ServisFirst Bancshares, Inc. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements and supplementary data required by Regulations S-X and by Item 302 of Regulation S‑K are set forth in the pages listed below. Page Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements 55 Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting 57 Consolidated Balance Sheets at December 31, 2025 and 2024 58 Consolidated Statements of Income for the Years Ended December 31, 2025, 2024 and 2023 59 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2025, 2024 and 2023 60 Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2025, 2024 and 2023 61 Consolidated Statements of Cash Flows for the Years Ended December 31, 2025, 2024 and 2023 62 Notes to Consolidated Financial Statements 63 54 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors ServisFirst Bancshares, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of ServisFirst Bancshares, Inc. and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2026, expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Allowance for Credit Losses The Company’s loan portfolio and the associated allowance for credit losses (“allowance”) were $13.70 billion and $171.7 million as of December 31, 2025, respectively. As further described in Notes 1 and 3 to the financial statements, the amount of the allowance represents management’s best estimate of current expected credit losses on loans considering the characteristics of the loan portfolio and the economic environment. To calculate the allowance, loans with similar risk characteristics are collectively evaluated in pools and loans that do not share similar risk characteristics are excluded from the collective pools and evaluated on an individual basis. Management evaluates each loan pool utilizing a discounted cash flow, probability of default / loss given default or remaining life method, depending on the nature of the loan pool. Losses are predicted over a period of time determined to be reasonable and supportable, and after such period, losses are reverted to long term historical averages. The estimated credit losses for each loan pool are then adjusted for qualitative factors not inherently considered in the quantitative analyses. Consideration is given to the following factors: lending policy, changes in nature and volume of loans, staff experience, changes in volume and trends of problem loans, concentration risk, trends in underlying collateral values, external factors, quality of loan review system and other economic conditions. Estimating qualitative factor adjustments requires significant judgment and can either increase or decrease the quantitative model estimation. 55 We identified the allowance for credit losses, and more specifically the other economic conditions qualitative factor adjustment applied in the allowance, as a critical audit matter. The principal consideration for our determination of the other economic conditions qualitative factor adjustment as a critical audit matter is the subjectivity of the assumptions that management utilized in determining and applying the qualitative factor in the allowance model. Furthermore, certain inputs and assumptions lack observable data and, therefore, applying audit procedures required a higher degree of auditor judgment and subjectivity due to the nature and extent of audit evidence and effort required to address this matter. The primary audit procedures we performed to address this critical audit matter included: ● Evaluated the design and tested the operating effectiveness of key controls relating to the Company’s allowance, including controls over the determination of other economic conditions qualitative factor adjustments and the precision of management’s review and approval of the resulting estimate. ● Assessed the appropriateness and reasonableness of the qualitative factor adjustment framework, including evaluating management’s judgments as to which assumptions and relevant assessed risks impacted the other economic conditions qualitative adjustment for each loan pool. ● Evaluated and tested the relevance and reliability of data utilized in the qualitative factor framework, including considering the data’s completeness and accuracy and testing the mathematical accuracy of the calculations for the other economic conditions qualitative factor. ● Analyzed the total qualitative factor adjustment applied to each loan pool, in comparison to changes in the Company’s quantitatively driven expected credit losses and loan pools and evaluated the appropriateness and level of the total qualitative factor adjustment applied in the overall allowance. We have served as the Company’s auditor since 2014. /s/ Forvis Mazars, LLP Tampa, Florida February 26, 2026 56 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors ServisFirst Bancshares, Inc. Opinion on the Internal Control Over Financial Reporting We have audited ServisFirst Bancshares, Inc. and subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of December 31, 2025 and 2024, and for each of the three years in the period ended December 31, 2025, and our report dated February 26, 2026, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definitions and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of reliable financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. /s/ Forvis Mazars, LLP Tampa, Florida February 26, 2026 57 SERVISFIRST BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) December 31, 2025 December 31, 2024 ASSETS Cash and due from banks $ 95,127 $ 116,394 Interest-bearing balances due from depository institutions 1,026,607 2,259,195 Securities purchased with agreement to resell 498,910 - Federal funds sold 6,052 1,045 Cash and cash equivalents 1,626,696 2,376,634 Available-for-sale debt securities, at fair value 1,068,825 1,161,400 Held-to-maturity debt securities (fair value of $ 616,535 and $ 639,496 , respectively) 660,076 714,853 Restricted equity securities 12,203 11,300 Mortgage loans held for sale 11,744 9,211 Loans 13,696,912 12,605,836 Less allowance for credit losses ( 171,683 ) ( 164,458 ) Loans, net 13,525,229 12,441,378 Premises and equipment, net 60,396 59,185 Accrued interest and dividends receivable 61,956 62,794 Deferred tax asset, net 49,705 61,748 Other real estate owned and repossessed assets 2,583 2,531 Bank owned life insurance contracts 435,328 299,787 Goodwill 13,615 13,615 Other assets 198,834 137,207 Total assets $ 17,727,190 $ 17,351,643 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits: Non-interest-bearing demand $ 2,684,272 $ 2,619,687 Interest-bearing 11,534,762 10,923,772 Total deposits 14,219,034 13,543,459 Federal funds purchased 1,471,628 1,993,728 Other borrowings 34,750 64,743 Accrued interest and dividends payable 29,990 28,026 Other liabilities 121,441 104,915 Total liabilities 15,876,843 15,734,871 Stockholders' equity: Preferred stock, par value $ 0.001 per share; 1,000,000 authorized and undesignated at December 31, 2025 and December 31, 2024 - - Common stock, par value $ 0.001 per share; 200,000,000 shares authorized: 54,624,955 shares issued and outstanding at December 31, 2025; and 54,569,427 shares issued and outstanding at December 31, 2024 54 54 Additional paid-in capital 237,839 235,781 Retained earnings 1,613,746 1,412,616 Accumulated other comprehensive loss ( 1,792 ) ( 32,179 ) Total stockholders' equity attributable to ServisFirst Bancshares, Inc. 1,849,847 1,616,272 Noncontrolling interest 500 500 Total stockholders' equity 1,850,347 1,616,772 Total liabilities and stockholders' equity $ 17,727,190 $ 17,351,643 See Notes to Consolidated Financial Statements. 58 SERVISFIRST BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) Year Ended December 31, 2025 2024 2023 Interest income: Interest and fees on loans $ 828,696 $ 788,105 $ 699,101 Taxable securities 67,122 66,535 53,499 Nontaxable securities 21 31 65 Federal funds sold 12,007 1,128 2,844 Other interest and dividends 82,581 90,322 57,737 Total interest income 990,427 946,121 813,246 Interest expense: Deposits 373,888 420,650 331,740 Borrowed funds 81,330 78,812 70,569 Total interest expense 455,218 499,462 402,309 Net interest income 535,209 446,659 410,937 Provision for credit losses 35,311 21,587 18,715 Net interest income after provision for credit losses 499,898 425,072 392,222 Noninterest income: Service charges on deposit accounts 11,884 9,434 8,420 Mortgage banking 5,464 4,922 2,755 Credit card income 8,327 8,280 8,631 Securities losses ( 16,375 ) - - Bank-owned life insurance income 14,817 9,533 7,574 Other operating income 3,105 2,887 3,037 Total noninterest income 27,222 35,056 30,417 Noninterest expenses: Salaries and employee benefits 94,815 96,318 80,965 Equipment and occupancy expense 14,597 14,519 14,295 Third party processing and other services 31,617 31,181 27,872 Professional services 7,175 6,901 5,916 FDIC and other regulatory assessments 10,990 10,687 15,614 Other real estate owned expense 155 199 47 Other operating expenses 25,641 21,341 33,342 Total noninterest expenses 184,990 181,146 178,051 Income before income taxes 342,130 278,982 244,588 Provision for income taxes 65,527 51,740 37,735 Net income 276,603 227,242 206,853 Dividends on preferred stock 62 62 62 Net income available to common stockholders $ 276,541 $ 227,180 $ 206,791 Basic earnings per common share $ 5.06 $ 4.17 $ 3.80 Diluted earnings per common share $ 5.06 $ 4.16 $ 3.79 See Notes to Consolidated Financial Statements. 59 SERVISFIRST BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Year Ended December 31, 2025 2024 2023 Net income $ 276,603 $ 227,242 $ 206,853 Other comprehensive income (loss), net of tax: Unrealized net holding gains (loss) arising during period from securities available for sale, net of tax of $ 6,919 , $ 7,347 , and $( 1,593 ) for the twelve months ended December 31, 2025, 2024, and 2023, respectively 17,878 15,902 ( 4,754 ) Amortization of net unrealized gains on securities transferred from available-for-sale to held-to-maturity, net of tax of $( 143 ), $( 155 ), and $( 197 ) for the twelve months ended December 31, 2025, 2024, and 2023, respectively ( 427 ) ( 486 ) ( 588 ) Reclassification adjustment for net losses on sale of securities, net of tax of $ 3,439 for 2025 12,936 - - Other comprehensive income (loss), net of tax 30,387 15,416 ( 5,342 ) Comprehensive income $ 306,990 $ 242,658 $ 201,511 See Notes to Consolidated Financial Statements. 60 SERVISFIRST BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands, except share amounts) Years Ended December 31, 2025, 2024 and 2023 Common Shares Preferred Stock Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Non-controlling Interest Total Stockholders' Equity Balance, January 1, 2023 54,326,527 $ 54 $ 229,693 $ 1,109,902 $ ( 42,253 ) $ 500 $ 1,297,896 Common dividends paid, $ 0.84 per share - - - ( 45,711 ) - - ( 45,711 ) Common dividends declared, $ 0.30 per share - - - ( 16,338 ) - - ( 16,338 ) Preferred dividends paid - - - ( 62 ) - - ( 62 ) Dividends on nonvested restricted stock recognized as compensation expense - - - 197 - - 197 Issue restricted shares pursuant to stock incentives, net of forfeitures 51,881 - - - - - - Issue shares of common stock upon exercise of stock options 83,172 - 1,287 - - - 1,287 13,798 shares of common stock withheld in net settlement upon exercise of stock options ( 1,975 ) - - - ( 1,975 ) Stock-based compensation expense - - 3,600 - - - 3,600 Other comprehensive loss, net of tax - - - - ( 5,342 ) - ( 5,342 ) Net income - - - 206,853 - - 206,853 Balance, December 31, 2023 54,461,580 $ - $ 54 $ 232,605 $ 1,254,841 $ ( 47,595 ) $ 500 $ 1,440,405 Impact of adoption ASU 2023-02, net of tax - - - ( 2,269 ) - - ( 2,269 ) Adjusted balance, January 1, 2024 54,461,580 54 232,605 1,252,572 ( 47,595 ) 500 1,438,136 Common dividends paid, $ 0.90 per share - - ( 49,074 ) - - ( 49,074 ) Common dividends declared, $ 0.34 per share - ( 18,280 ) ( 18,280 ) Preferred dividends paid - - ( 62 ) - - ( 62 ) Dividends on nonvested restricted stock recognized as compensation expense - - - 218 - - 218 Issue restricted shares pursuant to stock incentives, net of forfeitures 55,282 - - - - - - Issue shares of common stock upon exercise of stock options 52,565 - 916 - - - 916 13,798 shares of common stock withheld in net settlement upon exercise of stock options - ( 1,229 ) ( 1,229 ) Stock-based compensation expense - - 3,489 - - - 3,489 Other comprehensive income, net of tax - - - - 15,416 - 15,416 Net income - - - 227,242 - - 227,242 Balance, December 31, 2024 54,569,427 $ - $ 54 $ 235,781 $ 1,412,616 $ ( 32,179 ) $ 500 $ 1,616,772 Common dividends paid, $ 1.00 per share - - - ( 54,885 ) - - ( 54,885 ) Common dividends declared, $ 0.38 per share - - - ( 20,758 ) - - ( 20,758 ) Preferred dividends paid - - - ( 62 ) - - ( 62 ) Dividends on nonvested restricted stock recognized as compensation expense - - - - 232 - - 232 Issue restricted shares pursuant to stock incentives, net of forfeitures 39,498 - - - - - - Restricted shares withheld for taxes ( 9,197 ) - - - - - - - Issue shares of common stock upon exercise of stock options 25,227 - - 610 - - - 610 6,723 shares of common stock withheld in net settlement upon exercise of stock options - ( 1,509 ) ( 1,509 ) Stock-based compensation expense - - - 2,957 - - - 2,957 Other comprehensive income, net of tax - - - - - 30,387 - 30,387 Net income - - - - 276,603 - - 276,603 Balance, December 31, 2025 54,624,955 $ - $ 54 $ 237,839 $ 1,613,746 $ ( 1,792 ) $ 500 $ 1,850,347 See Notes to Consolidated Financial Statements. 61 SERVISFIRST BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2025 2024 2023 OPERATING ACTIVITIES Net income $ 276,603 $ 227,242 $ 206,853 Adjustments to reconcile net income to net cash provided by operating activities Deferred tax expense (benefit) 1,828 ( 3,351 ) ( 1,005 ) Provision for credit losses 35,311 21,587 18,715 Depreciation 4,728 4,785 4,436 Accretion on acquired loans 200 186 197 Amortization of investments in tax credit partnerships 38,207 12,565 14,353 Net amortization (accretion) of debt securities 123 ( 200 ) 49 Decrease (increase) in accrued interest and dividends receivable 838 ( 3,613 ) ( 10,759 ) Stock-based compensation expense 2,957 3,489 3,600 Increase in accrued interest and dividends payable 1,964 481 8,930 Proceeds from sale of mortgage loans held for sale 253,080 204,404 127,702 Originations of mortgage loans held for sale ( 250,148 ) ( 203,620 ) ( 128,414 ) Gain on sale of mortgage loans held for sale ( 5,464 ) ( 4,922 ) ( 2,755 ) Loss on sale of securities available for sale 16,375 - - Net (gain) loss on sale of other real estate owned and repossessed assets ( 298 ) ( 120 ) 28 Write down of other real estate owned and repossessed assets - 74 - Increase in cash surrender value of life insurance contracts ( 10,541 ) ( 7,028 ) ( 7,574 ) Net change in other assets, liabilities, and other operating activities ( 10,559 ) 956 ( 37,060 ) Net cash provided by operating activities 355,204 252,915 197,296 INVESTMENT ACTIVITIES Purchases of debt securities available-for-sale ( 485,438 ) ( 1,141,936 ) ( 1,001,811 ) Proceeds from maturities, calls and paydowns of debt securities available-for-sale 443,187 904,167 746,398 Proceeds from sale of debt securities available-for-sale 159,499 - - Purchases of debt securities held-to-maturity ( 2,975 ) ( 45,472 ) ( 48,723 ) Proceeds from maturities, calls and paydowns of debt securities held-to-maturity 57,182 312,643 100,180 Purchases of restricted equity securities ( 903 ) ( 1,074 ) ( 46,482 ) Proceeds from sale of restricted equity securities - - 43,990 Investment in tax credit partnerships and SBIC ( 76,027 ) ( 13,371 ) ( 9,303 ) Return of capital from tax credit partnerships and SBIC 1,039 274 191 Net increase in loans ( 1,122,452 ) ( 963,367 ) 16,314 Purchases of premises and equipment ( 5,939 ) ( 4,646 ) ( 3,910 ) Purchase of bank owned life insurance contracts ( 125,000 ) - - Proceeds from death benefit of bank owned life insurance contracts - 1,224 2,566 Proceeds from sale of other real estate owned and repossessed assets 3,336 3,024 158 Net cash used in investing activities ( 1,154,491 ) ( 948,534 ) ( 200,432 ) FINANCING ACTIVITIES Net increase (decrease) in non-interest-bearing deposits 64,585 ( 23,414 ) ( 678,246 ) Net increase in interest-bearing deposits 610,990 293,362 2,404,952 Net (decrease) increase in federal funds purchased ( 522,100 ) 737,004 ( 362,074 ) FHLB advances 1,000 - 300,000 Repayment of FHLB advances ( 1,000 ) - ( 300,000 ) Redemption of other borrowings ( 30,000 ) - - Proceeds from exercise of stock options 610 916 1,287 Taxes paid in net settlement of tax obligation upon exercise of stock options ( 1,509 ) ( 1,229 ) ( 1,975 ) Dividends paid on common stock ( 73,165 ) ( 65,412 ) ( 45,711 ) Dividends paid on preferred stock ( 62 ) ( 62 ) (62 ) Net cash provided by financing activities 49,349 941,165 1,318,171 Net (decrease) increase in cash and cash equivalents ( 749,938 ) 245,546 1,315,035 Cash and cash equivalents at beginning of period 2,376,634 2,131,088 816,053 Cash and cash equivalents at end of period $ 1,626,696 $ 2,376,634 2,131,088 SUPPLEMENTAL DISCLOSURE Cash paid for: Interest $ 453,254 $ 498,981 393,379 Income taxes 34,577 44,977 53,991 NONCASH TRANSACTIONS Other real estate acquired in settlement of loans $ 3,090 $ 5,729 933 Internally financed sale of other real estate owned - 1,215 - Dividends on nonvested restricted stock reclassified as compensation expense 232 218 197 Dividends declared but not paid 20,758 18,280 16,338 See Notes to Consolidated Financial Statements. 62 SERVISFIRST BANCSHARES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations ServisFirst Bancshares, Inc. (the “Company”) was formed on August 16, 2007 and is a bank holding company whose business is conducted by its wholly owned subsidiary ServisFirst Bank (the “Bank”). The Bank is headquartered in Birmingham, Alabama, and has provided a full range of banking services to individual and corporate customers throughout the Birmingham market since opening for business in May 2005. The Bank has since expanded into Florida, Georgia, North Carolina, South Carolina, Tennessee, Texas and Virginia. The Bank owns all of the stock of SF Intermediate Holding Company, Inc., which, in turn, owns all of the stock of SF TN Realty Holdings, Inc., which, in turn, owns all of the common stock of the Company’s real estate investment trusts, SF Realty 1, Inc., SF FLA Realty, Inc., SF GA Realty, Inc. and SF TN Realty, Inc. More details about SF Intermediate Holding Company, Inc. and its subsidiaries are included in Note 11. Operating Segments The Company operates as a single reportable segment, with a majority of its revenues derived from the business of banking. Senior management, which serves as the Chief Operating Decision Maker (“CODM”), regularly reviews consolidated financial performance and allocates resources on a Bank-wide basis. As a result, the Company’s financial statements reflect one reportable segment. Basis of Presentation and Accounting Estimates To prepare consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”), management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and future results could differ. The allowance for credit losses and the fair value of financial instruments are particularly subject to change. All numbers are in thousands except share and per share data. Basis of Consolidation The consolidated financial statements include the accounts of the Company and other entities in which it has a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation. Cash, Due from Banks, Interest-Bearing Balances due from Financial Institutions Cash and due from banks include cash on hand, cash items in process of collection, amounts due from banks and interest bearing balances due from financial institutions. The Company considers financial instruments with an original maturity of three months or less to be cash equivalents. For purposes of cash flows, cash and cash equivalents include cash and due from banks and federal funds sold and securities purchased with agreement to resell. Generally, federal funds are purchased and sold for one-day periods. Cash flows from loans, mortgage loans held for sale, federal funds sold, and deposits are reported net. Debt Securities Debt securities are classified based on the Company’s intention on the date of purchase. All debt securities classified as available-for-sale are recorded at fair value with any unrealized gains and losses reported in accumulated other comprehensive income (loss), net of the deferred income tax effects. Debt securities that the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity and are carried at historical cost and adjusted for amortization of premiums and accretion of discounts. Transfers of debt securities into the held-to-maturity category from available-for-sale category are made at fair value at the date of transfer. The unrealized holding gain or loss at the date of transfer is retained in accumulated other comprehensive income (loss) and in the carrying value of the held-to-maturity securities. Such amounts are amortized over the remaining life of the security. Interest and dividends on securities, including amortization of premiums and accretion of discounts calculated under the effective interest method, are included in interest income. For certain securities, amortization of premiums and accretion of discounts is computed based on the anticipated life of the security, which may be shorter than the stated life of the security. Realized gains and losses from the sale of securities are determined using the specific identification method and are recorded on the trade date of the sale. 63 Restricted Equity Securities Investments in restricted equity securities without a readily determinable market value are carried at cost. Mortgage Loans Held for Sale The Company classifies certain residential mortgage loans as held for sale. Typically, mortgage loans held for sale are sold to a third-party investor within a very short time period. The loans are sold without recourse and servicing is not retained. Net fees earned from this banking service are recorded in noninterest income. In the course of originating mortgage loans and selling those loans in the secondary market, the Company makes various representations and warranties to the purchaser of the mortgage loans. Each loan is underwritten using government agency guidelines. Any exceptions noted during this process are remedied prior to sale. These representations and warranties also apply to underwriting the real estate appraisal opinion of value for the collateral securing these loans. Under the representations and warranties, failure by the Company to comply with the underwriting and/or appraisal standards could result in the Company being required to repurchase the mortgage loan or to reimburse the investor for losses incurred (make whole requests) if such failure cannot be cured by the Company within the specified period following discovery. The Company continues to experience an insignificant level of investor repurchase demands. There were no expenses incurred as part of these buyback obligations for the years ended December 31, 2025 and 2024. Loans Loans are reported at unpaid principal balances, less unearned fees and the allowance for credit losses. Interest on all loans is recognized as income based upon the applicable rate applied to the daily outstanding principal balance of the loans. Interest income on nonaccrual loans is recognized on a cash basis or cost recovery basis until the loan is returned to accrual status. A loan may be returned to accrual status if the Company is reasonably assured of repayment of principal and interest and the borrower has demonstrated sustained performance for a period of at least six months. Loan fees, net of direct costs, are reflected as an adjustment to the yield of the related loan over the term of the loan. The Company does not have a concentration of loans to any one industry. The accrual of interest on loans is discontinued when there is a significant deterioration in the financial condition of the borrower and full repayment of principal and interest is not expected or the principal or interest is more than 90 days past due, unless the loan is both well-collateralized and in the process of collection. Generally, all interest accrued but not collected for loans that are placed on nonaccrual status are reversed against current interest income. Interest collections on nonaccrual loans are generally applied as principal reductions. The Company determines past due or delinquency status of a loan based on contractual payment terms. Loan modifications are concessions granted to borrowers in the normal course of business, which would not otherwise be considered, where the borrowers are experiencing financial difficulty. The concessions granted most frequently involve reductions or delays in required payments of principal and interest for a specified time, the rescheduling of payments in accordance with a bankruptcy plan or the charge-off of a portion of the loan. Allowance for Credit Losses ( “ ACL ” ) and Impairment of Debt Securities ACL – Debt Securities Held to Maturity Management uses a systematic methodology to determine its ACL for held-to-maturity debt securities. The ACL is a contra-asset valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected on the held-to-maturity portfolio. Management considers the effects of past events, current conditions, and reasonable and supportable forecasts on the collectability of the portfolio. The Company’s estimate of its ACL involves a high degree of judgment; therefore, management’s process for determining expected credit losses may result in a range of expected credit losses. Management monitors the held-to-maturity portfolio to determine whether an ACL would need to be recorded. As of December 31, 2025 and 2024, the Company had $ 660.1 million and $ 714.9 million, respectively, of held-to-maturity securities and no related ACL recorded, respectively. Impairment of Debt Securities Available for Sale For available-for-sale debt securities in an unrealized loss position, the Company will first assess whether i) it intends to sell or ii) it is more likely than not that it will be required to sell the debt security before recovery of its amortized cost basis. If either case is applicable, any previously recognized allowances are charged off and the debt security’s amortized cost is written down to fair value through income. If neither case is applicable, the debt security is evaluated to determine whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, any changes to the rating of the debt security by a rating agency and any adverse conditions specifically related to the debt security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the debt security are compared to the amortized cost basis of the debt security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded for the credit loss, limited by the amount by which the fair value is less than the amortized cost basis. Any impairment that has not been recorded through allowance for credit losses is recognized in other comprehensive income, net of tax. 64 Adjustments to the allowance are reported in the income statement as a component of credit loss expense. Debt securities are charged off against the allowance or, in the absence of any allowance, written down through income when deemed uncollectible by the Company or when either of the aforementioned criteria regarding intent or requirement to sell is met specifically for available-for-sale debt securities. The Company excludes the accrued interest receivable balance from the amortized cost basis in measuring expected credit losses on debt securities and does not record an ACL on accrued interest receivable. ACL – Loans The ACL is based on the Company’s evaluation of the loan portfolios, past loan loss experience, current asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay (including the timing of future payment), the estimated value of any underlying collateral, composition of the loan portfolio, economic conditions, industry and peer bank loan quality indications and other pertinent factors, including regulatory recommendations. The process is inherently subjective and subject to significant change as it requires material estimates. The allowance is increased by a provision for credit losses, which is charged to expense, and reduced by charge-offs, net of recoveries. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the ACL. Such agencies may require the Company to recognize adjustments to the allowance based on their judgments about information available to them at the time of their examination. Loans with similar risk characteristics are evaluated in pools and, depending on the nature of each identified pool, the Company utilizes a discounted cash flow (“DCF”), probability of default / loss given default (“PD/LGD”) or remaining life method. The historical loss experience estimate by pool is then adjusted by forecast factors that are quantitatively related to the Company’s historical credit loss experience, such as national unemployment rates and gross domestic product. Losses are predicted over a period of time determined to be reasonable and supportable, and at the end of the reasonable and supportable period losses are reverted to long term historical averages. The reasonable and supportable period and reversion period are re-evaluated each quarter by the Company and are dependent on the current economic environment among other factors. The estimated credit losses for each loan pool are then adjusted for changes in qualitative factors not inherently considered in the quantitative analyses. The qualitative adjustments either increase or decrease the quantitative model estimation. The Company considers factors that are relevant within the qualitative framework, which include the following: lending policy, changes in nature and volume of loans, staff experience, changes in volume and trends of problem loans, concentration risk, trends in underlying collateral values, external factors, quality of loan review system and other economic conditions. Loans that no longer share similar risk characteristics with the collectively evaluated pools are excluded from the collective evaluation and credit losses are estimated on an individual basis. Individual evaluations are performed for nonaccrual loans, loans rated substandard, and modified loans. Specific allowances were estimated based on one of several methods, including the estimated fair value of the underlying collateral, observable market value of similar debt or the present value of expected cash flows. The Company measures expected credit losses over the contractual term of a loan, adjusted for estimated prepayments. The contractual term excludes expected extensions, renewals and modifications unless there is a reasonable expectation that a troubled debt restructuring will be executed. Credit losses are estimated on the amortized cost basis of loans, which includes the principal balance outstanding, purchase discounts and premiums and deferred loan fees and costs. Accrued interest receivable on loans is excluded from the estimate of credit losses. ACL – Unfunded Loan Commitments The ACL is a liability account representing expected credit losses over the contractual period for which the Company is exposed to credit risk resulting from a contractual obligation to extend credit. No allowance is recognized if the Company has the unconditional right to cancel the obligation. The ACL is reported as a component of other liabilities within the Consolidated Balance Sheets. Adjustments to the ACL for unfunded commitments are reported in the Consolidated Income Statements as provision for credit losses. Foreclosed Real Estate Foreclosed real estate includes both formally foreclosed property and in-substance foreclosed property. At the time of foreclosure, foreclosed real estate is recorded at fair value less cost to sell, which becomes the property’s new basis. Any write downs based on the asset’s fair value at date of acquisition are charged to the allowance for credit losses. After foreclosure, these assets are carried at the lower of their new cost basis or fair value less cost to sell. Costs incurred in maintaining foreclosed real estate and subsequent adjustments to the carrying amount of the property are included in other operating expenses. 65 Premises and Equipment Land is carried at cost. Premises and equipment are carried at cost less accumulated depreciation. Expenditures for additions and major improvements that significantly extend the useful lives of the assets are capitalized. Expenditures for repairs and maintenance are charged to expense as incurred. Assets that are disposed of are removed from the accounts and the resulting gains or losses are recorded in operations. Depreciation is calculated on a straight-line basis over the estimated useful lives of the related assets ( 3 to 39.5 years). Leasehold improvements are amortized on a straight-line basis over the lesser of the lease terms or the estimated useful lives of the improvements. Leases The Company leases certain office space and equipment under operating leases. Leases are recognized as a liability to make lease payments and as an asset representing the right to use the asset during the lease term, or “lease liability” and “right-of-use asset,” respectively. The lease liability is measured as the present value of remaining lease payments, discounted at the Company’s incremental borrowing rate. The Company reports its right-of-use assets in other assets and its lease liabilities in other liabilities within the Consolidated Balance Sheets. Certain of the leases include one or more renewal options that extend the initial lease term 1 to 5 years. The exercise of lease renewal options is typically at the Company’s sole discretion; therefore, a majority of renewals to extend lease terms are not included in the right-of-use assets and lease liabilities as they are not reasonably certain to be exercised. Renewal options are regularly evaluated and when they are reasonably certain to be exercised, are included in lease terms. None of the Company’s leases provide an implicit discount rate. The Company uses its incremental collateralized borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. The Company does not recognize short-term leases on its Consolidated Balance Sheets. A short-term operating lease has an original term of 12 months or less and does not have a purchase option that is likely to be exercised. Bank Owned Life Insurance ( “ BOLI ” ) BOLI is comprised of long-term life insurance contracts on the lives of certain current and past employees where the insurance policy benefit and ownership are retained by the employer. Its cash surrender value is an asset that the Company uses to partially offset the future cost of employee benefits. The cash surrender value accumulation on BOLI is permanently tax deferred if the policy is held to the insured person’s death and certain other conditions are met. Goodwill The Company has recorded $ 13.6 million of goodwill at December 31, 2025 in connection with the acquisition of Metro Bancshares, Inc. in 2015. The Company tests its goodwill for impairment annually unless interim events or circumstances make it more likely than not that an impairment loss has occurred. Impairment is defined as the amount by which the carrying value of a reporting unit exceeds its fair value. Impairment losses, if incurred, would be charged to operating expense. For the purposes of evaluating goodwill, the Company has determined that it operates only one reporting unit. Derivatives and Hedging Activities As part of its overall interest rate risk management, the Company uses derivative instruments, which can include interest rate swaps, caps, and floors. GAAP requires all derivative instruments to be carried at fair value on the Consolidated Balance Sheets. This accounting standard provides special accounting provisions for derivative instruments that qualify for hedge accounting. To be eligible, the Company must specifically identify a derivative as a hedging instrument and identify the risk being hedged. The derivative instrument must be shown to meet specific requirements under this accounting standard. The Company designates the derivative on the date the derivative contract is entered into as a hedge of the (1) fair value of a recognized asset or liability or of an unrecognized firm commitment (a “fair-value” hedge) or (2) a forecasted transaction of the variability of cash flows to be received or paid related to a recognized asset or liability (a “cash-flow” hedge). Changes in the fair value of a derivative that is highly effective as a fair-value hedge, and that is designated and qualifies as a fair-value hedge, along with the loss or gain on the hedged asset or liability that is attributable to the hedged risk (including losses or gains on firm commitments), are recorded in current-period earnings. The changes in a derivative’s fair value that are included in the assessment of hedge effectiveness for a derivative that is highly effective and that is designated and qualifies as a cash-flow hedge are recorded in other comprehensive income until earnings are affected by the variability of cash flows (e.g., when periodic settlements on a variable-rate asset or liability are recorded in earnings). 66 The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives that are designated as fair-value or cash-flow hedges to specific assets and liabilities on the Consolidated Balance Sheets or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, as necessary, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively, as discussed below. The Company discontinues hedge accounting prospectively when: (1) it is determined that the derivative is no longer effective in offsetting changes in the fair value or cash flows of a hedged item (including firm commitments or forecasted transactions); (2) the derivative expires or is sold, terminated, or exercised; (3) the derivative is designated as a hedge instrument, because it is unlikely that a forecasted transaction will occur; (4) a hedged firm commitment no longer meets the definition of a firm commitment; or (5) management determines that designation of the derivative as a hedge instrument is no longer appropriate. When hedge accounting is discontinued because it is determined that the derivative no longer qualifies as an effective fair-value hedge, hedge accounting is discontinued prospectively and the derivative will continue to be carried on the balance sheet at its fair value with all changes in fair value being recorded in earnings but with no offsetting fair value adjustment being recorded on the hedged item. For a discontinued cash flow hedge the change in fair value is no longer recorded in other comprehensive income. The Company uses derivatives to hedge interest rate exposures associated with mortgage loan originations. Interest rate lock commitments related to loans that are originated for later sale are classified as derivatives. In the normal course of business, the Company regularly extends these rate lock commitments to customers during the loan origination process. The fair values of the Company’s rate lock commitments to customers as of December 31, 2025 and 2024 were not material and have not been recorded. Revenue Recognition The Company records revenue from contracts with customers in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). The guidance requires recognition of revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. While the majority of the Company’s revenue-generating transactions are excluded from the scope of ASC 606, including revenue generated from financial instruments, such as securities and loans, the relevant revenue-generating transactions are classified within non-interest income and are described as follows: • Deposit account service charges – represent service fees for monthly activity and maintenance on customer accounts. Attributes can be transaction-based, item-based or time-based. Revenue is recognized when our performance obligation is completed, which is generally monthly for maintenance services or when a transaction is processed. Payment for such performance obligations are generally received at the time the performance obligations are satisfied. • Credit card rewards program membership fees – represent memberships in our credit card rewards program and are paid annually by our cardholders at the time they open an account and on each anniversary. Revenue is recognized ratably over the membership period. Other non-interest income primarily includes income on BOLI contracts, letter of credit fees and gains on sale of loans held for sale. Income Taxes Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. 67 The Company follows the provisions of ASC Topic 740-10, Income Taxes (“ASC 740-10”) establishes a single model to address accounting for uncertain tax positions and prescribes a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. There is a two-step process in the evaluation of a tax position. The first step is recognition. A Company determines whether it is more likely than not that a tax position will be sustained upon examination, including a resolution of any related appeals or litigation processes, based upon the technical merits of the position. The second step is measurement. A tax position that meets the more likely than not recognition threshold is measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. Stock-Based Compensation At December 31, 2025, the Company had a stock-based compensation plan for grants of equity compensation to key employees and directors. The plan has been accounted for under the provisions of ASC Topic 718-10, Compensation – Stock Compensation with respect to employee stock options, restricted stock and performance-based stock units (“PSUs”). Specifically, awards are accounted for using the fair value-based method of accounting. Stock compensation costs are recognized prospectively for all new awards granted under the stock-based compensation plans. Compensation expense related to stock options is calculated using a method that is based on the underlying assumptions of the Black-Scholes-Merton option pricing model and is charged to expense over the requisite service period (e.g. vesting period). Compensation expense related to restricted stock awards is based upon the fair value of the awards on the date of grant and is charged to earnings over the requisite service period of the award. PSUs represent the opportunity to earn shares of the Company’s common stock after a prescribed period and based on the relative market performance of the Company’s stock, subject to the recipient’s continued employment through the end of the performance period. The actual shares earned under the PSUs generally range between zero and 150 % of the target level award, depending on the total stockholder return (“TSR”) of the Company over the performance period ranked relative to the TSR of a defined peer group of companies. A Monte Carlo simulation is used to estimate the fair value of the PSUs as of the valuation date. Compensation expense is recognized regardless of the extent to which the market condition is satisfied. Earnings per Common Share Basic earnings per common share are computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock options and performance shares. Loan Commitments and Related Financial Instruments Financial instruments, which include credit card arrangements, commitments to make loans and standby letters of credit, are issued to meet customer financing needs. The face amount for these items represents the exposure to loss before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded. Instruments such as stand-by letters of credit are considered, and accounted for as, financial guarantees. The fair value of these financial guarantees is not material. Fair Value of Financial Instruments Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in Note 20. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates. Comprehensive Income Comprehensive income consists of net income and other comprehensive income. Accumulated comprehensive (loss) income, which is recognized as a separate component of equity, includes unrealized gains and losses on available-for-sale debt securities and amortization of unrealized gains and losses on debt securities transferred from available-for-sale to held-to-maturity at the time of transfer. Amounts reported as accumulated comprehensive income (loss) are shown net of taxes. Advertising Advertising costs are expensed as incurred. Advertising expense for the years ended December 31, 2025, 2024 and 2023 was $ 1,151,000 , $ 951,000 and $ 768,000 , respectively. Advertising typically consists of local print media aimed at businesses that the Company targets as well as sponsorships of local events in which the Company’s clients and prospects are involved. Recent Accounting Pronouncements In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-02, Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method. These amendments expanded the permitted use of the proportional amortization method, which was previously only available to low-income housing tax credit investments, to other tax equity investments if certain conditions are met. Under the proportional amortization method, the initial cost of an investment is amortized in proportion to the income tax benefits received and both the amortization of the investment and the income tax benefits received are recognized as a component of income tax expense. ASU 2023-02 was adopted on a modified retrospective basis of transition or, for certain changes, a prospective basis, which resulted in a reduction to retained earnings as of January 1, 2024, of $ 2.3 million. 68 In November 2023, the FASB issued ASU 2023-07, Segment Reporting — Improvements to Reportable Segment Disclosures. This amendment is intended to improve disclosures about a public entity’s reportable segments and addresses requests from investors and other decision makers for additional, more detailed information about a reportable segment’s expenses. The amendment applies to all public entities that are required to report segment information in accordance with Topic 280. The amendments are to be applied retrospectively to all periods presented and segment expense categories should be based on the categories identified at adoption. The Company adopted ASU 2023-07 effective December 31, 2024. Adoption of ASU 2023-07 did not have a material impact on the Company's consolidated financial statements. See Note 22 – Segment Reporting for disclosures required by ASU 2023-07. In December 2023, the FASB issued ASU 2023‑09, Income Taxes (Topic   740): Improvements to Income Tax Disclosures , which requires enhanced annual income tax disclosures, including additional disaggregation within the effective tax rate reconciliation and income taxes paid by jurisdiction. The ASU is effective for public business entities for annual periods beginning after December 15, 2024, with early adoption permitted. Entities may apply the guidance either prospectively or retrospectively. In our Quarterly Report on Form 10‑Q for the period ending September 30, 2025, we previously disclosed that we had adopted ASU 2023‑09 using a retrospective transition method. Upon further evaluation of the implementation considerations and in light of the optional transition methods permitted under ASU 2023‑09, management determined that prospective application would provide more decision‑useful information and reduce implementation complexity. Accordingly, effective January 1, 2025, the Company is applying ASU 2023‑09 prospectively, and the enhanced income tax disclosures required by the ASU will first be reflected in our Annual Report on Form 10‑K for the year ending December 31, 2025. In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) . The amendments improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales and research and development). The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. We are currently evaluating the impact these changes may have on our consolidated financial statements. In November 2025, the FASB issued ASU 2025-08, Financial Instruments - Credit Losses - Purchased Loans . The amendment expands the population of acquired financial assets accounted for using the gross-up approach and aims to enhance comparability, consistency, and better reflect the economics of acquiring financial assets. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted in an interim or annual reporting period in which financial statements have not been issued or made available for issuance. We will adopt the amendment, but it will have no impact on current assets. 69 NOTE 2. DEBT SECURITIES The amortized cost and fair values of available-for-sale and held-to-maturity debt securities at December 31, 2025 and 2024 are summarized as follows: Gross Gross Amortized Unrealized Unrealized Market Cost Gain Loss Value December 31, 2025 (In Thousands) Debt Securities Available-for-Sale U.S. Treasury securities $ 520,100 $ 2,823 $ - $ 522,923 Mortgage-backed securities 133,126 1,030 ( 852 ) 133,304 State and municipal securities 10,362 1 ( 554 ) 9,809 Corporate debt 409,725 2,274 ( 9,210 ) 402,789 Total $ 1,073,313 $ 6,128 $ ( 10,616 ) $ 1,068,825 Debt Securities Held-to-Maturity U.S. Treasury securities $ 249,621 $ - $ ( 9,589 ) $ 240,032 Mortgage-backed securities 402,097 743 ( 34,395 ) 368,445 State and municipal securities 8,358 - ( 300 ) 8,058 Total $ 660,076 $ 743 $ ( 44,284 ) $ 616,535 December 31, 2024 Debt Securities Available-for-Sale U.S. Treasury securities $ 617,350 $ 580 $ ( 444 ) $ 617,486 Mortgage-backed securities 243,435 49 ( 24,210 ) 219,274 State and municipal securities 10,516 1 ( 1,000 ) 9,517 Corporate debt 335,758 38 ( 20,673 ) 315,123 Total $ 1,207,059 $ 668 $ ( 46,327 ) $ 1,161,400 Debt Securities Held-to-Maturity U.S. Treasury securities $ 249,403 $ - $ ( 19,632 ) $ 229,771 Mortgage-backed securities 457,365 14 ( 55,150 ) 402,229 State and municipal securities 8,085 - ( 589 ) 7,496 Total $ 714,853 $ 14 $ ( 75,371 ) $ 639,496 All mortgage-backed debt securities are issued by government sponsored enterprises (“GSEs”) such as Federal National Mortgage Association, Government National Mortgage Association, Federal Home Loan Bank, and Federal Home Loan Mortgage Corporation. The carrying value of debt securities pledged to secure public funds on deposits or for other purposes as required by law as of December 31, 2025 and 2024 was $ 1.23 billion and $ 1.43 billion, respectively. Restricted equity securities is comprised entirely of a restricted investment in Federal Home Loan Bank of Atlanta stock for membership requirement. At December 31, 2025 and 2024, there were no holdings of debt securities of any issuer, other than the U.S. government and its agencies, in an amount greater than 10% of stockholders’ equity. The amortized cost and fair value of debt securities as of December 31, 2025 and 2024 by contractual maturity are shown below. Actual maturities may differ from contractual maturities because the issuers may have the right to call or prepay obligations with or without call or prepayment penalties. December 31, 2025 December 31, 2024 Amortized Cost Market Value Amortized Cost Market Value (In Thousands) Debt securities available-for-sale Due within one year $ 441,619 $ 443,833 $ 223,145 $ 223,477 Due from one to five years 147,475 147,058 478,868 475,985 Due from five to ten years 332,436 325,957 258,611 240,114 Due after ten years 18,657 18,673 3,000 2,550 Mortgage-backed securities 133,126 133,304 243,435 219,274 $ 1,073,313 $ 1,068,825 $ 1,207,059 $ 1,161,400 Debt securities held-to-maturity Due within one year $ 53,787 $ 52,811 $ 250 $ 250 Due from one to five years 204,192 195,279 256,743 236,586 Due from five to ten years - - 495 431 Due after ten years - - - - Mortgage-backed securities 402,097 368,445 457,365 402,229 $ 660,076 $ 616,535 $ 714,853 $ 639,496 70 The following table identifies the Company’s investment securities that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 or more months, as of December 31, 2025 and 2024: Less Than Twelve Months Twelve Months or More Total Gross Gross Gross Unrealized Unrealized Unrealized Losses Fair Value Losses Fair Value Losses Fair Value (In Thousands) December 31, 2025 Debt Securities available-for-sale Mortgage-backed securities $ - $ - $ ( 852 ) $ 22,662 $ ( 852 ) $ 22,662 State and municipal securities - - ( 554 ) 9,363 ( 554 ) 9,363 Corporate debt ( 984 ) 77,583 ( 8,226 ) 155,724 ( 9,210 ) 233,307 Total $ ( 984 ) $ 77,583 $ ( 9,632 ) $ 187,749 $ ( 10,616 ) $ 265,332 Debt Securities held-to-maturity U.S. Treasury securities $ - $ - $ ( 9,589 ) $ 240,032 $ ( 9,589 ) $ 240,032 Mortgage-backed securities - - ( 34,395 ) 325,307 ( 34,395 ) 325,307 State and municipal securities ( 34 ) 2,954 ( 266 ) 4,604 ( 300 ) 7,558 Total $ ( 34 ) $ 2,954 $ ( 44,250 ) $ 569,943 $ ( 44,284 ) $ 572,897 December 31, 2024 Debt Securities available-for-sale U.S. Treasury securities $ ( 445 ) $ 250,547 $ - $ - $ ( 445 ) $ 250,547 Mortgage-backed securities $ ( 6 ) $ 577 $ ( 24,204 ) $ 179,178 $ ( 24,210 ) $ 179,755 State and municipal securities - - ( 1,000 ) 9,072 ( 1,000 ) 9,072 Corporate debt ( 1,307 ) 25,596 ( 19,366 ) 284,489 ( 20,673 ) 310,085 Total $ ( 1,758 ) $ 276,720 $ ( 44,570 ) $ 472,739 $ ( 46,328 ) $ 749,459 U.S. Treasury securities $ - $ - $ ( 19,632 ) $ 229,771 $ ( 19,632 ) $ 229,771 Mortgage-backed securities ( 536 ) 40,115 ( 54,614 ) 356,215 ( 55,150 ) 396,330 State and municipal securities - - ( 589 ) 7,247 ( 589 ) 7,247 Total $ ( 536 ) $ 40,115 $ ( 74,835 ) $ 593,233 $ ( 75,371 ) $ 633,348 At December 31, 2025 and 2024, no allowance for credit losses has been recognized on available-for-sale debt securities in an unrealized loss position as the Company does not believe any of the debt securities are credit impaired. This is based on the Company’s analysis of the risk characteristics, including credit ratings, and other qualitative factors related to available-for-sale debt securities. The issuers of these debt securities continue to make timely principal and interest payments under the contractual terms of the securities. The Company does not intend to sell these debt securities and it is more likely than not that the Company will not be required to sell the debt securities before recovery of their amortized cost, which may be at maturity. During the year ended December 31, 2025, the Company sold available-for-sale mortgage-backed securities with an amortized cost basis of $ 153.9 million and recorded a pre-tax loss of $ 16.4 million as a result of our portfolio restructuring. The proceeds from the sale were reinvested into higher-yielding securities. The unrealized losses are due to increases in market interest rates over the yields available at the time the debt securities were purchased. Management measures expected credit losses on held-to-maturity securities on a collective basis by major security type with each type sharing similar risk characteristics and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. With regard to U.S. Treasury and residential mortgage-backed securities issued by the U.S. government, or agencies thereof, it is expected that the securities will not be settled at prices less than the amortized cost basis of the securities as such securities are backed by the full faith and credit of and/or guaranteed by the U.S. government. Accordingly, no allowance for credit losses has been recorded for these securities. With regard to securities issued by States and political subdivisions and other held-to-maturity securities, management considers (i) issuer bond ratings, (ii) historical loss rates for given bond ratings, (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities, and (iv) internal forecasts. Historical loss rates associated with securities having similar grades as those in our portfolio have generally not been significant. Furthermore, as of December 31, 2025 and 2024, there were no past due principal or interest payments associated with these securities. Based upon (i) the issuer’s strong bond ratings and (ii) a zero historical loss rate, no allowance for credit losses has been recorded for held-to-maturity State and municipal securities as such amount is not material at December 31, 2025 and 2024. All debt securities in an unrealized loss position as of December 31, 2025 continue to perform as scheduled and the Company does not believe there is a possible credit loss or that an allowance for credit loss on these debt securities is necessary. The following table summarizes information about sales and calls of debt securities: Years Ended December 31, 2025 2024 2023 (In Thousands) Sale proceeds $ 159,499 $ - $ - Gross realized gains $ - $ - $ - Gross realized losses ( 16,375 ) - - Net realized (loss) gain $ ( 16,375 ) $ - $ - 71 NOTE 3. LOANS The loan portfolio is classified based on the underlying collateral utilized to secure each loan for financial reporting purposes. This classification is consistent with the Quarterly Report of Condition and Income filed by ServisFirst Bank with the Federal Deposit Insurance Corporation (“FDIC”). Commercial, financial and agricultural - Includes loans to business enterprises issued for commercial, industrial, agricultural production and/or other professional purposes. These loans are generally secured by equipment, inventory, and accounts receivable of the borrower and repayment is primarily dependent on business cash flows. Real estate – construction – Includes loans secured by real estate to finance land development or the construction of industrial, commercial or residential buildings. Repayment is dependent upon the completion and eventual sale, refinance or operation of the related real estate project. Owner-occupied commercial real estate mortgage – Includes loans secured by nonresidential properties for which the primary source of repayment is the cash flow from the ongoing operations conducted by the party that owns the property. 1-4 family real estate mortgage – Includes loans secured by residential properties, including home equity lines of credit. Repayment is primarily dependent on the personal cash flow of the borrower. Non-owner occupied commercial real estate mortgage – Includes loans secured by nonowner-occupied properties, including office buildings, industrial buildings, warehouses, retail buildings, and multifamily residential properties. Repayment is primarily dependent on income generated from the underlying collateral. Consumer – Includes loans to individuals not secured by real estate. Repayment is dependent upon the personal cash flow of the borrower. The composition of loans at December 31, 2025 and 2024 is summarized as follows: December 31, 2025 2024 (In Thousands) Commercial, financial and agricultural $ 3,146,736 $ 2,869,894 Real estate - construction 1,457,628 1,489,306 Real estate - mortgage: Owner-occupied commercial 2,739,823 2,547,143 1-4 family mortgage 1,671,713 1,444,623 Non-owner occupied commercial 4,603,389 4,181,243 Subtotal: Real estate mortgage 9,014,925 8,173,009 Consumer 77,623 73,627 Total Loans 13,696,912 12,605,836 Less: Allowance for credit losses ( 171,683 ) ( 164,458 ) Net Loans $ 13,525,229 $ 12,441,378 Changes in the ACL during the years ended December 31, 2025, 2024 and 2023 are as follows: Years Ended December 31, 2025 2024 2023 (In Thousands) Balance, beginning of year $ 164,458 $ 153,317 $ 146,297 Loans charged off ( 31,166 ) ( 13,684 ) ( 14,581 ) Recoveries 3,046 3,272 2,886 Provision for credit losses 35,345 21,553 18,715 Balance, end of year $ 171,683 $ 164,458 $ 153,317 GAAP requires a current expected credit losses (“CECL”) methodology for estimating all expected losses over the life of a financial asset. Under the CECL methodology, the ACL is measured on a collective basis for pools of loans with similar risk characteristics. For loans that do not share similar risk characteristics with the collectively evaluated pools, evaluations are performed on an individual basis. For all loan segments collectively evaluated, losses are predicted over a period of time determined to be reasonable and supportable, and at the end of the reasonable and supportable forecast period losses are reverted to long-term historical averages. The estimated loan losses for all loan segments are adjusted for changes in qualitative factors not inherently considered in the quantitative analyses. 72 The Company uses the DCF method to estimate ACL for all loan pools except for commercial and industrial (“C&I”) revolving lines of credit and credit cards. For all loan pools utilizing the DCF method, the Company utilizes and forecasts national unemployment rate as a loss driver. The Company also utilizes and forecasts gross domestic product (“GDP”) growth as a second loss driver for the majority of its loan pools. Consistent forecasts of the loss drivers are used across the loan segments. At December 31, 2025 and 2024, the Company utilized a reasonable and supportable forecast period of twelve months followed by a six-month straight-line reversion to long-term averages. The Company leveraged economic projections from reputable and independent sources to inform its loss driver forecasts. At December 31, 2025, the Company expects the national unemployment rate to fall during the forecast period with a rise in national GDP growth rate, with GDP showing improvement and unemployment relatively unchanged when compared to the forecast at December 31, 2024. The Company uses a loss-rate method to estimate expected credit losses for its C&I revolving lines of credit and a remaining life methodology on credit card pools. The C&I revolving lines of credit pool incorporates a probability of default (“PD”) and loss given default (“LGD”) modeling approach. This approach involves estimating the pool average life and then using historical correlations of default and loss experience over time to calculate the lifetime PD and LGD. These two inputs are then applied to the outstanding pool balance. The credit card pool incorporates a remaining life modeling approach, which utilizes an attrition-based method to estimate the remaining life of the pool. A quarterly average loss rate is then calculated using the Company’s historical loss data. The model reduces the pool balance quarterly on a straight-line basis over the estimated life of the pool. The quarterly loss rate is multiplied by the outstanding balance at each period-end resulting in an estimated loss for each quarter. The sum of estimated loss for all quarters is the total calculated reserve for the pool. Management has applied the loss-rate method to C&I lines of credit and to credit cards due to their generally short-term nature. An expected loss ratio is applied based on internal and peer historical losses. Each loan pool is adjusted for qualitative factors not inherently considered in the quantitative analyses. The qualitative adjustments either increase or decrease the quantitative model estimation. The Company considers factors that are relevant within the qualitative framework, which include the following: lending policy, changes in nature and volume of loans, staff experience, changes in volume and trends of problem loans, concentration risk, trends in underlying collateral values, external factors, quality of loan review system and other economic conditions. Inherent risks in the loan portfolio will differ based on type of loan. Specific risk characteristics by loan portfolio segment are listed below: Commercial and industrial loans include risks associated with borrower’s cash flow, debt service coverage and management’s expertise. These loans are subject to the risk that the Company may have difficulty converting collateral to a liquid asset if necessary, as well as risks associated with degree of specialization, mobility and general collectability in a default situation. These commercial loans may be subject to many different types of risks, including fraud, bankruptcy, economic downturn, deteriorated or non-existent collateral, and changes in interest rates. Real estate construction loans include risks associated with the borrower’s credit-worthiness, contractor’s qualifications, borrower and contractor performance, and the overall risk and complexity of the proposed project. Construction lending is also subject to risks associated with sub-market dynamics, including population, employment trends and household income. During times of economic stress, this type of loan has typically had a greater degree of risk than other loan types. Real estate mortgage loans consist of loans secured by commercial and residential real estate. Commercial real estate lending is dependent upon successful management, marketing and expense supervision necessary to maintain the property. Repayment of these loans may be adversely affected by conditions in the real estate market or the general economy. Also, commercial real estate loans typically involve relatively large loan balances to a single borrower. Residential real estate lending risks are generally less significant than those of other loans. Real estate lending risks include fluctuations in the value of real estate, bankruptcies, economic downturn and customer financial problems. Consumer loans carry a moderate degree of risk compared to other loans. They are generally more risky than traditional residential real estate loans but less risky than commercial loans. Risk of default is usually determined by the well-being of the local economies. During times of economic stress, there is usually some level of job loss both nationally and locally, which directly affects the ability of the consumer to repay debt. 73 Changes in the allowance for credit losses, segregated by loan type, during the years ended December 31, 2025, 2024 and 2023, respectively, are as follows: Commercial, financial and Real estate - Owner-occupied 1-4 family Non-owner occupied commercial Total Real estate - agricultural construction commercial mortgage commercial mortgage Consumer Total (In Thousands) Year Ended December 31, 2025 Allowance for credit losses: Balance at January 1, 2025 $ 55,330 $ 38,597 $ 22,302 $ 14,096 $ 31,328 $ 67,726 $ 2,805 $ 164,458 Charge-offs ( 24,904 ) ( 46 ) ( 4,038 ) ( 303 ) ( 1,168 ) ( 5,509 ) ( 707 ) ( 31,166 ) Recoveries 2,900 30 1 - - 1 115 3,046 Provision 30,294 ( 16,149 ) 568 10,946 8,811 20,325 875 35,345 Balance at December 31, 2025 $ 63,620 $ 22,432 $ 18,833 $ 24,739 $ 38,971 $ 82,543 $ 3,088 $ 171,683 Year Ended December 31, 2024 Allowance for credit losses: Balance at January 1, 2024 $ 52,121 $ 44,658 $ 17,702 $ 12,029 $ 25,395 $ 55,126 $ 1,412 $ 153,317 Charge-offs ( 12,115 ) - ( 237 ) ( 761 ) - ( 998 ) ( 571 ) ( 13,684 ) Recoveries 3,021 8 29 2 - 31 212 3,272 Provision 12,303 ( 6,069 ) 4,808 2,826 5,933 13,567 1,752 21,553 Balance at December 31, 2024 $ 55,330 $ 38,597 $ 22,302 $ 14,096 $ 31,328 $ 67,726 $ 2,805 $ 164,458 Year Ended December 31, 2023 Allowance for credit losses: Balance at January 1, 2023 $ 42,830 $ 42,889 $ 16,843 $ 12,219 $ 29,590 $ 58,652 $ 1,926 $ 146,297 Charge-offs ( 13,229 ) ( 108 ) ( 117 ) ( 54 ) - ( 171 ) ( 1,073 ) ( 14,581 ) Recoveries 2,800 3 - - - - 83 2,886 Provision 19,720 1,874 976 ( 136 ) ( 4,195 ) ( 3,355 ) 476 18,715 Balance at December 31, 2023 $ 52,121 $ 44,658 $ 17,702 $ 12,029 $ 25,395 $ 55,126 $ 1,412 $ 153,317 Allocation of a part of the ACL to one loan type does not preclude its ability to absorb losses in other loan types. We maintain an ACL for credit losses on unfunded commercial lending commitments and letters of credit to provide for the risk of loss inherent in these arrangements. The allowance is computed using a methodology similar to that used to determine the ACL for loans, modified to take into account the probability of a drawdown on the commitment. The ACL on unfunded loan commitments is classified as a liability account on the Consolidated Balance Sheets within other liabilities, while the corresponding provision for these credit losses is recorded as a component of provision for credit loss. The allowance for credit losses on unfunded commitments was $ 572,000 and $ 608,000 at December 31, 2025 and 2024, respectively. The provision expense (release) for unfunded commitments was ($ 36,000 ) for the year ended December 31, 2025 and was $ 32,000 for the year ended December 31, 2024. The credit quality of the loan portfolio is determined no less frequently than quarterly using categories similar to the standard asset classification system used by the federal banking agencies. The following table presents credit quality indicators for the loan loss portfolio segments and classes. These categories are utilized to develop the associated allowance for credit losses using historical losses adjusted for current economic conditions defined as follows: ● Pass – loans that are well protected by the current net worth and paying capacity of the obligor (or obligors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral. ● Special Mention – loans with potential weakness that may, if not reversed or corrected, weaken the credit or inadequately protect the Company’s position at some future date. These loans are not adversely classified and do not expose an institution to sufficient risk to warrant an adverse classification. ● Substandard – loans that exhibit well-defined weakness or weaknesses that presently jeopardize debt repayment. These loans are characterized by the distinct possibility that the Company will sustain some loss if the weaknesses are not corrected. ● Doubtful – loans that have all the weaknesses inherent in loans classified substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable. 74 The tables below presents loan balances classified by credit quality indicator, loan type and based on year of origination as of December 31, 2025 and 2024: December 31, 2025 2025 2024 2023 2022 2021 Prior Revolving Revolving lines of credit converted to term loans Total (In Thousands) Commercial, financial and agricultural Pass $ 682,117 $ 327,516 $ 120,889 $ 219,978 $ 186,839 $ 219,843 $ 1,267,362 $ 25,570 $ 3,050,114 Special Mention 4,206 1,927 231 2,716 1,822 6,878 20,423 4,564 42,767 Substandard - Accruing - 53 - 603 - 24,715 1,728 - 27,099 Substandard - Non-accrual - 885 669 336 1 8,176 15,793 896 26,756 Total Commercial, financial and agricultural $ 686,323 $ 330,381 $ 121,789 $ 223,633 $ 188,662 $ 259,612 $ 1,305,306 $ 31,030 $ 3,146,736 Current-period gross write-offs $ - $ - $ 669 $ 5,667 $ 1,925 $ 1,442 $ 14,878 $ 323 $ 24,904 Real estate - construction Pass $ 468,553 $ 396,658 $ 188,617 $ 185,466 $ 65,552 $ 26,911 $ 82,009 $ - $ 1,413,766 Special Mention - 6,401 - - - 479 150 - 7,030 Substandard - Accruing - - - - - 945 1 - 946 Substandard - Non-accrual - - 3,508 15,946 16,432 - - - 35,886 Total Real estate - construction $ 468,553 $ 403,059 $ 192,125 $ 201,412 $ 81,984 $ 28,335 $ 82,160 $ - $ 1,457,628 Current-period gross write-offs $ - $ - $ - $ 46 $ - $ - $ - $ - $ 46 Owner-occupied commercial Pass $ 471,700 $ 369,455 $ 158,561 $ 439,521 $ 420,902 $ 741,250 $ 78,331 $ 2,397 $ 2,682,117 Special Mention 3,570 4,786 1,787 394 7,252 16,043 2,794 - 36,626 Substandard - Accruing 125 - 1,552 - - 4,476 1,350 - 7,503 Substandard - Non-accrual - - 417 5,002 6,452 1,706 - - 13,577 Total Owner-occupied commercial $ 475,395 $ 374,241 $ 162,317 $ 444,917 $ 434,606 $ 763,475 $ 82,475 $ 2,397 $ 2,739,823 Current-period gross write-offs $ - $ 3,478 $ - $ - $ - $ 560 $ - $ - $ 4,038 1-4 family mortgage Pass $ 323,633 $ 236,761 $ 105,279 $ 274,544 $ 168,885 $ 115,994 $ 423,365 $ 4,096 $ 1,652,557 Special Mention - 160 173 40 2,681 1,397 4,685 - 9,136 Substandard - Accruing - - - - - 402 178 - 580 Substandard - Non-accrual 395 1,101 109 5,059 969 1,014 705 88 9,440 Total 1-4 family mortgage $ 324,028 $ 238,022 $ 105,561 $ 279,643 $ 172,535 $ 118,807 $ 428,933 $ 4,184 $ 1,671,713 Current-period gross write-offs $ - $ - $ - $ - $ - $ 37 $ 266 $ - $ 303 Non-owner occupied commercial Pass $ 673,189 $ 648,847 $ 208,324 $ 1,293,147 $ 711,292 $ 872,833 $ 79,131 $ 2,277 $ 4,489,040 Special Mention - - 259 340 25,079 - - - 25,678 Substandard - Accruing - - - 3,187 864 2,643 - - 6,694 Substandard - Non-accrual - 3,815 - 17,747 57,701 2,714 - - 81,977 Total Non-owner occupied commercial $ 673,189 $ 652,662 $ 208,583 $ 1,314,421 $ 794,936 $ 878,190 $ 79,131 $ 2,277 $ 4,603,389 Current-period gross write-offs $ - $ - $ - $ 1,117 $ 47 $ 4 $ - $ - $ 1,168 Consumer Pass $ 29,354 $ 3,584 $ 1,578 $ 1,594 $ 594 $ 2,130 $ 38,009 $ - $ 76,843 Special Mention - - - - 23 - 21 - 44 Substandard - Accruing - - - - - 21 - - 21 Substandard - Non-accrual - - - 15 - 700 - - 715 Total Consumer $ 29,354 $ 3,584 $ 1,578 $ 1,609 $ 617 $ 2,851 $ 38,030 $ - $ 77,623 Current-period gross write-offs $ - $ - $ - $ - $ - $ 573 $ 134 $ - $ 707 Total Loans Pass $ 2,648,546 $ 1,982,821 $ 783,248 $ 2,414,250 $ 1,554,064 $ 1,978,961 $ 1,968,207 $ 34,340 $ 13,364,437 Special Mention 7,776 13,274 2,450 3,490 36,857 24,797 28,073 4,564 121,281 Substandard - Accruing 125 53 1,552 3,790 864 33,202 3,257 - 42,843 Substandard - Non-accrual 395 5,801 4,703 44,105 81,555 14,310 16,498 984 168,351 Total Loans $ 2,656,842 $ 2,001,949 $ 791,953 $ 2,465,635 $ 1,673,340 $ 2,051,270 $ 2,016,035 $ 39,888 $ 13,696,912 Current-period gross write-offs $ - $ 3,478 $ 669 $ 6,830 $ 1,972 $ 2,616 $ 15,278 $ 323 $ 31,166 75 December 31, 2024 2024 2023 2022 2021 2020 Prior Revolving Revolving lines of credit converted to term loans Total (In Thousands) Commercial, financial and agricultural Pass $ 529,002 $ 171,139 $ 331,476 $ 273,304 $ 120,088 $ 195,011 $ 1,121,196 $ 248 $ 2,741,464 Special Mention 1,767 666 12,260 2,442 3,254 10,001 21,647 - 52,037 Substandard - Accruing 1,064 - 987 349 364 25,620 22,317 - 50,701 Substandard - Non-accrual - 1,177 2,049 8,201 271 8,513 5,481 - 25,692 Total Commercial, financial and agricultural $ 531,833 $ 172,982 $ 346,772 $ 284,296 $ 123,977 $ 239,145 $ 1,170,641 $ 248 $ 2,869,894 Current-period gross write-offs $ 36 $ 1,002 $ - $ 52 $ 675 $ 4,327 $ 2,851 $ 3,172 $ 12,115 Real estate - construction Pass $ 367,276 $ 292,379 $ 506,542 $ 150,307 $ 32,330 $ 16,083 $ 72,793 $ - $ 1,437,710 Special Mention 259 3,100 28,224 16,477 - - - - 48,060 Substandard - Accruing - 590 2,000 - - 946 - - 3,536 Substandard - Non-accrual - - - - - - - - - Total Real estate - construction $ 367,535 $ 296,069 $ 536,766 $ 166,784 $ 32,330 $ 17,029 $ 72,793 $ - $ 1,489,306 Current-period gross write-offs $ - $ - $ - $ - $ - $ - $ - $ - $ - Owner-occupied commercial Pass $ 377,351 $ 168,561 $ 503,351 $ 467,790 $ 276,795 $ 594,794 $ 65,269 $ 802 $ 2,454,713 Special Mention 10,148 6,410 1,373 22,087 5,441 16,912 4,961 - 67,332 Substandard - Accruing 3,562 417 1,147 6,681 2,169 2,378 - - 16,354 Substandard - Non-accrual - - 2,886 - 79 5,779 - - 8,744 Total Owner-occupied commercial $ 391,061 $ 175,388 $ 508,757 $ 496,558 $ 284,484 $ 619,863 $ 70,230 $ 802 $ 2,547,143 Current-period gross write-offs $ - $ - $ - $ 100 $ - $ 137 $ - $ - $ 237 1-4 family mortgage Pass $ 294,602 $ 126,953 $ 319,472 $ 188,104 $ 65,673 $ 78,629 $ 351,240 $ - $ 1,424,673 Special Mention - 469 2,523 2,943 1,124 6,628 2,428 - 16,115 Substandard - Accruing - - - - - 403 381 - 784 Substandard - Non-accrual - 265 646 855 405 380 500 - 3,051 Total 1-4 family mortgage $ 294,602 $ 127,687 $ 322,641 $ 191,902 $ 67,202 $ 86,040 $ 354,549 $ - $ 1,444,623 Current-period gross write-offs $ - $ 28 $ 61 $ 62 $ - $ 129 $ 481 $ - $ 761 Non-owner occupied commercial Pass $ 479,275 $ 174,415 $ 1,449,886 $ 888,829 $ 367,100 $ 670,317 $ 70,161 $ 246 $ 4,100,229 Special Mention - - 8,304 53,926 - 3,376 - - 65,606 Substandard - Accruing - - 4,584 - - 9,565 - - 14,149 Substandard - Non-accrual - - 384 875 - - - - 1,259 Total Non-owner occupied commercial $ 479,275 $ 174,415 $ 1,463,158 $ 943,630 $ 367,100 $ 683,258 $ 70,161 $ 246 $ 4,181,243 Current-period gross write-offs $ - $ - $ - $ - $ - $ - $ - $ - $ - Consumer Pass $ 33,004 $ 2,941 $ 2,462 $ 1,346 $ 1,234 $ 2,505 $ 29,335 $ - $ 72,827 Special Mention - - - - - - 45 - 45 Substandard - Accruing - - - - - - - - - Substandard - Non-accrual - - - - - 755 - - 755 Total Consumer $ 33,004 $ 2,941 $ 2,462 $ 1,346 $ 1,234 $ 3,260 $ 29,380 $ - $ 73,627 Current-period gross write-offs $ 19 $ 8 $ - $ - $ - $ 75 $ 469 $ - $ 571 Total Loans Pass $ 2,080,509 $ 936,388 $ 3,113,189 $ 1,969,680 $ 863,220 $ 1,557,340 $ 1,709,994 $ 1,296 $ 12,231,616 Special Mention 12,174 10,645 52,684 97,875 9,819 36,917 29,081 - 249,195 Substandard - Accruing 4,626 1,007 8,718 7,030 2,533 38,912 22,698 - 85,524 Substandard - Non-accrual - 1,442 5,965 9,931 755 15,427 5,981 - 39,501 Total Loans $ 2,097,309 $ 949,482 $ 3,180,556 $ 2,084,516 $ 876,327 $ 1,648,596 $ 1,767,754 $ 1,296 $ 12,605,836 Current-period gross write-offs $ 55 $ 1,038 $ 61 $ 214 $ 675 $ 4,668 $ 3,801 $ 3,172 $ 13,684 76 Nonperforming loans include nonaccrual loans and loans 90 or more days past due and still accruing. Loans by performance status as of December 31, 2025 and 2024 are as follows: December 31, 2025 Performing Nonperforming Total (In Thousands) Commercial, financial and agricultural $ 3,119,879 $ 26,857 $ 3,146,736 Real estate - construction 1,421,743 35,885 1,457,628 Real estate - mortgage: Owner-occupied commercial 2,726,245 13,578 2,739,823 1-4 family mortgage 1,661,950 9,763 1,671,713 Non-owner occupied commercial 4,521,412 81,977 4,603,389 Total real estate - mortgage 8,909,607 105,318 9,014,925 Consumer 76,854 769 77,623 Total $ 13,528,083 $ 168,829 $ 13,696,912 December 31, 2024 Performing Nonperforming Total (In Thousands) Commercial, financial and agricultural $ 2,844,164 $ 25,730 $ 2,869,894 Real estate - construction 1,488,645 661 1,489,306 Real estate - mortgage: Owner-occupied commercial 2,538,399 8,744 2,547,143 1-4 family mortgage 1,439,332 5,291 1,444,623 Non-owner occupied commercial 4,179,984 1,259 4,181,243 Total real estate - mortgage 8,157,715 15,294 8,173,009 Consumer 72,846 781 73,627 Total $ 12,563,370 $ 42,466 $ 12,605,836 Loans by past due status as of December 31, 2025 and 2024 are as follows: December 31, 2025 Past Due Status (Accruing Loans) Total Past Total Nonaccrual 30-59 Days 60-89 Days 90+ Days Due Nonaccrual Current Total Loans With No ACL (In Thousands) Commercial, financial and agricultural $ 1,001 $ 1,533 $ 101 $ 2,635 $ 26,756 $ 3,117,345 $ 3,146,736 $ 19,724 Real estate - construction - 1,148 - 1,148 35,885 1,420,595 1,457,628 35,173 Real estate - mortgage: Owner-occupied commercial 5,815 295 - 6,110 13,578 2,720,135 2,739,823 13,578 1-4 family mortgage 998 4,770 323 6,091 9,440 1,656,182 1,671,713 8,993 Non-owner occupied commercial 2,663 - - 2,663 81,977 4,518,749 4,603,389 77,930 Total real estate -mortgage 9,476 5,065 323 14,864 104,995 8,895,066 9,014,925 100,501 Consumer 491 140 54 685 715 76,223 77,623 15 Total $ 10,968 $ 7,886 $ 478 $ 19,332 $ 168,351 $ 13,509,229 $ 13,696,912 $ 155,413 77 December 31, 2024 Past Due Status (Accruing Loans) Total Past Total Nonaccrual 30-59 Days 60-89 Days 90+ Days Due Nonaccrual Current Total Loans With No ACL (In Thousands) Commercial, financial and agricultural $ 9,218 $ 8,469 $ 38 $ 17,725 $ 25,692 $ 2,826,477 2,869,894 $ 22,266 Real estate - construction 6,046 15,898 661 22,605 - 1,466,701 1,489,306 - Real estate - mortgage: Owner-occupied commercial 9,494 2,478 - 11,972 8,744 2,526,427 2,547,143 8,644 1-4 family mortgage 1,157 3,111 2,240 6,508 3,051 1,435,064 1,444,623 2,787 Non-owner occupied commercial 4,432 - - 4,432 1,259 4,175,552 4,181,243 729 Total real estate -mortgage 15,083 5,589 2,240 22,912 13,054 8,137,043 8,173,009 12,160 Consumer 83 34 26 143 755 72,729 73,627 - Total $ 30,430 $ 29,990 $ 2,965 $ 63,385 $ 39,501 $ 12,502,950 12,605,836 $ 34,426 There was no interest earned on nonaccrual loans for the years ended December 31, 2025 and 2024. Loans that no longer share similar risk characteristics with the collectively evaluated pools are estimated on an individual basis. A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The following table summarizes collateral-dependent gross loans held for investment by collateral type as follows: Accounts ACL December 31, 2025 Real Estate Receivable Equipment Other Total Allocation (In Thousands) Commercial, financial and agricultural $ 18,792 $ 2,247 $ 2,763 $ 30,235 $ 54,037 $ 17,465 Real estate - construction 35,946 - - 944 36,890 712 Real estate - mortgage: Owner-occupied commercial 21,076 - - 76 21,152 - 1-4 family mortgage 9,887 - 109 - 9,996 446 Non-owner occupied commercial 87,917 - - 875 88,792 5,434 Total real estate - mortgage 118,880 - 109 951 119,940 5,880 Consumer - - 15 721 736 721 Total $ 173,618 $ 2,247 $ 2,887 $ 32,851 $ 211,603 $ 24,778 Accounts ACL December 31, 2024 Real Estate Receivable Equipment Other Total Allocation (In Thousands) Commercial, financial and agricultural $ 18,901 $ 1,721 $ 7,449 $ 42,684 $ 70,755 $ 17,615 Real estate - construction 2,590 - - 946 3,536 - Real estate - mortgage: Owner-occupied commercial 24,935 - - 78 25,013 2,890 1-4 family mortgage 3,719 - 109 - 3,828 287 Non-owner occupied commercial 14,533 - - 875 15,408 2,081 Total real estate - mortgage 43,187 - 109 953 44,249 5,258 Consumer - - - 755 755 755 Total $ 64,678 $ 1,721 $ 7,558 $ 45,338 $ 119,295 $ 23,628 The table below details the amortized cost basis at the end of the reporting period for loans made to borrowers experiencing financial difficulty that were modified during the years ended December 31, 2025 and 2024: Year Ended December 31, 2025 Payment Deferral Term and Term New Percentage of Extensions Payment Deferral Extensions Origination Total Total Loans (In Thousands) Commercial, financial and agricultural $ 150 $ 10,163 $ 494 $ - $ 10,807 0.08 % Real estate - construction - 5,945 - - 5,945 0.04 % Owner-occupied commercial - 13,252 - - 13,252 0.10 % 1-4 family mortgage - 402 - - 402 - % Total $ 150 $ 29,762 $ 494 $ - $ 30,406 0.22 % 78 Year Ended December 31, 2024 Payment Deferral Term and Term New Percentage of Extensions Payment Deferral Extensions Origination Total Total Loans (In Thousands) Commercial, financial and agricultural $ 248 $ 12,354 $ - $ - $ 12,602 0.10 % Owner-occupied commercial 3,562 5,827 - - 9,389 0.07 % 1-4 family mortgage 175 174 - 96 445 - % Total $ 3,985 $ 18,355 $ - $ 96 $ 22,436 0.17 % The following table summarizes the financial impacts of loan modifications made to borrowers experiencing financial difficulty during the year ended December 31, 2025: Year Ended December 31, 2025 Total Payment Term Extensions Deferral (In months) (In Thousands) Commercial, financial and agricultural 3 to 58 $ 903 Real estate - construction 4 to 5 339 Owner-occupied commercial 4 to 8 232 1-4 family mortgage 4 17 Non-owner occupied commercial - - Year Ended December 31, 2024 Total Payment Term Extensions Deferral (In months) (In Thousands) Commercial, financial and agricultural 4 to 95 $ 1,403 Real estate - construction - - Owner-occupied commercial 5 to 60 16 1-4 family mortgage 3 to 121 9 Non-owner occupied commercial - - There were no loans that were modified in the previous twelve months (i.e., the twelve months prior to default) that defaulted during the years ended December 31, 2025 and December 31, 2024, respectively. For purposes of this disclosure, default is defined as 90 days past due and still accruing or placement on nonaccrual status. In the ordinary course of business, the Company has granted loans to certain related parties, including directors, and their affiliates. The interest rates on these loans were substantially the same as rates prevailing at the time of the transaction and repayment terms are customary for the type of loan. Changes in related party loans for the years ended December 31, 2025 and 2024 are as follows: Years Ended December 31, 2025 2024 (In Thousands) Balance, beginning of year $ 42,427 $ 39,831 Advances 28,182 32,740 Repayments ( 24,086 ) ( 29,585 ) Removal - ( 559 ) Balance, end of year $ 46,523 $ 42,427 79 NOTE 4. FORECLOSED PROPERTIES Other real estate and certain other assets acquired in foreclosure are carried at the lower of the recorded investment in the loan or fair value less estimated costs to sell the property. An analysis of foreclosed properties for the years ended December 31, 2025, 2024 and 2023 follows: 2025 2024 2023 (In Thousands) Balance at beginning of year $ 2,531 $ 995 $ 248 Transfers from loans and capitalized expenses 3,090 4,514 933 Foreclosed properties sold ( 3,336 ) ( 3,024 ) ( 158 ) Gain (loss) on sale 298 120 ( 28 ) Write downs and partial liquidations - ( 74 ) - Balance at end of year $ 2,583 $ 2,531 $ 995 NOTE 5. PREMISES AND EQUIPMENT Premises and equipment are summarized as follows: December 31, 2025 2024 (In Thousands) Land $ 8,086 $ 7,497 Building 34,076 34,037 Furniture and equipment 42,768 40,771 Leasehold improvements 16,866 14,669 Construction in progress 2,907 1,798 Total premises and equipment, cost 104,703 98,772 Accumulated depreciation ( 44,307 ) ( 39,587 ) Total premises and equipment, net $ 60,396 $ 59,185 The provisions for depreciation charged to occupancy and equipment expense for the years ended December 31, 2025, 2024 and 2023 were $ 4.7 million, $ 4.8 million and $ 4.4 million, respectively. NOTE 6. LEASES The Company leases space under non-cancelable operating leases for several of its banking offices and certain office equipment. The Company reports its right-of-use asset in other assets and its lease liabilities in other liabilities in its Consolidated Balance Sheets. Supplemental balance sheet information related to operating leases is as follows: December 31, 2025 December 31, 2024 Right-of-use assets $ 22,018 $ 26,059 Lease liabilities $ 23,060 $ 27,053 Weighted average remaining lease term 7.3 7.8 Weighted average discount rate 3.9 % 3.8 % Lease costs during the years ended December 31, 2025 and 2024 were as follows (in thousands): 2025 2024 Operating lease cost $ 5,998 $ 5,706 Short-term lease cost 35 75 Variable lease cost 895 852 Sublease income ( 20 ) ( 19 ) Net lease cost $ 6,908 $ 6,614 80 The following table reconciles future undiscounted lease payments due under non-cancelable leases to the aggregate lease liability as of December 31, 2025: (In Thousands) 2025 $ 5,376 2026 4,308 2027 3,357 2028 2,776 2029 2,313 Thereafter 8,789 Total lease payments $ 26,919 Less: imputed interest ( 3,859 ) Present value of operating lease liabilities $ 23,060 NOTE 7. VARIABLE INTEREST ENTITIES ( “ VIEs ” ) The Company utilizes special purpose entities (“SPEs”) that constitute investments in limited partnerships that undertake certain development projects to achieve federal and state tax credits. These SPEs are typically structured as VIEs and are thus subject to consolidation by the reporting enterprise that absorbs the majority of the economic risks and rewards of the VIE. To determine whether it must consolidate a VIE, the Company analyzes the design of the VIE to identify the sources of variability within the VIE, including an assessment of the nature of risks created by the assets and other contractual obligations of the VIE, and determines whether it will both absorb a majority of that variability and has the power to direct the activities that most significantly impact the economic performance of the entity. See Note 16, Commitments and Contingencies, for additional disclosures regarding the Company’s VIEs. NOTE 8. DEPOSITS Deposits at December 31, 2025, and December 31, 2024 were as follows: December 31, December 31, 2025 2024 (In Thousands) Noninterest-bearing demand $ 2,684,272 $ 2,619,687 Interest-bearing checking 10,034,713 9,511,161 Savings 110,298 102,088 Time deposits, $250,000 and under 369,855 367,216 Time deposits, over $250,000 1,019,896 943,307 $ 14,219,034 $ 13,543,459 The scheduled maturities of time deposits at December 31, 2025 were as follows: (In Thousands) 2026 $ 1,324,200 2027 49,277 2028 3,908 2029 8,148 2030 4,218 Total $ 1,389,751 At December 31, 2025 and 2024, overdraft deposits reclassified to loans were $2.5 million and $10.7 million, respectively. NOTE 9. FEDERAL FUNDS PURCHASED At December 31, 2025, the Company had $ 1.37 billion in federal funds purchased from its correspondent banks that are clients of its correspondent banking unit, compared to $ 1.91 billion at December 31, 2024. Rates paid on these funds were between 3.67 % and 3.75 % as of December 31, 2025 and 4.42 % and 4.50 % as of December 31, 2024. 81 At December 31, 2025, the Company had available lines of credit totaling approximately $ 472.0 million with various financial institutions for borrowing on a short-term basis, compared to $ 537.0 million at December 31, 2024. The Company had $ 100.0 million outstanding borrowings from these lines at December 31, 2025, compared to $ 80.0 million outstanding borrowings from these lines at December 31, 2024. NOTE 10. OTHER BORROWINGS Other borrowings are comprised of: ● $ 34.75 million of the Company’s 4 % Subordinated Notes due October 21, 2030, which were issued in a private placement in October 2020 and pay interest semi-annually. Debt is reported net of unamortized issuance costs of $ 0 and $ 7,000 as of December 31, 2025 and 2024, respectively. During the fourth quarter of 2025, the Company redeemed its $ 30 million 4.5% Subordinated Notes due November 2027, which were outstanding as of December 31, 2024. NOTE 11. SF INTERMEDIATE HOLDING COMPANY, INC., SF HOLDING 1, INC., SF TN REALTY HOLDINGS, INC., SF REALTY 1, INC., SF FLA REALTY, INC., SF GA REALTY, INC. AND SF TN REALTY, INC. In January 2012, the Company formed SF Holding 1, Inc., an Alabama corporation, and its subsidiary, SF Realty 1, Inc., an Alabama corporation. In September 2013, the Company formed SF FLA Realty, Inc., an Alabama corporation and a subsidiary of SF Holding 1, Inc. In May 2014, the Company formed SF GA Realty, Inc., an Alabama corporation and a subsidiary of SF Holding 1, Inc. In February 2016, the Company formed SF TN Realty, Inc., an Alabama corporation and a subsidiary of SF Holding 1, Inc. Also in February 2016, the Company formed SF Intermediate Holding Company, Inc., an Alabama corporation. Immediately following the formation of SF Intermediate Holding Company, Inc., ServisFirst Bank assigned all of the outstanding capital stock of SF Holding 1, Inc. to SF Intermediate Holding Company, Inc., such that SF Holding 1, Inc. became a wholly-owned first tier subsidiary of SF Intermediate Holding Company, Inc. In November 2022, SF Intermediate Holding Company, Inc. formed SF TN Realty Holdings, Inc., a Delaware corporation. In December 2022, SF Holding 1, Inc. merged with and into SF TN Realty Holdings, Inc., with SF TN Realty Holdings, Inc being the surviving entity. Following the merger, SF Realty 1, SF FLA Realty, SF GA Realty and SF TN Realty are all subsidiaries of SF TN Realty Holdings, Inc. SF Realty 1, SF FLA Realty, SF GA Realty and SF TN Realty all hold and manage participations in residential mortgages and commercial real estate loans originated by ServisFirst Bank and have elected to be treated as real estate investment trusts (“REIT”) for U.S. income tax purposes. SF Intermediate Holding Company, Inc., SF TN Realty Holdings, Inc., SF Realty 1, Inc., SF FLA Realty, Inc., SF GA Realty, Inc. and SF TN Realty, Inc. are all consolidated into the Company. NOTE 12. EMPLOYEE AND DIRECTOR BENEFITS The Company has a stock incentive plan, which is described below. The compensation cost that has been charged against income for the plan was approximately $ 3.0 million, $ 3.5 million and $ 3.6 million for the years ended December 31, 2025, 2024 and 2023, respectively. Stock Incentive Plan On March 23, 2009, the Company’s Board of Directors adopted the 2009 Stock Incentive Plan (the “Plan”), which was effective upon approval by the stockholders at the 2009 Annual Meeting of Stockholders. The 2009 Plan originally permitted the grant of up to 2,550,000 shares of common stock. With stockholder approval during 2014, the Plan was amended in order to allow the Company to grant up to 5,550,000 shares of common stock. The Plan authorizes the grant of stock appreciation rights, restricted stock, incentive stock options, non-qualified stock options, non-stock share equivalents, performance shares or performance units and other equity-based awards. Option awards are generally granted with an exercise price equal to the fair market value of the Company’s stock at the date of grant. As of December 31, 2025, there are a total of 2,950,298 shares available to be granted under the Plan. Stock-based compensation expense for stock-based awards is based on the grant-date fair value. For stock option awards, the fair value is estimated at the date of grant using the Black-Scholes-Merton valuation model. This model requires the input of highly subjective assumptions, changes to which can materially affect the fair value estimate. The fair value of each option granted is estimated on the date of grant using the Black-Scholes-Merton model based on the weighted-average assumptions for expected dividend yield, expected stock price volatility, risk-free interest rate and expected life of options granted. 82 There were no grants of stock options during the years ended December 31, 2025 and 2024. The following tables summarize stock option activity: Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (In Thousands) Year Ended December 31, 2025: Outstanding at beginning of year 80,450 $ 26.03 1.9 $ 4,723 Exercised ( 31,950 ) 17.10 - 1,747 Outstanding at end of year 48,500 $ 31.92 2.0 $ 1,933 Exercisable at December 31, 2025: 48,500 $ 31.92 2.0 $ 1,933 Year Ended December 31, 2024: Outstanding at beginning of year 165,300 $ 24.35 2.9 $ 7,211 Exercised ( 77,350 ) 23.71 2.0 57,618 Forfeited ( 7,500 ) 6.92 - - Outstanding at end of year 80,450 $ 26.03 1.9 $ 4,723 Exercisable at December 31, 2024: 80,450 $ 26.03 1.9 $ 4,723 Year Ended December 31, 2023: Outstanding at beginning of year 280,000 $ 19.43 3.0 $ 14,088 Exercised ( 112,200 ) 11.84 0.7 6,148 Forfeited ( 2,500 ) 35.47 4.8 78 Outstanding at end of year 165,300 $ 24.35 2.9 $ 7,211 Exercisable at December 31, 2023: 143,300 $ 21.84 2.2 $ 6,419 Exercisable options at December 31, 2025 were as follows: Range of Exercise Price Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (In Thousands) $ 14.00 - 15.00 2,000 14.32 0.7 115 18.00 - 19.00 2,000 18.32 0.1 107 19.00 - 20.00 8,000 19.16 0.1 421 34.00 - 35.00 2,000 34.09 3.1 75 35.00 - 36.00 26,500 35.63 2.8 958 38.00 - 39.00 5,500 38.26 1.1 184 41.00 - 42.00 1,000 41.21 2.1 31 43.00 - 44.00 1,500 43.80 2.5 42 48,500 $ 31.92 2.0 $ 1,933 As of December 31, 2025, there were no non-vested stock options. Restricted Stock and Performance Shares The Company periodically grants restricted stock awards that vest upon service conditions. Dividend payments are made during the vesting period. The value of restricted stock is determined to be the current value of the Company’s stock, and this total value will be recognized as compensation expense over the vesting period. As of December 31, 2025, there was $ 5.4 million of total unrecognized compensation cost related to non-vested restricted stock. As of December 31, 2025, non-vested restricted stock had a weighted average remaining time to vest of 2.4 years. 83 The Company periodically grants PSUs that give plan participants the opportunity to earn stock between 0 % and 150 % of the number of PSUs granted based on achieving certain performance metrics. The number of stock earned upon vesting of PSUs is determined by reference to the Company’s total shareholder return relative to a peer group of other publicly traded banks and bank holding companies during the performance period. The performance period is generally three years starting on the grant date. The fair value of PSUs is determined using a Monte Carlo simulation model on the grant date. As of December 31, 2025, there was $ 1.5 million of total unrecognized compensation cost related to non-vested PSUs. As of December 31, 2025, non-vested performance stock had a weighted average remaining time to vest of 3 years. The following table summarizes restricted stock and PSU activity: Restricted Stock PSU Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Year Ended December 31, 2025: Non-vested at beginning of year 145,837 $ 66.35 30,065 $ 70.45 Granted 44,989 82.00 16,316 77.97 Additional performance share attainment - - 290 89.68 Vested ( 40,631 ) 62.53 ( 13,934 ) 69.30 Forfeited ( 10,782 ) 71.15 ( 2,645 ) 71.82 Non-vested at end of year 139,413 $ 72.15 30,092 $ 74.26 Year Ended December 31, 2024: Non-vested at beginning of year 158,298 $ 58.08 31,944 $ 58.25 Granted 54,794 68.95 20,469 59.07 Vested ( 49,090 ) 46.04 ( 18,653 ) 37.05 Forfeited ( 18,165 ) 56.98 ( 3,695 ) 70.58 Non-vested at end of year 145,837 $ 66.35 30,065 $ 70.45 Year Ended December 31, 2023: Non-vested at beginning of year 141,580 $ 56.39 23,852 $ 54.16 Granted 64,880 58.45 8,092 70.29 Vested ( 35,163 ) 49.85 - - Forfeited ( 12,999 ) 63.78 - - Non-vested at end of year 158,298 $ 58.08 31,944 $ 58.25 Retirement Plans The Company has a retirement savings 401(k) and profit-sharing plan in which all employees 21 years of age and older may participate after completion of one year of service. The Company matches employees’ contributions based on a percentage of salary contributed by participants and may make additional discretionary profit-sharing contributions. The Company’s expense for the plan was $ 2.5 million, $ 2.3 million and $ 2.1 million for 2025, 2024 and 2023, respectively. NOTE 13. REGULATORY MATTERS The Bank is subject to dividend restrictions set forth in the Alabama Banking Code and by the Alabama State Banking Department. Under such restrictions, the Bank may not, without the prior approval of the Alabama State Banking Department, declare dividends in excess of the sum of the current year’s earnings plus the retained earnings from the prior two years. Based on these restrictions, the Bank would be limited to paying $ 500.3 million in dividends as of December 31, 2025. 84 The Bank is subject to various regulatory capital requirements administered by the state and federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank and the financial statements. Under regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines involving quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification under the prompt corrective guidelines are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of common equity Tier 1 capital, total risk-based capital and Tier 1 capital to risk-weighted assets (as defined in the regulations), and Tier 1 capital to adjusted total assets (as defined). Management believes, as of December 31, 2025, that the Bank meets all capital adequacy requirements to which it is subject. As of December 31, 2025, the most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To remain categorized as well capitalized, the Bank will have to maintain minimum CET1, total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as disclosed in the table below. Management believes that it is well capitalized under the prompt corrective action provisions as of December 31, 2025. The Company’s and Bank’s actual capital amounts and ratios are presented in the following table: Actual For Capital Adequacy Purposes To Be Well Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio As of December 31, 2025: CET I Capital to Risk Weighted Assets: Consolidated $ 1,838,024 11.65 % $ 709,755 4.50 % N/A N/A ServisFirst Bank 1,866,335 11.83 % 709,698 4.50 % $ 1,025,119 6.50 % Tier I Capital to Risk Weighted Assets: Consolidated 1,838,524 11.66 % 946,340 6.00 % N/A N/A ServisFirst Bank 1,866,835 11.84 % 946,264 6.00 % 1,261,685 8.00 % Total Capital to Risk Weighted Assets: Consolidated 2,038,579 12.93 % 1,261,787 8.00 % N/A N/A ServisFirst Bank 2,039,090 12.93 % 1,261,685 8.00 % 1,577,107 10.00 % Tier I Capital to Average Assets: Consolidated 1,838,524 10.26 % 717,027 4.00 % N/A N/A ServisFirst Bank 1,866,835 10.41 % 716,995 4.00 % 896,244 5.00 % As of December 31, 2024: CET I Capital to Risk Weighted Assets: Consolidated $ 1,634,837 11.42 % $ 644,441 4.50 % N/A N/A ServisFirst Bank 1,694,412 11.83 % 644,402 4.50 % $ 930,803 6.50 % Tier I Capital to Risk Weighted Assets: Consolidated 1,635,337 11.42 % 859,255 6.00 % N/A N/A ServisFirst Bank 1,694,912 11.84 % 859,203 6.00 % 1,145,604 8.00 % Total Capital to Risk Weighted Assets: Consolidated 1,847,146 12.90 % 1,145,673 8.00 % N/A N/A ServisFirst Bank 1,859,978 12.99 % 1,145,604 8.00 % 1,432,005 10.00 % Tier I Capital to Average Assets: Consolidated 1,635,337 9.59 % 682,238 4.00 % N/A N/A ServisFirst Bank 1,694,912 9.94 % 682,223 4.00 % 852,779 5.00 % 85 NOTE 14. OTHER OPERATING INCOME AND EXPENSES The major components of other operating income and expense included in noninterest income and noninterest expense are as follows: Years Ended December 31, 2025 2024 2023 (In Thousands) Other Operating Income ATM fee income $ 610 $ 632 $ ( 200 ) Mark to market interest rate cap derivative - - 48 Loss on sale of fixed assets - ( 91 ) - Merchant services fees 2,337 2,278 2,214 Other 158 68 975 Total other operating income $ 3,105 $ 2,887 $ 3,037 Other Operating Expenses Other loan expenses $ 5,283 $ 2,754 $ 2,794 Customer and public relations 3,587 3,338 2,971 Sales and use tax 601 779 771 Write-down investment in tax credit partnerships 1,360 1,396 12,053 Telephone 588 564 597 Donations and contributions 618 658 651 Marketing 1,151 951 768 Supplies 752 701 705 Fraud and forgery losses 516 2,139 1,435 Directors fees 794 807 797 Postage 336 352 361 Other operational losses 2,856 270 449 Other insurance expense 1,858 1,845 1,794 Courier 657 619 528 Core processing deconversion expense - 134 - EDP contract termination - - 1,134 Privilege tax expense 2,014 1,767 4,300 Other 2,670 2,267 1,234 Total other operating expenses $ 25,641 $ 21,341 $ 33,342 NOTE 15. INCOME TAXES The components of income tax expense are as follows: Year Ended December 31, 2025 2024 2023 (In Thousands) Current tax expense: Federal $ 58,121 $ 51,897 $ 35,124 State 5,578 3,194 3,616 Total current tax expense 63,699 55,091 38,740 Deferred tax (benefit) expense: Federal 1,082 ( 2,227 ) ( 1,057 ) State 746 ( 1,124 ) 52 Total deferred tax (benefit) 1,828 ( 3,351 ) ( 1,005 ) Total income tax expense $ 65,527 $ 51,740 $ 37,735 The reconciliation of the effective income tax rate to the federal statutory rate is as follows: Year Ended December 31, 2025 Amount % of Pre-tax Earnings (In Thousands) US federal statutory income tax 71,848 21.00 % State and local income taxes, net of federal income tax effect(2) 5,023 1.47 % Tax credits: Energy tax credits ( 4,500 ) ( 1.32 )% Other credits ( 4,592 ) ( 1.34 )% Nontaxable or nondeductible items ( 2,863 ) ( 0.84 )% Change in unrecognized tax positions 176 0.05 % Other 435 0.13 % Effective income tax and rate(1) $ 65,527 19.15 % (1) Post-adoption of ASU 2023-09 (2) State taxes in Alabama, Florida, and South Carolina make up the majority (greater than 50%) of the tax effect in this category 86 Year Ended December 31, 2024 Amount % of Pre-tax Earnings (In Thousands) Income tax at statutory federal rate $ 58,585 21.00 % Effect on rate of: State income tax, net of federal tax effect 1,787 0.64 % Tax-exempt income, net of expenses ( 14 ) ( 0.01 )% Bank-owned life insurance contracts ( 2,002 ) ( 0.72 )% Excess tax benefit from stock compensation ( 1,117 ) ( 0.40 )% Federal tax credits, net of related amortization ( 6,297 ) ( 2.26 )% Other 798 0.36 % Effective income tax and rate(3) $ 51,740 18.61 % (3) 2024 and 2023 are pre-adoption of ASU 2023-09 Year Ended December 31, 2023 Amount % of Pre-tax Earnings (In Thousands) Income tax at statutory federal rate $ 51,363 21.00 % Effect on rate of: State income tax, net of federal tax effect 3,339 1.37 % Tax-exempt income, net of expenses ( 92 ) ( 0.04 )% Bank-owned life insurance contracts ( 1,591 ) ( 0.65 )% Excess tax benefit from stock compensation ( 1,242 ) ( 0.51 )% Federal tax credits, net of related amortization ( 16,002 ) ( 6.54 )% Other 1,960 0.80 % Effective income tax and rate(3) $ 37,735 15.43 % (3) 2024 and 2023 are pre-adoption of ASU 2023-09 The components of net deferred tax asset are as follows: December 31, 2025 2024 (In Thousands) Deferred tax assets: Allowance for credit losses $ 43,236 $ 41,431 Other real estate owned - 255 Nonqualified equity awards 1,472 1,375 Nonaccrual interest 216 814 State tax credits carryforward 1,530 2,195 Deferred loan fees 4,523 4,074 Reserve for unfunded commitments - - Accrued bonus 3,685 3,910 Capital loss carryforward 662 1,716 Lease liability 5,788 6,790 Deferred revenue - - Net unrealized loss on securities available for sale 722 10,937 Other deferred tax assets 780 1,996 Total deferred tax assets 62,614 75,493 Deferred tax liabilities: Depreciation 3,671 4,138 Prepaid expenses 921 781 Investments 1,178 950 Right-of-use assets and other leasing transactions 5,527 6,541 Other deferred tax liabilities 1,612 1,335 Total deferred tax liabilities 12,909 13,745 Net deferred tax assets $ 49,705 $ 61,748 87 The Federal and State total of income taxes paid (net of refunds received): 2025 Federal $ 27,521,000 State(4) 7,056,359 Total 34,577,359 5% threshold (4) 1,728,868 (4) No individual state payments over threshold The Company believes its net deferred tax asset is recoverable as of December 31, 2025 and 2024 based on the expectation of future taxable income and other relevant considerations. Pursuant to ASC 740-10-30-2 Income Taxes , deferred tax assets and liabilities are measured using enacted tax rates applicable to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company and its subsidiaries file a consolidated U.S. Federal income tax return and various consolidated and separate company state income tax returns. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the years ended December 31, 2022 through 2024. The Company is also currently open to audit by several state departments of revenue for the years ended December 31, 2022 through 2024. The audit periods differ depending on the date the Company began business activities in each state. Accrued interest and penalties on unrecognized income tax benefits totaled $ 206,000 and $ 495,000 as of December 31, 2025 and 2024, respectively. Interest and penalties related to unrecognized income tax benefits are recorded in the provision for income taxes. The Company has $ 513,000 of unrecognized tax benefits (net of the federal benefit on state income tax issues) recorded as of December 31, 2025. Unrecognized income tax benefits as of December 31, 2025, and December 31, 2024, that, if recognized, would impact the effective income tax rate totaled $ 513,000 and $ 1,511,000 (net of the federal benefit on state income tax issues), respectively. The following table presents a summary of the changes during 2025, 2024 and 2023 in the amount of unrecognized tax benefits that are included in the consolidated balance sheets: 2025 2024 2023 (In Thousands) Balance, beginning of year $ 1,913 $ 2,092 $ - Increases related to prior year tax positions - - 1,285 Decreases related to prior year tax positions ( 1,401 ) ( 854 ) - Increases related to current year tax positions 137 675 807 Balance, end of year $ 649 $ 1,913 $ 2,092 NOTE 16. COMMITMENTS AND CONTINGENCIES Loan Commitments The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, credit card arrangements, and standby letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets. A summary of the Company’s approximate commitments and contingent liabilities is as follows: 2025 2024 2023 (In Thousands) Commitments to extend credit $ 3,779,178 $ 3,552,958 $ 3,410,283 Credit card arrangements 395,780 366,843 381,524 Standby letters of credit and financial guarantees 117,371 125,147 86,065 Total $ 4,292,329 $ 4,044,948 $ 3,877,872 88 Commitments to extend credit, credit card arrangements, commercial letters of credit and standby letters of credit all include exposure to some credit loss in the event of nonperformance of the customer. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet financial instruments. Because these instruments have fixed maturity dates, and because many of them expire without being drawn upon, they do not generally present any significant liquidity risk to the Company. The Company invests in certain affordable housing projects throughout its market area as a means of supporting local communities. The Company receives tax credits related to these investments, for which it typically acts as a limited partner and therefore does not exert control over the operating or financial policies of the partnerships. The Company typically provides financing during the construction and development of the properties. Tax credits are subject to recapture by taxing authorities based on compliance features required to be met at the project level. The Company’s maximum potential exposure to losses relative to investments in VIEs is generally limited to the sum of the outstanding balance, future funding commitments and any related loans to the entity, exclusive of any potential tax recapture associated with the investments. Loans to these entities are underwritten in substantially the same manner as the Company’s other loans and are generally secured. The Company invests as a limited partner in certain projects through the New Market Tax Credit program, which is a Federal financial program aimed to stimulate business and real estate investment in underserved communities via a Federal tax credit. The Company has investments in and future funding commitments related to private equity and certain other equity method investments. The risk exposure relating to such commitments is generally limited to the amount of investments and future funding commitments made. The following table summarizes certain tax credit and certain equity investments. December 31, Balance Sheet Location 2025 2024 (In Thousands) Investments in affordable housing projects and other qualified tax credits: Carrying amount Other assets $ 98,681 $ 75,705 Amount of future funding commitments including in carrying amount Other liabilities 65,439 39,502 Lending exposures Loans 107,764 96,224 SBIC and certain other equity method investments: Carrying amount Other assets 13,399 4,642 Amount of future funding commitments not included in carrying amount N/A 18,551 12,308 The following table presents a summary of tax credits and amortization expense associated with those investments accounted for using the proportional amortization method for the period indicated. Income Statement Location 2025 2024 (In Thousands) Income tax credits and other income tax benefits Income tax expense $ ( 42,762 ) $ ( 13,392 ) Amortization expense Income tax expense 36,634 11,162 NOTE 17. CONCENTRATIONS OF CREDIT The Company originates primarily commercial, residential, and consumer loans to customers in the Company’s market area. The ability of the majority of the Company’s customers to honor their contractual loan obligations is dependent on the economy in the market area. The Company’s loan portfolio is concentrated primarily in loans secured by real estate, principally secured by real estate in the Company’s primary market areas. In addition, a substantial portion of the other real estate owned is located in that same market. Accordingly, the ultimate collectability of the loan portfolio and the recovery of the carrying amount of other real estate owned are susceptible to changes in market conditions in the Company’s primary market area. 89 NOTE 18. EARNINGS PER COMMON SHARE Basic earnings per common share are computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable pursuant to the exercise of stock options and vesting of performance shares. The difference in earnings per share under the two-class method was not significant at December 31, 2025, 2024 and 2023. Year Ended December 31, 2025 2024 2023 (Dollar Amounts In Thousands Except Per Share Amounts) Earnings Per Share Weighted average common shares outstanding 54,609,237 54,528,302 54,411,171 Net income available to common stockholders $ 276,541 $ 227,180 $ 206,791 Basic earnings per common share $ 5.06 $ 4.17 $ 3.80 Weighted average common shares outstanding 54,609,237 54,528,302 54,411,171 Dilutive effects of assumed exercise of stock options and vesting of performance shares 57,037 95,932 124,144 Weighted average common and dilutive potential common shares outstanding 54,666,274 54,624,234 54,535,315 Net income available to common stockholders $ 276,541 $ 227,180 $ 206,791 Diluted earnings per common share $ 5.06 $ 4.16 $ 3.79 NOTE 19. RELATED PARTY TRANSACTIONS As more fully described in Note 3 “ Loans, ” the Company had outstanding loan balances, as made in the ordinary course of business, to related parties as of December 31, 2025 and 2024 in the amount of $ 46.5 million and $ 42.4 million, respectively. Deposits of related parties are also accepted in the ordinary course of business. The aggregate balances of related party deposits are immaterial as of December 31, 2025 and 2024, respectively. NOTE 20. FAIR VALUE MEASUREMENT Measurement of fair value under GAAP establishes a hierarchy that prioritizes observable and unobservable inputs used to measure fair value, as of the measurement date, into three broad levels, which are described below: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and also considers counterparty credit risk in its assessment of fair value. Debt Securities . Where quoted prices are available in an active market, securities are classified within Level 1 of the hierarchy. Level 1 securities include highly liquid government securities such as U.S. Treasuries and exchange-traded equity securities. For securities traded in secondary markets for which quoted market prices are not available, the Company generally relies on pricing services provided by independent vendors. Such independent pricing services are to advise the Company on the carrying value of the securities available for sale portfolio. As part of the Company’s procedures, the price provided from the service is evaluated for reasonableness given market changes. When a questionable price exists, the Company investigates further to determine if the price is valid. If needed, other market participants may be utilized to determine the correct fair value. The Company has also reviewed and confirmed its determinations in discussions with the pricing service regarding their methods of price discovery. Securities measured with these techniques are classified within Level 2 of the hierarchy and often involve using quoted market prices for similar securities, pricing models or discounted cash flow calculations using inputs observable in the market where available. Examples include U.S. government agency securities, mortgage-backed securities, obligations of states and political subdivisions, and certain corporate, asset-backed and other securities. In cases where Level 1 or Level 2 inputs are not available, as in the case of certain corporate securities, these securities are classified in Level 3 of the hierarchy. 90 Derivative Instruments . The fair values of derivatives are determined based on a valuation pricing model using readily available observable market parameters such as interest rate curves, adjusted for counterparty credit risk. These measurements are classified as Level 2 within the valuation hierarchy. Loans Individually Evaluated. Loans individually evaluated are measured and reported at fair value when full payment under the loan terms is not probable. Loans individually evaluated are carried at the present value of expected future cash flows using the loan’s existing rate in a discounted cash flow calculation, or the fair value of the collateral if the loan is collateral-dependent. Expected cash flows are based on internal inputs reflecting expected default rates on contractual cash flows. This method of estimating fair value does not incorporate the exit-price concept of fair value described in ASC 820-10 and would generally result in a higher value than the exit-price approach. For loans measured using the estimated fair value of collateral less costs to sell, fair value is generally determined based on appraisals performed by certified and licensed appraisers using inputs such as absorption rates, capitalization rates and market comparables, adjusted for estimated costs to sell. Management modifies the appraised values, if needed, to take into account recent developments in the market or other factors, such as changes in absorption rates or market conditions from the time of valuation, and anticipated sales values considering management’s plans for disposition. Such modifications to the appraised values could result in lower valuations of such collateral. Estimated costs to sell are based on current amounts of disposal costs for similar assets. These measurements are classified as Level 3 within the valuation hierarchy. Loans individually evaluated are subject to nonrecurring fair value adjustment upon initial recognition or subsequent individual evaluation. A portion of the allowance for credit losses is allocated to loans individually evaluated if the value of such loans is deemed to be less than the unpaid balance. The range of fair value adjustments and weighted average adjustments as of December 31, 2025 was 0 % to 70 % and 17.1 %, respectively. The range of fair value adjustments and weighted average adjustment as of December 31, 2024 was 0 % to 75 % and 25.5 %, respectively. Loans individually evaluated are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly based on the same factors identified above. The amount recognized to write-down individually evaluated loans that are measured at fair value on a nonrecurring basis was $ 22.5 million and $ 18.3 million during the years ended December 31, 2025 and 2024, respectively. Other Real Estate Owned and Repossessed Assets . Other real estate assets (“OREO”) acquired through, or in lieu of, foreclosure are held for sale and are initially recorded at the lower of cost or fair value, less selling costs. Any write-downs to fair value at the time of transfer to OREO are charged to the allowance for credit losses subsequent to foreclosure. Values are derived from appraisals of underlying collateral and discounted cash flow analysis. Appraisals are performed by certified and licensed appraisers. Subsequent to foreclosure, valuations are updated periodically and assets are marked to current fair value, not to exceed the new cost basis. In the determination of fair value subsequent to foreclosure, management also considers other factors or recent developments, such as changes in absorption rates and market conditions from the time of valuation, and anticipated sales values considering management’s plans for disposition, which could result in adjustment to lower the property value estimates indicated in the appraisals. The range of fair value adjustments and weighted average adjustment as of December 31, 2025 was 10 % to 27 % and 23.5 %, respectively. The range of fair value adjustments and weighted average adjustment as of December 31, 2024 was 19 % to 47 % and 22.7 % respectively. These measurements are classified as Level 3 within the valuation hierarchy. Net gains (losses) on the sale and write-downs of OREO of $ 298,000 and ($ 132,000 ) were recognized during the years ended December 31, 2025 and 2024, respectively. These charges were for write-downs in the value of OREO subsequent to foreclosure and losses on the disposal of OREO. OREO is classified within Level 3 of the hierarchy. There were five residential real estate loan foreclosures for $ 2.5 million classified as OREO as of December 31, 2025, compared to three residential real estate loan foreclosures for $ 852,400 as of December 31, 2024. There was one residential real estate loan for $ 171,000 that was in the process of being foreclosed as of December 31, 2025. There was one residential real estate loan for $ 82,000 that was in the process of being foreclosed as of December 31, 2024. The following table presents the Company’s financial assets and financial liabilities carried at fair value on a recurring basis as of December 31, 2025 and 2024. There were no liabilities measured at fair value on a recurring basis as of December 31, 2025 and 2024. Fair Value Measurements at December 31, 2025 Using Quoted Prices in Active Markets Significant Other Significant for Identical Observable Inputs Unobservable Assets (Level 1) (Level 2) Inputs (Level 3) Total Assets Measured on a Recurring Basis: (In Thousands) Available-for-sale debt securities: U.S. Treasury securities $ 522,923 $ - $ - $ 522,923 Mortgage-backed securities - 133,304 - 133,304 State and municipal securities - 9,809 - 9,809 Corporate debt - 402,789 - 402,789 Total available-for-sale debt securities 522,923 545,902 - 1,068,825 Total assets at fair value $ 522,923 $ 545,902 $ - $ 1,068,825 91 Fair Value Measurements at December 31, 2024 Using Quoted Prices in Active Markets Significant Other Significant for Identical Observable Inputs Unobservable Assets (Level 1) (Level 2) Inputs (Level 3) Total Assets Measured on a Recurring Basis: (In Thousands) Available-for-sale debt securities: U.S. Treasury securities $ 617,486 $ - $ - $ 617,486 Mortgage-backed securities - 219,274 - 219,274 State and municipal securities - 9,517 - 9,517 Corporate debt - 315,123 - 315,123 Total available-for-sale debt securities 617,486 543,914 - 1,161,400 Total assets at fair value $ 617,486 $ 543,914 $ - $ 1,161,400 The carrying amount and estimated fair value of the Company’s financial instruments measured on a nonrecurring basis were as follows: Fair Value Measurements at December 31, 2025 Using Quoted Prices in Active Markets Significant Other Significant for Identical Observable Unobservable Assets (Level 1) Inputs (Level 2) Inputs (Level 3) Total Assets Measured on a Nonrecurring Basis: (In Thousands) Loans individually evaluated $ - $ - $ 186,825 $ 186,825 Other real estate owned and repossessed assets - - 2,583 2,583 Total assets at fair value $ - $ - $ 189,408 $ 189,408 Fair Value Measurements at December 31, 2024 Using Quoted Prices in Active Markets Significant Other Significant for Identical Observable Unobservable Assets (Level 1) Inputs (Level 2) Inputs (Level 3) Total Assets Measured on a Nonrecurring Basis: (In Thousands) Loans individually evaluated $ - $ - $ 95,667 $ 95,667 Other real estate owned and repossessed assets - - 2,531 2,531 Total assets at fair value $ - $ - $ 98,198 $ 98,198 There were no liabilities measured at fair value on a non-recurring basis as of December 31, 2025 and 2024. In the case of the debt securities portfolio, the Company monitors the portfolio to ascertain when transfers between levels have been affected. The nature of the remaining assets and liabilities is such that transfers in and out of any level are expected to be rare. For the year ended December 31, 2025, there were no transfers compared to two transfers from Level 3 to Level 2 during 2024. 92 The table below includes a rollforward of the balance sheet amounts for the years ended December 31, 2025 and 2024 (including the change in fair value) for financial instruments classified by the Company within Level 3 of the valuation hierarchy measured at fair value on a recurring basis including changes in fair value due in part to observable factors that are part of the valuation methodology: For the year ended December 31, 2025 2024 Available-for-sale Securities Available-for-sale Securities (In Thousands) Fair value, beginning of period $ - $ 6,860 Transfers into Level 3 - - Total realized gains included in income - - Changes in unrealized gains/losses included in other comprehensive income for assets and liabilities still held at period-end - ( 1,329 ) Purchases - - Transfers out of Level 3 - ( 5,531 ) Fair value, end of period $ - $ - The fair value of a financial instrument is the current amount that would be exchanged in a sale between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Current GAAP excludes certain financial instruments and all nonfinancial instruments from its fair value disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company. December 31, 2025 Carrying / Notional Amount Estimated Fair Value Quoted Market Prices in an Active Market (Level 1) Models with Significant Observable Market Parameters (Level 2) Models with Significant Unobservable Market Parameters (Level 3) (In Thousands) Financial Assets: Cash and cash equivalents $ 1,121,734 $ 1,121,734 $ 1,121,734 $ - $ - Securities purchased with agreement to resell 498,910 498,910 498,910 - - Held to maturity U.S. Treasury securities 249,621 240,032 240,032 - - Federal funds sold 6,052 6,052 - 6,052 - Held to maturity debt securities 410,455 376,503 - 376,003 500 Mortgage loans held for sale 11,744 11,744 - 11,744 - Restricted equity securities 12,203 12,203 - 12,203 - Loans, net 13,525,229 13,267,169 - - 13,267,169 Financial Liabilities: Deposits $ 14,219,034 $ 14,217,711 $ - $ 14,217,711 $ - Federal funds purchased 1,471,628 1,471,628 - 1,471,628 - Other borrowings 34,750 31,258 - 31,258 - December 31, 2024 Carrying / Notional Amount Estimated Fair Value Quoted Market Prices in an Active Market (Level 1) Models with Significant Observable Market Parameters (Level 2) Models with Significant Unobservable Market Parameters (Level 3) (In Thousands) Financial Assets: Cash and cash equivalents $ 2,375,589 $ 2,375,589 $ 2,375,589 $ - $ - Held to maturity U.S. Treasury securities 249,403 229,771 229,771 - - Federal funds sold 1,045 1,045 - 1,045 - Held to maturity debt securities 465,450 409,725 - 409,475 250 Mortgage loans held for sale 9,211 9,211 - 9,211 - Restricted equity securities 11,300 11,300 - 11,300 - Loans, net 12,441,378 12,013,721 - - 12,013,721 Financial Liabilities: Deposits $ 13,543,459 $ 13,540,438 $ - $ 13,540,438 $ - Federal funds purchased 1,993,728 1,993,728 - 1,993,728 - Other borrowings 64,743 59,130 - 59,130 - 93 NOTE 21. PARENT COMPANY FINANCIAL INFORMATION The following information presents the condensed balance sheet of the Company as of December 31, 2025 and 2024 and the condensed statements of income and cash flows for the years ended December 31, 2025, 2024 and 2023. CONDENSED BALANCE SHEETS (In Thousands) December 31, 2025 December 31, 2024 ASSETS Cash and due from banks $ 26,205 $ 22,584 Investment in subsidiary 1,878,159 1,675,847 Other assets 1,268 864 Total assets $ 1,905,632 $ 1,699,295 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Other borrowings $ 34,750 $ 64,743 Other liabilities 21,035 18,280 Total liabilities 55,785 83,023 Stockholders' equity: Preferred stock, par value $ 0.001 per share; 1,000,000 authorized and undesignated at December 31, 2025 and December 31, 2024 - - Common stock, par value $ 0.001 per share; 200,000,000 shares authorized: 54,624,955 shares issued and outstanding at December 31, 2025; and 54,569,427 shares issued and outstanding at December 31, 2024 at December 31, 2021 54 54 Additional paid-in capital 237,839 235,781 Retained earnings 1,613,746 1,412,616 Accumulated other comprehensive loss ( 1,792 ) ( 32,179 ) Total stockholders' equity 1,849,847 1,616,272 Total liabilities and stockholders' equity $ 1,905,632 $ 1,699,295 CONDENSED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2025, 2024, and 2023. (In Thousands) 2025 2024 2023 Income: Dividends received from subsidiary $ 109,500 $ 71,887 $ 62,500 Other income 65 92 44 Total income 109,565 71,979 62,544 Expense: Other expenses 2,947 2,683 2,829 Total expenses 2,947 2,683 2,829 Equity in undistributed earnings of subsidiary 169,923 157,884 147,076 Net income 276,541 227,180 206,791 Dividends on preferred stock - - - Net income available to common stockholders $ 276,541 $ 227,180 $ 206,791 94 STATEMENTS OF CASH FLOW FOR THE YEARS ENDED DECEMBER 31, 2025, 2024, and 2023. (In Thousands) 2025 2024 2023 Operating activities Net income $ 276,541 $ 227,180 $ 206,791 Adjustments to reconcile net income to net cash provided by operating activities: Other 168 ( 1,311 ) 2,230 Equity in undistributed earnings of subsidiary ( 169,923 ) ( 157,887 ) ( 147,076 ) Net cash provided by operating activities 106,786 67,982 61,945 Investing activities Other - - ( 300 ) Net cash used in investing activities - - ( 300 ) Financing activities Redemption of subordinated notes ( 30,000 ) - - Dividends paid on common stock ( 73,165 ) ( 65,412 ) ( 60,923 ) Net cash used in financing activities ( 103,165 ) ( 65,412 ) ( 60,923 ) Net change in cash and cash equivalents 3,621 2,570 722 Cash and cash equivalents at beginning of year 22,584 20,014 19,292 Cash and cash equivalents at end of year $ 26,205 $ 22,584 $ 20,014 NOTE 22. SEGMENT REPORTING The Bank’s revenue is primarily derived from the business of banking. The Bank’s financial performance is monitored on consolidated basis by senior management, which is considered to be the Bank’s CODM. Senior Management includes the following officers of the Company: Chairman of the Board and Chief Executive Officer; President; Executive Vice President, Chief Financial Officer; Executive Vice President, Chief Operating Officer. Financial performance is reported to the CODM monthly, and the primary measure of performance is net income, net interest income, non-interest income, significant expenses and budget to actual results, and provides guidance in strategy and the allocation of resources. The allocation of resources throughout the Bank is based on consolidated profitability and efficiency metrics. The presentation of financial performance to the CODM is consistent with amounts and financial statement line items shown in the Bank’s consolidated balance sheets and consolidated statements of income. Additionally, the Bank’s significant expenses are adequately segmented by category and amount in the consolidated statements of income to include all significant items when considering both qualitative and quantitative factors. Significant expenses of the Company include salaries and employee benefits, equipment and occupancy expense, third-party processing and other services, and professional services. All of the Bank’s financial results are similar and considered by management to be aggregated into one reportable operating segment. While the Company has assigned certain management responsibilities by region and business line, the Bank’s CODM evaluates financial performance on a Bank-wide basis. The majority of the Bank’s revenue is from the business of banking, and the Bank’s regions have similar economic characteristics, products, services and customers. Accordingly, all of the Bank’s operations are considered by management to be aggregated in one reportable operating segment. Because we report on a single segment basis, our financial statements may not be directly comparable to financial institutions that present multiple reportable segments. Should future organizational changes in our management structure or business model necessitate more detailed segment disclosures, we will revise our segment reporting accordingly. As of the date of these consolidated financial statements, no such changes have occurred, and management continues to evaluate performance on a consolidated entity basis. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. There were no disagreements with accountants regarding accounting and financial disclosure matters during the year ended December 31, 2025.