for credit losses for the year ended December 31, 2025 reflected $130.7 million in provision for loan losses and a $11.1 million provision for unfunded commitments.

Included in the provision for credit losses for the year ended December 31, 2025 was $89.5 million of Day 1 initial provision expense on non-PCD loans and $11.4 million on unfunded commitments on loans acquired from Sandy Spring in the second quarter of 2025. Included in the provision for credit losses for the year ended December 31, 2024 was $13.2 million of Day 1 initial provision expense on non-PCD loans and $1.4 million on unfunded commitments, on loans acquired from American National in the second quarter of 2024. Outside of the Day 1 initial provision expense recorded on non-PCD loans and unfunded commitments acquired from Sandy Spring in the second quarter of 2025 and American National in the second quarter of 2024, respectively, the provision for credit losses increased compared to the prior year, primarily due to an increase in net charge-offs, primarily driven by the charge-off of two commercial and industrial loans, as discussed above.

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Allowance for Credit Losses

At December 31, 2025, the ACL was $321.3 million, an increase of $127.6 million from December 31, 2024, comprised of an ALLL of $295.1 million and a reserve for unfunded commitments of $26.2 million. The increase in the ACL was primarily due to the initial ACL recorded in the Sandy Spring acquisition. Outside of the initial ACL related to the Sandy Spring acquisition in the second quarter of 2025 and American National in the second quarter of 2024, respectively, the ACL at December 31, 2025 increased from the prior year, primarily due to the impact of macroeconomic forecasts and loan growth, partially offset by the charge-off of two individually assessed commercial loans.

The following table summarizes the ACL as of December 31, (dollars in thousands):

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The following table summarizes net charge-off activity by loan segment for the years ended December 31, (dollars in thousands):

(1) Net charge-off rates are calculated by dividing net charge-offs by average LHFI for the period for each loan category.

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The following table summarizes the ALLL activity by loan segment and the percentage of the loan portfolio that the related ALLL covers as of December 31, (dollars in thousands):

(1) The percentage represents the loan balance divided by total LHFI.

(2) The percentage represents ALLL divided by the total LHFI for each category.

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The increase in the ALLL from the prior year for the Commercial segment is primarily due to the Sandy Spring acquisition and the impact of macroeconomic forecasts, partially offset by the charge-off of two individually assessed commercial and industrial loans. The increase in the ALLL from the prior year for the Consumer segment is primarily due to the Sandy Spring acquisition, partially offset by the run-off of the third-party lending and auto portfolios.

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DEPOSITS

As of December 31, 2025, our total deposits were $30.5 billion, an increase of $10.1 billion or 49.4% compared to December 31, 2024, primarily reflecting the impact of the Sandy Spring acquisition. Total interest-bearing deposits consisted of interest checking accounts, money market accounts, savings accounts, time deposits, and brokered deposits. Our total time deposit balances with customers totaled $5.7 billion and accounted for 25.3% of total interest-bearing customer deposits at December 31, 2025, compared to $4.1 billion and 27.5%, respectively, at December 31, 2024. We seek to fund increased loan volumes by growing core deposits, but, subject to internal policy limits on the amount of wholesale funding we may maintain, we may use wholesale funding sources to fund shortfalls, if any, or provide additional liquidity. We use brokered deposits purchased through nationally recognized networks as part of our overall liquidity management strategy on an as needed basis. At December 31, 2025, our brokered deposits totaled $1.1 billion, compared to $1.2 billion at December 31, 2024. During 2025, we paid down $89.6 million in brokered deposits and continued to reduce higher-cost, non-relationship deposits acquired from Sandy Spring.

The following table presents the deposit balances, including brokered deposits, by major category as of December 31, (dollars in thousands):

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(1) Includes uninsured deposits of $10.8 billion and $7.1 billion as of December 31, 2025 and 2024, respectively, and collateralized deposits of $1.2 billion and $1.1 billion as of December 31, 2025 and 2024, respectively. Amounts are based on estimated amounts of uninsured deposits as of the reported period.

Maturities of time deposits in excess of FDIC insurance limits were as follows as of December 31, (dollars in thousands):

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CAPITAL RESOURCES

Capital resources represent funds, earned or obtained, over which financial institutions can exercise greater or longer control in comparison with deposits and borrowed funds. Our management reviews our capital adequacy on an ongoing basis with reference to size, composition, and quality of our resources and consistency with regulatory requirements and industry standards. We seek to maintain a capital structure that will assure an adequate level of capital to support anticipated asset growth and to absorb potential losses, while allowing us to effectively leverage our capital to maximize return to shareholders.

On January 29, 2026, we announced that our Board of Directors declared a quarterly dividend on our outstanding shares of our Series A preferred stock. The dividend of $171.88 per share (equivalent to $0.43 per outstanding depositary share) is payable on March 2, 2026 to preferred shareholders of record as of February 13, 2026. Our Board of Directors also declared a quarterly dividend of $0.37 per share of common stock, which is payable on February 27, 2026 to common shareholders of record as of February 13, 2026.

Under the Basel III capital rules, we must comply with the following minimum capital ratios: (i) a common equity Tier 1 capital ratio of 7.0% of risk-weighted assets; (ii) a Tier 1 capital ratio of 8.5% of risk-weighted assets; (iii) a total capital ratio of 10.5% of risk-weighted assets; and (iv) a leverage ratio of 4.0% of total assets. These ratios, with the exception of the leverage ratio, include a 2.5% capital conservation buffer, which is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of common equity Tier 1 to risk-weighted assets above the minimum but below the conservation buffer will face constraints on dividends, equity repurchases, and compensation based on the amount of the shortfall.

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The following table summarizes our regulatory capital and related ratios as of December 31, (dollars in thousands):

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(1) Calculated by subtracting the regulatory minimum capital ratio requirements from the Company’s actual ratio results for Common equity, Tier 1, and Total risk-based capital. The lowest of the three measures represents the Company’s capital conservation buffer ratio.

(+) Refer to “Non-GAAP Financial Measures” within this Item 7 for more information about this non-GAAP financial measure, including a reconciliation of this measure to the most directly comparable financial measure calculated in accordance with GAAP.

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For more information about our off-balance sheet obligations and cash requirements refer to section “Liquidity” included within this Item 7.

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MARKET RISK

Interest Sensitivity

Market risk is the risk of loss arising from adverse changes in the fair value of financial instruments due to changes in interest rates, exchange rates, and equity prices. Our market risk is composed primarily of interest rate risk. Our asset liability management committee is responsible for reviewing our interest rate sensitivity position and establishing policies to monitor and limit exposure to this risk. Our Board of Directors reviews and approves the policies established by our asset liability management committee.

We monitor interest rate risk using three complementary modeling tools: static gap analysis, earnings simulation modeling, and economic value simulation (net present value estimation). Each of these models measures changes in a variety of interest rate scenarios. While each of the interest rate risk models has limitations, taken together, they represent a reasonably comprehensive view of the magnitude of our interest rate risk, the distribution of risk along the yield curve, the level of risk through time, and the amount of exposure to changes in certain interest rate relationships. We use the static gap analysis, which measures aggregate re-pricing values, less often because it does not effectively consider the optionality embedded into many assets and liabilities and, therefore, we do not address it here. We use earnings simulation and economic value simulation models on a regular basis, which more effectively measure the cash flow and optionality impacts, and these models are discussed below.

We determine the overall magnitude of interest sensitivity risk and then we create policies and practices governing asset generation and pricing, funding sources and pricing, and off-balance sheet commitments. These policies and practices are based on management’s expectations regarding future interest rate movements, the states of the national, regional and local economies, and other financial and business risk factors. We use simulation modeling to measure and monitor the effect of various interest rate scenarios and business strategies on our net interest income. This modeling reflects interest rate changes and the related impact on net interest income and net income over specified time horizons.

Earnings Simulation Modeling

Management uses earnings simulation modeling to measure the sensitivity of our net interest income to changes in interest rates. The model calculates an earnings estimate based on current and projected balances and rates. This method is subject to the accuracy of the assumptions that underlie the process, but we believe it provides a better analysis of the sensitivity of earnings to changes in interest rates than other analyses, such as the static gap analysis noted above.

We derive the assumptions used in the model from historical trends and management’s outlook, including expected loan growth, loan prepayment rates, projected loan origination spreads, deposit growth rates, changes to deposit product betas and non-maturity deposit decay rates, and projected yields and rates. These assumptions may not be realized and unanticipated events and circumstances may also occur that cause the assumptions to be inaccurate. The model also does not take into account any future actions of management to mitigate the impact of interest rate changes. Our asset liability management committee monitors the assumptions at least quarterly and periodically adjusts them as it deems appropriate. In the modeling, we assume that all maturities, calls, and prepayments in the securities portfolio are reinvested in like instruments, and we base the MBS prepayment assumptions on industry estimates of prepayment speeds for portfolios with similar coupon ranges and seasoning. We also use different interest rate scenarios and yield curves to measure the sensitivity of earnings to changing interest rates. Interest rates on different asset and liability accounts move differently when the short-term market rate changes and these differences are reflected in the different rate scenarios. We adjust deposit betas, decay rates and loan prepayment speeds periodically in our models for non-maturity deposits and loans.

We use our earnings simulation model to estimate earnings in rate environments where rates are instantaneously shocked up or down around a “most likely” rate scenario, based on implied forward rates and futures curves. The analysis assesses the impact on net interest income over a 12-month period after an immediate increase or “shock” in rates, of 100 bps up to 300 bps. The model, under all scenarios, does not drop the index below zero.

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The following table represents the interest rate sensitivity on our net interest income across the rate paths modeled for balances as of December 31,:

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If an institution is asset sensitive its assets reprice more quickly than its liabilities and net interest income would be expected to increase in a rising interest rate environment and decrease in a falling interest rate environment. If an institution is liability sensitive its liabilities reprice more quickly than its assets and net interest income would be expected to decrease in a rising interest rate environment and increase in a falling interest rate environment.

From a net interest income perspective, we were more asset sensitive as of December 31, 2025 compared to 2024. This shift is due, in part, to the changing market characteristics of certain loan and deposit products and, in part, due to securities portfolio strategies. We expect net interest income to increase with an immediate increase or shock in market rates. In a decreasing interest rate environment, we expect a decline in net interest income as interest-earning assets re-price more quickly than interest-bearing deposits.

Economic Value Simulation Modeling

We use economic value simulation modeling to calculate the estimated fair value of assets and liabilities over different interest rate environments. We calculate the economic values based on discounted cash flow analysis. The net economic value of equity is the economic value of all assets minus the economic value of all liabilities. The change in net economic value over different rate environments is an indication of the longer-term earnings capability of the balance sheet. We use the same assumptions in the economic value simulation model as in the earnings simulation model. The economic value simulation model uses instantaneous rate shocks to the balance sheet.

The following table reflects the estimated change in net economic value over different rate environments using economic value simulation for the balances as of December 31,:

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