HANCOCK WHITNEY CORP (HWC)

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

FORWARD-LOOKING STATEMENTS

The objective of this discussion and analysis is to provide material information relevant to the assessment of the financial condition and results of operations of Hancock Whitney Corporation and its subsidiaries during the three months ended March 31, 2026 and selected comparable prior periods, including an evaluation of the amounts and certainty of cash flows from operations and outside sources. This discussion and analysis is intended to highlight and supplement financial and operating data and information presented elsewhere in this report, including the consolidated financial statements and related notes. The discussion contains forward-looking statements within the meaning and protections of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, our actual results may differ from those expressed or implied by the forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this Quarterly Report on Form 10-Q and in other reports or documents that we file from time to time with the SEC include, but are not limited to, the following:

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general economic and business conditions in our local markets, including conditions affecting employment levels, interest rates, inflation, the threat of recession, volatile equity capital markets, property and casualty insurance costs, collateral values, customer income, creditworthiness and confidence, spending and savings that may affect customer bankruptcies, defaults, charge-offs and deposit activity; and the impact of the foregoing on customer behavior (including the velocity and levels of deposit withdrawals and loan repayment);

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uncertainties surrounding geopolitical conflict, trade policy, taxation policy, and monetary policy, which continue to impact the outlook for future economic growth; a sustained increase in commodity prices; impacts from current and/or future imposition of tariffs by the United States against other nations; consideration of responsive actions by these nations, including retaliatory tariffs, or the expansion of import fees and tariffs among a larger group of nations is bringing greater ambiguity to the outlook for future economic growth, including reduced consumer spending, lower economic growth or recession, reduced demand for U.S. exports, disruptions to supply chains, impacts from decreased international tourism, decreased demand for banking products and services, and negative credit quality developments arising from the foregoing or other factors;

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adverse developments in the banking industry highlighted by high-profile bank failures and the potential impact of such developments on customer confidence, liquidity and regulatory responses to these developments (including increases in the cost of our deposit insurance assessments), the Company's ability to effectively manage its liquidity risk and any growth plans, and the availability of capital and funding;

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balance sheet and revenue growth expectations may differ from actual results;

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the risk that our provision for credit losses may be inadequate or may be negatively affected by credit risk exposure;

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loan growth expectations;

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management’s predictions about charge-offs;

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fluctuations in commercial and residential real estate values, especially as they relate to the value of collateral supporting the Company's loans;

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the risk that our enterprise risk management framework may not identify or address risks adequately, which may result in unexpected losses;

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the impact of business combinations on our performance and financial condition including our ability to successfully integrate the businesses;

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the potential impact of third-party business combinations in our footprint on our performance and financial condition;

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deposit trends, including growth, pricing and betas;

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credit quality trends;

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changes in interest rates, including actions taken by the Federal Reserve Board and the impact of fluctuations in interest rates on our financial projections, models and guidance;

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net interest margin trends, including the impact of ongoing elevated interest rates;

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changes in the cost and availability of funding due to changes in the deposit and credit markets;

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success of revenue-generating and cost reducing initiatives;

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future expense levels;

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changes in expense to revenue (efficiency ratio), including the risk that we may not realize and/or sustain benefits from efficiency and growth initiatives or that we may not be able to realize cost savings or revenue benefits in the time period expected, which could negatively affect our future profitability;

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the impact of supplemental disclosure items on our results of operations;

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the effectiveness of derivative financial instruments and hedging activities to manage risks;

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risks related to our reliance on third parties to provide key components of our business infrastructure, including the risks related to disruptions in services or financial difficulties of a third-party vendor;

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•
risks related to potential claims, damages, penalties, fines and reputational damage resulting from pending or future litigation, regulatory proceedings or enforcement actions;

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risks related to the ability of our operational framework to manage risks associated with our business such as credit risk and operation risk, including third-party vendors and other service providers, which could, among other things, result in a material breach of operating or security systems as a result of a cyber-attack or similar acts;

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the extensive use, reliability, disruption, and accuracy of the models and data upon which we rely;

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risks related to our implementation of new lines of business, new products and services, new technologies, and expansion of our existing business opportunities;

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risks related to the development and use of artificial intelligence;

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projected tax rates;

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future profitability;

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purchase accounting impacts, such as accretion levels;

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our ability to identify and address potential cybersecurity risks and/or breaches, which may be exacerbated by recent developments in generative artificial intelligence, on our systems and/or third party vendors and service providers on which we rely, a material failure of which could disrupt our business and result in the disclosure of and/or misuse or misappropriation of confidential or proprietary information, disruption or damage to our systems, increased costs, losses, or adverse effects to our reputation;

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our ability to receive dividends from Hancock Whitney Bank could affect our liquidity, including our ability to pay dividends or take other capital actions;

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the risk that we may be required to make substantial expenditures to keep pace with regulatory initiatives and rapid technology changes in the financial services market;

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the impact on our financial results, reputation, and business if we are unable to comply with all applicable federal and state regulations or other supervisory actions or directives and any necessary capital initiatives;

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our ability to effectively compete with other traditional and non-traditional financial services companies, some of whom possess greater financial resources than we do or are subject to different regulatory standards;

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our ability to maintain adequate internal controls over financial reporting;

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the financial impact of future tax legislation;

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the effects of geopolitical conflicts, war or other conflicts, acts of terrorism, climate change, natural disasters such as hurricanes, freezes, flooding, man-made disasters, such as oil spills, health emergencies, epidemics or pandemics, or other catastrophic events that may affect general economic conditions, and/or increase costs, including, but not limited to, property and casualty and other insurance costs;

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risks related to diversity, equity and inclusion, and environmental, social and governance legislation, rulemaking, activism and litigation, the scope and pace of which could alter our reputation and shareholder, associate, customer and third-party affiliations;

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changes in laws and regulations affecting our businesses, including governmental monetary and fiscal policies, legislation and regulations relating to bank products and services, increased regulatory scrutiny resulting from bank failures, as well as changes in the enforcement and interpretation of such laws and regulations by applicable governmental and self-regulatory agencies, which could require us to change certain business practices, increase compliance risk, reduce our revenue, impose additional costs on us, or otherwise negatively affect our businesses;

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the impact of federal government shutdowns, and uncertainties stemming from extended durations of such;

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the potential implementation of a regulatory reform agenda impacting rulemaking, supervision, examination and enforcement priorities of the federal banking agencies; and

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the risk that the regulatory environment may not be conducive to or may prohibit the consummation of future mergers and/or business combinations, may increase the length of time and amount of resources required to consummate such transactions, and the potential to reduce anticipated benefits from such mergers or combinations.

Also, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “forecast,” “goals,” “targets,” “initiatives,” “focus,” “potentially,” “probably,” “projects,” “outlook,” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and “could.” Forward-looking statements are based upon the current beliefs and expectations of management and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events.

Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward looking statements. Additional factors that could cause actual results to differ materially can be found in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, or in other periodic reports that we file with the SEC.

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You are cautioned not to place undue reliance on these forward-looking statements. We do not intend, and undertake no obligation, to update or revise any forward-looking statements, whether as a result of differences in actual results, changes in assumptions or changes in other factors affecting such statements, except as required by law.

OVERVIEW

Non-GAAP Financial Measures

Management’s Discussion and Analysis of Financial Condition and Results of Operations include non-GAAP measures used to describe our performance. These non-GAAP financial measures have inherent limitations as analytical tools and should not be considered on a standalone basis or as a substitute for analyses of financial condition and results as reported under GAAP. Non-GAAP financial measures are not standardized and therefore, it may not be possible to compare these measures with other companies that present measures having the same or similar names. These disclosures should not be considered an al

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

The objective of this discussion and analysis is to provide material information relevant to the assessment of the financial condition and results of operations of Hancock Whitney Corporation and its subsidiaries during the year ended December 31, 2025 and selected prior periods, including an evaluation of the amounts and certainty of cash flows from operations and outside sources. This discussion and analysis is intended to highlight and supplement financial and operating data and information presented elsewhere in this report, including the consolidated financial statements and related notes. The discussion contains forward-looking statements, which are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, our actual results may differ from those expressed or implied by the forward-looking statements. See Forward-Looking Statements in Part I of this Annual Report.

Non-GAAP Financial Measures

Management’s Discussion and Analysis of Financial Condition and Results of Operations include non-GAAP measures used to describe our performance. A reconciliation of those measures to GAAP measures are provided in Table 1 “Consolidated Financial Results” and Table 31 “Quarterly Consolidated Financial Results” of this section. The following is an overview of the non-GAAP measures used and the reasons why management believes they are useful and important in understanding the Company’s financial condition and results of operations included below.

Consistent with the provisions of Subpart 229.1400 of Regulation S-K, “Disclosures by Bank and Savings and Loan Registrants,” we present net interest income, net interest margin and efficiency ratios on a fully taxable equivalent (te) basis. The te basis adjusts for the tax-favored status of interest income from certain loans and investments using the statutory federal tax rate (21% for all periods presented) to increase tax-exempt interest income to a taxable-equivalent basis. This measure is the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources.

We present certain additional non-GAAP financial measures to assist the reader with a better understanding of the Company’s performance period over period, as well as to provide investors with assistance in understanding the success management has experienced in executing its strategic initiatives. The Company highlights certain items that are outside of our principal business and/or are not indicative of forward-looking trends in supplemental disclosure items below our GAAP financial data and presents certain “Adjusted” ratios that exclude these disclosed items. These adjusted ratios provide management and the reader with a measure that may be more indicative of forward-looking trends in our business, as well as demonstrates the effects of significant gains or losses and changes.

We define Adjusted Pre-Provision Net Revenue as net income excluding provision expense and income tax expense, plus the taxable equivalent adjustment (as defined above), less supplemental disclosure items (as defined above). Management believes that adjusted pre-provision net revenue is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle. We define Adjusted Revenue as net interest income (te) and noninterest income less supplemental disclosure items. We define Adjusted Noninterest Expense as noninterest expense less supplemental disclosure items. We define our Efficiency Ratio as noninterest expense to total net interest income (te) and noninterest income, excluding amortization of purchased intangibles and supplemental disclosure items, if applicable. Management believes adjusted revenue, adjusted noninterest expense and the efficiency ratio are useful measures as they provide a greater understanding of ongoing operations and enhance comparability with prior periods.

EXECUTIVE OVERVIEW

The discussions and analyses that follow provide insight into the impact of macroeconomic and industry trends on our performance in the most recent fiscal year, and our outlook for the near term.

Acquisition

On May 2, 2025, we completed the acquisition of Sabal Trust Company (“Sabal”). Based in St. Petersburg, Florida, with three additional locations in the Central Florida region, Sabal was the largest independent, employee-owned non-depository trust company in Florida. The transaction added assets under management and administration of approximately $3 billion to our existing trust and asset management business and provides the opportunity to develop relationships and offer other private banking, wholesale and retail products and services in high-growth markets. For additional information on this transaction, refer to Note 2 – "Acquisition" in the notes to our consolidated financial statements included elsewhere in this document.

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Subsequent Event

In January 2026, we executed a restructuring of our available for sale securities portfolio whereby we sold securities with an amortized cost of $1.5 billion and average yield of 2.49% and reinvested the $1.4 billion of proceeds with the purchase of securities with an average yield of 4.35%. We anticipate a 50 month payback period to cover the $98.5 million pre-tax loss associated with the sale, or approximately $0.93 per diluted share after tax, that will be reflected in our first quarter 2026 operating results. The restructure is expected to contribute approximately $23.8 million to net interest income, or $0.23 per diluted share, resulting in increases of 32 basis points (bps) to the securities portfolio yield and 7 bps to net interest margin on an annual basis.

Current Economic Environment

The year ended December 31, 2025 began with notable economic shifts as the new presidential administration swiftly began implementing its second-term agenda. The impacts of tariffs, tax reform, deportations, and deregulation each carried distinct economic and market implications. Tariffs quickly became the most influential factor, creating cost pressures across supply chains. Further, concerns over the pace and scale of tariffs created increased uncertainty as to near and long term effects that led to significant volatility in equity markets in the early part of the year. As policy clarity improved, markets successfully rebounded from the steep descent and remained strong for the duration of the year.

Labor market statistics continued to indicate weakening that stemmed from policy uncertainty, labor force impacts of deportation efforts and the increasing use of artificial intelligence. Job gains decelerated substantially compared to 2024, and the unemployment rate rose to 4.4% in December 2025 compared to 4.1% a year earlier. Despite deterioration in the labor market, consumer spending remained resilient and real gross domestic product (GDP) displayed growth of approximately 2.2% for 2025, rebounding from a net decline in the first quarter. The Federal Reserve held monetary policy steady for most of the year amid the difficult crosswinds. By September, some stabilization in inflation markers and sustained weakening in the labor market led to a 25 basis point interest rate cut. Operational disruptions and negative economic impacts of the 43-day government shutdown that followed shortly thereafter further clouded the economic picture, but the Federal Reserve subsequently issued two additional 25 basis point cuts in the fourth quarter of 2025, with the expectation that the adjusted rates will allow stabilization in the labor market and the resumption of downward trends in inflationary conditions.

A number of headwinds that have burdened the financial services industry in recent years continued to ease, with many institutions benefiting from recent interest rate movement, robust capital markets, deregulation and credit quality stabilization. Within our markets, loan demand gained momentum and deposit cost pressures eased amid the falling interest rate environment, contributing favorably to net interest margin and profitability.

Economic Outlook

We utilize economic forecasts produced by Moody’s Analytics (Moody’s) that provide various scenarios to assist in the development of our economic outlook. This outlook discussion utilizes the December 2025 Moody’s forecast, the most current available at December 31, 2025. The forecasts are anchored on a baseline forecast scenario, which Moody’s defines as the “most likely outcome” of where the economy is headed based on current conditions. Several upside and downside scenarios are produced that are derived from the baseline scenario and incorporate varying degrees of favorable and unfavorable adjustments to economic indicators and circumstances as compared to the baseline. The macroeconomic variables underlying the December 2025 economic scenarios differ in many respects from the comparable forecasts available at December 31, 2024 given the shift in economic circumstances and risks.

The baseline economic scenario acknowledges that economic policy under the current administration is rapidly shifting. Key assumptions within the December 2025 baseline forecast include the following: (1) the effective tariff rate will rise from just over 2% at the start of 2025 to approximately 12% by early 2026 before gradually falling late in the decade; (2) while the unemployment rate is still relatively low at 4.4%, it will continue to rise to a peak of 4.8% in late 2026 before gradually returning to near 4% in 2029; (3) GDP growth will begin to decelerate, displaying modest annual below-trend growth in the coming years of 2.1% in 2026, 1.9% in 2027 and 2.1% in 2028; (4) the 10-year U.S. Treasury yield will remain elevated near its current rate through the end of the decade as a result of elevated inflation and a deteriorating fiscal outlook; and (5) the soft economy and a struggling job market will prompt the Federal Reserve to continue to cut its benchmark rate until it reaches 2.75% in early 2027 before a return to its neutral level of 3% in 2028. The scenario further assumes that, with these rate cuts, the recent acceleration in inflation will prove temporary as it is largely due to a one-time price increase caused by higher tariffs.

The S-2 scenario presents a downside alternative to the baseline. The S-2 scenario assumes the impacts of the current administration's tariffs and deportations on the economy are worse than expected, still-elevated interest rates weaken credit-sensitive spending more than anticipated, and there is longer and farther-reaching disturbance from geopolitical conflict. The effective tariff rate is forecasted to increase to 15% and remain elevated through the end of 2028. Further, the S-2 scenario assumes that the unemployment rate will increase considerably to 6.6% in 2026 (peaking at 7.2% in the fourth quarter) before gradually improving to 4.2% in 2029. As a result of these pressures, the U.S. falls into a mild recession beginning in the first quarter of 2026 that lasts for three quarters, with the stock

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market contracting 22% and a peak-to-trough decline in GDP of 1%. The combination of a recession and rising inflation causes the Federal Reserve to lower its benchmark rate moderately over the course of a few quarters; as the recession persists and inflation subsides, the Federal Reserve subsequently reduces the rate more significantly.

Management has deemed certain assumptions underlying the S-2 scenario to be as likely to occur in the near term than those underlying the baseline scenario, and as such, the baseline scenario and the S-2 scenario were each given probability weightings of 50% in the calculation of our allowance for credit losses calculation at December 31, 2025.

The credit loss outlook for our portfolio as a whole has not changed materially since December 31, 2024. We continue to closely monitor our portfolio for customers that are sensitive to prolonged inflation, the elevated interest rate environment, tariffs, labor market conditions and/or other economic circumstances that may impact credit quality.

Rapidly evolving changes in fiscal and other policies of the current administration have created heightened uncertainty as to the impact on the U.S and global economies. The effects of continued elevated inflation, a softening labor market, and the Federal Reserve’s actions to counter those effects, as well as to respond to other economic concerns, could reduce economic growth in the near term. The full extent of the impact of these and other influential factors are uncertain and may have an adverse effect on the U.S. economy, including the possibility of an economic recession or slower growth in the near or midterm.

Highlights of 2025 Financial Results

Net income for the year ended December 31, 2025 was $486.1 million, or $5.67 per diluted common share, compared to $460.8 million, or $5.28 per diluted common share in 2024. Included in the results of the year ended December 31, 2025 is a charge of $5.9 million (pre-tax), or $0.05 per share after tax, attributable to costs associated with the acquisition of Sabal. Included in the results of the year ended December 31, 2024 is a charge of $3.8 million, or $0.03 per diluted share after-tax, supplemental disclosure item attributable to a revision of the FDIC special assessment. The following is an overview of financial results for the year ended December 31, 2025 compared to December 31, 2024:

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Net income of $486.1 million, or $5.67 per diluted common share, up from $460.8 million, or $5.28 per diluted share

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Adjusted pre-provision net revenue, a non-GAAP measure, totaled $679.9 million, up $38.8 million

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Provision for credit losses of $51.2 million in 2025, compared to $52.2 million in 2024; allowance for credit losses to total loans remains strong at 1.43% at December 31, 2025, down 4 basis points

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Loans of $24.0 billion, up $659.0 million, or 3%

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Deposits of $29.3 billion, down $213.1 million, or 1%

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Tangible common equity ratio of 10.06%, up 59 bps; common equity tier 1 capital ratio of 13.65%, down 49 bps, reflecting the return of capital through our share repurchase program and an increase in shareholder dividends

•
Credit metrics remain relatively stable, with criticized commercial loans down $87.7 million, or 14%, and nonaccrual loans up $9.5 million, or 10%; the net charge-off ratio was 0.22% compared to 0.19%

•
Net interest margin expanded 10 bps to 3.47%

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Efficiency ratio (a non-GAAP measure) improved to 54.78%, compared to 55.36%

The year ended December 31, 2025 was an outstanding year for our company. Net interest margin expanded ten basis points, adjusted pre-provision net revenue and return on assets grew, efficiency ratio improved, and credit quality remained stable. We deployed capital through the repurchase of 4.3 million shares of our common stock, increasing our quarterly shareholder dividends, and funding both organic and inorganic growth, including the acquisition of Sabal Trust Company on May 2, 2025. The Sabal acquisition expanded our trust and asset management business in Central Florida and provides opportunities to build relationships in that region. We experienced loan growth of 3% across our footprint and in most business segments, driven by increased demand and progress on our multi-year growth plan. We remain committed to continuing to fulfill our organic growth initiatives while maintaining operational efficiency and proactively managing capital to enhance shareholder value.

The table that follows presents our consolidated financial results. Additional information related to our results and outlook are included in the discussions that follow.

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Table 1. Consolidated Financial Results

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(a) Interest income includes the net impact of discount accretion and premium amortization arising from business combinations. Net purchase accounting discount accretion totaled $2.1 million and $2.4 million the years ended December 31, 2024, and 2023. There was no net purchase accounting discount accretion included in interest income in 2025.

(b) For analytical purposes, management adjusts interest income and net interest income for tax-exempt items to a taxable equivalent basis using a federal income tax rate of 21%.

(c) The tangible common equity ratio is common stockholders’ equity less intangible assets divided by total assets less intangible assets.

(d) The efficiency ratio (a non-GAAP measure) is noninterest expense to total net interest (te) and noninterest income, excluding amortization of purchased intangibles and supplemental disclosure items.

(e) See non-GAAP financial measures section of this analysis for a discussion of these measures.

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RESULTS OF OPERATIONS

The following is a discussion of results from operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. Refer to previously filed Annual Reports on Form 10-K Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for discussion of prior year variances.

Net Interest Income

For the year ended December 31, 2025, net interest income was $1.1 billion, up $26.9 million, or 2%, from 2024. Net interest income is the primary component of our earnings and represents the difference, or spread, between revenue generated from interest-earning assets and the interest expense related to funding those assets. For analytical purposes, net interest income is adjusted to a taxable equivalent basis (te) using the statutory federal tax rate of 21% on tax exempt items (primarily interest on municipal securities and loans). Net interest income (te) was $1.1 billion in 2025, up $26.1 million, or 2%, from 2024, comprised of a decrease in interest income (te) of $79.1 million that was more than offset by a decrease of $105.2 million in interest expense. The increase in net interest income (te) was largely interest rate driven, as the decline in prevailing rates on interest-bearing liabilities and an increase in securities yields outpaced lower yields on loans; it is also reflective of the impact of favorable changes in average balance of and mix within interest-bearing liabilities that was partially offset by the impact of a decline in average loans. Net interest margin, the ratio of net interest income (te) to average earning assets, increased 10 bps to 3.47% in 2025 from 3.37% in 2024.

The $79.1 million decrease in interest income (te) was largely attributable to a decrease in both loan yields and average balances, partially offset by increases in securities yields and average balances. The yield on earning assets (te) was down 22 bps to 5.04%, driven primarily by a 34 bp decline in the loan yield that reflects the impact of the new and repricing loans in the current interest rate environment. The yield on investment securities was up 25 bps to 2.88% as new investments and reinvestments were made at higher yields, and also reflecting the favorable impact of certain fair value hedges that became effective in 2025.

The $105.2 million decrease in interest expense was largely driven by the impact of the falling interest rate environment on interest-bearing liabilities, particularly in interest-bearing deposit cost, volume and mix. Compared to the prior year, average interest-bearing deposits were down $191.8 million in 2025, and the mix therein saw a shift from higher-cost time deposits to transaction and savings deposits as instruments matured. Average other short-term borrowings, consisting primarily of FHLB advances, were up $104.4 million in 2025 compared to 2024, largely as a function of funding needs. Our total cost of funds decreased 31 bps to 1.57% in 2025, largely driven by a 54 bp decline in the cost of interest-bearing deposits.

Though interest rates remain elevated, the Federal Reserve issued a series of cuts to its benchmark rate between September 2024 and December 2025 totaling 175 bps. Our loan and interest-bearing deposits betas for the current down rate cycle were 34% and 48%, respectively, contributing to expansion in our net interest margin.

Discussions of Asset/Liability Management and Net Interest Income at Risk later in this item provide additional information regarding our management of interest rate risk and the potential impact from changes in interest rates, respectively.

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TABLE 2. Summary of Average Balances, Interest and Rates (te) (a)

(a)
Taxable equivalent (te) amounts are calculated using federal income tax rate of 21%.

(b)
Includes nonaccrual loans.

(c)
Average securities do not include unrealized holding gains or losses on available for sale securities.

(d)
Included in interest income is net purchase accounting accretion of $2.1 million and $2.4 million for the years ended December 31, 2024, and 2023, respectively. There was no purchase accounting accretion in 2025.

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TABLE 3. Summary of Changes in Net Interest Income (te) (a) (b)

(a)
Taxable equivalent (te) amounts are calculated using a federal income tax rate of 21%.

(b)
Amounts shown as due to changes in either volume or rate includes an allocation of the amount that reflects the interaction of volume and rate changes. This allocation is based on the absolute dollar amounts of change due solely to changes in volume or rate.

(c)
Includes nonaccrual loans.

(d)
Average securities do not include unrealized holding gains or losses on available for sale securities.

Provision for Credit Losses

During the year ended December 31, 2025, we recorded a provision for credit losses of $51.2 million, compared to $52.2 million for the year ended December 31, 2024. The provision for credit losses recorded in 2025 included net charge-offs of $52.5 million and a $1.3 million reserve release. The provision for credit losses recorded in 2024 included net charge-offs of $46.0 million and a reserve build of $6.1 million. The modest reserve release in 2025 reflects our relatively consistent economic outlook and stable credit metrics.

Net charge-offs for the year ended December 31, 2025 totaled $52.5 million, or 0.22% of average loans outstanding, comprised of net charge-offs of $39.4 million in the commercial portfolio, $0.1 million in the residential mortgage portfolio and $13.0 million in the consumer portfolio. Net charge-offs for the year ended December 31, 2024 totaled $46.0 million, or 0.19% of average loans outstanding, comprised of net charge-offs of $31.3 million in the commercial portfolio and $14.9 million in the consumer portfolio, partially offset by net recoveries of $0.2 million in the residential mortgage portfolio. The increase in net charge-offs compared to the prior year was due to lower recoveries of $16.0 million compared to $27.1 million in 2024. Gross charge-offs for 2025 were down $4.6 million, at $68.5 million compared to $73.1 million in 2024.

Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Balance Sheet Analysis—Allowance for Credit Losses” provides additional information on changes in the allowance for credit losses and general credit quality.

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Noninterest Income

Noninterest income for the year ended December 31, 2025 totaled $406.4 million, a $42.3 million, or 12%, increase from 2024. The increase in noninterest income from the year ended December 31, 2024 is attributable in part to the Sabal acquisition, as well as growth in most revenue lines, partially offset by declines in gains on sales of assets and other miscellaneous income. Noninterest income variances are discussed in more detail below.

Table 4 presents, for each of the three years ended December 31, 2025, 2024 and 2023, the components of noninterest income, along with the percentage changes between years. Table 5 presents supplemental disclosure items included in noninterest income (Table 4) by component for the same periods.

TABLE 4. Noninterest Income

n/m – not meaningful

TABLE 5. Supplemental Disclosure Items Included in Noninterest Income

Service charges on deposit accounts include consumer, business, and corporate deposit account servicing fees, as well as nonsufficient funds fees on non-consumer accounts, overdraft and overdraft protection fees, and other customer transaction-related fees. Service charges on deposit accounts were $99.2 million, up $8.1 million, or 9%, from 2024. The increase from 2024 was largely attributable to increases of $4.1 million in consumer overdraft fees and service charges, and $4.3 million in analysis fees and overdraft fees on business accounts.

Trust fee income represents revenue generated from asset management services provided to individuals, businesses and institutions. Trust fees totaled $89.6 million, up $17.9 million, or 25%, from 2024. The increase reflects $14.5 million in personal trust fees as a result of the Sabal acquisition and growth in our legacy personal and corporate trust fees, partially offset by a decline in employee benefits trust revenue. Trust assets under management increased to $14.0 billion at December 31, 2025, inclusive of $2.7 billion attributable to the Sabal transaction, compared to $10.2 billion at December 31, 2024.

Bank card and ATM fees include income from credit and debit card transactions, fees earned from processing card transactions for merchants, and fees earned from ATM transactions. Bank card and ATM fees totaled $86.1 million, up $0.6 million, or 1%, with increases in purchasing card and debit card processing fees largely offset by declines in business credit card processing fees and ATM fees.

Investment and annuity fees and insurance commissions, which include both fees earned from sales of annuity and insurance products as well as managed account fees, totaled $49.2 million, a $5.7 million, or 13%, increase from 2024, largely attributable to increases of $2.0 million in investment management fees and $1.9 million in fixed income trading fees and also reflects increases in annuity fees, corporate underwriting fees and insurance commissions.

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Income from secondary mortgage market operations is comprised of income produced from the origination and sales of residential mortgage loans in the secondary market. We offer a full range of mortgage products to our customers and typically sell longer-term fixed rate loans, while retaining the majority of adjustable-rate loans and mortgage loans generated through programs to support customer relationships. Income from secondary mortgage market operations totaled $14.8 million, an increase of $2.4 million, or 19%, from 2024. The increase was attributable to higher mortgage loans production compared to the prior year. Secondary mortgage market operations income will vary based on application volume and the percentage of loans closed and ultimately sold.

Losses on sales of securities totaled less than $0.1 million for the year ended December 31, 2025. There were no gains or losses on sales of securities during the year ended December 31, 2024.

Income from bank-owned life insurance (BOLI) is generated through insurance benefit proceeds as well as the growth of the cash surrender value of insurance contracts held. BOLI income totaled $21.3 million in 2025, an increase of $4.4 million, or 26%, from 2024. The increase was attributable to an increase in income from changes in cash surrender value of $3.0 million and an increase in mortality gains of $1.4 million.

Credit-related fees include fees assessed on letters of credit and unused portions of loan commitments. Credit-related fees were $11.3 million in 2025, down $0.8 million, or 6%, from 2024, driven primarily by a decrease in unused commitment fees. Income from these products will vary based on letters of credit issued, credit line utilization and prevailing assessment rates.

Income from derivatives, largely resulting from our customer interest rate derivative program, totaled $5.8 million in 2025, compared to a loss of $3.8 million in 2024. The year-over-year increase was due largely to higher income of $6.5 million associated with our customer interest rate derivative program, driven mostly by favorable market conditions. In addition, losses resulting from assumption changes to the Visa Class B derivative liability was down $2.5 million. The remaining year-over-year increase is largely attributable to the lower holding costs related to derivative collateral. Derivative income or loss can be volatile and is dependent upon the composition of the portfolio, volume and mix of sales activity and market value adjustments due to market interest rate movement.

Net gains on sales of premises, equipment and other assets consists primarily of net revenue earned from sales of excess bank owned facilities and equipment no longer in use, gains on sales of Small Business Administration and other non-residential mortgage loans, and leases and other assets associated with the equipment finance line of business. Net gains on sales of premises, equipment and other assets totaled $6.1 million in 2025, compared to $7.8 million in 2024, down $1.7 million, as the comparative period included a $1.5 million gain on the sale of a former branch property.

Other miscellaneous income is comprised of various items, including dividends on FHLB stock, income from small business investment companies (SBICs), and syndication fees, among others. Other miscellaneous income for the year ended December 31, 2025 was $23.0 million, down $4.0 million, or 15%, from 2024, driven primarily by a decrease of $6.6 million in dividends on FHLB stock, reflecting a decline in the level of stock owned and the yield, partially offset by an increase of $2.9 million in syndication fees.

Noninterest Expense

Noninterest expense for the year ended December 31, 2025 totaled $851.6 million, a $31.7 million, or 4%, increase from the year ended December 31, 2024. Included in noninterest expense for year ended December 31, 2025 were supplemental disclosure items totaling $5.9 million attributable to costs associated with the acquisition of Sabal. Included in noninterest expense for the year ended December 31, 2024 is a supplemental disclosure item of $3.8 million attributable to an adjustment to the special assessment by the FDIC in connection with the protection of uninsured depositors under the systemic risk exception. Excluding the supplemental disclosure items for both periods, noninterest expense totaled $845.7 million, up $29.6 million, or 4%, from 2024. Noninterest expense variances are discussed in more detail below.

Table 6 presents, for each of the three years ended December 31, 2025, 2024 and 2023, noninterest expense, along with the percentage changes between years. Table 7 presents supplemental disclosure items included in noninterest expense (Table 6) by component for the same periods.

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TABLE 6. Noninterest Expense

n/m - not meaningful

TABLE 7. Supplemental Disclosure Items Included in Noninterest Expense

Personnel expense consists of salaries, incentive compensation, long-term incentives, payroll taxes, and other employee benefits such as 401(k), pension, and medical, life and disability insurance. Personnel expense totaled $475.4 million in 2025, up $6.0 million, or 1% from 2024. The year ended December 31, 2025 included $1.4 million of Sabal acquisition costs highlighted as supplemental disclosure items. Excluding these acquisition costs, personnel expense was up $4.6 million, or 1%. The increase was driven largely by increases in salary, bonus and stock-based compensation expenses, reflecting merit increases and higher headcount, as well as an increase in associate acquisition expenses. These increases were partially offset by a favorable impact from salary deferrals associated with lending activities, and decreases in commissions, incentives expense and retirement and health benefits expense. Personnel expense associated with ongoing Sabal operations contributed $5.9 million to the variance compared to the prior year.

Occupancy and equipment expenses are primarily composed of lease expenses, depreciation, maintenance and repairs, rent, taxes, and other equipment expenses. Occupancy and equipment expenses totaled $72.9 million in 2025, up $1.8 million, or 3%, from 2024, largely driven by building and equipment maintenance and leased facility expense that were partially offset by decreases in depreciation and amortization and building insurance costs.

Data processing expense includes expenses related to third party technology processing and servicing costs, technology project costs and fees associated with bank card and ATM transactions. Data processing expense totaled $127.2 million in 2025, up $5.3 million, or 4%, from 2024. Included in the year ended December 31, 2025 was $2.0 million of Sabal acquisition costs highlighted as

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supplemental disclosure items. Excluding these acquisition costs, data processing expense was up $3.4 million, or 3%. The increase was largely attributable to increases in certain technology processing, licensing and maintenance totaling $5.1 million, increases in activity-based fees, including card processing, credit card rewards expense and ATM servicing totaling $2.7 million, partially offset by a decrease in amortization and maintenance on data processing software of $4.4 million. Data processing expense can vary from period to period, depending on business needs and technology enhancement initiatives.

Professional services expense includes accounting and audit, legal, consulting and certain outsourced service expense. Professional services expense totaled $57.1 million in 2025, up $15.1 million, or 36%, from 2024. Included in the year ended December 31, 2025 was $1.5 million of Sabal acquisition costs highlighted as supplemental disclosure items. Excluding these acquisition costs, professional services expense was up $13.6 million, or 32%, largely attributable to costs associated with consulting and other professional services for stand-alone engagements, including process improvement projects, and to legal fees and expense for certain outsourced initiatives. Professional services expense may vary from period to period, generally related to the timing of external service needs.

Amortization of intangibles totaled $10.0 million in 2025, up $0.5 million, or 6%, from 2024 as a result of amortization of intangible assets acquired in the Sabal transaction.

Deposit insurance and regulatory fees totaled $18.0 million for the year ended December 31, 2025, down $6.2 million, or 26%, from 2024. Included in the year ended December 31, 2024 is the supplemental disclosure item of $3.8 million described above attributable to a special assessment made by the FDIC. Excluding the supplemental disclosure item, deposit insurance and regulatory fees were down $2.4 million, or 12%, from 2024, mostly reflective of changes in our risk-based assessment calculation as well as less significant quarterly adjustments to the special assessment based on quarterly updates from the FDIC.

The FDIC special assessment expense recorded to date is management's estimate of our portion of the cost attributable to the systemic risk exception based on information from the FDIC. However, the loss estimates resulting from the failures of Silicon Valley Bank and Signature Bank may be subject to further change pending the projected and actual outcome of loss share agreements, joint ventures, and outstanding litigation. The exact amount of losses incurred will not be determined until the FDIC terminates the receiverships of these banks; therefore, the exact exposure to the Company remains unknown.

Net loss on other real estate and foreclosed assets totaled $3.1 million in 2025, compared to a net gain of $2.5 million in 2024. The level of net income or losses associated with holding and maintaining the other real estate owned portfolio can vary depending on sales activity, valuation adjustments and income or expense associated with operating and maintaining foreclosed property. Gains or losses on the sale of other real estate and foreclosed assets may occur periodically and are dependent on the number and type of assets for sale and current market conditions.

Corporate value, franchise taxes, and other non-income taxes totaled $17.3 million in 2025, down $1.7 million, or 9%, from 2024, largely driven by decreases in both bank share tax and franchise tax. Bank share tax, the largest component of this line item, is based on multiple variables, including average quarterly assets, earnings and stockholders’ equity to determine the taxable assessment value.

Business development-related expenses (including advertising, travel, entertainment and contributions) totaled $34.3 million in 2025, up $3.2 million, or 10%, from 2024, largely driven by increases in digital media advertising, sponsorships, travel expense and charitable contributions.

Other retirement expense includes costs associated with pension and other post-retirement plan expense. Noninterest expense in each of the years ended December 31, 2025 and 2024 was reduced by a net credit in other retirement expense totaling $16.2 million and $18.1 million, respectively. The decrease in the net credit in 2025 was largely driven by changes in actuarial assumptions for the current plan year.

All other expenses totaled $52.6 million in 2025, relatively flat compared to 2024. Included in the year ended December 31, 2025 was approximately $1.0 million of Sabal acquisition costs highlighted as supplemental disclosure items. Excluding these acquisition costs, other expenses were down $0.8 million, or 2%.

Income Taxes

We recorded income tax expense at an effective rate of 20.6% in 2025, compared to 19.7% in 2024. The comparability of the effective tax rate between 2025 and 2024 is affected by higher pre-tax book income in 2025 that decreased the relative impact of net tax benefits related to tax credit investments, tax-exempt interest income and bank-owned life insurance. Our effective tax rate has historically varied from the federal statutory rate primarily due to tax-exempt income and tax credits. Interest income on bonds issued

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by or loans to state and municipal governments and authorities, and earnings from the bank-owned life insurance contract program are the major components of tax-exempt income.

Table 8 reconciles reported income tax expense to that computed at the statutory tax rate of 21% for the years ended December 31, 2025, 2024 and 2023.

TABLE 8. Income Taxes

The main source of tax credits has been investments in tax-advantage securities and tax credit projects. These investments are made primarily in the markets we serve and directed at tax credits issued under the Federal and State New Market Tax Credit (NMTC), Low-Income Housing Tax Credit (LIHTC) and pre-2018 Qualified Zone Academy Bonds (QZAB) and Qualified School Construction Bonds (QSCB) programs. The investments generate tax credits which reduce current and future taxes and are recognized when earned as a benefit in the provision for income taxes. Additionally, the amortization of the LIHTC investment cost will be recognized as a component of income tax expense in proportion to the tax credits recognized over the 10-year credit period of each project.

We have invested in NMTC projects through investments in our own CDEs, as well as other unrelated CDEs. Federal tax credits from NMTC investments are recognized over a seven-year period, while recognition of the benefits from state tax credits varies from three to five years.

Based only on tax credit investments that have been made through 2025, we expect to realize benefits from federal and state tax credits over the next three years totaling $8.2 million, $8.0 million and $5.5 million for 2026, 2027 and 2028, respectively. We intend to continue making investments in tax credit projects. However, our ability to access new credits will depend upon, among other factors, federal and state tax policies and the level of competition for such credits.

At December 31, 2025, we had a net deferred tax asset of $55.8 million, which is comprised of $218.9 million in deferred tax assets (net of valuation allowance), offset by $163.1 million of deferred tax liabilities. Several factors are considered in determining the recoverability of the deferred tax asset components, such as the history of taxable earnings, reversal of taxable temporary differences, future taxable income and tax planning strategies. Based on our review of these factors, we have established a $3.7 million valuation allowance for state net operating losses and $2.3 million valuation allowance for deferred executive compensation.

BALANCE SHEET ANALYSIS

Short-Term Investments

Short-term liquidity assets are held to ensure funds are available to meet the cash flow needs of both borrowers and depositors. At December 31, 2025, short-term liquidity investments, including interest-bearing bank deposits and federal funds sold, totaled $132.3 million, a decrease of $807.4 million from December 31, 2024. Average short-term investments for 2025 totaled $492.4 million, down $55.4 million from $547.8 million in 2024. Typically, these balances will change on a daily basis depending upon movement in customer loan and deposit accounts.

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Investment Securities

The purpose of the securities portfolio is to increase profitability, mitigate interest rate risk, provide liquidity and comply with regulatory pledging requirements. Our securities portfolio includes securities categorized as available for sale and held to maturity. Available for sale securities are carried at fair value and may be sold prior to maturity. Unrealized gains or losses on available for sale securities, net of deferred taxes, are recorded as accumulated other comprehensive income or loss in stockholders' equity.

Our investment in securities totaled $8.1 billion at December 31, 2025, up $497.6 million from December 31, 2024. The investment securities portfolio is managed by ALCO to assist in the management of interest rate risk and liquidity while providing an acceptable rate of return. At December 31, 2025, the amortized cost of securities available for sale totaled $6.3 billion and securities held to maturity totaled $2.1 billion, compared to $5.8 billion and $2.4 billion, respectively, at December 31, 2024. The year over year changes in each of the portfolios is largely reflective of maturities and paydowns from both portfolios reinvested in the available for sale portfolio.

Our securities portfolio consists mainly of residential and commercial mortgage-backed securities that are issued or guaranteed by U.S. government agencies. We invest only in high quality investment grade securities and manage the investment portfolio duration generally between two and five and a half years. At December 31, 2025, the average expected maturity of the portfolio was 5.58 years with an effective duration of 3.89 years and a nominal weighted-average yield of 2.87%. Under an immediate, parallel rate shock of 100 bp and 200 bp increases, the effective duration would be 3.95 years and 3.94 years, respectively. At December 31, 2024, the average expected maturity of the portfolio was 5.58 years with an effective duration of 4.12 years and a nominal weighted-average yield of 2.66%. The change in expected maturity, effective duration, and nominal weighted-average yield is primarily attributable to both portfolio reinvestment activity and growth in 2025.

We have in place fair value hedges on certain fixed-rate commercial mortgage-backed securities. As of December 31, 2025, we had approximately $397.5 million in notional amount of forward-starting fixed payer swaps that convert the latter portion of the term of these available for sale securities to a floating rate. These derivative instruments are designated as fair value hedges of interest rate risk. This strategy provides a fixed-rate coupon during the front-end unhedged tenor of the bonds and results in a floating-rate security during the back-end hedged tenor. During the year ended December 31, 2025, $248.5 million of fair value hedges became effective, with the net earnings recorded in interest income. Once effective, fair value hedges synthetically convert the notional amount of the hedged asset over the life of the hedge to a variable rate instrument that is indexed to the federal funds effective rate.

At the end of each reporting period, we evaluate the securities portfolio for credit loss. Based on our assessments, expected credit loss was negligible for all reporting periods in 2025 and 2024, and therefore no allowance for credit loss was recorded.

There were no investments in securities of a single issuer, other than U.S. Treasury and U.S. government agency securities and mortgage-backed securities issued or guaranteed by U.S. government agencies that exceeded 10% of stockholders’ equity. We do not invest in subprime or “Alt A” home mortgage-backed securities. Investments classified as available for sale are carried at fair value, while held to maturity securities are carried at amortized cost. Unrealized holding gains (losses) on available for sale securities are excluded from net income and are recognized, net of tax, in other comprehensive income and in accumulated other comprehensive income, a separate component of stockholders’ equity.

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The following table presents the amortized cost of debt securities by type at December 31, 2025 and 2024.

TABLE 9. Debt Securities by Type

The amortized cost, fair value and yield of debt securities at December 31, 2025, by final contractual maturity, are presented in the following table. Securities are classified according to their final contractual maturities without consideration of scheduled and unscheduled principal amortization, potential prepayments or call options. Accordingly, actual maturities will differ from their reported contractual maturities. The expected average maturity years presented in the table includes scheduled principal payments and assumptions for prepayments. The yield calculation does not include adjustments to amortized cost of available for sale securities for active fair value hedges.

TABLE 10. Debt Securities Maturities by Type

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In January 2026, we executed a restructuring of our available for sale securities portfolio whereby we sold securities with an amortized cost of $1.5 billion and average yield of 2.49% and reinvested the $1.4 billion of proceeds with the purchase of securities with an average yield of 4.35%. Management deemed the restructure an effective way of utilizing capital to enhance future net interest income. For further information on the restructure, refer to the “Subsequent Event” section that appears earlier in this analysis.

Loan Portfolio

Total loans at December 31, 2025 were $24.0 billion, up $659.0 million, or 3%, from December 31, 2024. The increase is reflective of increased loan demand, including strong net production in owner occupied and investor commercial real estate and equipment finance loans.

Our commercial customer base is diversified over a range of industries. We lend mainly to middle-market and smaller commercial entities, although we do participate in larger shared-credit loan facilities generally with businesses/sponsors operating in our market areas that are well known to the relationship officers. The funded balance of our shared national credits portfolio at December 31, 2025 totaled approximately $2.0 billion, or 9% of total loans, compared to $2.3 billion, or 10% of total loans at December 31, 2024. At December 31, 2025, our largest industry concentrations in shared national credit include approximately $324.4 million in real estate, rental and leasing, $303.6 million in finance and insurance, $234.6 million in manufacturing, and $234.4 million in information, with the remaining of the balance in other diverse industries.

The following table shows the composition of our loan portfolio at December 31, 2025 and 2024.

TABLE 11. Loans Outstanding by Type

The commercial and industrial (“C&I”) loan portfolio includes both commercial non-real estate and commercial real estate – owner occupied loans. C&I loans totaled $13.1 billion, or 55% of the total loan portfolio at December 31, 2025, an increase of $190.5 million, or 1%, from December 31, 2024. The year over year growth in this portfolio reflects increased demand with strong production in the owner occupied commercial real estate and equipment finance loans, and is net of a $255.7 million decrease in shared national credits. The decrease in shared national credits is the result of a strategic decision to reduce exposure in that portfolio as we focus on originating more granular loans in our markets with more opportunities for a full-service relationship.

Our C&I loan portfolio is well diversified by product, client, and geography throughout our footprint. Nevertheless, we may be exposed to certain concentrations of credit risk which exist in relation to different borrowers or groups of borrowers, specific types of collateral and industries.

The following table provides detail of the more significant industry concentrations for our C&I loan portfolio, which is based on NAICS codes for all industries, with the exception of energy, which is based on the borrower’s source of revenue (i.e. manufacturer whose income is derived from energy-related business is reported as energy).

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TABLE 12. Commercial & Industrial Loans by Industry Concentration

Commercial real estate – income producing loans totaled $4.3 billion at December 31, 2025, up $484.6 million, or 13%, from December 31, 2024, reflective of robust demand in this space. Construction and land development loans totaled approximately $1.2 billion at December 31, 2025, down $42.0 million, or 3%, from December 31, 2024. The decrease reflects loans converting to permanent financing outpacing the funding of new and existing loans.

The following table details the end of period aggregated commercial real estate – income producing and construction loan balances by property type. Loans reflected in 1-4 Family Residential Construction include both loans to construction builders as well as single-family borrowers.

TABLE 13. Commercial Real Estate– Income Producing and Construction by Property Type Concentration

Residential mortgages totaled $4.0 billion at December 31, 2025, up $55.6 million, or 1%, from December 31, 2024. Consumer loans totaled $1.3 billion at December 31, 2025, down $29.7 million, or 2%, compared to December 31, 2024. Approximately $14.3 million of the decline in consumer loans is in the indirect automobile lending portfolio, a business that we exited and the existing portfolio in runoff.

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The following table shows average loans by category, the effective taxable equivalent yield and the percentage of total loans for each of the preceding three years.

TABLE 14. Average Loans

The following table sets forth the contractual maturity by portfolio segment at December 31, 2025.

TABLE 15. Loan Maturities by Type

The sensitivity to interest rate changes for the portion of our loan portfolio that matures after one year is shown below.

TABLE 16. Loan Sensitivity to Changes in Interest Rates for Loans that Mature After One Year

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Asset Quality

The following table sets forth, for the periods indicated, nonaccrual loans and reportable loans modified or restructured loans, by type, and foreclosed and surplus ORE and other foreclosed assets. Loans past due 90 days or more and still accruing are also disclosed.

TABLE 17. Nonaccrual loans, loans modified or restructured, and ORE and foreclosed assets

Nonaccrual loans plus ORE and foreclosed assets totaled $121.7 million at December 31, 2025, down $3.5 million from December 31, 2024. Nonaccrual loans totaled $106.9 million, up $9.5 million from December 31, 2024. Nonaccrual loans as a percentage of the loan portfolio increased to 0.45% in 2025, compared to 0.42% in 2024. ORE and foreclosed assets were $14.8 million at December 31, 2025, down $13.0 million from December 31, 2024, largely attributable the sale of a foreclosed property from one commercial borrower.

Reportable modified loans to borrowers experiencing financial difficulty totaled $162.8 million at December 31, 2025 and includes $5.8 million of nonaccrual loans. Modified loans to borrowers experiencing financial difficulty totaled $99.5 million at December 31, 2024 and included $20.2 million of nonaccrual loans. These reportable modifications are granted as a part of our loss mitigation

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strategy to maximize expected payments. The increase in reportable modified loans reflects the continued stress on certain borrowers resulting from prolonged elevated interest rates, inflation, insurance costs, and other market conditions.

Criticized commercial loans totaled $535.4 million at December 31, 2025, down $87.6 million, or 14%, from $623.0 million at December 31, 2024. Criticized loans are defined as those having potential or well-defined weaknesses that deserve management’s close attention (risk-rated special mention, substandard and doubtful), including both accruing and nonaccruing loans. Criticized commercial loans comprised 2.88% of that portfolio at December 31, 2025, down from 3.47% at December 31, 2024. We remain focused on identifying specific and broader risk indicators that may be impacting certain segments in our portfolio, and we have not seen signs of significant weakening in any particular industry, sector or geographic segment beyond what we believe has been experienced by the banking industry as a whole. Our criticized commercial loans at December 31, 2025 are spread across many industries, with the largest concentrations as follows: $96.4 million real estate, rental and leasing, $67.5 million in hospitality, $63.9 million in transportation and warehousing, $62.9 million healthcare and social assistance, $57.4 million in retail trade, $54.4 million in construction and $51.1 million in wholesale trade. Commercial loans risk rated pass-watch totaled $614.8 million at December 31, 2025, compared to $521.4 million at December 31, 2024. The pass-watch risk rating includes credits with negative performance trends that reflect sufficient risk to cause concern, but have not risen to the level of criticized.

Allowance for Credit Losses

At December 31, 2025, the allowance for credit losses was $341.7 million, comprised of $307.8 million in allowance for loan losses and $33.9 million in the reserve for unfunded lending commitments. The allowance for credit losses decreased $1.3 million from $342.9 million at December 31, 2024, which was comprised of $318.9 million in allowance for loan losses and $24.1 million in the reserve for unfunded lending commitments. The $11.2 million decrease in the funded allowance was largely due to a reduction in reserves on commercial real estate – income producing loans, a portfolio where credit metrics have been improving. The $9.9 million increase in the reserve for unfunded lending commitments was largely volume driven.

Our allowance for credit losses coverage to total loans decreased to 1.43% at December 31, 2025, compared to 1.47% at December 31, 2024. The allowance for credit losses on the commercial portfolio totaled $272.0 million, or 1.46% of that portfolio, at December 31, 2025, down from $272.5 million, or 1.52%, at December 31, 2024. The allowance for credit losses on the residential mortgage portfolio totaled $42.8 million, or 1.07% of that portfolio, at December 31, 2025, relatively flat compared to $42.4 million, or 1.07%, at December 31, 2024. The allowance for credit losses on the consumer portfolio totaled $26.8 million, or 2.00% of that portfolio, at December 31, 2025, down from $28.0 million, or 2.04%, at December 31, 2024.

The $1.3 million net decrease in the allowance for credit losses from December 31, 2024 includes a decrease of $2.2 million in individually evaluated reserves (generally used for nonperforming loans), partially offset by an increase of $0.9 million in collectively evaluated reserves. We utilized the December 2025 Moody’s economic scenarios to inform our allowance for credit losses at December 31, 2025. After considering the variables underlying each of the Moody’s economic scenarios, management probability-weighted the baseline scenario at 50% and the downside S-2 mild recessionary scenario at 50% in the estimation of the allowance for credit losses at December 31, 2025, compared to probability weighting of the baseline scenario at 40% and the downside S-2 mild recessionary scenario at 60% in the estimation of the allowance for credit losses at December 31, 2024. The change in probability weightings from those used at December 31, 2024, does not indicate a significant shift in our overall credit loss outlook, but rather reflects a shift in the assumptions underlying the forecasts. Each of the scenarios considered have varying degrees of severity and duration of impacts to forecasted market conditions, economic indicators, monetary and other governmental policies and geopolitical conditions, among other variables. Refer to the Economic Outlook section of this discussion and analysis for further information on the Moody’s scenarios and our weighting assumptions.

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The following table sets forth activity in the allowance for loan losses for the periods indicated.

TABLE 18. Summary of Activity in the Allowance for Credit Losses