SOUTH PLAINS FINANCIAL, INC. (SPFI)

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

The following discussion and analysis of our financial condition and results of operations for the periods covered by this Quarterly Report on Form 10-Q (this “Form 10-Q”) and
should be read in conjunction with our consolidated financial statements and the accompanying notes thereto included in this Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report on Form
10-K”) filed with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to Rule 424(b) of the Securities Act of 1933, as amended (the “Securities Act”), on March 5, 2026. Unless we state otherwise or the context otherwise requires,
references in this Form 10-Q to “we,” “our,” “us” and “the Company” refer to South Plains Financial, Inc., a Texas corporation, our wholly-owned banking subsidiary, City Bank, a Texas banking association and our other consolidated subsidiaries.
References in this Form 10-Q to the “Bank” refer to City Bank.

Cautionary Notice Regarding Forward-Looking Statements

This Form 10-Q contains statements that we believe are “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or
phrases such as “may,” “might,” “should,” “could,” “predict,” “potential,” “believe,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “strive,” “projection,” “goal,” “target,” “outlook,” “aim,” “would,”
“annualized” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations,
estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such
forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking
statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following:

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The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this Form 10-Q and the risk factors set forth in our 2025
Annual Report on Form 10-K.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the
accompanying notes included in Item 8. Financial Statements and Supplementary Data. This discussion and analysis contains forward-looking statements that are subject to certain risks and uncertainties and are based on certain assumptions that we
believe are reasonable but may prove to be inaccurate. Certain risks, uncertainties and other factors, including those set forth under “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors” and elsewhere in this Report, may cause
actual results to differ materially from those projected results discussed in the forward-looking statements appearing in this discussion and analysis. Except as required by law, we assume no obligation to update any of these forward-looking
statements.

Discussion in this Form 10-K includes results of operations and financial condition for 2025 and 2024 and year-over-year comparisons between 2025 and 2024. For discussion on
results of operations and financial condition pertaining to 2024 and 2023 and year-over-year comparisons between 2024 and 2023, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II,
Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 7, 2025.

Overview

We are a bank holding company headquartered in Lubbock, Texas, and our wholly-owned subsidiary, City Bank is one of the largest independent banks in West Texas and has additional banking
operations in the Dallas, El Paso, Greater Houston, the Permian Basin, and College Station, Texas markets, and the Ruidoso, New Mexico market. Through City Bank, we provide a wide range of commercial and consumer financial services to small and
medium-sized businesses and individuals in our market areas. Our principal business activities include commercial and retail banking, along with investment, trust and mortgage services.

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On December 1, 2025, SPFI, and BOH Holdings, Inc., a Texas corporation (“BOH”), entered into an Agreement and Plan of Reorganization (the “Reorganization Agreement”), providing for the
acquisition by SPFI of BOH through the merger of BOH with and into SPFI, with SPFI surviving the merger (the “Merger”). At December 31, 2025, BOH had $745.1 million in assets, $624.5 million in total gross loans, and $603.0 million in deposits.
Pursuant to the terms and subject to the conditions of the Reorganization Agreement, which has been unanimously approved by the boards of directors of each of SPFI and BOH, each share of BOH common stock issued and outstanding immediately prior
to the effective time of the Merger (the “effective time”) will be converted into the right to receive, without interest, 0.1925 shares of SPFI common stock, subject to adjustment pursuant to the terms of the Reorganization Agreement (the
“Exchange Ratio”), plus cash in lieu of any fractional shares.

Based on the closing price of $37.79 for SPFI common stock on November 28, 2025, the Merger would have an aggregate value of approximately $105.9 million, though the transaction value is likely
to change until closing due to fluctuations in the price of SPFI common stock. Immediately following the consummation of the Merger, Bank of Houston, a Texas state banking association and wholly-owned subsidiary of BOH, will merge with and into
City Bank, with City Bank surviving the merger. The Merger is expected to close during the second quarter of 2026, subject to the satisfaction of customary closing conditions, including the receipt of all required regulatory approvals and the
approval of BOH’s shareholders.

Selected Financial Data

The following table sets forth certain of our selected financial data for, and as of the end of, each of the periods indicated (dollars in thousands, except per share data).

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Results of Operations

Net income for the year ended December 31, 2025 was $58.5 million, or $3.44 per diluted share, compared to $49.7 million, or $2.92 per diluted share, for the year ended December 31, 2024. The
increase in net income was primarily the result of an increase of $19.9 million in net interest income, partially offset by a decrease of $3.2 million in noninterest income and an increase of $5.0 million in noninterest expenses. Details of the
changes in the various components are further discussed below.

Return on average assets was 1.33% and return on average equity was 12.70% for the year ended December 31, 2025, compared to 1.17% and 11.75%, respectively, for the year ended December 31,
2024. The increase in return on average assets was primarily due to the increase in net income of 17.6%, relative to an increase of 3.6% in total average assets.

Net Interest Income

Net interest income is the principal source of the Company’s net income and represents the difference between interest income (interest and fees earned on assets, primarily loans and investment
securities) and interest expense (interest paid on deposits and borrowed funds). We generate interest income from interest-earning assets that we own, including loans and investment securities. We incur interest expense from interest-bearing
liabilities, including interest-bearing deposits and other borrowings, notably FHLB advances and subordinated notes. To evaluate net interest income, we measure and monitor (i) yields on our loans and other interest-earning assets, (ii) the costs
of our deposits and other funding sources, (iii) our net interest spread and (iv) our net interest margin. Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net
interest margin is calculated as the annualized net interest income on a fully tax-equivalent basis divided by average interest-earning assets.

Changes in the market interest rates and interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as the volume and types of interest-earning assets,
interest-bearing and noninterest-bearing liabilities, are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income.

The following table presents, for the periods indicated, information about: (i) weighted average balances, the total dollar amount of interest income from interest-earning assets and the
resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest
margin. For purposes of this table, interest income, net interest margin and net interest spread are shown on a fully tax-equivalent basis.

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Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes
in average interest rates. The following tables set forth the effects of changing rates and volumes on our net interest income during the period shown. Information is provided with respect to (i) effects on interest income attributable to changes
in volume (change in volume multiplied by prior rate) and (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume). Change applicable to both volume and rate have been allocated to volume.

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Net interest income for the year ended December 31, 2025 was $167.0 million compared to $147.1 million for the year ended December 31, 2024, an increase of $19.9 million, or 13.5%. The increase
in net interest income in 2025 was comprised of a $11.1 million, or 4.6%, increase in interest income and a $8.8 million, or 9.4%, decrease in interest expense. The growth in interest income was primarily attributable to increases of $8.9 million
in loan interest income. The increase in loan interest income was primarily due to growth of $33.4 million in average loans outstanding and an increase of 22 basis points in the yield on loans. Additionally, there was a recovery of $1.7 million
in interest during the second quarter of 2025, related to a full repayment of a loan that had previously been on nonaccrual. This recovery positively impacted the loan yield by approximately 6 basis points during 2025.

The $8.8 million decrease in interest expense for the year ended December 31, 2025 was primarily related to a 42 basis points decrease in the rate paid on interest-bearing liabilities over the
same period in 2024, partially offset by an increase of $96.4 million in average interest-bearing liabilities. The decline in rates was largely attributed to the Federal Open Market Committee (“FOMC”) of the Board of Governors of the Federal
Reserve dropping their target benchmark interest rate, resulting in federal funds rate decreases of 75 basis points in the last four months of 2025.

For the year ended December 31, 2025, net interest margin and net interest spread were 3.98% and 3.04%, respectively, compared to 3.65% and 2.58% for the same period in 2024, respectively,
which reflects the changes in interest income and interest expense discussed above.

Provision for Credit losses

Credit risk is inherent in the business of making loans. We establish an allowance for credit losses (“ACL”) through charges to earnings, which are shown in the consolidated
statements of comprehensive income as the provision for credit losses. Credit losses on loans are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. The provision for credit losses is
determined by conducting a quarterly evaluation of the adequacy of our ACL and charging the shortfall or excess, if any, to the current quarter’s expense. This has the effect of creating variability in the amount and frequency of charges to our
earnings. The provision for credit losses and the amount of allowance for each period are dependent upon many factors, including loan growth, net charge-offs, changes in the composition of the loan portfolio, delinquencies, management’s
assessment of the quality of the loan portfolio, the valuation of problem loans and the general economic conditions in our market areas. See “Financial Statements and Supplementary Data – Note 1.
Summary of Significant Accounting Policies” in the notes to our consolidated financial statements included elsewhere in this Report for more detailed discussion.

The provision for credit losses for the year ended December 31, 2025 was $5.2 million compared to $4.3 million for the year ended December 31, 2024. The provision during the year ended December
31, 2025 was largely attributable to net charge-offs of $3.0 million and loan growth during 2025. Net charge-offs decreased $428 thousand during 2025 as compared to 2024. The allowance for credit losses as a percentage of loans held for
investment was 1.44% at December 31, 2025 and 1.42% at December 31, 2024. Further discussion of the allowance for credit losses is noted below.

Noninterest Income

While interest income remains the largest single component of total revenues, noninterest income is an important contributing component. The largest portion of our noninterest income is
associated with our mortgage banking activities. Other sources of noninterest income include service charges on deposit accounts, and bank card services and interchange fees.

The following table sets forth the major components of our noninterest income for the periods indicated:

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Noninterest income for the year ended December 31, 2025 was $44.9 million compared to $48.1 million for the year ended December 31, 2024, a decrease of $3.2 million, or 6.6%. Significant
changes in the components of noninterest income are detailed below.

Service charges on deposit accounts - Income from service charges on deposit accounts increased $797 thousand, or 9.9% for the year ended December 31,
2025 compared to the same period in 2024. This was largely a result of increased commercial deposits, a continued focus on growing treasury management services, which began building during 2024, and an increase in customer overdraft fees.

Mortgage banking activities - Income from mortgage banking activities decreased $3.5 million, or 24.7%, to $10.7 million for the year ended December 31,
2025 from $14.2 million for the year ended December 31, 2024. The decrease was primarily the result of a $3.3 million negative fair value adjustment of the Company’s mortgage servicing rights portfolio for the year ended December 31, 2025 as
compared to a negative $1.2 million adjustment for the same period in 2024. The $2.1 million larger negative adjustment in 2025 was mainly due to overall lower rates during the year as compared to 2024. In addition, there was also a decrease of
$23.3 million, or 8.0%, in mortgage loan originations in the current year as compared to the prior year.

Other income and fees - Other noninterest income and fees decreased $959 thousand for the year ended December 31, 2025 compared to the same period in
2024. The decrease was primarily the result of decreases of $576 thousand in income from SBIC investments and $611 thousand recognized for property insurance proceeds during the current year as compared to the prior year.

Noninterest Expense

The following table sets forth the major components of our noninterest expense for the periods indicated:

Noninterest expense for the year ended December 31, 2025 was $132.6 million compared to $127.6 million for the year ended December 31, 2024, an increase of $5.0 million, or 4.0%. Significant
changes in the components of noninterest expense are detailed below.

Salaries and employee benefits - Salaries and employee benefits increased $2.6 million, or 3.5%, from $74.3 million for the year ended December 31, 2024
to $76.9 million for the year ended December 31, 2025. This was primarily driven by annual salary adjustments, which became effective in January of 2025.

Professional services - Professional services increased $727 thousand, or 11.0%, from $6.6 million for the year ended December 31, 2024 to $7.3 million
for the year ended December 31, 2025. This was primarily driven by approximately $500 thousand in merger related expenses and by increased consulting fees for technology projects and other initiatives during 2025 as compared to 2024.

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IT and data services – IT and data services expenses increased $415 thousand or 9.7% in the current year from $4.3 million for the year ended December
31, 2024 to $4.7 million for the year ended December 31, 2025. The increase relates primarily to the continued rising cost of technology services and customers using more digital services.

Other expenses - Other expenses increased $878 thousand, or 5.3%, from $16.6 million for the year ended December 31, 2024 to $17.5 million
for the year ended December 31, 2025. This increase was primarily driven by an increase of $845 thousand in the ineffectiveness related to fair value hedges on municipal securities in 2025 as compared to 2024.

Financial Condition

Our total assets increased $248.3 million, or 5.9%, to $4.48 billion at December 31, 2025 as compared to $4.23 billion at December 31, 2024. Our loans held for investment increased $89.4
million, or 2.9%, to $3.14 billion at December 31, 2025, compared to $3.06 billion at December 31, 2024. Total deposits increased $253.2 million, or 7.0% to $3.87 billion at December 31, 2025, compared to $3.62 billion at December 31, 2024.

Loan Portfolio

Our loans represent the largest portion of earning assets, greater than our securities portfolio or any other asset category, and the quality and diversification of the loan portfolio is an
important consideration when reviewing the Company’s financial condition. We originate substantially all of the loans in our portfolio, except certain loan participations that are independently underwritten by the Company prior to purchase.

Loans held for investments increased $89.4 million, or 2.9%, to $3.14 billion at December 31, 2025 as compared to $3.06 billion at December 31, 2024. The organic loan growth remained
relationship-focused and occurred broadly across the loan portfolio, partially offset by a decrease of $86.2 million in multi-family property loans.

The following table shows the contractual maturities of our loans held for investment portfolio at December 31, 2025:

The following table shows the distribution between fixed and adjustable interest rate loans for maturities greater than one year as of December 31, 2025:

At December 31, 2025, there was $1.59 billion in adjustable rate loans, with $877.7 million of these loans that mature or reprice in the next twelve months. Of these loans that mature or
reprice in the next twelve months, $597.0 million will reprice immediately upon changes in the underlying index rate, with the remaining $280.7 million being subject to rate ceilings, floors above the current index, or a future repricing date.
The Wall Street Journal prime rate is the predominate index used by the Bank.

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The Bank is primarily involved in real estate, commercial, agricultural and consumer lending activities with customers throughout Texas and Eastern New Mexico. We have a collateral
concentration as 71.6% of our loans were secured by real property as of December 31, 2025, compared to 73.7% as of December 31, 2024. We believe that these loans are not concentrated in any one single property type and that they are
geographically dispersed throughout the areas we serve. Although the Bank has diversified portfolios, its debtors’ ability to honor their contracts is substantially dependent upon the general economic conditions of the markets in which it
operates, which consist primarily of agribusiness, wholesale/retail, oil and gas and related businesses, healthcare industries and institutions of higher education. Commercial real estate loans and residential construction loans represent 37.0%
of loans held for investment as of December 31, 2025 and represented 40.1% of loans held for investment as of December 31, 2024. Further, 96% of the total dollar amount of these loans are secured by collateral located in the state of Texas.

We have established concentration limits in the loan portfolio for commercial real estate loans and unsecured lending, among other loan types. All loan types are within established limits. We
use underwriting guidelines to assess the borrowers’ historical cash flow to determine debt service, and we further stress test the debt service under higher interest rate scenarios. Financial and performance covenants are used in commercial
lending to allow us to react to a borrower’s deteriorating financial condition, should that occur.

Commercial Real Estate. Our commercial real estate portfolio includes loans for commercial property that is owned by real estate investors, construction
loans to build owner-occupied properties, and loans to developers of commercial real estate investment properties and residential developments. Residential construction loans are broken out separately below. Commercial real estate loans are
subject to underwriting standards and processes similar to our commercial loans. These loans are underwritten primarily based on projected cash flows for income-producing properties and collateral values for non-income-producing properties. The
repayment of these loans is generally dependent on the successful operation of the property securing the loans or the sale or refinancing of the property. Real estate loans may be adversely affected by conditions in the real estate markets or in
the general economy. The properties securing our real estate portfolio are diversified by type and geographic location. This diversity helps reduce the exposure to adverse economic events that affect any single market or industry.

Commercial real estate loans decreased $54.4 million, or 4.9%, to $1.06 billion as of December 31, 2025 from $1.12 billion as of December 31, 2024. The decrease was primarily driven by a
decrease of $86.2 million in multi-family loans and $18.9 million in hospitality loans, partially offset by increases in residential and commercial land development loans and other commercial real estate loans.

Commercial – General and Specialized. Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably.
Underwriting standards have been designed to determine whether the borrower possesses sound business ethics and practices, to evaluate current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed,
and to ensure appropriate collateral is obtained to secure the loan. 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 real estate, accounts receivable, or inventory, and typically include personal guarantees. Owner-occupied real estate is included in commercial loans, as the
repayment of these loans is generally dependent on the operations of the commercial borrower’s business rather than on income-producing properties or the sale of the properties. Commercial loans are grouped into two distinct sub-categories:
specialized and general. Commercial related loans that are considered “specialized” include agricultural production and real estate loans, energy loans, and finance, investment, and insurance loans. Commercial related loans that contain a broader
diversity of borrowers, sub-industries, or serviced industries are grouped into the “general category.” These include goods, services, restaurant & retail, construction, and other industries. Performance of these loans is subject to operating
and cash flow results of the borrower, with risk in the volatility of operating results for particular industries.

Commercial general loans increased $102.0 million, or 18.3%, to $659.3 million as of December 31, 2025 from $557.4 million as of December 31, 2024. The increase in commercial general loans was
primarily due to increases broadly across this segment with the largest increases coming from restaurant and retail loans and goods and services loans.

Commercial specialized loans increased $20.4 million, or 5.2%, to $409.4 million as of December 31, 2025 from $389.0 million as of December 31, 2024. This increase was primarily due to growth
of $28.1 million in energy sector loans, partially offset by a decrease of $7.1 million in agricultural real estate loans.

Consumer. We utilize a computer-based credit scoring analysis to supplement our policies and procedures in underwriting consumer loans. Our 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
our risk. Residential real estate loans are included in consumer loans. We generally require mortgage title insurance and hazard insurance on these residential real estate loans. All consumer loans are generally dependent on the risk
characteristics of the borrower’s ability to repay the loan, a consideration of the debt to income ratio, employment and income stability, the loan-to-value ratio, and the age, condition and marketability of the collateral.

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Consumer loans increased $25.3 million, or 2.9%, to $911.1 million as of December 31, 2025, from $885.8 million as of December 31, 2024. The increase in these loans was primarily a result of a
$23.5 million increase in residential mortgage loans. As of December 31, 2025, our consumer loan portfolio was comprised of $589.9 million in 1-4 family residential loans, $259.2 million in auto loans, and $62.1 million in other consumer loans.

Construction. Loans for residential construction are for single-family properties to developers, builders, or end-users. These loans are underwritten
based on estimates of costs and completed value of the project. Funds are advanced based on estimated percentage of completion for the project. Performance of these loans is affected by economic conditions as well as the ability to control costs
of the projects.

Construction loans decreased $3.8 million, or 3.6%, to $100.1 million as of December 31, 2025 from $103.9 million as of December 31, 2024.

The commercial real estate and construction categories comprise the Company’s nonowner-occupied real estate loans. Total nonowner-occupied real estate loans were $1.16 billion at December 31,
2025 and $1.22 billion at December 31, 2024. Nonowner-occupied commercial real estate loans are made up of income-producing commercial real estate property loans and construction, acquisition, and development property loans. As of December 31,
2025, total income-producing commercial real estate property loans totaled $796.3 million and was comprised of $229.7 million of multi-family property loans, $183.3 million of retail property loans, $141.3 million of office property loans, $42.2
million in hospitality loans, and $199.8 million in industrial and other property loans. Industrial and other property loans include types such as warehouse, mini-storage, and convenience stores. As of December 31, 2025, total construction,
acquisition, and development property loans totaled $368.4 million and was comprised of $100.1 million in residential construction property loans and $268.3 million of commercial construction and other land development loans. The weighted average
loan-to-value of income-producing nonowner-occupied commercial real estate loans was approximately 55% at December 31, 2025. The weighted average loan-to-value of nonowner-occupied office commercial real estate loans was approximately 58% at
December 31, 2025.

Owner-occupied commercial real estate loans totaled $419.0 million at December 31, 2025 and $366.8 million at December 31, 2024.

We are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include
commitments to extend credit 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. The Company’s exposure to
credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit to our customers is represented by the contractual or notional amount of those instruments.
Commitments to extend credit and standby letters of credit are not recorded as an asset or liability by the Company until the instrument is exercised. The contractual or notional amounts of those instruments reflect the extent of involvement we
have in particular classes of financial instruments.

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. 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. The Company
uses the same credit policies in making commitments and conditional obligations as they do for on-balance sheet instruments. The amount and nature of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on
management’s credit evaluation of the potential borrower.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public
and private short-term borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company holds collateral supporting those commitments for
which collateral is deemed necessary.

The following table summarizes commitments we have made as of the dates presented.

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Allowance for Credit Losses

The ACL for loans is established for future expected credit losses through a provision for credit losses charged to earnings. Management evaluates the appropriate level of the ACL on a
quarterly basis. The analysis takes into consideration the results of an ongoing loan review process, the purpose of which is to determine the level of credit risk within the portfolio and to ensure proper adherence to underwriting and
documentation standards. Additional allowances are provided to those loans which appear to represent a greater than normal exposure to risk. The quality of the loan portfolio and the adequacy of the ACL is assessed by regulatory examinations and
the Company’s internal and external loan reviews. The ACL consists of two elements: (1) specific valuation allowances established for expected losses on specifically analyzed loans and (2) collective valuation allowances calculated using
comparable and quantifiable information from both internal and external sources about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported
amount. Expected credit losses are estimated over the contractual term of the loans and adjusted for expected prepayments.

To determine the adequacy of the ACL on loans, the Company applied a dual credit risk rating (“DCRR”) methodology that estimates each
loan’s probability of default and loss given default to calculate the expected credit loss to non-analyzed loans. The DCRR process quantifies the expected credit loss at the loan level for the entire loan portfolio. Loan grades are assigned by
a customized scorecard that risk rates each loan based on multiple probability of default and loss given default elements to measure the risk of the loan portfolio. The ACL estimate incorporates the Company’s DCRR loan level risk rating
methodology and the expected default rate frequency term structure to derive loan level life of loan estimates of credit losses for every loan in the portfolio. The estimated credit loss for each loan is adjusted based on one-year through the
cycle estimate of expected credit loss to a life of loan measurement that reflects current conditions and forecasts. The life of loan expected loss is determined using the contractual weighted average life of the loan adjusted for prepayments.
Prepayment speeds are determined by grouping the loans into pools based on segments and risk rating. After the life of loan expected losses are determined, they are adjusted to reflect the Company’s reasonable and supportable economic forecast
over a selected range of a one to two years. The Company has developed regression models to project net charge-off rates based on macroeconomic variables (“MEVs”), typically a one-year period is used. MEV’s considered in the analysis
consist of data gathered from the St. Louis Federal Reserve Research Database (“FRED”), such as, federal funds rate, 10-year treasury rates, 30-year mortgage rates, crude oil prices, consumer price index, housing price index, unemployment rates,
housing starts, gross domestic product, and disposable personal income. These regression models are applied to the Company’s economic forecast to determine the corresponding net charge-off rates. The projected
net charge-off rates for the given economic scenario are used to adjust the through the cycle expected losses. Qualitative adjustments are also made to ACL results for additional risk factors that are relevant in assessing the expected credit
losses within our loan segments. These qualitative factor (“Q-Factor”) adjustments may increase or decrease management’s estimate of the ACL by a calculated percentage based upon the estimated level of perceived risk within a particular
segment. Q-Factor risk decisions consider concentrations of the loan portfolio, expected changes to the economic forecasts, large relationships, and other factors related to credit administration, such as borrower’s risk rating and the
potential effect of delayed credit score migrations. Management quantifiably identifies segment percentage Q-Factor adjustments using a scorecard risk rating system scaled to historical loss experience within a segment and management’s
perceived risk for that particular segment. In addition to the loan level evaluations, nonaccrual loans with a balance of $250 thousand or more are individually analyzed based on facts and circumstances of the loan to determine if a specific
allowance amount may be necessary. Specific allowances may also be established for loans whose outstanding balances are below the above threshold when it is determined that the risk associated with the loan differs significantly from the risk
factor amounts established for its loan category.

The ACL for loans was $45.1 million at December 31, 2025 compared to $43.2 million at December 31, 2024, an increase of $1.9 million, or 4.4%. The ACL for loans as a
percentage of loans held for investment was 1.44% at December 31, 2025 and 1.42% at December 31, 2024.

The following table provides an analysis of the ACL for loans and other data during the periods indicated.

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Net charge-offs totaled $3.0 million and were 0.10% of average loans outstanding for the year ended December 31, 2025, compared to $3.5 million and 0.11% for the year ended December 31, 2024. Gross charge-offs
increased $44 thousand and recoveries increased $472 thousand for the year ended December 31, 2025 compared to the same period in 2024.

While the entire ACL for loans is available to absorb losses from any part of our loan portfolio, the following table sets forth the allocation of the ACL for loans for the periods presented
and the percentage of allowance in each classification to total allowance:

Asset Quality

Loans are considered delinquent when principal or interest payments are past due 30 days or more. Delinquent loans may remain on accrual status between 30 days and 90 days past due. Loans on
which the accrual of interest has been discontinued are designated as nonaccrual loans. Typically, the accrual of interest on loans is discontinued when principal or interest payments are past due 90 days or when, in the opinion of management,
there is a reasonable doubt as to collectability in the normal course of business. When loans are placed on nonaccrual status, all interest previously accrued but not collected is reversed against current period interest income. Income on
nonaccrual loans is subsequently recognized only to the extent that cash is received and the loan’s principal balance is deemed collectible. Loans are restored to accrual status when loans become well-secured and management believes full
collectability of principal and interest is probable.

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Loans that exhibit characteristics different from their pool characteristics are evaluated on an individual basis. Loans evaluated individually are not included in the collective ACL
evaluation. Income from loans on nonaccrual status is recognized to the extent cash is received and when the loan’s principal balance is deemed collectible. Depending on a particular loan’s circumstances, we analyze loans for specific allowance
based upon either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral less estimated costs to sell if the loan is collateral
dependent. A loan is considered collateral dependent when repayment of the loan is based solely on the liquidation of the collateral. Fair value, where possible, is determined by independent appraisals, typically on an annual basis. Between
appraisal periods, the fair value may be adjusted based on specific events, such as if deterioration of quality of the collateral comes to our attention as part of our problem loan monitoring process, or if discussions with the borrower lead us
to believe the last appraised value no longer reflects the actual market for the collateral. The specific allowance amount on a collateral-dependent loan is charged-off to the allowance if deemed not collectible and the impairment amount on a
loan that is not collateral-dependent is set up as a specific reserve.

Real estate we acquire as a result of foreclosure or by deed-in-lieu of foreclosure is classified as other real estate owned (“OREO”) until sold and is initially recorded at fair value less
costs to sell when acquired, establishing a new cost basis. OREO and repossessed assets are reported as foreclosed assets.

Nonperforming loans include nonaccrual loans and loans past due 90 days or more. Nonperforming assets consist of nonperforming loans plus foreclosed assets.

At December 31, 2025, our total nonaccrual loans were $7.1 million, or 0.22% of total loans held for investment, as compared to $22.1 million, or 0.72% of total loans held for investment, at
December 31, 2024. These loans within this amount that exceeded $250 thousand were specifically analyzed and specific valuation allowances were established as necessary and included in the ACL for loans as of December 31, 2025 to cover any
probable loss. The decrease in the year ended December 31, 2025 was primarily due to the full repayment of a $19.5 million loan in the second quarter of 2025 that had been on nonaccrual at December 31, 2024. This decrease was partially offset by
other loans being placed on nonaccrual status during 2025.

Nonperforming loans were $9.8 million at December 31, 2025 and $24.0 million at December 31, 2024. This decrease is mainly due to the nonaccrual changes noted above.

Occasionally, the Company modifies loans to borrowers in financial distress by providing principal forgiveness, term extensions, an other than insignificant payment delay, or interest rate
reduction. When principal forgiveness is provided, the amount of forgiveness is charged-off against the ACL for loans. Typically, one type of concession, such as term extension, is granted initially. If the borrower continues to experience
financial difficulty, another concession, such as principal forgiveness, may be granted. In some cases, the Company provides multiple types of concessions on one loan. The Company closely monitors the performance of loans that are modified to
borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. Upon the Company’s determination that a modified loan has subsequently been deemed to not be fully collectible, the uncollectible amount is
written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACL for loans is adjusted by the same amount.

If a borrower on a modified accruing loan has demonstrated performance under the previous terms, is not experiencing financial difficulty and shows the capacity to continue to perform under the
restructured terms, the loan will remain on accrual status. Otherwise, the loan will be placed on nonaccrual status until the borrower demonstrates a sustained period of performance, which generally requires six consecutive months of payments.

Securities Portfolio

The securities portfolio is the second largest component of the Company’s interest-earning assets, and the structure and composition of this portfolio is important to an analysis of the
financial condition of the Company. The securities portfolio serves the following purposes: (i) it provides a source of pledged assets for securing certain deposits and borrowed funds, as may be required by law or by specific agreement with a
depositor or lender; (ii) it provides liquidity to even out cash flows from the loan and deposit activities of customers; (iii) it can be used as an interest rate risk management tool, since it provides a large base of assets, the maturity and
interest rate characteristics of which can be changed more readily than the loan portfolio to better match changes in the deposit base and other funding sources of the Company; and (iv) it is an alternative interest-earning asset when loan demand
is weak or when deposits grow more rapidly than loans.

The securities portfolio consists of securities classified as either held-to-maturity or available-for-sale. Securities consist primarily of state and municipal securities, mortgage-backed
securities and U.S. government sponsored agency securities. We determine the appropriate classification at the time of purchase. All held-to-maturity securities are reported at amortized cost, adjusted for premiums and discounts that are
recognized in interest income using the interest method over the period to maturity. All available-for-sale securities are reported at fair value.

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Total securities at December 31, 2025 were $567.5 million, representing a decrease of $9.7 million, or 1.7%, compared to $577.2 million at December 31, 2024. The decrease
was primarily due to $28.9 million in maturities, prepayments and calls, net of purchases and a $21.7 million decrease in the fair value of securities available for sale at December 31, 2025 as compared to December 31, 2024.

Certain securities have fair values less than amortized cost and, therefore, contain unrealized losses. During the year ended December 31, 2025, the fair value adjustment to the Company’s
securities available for sale increased $21.7 million after decreasing by $9.7 million during 2024. The change resulted from decreased longer-term interest rates during 2025. At December 31, 2025, the Company evaluated whether the decline in fair
value has resulted from credit losses or other factors. Within this evaluation, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by rating agency, and adverse conditions
specifically related to the security, among other factors. Based on management’s evaluation no unrealized losses on securities were determined to be due to credit loss. Additionally, we anticipate full recovery of amortized cost with respect to
these securities by maturity, or sooner in the event of a more favorable market interest rate environment. We do not intend to sell these securities and it is not probable that we will be required to sell them before recovery of the amortized
cost basis, which may be at maturity, thus no ACL or losses have been recognized or realized in the consolidated financial statements for securities in the portfolio.

The following table sets forth certain information regarding contractual maturities and the weighted average yields of our investment securities as of the date presented. Expected maturities
may differ from contractual maturities if borrowers have the right to call or prepay obligation with or without call or prepayment penalties.

Deposits

Deposits represent the Company’s primary and most vital source of funds. We offer a variety of deposit products including demand deposits accounts, interest-bearing products, savings accounts
and certificate of deposits. We put continued effort into gathering noninterest-bearing demand deposit accounts through loan production, customer referrals, marketing staffs, mobile and online banking and various involvements with community
networks.

Total deposits at December 31, 2025 were $3.87 billion, representing an increase of $253.2 million, or 7.0%, compared to $3.62 billion at December 31, 2024. The increase was due to organic
growth and occurred broadly across commercial and retail deposits, with growth in both noninterest-bearing and interest-bearing deposits. As of December 31, 2025, 26.4% of total deposits were comprised of noninterest-bearing demand accounts,
62.5% of interest-bearing non-maturity accounts and 11.1% of time deposits. Interest-bearing non-maturity accounts included $210.8 million in brokered deposits, which represented 5.4% of total deposits at December 31, 2025.

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The following table shows the deposit mix as of the dates presented:

The following table summarizes our average deposit balances and weighted average rates for the periods indicated:

Time deposits issued in amounts of more than $250 thousand represent the type of deposit most likely to affect the Company’s future earnings because of interest rate sensitivity. The effective
cost of these funds is generally higher than other time deposits because the funds are usually obtained at premium rates of interest.

The scheduled maturities of time deposits of more than $250 thousand as of December 31, 2025 follows:

The estimated amount of uninsured deposits as of December 31, 2025 was $1.40 billion. This represented approximately 36% of total deposits and excludes $336 million of collateralized public
fund deposits.

Borrowed Funds

In addition to deposits, we may utilize advances from the FHLB and other borrowings as a supplementary funding source to finance our operations.

FHLB Advances. The FHLB allows us to borrow, both short and long-term, on a blanket floating lien status collateralized by first mortgage loans and
commercial real estate loans as well as FHLB stock. At December 31, 2025 and 2024, we had total remaining borrowing capacity from the FHLB of $1.27 billion and $1.11 billion, respectively. We had no FHLB borrowings during the years ended December
31, 2025 or 2024.

The Company may use FHLB letters of credit to pledge to certain public deposits. The outstanding balance of FHLB letters of credit was $0 and $75.0 million at December 31, 2025 and December 31,
2024, respectively.

Federal Reserve Bank of Dallas. The Bank has a line of credit with the FRB. The amount of the line is determined on a monthly basis by the Federal
Reserve Bank. The line is collateralized by a blanket floating lien on all agriculture, commercial and consumer loans. The amount of the line was $659.7 million and $654.0 million at December 31, 2025 and 2024, respectively. There were no amounts
outstanding on the FRB line of credit at December 31, 2025 and 2024. We had no long-term FRB borrowings during the years ended December 31, 2025 or 2024.

Lines of Credit. The Bank has uncollateralized lines of credit with multiple banks as a source of funding for liquidity management. The total amount of
the lines was $140.0 million and $140.0 million as of December 31, 2025 and 2024. The lines were not used, other than testing during the years ended December 31, 2025 and 2024.

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Subordinated Debt

In December 2018, the Company issued $14.1 million of subordinated notes that have a maturity date of December 2030 and a weighted average fixed rate of 6.41% for the first seven years. After
the fixed rate period, all notes will float at the Wall Street Journal prime rate, with a floor of 4.0% and a ceiling of 7.5%. These notes pay interest quarterly, are unsecured, and may be called by the
Company at any time after the remaining maturity is five years or less. Additionally, these notes are intended to qualify for Tier 2 capital treatment, subject to regulatory limitations.

On September 29, 2020, the Company issued $50.0 million in subordinated notes. Proceeds were reduced by approximately $926 thousand in debt issuance costs. The notes had a maturity date of
September 2030 with a fixed rate of 4.50% for the first five years. On August 25, 2025, the Company notified holders (the “Redemption Notice”) of these notes that it had elected to redeem all of these outstanding notes effective on September 30,
2025 (the “Redemption Date”). Each of these notes were redeemed pursuant to the terms of the Indenture, dated as of September 29, 2020, between the Company and UMB Bank, National Association, as trustee for these notes (the “Trustee”), at the
Redemption Price totaling $50.0 million in aggregate principal amount, plus accrued and unpaid interest (the “Redemption Price”). As provided in the Redemption Notice, on the Redemption Date, the Trustee paid the relevant Redemption Price to the
holders of these notes appearing on the books and records of the Trustee on the Redemption Date. The notes ceased to represent the right to payment of principal and interest upon the payment to the holders of the notes by the Trustee representing
the Redemption Price. The Company received all necessary regulatory approvals for the redemption of these notes.

As of December 31, 2025, the total amount of subordinated debt outstanding was $14.1 million.

Junior Subordinated Deferrable Interest Debentures and Trust Preferred Securities. Between March 2004 and June 2007, the Company formed three
wholly-owned statutory business trusts solely for the purpose of issuing trust preferred securities, the proceeds of which were invested in junior subordinated deferrable interest debentures. The trusts are not consolidated and the debentures
issued by the Company to the trusts are reflected in the Company’s consolidated balance sheets. The Company records interest expense on the debentures in its consolidated financial statements. The amount of debentures outstanding was $46.4
million at December 31, 2025 and 2024. The Company has the right, as has been exercised in the past, to defer payments of interest on the securities for up to twenty consecutive quarters. During such time, corporate dividends may not be paid. The
Company is current in its interest payments on the debentures.

The chart below indicates certain information, as of December 31, 2025, about each of the statutory trusts and the junior subordinated deferrable interest debentures, including the date the
junior subordinated deferrable interest debentures were issued, outstanding amounts of trust preferred securities and junior subordinated deferrable interest debentures, the maturity date of the junior subordinated deferrable interest debentures,
and the interest rates on the junior subordinated deferrable interest debentures.

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Liquidity and Capital Resources

Liquidity

Liquidity refers to the measure of our ability to meet the cash flow requirements of depositors and borrowers, while at the same time meeting our operating, capital and strategic cash flow
needs, all at a reasonable cost. We continuously monitor our liquidity position to ensure that assets and liabilities are managed in a manner that will meet all short-term and long-term cash requirements. We manage our 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 our shareholders.

Our liquidity position is supported by management of liquid assets and access to alternative sources of funds. Our liquid assets include cash, interest-bearing deposits in correspondent banks,
federal funds sold, and fair value of unpledged investment securities. Other available sources of liquidity include wholesale deposits, and additional borrowings from correspondent banks, FHLB advances, and the FRB discount window. At December
31, 2025, the Bank had the capacity to borrow funds from the FHLB and the Federal Reserve discount window of up to approximately $1.27 billion and $659.7 million, respectively. Additionally, we have uncollateralized lines with multiple banks
totaling $140.0 million at December 31, 2025. These lines are not guaranteed and we are not placing reliance on them.

Our short-term and long-term liquidity requirements are primarily met through cash flow from operations, redeployment of prepaying and maturing balances in our loan and investment portfolios,
and increases in customer deposits. Other alternative sources of funds will supplement these primary sources to the extent necessary to meet additional liquidity requirements on either a short-term or long-term basis.

Capital

Total stockholders’ equity increased to $493.8 million as of December 31, 2025, compared to $438.9 million as of December 31, 2024. The increase from December 31, 2024 was primarily the result
of $58.5 million in net income and an increase of $12.9 million in accumulated other comprehensive income (“AOCI”) related to fair value changes in securities available for sale and related fair value hedges, partially offset by $10.1 million in
dividends paid, and repurchases of common stock of $8.5 million for the year ended December 31, 2025.

We are subject to various regulatory capital requirements administered by the federal and state banking regulators. Failure to meet regulatory capital requirements may result in certain
mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for “prompt corrective
action” (described below), we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting policies. The capital amounts and
classifications are subject to qualitative judgments by the federal banking regulators about components, risk weightings and other factors. Qualitative measures established by regulation to ensure capital adequacy required us to maintain minimum
amounts and ratio of common equity tier 1 (“CET1”) capital, tier 1 capital and total capital to risk-weighted assets and of tier 1 capital to average consolidated assets, referred to as the “leverage ratio.”

The risk-based capital ratios measure the adequacy of a bank’s capital against the riskiness of its assets and off-balance sheet activities. Failure to maintain adequate capital is a basis for
“prompt corrective action” or other regulatory enforcement action. In assessing a bank’s capital adequacy, regulators also consider other factors such as interest rate risk exposure; liquidity, funding and market risks; quality and level of
earnings; concentrations of credit, quality of loans and investments; risks of any nontraditional activities; effectiveness of bank policies; and management’s overall ability to monitor and control risks.

At December 31, 2025, both we and the Bank met all the capital adequacy requirements to which we and the Bank were subject. At December 31, 2025, we and the Bank were “well capitalized” under
the regulatory framework for prompt corrective action. Management believes that no conditions or events have occurred since December 31, 2025 that would materially adversely change such capital classifications. From time to time, we may need to
raise additional capital to support our and the Bank’s further growth and to maintain our “well capitalized” status.

The table below also summarizes the capital requirements applicable to us and the Bank in order to be considered “well-capitalized” from a regulatory perspective, as well as our and the Bank’s
capital ratios as of the dates indicated.

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