FIRST FINANCIAL BANKSHARES INC (FFIN)

CIK: 0000036029. SIC: 6022 State Commercial Banks. Latest 10-K as of: 2026-02-25.

SIC breadcrumb: Finance, Insurance, And Real Estate > Depository Institutions > SIC 6022 State Commercial Banks

SEC company page: https://www.sec.gov/edgar/browse/?CIK=36029. Latest filing source: 0001193125-26-071549.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-25. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000036029.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-05. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000036029.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001193125-26-206412.

Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization. Confidence: high. Filing date: 2026-05-05. Report date: 2026-03-31.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When used in this Form 10-Q, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “predict,” “project,” “could,” “may,” or “would” and similar expressions, as they relate to us or our management, identify forward-looking statements. These forward-looking statements are based on information currently available to our management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including, but not limited, to those discussed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, under the heading “Risk Factors,” and the following:

•
general economic conditions, including the impact of government shutdowns, our local, state and national real estate markets, and employment trends;

•
the effects of and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”);

•
effect of severe weather conditions, including hurricanes, tornadoes, flooding and droughts;

•
volatility and disruption in national and international financial and commodity markets;

•
government intervention in the U.S. financial system including the effects of recent legislative, tax, accounting, tariffs, and regulatory actions and reforms, including the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Jumpstart Our Business Startups Act, the Consumer Financial Protection Bureau (“CFPB”), the Inflation Reduction Act of 2022, the capital ratios of Basel III as adopted by the federal banking authorities and the Tax Cuts and Jobs Act, and the One Big Beautiful Bill Act ("OBBBA");

•
political or social unrest and economic instability;

•
the ability of the federal government to address the national economy;

•
changes in our competitive environment from other financial institutions and financial service providers;

•
the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board (“PCAOB”), the Financial Accounting Standards Board (“FASB”) and other accounting standard setters;

•
effect of a pandemic, epidemic, or highly contagious disease, on our Company, the communities where we have our branches, the state of Texas and the United States, related to the economy and overall financial stability, including disruptions to supply channels and labor availability;

•
government and regulatory responses to a pandemic, epidemic, or highly contagious disease;

•
the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which we and our subsidiaries must comply;

•
the costs, effects and results of regulatory examinations, investigations or reviews and the ability to obtain required regulatory approvals;

•
changes in the demand for loans, including loans originated for sale in the secondary market;

•
fluctuations in the value of collateral securing our loan portfolio and in the level of the allowance for credit losses;

•
the accuracy of our estimates of future credit losses;

•
the accuracy of our estimates and assumptions regarding the performance of our securities portfolio, including securities with a current unrealized loss;

•
inflation, interest rate, market and monetary fluctuations;

•
soundness of other financial institutions with which we have transactions;

•
changes in consumer spending, borrowing and savings habits;

•
changes in commodity prices (e.g., oil and gas, cattle, and wind energy);

•
our ability to attract deposits, maintain and/or increase market share;

•
changes in our liquidity position, including a result of a reduction in the amount of sources of liquidity we currently have;

•
fluctuations in the market value and liquidity of the investment securities we have classified as available-for-sale ("AFS"), including the effects of changes in market interest rates;

•
changes in the reliability of our vendors, internal control system or information systems;

•
cyber-attacks on our technology information systems, including fraud from our customers and external third-party vendors;

30

•
our ability to attract and retain qualified employees;

•
acquisitions and integration of acquired businesses;

•
the possible impairment of goodwill and other intangibles associated with our acquisitions;

•
consequences of continued bank mergers and acquisitions in our market area, resulting in fewer but much larger and stronger competitors;

•
expansion of operations, including branch openings, new product offerings and expansion into new markets;

•
changes in our compensation and benefit plans;

•
acts of God or of war or terrorism;

•
the impact of changes to the global climate and its effect on our operations and customers;

•
potential risk of environmental liability associated with lending activities;

•
the rise of Artificial Intelligence as a commonly used resource; and

•
our success at managing the risk involved in the foregoing items.

In addition, financial markets and global supply chains may continue to be adversely affected by the current or anticipated impact of military conflict, including the current Ukraine and Middle East conflicts and other world events, terrorism or other geopolitical events.

Such forward-looking statements reflect the current views of our management with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategies and liquidity. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this paragraph. We undertake no obligation to publicly update or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise (except as required by law).

Introduction

As a financial holding company, we generate most of our revenue from interest on loans and investments, trust fees, gain on sale of mortgage loans and service charges and fees on deposit accounts. Our primary source of funding for our loans and investments are deposits held by our bank subsidiary, First Financial Bank. Our largest expenses are interest on deposits and salaries and related employee benefits. We measure our performance by calculating our return on average assets, return on average equity, regulatory capital ratios, net interest margin and efficiency ratio, which is calculated by dividing noninterest expense by the sum of net interest income on a tax equivalent basis and noninterest income.

The following discussion and analysis of operations and financial condition should be read in conjunction with the consolidated financial statements and accompanying footnotes included in Item 1 of this Form 10-Q as well as those included in the Company’s 2025 Annual Report on Form 10-K.

Critical Accounting Policies

We prepare consolidated financial statements based on generally accepted accounting principles (“GAAP”) and customary practices in the banking industry. These policies, in certain areas, require us to make significant estimates and assumptions.

We deem a policy critical if (i) the accounting estimate requires us to make assumptions about matters that are highly uncertain at the time we make the accounting estimate; and (ii) different estimates that reasonably could have been used in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, would have a material impact on the financial statements.

We deem our most critical accounting policies to be (i) our allowance for credit losses and our provision for credit losses and (ii) our valuation of financial instruments. We have other significant accounting policies and continue to evaluate the materiality of their impact on our consolidated financial statements, but we believe these other policies either do not generally require us to make estimates and judgments that are difficult or subjective, or it is less likely they would have a material impact on our reported results for a given period. A discussion of (i) our allowance for credit losses and our provision for credit losses and (ii) our valuation of financial instruments is included in Notes 1, 3, and 9 to our Consolidated Financial Statements.

It is difficult to estimate how potential changes in any one economic factor or input might affect the overall allowance because a wide variety of factors and inputs are considered in estimating the ACL and changes in those factors and inputs considered may not occur at the same rate and may not be consistent across all product types. Additionally, changes in factors and inputs may be directionally inconsistent, such that improvement in one factor may offset deterioration in others. A large driver to the ACL is the overall credit quality of the underlying credits. Deterioration or improvement in credit quality could have a significant impact on the overall level of ACL.

Stock Repurchase

On July 22, 2025, the Company's Board of Directors extended the authorization to repurchase up to 5 million common shares through July 31, 2026.

The prior authorization had been in place since July 27, 2021. The stock repurchase plan authorizes management to repurchase and retire the stock at such time as repurchases and retirements are considered beneficial to the Company and stockholders. Any repurchase of stock will be made through

31

the open market, block trades, or in privately negotiated transactions in accordance with applicable laws and regulations. Under the repurchase plan, there is no minimum number of shares that the Company is required to repurchase. There have been no repurchases during 2025 or through March 31, 2026.

Results of Operations

Performance Summary. Net earnings for the first quarter of 2026 were $71.54 million, an increase of 16.62% when compared to earnings of $61.35 million for the first quarter of 2025. Diluted earnings per share was $0.50 for the first quarter of 2026 and $0.43 for the first quarter of 2025.

The return on average assets was 1.89% for the first quarter of 2026, as compared to 1.78% for the first quarter of 2025. The return on average equity was 14.83% for the first quarter of 2026, as compared to 15.12% for the first quarter of 2025.

Net Interest Income. Net interest income is the difference between interest income on earning assets and interest expense on liabilities incurred to fund those assets. Our earning assets consist primarily of loans and investment securities. Our liabilities to fund those assets consist primarily of noninterest-bearing and interest-bearing deposits.

Tax-equivalent net interest income was $138.58 million for the first quarter of 2026, as compared to $121.49 million for the same period last year. The increase in tax equivalent net interest income for the first quarter of 2026 compared to the same quarter in 2025 was largely attributable to the increases in average loans, the increase in average balance and the rate of return on taxable and tax-exempt investment securities, and a $1.26 million reversal of interest expense. Average earning assets were $14.54 billion for the first quarter of 2026, as compared to $13.16 billion during the first quarter of 2025. The increase of $1.38 billion in average earning assets for the first quarter of 2026 when comp

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-25. Report date: 2025-12-31.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion contains forward-looking statements that are subject to risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to those listed in “Item 1A – Risk Factors” and in the “Cautionary Statement Regarding Forward-Looking Statements” notice on page 1.

Introduction

As a financial holding company, we generate most of our revenue from interest on loans and investments, trust fees, gain on sale of mortgage loans and service charges and fees on deposit accounts. Our primary source of funding for our loans and investments are deposits held by our bank subsidiary, First Financial Bank. Our largest expenses are salaries and related employee benefits. We measure our performance by calculating our return on average assets, return on average equity, regulatory capital ratios, net interest margin and efficiency ratio, which is calculated by dividing noninterest expense by the sum of net interest income on a tax equivalent basis and noninterest income.

The following discussion and analysis of the major elements of our consolidated balance sheets as of December 31, 2025 and 2024, and consolidated statements of earnings for the years 2023 through 2025 should be read in conjunction with our consolidated financial statements, accompanying notes, and selected financial data presented elsewhere in this Form 10-K.

Critical Accounting Policies

We prepare consolidated financial statements based on generally accepted accounting principles (“GAAP”) and customary practices in the banking industry. These policies, in certain areas, require us to make significant estimates and assumptions.

We deem a policy critical if (1) the accounting estimate required us to make assumptions about matters that are highly uncertain at the time we make the accounting estimate; and (2) different estimates that reasonably could have been used in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, would have a material impact on the financial statements.

We deem our most critical accounting policies to be (1) our allowance for credit losses (“ACL”) and our provision for credit losses and (2) our valuation of financial instruments. We have other significant accounting policies and continue to evaluate the materiality of their impact on our consolidated financial statements, but we believe these other policies either do not generally require us to make estimates and judgments that are difficult or subjective, or it is less likely they would have a material impact on our reported results for a given period. A discussion of (1) our allowance for credit losses and our provision for credit losses and (2) our valuation of financial instruments is included in Notes 1 and 10, respectively, to our Consolidated Financial Statements.

It is difficult to estimate how potential changes in any one economic factor or input might affect the overall allowance because a wide variety of factors and inputs are considered in estimating the ACL and changes in those factors and inputs considered may not occur at the same rate and may not be consistent across all product types. Additionally, changes in factors and inputs may be directionally inconsistent, such that improvement in one factor may offset deterioration in others. A large driver to the ACL is the overall credit quality of the underlying credits. Deterioration or improvement in credit quality could have a significant impact on the overall level of ACL.

Stock Repurchase

On July 22, 2025, the Company’s Board of Directors extended the authorization to repurchase up to 5,000,000 common shares through July 31, 2026. The prior authorization had been in place since July 27, 2021. The stock repurchase plan authorizes management to repurchase and retire the stock at such time as repurchases and retirements are considered beneficial to the Company and stockholders. Any repurchase of stock will be made through the open market, block trades, or in privately negotiated transactions in accordance with applicable laws and regulations. Under the repurchase plan, there is no minimum number of shares that the Company is required to repurchase. There have been no repurchases during 2024 or 2025.

Other Recently Issued and Effective Authoritative Accounting Guidance

ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” ASU 2023-09 requires entities to disclose more detailed information in their reconciliation of their statutory tax rate to their effective tax rate. Public business entities (PBEs) are required to provide this incremental detail in a numerical, tabular format. The ASU also requires entities to disclose more detailed information about income taxes paid, including by jurisdiction; pretax income (or loss) from continuing operations; and income tax expense (or benefit). ASU 2023-09 became effective for our annual financial statements in 2025 and did not have a significant effect on the financial statements.

35

Table of Contents

ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” ASU 2024-03 requires new financial statement disclosures in tabular format, disaggregating information about prescribed categories underlying any relevant income statement expense caption. The prescribed categories include, among other things, employee compensation, depreciation, and intangible asset amortization. Additionally, entities must disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. ASU 2024-03 will be effective, on a prospective basis, for our 2027 annual report and interim periods thereafter. The Company is evaluating the impact of this ASU and does not believe it will have a significant impact on the Company's financial statements.

ASU 2025-08, "Financial Instruments - Credit Losses (Topic 326): Purchased Loans.” ASU 2025-08 amends the guidance on the accounting for certain purchased loans. The new guidance makes significant changes to the accounting for certain acquired seasoned loans subject to the current expected credit loss model. The amendments in ASU 2025-08 apply prospectively and will be effective for the Company beginning January 1, 2027, with early adoption permitted, and is not expected to have a significant impact on the Company’s financial statements.

ASU 2025-11, "Interim Reporting (Topic 270): Narrow-Scope Improvements.” ASU 2025-11 is intended to provide clarity about the current interim reporting requirements, provides a list of the interim disclosures required by all other Codification topics and establishes a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASC 2025-11 will be effective for the Company beginning January 1, 2028, with early adoption permitted, and is not expected to have a significant impact on the Company’s financial statements.

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Table of Contents

Selected Financial Data

The selected financial data presented below as of and for the years ended December 31, 2025, 2024, 2023, 2022, and 2021, have been derived from our audited consolidated financial statements. The data set forth below may not be fully comparable from period to period (see Notes 1 and 3 to the Notes to Consolidated Financial Statements for further information). The results of operations presented below are not necessarily indicative of the results of operations that may be achieved in the future.

Year Ended December 31,

2025

2024

2023

2022

2021

(dollars in thousands, except per share data)

Summary Income Statement Information:

Interest income

$

702,480

$

628,918

$

528,070

$

432,854

$

376,405

Interest expense

201,593

202,177

144,261

31,440

6,042

Net interest income

500,887

426,741

383,809

401,414

370,363

Provision for credit losses

28,609

13,821

10,631

17,427

(1,139

)

Noninterest income

130,716

123,989

108,003

131,665

142,176

Noninterest expense

293,391

265,063

237,882

234,778

241,708

Earnings before income taxes

309,603

271,846

243,299

280,874

271,970

Income tax expense

56,024

48,335

44,322

46,399

44,408

Net earnings

$

253,579

$

223,511

$

198,977

$

234,475

$

227,562

Per Share Data:

Earnings per share, basic

$

1.77

$

1.56

$

1.39

$

1.64

$

1.60

Earnings per share, diluted

1.77

1.56

1.39

1.64

1.59

Cash dividends declared

0.75

0.72

0.71

0.66

0.58

Book value at period-end

13.39

11.24

10.50

8.87

12.34

Earnings performance ratios:

Return on average assets

1.76

%

1.68

%

1.55

%

1.76

%

1.89

%

Return on average equity

14.59

14.51

14.99

16.72

13.31

Dividend payout ratio

42.38

46.06

50.96

40.18

36.30

Summary Balance Sheet Data (Period-end):

Securities

$

5,514,113

$

4,617,759

$

4,732,762

$

5,474,359

$

6,573,179

Loans, held-for-investment

8,158,276

7,913,098

7,148,791

6,441,868

5,388,972

Total assets

15,446,476

13,979,418

13,105,594

12,974,066

13,102,461

Deposits

13,345,529

12,099,174

11,138,300

11,005,507

10,566,488

Total liabilities

13,529,159

12,372,858

11,606,694

11,708,329

11,343,237

Total shareholders’ equity

1,917,317

1,606,560

1,498,900

1,265,737

1,759,224

Asset quality ratios:

Allowance for credit losses/period-end loans

   held-for-investment

1.29

%

1.24

%

1.24

%

1.18

%

1.18

%

Nonperforming assets/period-end loans held-

   for-investment plus foreclosed assets

0.69

0.80

0.49

0.38

0.63

Net charge offs (recoveries)/average loans

0.29

0.05

0.03

(0.01

)

0.02

Capital ratios:

Average shareholders’ equity/average assets

12.08

%

11.56

%

10.32

%

10.55

%

14.20

%

Leverage ratio (1)

12.55

12.49

12.06

10.96

11.13

Tier 1 risk-based capital (2)

19.99

18.83

18.50

18.22

19.35

Common equity tier 1 capital (3)

19.99

18.83

18.50

18.22

19.35

Total risk-based capital (4)

21.17

20.00

19.62

19.29

20.34

(1)
Calculated by dividing at period-end, shareholders’ equity (before accumulated other comprehensive earnings/loss) less intangible assets by fourth quarter average assets less intangible assets.

(2)
Calculated by dividing at period-end, shareholders’ equity (before accumulated other comprehensive earnings/loss) less intangible assets by risk-adjusted assets.

(3)
Calculated by dividing at period-end, shareholders’ equity (before accumulated other comprehensive earnings/loss) less intangible assets by risk-adjusted assets.

(4)
Calculated by dividing at period-end, shareholders’ equity (before accumulated other comprehensive earnings/loss) less intangible assets plus allowance for loan losses to the extent allowed under regulatory guidelines by risk-adjusted assets.

37

Table of Contents

Results of Operations

Performance Summary. Net earnings for 2025 were $253.58 million compared to net earnings of $223.51 million for 2024, reflecting an increase of $30.07 million, or 13.45%. The increase in earnings for 2025 over 2024 was primarily attributable to the overall growth in net interest income driven by strong growth in the Company's interest earning assets. Additionally, with the strong growth in deposits in 2025 combined with the continued proceeds resulting from maturities and paydowns of the Company's lower yielding investment portfolio, we were able to redeploy those funds into higher-yielding organic loans and investments during 2025. Furthermore, trust fee income increased $4.41 million, or 9.30%, when compared to 2024.

Net earnings for 2024 were $223.51 million compared to $198.98 million for 2023, reflecting an increase of $24.53 million, or 12.33%. The increase in earnings for 2024 over 2023 was primarily attributable to the overall growth in net interest income from the growth in earning assets. Additionally, trust fee income increased $6.99 million when compared to 2023 and there was no loss on sales of AFS securities in 2024 when compared to a $7.12 million loss in 2023. The proceeds from sales of securities during 2023 were used to fund higher-yielding organic loan growth during 2024.

On a diluted net earnings per share basis, net earnings were $1.77 for 2025, as compared to $1.56 for 2024 and $1.39 for 2023. The return on average assets was 1.76% for 2025, as compared to 1.68% for 2024 and 1.55% for 2023. The return on average equity was 14.59% for 2025, as compared to 14.51% for 2024 and to 14.99% for 2023.

Net Interest Income. Net interest income is the difference between interest income on earning assets and interest expense on liabilities incurred to fund those assets. Our earning assets consist primarily of loans and investment securities. Our liabilities to fund those assets consist primarily of noninterest-bearing and interest-bearing deposits.

Tax-equivalent net interest income was $513.63 million in 2025, as compared to $437.19 million in 2024, and $395.36 million in 2023. Average earning assets were $13.55 billion in 2025, as compared to $12.48 billion in 2024 and $12.00 billion in 2023. The increase in tax-equivalent net interest income in 2025 compared to 2024 was largely attributable to the change in the mix of interest earning assets primarily derived from continued loan growth combined with increase in volume and yield on the Company's taxable and tax-exempt securities. The increase of $1.06 billion in average earning assets in 2025 when compared to 2024 was primarily a result of an increase in loans of $607.02 million, an increase in taxable securities of $265.67 million, and an increase in tax-exempt securities of $109.59 million. The increase in tax-equivalent net interest income in 2024 compared to 2023 was largely attributable to the change in the mix of interest earning assets primarily derived from an increase in average loans offset by a decrease in taxable and tax-exempt securities. Additionally, the rates received on loans continued to increase along with the rates paid on deposits. The increase of $483.34 million in average earning assets in 2024 when compared to 2023 was primarily a result of an increase in loans of $732.00 million, offset by a decrease in taxable securities of $211.16 million and a decrease in tax-exempt securities of $176.36 million. Average interest-bearing liabilities were $9.18 billion in 2025, as compared to $8.39 billion in 2024 and $7.84 billion in 2023. The yield on earning assets increased 16 basis points in 2025 when compared to 2024 while the rate paid on interest-bearing liabilities decreased 21 basis points. The yield on earning assets increased 62 basis points in 2024 when compared to 2023 while the rate paid on interest-bearing liabilities increased 57 basis points.

The table below allocates the change in tax-equivalent net interest income between the amount of change attributable to volume and to rate.

Changes in Interest Income and Interest Expense (in thousands):

2025 Compared to 2024

2024 Compared to 2023

Change Attributable to

Total

Change Attributable to

Total

Volume

Rate

Change

Volume

Rate

Change

Short-term investments

$

4,262

$

(3,271

)

$

991

$

7,068

$

359

$

7,427

Taxable investment securities

6,592

17,828

24,420

(4,821

)

6,522

1,701

Tax-exempt investment securities (1)

3,018

5,631

8,649

(5,059

)

(1,632

)

(6,691

)

Loans (1) (2)

40,798

998

41,796

44,007

53,299

97,306

Interest income

54,670

21,186

75,856

41,195

58,548

99,743

Interest-bearing deposits

21,901

(17,206

)

4,695

16,996

52,975

69,971

Repurchase agreements

(3,770

)

(838

)

(4,608

)

(11,223

)

552

(10,671

)

Borrowings

(354

)

(319

)

(673

)

(1,066

)

(317

)

(1,383

)

Interest expense

17,777

(18,363

)

(586

)

4,707

53,210

57,917

Net interest income

$

36,893

$

39,549

$

76,442

$

36,488

$

5,338

$

41,826

(1)
Computed on a tax-equivalent basis assuming a marginal tax rate of 21%.

(2)
Nonaccrual loans are included in loans.

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Table of Contents

The net interest margin for 2025 was 3.79% which was an increase of 29 basis points from 2024. The net interest margin in 2024 was 3.50%, an increase of 21 basis points from 2023. The net interest margin has expanded during the past year primarily due to (i) a shift in asset mix from lower yielding investment securities to higher yielding loans and investment securities, (ii) strong growth in deposits that has enabled the Company to deploy those funds into higher yielding loan and securities portfolio and (iii) increased loan yields due to new and renewing loans and variable rate loans repricing higher. The Federal Reserve began increasing interest rates in March 2022 and continuing into 2023 to a peak of 5.25% to 5.50%. Most recently, the Federal Reserve decreased interest rates 100 basis points in 2024, and 25 basis points in September, October, and December 2025, respectively, resulting in a target range of 3.50% to 3.75% at December 31, 2025.

There are $1.52 billion of municipal and related deposits which are indexed to short-term treasury rates which have continued to fluctuate with the changes in the applicable rate index. Average municipal and related deposits totaled $1.58 billion and $1.46 billion for the years ended December 31, 2025 and 2024, respectively, with an average rate paid of 3.42% and 3.94%, for the respective years then ended.

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Table of Contents

The net interest margin, which measures tax-equivalent net interest income as a percentage of average earning assets, is illustrated in the table below for the years 2023 through 2025.

Average Balances and Average Yields and Rates (in thousands, except percentages):

2025

2024

2023

Average

Balance

Income/

Expense

Yield/

Rate

Average

Balance

Income/

Expense

Yield/

Rate

Average

Balance

Income/

Expense

Yield/

Rate

Assets

Short-term investments (1)

$

337,954

$

14,430

4.27

%

$

256,857

$

13,439

5.23

%

$

118,008

$

6,012

5.09

%

Taxable investment

   securities (2)

3,555,356

106,046

2.98

3,289,683

81,626

2.48

3,500,839

79,925

2.28

Tax-exempt investment

    securities (2)(3)

1,530,433

47,773

3.12

1,420,846

39,124

2.75

1,597,204

45,815

2.87

Loans (3)(4)

8,123,368

546,972

6.73

7,516,352

505,176

6.72

6,784,352

407,870

6.01

Total earning assets

13,547,111

$

715,221

5.28

%

12,483,738

$

639,365

5.12

%

12,000,403

$

539,622

4.50

%

Cash and due from banks

247,251

229,654

231,046

Bank premises and

   equipment, net

149,604

151,619

152,477

Other assets

238,106

238,296

245,550

Goodwill and other

   intangible assets, net

313,822

314,314

315,067

Allowance for credit losses

(103,332

)

(93,209

)

(83,281

)

Total assets

$

14,392,562

$

13,324,412

$

12,861,262

Liabilities and Shareholders’

   Equity

Interest-bearing deposits

$

9,085,018

$

199,496

2.20

%

$

8,166,855

$

194,801

2.39

%

$

7,188,171

$

124,830

1.74

%

Repurchase Agreements

53,752

860

1.60

173,068

5,468

3.16

568,205

16,139

2.84

Borrowings

44,751

1,236

2.76

54,943

1,909

3.47

81,262

3,292

4.05

Total interest-bearing

   liabilities

9,183,521

$

201,592

2.20

%

8,394,866

$

202,178

2.41

%

7,837,638

$

144,261

1.84

%

Noninterest-bearing

   deposits

3,381,632

3,316,040

3,632,559

Other liabilities

88,794

73,559

63,238

Total liabilities

12,653,947

11,784,465

11,533,435

Shareholders’ equity

1,738,615

1,539,947

1,327,827

Total liabilities and

   shareholders’ equity

$

14,392,562

$

13,324,412

$

12,861,262

Net interest income

$

513,629

$

437,187

$

395,361

Rate Analysis:

Interest income/earning

   assets

5.28

%

5.12

%

4.50

%

Interest expense/earning

   assets

(1.49

)

(1.62

)

(1.21

)

Net interest margin

3.79

%

3.50

%

3.29

%

(1)
Short-term investments are comprised of federal funds sold, interest-bearing deposits in banks and interest- bearing time deposits in banks.

(2)
Average balances include unrealized gains and losses on AFS securities.

(3)
Includes tax-equivalent yield adjustment of approximately $12.74 million, $10.45 million and $11.55 million for the years ended December 31, 2025, 2024 and 2023, respectively, using an effective tax rate of 21%.

(4)
Includes nonaccrual loans.

Noninterest Income. Noninterest income for 2025 was $130.72 million compared to $123.99 million in 2024. Notable changes in certain categories of noninterest income included an increase in trust fee income of $4.41 million, or 9.30%, and an increase in mortgage related income of $2.37 million, or 17.95%, compared to 2024. There were no securities sales in 2025 and 2024. Trust revenue increased primarily due to growth in assets under management to $11.94 billion at December 31, 2025 compared to $10.83 billion at December 31, 2024. Mortgage income increased to $15.55 million in 2025 compared to $13.18 million in 2024 due to increased loan origination volume and pricing margins have improved.

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Table of Contents

Noninterest income for 2024 was $123.99 million compared to $108.00 million in 2023. Changes in certain categories of noninterest income included (i) no losses on sales of AFS securities in 2024 when compared to $7.12 million losses in 2023, (ii) an increase in Trust fee income of $6.99 million and (iii) an increase in gain on sale and fees of mortgage loans of $1.29 million when compared to 2023. AFS securities totaling $411.13 million were sold during 2023 resulting in a loss on sales of securities of $7.12 million. There were no securities sales in 2024. Trust revenue increased primarily due to growth in assets under management to $10.83 billion at December 31, 2024 compared to $9.78 billion at December 31, 2023, as well as increases in oil and gas related fees. Mortgage income increased to $13.18 million in 2024 compared to $11.89 million in 2023 due to increased loan origination volume.

Noninterest Income (in thousands):

2025

Increase

(Decrease)

2024

Increase

(Decrease)

2023

Trust fees

$

51,861

$

4,412

$

47,449

$

6,993

$

40,456

Service charges on deposit accounts

24,889

(99

)

24,988

(390

)

25,378

Debit card fees

21,310

240

21,070

(651

)

21,721

Credit card fees

2,661

124

2,537

(108

)

2,645

Gain on sale and fees of mortgage loans

15,550

2,367

13,183

1,293

11,890

Net gain (loss) on sale of available-for-sale securities

—

—

—

7,119

(7,119

)

Net gain (loss) on sale of foreclosed assets

31

82

(51

)

(97

)

46

Net gain (loss) on sale of assets

6

(478

)

484

(1,041

)

1,525

Loan recoveries

3,594

584

3,010

955

2,055

Other:

Check printing fees

140

14

126

16

110

Safe deposit rental fees

742

(30

)

772

(31

)

803

Credit life and debt protection fees

1,041

7

1,034

429

605

Brokerage commissions

1,730

43

1,687

176

1,511

Wire transfer fees

1,809

5

1,804

158

1,646

Miscellaneous income

5,352

(544

)

5,896

1,165

4,731

Total other

10,814

(505

)

11,319

1,913

9,406

Total Noninterest Income

$

130,716

$

6,727

$

123,989

$

15,986

$

108,003

Noninterest Expense. Total noninterest expense for 2025 amounted to $293.39 million, an increase of $28.33 million, or 10.69%, as compared to 2024. Total noninterest expense for 2024 was $265.06 million, an increase of $27.18 million, or 11.43%, as compared to 2023. An important measure in determining whether a financial institution effectively manages noninterest expenses is the efficiency ratio, which is calculated by dividing noninterest expense by the sum of net interest income on a tax-equivalent basis and noninterest income. Lower ratios indicate better efficiency since more income is generated with a lower noninterest expense total. Our efficiency ratio for 2025 was 45.53%, as compared to 47.23% for 2024 and 47.26% for 2023.

Salaries and employee benefits for 2025 totaled $174.55 million, an increase of $21.26 million, or 13.87%, as compared to 2024. The net increase reflected an increase of $3.00 million in profit sharing expense and $3.16 million in officer bonus and incentive accruals related to growth in earnings over the prior year. Additionally, officer and employee salaries increased for merit-based pay increases, an increase in headcount, as well as market adjustments for front line staff over the past year.

All other categories of noninterest expense for 2025 totaled $118.84 million, an increase of $7.07 million, or 6.33%, as compared to 2024. Included in noninterest expense during 2025, excluding salary and employee benefit related costs, were increases in software amortization and expense and operational and other losses offset by a decrease in legal fees and other related costs of $2.08 million.

Salaries and employee benefits for 2024 totaled $153.30 million, an increase of $21.38 million, or 16.21%, as compared to 2023. The net increase reflected an increase of $8.09 million in profit sharing expense and $4.81 million in officer bonus and incentive accruals related to growth in earnings over the prior year. Additionally, officer and employee salaries increased for additions to the middle market lending team and the audit and risk departments due to growth, as well as merit-based pay increases since the prior year.

All other categories of noninterest expense for 2024 totaled $111.77 million, an increase of $5.80 million, or 5.47%, as compared to 2023. Included in noninterest expense during 2024, excluding salary and employee benefit related costs, were increases in software amortization and expense, occupancy expense, and legal and professional fees offset by a decrease in FDIC insurance premiums of $1.25 million due to the special assessment accrued and expensed in the prior year.

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Table of Contents

Noninterest Expense (in thousands):

2025

Increase

(Decrease)

2024

Increase

(Decrease)

2023

Salaries, commissions and incentives (excluding mortgage)

$

120,308

$

13,700

$

106,608

$

9,453

$

97,155

Mortgage salaries and incentives

10,318

1,359

8,959

664

8,295

Medical

12,296

(108

)

12,404

1,929

10,475

Profit sharing

12,469

3,003

9,466

8,093

1,373

401(k) match expense

4,363

439

3,924

174

3,750

Payroll taxes

8,695

965

7,730

452

7,278

Stock based compensation

6,102

1,897

4,205

616

3,589

Total salaries and employee benefits

174,551

21,255

153,296

21,381

131,915

Net occupancy expense

14,323

(256

)

14,579

813

13,766

Equipment expense

9,321

256

9,065

520

8,545

FDIC assessment fees

6,490

(8

)

6,498

(1,251

)

7,749

Debit card expense

13,456

688

12,768

(165

)

12,933

Professional and service fees

11,179

489

10,690

880

9,810

Printing, stationery and supplies

1,939

575

1,364

(1,090

)

2,454

Operational and other losses

4,800

1,059

3,741

(101

)

3,842

Software amortization and expense

16,496

2,973

13,523

3,235

10,288

Amortization of intangible assets

352

(266

)

618

(294

)

912

Other:

Data processing fees

2,739

175

2,564

513

2,051

Postage

1,689

142

1,547

98

1,449

Advertising

3,099

225

2,874

95

2,779

Correspondent bank service charges

1,036

111

925

95

830

Telephone

2,690

(290

)

2,980

(360

)

3,340

Public relations and business development

3,867

713

3,154

(98

)

3,252

Directors’ fees

3,455

554

2,901

355

2,546

Audit and accounting fees

1,982

189

1,793

(448

)

2,241

Legal fees and other related costs

1,090

(2,075

)

3,165

1,630

1,535

Regulatory exam fees

1,006

(133

)

1,139

(133

)

1,272

Travel

2,188

332

1,856

(2

)

1,858

Courier expense

1,471

199

1,272

54

1,218

Other real estate owned

182

100

82

(8

)

90

Other miscellaneous expense

13,990

1,321

12,669

1,462

11,207

Total other

40,484

1,563

38,921

3,253

35,668

Total Noninterest Expense

$

293,391

$

28,328

$

265,063

$

27,181

$

237,882

Income Taxes. Income tax expense was $56.02 million for 2025, as compared to $48.34 million for 2024 and $44.32 million for 2023. Our effective tax rates on pretax income were 18.10%, 17.78% and 18.22%, respectively, for the years 2025, 2024 and 2023. The effective tax rates differ from the statutory federal tax rate of 21.0% largely due to tax exempt interest income earned on certain investment securities and loans, the deductibility of dividends paid to our employee stock ownership plan, excess tax benefits for distribution under our deferred compensation plan and vesting of equity awards, New Market Tax Credit ("NMTC") benefits, and Low Income Housing Tax Credits ("LIHTC").

Balance Sheet Review

Loans. Our portfolio is comprised of loans made to businesses, professionals, individuals, and farm and ranch operations located in the primary trade areas served by our subsidiary bank. As of December 31, 2025, total loans HFI were $8.16 billion, an increase of $245.18 million as compared to December 31, 2024.

As compared to year-end 2024 balances, total commercial loans decreased by $87.28 million, agricultural loans increased $233 thousand, total real estate loans increased $245.04 million, and total consumer loans increased $87.18 million. Loans averaged $8.12 billion during 2025, an increase of $607.02 million over 2024 average balances.

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Table of Contents

For modeling purposes, our loan portfolio segments include Commercial and Industrial (“C&I”), Municipal, Agricultural, Construction and Development, Farm, Non-Owner Occupied and Owner Occupied Commercial Real Estate (“CRE”), Residential, Consumer Auto, and Consumer Non-Auto. This additional segmentation allows for a more precise pooling of loans with similar credit risk characteristics and credit monitor procedures for the Company’s calculation of its allowance for credit losses.

The table below outlines the composition of the Company’s HFI loans by portfolio segment.

Composition of Loans Held-For-Investment (in thousands):

December 31,

2025

2024

2023

2022

2021

Commercial:

C&I

$

1,116,461

$

1,176,993

$

1,164,811

$

917,317

$

837,075

Municipal

342,501

369,246

214,850

221,090

177,905

Total Commercial

1,458,962

1,546,239

1,379,661

1,138,407

1,014,980

Agricultural

95,776

95,543

84,890

76,947

98,089

Real Estate:

Construction & Development

1,157,865

1,054,603

963,158

959,426

749,793

Farm

327,625

339,665

344,954

306,322

217,220

Non-Owner Occupied CRE

832,816

805,566

827,969

732,089

623,434

Owner Occupied CRE

1,120,608

1,083,100

1,037,281

954,400

821,653

Residential

2,285,830

2,196,767

1,834,593

1,575,758

1,334,419

Total Real Estate

5,724,744

5,479,701

5,007,955

4,527,995

3,746,519

Consumer:

Auto

732,351

638,560

521,859

550,635

405,416

Non-Auto

146,443

153,055

154,426

147,884

123,968

Total Consumer

878,794

791,615

676,285

698,519

529,384

Total

$

8,158,276

$

7,913,098

$

7,148,791

$

6,441,868

$

5,388,972

Loans HFS, consisting of secondary market mortgage loans, totaled $29.99 million and $8.24 million at December 31, 2025 and 2024, respectively. At December 31, 2025 and 2024, $4.56 million and $442 thousand are valued at the lower of cost or fair value, and the remaining amount is valued under the fair value option.

The Company has certain lending policies and procedures in place that are designed to maximize loan growth with an acceptable level of risk. Management reviews and approves these policies and procedures on an annual basis and makes changes as appropriate with input from our Board of Directors. Management and the board receives and reviews monthly reports related to loan originations, quality, concentrations, delinquencies, nonperforming and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions, both by type of loan and geographic location.

Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and effectively. Underwriting standards are designed to determine whether the borrower possesses sound business ethics and practices and to evaluate current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed. Commercial loans are primarily made based on the identified cash flows of the borrower and, secondarily, on the underlying collateral provided by the borrower. Most commercial loans are secured by the assets being financed or other business assets, such as accounts receivable or inventory, and include personal guarantees.

Agricultural loans are subject to underwriting standards and processes similar to commercial loans. These agricultural loans are based primarily on the identified cash flows of the borrower and, secondarily, on the underlying collateral provided by the borrower. Most agricultural loans are secured by the agriculture related assets being financed, such as farm land, cattle or equipment, and include personal guarantees.

Real estate loans are also subject to underwriting standards and processes similar to commercial and agricultural loans. These loans are underwritten primarily based on projected cash flows and, secondarily, as loans secured by real estate. The repayment of real estate loans is generally largely dependent on the successful operation of the property securing the loans or the business conducted on the property securing the loan. Real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s real estate portfolio are generally diverse in terms of type and geographic location within Texas. This diversity helps reduce the exposure to adverse economic events that affect any single market or industry.

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Table of Contents

Consumer loan underwriting utilizes methodical credit standards and analysis to supplement the Company’s underwriting policies and procedures. The Company’s loan policy addresses types of consumer loans that may be originated and the collateral, if secured, which must be perfected. The relatively smaller individual dollar amounts of consumer loans that are spread over numerous individual borrowers also minimize the Company’s risk.

Commercial real estate loans (owner and non-owner occupied CRE) represent 23.94% of the Company's total loan portfolio as of December 31, 2025. Non-owner occupied CRE represents $832.82 million, or 10.21%, of the Company's total loan portfolio as of December 31, 2025. The properties securing this portfolio are diverse as to geographic location in Texas as well as industry type. Collateral for CRE loans is located throughout the Company's markets in central west Texas, the Dallas-Forth Worth metroplex and southeast Texas with less than 1% of properties located outside of the state. The largest concentrations in the CRE portfolio as to type are industrial/manufacturing at approximately 18.60% and multifamily at approximately 7.75% as of December 31, 2025. All additional CRE portfolio property type categories are below the identified concentration levels. Credit underwriting standards are periodically reviewed and adjusted based upon observations from our ongoing monitoring of economic conditions in our lending areas. In response to the current interest rate environment and increases in benchmark rates, the Company has enhanced stress testing and loan review activities to mitigate interest rate reset risk with a specific emphasis on borrowers' abilities to absorb the impact of higher interest rates as loans that were made in a much lower rate environment renew.

Maturity Distribution and Interest Sensitivity of Loans at December 31, 2025 (in thousands):

The following tables summarize maturity information of our loan portfolio as of December 31, 2025. The table also presents the portion of loans that have fixed interest rates or variable interest rates that fluctuate over the life of the loans in accordance with changes in an interest rate index.

Total Loans Held-for-Investment

Due in One Year or Less

After One but Within Five Years

After Five but Within Fifteen Years

After Fifteen Years

Total

Commercial:

C&I

$

450,962

$

536,575

$

116,928

$

11,996

$

1,116,461

Municipal

55,564

76,465

146,096

64,376

342,501

Total Commercial

506,526

613,040

263,024

76,372

1,458,962

Agricultural

78,597

15,710

1,469

—

95,776

Real Estate:

Construction & Development

582,203

205,008

243,037

127,617

1,157,865

Farm

18,873

49,560

156,317

102,875

327,625

Non-Owner Occupied CRE

80,320

329,163

341,470

81,863

832,816

Owner Occupied CRE

47,244

295,979

585,529

191,856

1,120,608

Residential

158,122

151,837

846,685

1,129,186

2,285,830

Total Real Estate

886,762

1,031,547

2,173,038

1,633,397

5,724,744

Consumer:

Auto

6,871

700,689

24,791

—

732,351

Non-Auto

34,210

81,688

27,396

3,149

146,443

Total Consumer

41,081

782,377

52,187

3,149

878,794

Total

$

1,512,966

$

2,442,674

$

2,489,718

$

1,712,918

$

8,158,276

% of Total Loans

18.55

%

29.94

%

30.51

%

21.00

%

100.00

%

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Table of Contents

Loans with fixed interest rates:

Due in One Year or Less

After One but Within Five Years

After Five but Within Fifteen Years

After Fifteen Years

Total

Commercial:

C&I

$

77,689

$

317,577

$

9,071

$

—

$

404,337

Municipal

53,651

76,141

87,220

25,148

242,160

Total Commercial

131,340

393,718

96,291

25,148

646,497

Agricultural

7,506

10,161

175

—

17,842

Real Estate:

Construction & Development

276,430

52,812

37,240

13,450

379,932

Farm

10,478

42,517

62,883

19,543

135,421

Non-Owner Occupied CRE

57,703

180,585

31,091

4,090

273,469

Owner Occupied CRE

24,721

160,771

12,678

3,614

201,784

Residential

118,310

121,843

470,955

209,800

920,908

Total Real Estate

487,642

558,528

614,847

250,497

1,911,514

Consumer:

Auto

6,871

700,689

24,791

—

732,351

Non-Auto

33,551

81,378

26,973

481

142,383

Total Consumer

40,422

782,067

51,764

481

874,734

Total

$

666,910

$

1,744,474

$

763,077

$

276,126

$

3,450,587

% of Total Loans

8.18

%

21.38

%

9.35

%

3.39

%

42.30

%

Loans with variable interest rates:

Due in One Year or Less

After One but Within Five Years

After Five but Within Fifteen Years

After Fifteen Years

Total

Commercial:

C&I

$

373,273

$

218,998

$

107,857

$

11,996

$

712,124

Municipal

1,913

324

58,876

39,228

100,341

Total Commercial

375,186

219,322

166,733

51,224

812,465

Agricultural

71,091

5,549

1,294

—

77,934

Real Estate:

Construction & Development

305,773

152,196

205,797

114,167

777,933

Farm

8,395

7,043

93,434

83,332

192,204

Non-Owner Occupied CRE

22,617

148,578

310,379

77,773

559,347

Owner Occupied CRE

22,523

135,208

572,851

188,242

918,824

Residential

39,812

29,994

375,730

919,386

1,364,922

Total Real Estate

399,120

473,019

1,558,191

1,382,900

3,813,230

Consumer:

Auto

—

—

—

—

—

Non-Auto

659

310

423

2,668

4,060

Total Consumer

659

310

423

2,668

4,060

Total

$

846,056

$

698,200

$

1,726,641

$

1,436,792

$

4,707,689

% of Total Loans

10.37

%

8.56

%

21.16

%

17.61

%

57.70

%

Of the $4.71 billion of the variable interest rate loans shown above, loans totaling $2.17 billion mature or reprice over the next twelve months. Of this amount, approximately $1.81 billion will reprice immediately upon changes in the underlying index rate (primarily U.S. prime rate) with the remaining $354.40 million being subject to floors above or ceilings below the current index.

Asset Quality. Our loan portfolio is subject to periodic reviews by our centralized independent loan review group as well as periodic examinations by bank regulatory agencies. Loans are placed on nonaccrual status when, in management's opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Nonaccrual, past due 90 days or more and still accruing, and restructured loans plus foreclosed assets were $56.49 million at December 31, 2025, as compared to $63.10 million at December 31, 2024 and $35.10 million at December 31, 2023. As a percent of loans HFI and foreclosed assets, these assets were 0.69% at December 31, 2025, as compared to 0.80% at December 31, 2024 and 0.49% at December 31, 2023. As a percent of total assets, these assets were 0.37% at December 31, 2025, as compared to 0.45% at December 31, 2024 and 0.27% at December 31, 2023. We believe the level of these assets to be manageable and are not aware of any material classified credits not properly disclosed as nonperforming at December 31, 2025.

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Table of Contents

Nonaccrual, Past Due 90 Days or More and Still Accruing, Restructured Loans and Foreclosed Assets (in thousands, except percentages):

At December 31,

2025

2024

2023

2022

2021

Nonaccrual loans

$

55,121

$

61,938

$

33,609

$

24,325

$

31,673

Loans still accruing and past due 90 days or more

892

287

1,004

—

8

Nonperforming loans

56,013

62,225

34,613

24,325

31,681

Foreclosed assets

479

871

483

—

2,477

Total nonperforming assets

$

56,492

$

63,096

$

35,096

$

24,325

$

34,158

As a % of loans held-for-investment and foreclosed assets

0.69

%

0.80

%

0.49

%

0.38

%

0.63

%

As a % of total assets

0.37

0.45

0.27

0.19

0.26

We record interest payments received on nonaccrual loans as reductions of principal. Prior to the loans being placed on nonaccrual, we recognized interest income on these loans as of December 31, 2025 of approximately $795 thousand during the year ended December 31, 2025. If interest on all nonaccrual loans at December 31, 2025 had been recognized on a full accrual basis during the year ended December 31, 2025, such income would have approximated $5.69 million.

Included in our loan portfolio are certain other loans not included in the table above that are deemed to be potential problem loans. Potential problem loans are those loans that are currently performing, but for which known information about trends, uncertainties or possible credit problems of the borrowers causes management to have serious doubts as to the ability of such borrowers to comply with present repayment terms, possibly resulting in the transfer of such loans to nonperforming status. These potential problem loans totaled $3.67 million as of December 31, 2025.

See Note 3 to the Consolidated Financial Statements for more information on these assets.

Allowance for Credit Losses. The allowance for credit losses is the amount we determine as of a specific date to be appropriate to absorb current expected credit losses on existing loans. For a discussion of our methodology, see our accounting policies in Note 1 to the Consolidated Financial Statements. The provision for credit losses was $28.61 million in 2025, $13.82 million in 2024, and $10.63 million in 2023. The Company's provision for credit losses during 2025 was impacted by a $21.55 million credit loss believed to be due to fraudulent activity associated with a commercial borrower. The Company's provision for credit losses during 2024 was driven by strong organic loan growth and an increase in classified loans.

As a percent of average loans, net loan charge-offs were 0.29%, 0.05%, and 0.03% during 2025, 2024, and 2023, respectively. The allowance for credit losses as a percent of loans HFI was 1.29% as of December 31, 2025, as compared to 1.24% as of December 31, 2024, and 2023, respectively. Included in the following tables are further analysis of our allowance for credit losses.

Although we believe we use the best information available to make credit loss allowance determinations, future adjustments could be necessary if circumstances or economic conditions differ substantially from the assumptions used in making our initial determinations. A downturn in the economy or lower employment could result in increased levels of nonaccrual, past due 90 days or more and still accruing, foreclosed assets, charge-offs, increased provision for credit losses and reductions in income. Additionally, as an integral part of their examination process, bank regulatory agencies regularly review the adequacy of our allowance for credit losses. The banking agencies could require additions to our allowance for credit losses based on their judgment of information available to them at the time of their examinations of our bank subsidiary.

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Table of Contents

Loan Loss Experience and Allowance for Credit Losses (in thousands, except percentages):

2025

2024

2023

2022

2021

Balance at January 1,

$

98,325

$

88,734

$

75,834

$

63,465

$

66,534

Charge-offs:

Commercial:

C&I

(20,677

)

(1,392

)

(1,816

)

(589

)

(1,600

)

Municipal

—

—

—

—

—

Total Commercial

(20,677

)

(1,392

)

(1,816

)

(589

)

(1,600

)

Agricultural

—

(67

)

(9

)

(9

)

(2,683

)

Real estate:

Construction & Development

(40

)

(205

)

—

(100

)

—

Farm

—

—

—

—

—

Non-Owner Occupied CRE

(250

)

(763

)

—

—

(6

)

Owner Occupied CRE

(4,405

)

—

(10

)

(537

)

(231

)

Residential real estate

(701

)

(13

)

(258

)

(186

)

(93

)

Total real estate

(5,396

)

(981

)

(268

)

(823

)

(330

)

Consumer:

Auto

(1,518

)

(1,680

)

(1,006

)

(596

)

(610

)

Non-Auto

(543

)

(895

)

(600

)

(435

)

(285

)

Total Consumer

(2,061

)

(2,575

)

(1,606

)

(1,031

)

(895

)

Total charge-offs

(28,134

)

(5,015

)

(3,699

)

(2,452

)

(5,508

)

Recoveries:

Commercial:

C&I

3,042

576

267

953

2,150

Municipal

—

—

—

—

—

Total Commercial

3,042

576

267

953

2,150

Agricultural

74

111

286

155

36

Real estate:

Construction & Development

6

4

106

—

1

Farm

1

—

—

—

110

Non-Owner Occupied CRE

36

37

71

852

702

Owner Occupied CRE

317

122

227

699

821

Residential real estate

76

98

24

114

96

Total Real Estate

436

261

428

1,665

1,730

Consumer:

Auto

596

448

398

293

401

Non-Auto

298

161

170

215

211

Total Consumer

894

609

568

508

612

Total recoveries

4,446

1,557

1,549

3,281

4,528

Net recoveries (charge-offs)

(23,688

)

(3,458

)

(2,150

)

829

(980

)

Provision (reversal) for loan losses

30,899

13,049

15,050

11,540

(2,089

)

Balance at December 31,

$

105,536

$

98,325

$

88,734

$

75,834

$

63,465

2025

2024

2023

2022

2021

Loans, held-for-investment at year-end

$

8,158,276

$

7,913,098

$

7,148,791

$

6,441,868

$

5,388,972

Average loans

8,123,368

7,516,352

6,784,352

5,923,594

5,341,332

Net (recoveries) charge-offs/average loans

0.29

%

0.05

%

0.03

%

(0.01

)%

0.02

%

Allowance for credit losses/year-end loans

   held-for-investment

1.29

%

1.24

%

1.24

%

1.18

%

1.18

%

Allowance for credit losses/nonaccrual, past due

   90 days still accruing and restructured loans

188.41

158.02

256.36

311.75

200.33

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Table of Contents

Allocation of Allowance for Credit Losses (in thousands):

At December 31,

2025

2024

2023

2022

2021

Allocation

Amount

Allocation

Amount

Allocation

Amount

Allocation

Amount

Allocation

Amount

Commercial:

C&I

$

17,696

$

15,436

$

15,698

$

16,129

$

12,280

Municipal

135

200

195

1,026

348

Total Commercial

17,831

15,636

15,893

17,155

12,628

Agricultural

325

1,653

1,281

1,041

1,597

Real estate:

Construction & Development

17,000

19,861

28,553

26,443

17,627

Farm

2,577

2,871

2,914

1,957

663

Non-Owner Occupied CRE

14,561

14,664

13,425

9,075

10,722

Owner Occupied CRE

25,368

21,413

13,813

9,928

10,828

Residential real estate

25,614

20,488

11,654

9,075

8,133

Total Real Estate

85,120

79,297

70,359

56,478

47,973

Consumer:

Auto

1,598

1,186

810

845

896

Non-Auto

662

553

391

315

371

Total Consumer

2,260

1,739

1,201

1,160

1,267

Total

$

105,536

$

98,325

$

88,734

$

75,834

$

63,465

Percent of Loans in Each Category of Total Loans:

At December 31,

2025

2024

2023

2022

2021

Commercial:

C&I

13.69

%

14.87

%

16.29

%

14.24

%

15.53

%

Municipal

4.20

4.67

3.01

3.43

3.30

Total Commercial

17.88

19.54

19.30

17.67

18.83

Agricultural

1.17

1.21

1.19

1.19

1.83

Real estate:

Construction & Development

14.19

13.33

13.47

14.89

13.91

Farm

4.02

4.29

4.83

4.76

4.03

Non-Owner Occupied CRE

10.21

10.18

11.58

11.36

11.57

Owner Occupied CRE

13.74

13.69

14.51

14.82

15.25

Residential real estate

28.02

27.76

25.66

24.46

24.76

Total Real Estate

70.17

69.25

70.05

70.29

69.52

Consumer:

Auto

8.98

8.07

7.30

8.55

7.52

Non-Auto

1.80

1.93

2.16

2.30

2.30

Total Consumer

10.77

10.00

9.46

10.85

9.82

Total

100.00

%

100.00

%

100.00

%

100.00

%

100.00

%

Interest-Bearing Demand Deposits in Banks. The Company had interest-bearing demand deposits in banks of $826.95 million at December 31, 2025 and $503.42 million at December 31, 2024, respectively. At December 31, 2025, our interest-bearing deposits in banks included $820.75 million maintained at the Federal Reserve Bank of Dallas and $6.20 million on deposit with the Federal Home Loan Bank of Dallas (FHLB). The average balance of interest-bearing deposits in banks was $329.39 million, $253.39 million and $115.79 million in 2025, 2024 and 2023, respectively. The average yield on interest-bearing deposits in banks was 4.26%, 5.23% and 5.09% in 2025, 2024 and 2023, respectively.

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Table of Contents

Available-for-Sale Securities. At December 31, 2025, securities with a fair value of $5.51 billion were classified as securities AFS. There were no securities classified as held-to-maturity at December 31, 2025 and 2024. As compared to December 31, 2024, the AFS portfolio at December 31, 2025, reflected (i) an increase of $802.36 million in mortgage-backed securities; (ii) an increase of $311.13 million in obligations of states and political subdivisions; (iii) a decrease of $212.75 million in U.S. Treasury securities; and (iv) a decrease of $4.39 million in corporate bonds and other securities. As compared to December 31, 2023, the AFS portfolio at December 31, 2024, reflected (i) a decrease of $208.67 million in U.S. Treasury securities (ii) a decrease of $56.91 million in obligations of states and political subdivisions; (iii) an increase of $149.87 million in mortgage-backed securities; and (iv) an increase of $711 thousand in corporate bonds and other securities. Securities AFS included an unrealized loss fair value adjustment of $342.03 million, $537.55 million and $510.92 million at December 31, 2025, 2024, and 2023, respectively. Our mortgage related securities are backed by GNMA, FNMA or FHLMC or are collateralized by securities backed by these agencies.

See the below table and Note 2 to the Consolidated Financial Statements for additional disclosures relating to the maturities and fair values of the investment portfolio at December 31, 2025 and 2024.

Maturities and Yields of Available-for-Sale Held at December 31, 2025 (in thousands, except percentages):

Maturing

One Year

or Less

After One Year

Through

Five Years

After Five Years

Through

Ten Years

After

Ten Years

Total

Available-for-Sale:

Amount

Yield

Amount

Yield

Amount

Yield

Amount

Yield

Amount

Yield

U.S. Treasury securities

$

60,813

1.38

%

$

—

—

%

$

—

—

%

$

—

—

%

$

60,813

1.38

%

Obligations of states and

   political subdivisions

64,698

4.09

664,138

2.60

593,053

4.17

429,484

2.78

1,751,373

3.23

Corporate bonds and other

   securities

37,544

3.12

63,735

2.26

—

—

—

—

101,279

2.58

Mortgage-backed securities

22,114

2.61

1,823,934

3.19

1,586,520

2.99

168,080

2.66

3,600,648

3.07

Total

$

185,169

2.83

%

$

2,551,807

3.01

%

$

2,179,573

3.31

%

$

597,564

2.75

%

$

5,514,113

3.10

%

All yields are computed on a tax-equivalent basis assuming a marginal tax rate of 21%. Yields on AFS securities are based on amortized cost. Maturities of mortgage-backed securities are based on contractual maturities and could differ due to prepayments of underlying mortgages. Maturities of other securities are reported at the earlier of maturity date or call date.

As of December 31, 2025, the investment portfolio had an overall tax equivalent yield of 3.10%, a weighted average life of 6.54 years and modified duration of 5.43 years. At December 31, 2024, the investment portfolio had an overall tax equivalent yield of 2.55%, a weighted average life of 7.03 years and modified duration of 5.82 years.

Deposits. Deposits held by our subsidiary bank represent our primary source of funding. Total deposits were $13.35 billion as of December 31, 2025, as compared to $12.10 billion as of December 31, 2024 and $11.14 billion as of December 31, 2023. The table below provides a breakdown of average deposits and rates paid over the past three years and the remaining maturity of time deposits of $250,000 or more:

Composition of Average Deposits and Remaining Maturity of Time Deposits of $250,000 or More (in thousands, except percentages):

2025

2024

2023

Average

Balance

Average

Rate

Average

Balance

Average

Rate

Average

Balance

Average

Rate

Noninterest-bearing deposits

$

3,381,632

—

%

$

3,316,040

—

%

$

3,632,559

—

%

Interest-bearing deposits

Interest-bearing checking

4,614,246

2.10

4,088,349

2.23

3,321,139

1.36

Savings and money market accounts

3,568,805

2.08

3,115,728

2.19

3,018,102

1.74

Time deposits under $250,000

561,803

3.05

599,358

3.58

536,884

3.05

Time deposits of $250,000 or more

340,164

3.32

363,420

3.86

312,046

3.44

Total interest-bearing deposits

9,085,018

2.20

%

8,166,855

2.39

%

7,188,171

1.74

%

Total average deposits

$

12,466,650

$

11,482,895

$

10,820,730

Total cost of deposits

1.60

%

1.70

%

1.15

%

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Table of Contents

The table below outlines the maturity of time deposits of $250,000 or more (in thousands):

As of December 31, 2025

Three months or less

$

190,124

Over three through six months

88,060

Over six through twelve months

53,841

Over twelve months

20,961

Total time deposits of $250,000 or more

$

352,986

The estimated amount of uninsured and uncollateralized deposits including related interest accrued and unpaid is approximately $4.03 billion, or 30.23% of total deposits, as of December 31, 2025.

Borrowings. Included in borrowings were federal funds purchased, advances from the FHLB and other borrowings of $21.68 million, $135.60 million and $22.15 million at December 31, 2025, 2024 and 2023, respectively. The average balance of federal funds purchased, advances from the FHLB and other borrowings were $44.75 million, $54.94 million and $81.26 million during 2025, 2024 and 2023, respectively. The average rates paid on these borrowings were 2.76%, 3.47% and 4.05% during the years ended December 31, 2025, 2024 and 2023, respectively.

Repurchase Agreements. Securities sold under repurchase agreements were $62.96 million, $61.42 million and $381.93 million at December 31, 2025, 2024 and 2023, respectively. Securities sold under repurchase agreements are generally with significant customers of the Company that require short-term liquidity for their funds for which we pledge certain securities that have a fair value equal to at least the amount of the short-term borrowing. The average balances of securities sold under repurchase agreements were $53.75 million, $173.07 million and $568.21 million in 2025, 2024 and 2023, respectively. The average balances of securities sold under repurchase agreements has decreased from the prior year related to the timing of customers moving funds to IntraFi deposit accounts throughout 2024. The average rates paid on securities sold under repurchase agreements were 1.60%, 3.16% and 2.84% for the years ended December 31, 2025, 2024 and 2023, respectively. The weighted average interest rate on federal funds purchased, securities sold under repurchase agreements and advances from the FHLB was 1.46%, 2.01% and 3.27% at December 31, 2025, 2024 and 2023, respectively. The highest amount of federal funds purchased, securities sold under repurchase agreements and advances from the FHLB at any month-end during 2025, 2024 and 2023 was $197.51 million, $563.28 million and $822.98 million, respectively.

Interest Rate Risk

Interest rate risk results when the maturity or repricing intervals of interest-earning assets and interest-bearing liabilities are different. Our exposure to interest rate risk is managed primarily through our strategy of selecting the types and terms of interest-earning assets and interest-bearing liabilities that generate favorable earnings while limiting the potential negative effects of changes in market interest rates. We use no off-balance-sheet financial instruments to manage interest rate risk.

Our subsidiary bank has an asset liability management committee that monitors interest rate risk and compliance with investment policies. The subsidiary bank utilizes an earnings simulation model as the primary quantitative tool in measuring the amount of interest rate risk associated with changing market rates. The model quantifies the effects of various interest rate scenarios on projected net interest income and net income over the next twelve months. The model measures the impact on net interest income relative to a base case scenario of hypothetical fluctuations in interest rates over the next twelve months. These simulations incorporate assumptions regarding balance sheet growth and mix, pricing and the re-pricing and maturity characteristics of the existing and projected balance sheet.

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Table of Contents

The following analysis depicts the estimated impact on net interest income of immediate changes in interest rates at the specified levels for the periods presented.

Percentage change in net interest income:

Change in interest rates:

December 31,

(in basis points)

2025

2024

 +200

3.45

%

0.64

%

 +100

1.83

%

0.42

%

 -100

(1.44

)%

(3.08

)%

 -200

(2.86

)%

(6.50

)%

The results for the net interest income simulations as of December 31, 2025 and December 31, 2024 resulted in an asset sensitive position. These are good faith estimates and assume that the composition of our interest sensitive assets and liabilities existing at each year-end will remain constant over the relevant twelve-month measurement period and that changes in market interest rates are instantaneous and sustained across the yield curve regardless of duration of pricing characteristics on specific assets or liabilities. Also, this analysis does not contemplate any actions that we might undertake in response to changes in market interest rates. We believe these estimates are not necessarily indicative of what actually could occur in the event of immediate interest rate increases or decreases of this magnitude. As interest-bearing assets and liabilities reprice in different time frames and proportions to market interest rate movements, various assumptions must be made based on historical relationships of these variables in reaching any conclusion. Since these correlations are based on competitive and market conditions, we anticipate that our future results will likely be different from the foregoing estimates, and such differences could be material.

Should we be unable to maintain a reasonable balance of maturities and repricing of our interest-earning assets and our interest-bearing liabilities, we could be required to dispose of our assets in an unfavorable manner or pay a higher than market rate to fund our activities. Our asset liability committee oversees and monitors this risk.

The fair value of our investment securities classified as available-for-sale totaled $5.51 billion at December 31, 2025. During the year ended December 31, 2025, the corresponding unrealized loss before taxes on the portfolio of $537.55 million at December 31, 2024, declined to an unrealized loss before taxes of $342.03 million at December 31, 2025, which is recorded net of taxes in accumulated other comprehensive earnings (loss) in shareholders' equity. The unrealized gains or losses, net of taxes, on the portfolio are excluded from the calculation of all regulatory capital ratios. The improvement in the fair value was driven by changes in interest rates based on expected actions by the Federal Reserve Board and other market conditions. The overall valuation of the portfolio is most correlated to the 5-year U.S. Treasury rates based on the composition and duration of the portfolio. At December 31, 2025, the 5-year U.S. Treasury rate was 3.72% compared to 4.39% at December 31, 2024, representing a 66 basis point decrease during the year. As of December 31, 2025, an increase of 100 basis points in the 5-year U.S. Treasury rate would result in an increase to unrealized losses by approximately $259.83 million before taxes, while a 100 basis point decrease in the same rate would result in a decrease to unrealized losses by approximately $228.37 million before taxes. The Company does not intend to sell any impaired available for sale securities before fair value recovers to the current amortized cost, and it is more-likely-than-not that the Company will not be required to sell impaired securities before fair value recovers, which may be maturity.

Capital and Liquidity

Capital. We evaluate capital resources by our ability to maintain adequate regulatory capital ratios to do business in the banking industry. Issues related to capital resources arise primarily when we are growing at an accelerated rate but not retaining a significant amount of our profits or when we experience significant asset quality deterioration.

Total shareholders’ equity was $1.92 billion, or 12.41% of total assets at December 31, 2025, as compared to $1.61 billion, or 11.49% of total assets at December 31, 2024. Included in shareholders’ equity were $269.94 million and $424.29 million at December 31, 2025 and 2024, respectively, in unrealized losses on investment securities AFS, net of related income taxes. Unrealized gains and losses on investment securities AFS are excluded from and do not impact regulatory capital. During 2025, total shareholders’ equity averaged $1.74 billion, or 12.08% of average assets, as compared to $1.54 billion, or 11.56% of average assets during 2024.

Banking regulators measure capital adequacy by means of the risk-based capital ratios and leverage ratio under the Basel III Rules and prompt corrective action regulations. The risk-based capital rules provide for the weighting of assets and off-balance-sheet commitments and contingencies according to prescribed risk categories. Regulatory capital is then divided by risk-weighted assets to determine the risk-adjusted capital ratios. The leverage ratio is computed by dividing shareholders’ equity less intangible assets by quarter-to-date average assets less intangible assets.

Beginning in January 2015, under the Basel III Rules, the implementation of the capital conservation buffer was effective for the Company starting at the 0.625% level and increasing 0.625% each year thereafter, until it reached 2.5% on January 1, 2019. The capital conservation buffer is designed to absorb losses during periods of economic stress and requires increased capital levels for the purpose of capital distributions and

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Table of Contents

other payments. Failure to meet the amount of the buffer will result in restrictions on the Company’s ability to make capital distributions, including divided payments and stock repurchases, and to pay discretionary bonuses to executive officers.

As of December 31, 2025 and 2024, we had a total risk-based capital ratio of 21.17% and 20.00%, a Tier 1 capital to risk-weighted assets ratio of 19.99% and 18.83%, a common equity Tier 1 capital to risk-weighted ratio of 19.99% and 18.83% and a Tier 1 leverage ratio of 12.55% and 12.49%, respectively. The regulatory capital ratios as of December 31, 2025 and 2024 were calculated under Basel III Rules.

Our subsidiary bank made the election to continue to exclude accumulated other comprehensive income from capital in connection with its March 31, 2015 quarterly financial filing and, in effect, to retain the accumulated other comprehensive income treatment under the prior capital rules.

Liquidity. Liquidity is our ability to meet cash demands as they arise. Such needs can develop from loan demand, deposit withdrawals or acquisition opportunities. Potential obligations resulting from the issuance of standby letters of credit and commitments to fund future borrowings to our loan customers are other factors affecting our liquidity needs. Many of these obligations and commitments are expected to expire without being drawn upon; therefore the total commitment amounts do not necessarily represent future cash requirements affecting our liquidity position. The potential need for liquidity arising from these types of financial instruments is represented by the contractual notional amount of the instrument. Asset liquidity is provided by cash and assets which are readily marketable or which will mature in the near future. Liquid assets include cash, federal funds sold, and short-term investments in time deposits in banks. Liquidity is also provided by access to funding sources, which include core depositors and correspondent banks that maintain accounts with and sell federal funds to our subsidiary bank. Other sources of funds include our ability to borrow from short-term sources, such as purchasing federal funds from correspondent banks, sales of securities under agreements to repurchase and other borrowings, which amounted to $84.64 million at December 31, 2025, and an unfunded $50.00 million revolving line of credit established with Frost Bank, a nonaffiliated bank, which matures on June 30, 2027 (see next paragraph). Our subsidiary bank also has federal funds purchased lines of credit with two non-affiliated banks totaling $175.00 million. At December 31, 2025, there were no amounts drawn on these lines of credit. Our subsidiary bank also has (i) an available line of credit with the FHLB totaling $2.31 billion at December 31, 2025, secured by portions of our loan portfolio and certain investment securities; and (ii) access to approximately $1.85 billion at the Federal Reserve Bank of Dallas discount window lending program secured by portions of certain

investment securities and portions of our loan portfolio. At December 31, 2025, there was $670.00 million used on the FHLB line advance for undisbursed commitments (letters of credit) used to secure public funds.

The Company renewed and amended its loan agreement, effective June 30, 2025, with Frost Bank. Under the loan agreement, as renewed and amended, we are permitted to draw up to $50.00 million on a revolving line of credit. See Note 8 - Line of Credit in the accompanying notes to consolidated financial statements regarding further information on this line of credit.

In addition, we anticipate that any future acquisition of financial institutions, expansion of branch locations or offering of new products could also place a demand on our cash resources. Available cash and cash equivalents at our parent company, which totaled $138.86 million at December 31, 2025, investment securities which totaled $1.12 million at December 31, 2025 with maturities over 4 to 5 years, available dividends from our subsidiaries which totaled $366.54 million at December 31, 2025, utilization of available lines of credit, and future debt or equity offerings are expected to be the source of funding for these potential acquisitions or expansions.

The Company continuously monitors the Company's liquidity position to ensure that assets and liabilities are managed in a manner that will meet all of the Company's short-term and long-term cash requirements. The Company manages the Company's liquidity position to meet the daily cash flow needs of customers, while maintaining an appropriate balance between assets and liabilities to meet the return on investment objectives of the Company's shareholders. The Company also monitors its liquidity requirements in light of interest rate trends, changes in the economy, and the scheduled maturity and interest rate sensitivity of the investment and loan portfolios and deposits.

In the ordinary course of business, we have entered into contractual obligations and have made other commitments to make future payments. Refer to the accompanying notes to consolidated financial statements for the expected timing of such payments as of December 31, 2025. These payments related to time deposits with stated maturity dates (Note 7 - Deposits and Borrowings) and operating leases (Note 11 - Commitments and Contingencies). In addition, we have construction contracts with remaining future minimum contractual obligations of approximately $4.89 million in 2026.

Off-Balance Sheet/Reserve for Unfunded Commitments. We are a party to financial instruments with off-balance sheet (“OBS”) risk in the normal course of business to meet the financing needs of our customers. These financial instruments include unfunded lines of credit, commitments to extend credit and federal funds sold to correspondent banks and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. At December 31, 2025, the Company’s reserve for unfunded commitments totaled $6.39 million which is recorded in other liabilities.

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Our exposure to credit loss in the event of nonperformance by the counterparty to the financial instrument for unfunded lines of credit, commitments to extend credit and standby letters of credit is represented by the contractual notional amount of these instruments. We generally use the same credit policies in making commitments and conditional obligations as we do for on-balance-sheet instruments.

Unfunded lines of credit and commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. These commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. We evaluate each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, as we deem necessary upon extension of credit, is based on our credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property, plant, and equipment and income-producing commercial properties.

Standby letters of credit are conditional commitments we issue to guarantee the performance of a customer to a third-party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The average collateral value held on letters of credit usually exceeds the contract amount.

See further disclosure of the unfunded lines of credit, unfunded commitments to extend credit and standby letters of credit (Note 12 - Financial Instruments with Off-Balance-Sheet Risk). Future notional amounts committed are $904.09 million in less than one year, $445.74 million in more than one year but less than three years and $442.28 million thereafter.

We believe we have no other OBS arrangements or transactions with unconsolidated, special purpose entities that would expose us to liability that is not reflected on the face of the financial statements.

Parent Company Funding. Our ability to fund various operating expenses, dividends, and cash acquisitions is generally dependent on our own earnings (without giving effect to our subsidiaries), cash reserves and funds derived from our subsidiaries. These funds historically have been produced by intercompany dividends and management fees that are limited to reimbursement of actual expenses. We anticipate that our recurring cash sources will continue to include dividends and management fees from our subsidiaries. At December 31, 2025, $366.54 million was available for the payment of intercompany dividends by our subsidiaries without the prior approval of regulatory agencies. Our subsidiaries paid aggregate dividends to us of $149.40 million in 2025 and $55.50 million in 2024.

Dividends. Our long-term dividend policy is to pay cash dividends to our shareholders of approximately 40% to 50% of annual net earnings while maintaining adequate capital to support growth. We are also restricted by a loan covenant within our line of credit agreement with Frost Bank to dividend no greater than 55% of net income, as defined in such loan agreement. The cash dividend payout ratios have amounted to 42.38%, 46.06% and 50.96% of net earnings, respectively, in 2025, 2024 and 2023. Given our current capital position, projected earnings and asset growth rates, we do not anticipate any significant change in our current dividend policy.

To pay dividends, we and our subsidiary bank must maintain adequate capital above regulatory guidelines and comply with the general requirements applicable to a Texas corporation. Generally, a Texas corporation may not pay a dividend to its shareholders if (i) after giving effect to the dividend, the corporation would be insolvent, or (ii) the amount of the dividend would exceed the surplus of the corporation. In addition, if the applicable regulatory authority believes that a bank under its jurisdiction is engaged in or is about to engage in an unsafe or unsound practice (which, depending on the financial condition of the bank, could include the payment of dividends), the authority may require, after notice and hearing, that such bank cease and desist from the unsafe practice. As a member bank, First Financial Bank may not declare or pay a dividend if the total of all dividends declared during the calendar year, including the proposed dividend, exceeds the sum of the bank's net income (as reportable in its Reports of Condition and Income) during the current calendar year and the retained net income of the prior two calendar years, unless the dividend has been approved by the Federal Reserve Board.

The Federal Reserve Board, the FDIC, the Texas Department of Banking, and the OCC have each indicated that paying dividends that deplete a bank’s capital base to an inadequate level would be an unsafe and unsound banking practice. The Federal Reserve Board, the Texas Department of Banking, the OCC and the FDIC expect that bank holding companies and insured banks should generally only pay dividends out of current operating earnings.

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