SIMMONS FIRST NATIONAL CORP 10-K

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Liquidity and Market Risk Management Parent Company The Company has leveraged its investment in Simmons Bank and depends upon the dividends paid to it, as the sole shareholder of Simmons Bank, as a principal source of funds for dividends to shareholders, stock repurchases and debt service requirements. At December 31, 2024, undivided profits of Simmons Bank were approximately $550.4 million, none of which were available for the payment of dividends to the Company without regulatory approval. In addition to dividends, other sources of liquidity for the Company are the sale of equity securities and the borrowing of funds. Subsidiary Bank Generally speaking, Simmons Bank relies upon net inflows of cash from financing activities, supplemented by net inflows of cash from operating activities, to provide cash used in investing activities. Typical of most banking companies, significant financing activities include: deposit gathering; use of short-term borrowing facilities, such as federal funds purchased and repurchase agreements; and the issuance of long-term debt. The subsidiary bank’s primary investing activities include loan originations and purchases of investment securities, offset by loan payoffs and investment cash flows and maturities. Liquidity represents an institution’s ability to provide funds to satisfy demands from depositors and borrowers by either converting assets into cash or accessing new or existing sources of incremental funds. A major responsibility of management is to maximize net interest income within prudent liquidity constraints. Internal corporate guidelines have been established to constantly measure liquid assets as well as relevant ratios concerning earning asset levels and purchased funds. The management and Board of Directors of the subsidiary bank monitor these same indicators and makes adjustments as needed. 66 Liquidity Management The objective of our liquidity management is to access adequate sources of funding to ensure that cash flow requirements of depositors and borrowers are met in an orderly and timely manner. Sources of liquidity are managed so that reliance on any one funding source is kept to a minimum. Our liquidity sources are prioritized for both availability and time to activation. Our liquidity is a primary consideration in determining funding needs and is an integral part of asset/liability management. Pricing of the liability side is a major component of interest margin and spread management. Adequate liquidity is a necessity in addressing this critical task. There are seven primary and secondary sources of liquidity available to the Company. The particular liquidity need and timeframe determine the use of these sources. The first source of liquidity available to the Company is federal funds. Federal funds are available on a daily basis and are used to meet the normal fluctuations of a dynamic balance sheet. As of December 31, 2024, the Bank had approximat ely $435.0 million in f ederal funds lines of credit from upstream correspondent banks that can be accessed, if and when needed. In order to ensure availability of these upstream funds we test these borrowing lines at least annually. Historical monitoring of these funds has made it possible for us to project seasonal fluctuations and structure our funding requirements on a month-to-month basis. Second, Simmons Bank has lines of credit available with the Federal Home Loan Bank. While we use portions of those lines to match off longer-term mortgage loans, we also use those lines to meet liquidity needs. Approximately $4.72 billion of these lines of credit are currently available, if needed, for liquidity. A third source of liquidity is that we have the ability to access large wholesale deposits from both the public and private sector to fund short-term liquidity needs. A fourth source of liquidity is the retail deposits available through our network of financial centers throughout Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas. Although this method can be a somewhat more expensive alternative to supplying liquidity, this source can be used to meet intermediate term liquidity needs. Fifth, we use a laddered investment portfolio that ensures there is a steady source of intermediate term liquidity. These funds can be used to meet seasonal loan patterns and other intermediate term balance sheet fluctuations. Approximately 41.0% of the investment portfolio is classified as available-for-sale, and we may generate additional liquidity through opportunistic sales of investment securities. We also use securities held in the securities portfolio to pledge when obtaining public funds. Sixth, we have a network of downstream correspondent banks from which we can access debt to meet liquidity needs. Finally, we have the ability to access funds through the Federal Reserve Bank Discount Window. We believe these various sources of available liquidity are sufficient for short-term, intermediate-term and long-term liquidity. Market Risk Management Market risk arises from changes in interest rates. We have risk management policies to monitor and limit exposure to market risk. In asset and liability management activities, policies designed to minimize structural interest rate risk are in place. The measurement of market risk associated with financial instruments is meaningful only when all related and offsetting on- and off-balance-sheet transactions are aggregated, and the resulting net positions are identified. 67 Interest Rate Sensitivity Interest rate risk represents the potential impact of interest rate changes on net income and capital resulting from mismatches in repricing opportunities of assets and liabilities over a period of time. A number of tools are used to monitor and manage interest rate risk, including simulation models and interest sensitivity gap analysis. Management uses simulation models to estimate the effects of changing interest rates and various balance sheet strategies on the level of the Company’s net income and capital. As a means of limiting interest rate risk to an acceptable level, management may alter the mix of floating and fixed-rate assets and liabilities, change pricing schedules, manage investment maturities during future security purchases, or enter into derivative contracts such as interest rate swaps. The simulation model incorporates management’s assumptions regarding the level of interest rates or balance changes for indeterminate maturity deposits for a given level of market rate changes. These assumptions have been developed through anticipated pricing behavior. Key assumptions in the simulation models include the relative timing of prepayments, cash flows and maturities. These assumptions are inherently uncertain and, as a result, the model cannot precisely estimate net interest income or precisely predict the impact of a change in interest rates on net income or capital. Actual results will differ from simulated results due to the timing, magnitude and frequency of interest rate changes and changes in market conditions and management strategies, among other factors. As of December 31, 2024, the model simulations projected that 100 and 200 basis point increases in interest rates would result in negative variances in net interest income of 1.70% and 3.78%, respectively, relative to the base case over the next 12 months. Interest rate decreases of 100 and 200 basis points would result in positive variances in net interest income of 0.89% and 1.81%, respectively, relative to the base case over the next 12 months. These results reflect a liability-sensitive balance sheet and are consistent with the Company’s shift toward short-term funding combined with relatively little change in the mix of interest-earning assets. These are good faith estimates and assume that the composition of our interest sensitive assets and liabilities existing at each year-end will remain constant over the relevant twelve month measurement period and that changes in market interest rates are instantaneous and sustained across the yield curve regardless of duration of pricing characteristics of specific assets or liabilities. Also, this analysis does not contemplate any actions that we might undertake in response to changes in market interest rates. We believe these estimates are not necessarily indicative of what actually could occur in the event of immediate interest rate increases or decreases of this magnitude. As interest-bearing assets and liabilities reprice in different time frames and proportions to market interest rate movements, various assumptions must be made based on historical relationships of these variables in reaching any conclusion. Since these correlations are based on competitive and market conditions, we anticipate that our future results will likely be different from the foregoing estimates, and such differences could be material. The table below presents our sensitivity to net interest income at December 31, 2024. Table 24: Net Interest Income Sensitivity Interest Rate Scenario % Change from Base Up 200 basis points (3.78) % Up 100 basis points (1.70) % Down 100 basis points 0.89 % Down 200 basis points 1.81 % 68 ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX Management’s Report on Internal Control Over Financial Reporting 70 Report of Independent Registered Public Accounting Firm (PCAOB ID 686 ) Report on Internal Control Over Financial Reporting 71 Report on Consolidated Financial Statements 72 Consolidated Balance Sheets, December 31, 2024 and 2023 74 Consolidated Statements of Income, Years Ended December 31, 2024, 2023 and 2022 75 Consolidated Statements of Comprehensive Income, Years Ended December 31, 2024, 2023 and 2022 76 Consolidated Statements of Cash Flows, Years Ended December 31, 2024, 2023 and 2022 77 Consolidated Statements of Stockholders’ Equity, Years Ended December 31, 2024, 2023 and 2022 78 Notes to Consolidated Financial Statements, December 31, 2024, 2023 and 2022 79 69 Management’s Report on Internal Control Over Financial Reporting The management of Simmons First National Corporation (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of the Company’s financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Accordingly, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth in Internal Control – Integrated Framework (2013 edition) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO ). Based on this assessment, management has determined that the Company’s internal control over financial reporting as of December 31, 2024 is effective based on the specified criteria. Forvis Mazars, LLP, the independent registered public accounting firm that audited the consolidated financial statements of the Company included in this Annual Report on Form 10-K, has issued an audit report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024. The report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024, immediately follows. 70 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders, Board of Directors and Audit Committee Simmons First National Corporation Pine Bluff, Arkansas Opinion on the Internal Control over Financial Reporting We have audited Simmons First National Corporation’s (the Company) internal control over financial reporting as of December 31, 2024, 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, 2024, 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, 2024 and 2023, and for each of the three years in the period ended December 31, 2024, and our report dated February 27, 2025, expressed an unqualified opinion on those consolidated 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 Reporting 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. Forvis Mazars, LLP /s/ Forvis Mazars, LLP Little Rock, Arkansas February 27, 2025 71 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders, Board of Directors and Audit Committee Simmons First National Corporation Pine Bluff, Arkansas Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Simmons First National Corporation (the “Company”) as of December 31, 2024 and 2023, 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, 2024, and the related notes (“financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, 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, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated February 27, 2025, 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 Matters The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Allowance for Credit Losses The Company’s loan portfolio totaled $17.01 billion as of December 31, 2024 and the allowance for credit losses on loans was $235.0 million. As more fully described in Notes 1 and 4 to the Company’s consolidated financial statements, for loans receivable, the Allowance for Credit Loss (ACL) is a contra-asset valuation account, calculated in accordance with Topic 326 that is deducted from the amortized cost basis of loans to present the net amount expected to be collected. 72 The amount of each allowance account represents management’s best estimate of current expected credit losses on those financial instruments considering all available information from internal and external sources, relevant to assessing exposure to credit loss over the contractual term of the instrument. Loans with similar risk characteristics are aggregated into homogenous segments for assessment. Expected credit losses are estimated by either lifetime loss rates or expected cash flows based on three key parameters: probability of default (PD), exposure-at-default (EAD) or loss given default (LGD). The estimates include economic forecasts over the reasonable and supportable forecast period based on projected performance of economic variables that have a statistical relationship. Management qualitatively adjusts its model results for risk factors that were not considered within the modeling processes but were still relevant in assessing the expected credit losses within the loan pools. In some cases, management determined that an individual loan exhibited unique characteristics which differentiated the loan from other loans with the identified loan pools. In such cases the loans were evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Auditing management’s estimate of the ACL involved a high degree of subjectivity due to management’s identification and measurement of the qualitative factor adjustments being highly judgmental. The primary procedures we performed as of December 31, 2024 to address this critical audit matter included: • Obtained an understanding of the Company’s process for establishing the qualitative adjustment. • Evaluated and tested the design and operating effectiveness of controls over the establishment of qualitative factors. • Evaluated the qualitative adjustments to the ACL including assessing the basis for adjustments and the reasonableness of the significant assumptions. • Evaluated credit quality trends in delinquencies, non-accruals and charge-offs. Goodwill As reflected in the Company’s consolidated financial statements at December 31, 2024, the Company’s goodwill was $1.32 billion. As disclosed in Note 7 to the consolidated financial statements, goodwill is tested for impairment at least annually or more frequently if indicators of impairment require the performance of an interim impairment assessment. Auditing management’s impairment tests of goodwill was complex and highly judgmental due to the calculation relying on several assumptions that have a level of subjectivity and judgment. These assumptions are dependent on market and economic conditions. Key inputs to estimate terminal fair value of the Company include projected forecasts, noninterest expense savings and a pricing multiple based on a group of peer banks with similar characteristics. We obtained an understanding, evaluated the design and operating effectiveness of controls over the Company’s goodwill assessment process. For example, we tested the controls over the Company’s review of the significant assumptions utilized in estimating the fair value of the reporting unit. To test the fair values of the reporting unit, our audit procedures included, among others, assessing methodologies, testing the significant assumptions described above, and testing the completeness and accuracy of the underlying data used by the Company. Our testing procedures over the significant assumptions included, among others, comparing forecasted revenue to current industry and economic trends. We assessed the historical accuracy of management’s estimates by comparing past projections to actual performance and assessed the sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the reporting unit resulting from changes in the assumptions. We also involved an internal valuation professional to assist in evaluating the Company’s models, valuation methodology, and significant assumptions used in the fair value estimates. Forvis Mazars, LLP /s/ Forvis Mazars, LLP We have served as the Company’s auditor since 1972. Little Rock, Arkansas February 27, 2025 73 Simmons First National Corporation Consolidated Balance Sheets December 31, 2024 and 2023 (In thousands, except share data) 2024 2023 ASSETS Cash and noninterest bearing balances due from banks $ 429,705 $ 345,258 Interest bearing balances due from banks and federal funds sold 257,672 268,834 Cash and cash equivalents 687,377 614,092 Interest bearing balances due from banks – time 100 100 Investment securities: Held-to-maturity, net of allowance for credit losses of $ 3,214 at December 31, 2024 and 2023 3,636,636 3,726,288 Available-for-sale, at estimated fair value (amortized cost of $ 2,852,774 and $ 3,509,709 at December 31, 2024 and 2023, respectively) 2,529,426 3,152,153 Total investments 6,166,062 6,878,441 Mortgage loans held for sale 11,417 9,373 Loans 17,005,937 16,845,670 Allowance for credit losses on loans ( 235,019 ) ( 225,231 ) Net loans 16,770,918 16,620,439 Premises and equipment 585,431 570,678 Foreclosed assets and other real estate owned 9,270 4,073 Interest receivable 123,243 122,430 Bank owned life insurance 531,805 500,559 Goodwill 1,320,799 1,320,799 Other intangible assets 97,242 112,645 Other assets 572,385 592,045 Total assets $ 26,876,049 $ 27,345,674 LIABILITIES AND STOCKHOLDERS’ EQUITY Deposits: Noninterest bearing transaction accounts $ 4,460,517 $ 4,800,880 Interest bearing transaction accounts and savings deposits 10,982,022 10,997,425 Time deposits 6,443,211 6,446,673 Total deposits 21,885,750 22,244,978 Federal funds purchased and securities sold under agreements to repurchase 37,109 67,969 Other borrowings 745,372 972,366 Subordinated notes and debentures 366,293 366,141 Accrued interest and other liabilities 312,653 267,732 Total liabilities 23,347,177 23,919,186 Stockholders’ equity: Common stock, Class A, $ 0.01 par value; 350,000,000 shares authorized at December 31, 2024 and 2023; 125,651,540 and 125,184,119 shares issued and outstanding at December 31, 2024 and 2023, respectively 1,257 1,252 Surplus 2,511,590 2,499,930 Undivided profits 1,376,935 1,329,681 Accumulated other comprehensive loss ( 360,910 ) ( 404,375 ) Total stockholders’ equity 3,528,872 3,426,488 Total liabilities and stockholders’ equity $ 26,876,049 $ 27,345,674 See Notes to Consolidated Financial Statements. 74 Simmons First National Corporation Consolidated Statements of Income Years Ended December 31, 2024, 2023 and 2022 (In thousands, except per share data) 2024 2023 2022 INTEREST INCOME Loans, including fees $ 1,083,093 $ 989,196 $ 694,192 Interest bearing balances due from banks and federal funds sold 11,808 13,490 5,500 Investment securities 216,433 206,918 158,203 Mortgage loans held for sale 731 557 720 Other loans held for sale — — 3,120 TOTAL INTEREST INCOME 1,312,065 1,210,161 861,735 INTEREST EXPENSE Deposits 600,240 472,919 99,049 Federal funds purchased and securities sold under agreements to repurchase 602 1,150 941 Other borrowings 55,127 60,517 24,934 Subordinated notes and debentures 27,631 25,449 19,495 TOTAL INTEREST EXPENSE 683,600 560,035 144,419 NET INTEREST INCOME 628,465 650,126 717,316 Provision for credit losses 46,785 42,028 14,074 NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 581,680 608,098 703,242 NONINTEREST INCOME Service charges on deposit accounts 49,898 50,530 46,527 Debit and credit card fees 32,875 31,472 31,203 Wealth management fees 32,806 30,203 31,895 Mortgage lending income 8,077 7,733 10,522 Bank owned life insurance income 15,227 11,717 11,146 Other service charges and fees 9,188 9,122 7,616 Loss on sale of securities, net ( 28,393 ) ( 20,609 ) ( 278 ) Gain on insurance settlement — — 4,074 Other income 27,493 35,398 27,361 TOTAL NONINTEREST INCOME 147,171 155,566 170,066 NONINTEREST EXPENSE Salaries and employee benefits 284,124 286,117 286,982 Occupancy expense, net 48,214 46,741 44,321 Furniture and equipment expense 22,047 20,741 20,665 Other real estate and foreclosure expense 700 892 1,003 Deposit insurance 23,938 29,986 11,608 Merger related costs — 1,420 22,476 Other operating expenses 178,520 177,164 179,693 TOTAL NONINTEREST EXPENSE 557,543 563,061 566,748 INCOME BEFORE INCOME TAXES 171,308 200,603 306,560 Provision for income taxes 18,615 25,546 50,148 NET INCOME $ 152,693 $ 175,057 $ 256,412 BASIC EARNINGS PER SHARE $ 1.22 $ 1.39 $ 2.07 DILUTED EARNINGS PER SHARE $ 1.21 $ 1.38 $ 2.06 See Notes to Consolidated Financial Statements. 75 Simmons First National Corporation Consolidated Statements of Comprehensive Income Years Ended December 31, 2024, 2023 and 2022 (In thousands) 2024 2023 2022 NET INCOME $ 152,693 $ 175,057 $ 256,412 OTHER COMPREHENSIVE INCOME (LOSS) Unrealized holding gains (losses) arising during the period on available-for-sale securities 7,475 108,612 ( 593,010 ) Less: Reclassification adjustment for realized losses included in net income ( 28,393 ) ( 20,609 ) ( 278 ) Less: Realized gains (losses) on available-for-sale securities interest rate hedges 834 1,960 ( 98,374 ) Net unrealized losses on securities transferred from available-for-sale to held-to-maturity during the period — — ( 206,682 ) Less: Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity ( 23,810 ) ( 25,971 ) ( 14,632 ) Other comprehensive income (loss), before tax effect 58,844 153,232 ( 686,408 ) Less: Tax effect of other comprehensive income (loss) 15,379 40,047 ( 179,393 ) TOTAL OTHER COMPREHENSIVE INCOME (LOSS) 43,465 113,185 ( 507,015 ) COMPREHENSIVE INCOME (LOSS) $ 196,158 $ 288,242 $ ( 250,603 ) See Notes to Consolidated Financial Statements. 76 Simmons First National Corporation Consolidated Statements of Cash Flows Years Ended December 31, 2024, 2023 and 2022 (In thousands) 2024 2023 2022 OPERATING ACTIVITIES Net income $ 152,693 $ 175,057 $ 256,412 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 46,116 47,877 48,962 Provision for credit losses 46,785 42,028 14,074 Loss on sale of investments 28,393 20,609 278 Net amortization (accretion) of investment securities and assets 16,605 14,982 ( 39,031 ) Net amortization on borrowings 152 152 313 Stock-based compensation expense 11,290 12,189 15,317 Gain on sale of foreclosed assets and other real estate owned ( 928 ) ( 182 ) ( 390 ) Gain on sale of mortgage loans held for sale ( 8,302 ) ( 7,981 ) ( 16,699 ) Loss (gain) on sale of loans 234 — ( 282 ) Deferred income taxes ( 3,233 ) ( 2,460 ) 14,933 Income from bank owned life insurance ( 15,578 ) ( 12,905 ) ( 11,164 ) Loss from early retirement of TruPS — — 365 Originations of mortgage loans held for sale ( 277,450 ) ( 262,901 ) ( 497,815 ) Proceeds from sale of mortgage loans held for sale 283,708 264,995 547,384 Changes in assets and liabilities: Interest receivable ( 813 ) ( 19,538 ) ( 22,107 ) Other assets 101,288 263,969 ( 7,214 ) Accrued interest and other liabilities 53,195 ( 3,908 ) 10,417 Income taxes payable ( 8,231 ) 8,996 8,445 Net cash provided by operating activities 425,924 540,979 322,198 INVESTING ACTIVITIES Net change in loans ( 214,188 ) ( 786,775 ) ( 1,900,325 ) Proceeds from sale of loans 13,044 69,760 73,746 Decrease in due from banks - time — 695 1,087 Purchases of premises and equipment, net ( 45,509 ) ( 33,086 ) ( 35,268 ) Proceeds from sale of foreclosed assets and other real estate owned 5,428 2,071 4,754 Proceeds from sale of available-for-sale securities 251,517 247,948 — Proceeds from maturities of available-for-sale securities 300,466 302,802 1,137,923 Purchases of available-for-sale securities ( 7,071 ) ( 7,518 ) ( 261,375 ) Proceeds from maturities of held-to-maturity securities 81,488 85,192 86,229 Purchases of held-to-maturity securities — ( 68,368 ) ( 331,273 ) Proceeds from bank owned life insurance death benefits 1,376 3,686 1,873 Purchases of bank owned life insurance ( 24,528 ) — — Surrender of bank owned life insurance 7,484 — — Cash received in business combinations, net — — 276,396 Net cash provided by (used in) investing activities 369,507 ( 183,593 ) ( 946,233 ) FINANCING ACTIVITIES Net change in deposits ( 359,228 ) ( 302,747 ) 462,530 Proceeds from issuance of other borrowed funds 3,375,000 3,725,000 1,160,000 Repayments of other borrowed funds ( 3,601,994 ) ( 3,611,930 ) ( 1,676,726 ) Repayments of subordinated debentures — — ( 56,189 ) Dividends paid on common stock ( 105,439 ) ( 100,962 ) ( 94,096 ) Net change in federal funds purchased and securities sold under agreements to repurchase ( 30,860 ) ( 92,434 ) ( 25,000 ) Net shares cancelled under stock compensation plans ( 595 ) ( 2,854 ) ( 5,033 ) Shares issued under employee stock purchase plan 970 833 1,151 Repurchase of common stock — ( 40,322 ) ( 111,133 ) Net cash used in financing activities ( 722,146 ) ( 425,416 ) ( 344,496 ) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 73,285 ( 68,030 ) ( 968,531 ) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 614,092 682,122 1,650,653 CASH AND CASH EQUIVALENTS, END OF YEAR $ 687,377 $ 614,092 $ 682,122 See Notes to Consolidated Financial Statements. 77 Simmons First National Corporation Consolidated Statements of Stockholders’ Equity Years Ended December 31, 2024, 2023 and 2022 (In thousands, except share data) Common Stock Surplus Accumulated Other Comprehensive Income (Loss) Undivided Profits Total Balance, December 31, 2021 $ 1,127 $ 2,164,989 $ ( 10,545 ) $ 1,093,270 $ 3,248,841 Comprehensive income — — ( 507,015 ) 256,412 ( 250,603 ) Stock issued for employee stock purchase plan – 59,475 shares 1 1,150 — — 1,151 Stock-based compensation plans, net – 429,423 shares 3 10,281 — — 10,284 Stock issued for Spirit acquisition - 18,275,074 shares 183 464,735 — — 464,918 Stock repurchases - 4,432,762 shares ( 44 ) ( 111,089 ) — — ( 111,133 ) Dividends on common stock – $ 0.76 per share — — — ( 94,096 ) ( 94,096 ) Balance, December 31, 2022 1,270 2,530,066 ( 517,560 ) 1,255,586 3,269,362 Comprehensive income — — 113,185 175,057 288,242 Stock issued for employee stock purchase plan - 42,510 shares — 833 — — 833 Stock-based compensation plans, net - 352,004 shares 5 9,330 — — 9,335 Stock repurchases - 2,257,049 shares ( 23 ) ( 40,299 ) — — ( 40,322 ) Dividends on common stock - $ 0.80 per share — — — ( 100,962 ) ( 100,962 ) Balance, December 31, 2023 1,252 2,499,930 ( 404,375 ) 1,329,681 3,426,488 Comprehensive income — — 43,465 152,693 196,158 Stock issued for employee stock purchase plan - 53,161 shares — 970 — — 970 Stock-based compensation plans, net - 414,435 shares 5 10,690 — — 10,695 Dividends on common stock – $ 0.84 per share — — — ( 105,439 ) ( 105,439 ) Balance, December 31, 2024 $ 1,257 $ 2,511,590 $ ( 360,910 ) $ 1,376,935 $ 3,528,872 See Notes to Consolidated Financial Statements. 78 Simmons First National Corporation Notes to Consolidated Financial Statements NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations and Principles of Consolidation Simmons First National Corporation (“Company”) is a Mid-South financial holding company headquartered in Pine Bluff, Arkansas, and the parent company of Simmons Bank, an Arkansas state-chartered bank that has been in operation since 1903 (“Simmons Bank” or the “Bank”). Simmons First Insurance Services, Inc. and Simmons First Insurance Services of TN, LLC are wholly-owned subsidiaries of Simmons Bank and are insurance agencies that offer various lines of personal and corporate insurance coverage to individual and commercial customers. The Company, through its subsidiaries, offers, among other things, consumer, real estate and commercial loans; checking, savings and time deposits; and specialized products and services (such as credit cards, trust and fiduciary services, investments, agricultural finance lending, equipment lending, insurance and Small Business Administration (“SBA”) lending) from approximately 222 financial centers as of December 31, 2024, located throughout market areas in Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas. The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation. Simmons Bank is an Arkansas state-chartered bank and a member of the Federal Reserve System through the Federal Reserve Bank of St. Louis. Due to the Company’s typical acquisition process, there may be brief periods of time during which the Company may operate another subsidiary bank that the Company acquired through a merger with a target bank holding company as a separate subsidiary while preparing for the merger and integration of that subsidiary bank into Simmons Bank. However, it is the Company’s intent to generally maintain Simmons Bank as the Company’s sole subsidiary bank. Operating Segments Operating segments are components of an enterprise about which separate financial information is available that is regularly evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company is organized with community and commercial banking groups. Each of these groups provide one or more similar banking services, including such products and services as loans; time deposits, checking and savings accounts; treasury management; and credit cards. Loan products include consumer, real estate, commercial, agricultural, equipment, warehouse lending and SBA lending. The individual banking groups have similar operating and economic characteristics. While the chief operating decision maker monitors the revenue streams of the various products, services, branch locations, divisions and groups, operations are managed, financial performance is evaluated, and management makes decisions on how to allocate resources, on a Company-wide basis. Accordingly, the respective groups are considered by management to be aggregated into one reportable operating segment. The Company also considers its wealth group, which provides trust and investment services, as well as insurance services, to be operating segments. Information on these segments is not reported separately since they do not meet the quantitative thresholds under Accounting Standards Codification (“ASC”) Topic 280-10-50-12, and, as a result, are reported within “Other” in the following tables. The Company’s chief operating decision maker (“CODM”) is the chief executive officer. The CODM evaluates the performance of the Company’s reportable operating segments using net interest income and net income. The CODM analyzes on the spread between interest revenue and interest expense (net interest income) to assess performance and to allocate operating and capital resources. Therefore, interest revenue is presented net of interest expense. Additionally, the CODM reviews budgeted net income versus actual net income of the Company to allocate resources to meet the Company’s strategic objectives. 79 The following table provides a summary of the Company’s reportable operating segment results as of or for the years ended December 31, 2024, 2023 and 2022. (In thousands) Community and Commercial Banking Other Consolidated December 31, 2024 Net interest income $ 627,698 $ 767 $ 628,465 Noninterest income 109,701 37,470 147,171 Total net revenue 737,399 38,237 775,636 Noninterest expense: Salaries and employee benefits 265,610 18,514 284,124 Occupancy expense, net 46,373 1,841 48,214 Furniture and equipment expense 22,045 2 22,047 Deposit insurance 23,938 — 23,938 Other operating expenses (1) 173,295 5,925 179,220 Total noninterest expense 531,261 26,282 557,543 Income before provision for credit losses and income taxes 206,138 11,955 218,093 Provision for credit losses 46,785 — 46,785 Income tax expense 18,530 85 18,615 Net income $ 140,823 $ 11,870 $ 152,693 Assets as of December 31, 2024 $ 26,870,061 $ 5,988 $ 26,876,049 December 31, 2023 Net interest income $ 650,928 $ ( 802 ) $ 650,126 Noninterest income 120,567 34,999 155,566 Total net revenue 771,495 34,197 805,692 Noninterest expense: Salaries and employee benefits 268,300 17,817 286,117 Occupancy expense, net 46,712 29 46,741 Furniture and equipment expense 20,740 1 20,741 Deposit insurance 29,986 — 29,986 Other operating expenses (1) 173,480 5,996 179,476 Total noninterest expense 539,218 23,843 563,061 Income before provision for credit losses and income taxes 232,277 10,354 242,631 Provision for credit losses 42,028 — 42,028 Income tax expense 25,451 95 25,546 Net income $ 164,798 $ 10,259 $ 175,057 Assets as of December 31, 2023 $ 27,338,690 $ 6,984 $ 27,345,674 80 (In thousands) Community and Commercial Banking Other Consolidated December 31, 2022 Net interest income $ 717,316 $ — $ 717,316 Noninterest income 136,820 33,246 170,066 Total net revenue 854,136 33,246 887,382 Noninterest expense: Salaries and employee benefits 268,817 18,165 286,982 Occupancy expense, net 44,296 25 44,321 Furniture and equipment expense 20,642 23 20,665 Deposit insurance 11,608 — 11,608 Other operating expenses (1) 196,875 6,297 203,172 Total noninterest expense 542,238 24,510 566,748 Income before provision for credit losses and income taxes 311,898 8,736 320,634 Provision for credit losses 14,074 — 14,074 Income tax expense 50,065 83 50,148 Net income $ 247,759 $ 8,653 $ 256,412 Assets as of December 31, 2022 $ 27,453,130 $ 7,931 $ 27,461,061 _________________________ (1) Other operating expenses primarily include professional services, marketing, software and technology, amortization of intangibles and other general operating expenses. Use of Estimates The preparation of financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income items and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in the accompanying consolidated financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the date of the consolidated financial statements and actual results may differ from these estimates. Such estimates include, but are not limited to, the Company’s allowance for credit losses. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses, the valuation of acquired loans, valuation of goodwill and subsequent impairment analysis, stock-based compensation plans and income taxes. Management obtains third party valuations to assist in valuing certain aspects of these material estimates, as appropriate, including independent appraisals for significant properties in connection with the determination of the allowance for credit losses and the fair value of acquired loans. Assumptions used in the goodwill impairment analysis involve internally projected forecasts, coupled with market and third-party data. These material estimates could change as a result of the uncertainty in current macroeconomic conditions and other factors that are beyond the Company’s control and could cause actual results to differ materially from those projected. Reclassifications Various items within the accompanying consolidated financial statements for previous years have been reclassified to provide more comparative information. These reclassifications were not material to the consolidated financial statements. Cash Equivalents The Company considers all liquid investments with original maturities of three months or less to be cash equivalents. For purposes of the consolidated statements of cash flows, cash and cash equivalents are considered to include cash and noninterest bearing balances due from banks, interest bearing balances due from banks and federal funds sold and securities purchased under agreements to resell. At December 31, 2024, nearly all of the interest-bearing and noninterest bearing deposits were uninsured with nearly all of these balances held at the Federal Reserve Bank. 81 Investment Securities Held-to-maturity securities (“HTM”), which include any security for which the Company has the positive intent and ability to hold until maturity, are carried at historical cost adjusted for amortization of premiums and accretion of discounts. Premiums and discounts are amortized and accreted, respectively, to interest income using the constant effective yield method over the estimated life of the security. Prepayments are anticipated for mortgage-backed and SBA securities. Premiums on callable securities are amortized to their earliest call date. Available-for-sale securities (“AFS”), which include any security for which the Company has no immediate plan to sell but which may be sold in the future, are carried at fair value. Realized gains and losses, based on specifically identified amortized cost of the individual security, are included in other income. Unrealized gains and losses are recorded, net of related income tax effects, in stockholders’ equity. Premiums and discounts are amortized and accreted, respectively, to interest income using the constant effective yield method over the estimated life of the security. Prepayments are anticipated for mortgage-backed and SBA securities. Premiums on callable securities are amortized to their earliest call date. Trading securities, if any, which include any security held primarily for near-term sale, are carried at fair value. Gains and losses on trading securities are included in other income. Allowance for Credit Losses - Investment Securities Allowance for Credit Losses - HTM Securities - The Company measures expected credit losses on HTM securities on a collective basis by major security type, with each type sharing similar risk characteristics. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Company has made the election to exclude accrued interest receivable on HTM securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. Allowance for Credit Losses - AFS Securities - For AFS securities in an unrealized loss position, the Company first evaluates whether it intends to sell, or whether it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of these criteria regarding intent or requirement to sell is met, the AFS security amortized cost basis is written down to fair value through income. If the criteria is not met, the Company is required to assess whether the decline in fair value has resulted from credit losses or noncredit-related factors. If the assessment indicates a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the 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 allowance for credit loss is recorded through income as a component of provision for credit loss expense. If the assessment indicates that a credit loss does not exist, the Company records the decline in fair value through other comprehensive income, net of related income tax effects. The Company has made the election to exclude accrued interest receivable on AFS securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of an AFS security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Mortgage Loans Held For Sale Mortgage Loans Held for Sale are carried at fair value which is determined on an aggregate basis. Adjustments to fair value are recognized monthly and reflected in earnings. The Company regularly sells mortgages into the capital markets to mitigate the effects of interest rate volatility during the period from the time an interest rate lock commitment (“IRLC”) is issued until the IRLC funds creating a mortgage loan held for sale and its subsequent sale into the secondary/capital markets. Loan sales are typically executed on a mandatory basis. Under a mandatory commitment, the Company agrees to deliver a specified dollar amount with predetermined terms by a certain date. Generally, the commitment is not loan specific, and any combination of loans can be delivered into the outstanding commitment provided the terms fall within the parameters of the commitment. Upon failure to deliver, the Company is subject to fees based on market movement. The IRLCs are derivative instruments; their fair values at December 31, 2024 and 2023 were not material. Gains and losses resulting from sales of mortgage loans are recognized when the respective loans are sold to correspondent lenders, investors or aggregators. Gains and losses are determined by the difference between the sale price and the carrying amount in the loans sold, net of discounts collected, or premiums paid. Hedge instruments are, likewise, carried at fair value and associated gains/losses are realized at time of settlement. 82 Loans Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-offs are reported at their amortized cost basis, which is the unpaid principal balance outstanding, net of unearned income, deferred loan fees and costs, premiums and discounts associated with acquisition date fair value adjustments on acquired loans, and any direct principal charge-offs. The Company has made a policy election to exclude accrued interest from the amortized cost basis of loans and report accrued interest separately from the related loan balance on the consolidated balance sheets. For loans amortized at cost, interest income is accrued based on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are deferred and amortized as a level yield adjustment over the respective term of the loan. The accrual of interest on loans, except on certain government guaranteed loans, is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past due status is based on contractual terms of the loan. In all cases, loans are placed on non-accrual or charged off at an earlier date if collection of principal or interest is considered doubtful. Discounts and premiums on purchased residential real estate loans are amortized to income using the interest method over the remaining period to contractual maturity, adjusted for anticipated prepayments. Discounts and premiums on purchased consumer loans are recognized over the expected lives of the loans using methods that approximate the interest method. Further information regarding accounting policies related to past due loans, non-accrual loans, and modifications to borrowers experiencing financial difficulty is presented in Note 4, Loans and Allowance for Credit Losses. Additionally, for discussion of the Company’s accounting for acquired loans, see Acquisition Accounting, Loans later in this section. Allowance for Credit Losses The allowance for credit losses is a reserve established through a provision for credit losses charged to expense which represents management’s best estimate of lifetime expected losses based on reasonable and supportable forecasts, quantitative factors, and other qualitative considerations. Loans with similar risk characteristics such as loan type, collateral type, and internal risk ratings are aggregated for collective assessment. The Company uses statistically-based models that leverage assumptions about current and future economic conditions throughout the contractual life of the loan. Expected credit losses are estimated by either lifetime loss rates or expected loss cash flows based on three key parameters: probability-of-default (“PD”), exposure-at-default (“EAD”), and loss-given-default (“LGD”). Future economic conditions are incorporated to the extent that they are reasonable and supportable. Beyond the reasonable and supportable periods, the economic variables revert to a historical equilibrium at a pace dependent on the state of the economy reflected within the economic scenarios. The Company also includes qualitative adjustments to the allowance based on factors and considerations that have not otherwise been fully accounted for. Loans that have unique risk characteristics are evaluated on an individual basis. These evaluations are typically performed on loans with a deteriorated internal risk rating. For a collateral-dependent loan, our evaluation process includes a valuation by appraisal or other collateral analysis adjusted for selling costs, when appropriate. This valuation is compared to the remaining outstanding principal balance of the loan. If a loss is determined to be probable, the loss is included in the allowance for credit losses as a specific allocation. Reserve for Unfunded Commitments In addition to the allowance for credit losses, the Company has established a reserve for unfunded commitments, classified in other liabilities, 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. This reserve is maintained at a level management believes to be sufficient to absorb losses arising from unfunded loan commitments. The adequacy of the reserve for unfunded commitments is determined quarterly based on methodology similar to the methodology for determining the allowance for credit losses. The allowance for credit loss is reported as a component of accrued interest and other liabilities in the consolidated balance sheets. Adjustments to the allowance are reported in the income statement as a component of the provision for credit losses. 83 Acquisition Accounting, Loans The Company accounts for its acquisitions under ASC Topic 805, Business Combinations , which requires the use of the acquisition method of accounting. All identifiable assets acquired, including loans, are recorded at fair value. The fair value for acquired loans at the time of acquisition is based on a variety of factors including discounted expected cash flows, adjusted for estimated prepayments and credit losses. In accordance with ASC 326, the fair value adjustment is recorded as premium or discount to the unpaid principal balance of each acquired loan. Loans that have been identified as having experienced a more-than-insignificant deterioration in credit quality since origination is a purchased credit deteriorated (“PCD”) loan. The net premium or discount on PCD loans is adjusted by the Company’s allowance for credit losses recorded at the time of acquisition. The remaining net premium or discount is accreted or amortized into interest income over the remaining life of the loan using a constant yield method. The net premium or discount on loans that are not classified as PCD (“non-PCD”), that includes credit and non-credit components, is accreted or amortized into interest income over the remaining life of the loan using a constant yield method. The Company then records the necessary allowance for credit losses on the non-PCD loans through provision for credit losses expense. For further discussion of the Company’s acquisition and loan accounting, see Note 2, Acquisitions, and Note 4, Loans and Allowance for Credit Losses. Trust Assets Trust assets (other than cash deposits) held by the Company in fiduciary or agency capacities for its customers are not included in the accompanying consolidated balance sheets since such items are not assets of the Company. Premises and Equipment Depreciable assets are stated at cost less accumulated depreciation. Depreciation is charged to expense using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are capitalized and amortized by the straight-line method over the terms of the respective leases or the estimated useful lives of the improvements, whichever is shorter. Right-of-use lease assets are operating leases with a term greater than one year and are included in premises and equipment. Foreclosed Assets Held For Sale Assets acquired by foreclosure or in settlement of debt and held for sale are valued at estimated fair value less estimated cost to sell as of the date of foreclosure. Management evaluates the value of foreclosed assets held for sale periodically and any decreases in the fair value are charged to other expense. Bank Owned Life Insurance The Company maintains bank-owned life insurance policies on certain current and former employees and directors, which are recorded at their cash surrender values as determined by the insurance carriers. The appreciation in the cash surrender value of the policies is recognized as a component of noninterest income in the Company’s consolidated statements of income. Goodwill and Intangible Assets Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. Other intangible assets represent purchased assets that also lack physical substance but can be separately distinguished from goodwill because of contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination with a related contract, asset or liability. The Company performs an annual goodwill impairment test, and more than annually if circumstances warrant, in accordance with ASC Topic 350, Intangibles – Goodwill and Other, as amended by Accounting Standards Update (“ASU”) 2011-08 - Testing Goodwill for Impairment . ASC Topic 350 requires that goodwill and intangible assets that have indefinite lives be reviewed for impairment annually, or more frequently if certain conditions occur. Intangible assets with finite lives are amortized over the estimated life of the asset, and are reviewed for impairment whenever events or changes in circumstances indicated that the carrying value may not be recoverable. Impairment losses on recorded goodwill, if any, will be recorded as operating expenses. 84 Derivative Financial Instruments The Company may enter into derivative contracts for the purposes of managing exposure to interest rate risk to meet the financing needs of its customers. A derivative instrument is a financial tool which derives its value from the value of some other financial instrument, or variable index, including certain hedging instruments embedded in other contracts. These products are primarily designed to reduce interest rate risk for either the Company or its customers who proactively manage these risks. The Company records all derivatives on the balance sheet at fair value. In an effort to meet the financing needs of its customers and mitigate the impact of changing interest rates on the fair value of AFS securities, the Company has entered into fair value hedges. Fair value hedges include interest rate swap agreements on fixed rate loans and fixed rate callable AFS securities. To qualify for hedge accounting, derivatives must be highly effective at reducing the risk associated with the exposure being hedged and must be designated as a hedge at the point of inception of the derivative contract. For derivatives designated as hedging the exposure to changes in the fair value of the hedged item, the gain or loss is recognized in earnings in the period of change together with the offsetting loss or gain of the hedging instrument. The fair value hedges are considered to be highly effective and any hedge ineffectiveness was deemed not material. Fair value adjustments related to cash flow hedges are recorded in other comprehensive income and are reclassified to earnings when the hedged transaction is reflected in earnings. Securities Sold Under Agreements to Repurchase The Company sells securities under agreements to repurchase to meet customer needs for sweep accounts. At the point funds deposited by customers become investable, those funds are used to purchase securities owned by the Company and held in its general account with the designation of Customers’ Securities. A third party maintains control over the securities underlying overnight repurchase agreements. The securities involved in these transactions are generally U.S. Treasury or Federal Agency issues. Securities sold under agreements to repurchase generally mature on the banking day following that on which the investment was initially purchased and are treated as collateralized financing transactions which are recorded at the amounts at which the securities were sold plus accrued interest. Interest rates and maturity dates of the securities involved vary and are not intended to be matched with funds from customers. Revenue from Contracts with Customers ASC Topic 606, Revenue from Contracts with Customers , applies to all contracts with customers to provide goods or services in the ordinary course of business. However, Topic 606 specifically does not apply to revenue related to financial instruments, guarantees, insurance contracts, leases, or nonmonetary exchanges. Given these scope exceptions, interest income recognition and measurement related to loans and investments securities, the Company’s two largest sources of revenue, are not accounted for under Topic 606. Also, the Company does not use Topic 606 to account for gains or losses on its investments in securities, loans, and derivatives due to the scope exceptions. Certain revenue streams, such as service charges on deposit accounts, gains or losses on the sale of Other Real Estate Owned (“OREO”), and trust income, fall under the scope of Topic 606 and the Company must recognize revenue at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. Topic 606 is applied using five steps: 1) identify the contract with the customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue when (or as) the entity satisfies a performance obligation. The Company has evaluated the nature of all contracts with customers that fall under the scope of Topic 606 and determined that further disaggregation of revenue from contracts with customers into categories was not necessary. There has not been significant revenue recognized in the current reporting periods resulting from performance obligations satisfied in previous periods. In addition, there has not been a significant change in timing of revenues received from customers. A description of performance obligations for each type of contract with customers is as follows: Service charges on deposit accounts – The Company’s primary source of funding comes from deposit accounts with its customers. Customers pay certain fees to access their cash on deposit including, but not limited to, non-transactional fees such as account maintenance, dormancy or statement rendering fees, and certain transaction-based fees such as ATM, wire transfer, overdraft or returned check fees. The Company generally satisfies its performance obligations as services are rendered. The transaction prices are fixed, and are charged either on a periodic basis or based on activity 85 Debit and credit card fees – These represent debit and credit card interchange fees, along with credit card fee income. The Company generally satisfies its performance obligations related to interchange and merchant fees as services are rendered. Periodic credit card fees, net of direct origination costs, are recognized as revenue on a straight-line basis over the period the fee entitles the cardholder to use the card. Sale of OREO – In the normal course of business, the Company will enter into contracts with customers to sell OREO, which has generally been foreclosed upon by the Company. The Company generally satisfies its performance obligation upon conveyance of property from the Company to the customer, generally by way of an executed agreement. The transaction price is fixed, and on occasion the Company will finance a portion of the proceeds the customers uses to purchase the property. These properties are generally sold without recourse or warranty. Wealth management fees – The Company enters into contracts with its customers to manage assets for investment, and/or transact on their accounts. The Company generally satisfies its performance obligations as services are rendered. The management fee is a fixed percentage-based fee calculated upon the average balance of assets under management and is charged to customers on a monthly basis. Income Taxes The Company accounts for income taxes in accordance with income tax accounting guidance in ASC Topic 740, Income Taxes . The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances and information available at the reporting date and is subject to management’s judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company files consolidated income tax returns with its subsidiaries. Earnings Per Share Basic earnings per share are computed based on the weighted average number of shares outstanding during each year. Diluted earnings per share are computed using the weighted average common shares and all potential dilutive common shares outstanding during the period. The computation of per share earnings is as follows: (In thousands, except per share data) 2024 2023 2022 Net income available to common stockholders $ 152,693 $ 175,057 $ 256,412 Average common shares outstanding 125,489 126,338 123,958 Average potential dilutive common shares 627 438 512 Average diluted common shares 126,116 126,776 124,470 Basic earnings per share $ 1.22 $ 1.39 $ 2.07 Diluted earnings per share $ 1.21 $ 1.38 $ 2.06 86 There were 322,750 and 410,490 stock options excluded from the years ended December 31, 2024 and 2023 earnings per share calculations, respectively, due to the related stock option exercise price exceeding the average market price of the Company’s stock. There were no stock options excluded from the earnings per share calculation for the year ended December 31, 2022 due to the related stock option exercise price exceeding the average market price of the Company’s stock. Stock-Based Compensation The Company has adopted various stock-based compensation plans. The plans provide for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance stock units and stock awards. Pursuant to the plans, shares are reserved for future issuance by the Company, upon exercise of stock options or awarding of performance or bonus shares granted to directors, officers and other key employees. In accordance with ASC Topic 718, Compensation – Stock Compensation , the fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model that uses various assumptions. This model requires the input of highly subjective assumptions, changes to which can materially affect the fair value estimate. For additional information, see Note 14, Employee Benefit Plans. NOTE 2: ACQUISITIONS Spirit of Texas Bancshares, Inc. On April 8, 2022, the Company completed its merger with Spirit of Texas Bancshares, Inc. (“Spirit”) pursuant to the terms of the Agreement and Plan of Merger dated as of November 18, 2021 (“Spirit Agreement”), at which time Spirit merged with and into the Company, with the Company continuing as the surviving corporation. The Company issued 18,275,074 shares of its common stock valued at approximately $ 464.9 million as of April 8, 2022, plus $ 1,393,508.90 in cash, in exchange for all outstanding shares of Spirit capital stock (and common stock equivalents) to effect the merger. Prior to the acquisition, Spirit, headquartered in Conroe, Texas, conducted banking business through its subsidiary bank, Spirit of Texas Bank SSB, from 35 branches located primarily in the Texas Triangle - consisting of Dallas-Fort Worth, Houston, San Antonio and Austin metropolitan areas - with additional locations in the Bryan-College Station, Corpus Christi and Tyler metropolitan areas, along with offices in North Central and South Texas. Including the effects of the acquisition method accounting adjustments, the Company acquired approximately $ 3.11 billion in assets, including approximately $ 2.29 billion in loans (inclusive of loan discounts), and approximately $ 2.72 billion in deposits. Goodwill of $ 174.1 million was recorded as a result of the transaction. The merger strengthened the Company’s position in the Texas market and brought forth additional opportunities in the Company’s current footprint, which gave rise to the goodwill recorded. The goodwill will not be deductible for tax purposes. A summary, at fair value, of the assets acquired and liabilities assumed in the Spirit acquisition, as of the acquisition date, is as follows: (In thousands) Acquired from Spirit Fair Value Adjustments Fair Value Assets Acquired Cash and due from banks $ 277,790 $ — $ 277,790 Investment securities 362,088 ( 13,401 ) 348,687 Loans acquired 2,314,085 ( 19,925 ) 2,294,160 Allowance for credit losses on loans ( 17,005 ) 7,382 ( 9,623 ) Premises and equipment 84,135 ( 19,074 ) 65,061 Bank owned life insurance 36,890 — 36,890 Goodwill 77,681 ( 77,681 ) — Core deposit and other intangible assets 6,245 32,386 38,631 Other assets 58,403 ( 3,411 ) 54,992 Total assets acquired $ 3,200,312 $ ( 93,724 ) $ 3,106,588 87 (In thousands) Acquired from Spirit Fair Value Adjustments Fair Value Liabilities Assumed Deposits: Noninterest bearing transaction accounts $ 825,228 $ ( 534 ) $ 824,694 Interest bearing transaction accounts and savings deposits 1,383,663 — 1,383,663 Time deposits 509,209 1,081 510,290 Total deposits 2,718,100 547 2,718,647 Other borrowings 37,547 503 38,050 Subordinated debentures 36,491 879 37,370 Accrued interest and other liabilities 23,667 ( 3,311 ) 20,356 Total liabilities assumed 2,815,805 ( 1,382 ) 2,814,423 Equity 384,507 ( 384,507 ) — Total equity assumed 384,507 ( 384,507 ) — Total liabilities and equity assumed $ 3,200,312 $ ( 385,889 ) $ 2,814,423 Net assets acquired 292,165 Purchase price 466,311 Goodwill $ 174,146 During 2023, the Company finalized its analysis of the loans acquired along with other acquired assets and assumed liabilities related to the Spirit acquisition. The Company’s operating results include the operating results of the acquired assets and assumed liabilities of Spirit subsequent to the acquisition date. Summary of Unaudited Pro forma Information The unaudited pro forma information below for the year ended December 31, 2022 gives effect to the Spirit acquisition as if the acquisition had occurred on January 1, 2022. Pro forma earnings for the year ended December 31, 2022 were adjusted to exclude $ 18.7 million of acquisition-related costs, net of tax, incurred by the Company during 2022. The pro forma financial information is not necessarily indicative of the results of operations if the acquisition had been effective as of this date. (In thousands, except per share data) 2022 Revenue (1) $ 912,631 Net income $ 264,522 Diluted earnings per share $ 2.04 _________________________ (1) Net interest income plus non-interest income. As previously discussed, the Company’s acquisition of Spirit was completed on April 8, 2022, at which time Spirit was fully integrated into the Company’s operations. As a result, it is impracticable for the Company to provide certain post-closing information, such as revenue and earnings, as it relates to the Spirit acquisition. There were no acquisition-related costs recorded during the year ended 2024, while there were $ 1.4 million and $ 22.5 million of total acquisition-related costs recorded during the years ended 2023 and 2022, respectively. The following is a description of the methods used to determine the fair values of significant assets and liabilities presented in the acquisitions above. Cash and due from banks – The carrying amount of these assets is a reasonable estimate of fair value based on the short-term nature of these assets. Investment securities – Investment securities were acquired with an adjustment to fair value based upon quoted market prices if material. Otherwise, the carrying amount of these assets was deemed to be a reasonable estimate of fair value. 88 Loans acquired – Fair values for loans were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing, and current discount rates. The discount rates used for loans are based on current market rates for new originations of comparable loans and include adjustments for liquidity concerns. The discount rate does not include a factor for credit losses as that has been included in the estimated cash flows. Loans were grouped together according to similar characteristics and were treated in the aggregate when applying various valuation techniques. See Note 4, Loans and Allowance for Credit Losses, in the accompanying Notes to Consolidated Financial Statements for additional information related to purchased financial assets with credit deterioration. Premises and equipment – Bank premises and equipment were acquired with an adjustment to fair value, which represents the difference between the Company’s current analysis of property and equipment values completed in connection with the acquisition and book value acquired. Bank owned life insurance – Bank owned life insurance is carried at its current cash surrender value, which is the most reasonable estimate of fair value. Goodwill – The consideration paid as a result of the acquisition exceeded the fair value of the assets acquired, resulting in an intangible asset, goodwill. Goodwill established prior to the acquisitions, if applicable, was written off. Core deposit intangible – This intangible asset represents the value of the relationships that the acquired bank had with its deposit customers. The fair value of this intangible asset was estimated based on a discounted cash flow methodology that gave appropriate consideration to expected customer attrition rates, cost of the deposit base and the net maintenance cost attributable to customer deposits. Any core deposit intangible established prior to the acquisitions, if applicable, was written off. Other assets – The fair value adjustment results from certain assets whose value was estimated to be more or less than book value, such as certain prepaid assets, receivables and other miscellaneous assets. Otherwise, the carrying amount of these assets was deemed to be a reasonable estimate of fair value. Deposits – The fair values used for the demand and savings deposits that comprise the transaction accounts acquired, by definition equal the amount payable on demand at the acquisition date. The Company performed a fair value analysis of the estimated weighted average interest rate of the certificates of deposits compared to the current market rates and recorded a fair value adjustment for the difference when material. Other borrowings – The fair value of other borrowings is estimated based on borrowing rates currently available to the Company for borrowings with similar terms and maturities. Subordinated debentures – The fair value of subordinated debentures is estimated based on borrowing rates currently available to the Company for borrowings with similar terms and maturities. Accrued interest and other liabilities – The fair value adjustment results from certain liabilities whose value was estimated to be more or less than book value, such as certain accounts payable and other miscellaneous liabilities. The adjustment also establishes a liability for unfunded commitments equal to the fair value of that liability at the date of acquisition. The carrying amount of accrued interest and the remainder of other liabilities was deemed to be a reasonable estimate of fair value. 89 NOTE 3: INVESTMENT SECURITIES Held-to-maturity (“HTM”) securities, which include any security for which the Company has both the positive intent and ability to hold until maturity, are carried at historical cost adjusted for amortization of premiums and accretion of discounts. Premiums and discounts are amortized and accreted, respectively, to interest income using the constant effective yield method over the security’s estimated life. Prepayments are anticipated for mortgage-backed and SBA securities. Premiums on callable securities are amortized to their earliest call date. Available-for-sale (“AFS”) securities, which include any security for which the Company has no immediate plan to sell but which may be sold in the future, are carried at fair value. Realized gains and losses, based on specifically identified amortized cost of the individual security, are included in other income. Unrealized gains and losses are recorded, net of related income tax effects, in stockholders’ equity, further discussed below. Premiums and discounts are amortized and accreted, respectively, to interest income using the constant effective yield method over the estimated life of the security. Prepayments are anticipated for mortgage-backed and SBA securities. Premiums on callable securities are amortized to their earliest call date. During the quarters ended June 30, 2022 and September 30, 2021, the Company transferred, at fair value, $ 1.99 billion and $ 500.8 million, respectively, of securities from the AFS portfolio to the HTM portfolio. As of December 31, 2024, the related remaining combined net unrealized losses of $ 108.1 million in accumulated other comprehensive income (loss) will be amortized over the remaining life of the securities. No gains or losses on these securities were recognized at the time of transfer. The amortized cost, fair value and allowance for credit losses of investment securities that are classified as HTM are as follows: (In thousands) Amortized Cost Allowance for Credit Losses Net Carrying Amount Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value Held-to-maturity December 31, 2024 U.S. Government agencies $ 455,869 $ — $ 455,869 $ — $ ( 95,961 ) $ 359,908 Mortgage-backed securities 1,070,032 — 1,070,032 212 ( 133,746 ) 936,498 State and political subdivisions 1,857,373 ( 196 ) 1,857,177 20 ( 436,061 ) 1,421,136 Other securities 256,576 ( 3,018 ) 253,558 — ( 21,149 ) 232,409 Total HTM $ 3,639,850 $ ( 3,214 ) $ 3,636,636 $ 232 $ ( 686,917 ) $ 2,949,951 December 31, 2023 U.S. Government agencies $ 453,121 $ — $ 453,121 $ — $ ( 89,203 ) $ 363,918 Mortgage-backed securities 1,161,694 — 1,161,694 354 ( 107,834 ) 1,054,214 State and political subdivisions 1,858,680 ( 2,006 ) 1,856,674 284 ( 369,509 ) 1,487,449 Other securities 256,007 ( 1,208 ) 254,799 — ( 25,010 ) 229,789 Total HTM $ 3,729,502 $ ( 3,214 ) $ 3,726,288 $ 638 $ ( 591,556 ) $ 3,135,370 Mortgage-backed securities (“MBS”) are commercial MBS, secured by commercial properties, and residential MBS, generally secured by single-family residential properties. All mortgage-backed securities included in the table above were issued by U.S. government agencies or corporations. As of December 31, 2024, HTM MBS consisted of $ 136.0 million and $ 934.1 million of commercial MBS and residential MBS, respectively. As of December 31, 2023, HTM MBS consisted of $ 141.6 million and $ 1.02 billion of commercial MBS and residential MBS, respectively. 90 The amortized cost, fair value and allowance for credit losses of investment securities that are classified as AFS are as follows: (In thousands) Amortized Cost Allowance for Credit Losses Gross Unrealized Gains Gross Unrealized (Losses) Estimated Fair Value Available-for-sale December 31, 2024 U.S. Treasury $ 999 $ — $ — $ ( 3 ) $ 996 U.S. Government agencies 55,589 — 5 ( 1,047 ) 54,547 Mortgage-backed securities 1,545,539 — 4 ( 152,784 ) 1,392,759 State and political subdivisions 1,015,619 — 132 ( 157,569 ) 858,182 Other securities 235,028 — 166 ( 12,252 ) 222,942 Total AFS $ 2,852,774 $ — $ 307 $ ( 323,655 ) $ 2,529,426 December 31, 2023 U.S. Treasury $ 2,285 $ — $ — $ ( 31 ) $ 2,254 U.S. Government agencies 74,460 — 35 ( 1,993 ) 72,502 Mortgage-backed securities 2,138,652 — 8 ( 198,353 ) 1,940,307 State and political subdivisions 1,035,147 — 187 ( 132,541 ) 902,793 Other securities 259,165 — — ( 24,868 ) 234,297 Total AFS $ 3,509,709 $ — $ 230 $ ( 357,786 ) $ 3,152,153 All mortgage-backed securities included in the table above were issued by U.S. government agencies or corporations. As of December 31, 2024, AFS MBS consisted of $ 517.2 million and $ 875.5 million of commercial MBS and residential MBS, respectively. As of December 31, 2023, AFS MBS consisted of $ 710.1 million and $ 1.23 billion of commercial MBS and residential MBS, respectively. Accrued interest receivable on HTM and AFS securities at December 31, 2024 was $ 20.3 million and $ 24.1 million, respectively, and is included in interest receivable on the consolidated balance sheets. The Company has made the election to exclude all accrued interest receivable from securities from the estimate of credit losses. 91 The following tables summarize the Company’s AFS investments in an unrealized loss position for which an allowance for credit loss has not been recorded as of the years ended December 31, 2024 and 2023, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position: Less Than 12 Months 12 Months or More Total (In thousands) Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Estimated Fair Value Gross Unrealized Losses Available-for-sale December 31, 2024 U.S. Treasury $ — $ — $ 996 $ ( 3 ) $ 996 $ ( 3 ) U.S. Government agencies 717 ( 7 ) 51,186 ( 1,040 ) 51,903 ( 1,047 ) Mortgage-backed securities 7,480 ( 189 ) 1,384,532 ( 152,595 ) 1,392,012 ( 152,784 ) State and political subdivisions 16,843 ( 195 ) 829,754 ( 157,374 ) 846,597 ( 157,569 ) Other securities 12,912 ( 20 ) 162,803 ( 12,232 ) 175,715 ( 12,252 ) Total AFS $ 37,952 $ ( 411 ) $ 2,429,271 $ ( 323,244 ) $ 2,467,223 $ ( 323,655 ) December 31, 2023 U.S. Treasury $ — $ — $ 2,254 $ ( 31 ) $ 2,254 $ ( 31 ) U.S. Government agencies 8,614 ( 39 ) 59,732 ( 1,954 ) 68,346 ( 1,993 ) Mortgage-backed securities 9,182 ( 135 ) 1,930,105 ( 198,218 ) 1,939,287 ( 198,353 ) State and political subdivisions 3,050 ( 163 ) 869,379 ( 132,378 ) 872,429 ( 132,541 ) Other securities 11,016 ( 2,654 ) 223,025 ( 22,214 ) 234,041 ( 24,868 ) Total AFS $ 31,862 $ ( 2,991 ) $ 3,084,495 $ ( 354,795 ) $ 3,116,357 $ ( 357,786 ) As of December 31, 2024, the Company’s investment portfolio included $ 2.53 billion of AFS securities, of which $ 2.47 billion, or 97.5 %, were in an unrealized loss position that are not deemed to have credit losses. A portion of the unrealized losses were related to the Company’s MBS, which are issued and guaranteed by U.S. government-sponsored entities and agencies, and the Company’s state and political subdivision securities, specifically investments in insured fixed rate municipal bonds for which the issuers continue to make timely principal and interest payments under the contractual terms of the securities. Furthermore, the decline in fair value for each of the above AFS securities is attributable to the rates for those investments yielding less than current market rates. Management does not believe any of the securities are impaired due to reasons of credit quality. Management believes the declines in fair value for the securities are temporary. As of December 31, 2024, management does not have the immediate intent to sell the securities, and management believes the accounting standard of “more likely than not” has not been met regarding whether the Company would be required to sell any of the AFS securities before recovery of amortized cost. Allowance for Credit Losses All MBS held by the Company are issued by U.S. government-sponsored entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. Accordingly, no allowance for credit losses has been recorded for these securities. Regarding securities issued by state and political subdivisions and other HTM securities, the adequacy of the reserve for credit loss is determined quarterly based on methodology similar to the methodology for determining the allowance for credit losses on loans. The methodology considers, but is not limited to: (i) issuer bond ratings, (ii) issuer geography, (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities, (iv) probability-weighted multiple scenario forecasts, and (v) the issuers’ size. 92 The following table details activity in the allowance for credit losses by investment security type for the years ended December 31, 2024 and 2023 on the Company’s HTM and AFS securities held. (In thousands) State and Political Subdivisions Other Securities Total December 31, 2024 Held-to-maturity Beginning balance, January 1, 2024 $ 2,006 $ 1,208 $ 3,214 Provision for credit loss expense — — — Net (decrease) increase in allowance on previously impaired securities ( 1,810 ) 1,810 — Ending balance, December 31, 2024 $ 196 $ 3,018 $ 3,214 December 31, 2023 Held-to-maturity Beginning balance, January 1, 2023 $ 110 $ 1,278 $ 1,388 Provision for credit loss expense 824 1,002 1,826 Net increase (decrease) in allowance on previously impaired securities 1,072 ( 1,072 ) — Ending balance, December 31, 2023 $ 2,006 $ 1,208 $ 3,214 Available-for-sale Beginning balance, January 1, 2023 $ — $ — $ — Provision for credit loss expense — 12,800 12,800 Reduction due to sales — ( 2,078 ) ( 2,078 ) Securities charged-off — ( 7,000 ) ( 7,000 ) Net decrease in allowance on previously impaired securities — ( 3,722 ) ( 3,722 ) Ending balance, December 31, 2023 $ — $ — $ — Based upon the Company’s analysis of the underlying risk characteristics of its HTM and AFS portfolios, including credit ratings and other qualitative factors, as previously discussed, there was no provision for credit losses related to the Company’s securities portfolios recorded for the year ended December 31, 2024. The Company recorded a provision for credit losses related to AFS securities of $ 12.8 million for the year ended December 31, 2023. During the same period, the provision for credit loss expense on AFS securities was reduced by $ 3.7 million related to previously impaired securities. Additionally, during the year ended December 31, 2023, the Company charged-off $ 7.0 million directly related to one corporate bond which was deemed uncollectible in the period. The following table summarizes bond ratings for the Company’s HTM portfolio issued by state and political subdivisions and other securities as of December 31, 2024: State and Political Subdivisions (In thousands) Not Guaranteed or Pre-Refunded Other Credit Enhancement or Insurance Pre-Refunded Total Other Securities Aaa/AAA $ 182,920 $ 300,196 $ — $ 483,116 $ — Aa/AA 627,680 526,027 — 1,153,707 — A 38,673 161,904 — 200,577 108,527 Baa/BBB — 4,386 — 4,386 148,049 Not Rated 15,587 — — 15,587 — Total $ 864,860 $ 992,513 $ — $ 1,857,373 $ 256,576 93 Historical loss rates associated with securities having similar grades as those in the Company’s portfolio have generally not been significant. Pre-refunded securities, if any, have been defeased by the issuer and are fully secured by cash and/or U.S. Treasury securities held in escrow for payment to holders when the underlying call dates of the securities are reached. Securities with other credit enhancement or insurance continue to make timely principal and interest payments under the contractual terms of the securities. Accordingly, no allowance for credit losses has been recorded for these securities as there is no current expectation of credit losses related to these securities. Income earned on securities for the years ended December 31, 2024, 2023 and 2022, is as follows: (In thousands) 2024 2023 2022 Taxable: Held-to-maturity $ 42,848 $ 44,093 $ 33,778 Available-for-sale 110,565 99,085 60,659 Non-taxable: Held-to-maturity 40,371 40,612 36,516 Available-for-sale 22,649 23,128 27,250 Total $ 216,433 $ 206,918 $ 158,203 The amortized cost and estimated fair value by maturity of securities are shown in the following table as of December 31, 2024. Securities are classified according to their contractual maturities without consideration of principal amortization, potential prepayments or call options. Accordingly, actual maturities may differ from contractual maturities. Held-to-Maturity Available-for-Sale (In thousands) Amortized Cost Fair Value Amortized Cost Fair Value One year or less $ 1,906 $ 1,904 $ 4,170 $ 4,148 After one through five years 58,191 54,579 106,939 106,602 After five through ten years 393,485 345,000 194,665 181,393 After ten years 2,116,236 1,611,970 1,001,235 844,298 Securities not due on a single maturity date 1,070,032 936,498 1,545,539 1,392,759 Other securities (no maturity) — — 226 226 Total $ 3,639,850 $ 2,949,951 $ 2,852,774 $ 2,529,426 The carrying value, which approximates the fair value, of securities pledged as collateral, to secure public deposits and for other purposes, amounted to $ 2.36 billion at December 31, 2024 and $ 3.32 billion at December 31, 2023. There were no gross realized gains and $ 28.4 million gross realized losses from the sale of securities during the twelve months ended December 31, 2024, as the Company sold approximately $ 251.5 million of AFS investment securities as part of a strategic decision to sell low yielding securities to pay off higher rate wholesale fundings consisting of Federal Home Loan Bank (“FHLB”) advances during the year. There were no gross realized gains and approximately $ 20.6 million of gross realized losses from the sale of securities during the year ended December 31, 2023. The Company sold approximately $ 247.9 million of investment securities during 2023 related to a strategic decision to sell low yielding securities and use the proceeds to pay off higher rate wholesale fundings, including both brokered deposits and FHLB advances. There were approximately $ 46,000 of gross realized gains and $ 324,000 of gross realized losses from the call of securities during the year ended December 31, 2022. The income tax expense/benefit related to security gains/losses was 26.135 % of the gross amounts in 2024, 2023 and 2022. The Company has entered into various fair value hedging transactions to mitigate the impact of changing interest rates on the fair value of AFS securities. See Note 20, Derivative Instruments, for disclosure of the gains and losses recognized on derivative instruments and the cumulative fair value hedging adjustments to the carrying amount of the hedged securities. 94 NOTE 4: LOANS AND ALLOWANCE FOR CREDIT LOSSES At December 31, 2024, the Company’s loan portfolio was $ 17.01 billion, compared to $ 16.85 billion at December 31, 2023. The various categories of loans are summarized as follows: (In thousands) 2024 2023 Consumer: Credit cards $ 181,675 $ 191,204 Other consumer 127,319 127,462 Total consumer 308,994 318,666 Real estate: Construction and development 2,789,249 3,144,220 Single family residential 2,689,946 2,641,556 Other commercial 7,912,336 7,552,410 Total real estate 13,391,531 13,338,186 Commercial: Commercial 2,434,175 2,490,176 Agricultural 261,154 232,710 Total commercial 2,695,329 2,722,886 Other 610,083 465,932 Total loans $ 17,005,937 $ 16,845,670 The above table presents total loans at amortized cost. The difference between amortized cost and unpaid principal balance is due to (i) premiums and discounts associated with acquisition date fair value adjustments on acquired loans of $ 7.2 million and $ 13.2 million at December 31, 2024 and 2023, respectively, and (ii) deferred origination costs and fees of $ 9.6 million and $ 6.5 million at December 31, 2024 and 2023, respectively. Accrued interest on loans, which is excluded from the amortized cost of loans held for investment, totaled $ 78.8 million and $ 77.1 million at December 31, 2024 and 2023, respectively, and is included in interest receivable on the consolidated balance sheets. Loan Origination/Risk Management – The Company seeks to manage its credit risk by diversifying its loan portfolio, determining that borrowers have adequate sources of cash flow for loan repayment without liquidation of collateral; obtaining and monitoring collateral; and providing an adequate allowance for credit losses by regularly reviewing loans through the internal loan review process. The loan portfolio is diversified by borrower, purpose and industry. The Company seeks to use diversification within the loan portfolio to reduce its credit risk, thereby minimizing the adverse impact on the portfolio if weaknesses develop in either the economy or a particular segment of borrowers. Collateral requirements are based on credit assessments of borrowers and may be used to recover the debt in case of default. Consumer – The consumer loan portfolio consists of credit card loans and other consumer loans. Credit card loans are diversified by geographic region to reduce credit risk and minimize any adverse impact on the portfolio. Although they are regularly reviewed to facilitate the identification and monitoring of creditworthiness, credit card loans are unsecured loans, making them more susceptible to economic downturns that result in increased unemployment. Other consumer loans include direct installment loans and account overdrafts. Loans in this portfolio segment are sensitive to unemployment and other key consumer economic measures. Real estate – The real estate loan portfolio consists of construction and development loans (“C&D”), single family residential loans and commercial loans. C&D and commercial real estate (“CRE”) loans can be particularly sensitive to valuation of real estate. CRE cycles are inevitable. The long planning and production process for new properties and rapid shifts in business conditions and employment create an inherent tension between supply and demand for commercial properties. While general economic trends often move individual markets in the same direction over time, the timing and magnitude of changes are determined by other forces unique to each market. CRE cycles tend to be local in nature and longer than other credit cycles. Factors influencing the CRE market are traditionally different from those affecting residential real estate markets; thereby making predictions for one market based on the other difficult. Additionally, submarkets within CRE – such as office, industrial, apartment, retail and hotel – also experience different cycles, providing an opportunity to lower the overall risk through diversification across types of CRE loans. Management realizes that local demand and supply conditions will also mean that different geographic areas will experience cycles of different amplitude and length. The Company monitors these loans closely. 95 Commercial – The commercial loan portfolio includes commercial and agricultural loans, representing loans to commercial customers and farmers for use in normal business or farming operations to finance working capital needs, equipment purchases or other expansion projects. Paycheck Protection Program (“PPP”) loans are also included in the commercial loan portfolio. Collection risk in this portfolio is driven by the creditworthiness of the underlying borrowers, particularly cash flow from customers’ business or farming operations. The Company continues its efforts to keep loan terms short, reducing the negative impact of upward movement in interest rates. Term loans are generally set up with one or three year balloons, and the Company has instituted a pricing mechanism for commercial loans. It is standard practice to require personal guaranties on commercial loans for closely-held or limited liability entities. Paycheck Protection Program Loans - The Company originated loans pursuant to multiple PPP appropriations of the Coronavirus Aid, Relief and Economic Security Act which provided 100% federally guaranteed loans for small businesses to cover up to 24 weeks of payroll costs and assistance with mortgage interest, rent and utilities. Notably, these small business loans may be forgiven by the SBA if borrowers maintain their payrolls and satisfy certain other conditions. PPP loans have a zero percent risk-weight for regulatory capital ratios. As of December 31, 2024 and 2023, the total outstanding balance of PPP loans was $ 1.6 million and $ 4.8 million, respectively. Other – The other loan portfolio includes mortgage warehouse loans, representing warehouse lines of credit to mortgage originators for the disbursement of newly originated 1-4 family residential loans. Also included in the other loan portfolio are loans to public sector customers, including state and local governments. Nonaccrual and Past Due Loans – Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. The amortized cost basis of nonaccrual loans segregated by class of loans are as follows: (In thousands) 2024 2023 Consumer: Credit cards $ 565 $ 487 Other consumer 678 589 Total consumer 1,243 1,076 Real estate: Construction and development 10,681 2,457 Single family residential 33,972 27,209 Other commercial 28,524 11,960 Total real estate 73,177 41,626 Commercial: Commercial 35,161 39,886 Agricultural 570 734 Total commercial 35,731 40,620 Other 3 3 Total $ 110,154 $ 83,325 As of December 31, 2024 and 2023, nonaccrual loans for which there was no related allowance for credit losses had an amortized cost of $ 1.7 million and $ 3.2 million, respectively. These loans are individually assessed and do not hold an allowance due to being adequately collateralized under the collateral-dependent valuation method. 96 An age analysis of the amortized cost basis of past due loans, including nonaccrual loans, segregated by class of loans is as follows: (In thousands) Gross 30-89 Days Past Due 90 Days or More Past Due Total Past Due Current Total Loans 90 Days Past Due & Accruing December 31, 2024 Consumer: Credit cards $ 1,824 $ 635 $ 2,459 $ 179,216 $ 181,675 $ 529 Other consumer 1,752 381 2,133 125,186 127,319 — Total consumer 3,576 1,016 4,592 304,402 308,994 529 Real estate: Construction and development 332 10,530 10,862 2,778,387 2,789,249 — Single family residential 34,651 16,013 50,664 2,639,282 2,689,946 — Other commercial 5,433 26,973 32,406 7,879,930 7,912,336 — Total real estate 40,416 53,516 93,932 13,297,599 13,391,531 — Commercial: Commercial 3,535 27,059 30,594 2,403,581 2,434,175 74 Agricultural 393 104 497 260,657 261,154 — Total commercial 3,928 27,163 31,091 2,664,238 2,695,329 74 Other 276 3 279 609,804 610,083 — Total $ 48,196 $ 81,698 $ 129,894 $ 16,876,043 $ 17,005,937 $ 603 December 31, 2023 Consumer: Credit cards $ 1,734 $ 892 $ 2,626 $ 188,578 $ 191,204 $ 791 Other consumer 1,471 216 1,687 125,775 127,462 — Total consumer 3,205 1,108 4,313 314,353 318,666 791 Real estate: Construction and development 3,171 2,190 5,361 3,138,859 3,144,220 — Single family residential 30,697 12,522 43,219 2,598,337 2,641,556 7 Other commercial 4,702 3,612 8,314 7,544,096 7,552,410 — Total real estate 38,570 18,324 56,894 13,281,292 13,338,186 7 Commercial: Commercial 13,799 22,750 36,549 2,453,627 2,490,176 349 Agricultural 92 516 608 232,102 232,710 — Total commercial 13,891 23,266 37,157 2,685,729 2,722,886 349 Other — 3 3 465,929 465,932 — Total $ 55,666 $ 42,701 $ 98,367 $ 16,747,303 $ 16,845,670 $ 1,147 97 Loan Modifications to Borrowers Experiencing Financial Difficulty The Company has internal loan modification programs for borrowers experiencing financial difficulties. Modifications to borrowers experiencing financial difficulties may include interest rate reductions, principal or interest forgiveness and/or term extensions. The Company primarily uses interest rate reduction and/or payment modifications or extensions, with an occasional forgiveness of principal. The following table presents a summary of the amortized cost basis of loan modifications granted to borrowers experiencing financial difficulty, segregated by class of loans and type of loan modification, for the year ended December 31, 2024. Percent of Percent of Interest Rate Total Class Total Class (Dollars in thousands) Reduction of Loans Term Extension of Loans Real estate: Single family residential $ 1,241 0.05 % $ — — % Other commercial — — % 26,894 0.34 % Total real estate $ 1,241 $ 26,894 The financial effects of the modified loans made to borrowers experiencing financial difficulty in the single family residential real estate portfolio were not significant during the year ended December 31, 2024 and did not significantly impact the Company’s determination of the allowance for credit losses on loans during the year. During the year ended December 31, 2024, the Company modified one loan for a borrower experiencing financial difficulty related to the CRE portfolio, whereby the modification extended the term of the loan 1.5 years. As a result of the CRE loan modified during the year ended December 31, 2024 being collateral-dependent, the impact to the Company’s allowance for credit losses on loans was the difference between the fair value of the underlying collateral, adjusted for selling costs, and the remaining outstanding principal balance of the loan. The following table presents a summary of the amortized cost basis of loan modifications granted to borrowers experiencing financial difficulty, segregated by class of loans and type of loan modification, for the year ended December 31, 2023. Percent of Percent of Interest Rate Total Class Total Class (Dollars in thousands) Reduction of Loans Term Extension of Loans Real estate: Single family residential $ 79 — % $ — — % Other commercial — — % 30,493 0.40 % Total real estate 79 30,493 Commercial: Commercial — — % 746 0.03 % Total commercial — 746 Total $ 79 $ 31,239 The financial effects of the modified loans made to borrowers experiencing financial difficulty in the single family residential real estate and commercial portfolios were not significant during the year ended December 31, 2023 and did not significantly impact the Company’s determination of the allowance for credit losses on loans during the year. During the year ended December 31, 2023, the Company modified one loan for a borrower experiencing financial difficulty related to the CRE portfolio, whereby the modification allowed for two months of interest only payments with the remaining balance due at maturity. Upon modification, a charge-off of $ 9.6 million was recorded in relation to this modified loan during 2023. As a result of the CRE loan modified during the year ended December 31, 2023 being collateral-dependent, the impact to the Company’s allowance for credit losses on loans was the difference between the fair value of the underlying collateral, adjusted for selling costs, and the remaining outstanding principal balance of the loan. 98 The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty. There was one commercial loan to a borrower experiencing financial difficulty that was modified during the previous twelve months and which subsequently defaulted during the year ended December 31, 2024. A charge-off of $ 18,800 was recorded in relation to this commercial loan during the fourth quarter of 2024. There were no loans to borrowers experiencing financial difficulty that had a payment default during the year ended December 31, 2023 and were modified in the twelve months prior to default. In relation to loans modified to borrowers experiencing financial difficulty, the Company defines a payment default as a payment received more than 90 days after its due date. At December 31, 2024 and 2023, the Company had $ 4.0 million and $ 2.5 million, respectively, of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process. At December 31, 2024 and 2023, the Company had $ 1.3 million and $ 506,000 , respectively, of OREO secured by residential real estate properties. Credit Quality Indicators – As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to (i) the weighted-average risk rating of commercial and real estate loans, (ii) the level of classified commercial and real estate loans, (iii) net charge-offs, (iv) non-performing loans (see details above) and (v) the general economic conditions of the Company’s local markets. The Company utilizes a risk rating matrix to assign a risk rate to each of its commercial and real estate loans. Risk ratings are updated on an ongoing basis and are subject to change by continuous loan monitoring processes including lending management monitoring, executive management and board committee oversight, and independent credit review. A description of the general characteristics of the risk ratings is as follows: • Pass (Excellent) – This category includes loans which are virtually free of credit risk. Borrowers in this category represent the highest credit quality and greatest financial strength. • Pass (Good) - Loans under this category possess a nominal risk of default. This category includes borrowers with strong financial strength and superior financial ratios and trends. These loans are generally fully secured by cash or equivalents (other than those rated “excellent”). • Pass (Acceptable – Average) - Loans in this category are considered to possess a normal level of risk. Borrowers in this category have satisfactory financial strength and adequate cash flow coverage to service debt requirements. If secured, the perfected collateral should be of acceptable quality and within established borrowing parameters. • Pass (Monitor) - Loans in the Watch (Monitor) category exhibit an overall acceptable level of risk, but that risk may be increased by certain conditions, which represent “red flags”. These “red flags” require a higher level of supervision or monitoring than the normal “Pass” rated credit. The borrower may be experiencing these conditions for the first time, or it may be recovering from weakness, which at one time justified a higher rating. These conditions may include: weaknesses in financial trends; marginal cash flow; one-time negative operating results; non-compliance with policy or borrowing agreements; poor diversity in operations; lack of adequate monitoring information or lender supervision; questionable management ability/stability. • Special Mention - A loan in this category has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Special Mention loans are not adversely classified (although they are “criticized”) and do not expose an institution to sufficient risk to warrant adverse classification. Borrowers may be experiencing adverse operating trends or an ill-proportioned balance sheet. Non-financial characteristics of a Special Mention rating may include management problems, pending litigation, a non-existent or ineffective loan agreement or other material structural weakness, and/or other significant deviation from prudent lending practices. • Substandard - A Substandard loan is inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. The loans are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. This does not imply ultimate loss of the principal, but may involve burdensome administrative expenses and the accompanying cost to carry the loan. 99 • Doubtful - A loan classified Doubtful has all the weaknesses inherent in a substandard loan except that the weaknesses make collection or liquidation in full (on the basis of currently existing facts, conditions, and values) highly questionable and improbable. Doubtful borrowers are usually in default, lack adequate liquidity or capital, and lack the resources necessary to remain an operating entity. The possibility of loss is extremely high, but because of specific pending events that may strengthen the asset, its classification as loss is deferred. Pending factors include: proposed merger or acquisition; liquidation procedures; capital injection; perfection of liens on additional collateral; and refinancing plans. Loans classified as Doubtful are placed on nonaccrual status. • Loss - Loans classified Loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loans has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless loan, even though partial recovery may be affected in the future. Borrowers in the Loss category are often in bankruptcy, have formally suspended debt repayments, or have otherwise ceased normal business operations. Loans should be classified as Loss and charged-off in the period in which they become uncollectible. The Company monitors credit quality in the consumer portfolio by delinquency status. The delinquency status of loans is updated daily. A description of the delinquency credit quality indicators is as follows: • Current - Loans in this category are either current in payments or are under 30 days past due. These loans are considered to have a normal level of risk. • 30-89 Days Past Due - Loans in this category are between 30 and 89 days past due and are subject to the Company’s loss mitigation process. These loans are considered to have a moderate level of risk. • 90+ Days Past Due - Loans in this category are 90 days or more past due and are placed on nonaccrual status. These loans have been subject to the Company’s loss mitigation process and foreclosure and/or charge-off proceedings have commenced. The Company uses a dual risk rating scale that utilizes quantitative models and qualitative factors (“score cards”) to assist in determining the appropriate risk rating for its commercial loans. This dual risk rating methodology incorporates a “probability of default” analysis which utilizes quantified metrics such as loan terms and financial performance, as well as a “loss given default” analysis which utilizes collateral values and economics of the market, among other attributes. Model outputs are reviewed and analyzed to ensure the projected risk levels are commensurate with underwriting and credit leader expectations. The risk rating scale includes Probability of Default levels of 1 – 16 and Loss Given Default levels of A – I. The scale allows for more granular recognition of risk and diversification of grading among traditional Pass grades. The following is a reconciliation between the expanded risk rating scale and the Company’s traditional risk rating segments utilized within the commercial loan classes presented in the credit quality indicator tables. • Pass - Includes loans with an expanded risk rating of 1 through 11. Loans with a risk rating of 10 and 11 equate to loans included on management’s “watch list” and is intended to be utilized on a temporary basis for pass grade borrowers where a significant risk-modifying action is anticipated in the near term. • Special Mention - Includes loans with an expanded risk rating of 12. • Substandard - Includes loans with an expanded risk rating of 13 and 14. • Doubtful and loss - Includes loans with an expanded risk rating of 15 and 16. 100 The following table presents a summary of loans by credit quality indicator, as of December 31, 2024, segregated by class of loans. Term Loans Amortized Cost Basis by Origination Year (In thousands) 2024 2023 2022 2021 2020 2019 and Prior Lines of Credit (“LOC”) Amortized Cost Basis LOC Converted to Term Loans Amortized Cost Basis Total Consumer - credit cards Delinquency: Current $ — $ — $ — $ — $ — $ — $ 179,216 $ — $ 179,216 30-89 days past due — — — — — — 1,824 — 1,824 90+ days past due — — — — — — 635 — 635 Total consumer - credit cards — — — — — — 181,675 — 181,675 Current-period consumer - credit cards gross charge-offs — — — — — — 6,437 — 6,437 Consumer - other Delinquency: Current 63,986 17,227 17,877 4,713 1,304 893 19,186 — 125,186 30-89 days past due 515 176 701 59 14 2 285 — 1,752 90+ days past due 85 56 183 20 — 35 2 — 381 Total consumer - other 64,586 17,459 18,761 4,792 1,318 930 19,473 — 127,319 Current-period consumer - other gross charge-offs 192 680 553 98 13 10 292 — 1,838 Real estate - C&D Risk rating: Pass 50,288 113,056 71,908 28,921 18,187 20,653 2,468,334 2,771,347 Special mention — — 50 — — 376 2,862 3,288 Substandard 59 409 66 532 — 88 13,460 14,614 Doubtful and loss — — — — — — — — Total real estate - C&D 50,347 113,465 72,024 29,453 18,187 21,117 2,484,656 — 2,789,249 Current-period real estate - C&D gross charge-offs 162 — — — — — 521 683 Real estate - SF residential Delinquency: Current 225,040 324,605 559,278 314,700 187,752 543,590 484,317 — 2,639,282 30-89 days past due 1,205 4,201 9,578 3,316 1,525 12,389 2,437 — 34,651 90+ days past due 1,016 606 4,578 630 1,299 3,951 3,933 — 16,013 Total real estate - SF residential 227,261 329,412 573,434 318,646 190,576 559,930 490,687 — 2,689,946 Current-period real estate - SF residential gross charge-offs 3 190 231 — 37 134 247 — 842 Real estate - other commercial Risk rating: Pass 603,206 490,128 1,519,950 1,021,169 419,769 646,399 2,800,863 — 7,501,484 Special mention 9,479 16,272 12,401 9,494 1,472 12,754 111,466 — 173,338 Substandard 12,093 17,099 11,399 3,063 12,073 31,126 150,661 — 237,514 Doubtful and loss — — — — — — — — — Total real estate - other commercial 624,778 523,499 1,543,750 1,033,726 433,314 690,279 3,062,990 — 7,912,336 Current-period real estate - other commercial gross charge-offs — 5,202 38 15 — 1 168 — 5,424 101 Term Loans Amortized Cost Basis by Origination Year (In thousands) 2024 2023 2022 2021 2020 2019 and Prior Lines of Credit (“LOC”) Amortized Cost Basis LOC Converted to Term Loans Amortized Cost Basis Total Commercial Risk rating: Pass 245,945 253,518 257,227 118,910 28,620 44,606 1,411,467 200 2,360,493 Special mention 112 583 523 313 6 1,025 7,498 — 10,060 Substandard 10,743 2,035 8,317 2,876 2,954 5,923 30,771 — 63,619 Doubtful and loss — — 3 — — — — — 3 Total commercial 256,800 256,136 266,070 122,099 31,580 51,554 1,449,736 200 2,434,175 Current-period commercial - gross charge-offs 536 1,087 5,311 3,500 913 1,994 13,289 — 26,630 Commercial - agriculture Risk rating: Pass 30,103 23,222 20,673 8,220 2,825 1,209 169,849 — 256,101 Special mention — — 111 — — — 2,299 — 2,410 Substandard 1,222 14 29 — 123 14 1,241 — 2,643 Doubtful and loss — — — — — — — — — Total commercial - agriculture 31,325 23,236 20,813 8,220 2,948 1,223 173,389 — 261,154 Current-period commercial - agriculture gross charge-offs — 222 — 8 6 — 1 — 237 Other Delinquency: Current 71,671 35,574 136,416 26,930 1,287 30,085 307,841 — 609,804 30-89 days past due — 276 — — — — — — 276 90+ days past due — — — — — 3 — — 3 Total other 71,671 35,850 136,416 26,930 1,287 30,088 307,841 — 610,083 Current-period other - gross charge-offs — — — — — — 473 — 473 Total $ 1,326,768 $ 1,299,057 $ 2,631,268 $ 1,543,866 $ 679,210 $ 1,355,121 $ 8,170,447 $ 200 $ 17,005,937 102 The following table presents a summary of loans by credit quality indicator, as of December 31, 2023 segregated by class of loans. Term Loans Amortized Cost Basis by Origination Year (In thousands) 2023 2022 2021 2020 2019 2018 and Prior Lines of Credit (“LOC”) Amortized Cost Basis LOC Converted to Term Loans Amortized Cost Basis Total Consumer - credit cards Delinquency: Current $ — $ — $ — $ — $ — $ — $ 188,578 $ — $ 188,578 30-89 days past due — — — — — — 1,734 — 1,734 90+ days past due — — — — — — 892 — 892 Total consumer - credit cards — — — — — — 191,204 — 191,204 Current-period consumer - credit cards gross charge-offs — — — — — — 5,303 — 5,303 Consumer - other Delinquency: Current 55,091 35,904 12,115 3,838 1,471 1,106 16,250 — $ 125,775 30-89 days past due 400 719 127 53 2 16 154 — 1,471 90+ days past due 35 127 46 — — — 8 — 216 Total consumer - other 55,526 36,750 12,288 3,891 1,473 1,122 16,412 — 127,462 Current-period consumer - other gross charge-offs 220 826 493 79 29 128 449 — 2,224 Real estate - C&D Risk rating: Pass 138,749 143,711 52,081 45,027 10,278 13,632 2,710,853 504 $ 3,114,835 Special mention — 1,143 7,284 — — 396 16,682 — 25,505 Substandard — 101 48 — — 247 3,484 — 3,880 Doubtful and loss — — — — — — — — — Total real estate - C&D 138,749 144,955 59,413 45,027 10,278 14,275 2,731,019 504 3,144,220 Current-period real estate - C&D gross charge-offs — 1,148 — — — 8 349 — 1,505 Real estate - SF residential Delinquency: Current 371,326 620,933 352,589 238,128 121,416 504,675 388,705 565 $ 2,598,337 30-89 days past due 5,222 5,061 3,667 2,283 1,741 9,759 2,964 — 30,697 90+ days past due 1,313 2,443 1,810 1,661 120 3,465 1,710 — 12,522 Total real estate - SF residential 377,861 628,437 358,066 242,072 123,277 517,899 393,379 565 2,641,556 Current-period real estate - SF residential gross charge-offs — 111 12 73 — 677 232 — 1,105 Real estate - other commercial Risk rating: Pass 729,602 1,651,010 1,237,810 621,595 171,230 417,122 2,333,637 — 7,162,006 Special mention 37,302 8,458 10,149 7,844 1,364 11,604 84,978 — 161,699 Substandard 40,664 10,290 4,495 16,646 6,293 9,861 140,454 — 228,703 Doubtful and loss — — — 2 — — — — 2 Total real estate - other commercial 807,568 1,669,758 1,252,454 646,087 178,887 438,587 2,559,069 — 7,552,410 Current-period real estate - other commercial gross charge-offs — — — 7 2 35 9,731 — 9,775 103 Term Loans Amortized Cost Basis by Origination Year (In thousands) 2023 2022 2021 2020 2019 2018 and Prior Lines of Credit (“LOC”) Amortized Cost Basis LOC Converted to Term Loans Amortized Cost Basis Total Commercial Risk rating: Pass 440,872 354,016 200,941 67,320 27,374 42,953 1,271,826 — 2,405,302 Special mention 157 14,117 316 367 98 889 8,228 — 24,172 Substandard 1,998 11,874 6,272 2,934 1,722 3,392 32,510 — 60,702 Doubtful and loss — — — — — — — — — Total commercial 443,027 380,007 207,529 70,621 29,194 47,234 1,312,564 — 2,490,176 Current-period commercial - gross charge-offs 463 2,081 778 197 244 815 1,351 — 5,929 Commercial - agriculture Risk rating: Pass 39,680 30,075 13,940 6,280 2,071 303 134,180 — 226,529 Special mention 363 733 1,068 — — — 3,257 — 5,421 Substandard 518 37 71 104 26 — 4 — 760 Doubtful and loss — — — — — — — — — Total commercial - agriculture 40,561 30,845 15,079 6,384 2,097 303 137,441 — 232,710 Current-period commercial - agriculture gross charge-offs — 7 — — — 26 — — 33 Other Delinquency: Current 45,234 144,732 28,413 2,543 3,255 36,719 205,033 — 465,929 30-89 days past due — — — — — — — — — 90+ days past due — — — — — 3 — — 3 Total other 45,234 144,732 28,413 2,543 3,255 36,722 205,033 — 465,932 Current-period other - gross charge-offs — — — — — — 298 — 298 Total $ 1,908,526 $ 3,035,484 $ 1,933,242 $ 1,016,625 $ 348,461 $ 1,056,142 $ 7,546,121 $ 1,069 $ 16,845,670 Allowance for Credit Losses Allowance for Credit Losses – The allowance for credit losses is a reserve established through a provision for credit losses charged to expense, which represents management’s best estimate of lifetime expected losses based on reasonable and supportable forecasts, quantitative factors, and other qualitative considerations. The allowance, in the judgment of management, is necessary to reserve for expected loan losses and risks inherent in the loan portfolio. The Company’s allowance for credit loss methodology includes reserve factors calculated to estimate current expected credit losses to amortized cost balances over the remaining contractual life of the portfolio, adjusted for prepayments, in accordance with ASC Topic 326-20, Financial Instruments - Credit Losses . Accordingly, the methodology is comprised of two components: individual assessments on loans with unique risk characteristics and collective assessments for loans that share similar risk characteristics. Loans with similar risk characteristics such as loan type, collateral type, and internal risk ratings are aggregated for collective assessment. The Company uses statistically-based models that leverage assumptions about current and future economic conditions throughout the contractual life of the loan. Expected credit losses are estimated by either lifetime loss rates or expected loss cash flows based on three key parameters: probability-of-default (“PD”), exposure-at-default (“EAD”), and loss-given-default (“LGD”). Future economic conditions are incorporated to the extent that they are reasonable and supportable. Beyond the reasonable and supportable periods, the economic variables revert to a historical equilibrium at a pace dependent on the state of the economy reflected within the economic scenarios. To determine the best estimate of credit losses as of December 31, 2024 , the Company utilized a probability-weighted, multiple-scenario approach consisting of Baseline, Upside (S1), and Downside (S3) scenarios published by Moody’s Analytics in December 2024 that was updated to reflect the U.S. economic outlook. The Company also includes qualitative adjustments to the allowance based on factors and considerations that have not otherwise been fully accounted for. These factors may include but are not limited to portfolio trends and considerations, other economic considerations, policy actions, concentration risk, or imprecision risk. Loans with similar risk characteristics such as loan type, collateral type, and internal risk ratings are aggregated into homogeneous segments for assessment. Reserve factors are based on estimated probability of default and loss given default for each segment. The estimates are determined based on economic forecasts over the reasonable and supportable forecast period based on projected performance of economic variables that have a statistical relationship with the historical loss experience of the segments. 104 Loans that have unique risk characteristics are evaluated on an individual basis. These evaluations are typically performed on loans with a deteriorated internal risk rating. For a collateral-dependent loan, the Company’s evaluation process includes a valuation by appraisal or other collateral analysis adjusted for selling costs, when appropriate. This valuation is compared to the remaining outstanding principal balance of the loan. If a loss is determined to be probable, the loss is included in the allowance for credit losses as a specific allocation. Loans for which the repayment is expected to be provided substantially through the operation or sale of collateral and where the borrower is experiencing financial difficulty had an amortized cost of $ 102.6 million and $ 144.6 million as of December 31, 2024 and 2023, respectively, as further detailed in the table below. The collateral securing these loans consist of commercial real estate properties, residential properties, and other business assets. (In thousands) Real Estate Collateral Other Collateral Total December 31, 2024 Construction and development $ 1,251 $ — $ 1,251 Single family residential — — — Other commercial real estate 69,429 — 69,429 Commercial — 31,900 31,900 Total $ 70,680 $ 31,900 $ 102,580 December 31, 2023 Construction and development $ 43,826 $ — $ 43,826 Single family residential 3,870 — 3,870 Other commercial real estate 76,229 — 76,229 Commercial — 20,679 20,679 Total $ 123,925 $ 20,679 $ 144,604 The following table details activity in the allowance for credit losses by portfolio segment for the years ended December 31, 2024, 2023 and 2022. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories. (In thousands) Commercial Real Estate Credit Card Other Consumer and Other Total December 31, 2024 Beginning balance, January 1, 2024 $ 36,470 $ 177,177 $ 5,868 $ 5,716 $ 225,231 Provision for credit loss expense 30,389 10,249 5,485 662 46,785 Charge-offs ( 26,867 ) ( 6,949 ) ( 6,437 ) ( 2,311 ) ( 42,564 ) Recoveries 1,595 1,485 1,091 1,396 5,567 Net charge-offs ( 25,272 ) ( 5,464 ) ( 5,346 ) ( 915 ) ( 36,997 ) Ending balance, December 31, 2024 $ 41,587 $ 181,962 $ 6,007 $ 5,463 $ 235,019 December 31, 2023 Beginning balance, January 1, 2023 $ 34,406 $ 150,795 $ 5,140 $ 6,614 $ 196,955 Provision for credit loss expense 5,934 36,381 5,023 86 47,424 Charge-offs ( 5,962 ) ( 12,385 ) ( 5,303 ) ( 2,522 ) ( 26,172 ) Recoveries 2,092 2,386 1,008 1,538 7,024 Net charge-offs ( 3,870 ) ( 9,999 ) ( 4,295 ) ( 984 ) ( 19,148 ) Ending balance, December 31, 2023 $ 36,470 $ 177,177 $ 5,868 $ 5,716 $ 225,231 105 (In thousands) Commercial Real Estate Credit Card Other Consumer and Other Total December 31, 2022 Beginning balance, January 1, 2022 $ 17,458 $ 179,270 $ 3,987 $ 4,617 $ 205,332 Acquisition adjustment for PCD loans 6,433 3,187 — 2 9,622 Provision for credit loss expense 22,412 ( 34,456 ) 3,991 2,674 ( 5,379 ) Charge-offs ( 14,270 ) ( 4,122 ) ( 3,862 ) ( 1,876 ) ( 24,130 ) Recoveries 2,373 6,916 1,024 1,197 11,510 Net charge-offs ( 11,897 ) 2,794 ( 2,838 ) ( 679 ) ( 12,620 ) Ending balance, December 31, 2022 $ 34,406 $ 150,795 $ 5,140 $ 6,614 $ 196,955 As of December 31, 2024, the Company’s allowance for credit losses was considered sufficient based upon expected losses that were supported by scenario-weighted economic forecasts. The provision expense for the periods ended December 31, 2024 and 2023 was primarily due to the loan growth experienced during the periods, as well as the impact of updated economic assumptions. For the year ended December 31, 2022, provision expense related to loans was recaptured during the year for a variety of factors including a release of $ 16.0 million driven by improvements in certain industry specific qualitative factors for the restaurant, hospitality, student housing and office space industries due to lower pandemic related stresses. The remaining recapture during 2022 was driven by the planned exit of several large oil and gas relationships during the year, along with the Company’s improved asset credit quality metrics, which combined with improved Moody’s economic modeling scenarios, more than offset the $ 30.3 million Day 2 provision expense required for loans acquired by the Company in the Spirit acquisition. Reserve for Unfunded Commitments In addition to the allowance for credit losses, the Company has established a reserve for unfunded commitments, classified in other liabilities. This reserve is maintained at a level management believes to be sufficient to absorb losses arising from unfunded loan commitments. The reserve for unfunded commitments was $ 25.6 million as of both periods ended December 31, 2024 and 2023. The adequacy of the reserve for unfunded commitments is determined quarterly based on methodology similar to the methodology for determining the allowance for credit losses. No adjustment was made to the reserve for unfunded commitments during the year ended December 31, 2024, as it was considered sufficient to cover any loss expectations. During 2023, $ 16.3 million was released from the reserve for unfunded commitments primarily due to a decline in unfunded commitments resulting from customers utilizing lines of credit during the year. During 2022, an adjustment to the reserve for unfunded commitments resulted in an expense of $ 16.0 million due to the overall increase in unfunded commitments, primarily made up of commercial construction loans, which receive a higher reserve allocation than other loans. Additionally, an adjustment to the reserve for unfunded commitments resulted in an expense of $ 3.5 million which was due to the Day 2 provision expense required for unfunded commitments related to the Spirit acquisition. These adjustments were included in the provision for credit losses in the statement of income. Provision for Credit Losses Provision for credit losses is determined by the Company as the amount to be added to the allowance for credit loss accounts for various types of financial instruments including loans, securities and off-balance-sheet credit exposure after net charge-offs have been deducted to bring the allowance to a level which, in management's best estimate, is necessary to absorb expected credit losses over the lives of the respective financial instruments. The components of provision for credit losses for the years ended December 31 were as follows: (In thousands) 2024 2023 2022 Provision for credit losses related to: Loans $ 46,785 $ 47,424 $ ( 5,379 ) Unfunded commitments — ( 16,300 ) 19,453 Securities - HTM — 1,826 — Securities - AFS — 9,078 — Total $ 46,785 $ 42,028 $ 14,074 106 Purchased Credit Deteriorated Loans Purchased loans that reflect a more-than-insignificant deterioration of credit from origination are considered PCD. For PCD loans, the initial estimate of expected credit losses is recognized in the allowance for credit loss on the date of acquisition using the same methodology as discussed in the Allowance for Credit Losses section included above. The following table provides a summary of loans purchased as part of the Spirit acquisition with credit deterioration at acquisition: (In thousands) Commercial Real Estate Credit Card Other Consumer and Other Total Unpaid principal balance $ 8,258 $ 66,534 $ — $ 59 $ 74,851 PCD allowance for credit loss at acquisition ( 6,433 ) ( 3,187 ) — ( 2 ) ( 9,622 ) Non-credit related discount ( 378 ) ( 998 ) — ( 1 ) ( 1,377 ) Fair value of PCD loans $ 1,447 $ 62,349 $ — $ 56 $ 63,852 NOTE 5: RIGHT-OF-USE LEASE ASSETS AND LEASE LIABILITIES The Company accounts for its leases in accordance with ASC Topic 842, Leases , which requires recognition of most leases, including operating leases, with a term greater than 12 months on the balance sheet. At lease commencement, the lease contract is reviewed to determine whether the contract is a finance lease or an operating lease; a lease liability is recognized on a discounted basis, related to the Company’s obligation to make lease payments; and a right-of-use asset is also recognized related to the Company’s right to use, or control the use of, a specified asset for the lease term. The Company accounts for lease and non-lease components (such as taxes, insurance and common area maintenance costs) separately as such amounts are generally readily determinable under the lease contracts. Lease payments over the expected term are discounted using the Company’s FHLB advance rates for borrowings of similar term. If it is reasonably certain that a renewal or termination option will be exercised, the effects of such options are included in the determination of the expected lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company’s leases are classified as operating leases with a term, including expected renewal or termination options, greater than one year, and are related to certain office facilities and office equipment. The following table presents information as of December 31, 2024 and 2023 related to the Company’s right-of-use lease assets, included in premises and equipment, and lease liabilities, included in accrued interest and other liabilities. (Dollars in thousands) 2024 2023 Right-of-use lease assets $ 67,224 $ 67,267 Lease liabilities 69,319 68,788 Weighted average remaining lease term 8.33 years 8.81 years Weighted average discount rate 3.81 % 3.52 % Operating lease cost for the years ended December 31, 2024, 2023 and 2022 was $ 16.1 million, $ 15.7 million, and $ 14.2 million, respectively. 107 The Company’s remaining undiscounted minimum lease payments on operating leases as of December 31, 2024 are as follows: Year (In thousands) 2025 $ 13,754 2026 12,321 2027 9,909 2028 8,443 2029 7,523 Thereafter 29,938 Total undiscounted minimum lease payments 81,888 Less: Net present value adjustment 12,569 Lease liability included in other liabilities $ 69,319 NOTE 6: PREMISES AND EQUIPMENT Premises and equipment are stated at cost less accumulated depreciation and amortization. Total premises and equipment, net at December 31, 2024 and 2023 were as follows: (In thousands) 2024 2023 Right-of-use lease assets $ 67,224 $ 67,267 Premises and equipment: Land 124,819 122,093 Buildings and improvements 404,223 388,675 Furniture, fixtures and equipment 123,741 112,133 Software 63,844 61,242 Construction in progress 24,262 14,142 Accumulated depreciation and amortization ( 222,682 ) ( 194,874 ) Total premises and equipment, net $ 585,431 $ 570,678 NOTE 7: GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill is tested annually, or more often than annually, if circumstances warrant, for impairment. If the implied fair value of goodwill is lower than its carrying amount, goodwill impairment is indicated, and goodwill is written down to its implied fair value. Subsequent increases in goodwill value are not recognized in the financial statements. Goodwill totaled $ 1.32 billion at December 31, 2024 and 2023. Goodwill impairment was neither indicated no r recorded in 2024, 2023 or 2022. During the second quarter of 2024, the Company performed an annual goodwill impairment analysis and concluded that it is more likely-than-not that the fair value of goodwill continues to exceed its carrying value and therefore, goodwill was not impaired. During March of 2023, the Company’s share price began to decline as markets in the United States (“US”) responded to the sudden collapse of two US banks. As a result of the decrease in the Company’s market capitalization, the Company performed an interim goodwill impairment qualitative assessment during the first quarter of 2023 and concluded that it was more likely-than-not that the fair value of goodwill continued to exceed its carrying value and therefore, goodwill was not impaired. During the second quarter of 2023, the Company performed an annual goodwill impairment analysis and concluded no impairment existed. Additionally, the Company performed interim goodwill impairment assessments during the third and fourth quarters of 2023 and concluded no impairment existed during the periods. Core deposit premiums represent the value of the relationships that acquired banks had with their deposit customers and are amortized over periods ranging from 10 years to 15 years and are periodically evaluated, at least annually, as to the recoverability of their carrying value. Other intangible assets represent the value of other acquired relationships, including relationships with trust and wealth management customers, and are being amortized over various periods ranging from 8 years to 15 years. 108 Changes in the carrying amount and accumulated amortization of the Company’s core deposit premiums and other intangible assets at December 31, 2024 and 2023 were as follows: (In thousands) 2024 2023 Core deposit premiums: Balance, beginning of year $ 101,344 $ 116,016 Amortization ( 13,769 ) ( 14,672 ) Balance, end of year 87,575 101,344 Books of business and other intangibles: Balance, beginning of year 11,301 12,935 Amortization ( 1,634 ) ( 1,634 ) Balance, end of year 9,667 11,301 Total other intangible assets, net $ 97,242 $ 112,645 The carrying basis and accumulated amortization of the Company’s other intangible assets at December 31, 2024 and 2023 were as follows: (In thousands) 2024 2023 Core deposit premiums: Gross carrying amount $ 177,624 $ 187,467 Accumulated amortization ( 90,049 ) ( 86,123 ) Core deposit premiums, net 87,575 101,344 Books of business and other intangibles: Gross carrying amount 22,068 22,068 Accumulated amortization ( 12,401 ) ( 10,767 ) Books of business and other intangibles, net 9,667 11,301 Total other intangible assets, net $ 97,242 $ 112,645 Core deposit premium amortization expense recorded for the years ended December 31, 2024, 2023 and 2022 was $ 13.8 million, $ 14.7 million and $ 14.3 million, respectively. Amortization expense recorded for books of business and other intangibles was $ 1.6 million for each year ended December 31, 2024, 2023 and 2022. The Company’s estimated remaining amortization expense on other intangible assets as of December 31, 2024 is as follows: Year (In thousands) 2025 $ 12,819 2026 12,346 2027 12,218 2028 11,312 2029 8,563 Thereafter 39,984 Total $ 97,242 109 NOTE 8: TIME DEPOSITS Time deposits included approximately $ 1.55 billion and $ 1.73 billion of certificates of deposit over $250,000 at December 31, 2024 and 2023, respectively. Brokered time deposits were $ 3.30 billion and $ 2.90 billion at December 31, 2024 and 2023, respectively. Maturities of all time deposits at December 31, 2024 are as follows: Year (In thousands) 2025 $ 6,226,338 2026 172,868 2027 36,894 2028 3,966 2029 2,211 Thereafter 934 Total $ 6,443,211 Deposits are the Company’s primary funding source for loans and investment securities. The mix and repricing alternatives can significantly affect the cost of this source of funds and, therefore, impact the interest margin. NOTE 9: INCOME TAXES The provision for income taxes for the years ended December 31 is comprised of the following components: (In thousands) 2024 2023 2022 Income taxes currently payable $ 21,397 $ 28,006 $ 35,215 Deferred income taxes ( 2,782 ) ( 2,460 ) 14,933 Provision for income taxes $ 18,615 $ 25,546 $ 50,148 110 The tax effects of temporary differences between the tax basis of assets and liabilities and their financial reporting amounts that give rise to deferred income tax assets and liabilities, and their approximate tax effects, are as follows as of December 31, 2024 and 2023: (In thousands) 2024 2023 Deferred tax assets: Loans acquired $ 2,141 $ 3,644 Allowance for credit losses 55,196 53,445 Valuation of foreclosed assets 374 480 Tax NOLs from acquisition 9,945 9,643 Deferred compensation payable 3,989 3,355 Accrued equity and other compensation 9,323 8,048 Acquired securities 7,504 7,569 Right-of-use lease liability 16,416 16,501 Unrealized loss on AFS securities 128,873 143,624 Allowance for unfunded commitments 6,069 6,148 Other 7,163 7,627 Gross deferred tax assets 246,993 260,084 Deferred tax liabilities: Goodwill and other intangible amortization ( 38,139 ) ( 41,174 ) Accumulated depreciation ( 24,489 ) ( 24,632 ) Right-of-use lease asset ( 15,920 ) ( 16,136 ) Unrealized gain on swaps ( 25,174 ) ( 25,371 ) Other ( 13,268 ) ( 10,995 ) Gross deferred tax liabilities ( 116,990 ) ( 118,308 ) Net deferred tax asset $ 130,003 $ 141,776 A reconciliation of income tax expense at the statutory rate to the Company’s actual income tax expense is shown below for the years ended December 31: (In thousands) 2024 2023 2022 Computed at the statutory rate $ 35,974 $ 42,127 $ 64,378 Increase (decrease) in taxes resulting from: State income taxes, net of federal tax benefit ( 165 ) ( 983 ) 3,249 Discrete items related to share-based compensation 468 596 ( 74 ) Tax exempt interest income ( 15,330 ) ( 15,357 ) ( 14,484 ) Tax exempt earnings on bank owned life insurance ( 3,136 ) ( 2,607 ) ( 1,918 ) Federal tax credits ( 500 ) ( 218 ) ( 1,708 ) Other differences, net 1,304 1,988 705 Actual tax provision $ 18,615 $ 25,546 $ 50,148 111 The Company follows ASC Topic 740, Income Taxes , which prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. ASC Topic 740 also provides guidance on the accounting for and disclosure of unrecognized tax benefits, interest and penalties. The Company has no history of expiring net operating loss carryforwards and is projecting significant pre-tax and financial taxable income in future years. The Company expects to fully realize its deferred tax assets in the future. The amount of unrecognized tax benefits may increase or decrease in the future for various reasons including adding amounts for current tax year positions, expiration of open income tax returns due to the statutes of limitation, changes in management’s judgment about the level of uncertainty, status of examinations, litigation and legislative activity and the addition or elimination of uncertain tax positions. Section 382 of the Internal Revenue Code imposes an annual limit on the ability of a corporation that undergoes an “ownership change” to use its U.S. net operating losses to reduce its tax liability. The Company has engaged in three tax-free reorganization transactions in which acquired net operating losses are limited pursuant to Section 382. In total, approximately $ 33.6 million of federal net operating losses subject to the IRC Section 382 annual limitation are expected to be utilized by the Company. All of the acquired net operating loss carryforwards are expected to be fully utilized by 2036. The Company files income tax returns in the U.S. federal jurisdiction. The Company’s U.S. federal income tax returns are open and subject to examinations from the 2021 tax year and forward. The Company’s various state income tax returns are generally open from the 2021 and later tax return years based on individual state statute of limitations. NOTE 10: SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE The Company utilizes securities sold under agreements to repurchase to facilitate the needs of its customers and to facilitate secured short-term funding needs. Securities sold under agreements to repurchase are stated at the amount of cash received in connection with the transaction. The Company monitors collateral levels on a continuous basis. The Company may be required to provide additional collateral based on the fair value of the underlying securities. Securities pledged as collateral under repurchase agreements are maintained with the Company’s safekeeping agents. The gross amount of recognized liabilities for repurchase agreements was $ 36.7 million and $ 67.6 million at December 31, 2024 and 2023, respectively. The remaining contractual maturity of the securities sold under agreements to repurchase in the consolidated balance sheets as of December 31, 2024 and 2023 is presented in the following tables. Remaining Contractual Maturity of the Agreements (In thousands) Overnight and Continuous Up to 30 Days 30-90 Days Greater than 90 Days Total December 31, 2024 Repurchase agreements: U.S. Government agencies $ 36,709 $ — $ — $ — $ 36,709 December 31, 2023 Repurchase agreements: U.S. Government agencies $ 67,569 $ — $ — $ — $ 67,569 112 NOTE 11: OTHER BORROWINGS AND SUBORDINATED NOTES AND DEBENTURES Debt at December 31, 2024 and 2023 consisted of the following components: (In thousands) 2024 2023 Other Borrowings FHLB advances, net of discount, due 2025 to 2033, 4.38 % to 5.53 %, secured by real estate loans $ 727,945 $ 953,222 Other long-term debt 17,427 19,144 Total other borrowings 745,372 972,366 Subordinated Notes and Debentures Subordinated notes payable, due 4/1/2028, fixed-to-floating rate (fixed rate of 5.00 % through 3/31/2023, floating rate of 2.15 % above the three month LIBOR rate, reset quarterly) (1) 330,000 330,000 Subordinated notes payable, net of premium adjustments, due 7/31/2030, fixed-to-floating rate (fixed rate of 6.00 % through 7/30/2025, floating rate of 5.92 % above the three month SOFR rate, reset quarterly) 37,057 37,171 Unamortized debt issuance costs ( 764 ) ( 1,030 ) Total subordinated notes and debentures 366,293 366,141 Total other borrowings and subordinated debt $ 1,111,665 $ 1,338,507 _________________________ (1) The Company transitioned from the three month London Interbank Offered Rate (“LIBOR”) to the three month Secured Overnight Financing Rate (“SOFR”), plus a comparable spread adjustment of 26.161 basis points, beginning with interest accrued on the notes from and after October 1, 2023. In March 2018, the Company issued $ 330.0 million in aggregate principal amount, of 5.00 % Fixed-to-Floating Rate Subordinated Notes (“Notes”) at a public offering price equal to 100 % of the aggregate principal amount of the Notes. The Company incurred $ 3.6 million in debt issuance costs related to the offering during March 2018. The Notes will mature on April 1, 2028 and initially bore interest at a fixed rate of 5.00 % per annum, payable semi-annually in arrears. From and including April 1, 2023 to, but excluding, the maturity date or the date of earlier redemption, the interest rate resets quarterly to an annual interest rate equal to the “then-current three month LIBOR rate” plus 215 basis points, payable quarterly in arrears, and the Company transitioned from the “then-current three month LIBOR rate” to the “three month SOFR, plus a comparable spread adjustment of 26.161 basis points,” beginning with interest accrued on the Notes from and after October 1, 2023. The Notes will be subordinated in right of payment to the payment of the Company’s other existing and future senior indebtedness, including all of its general creditors. The Notes are obligations of the Company only and are not obligations of, and are not guaranteed by, any of its subsidiaries. The Company used a portion of the net proceeds from the sale of the Notes to repay certain outstanding indebtedness. The Notes qualify for Tier 2 capital treatment. The Company assumed subordinated debt in an aggregate principal amount, net of premium adjustments, of $ 37.4 million in connection with the Spirit acquisition in April 2022 (the “Spirit Notes”). The Spirit Notes will mature on July 31, 2030, and initially bear interest at a fixed annual rate of 6.00 %, payable quarterly, in arrears, to, but excluding, July 31, 2025. From and including July 31, 2025, to, but excluding, the maturity date or earlier redemption date, the interest rate will reset quarterly to an interest rate per annum equal to a benchmark rate, which is expected to be the then-current three-month SOFR rate, as published by the Federal Reserve Bank of New York (provided, that in the event the benchmark rate is less than zero, the benchmark rate will be deemed to be zero) plus 592 basis points, payable quarterly, in arrears. The Company had total FHLB advances of $ 727.9 million and $ 953.2 million at December 31, 2024 and 2023, respectively, which are primarily whole loan advances that are due less than one year from origination and therefore are classified as short-term advances by the Company. At December 31, 2024, the FHLB advances outstanding were secured by mortgage loans and investment securities totaling approximately $ 6.57 billion and the Company had approximately $ 4.72 billion of additional advances available from the FHLB. 113 The Company’s long-term debt primarily includes subordinated debt and other notes payable. Aggregate annual maturities of long-term debt at December 31, 2024, are as follows: Year (In thousands) 2025 $ 1,822 2026 1,824 2027 1,919 2028 332,792 2029 10,190 Thereafter 38,118 Total $ 386,665 NOTE 12: CAPITAL STOCK On February 27, 2009, at a special meeting, the Company’s shareholders approved an amendment to the Articles of Incorporation to establish 40,040,000 authorized shares of preferred stock, $ 0.01 par value. On April 27, 2022, the Company’s shareholders approved an amendment to the Company’s Articles of Incorporation to remove an $ 80.0 million cap on the aggregate liquidation preference associated with the preferred stock and increase the number of authorized shares of the Company’s Class A common stock from 175,000,000 to 350,000,000 . On October 29, 2019, the Company filed Amended and Restated Articles of Incorporation (“October Amended Articles”) with the Arkansas Secretary of State. The October Amended Articles classified and designated Series D Preferred Stock, Par Value $ 0.01 Per Share (“Series D Preferred Stock”), out of the Company’s authorized preferred stock. On November 30, 2021, the Company redeemed all of the Series D Preferred Stock, including accrued and unpaid dividends. On April 27, 2022, the Company’s shareholders approved an amendment to the Company’s Articles of Incorporation to remove the classification and designation for the Series D Preferred Stock. As of December 31, 2024 and 2023, there were no shares of preferred stock issued or outstanding. On May 17, 2024, the Company filed a shelf registration with the SEC. The shelf registration statement provides increased flexibility and more efficient access to raise capital from time to time through the sale of common stock, preferred stock, debt securities, depository shares, warrants, purchase contracts, subscription rights, units or a combination thereof, subject to market conditions. Specific terms and prices are determined at the time of any offering under a separate prospectus supplement that the Company is required to file with the SEC at the time of the specific offering. In January 2022, the Company’s Board of Directors authorized a stock repurchase program (“2022 Program”) under which the Company could repurchase up to $ 175.0 million of its Class A common stock currently issued and outstanding. Because the 2022 Program was set to terminate on January 31, 2024, the Company’s Board of Directors authorized a new stock repurchase program in January 2024 (“2024 Program”) under which the Company may repurchase up to $ 175.0 million of its Class A common stock currently issued and outstanding. The 2024 Program will be executed in accordance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, and will terminate on January 31, 2026 (unless terminated sooner). During 2024, no shares were repurchased under the 2024 Program. Market conditions and the Company’s capital needs will drive decisions regarding additional, future stock repurchases. During 2023, the Company repurchased 2,257,049 shares at an average price of $ 17.72 per share under the 2022 Program. Under the 2024 Program, which replaced the 2022 Program, the Company may repurchase shares of its common stock through open market and privately negotiated transactions or otherwise. The timing, pricing, and amount of any repurchases under the 2024 Program will be determined by the Company’s management at its discretion based on a variety of factors, including, but not limited to, trading volume and market price of the Company’s common stock, corporate considerations, the Company’s working capital and investment requirements, general market and economic conditions, and legal requirements. The 2024 Program does not obligate the Company to repurchase any common stock and may be modified, discontinued, or suspended at any time without prior notice. The Company anticipates funding for this 2024 Program to come from available sources of liquidity, including cash on hand and future cash flow. 114 NOTE 13: TRANSACTIONS WITH RELATED PARTIES At December 31, 2024 and 2023, Simmons Bank had extensions of credit to executive officers and directors and to companies in which Simmons Bank’s executive officers or directors were principal owners in the amount of $ 5.9 million at December 31, 2024 and $ 3.2 million at December 31, 2023. (In thousands) 2024 2023 Balance, beginning of year $ 3,207 $ 3,672 New extensions of credit 4,341 100 Repayments ( 1,637 ) ( 565 ) Balance, end of year $ 5,911 $ 3,207 In management’s opinion, such loans and other extensions of credit, deposits and vendor contracts (which were not material) were made in the ordinary course of business and were made on substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions with unrelated persons or through a competitive bid process. Further, in management’s opinion, these extensions of credit did not involve more than the normal risk of collectability or present other unfavorable features. NOTE 14: EMPLOYEE BENEFIT PLANS Retirement Plans The Company offers a qualified 401(k) Plan in which the Company makes matching contributions to encourage employees to save money for their retirement. The 401(k) Plan covers substantially all employees. Under the terms of the 401(k) Plan, employees may defer a portion of their eligible pay, up to the maximum allowed by I.R.S. regulation, and the Company matches 100 % of the first 3 % of compensation and 50 % of the next 2 % of compensation for a total match of 4 % of eligible pay for each participant who defers 5 % or more of his or her eligible pay. Additionally, the Company may make profit-sharing contributions to the 401(k) Plan which are allocated among participants based upon 401(k) Plan compensation without regard to participant contributions. Contribution expense to the plan totaled $ 14.3 million, $ 11.9 million and $ 13.0 million in 2024, 2023 and 2022, respectively. The Company also provides deferred compensation agreements with certain active and retired officers. The agreements provide monthly payments of retirement compensation for either stated periods or for the life of the participant. The charges to income for the plans was $ 2.0 million for 2024. There was a $ 316,000 benefit to income related to the plans for 2023. This benefit was primarily due to a reduction in the present value of the liability resulting from a significant increase in the discount factor used, as compared to previous years. The Company also reversed the accrued unvested liability during 2023 related to a former participant. The charges to income for the plans was $ 2.2 million for 2022. Such charges reflect the straight-line accrual over the employment period of the present value of benefits due each participant, as of their full eligibility date, using an appropriate discount factor. 115 Employee Stock Purchase Plan The Company established an Employee Stock Purchase Plan in 2015 which generally allows participants to make contributions of up to $ 25,000 per year, for the purpose of acquiring the Company’s common stock. At the end of each plan year, full shares of the Company’s stock are purchased for each employee based on that employee’s contributions. The Company has issued both general and special stock offerings under the plan. Substantially all employees are eligible for the general stock offering, under which full shares of the Company’s stock are purchased for an amount equal to 95 % of their fair market value at the end of the plan year, or, if lower, 95 % of their fair market value at the beginning of the plan year. The special stock offering is available to substantially all non-highly compensated employees with at least six months of service, and these employees may allocate up to $ 10,000 to this offering. Under the special stock offering, full shares of the Company’s stock are purchased for an amount equal to 85 % of their fair market value at the end of the plan year, or, if lower, 85 % of their fair market value at the beginning of the plan year. Stock-Based Compensation Plans The Company’s Board of Directors has adopted various stock-based compensation plans, including the Simmons First National Corporation 2023 Stock and Incentive Plan that was approved by shareholders and became effective April 18, 2023. These plans provide for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance stock units and stock awards. Pursuant to these plans, shares are reserved for future issuance by the Company upon exercise of stock options or awards of restricted stock, restricted stock units, performance stock units, or stock awards granted to directors, officers and other key employees or consultants. Stock-based compensation expense for all stock-based compensation awards is based on the grant date fair value. For all awards except stock option awards, the grant date fair value is the market value per share as of the grant date. For stock option awards, the fair value is estimated at the date of grant using the Black-Scholes option-pricing model. This model requires the input of highly subjective assumptions, changes to which can materially affect the fair value estimate. Additionally, there may be other factors that would otherwise have a significant effect on the value of employee stock options granted but are not considered by the model. Accordingly, while management believes that the Black-Scholes option-pricing model provides a reasonable estimate of fair value, the model does not necessarily provide the best single measure of fair value for the Company’s employee stock options. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model that uses various assumptions. Expected volatility is based on historical volatility of the Company’s stock and other factors. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Forfeitures are estimated at the time of grant, and are based partially on historical experience. 116 The table below summarizes the transactions under the Company’s active stock compensation plans at December 31, 2024, 2023 and 2022, and changes during the years then ended: Stock Options Outstanding Non-vested Stock Awards Outstanding Non-vested Stock Units Outstanding (1) (Shares in thousands) Number of Shares Weighted Average Exercise Price Number of Shares Weighted Average Grant-Date Fair Value Number of Shares Weighted Average Grant-Date Fair Value Balance, December 31, 2021 473 $ 22.50 2 $ 22.20 1,185 $ 26.51 Granted — — — — 719 26.42 Stock options exercised ( 3 ) 13.30 — — — — Stock awards/units vested (earned) — — ( 2 ) 22.20 ( 609 ) 26.30 Forfeited/expired — — — — ( 98 ) 25.68 Balance, December 31, 2022 470 22.56 — — 1,197 26.63 Granted — — — — 798 21.15 Stock options exercised ( 1 ) 10.65 — — — — Stock awards/units vested (earned) — — — — ( 490 ) 24.73 Forfeited/expired ( 22 ) 22.87 — — ( 232 ) 24.81 Balance, December 31, 2023 447 22.56 — — 1,273 24.23 Granted — — — — 895 19.08 Stock options exercised ( 88 ) 21.29 — — — — Stock awards/units vested (earned) — — — — ( 453 ) 24.45 Forfeited/expired ( 36 ) 22.52 — ( 194 ) 24.98 Balance, December 31, 2024 323 $ 22.92 — $ — 1,521 $ 21.04 Exercisable, December 31, 2024 323 $ 22.92 _________________________ (1) All stock units (including performance stock units). The following table summarizes information about stock options under the plans outstanding at December 31, 2024: Options Outstanding Options Exercisable Range of Exercise Prices Number of Shares (In thousands) Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Number of Shares (In thousands) Weighted Average Exercise Price $ 22.20 — $ 22.20 5 0.23 $ 22.20 5 $ 22.20 22.75 — 22.75 249 0.61 22.75 249 22.75 23.51 — 23.51 62 1.05 23.51 62 23.51 24.07 — 24.07 7 0.71 24.07 7 24.07 $ 22.20 — $ 24.07 323 0.69 $ 22.92 323 $ 22.92 117 The table below summarizes the Company’s performance stock unit activity for the years ended December 31, 2024, 2023 and 2022: (In thousands) Performance Stock Units Non-vested, December 31, 2021 331 Granted 184 Vested (earned) ( 149 ) Forfeited ( 14 ) Non-vested, December 31, 2022 352 Granted 302 Vested (earned) ( 72 ) Forfeited ( 90 ) Non-vested, December 31, 2023 492 Granted 188 Vested (earned) ( 42 ) Forfeited ( 115 ) Non-vested, December 31, 2024 523 Stock-based compensation expense was $ 11.3 million in 2024, $ 12.2 million in 2023 and $ 15.3 million in 2022. Stock-based compensation expense is recognized ratably over the requisite service period for all stock-based awards. There was no unrecognized stock-based compensation expense related to stock options at December 31, 2024. Unrecognized stock-based compensation expense related to non-vested stock awards and stock units was $ 14.7 million at December 31, 2024. At such date, the weighted-average period over which this unrecognized expense is expected to be recognized was 1.6 years. There was no intrinsic value of stock options outstanding and stock options exercisable at December 31, 2024. Aggregate intrinsic value represents the difference between the Company’s closing stock price on the last trading day of the period, which was $ 22.18 at December 31, 2024, and the exercise price multiplied by the number of options outstanding. There were 87,740 stock options exercised in 2024 with an intrinsic value of $ 78,000 . There were 900 stock options exercised in 2023 with an intrinsic value of $ 8,000 . There were 2,750 stock options exercised in 2022 with no intrinsic value. The fair value of the Company’s employee stock options granted is estimated on the date of grant using the Black-Scholes option-pricing model. This model requires the input of highly subjective assumptions, changes to which can materially affect the fair value estimate. There were no stock options granted during the years ended December 31, 2024, 2023 and 2022. NOTE 15: ADDITIONAL CASH FLOW INFORMATION The following is a summary of the Company’s additional cash flow information during the years ended December 31: (In thousands) 2024 2023 2022 Interest paid $ 652,107 $ 540,816 $ 134,980 Income taxes paid 9,979 20,948 25,084 Transfers of loans to foreclosed assets held for sale 9,697 3,075 1,219 Transfers of assets held for sale to other assets — — 100 Transfers of available-for-sale to held-to-maturity securities — — 1,992,542 118 NOTE 16: OTHER INCOME AND OTHER OPERATING EXPENSES Other income for the years ended December 31, 2024, 2023 and 2022 was $ 27.5 million, $ 35.4 million and $ 27.4 million, respectively. Other income for the year ended December 31, 2023 included a $ 4.0 million legal reserve recapture associated with previously disclosed legal matters. Other operating expenses consisted of the following during the years ended December 31: (In thousands) 2024 2023 2022 Professional services $ 22,179 $ 19,612 $ 19,138 Postage 8,735 9,458 8,955 Telephone 6,388 6,965 6,394 Credit card expense 12,886 13,243 12,243 Marketing 27,369 24,008 28,870 Software and technology 42,939 42,530 40,906 Operating supplies 2,482 2,591 2,556 Amortization of intangibles 15,403 16,306 15,915 Branch right sizing expense 2,746 5,467 3,475 Other expense 37,393 36,984 41,241 Total other operating expenses $ 178,520 $ 177,164 $ 179,693 NOTE 17: FAIR VALUE MEASUREMENTS ASC Topic 820, Fair Value Measurements defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance also establishes a fair value hierarchy that requires the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. ASC Topic 820 describes three levels of inputs that may be used to measure fair value: • Level 1 Inputs – Quoted prices in active markets for identical assets or liabilities. • Level 2 Inputs – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets; quoted prices for similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3 Inputs – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. 119 In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the Company’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Furthermore, the reported fair value amounts have not been comprehensively revalued since the presentation dates, and therefore, estimates of fair value after the balance sheet date may differ significantly from the amounts presented herein. A more detailed description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. Following is a description of the inputs and valuation methodologies used for assets measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. Available-for-sale securities – Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities would include highly liquid government bonds, mortgage products and certain other financial products. Other securities classified as available-for-sale are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the security’s terms and conditions, among other things. In order to ensure the fair values are consistent with ASC Topic 820, the Company periodically checks the fair values by comparing them to another pricing source, such as Bloomberg. The availability of pricing confirms Level 2 classification in the fair value hierarchy. The third-party pricing service is subject to an annual review of internal controls. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. The Company’s investment in U.S. Treasury securities, if any, is reported at fair value utilizing Level 1 inputs. The remainder of the Company’s available-for-sale securities are reported at fair value utilizing Level 2 inputs. Mortgage loans held for sale – Mortgage loans held for sale are reported at fair value on an aggregate basis. Adjustments to fair value are recognized monthly and reflected in earnings. In determining the fair value of loans held for sale, the Company may consider outstanding investor commitments, discounted cash flow analyses with market assumptions or the fair value of the collateral if the loan is collateral dependent. Such loans are classified within either Level 2 or Level 3 of the fair value hierarchy. Where assumptions are made using significant unobservable inputs, such loans held for sale are classified as Level 3. At December 31, 2024 and 2023, the aggregate fair value of mortgage loans held for sale exceeded their cost. Derivative instruments – The Company’s derivative instruments are reported at fair value utilizing Level 2 inputs. The Company obtains fair value measurements from dealer quotes. 120 The following table sets forth the Company’s financial assets by level within the fair value hierarchy that were measured at fair value on a recurring basis as of December 31, 2024 and 2023. Fair Value Measurements (In thousands) Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2024 Available-for-sale securities U.S. Treasury $ 996 $ 996 $ — $ — U.S. Government agencies 54,547 — 54,547 — Mortgage-backed securities 1,392,759 — 1,392,759 — State and political subdivisions 858,182 — 858,182 — Other securities 222,942 — 222,942 — Mortgage loans held for sale 11,417 — — 11,417 Derivative asset 127,474 — 127,474 — Derivative liability ( 24,032 ) — ( 24,032 ) — December 31, 2023 Available-for-sale securities U.S. Treasury $ 2,254 $ 2,254 $ — $ — U.S. Government agencies 72,502 — 72,502 — Mortgage-backed securities 1,940,307 — 1,940,307 — State and political subdivisions 902,793 — 902,793 — Other securities 234,297 — 234,297 — Mortgage loans held for sale 9,373 — — 9,373 Derivative asset 130,271 — 130,271 — Derivative liability ( 27,584 ) — ( 27,584 ) — Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. Assets and liabilities measured at fair value on a nonrecurring basis include the following: Individually assessed loans (collateral-dependent) – When the Company has a specific expectation to initiate, or has initiated, foreclosure proceedings, and when the repayment of a loan is expected to be substantially dependent on the liquidation of underlying collateral, the relationship is deemed collateral-dependent. Fair value of the loan is determined by establishing an allowance for credit loss for any exposure based on the valuation of the underlying collateral. The valuation of the collateral is determined by either an independent third-party appraisal or other collateral analysis. Discounts can be made by the Company based upon the overall evaluation of the independent appraisal. Collateral-dependent loans are classified within Level 3 of the fair value hierarchy due to the unobservable inputs used in determining their fair value such as collateral values and the borrower’s underlying financial condition. Collateral values supporting the individually assessed loans are evaluated quarterly for updates to appraised values or adjustments due to non-current valuations. Foreclosed assets and other real estate owned – Foreclosed assets and other real estate owned are reported at fair value, less estimated costs to sell. At foreclosure, if the fair value, less estimated costs to sell, of the real estate acquired is less than the Company’s recorded investment in the related loan, a write-down is recognized through a charge to the allowance for credit losses. Additionally, valuations are periodically performed by management and any subsequent reduction in value is recognized by a charge to income. The fair value of foreclosed assets and other real estate owned is estimated using Level 3 inputs based on unobservable market data. 121 The significant unobservable inputs (Level 3) used in the fair value measurement of collateral for collateral-dependent loans and foreclosed assets primarily relate to the specialized discounting criteria applied to the borrower’s reported amount of collateral. The amount of the collateral discount depends upon the condition and marketability of the collateral, as well as other factors which may affect the collectability of the loan. Management’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset. It is reasonably possible that a change in the estimated fair value for instruments measured using Level 3 inputs could occur in the future. As the Company’s primary objective in the event of default would be to liquidate the collateral to settle the outstanding balance of the loan, collateral that is less marketable would receive a larger discount. The following table sets forth the Company’s assets by level within the fair value hierarchy that were measured at fair value on a nonrecurring basis as of December 31, 2024 and 2023. Fair Value Measurements Using (In thousands) Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2024 Individually assessed loans (1) (2) (collateral-dependent) $ 102,580 $ — $ — $ 102,580 Foreclosed assets and other real estate owned (1) 881 — — 881 December 31, 2023 Individually assessed loans (1) (2) (collateral-dependent) $ 144,604 $ — $ — $ 144,604 Foreclosed assets and other real estate owned (1) 1,166 — — 1,166 ______________________ (1) These amounts represent the resulting carrying amounts on the consolidated balance sheets for collateral-dependent loans and foreclosed assets and other real estate owned for which fair value re-measurements took place during the period. (2) Identified reserves of $ 30.1 million and $ 18.7 million were related to collateral-dependent loans for which fair value re-measurements took place during the years ended December 31, 2024 and 2023, respectively. ASC Topic 825, Financial Instruments , requires disclosure in annual and interim financial statements of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or nonrecurring basis. The following methods and assumptions were used to estimate the fair value of each class of financial instruments not previously disclosed. Cash and cash equivalents – The carrying amount for cash and cash equivalents approximates fair value (Level 1). Interest bearing balances due from banks – The fair value of interest bearing balances due from banks – time is estimated using a discounted cash flow calculation that applies the rates currently offered on deposits of similar remaining maturities (Level 2). Held-to-maturity securities – Fair values for held-to-maturity securities equal quoted market prices, if available, such as for highly liquid government bonds (Level 1). If quoted market prices are not available, fair values are estimated based on quoted market prices of similar securities. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the security’s terms and conditions, among other things (Level 2). In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. 122 Loans – The fair value of loans is estimated by discounting the future cash flows, using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Additional factors considered include the type of loan and related collateral, variable or fixed rate, classification status, remaining term, interest rate, historical delinquencies, loan to value ratios, current market rates and remaining loan balance. The loans were grouped together according to similar characteristics and were treated in the aggregate when applying various valuation techniques. The discount rates used for loans were based on current market rates for new originations of similar loans. Estimated credit losses were also factored into the projected cash flows of the loans. The fair value of loans is estimated on an exit price basis incorporating the above factors (Level 3). Deposits – The fair value of demand deposits, savings accounts and money market deposits is the amount payable on demand at the reporting date (i.e., their carrying amount) (Level 2). The fair value of fixed-maturity time deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities (Level 3). Federal Funds purchased, securities sold under agreement to repurchase and short-term debt – The carrying amount for federal funds purchased, securities sold under agreement to repurchase and short-term debt are a reasonable estimate of fair value (Level 2). Other borrowings – For short-term instruments, the carrying amount is a reasonable estimate of fair value. For long-term debt, rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate the fair value (Level 2). Subordinated debentures – The fair value of subordinated debentures is estimated using the rates that would be charged for subordinated debentures of similar remaining maturities (Level 2). Accrued interest receivable/payable – The carrying amounts of accrued interest approximated fair value (Level 2). Commitments to extend credit, letters of credit and lines of credit – The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair values of letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date. The fair value of a financial instrument is the current amount that would be exchanged 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. 123 The estimated fair values, and related carrying amounts, of the Company’s financial instruments are as follows: Carrying Fair Value Measurements (In thousands) Amount Level 1 Level 2 Level 3 Total December 31, 2024 Financial assets: Cash and cash equivalents $ 687,377 $ 687,377 $ — $ — $ 687,377 Interest bearing balances due from banks - time 100 — 100 — 100 Held-to-maturity securities, net 3,636,636 — 2,949,951 — 2,949,951 Interest receivable 123,243 — 123,243 — 123,243 Loans, net 16,770,918 — — 16,153,128 16,153,128 Financial liabilities: Noninterest bearing transaction accounts 4,460,517 — 4,460,517 — 4,460,517 Interest bearing transaction accounts and savings deposits 10,982,022 — 10,982,022 — 10,982,022 Time deposits 6,443,211 — — 6,429,309 6,429,309 Federal funds purchased and securities sold under agreements to repurchase 37,109 — 37,109 — 37,109 Other borrowings 745,372 — 743,940 — 743,940 Subordinated notes and debentures 366,293 — 361,332 — 361,332 Interest payable 67,111 — 67,111 — 67,111 December 31, 2023 Financial assets: Cash and cash equivalents $ 614,092 $ 614,092 $ — $ — $ 614,092 Interest bearing balances due from banks - time 100 — 100 — 100 Held-to-maturity securities, net 3,726,288 — 3,135,370 — 3,135,370 Interest receivable 122,430 — 122,430 — 122,430 Loans, net 16,620,439 — — 15,734,766 15,734,766 Financial liabilities: Noninterest bearing transaction accounts 4,800,880 — 4,800,880 — 4,800,880 Interest bearing transaction accounts and savings deposits 10,997,425 — 10,997,425 — 10,997,425 Time deposits 6,446,673 — — 6,414,222 6,414,222 Federal funds purchased and securities sold under agreements to repurchase 67,969 — 67,969 — 67,969 Other borrowings 972,366 — 970,846 — 970,846 Subordinated notes and debentures 366,141 — 349,424 — 349,424 Interest payable 35,618 — 35,618 — 35,618 The fair value of commitments to extend credit, letters of credit and lines of credit is not presented since management believes the fair value to be insignificant. 124 NOTE 18: COMMITMENTS AND CREDIT RISK The Company grants agribusiness, commercial and residential loans to customers primarily throughout Arkansas, Kansas, Missouri, Oklahoma, Tennessee and Texas, along with credit card loans to customers throughout the United States. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Each customer’s creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real estate. At December 31, 2024, the Company had outstanding commitments to extend credit aggregating approximately $ 756.9 million and $ 4.03 billion for credit card commitments and other loan commitments, respectively. At December 31, 2023, the Company had outstanding commitments to extend credit aggregating approximately $ 738.2 million and $ 4.17 billion for credit card commitments and other loan commitments, respectively. As of December 31, 2024 and 2023, the Company had outstanding commitments to originate fixed-rate mortgage loans of approximately $ 17.8 million and $ 16.6 million respectively. The commitments extend over varying periods of time with the majority being disbursed within a thirty-day period. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company had total outstanding letters of credit amounting to $ 41.6 million and $ 54.2 million at December 31, 2024 and 2023, respectively, with terms ranging from 9 months to 15 years. At December 31, 2024 and 2023, the Company had no deferred revenue under standby letter of credit agreements. The Company has purchased letters of credit from the FHLB as security for certain public deposits. The amount of the letters of credit was $ 1.12 billion and $ 580.8 million at December 31, 2024 and 2023, respectively, and they expire in less than one year from issuance. At December 31, 2024, the Company did not have concentrations of 5% or more of the investment portfolio in bonds issued by a single municipality. NOTE 19: NEW ACCOUNTING STANDARDS Recently Adopted Accounting Standards Segment Reporting - In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which expanded reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. The amendments in this update introduced a new requirement to disclose significant segment expenses regularly provided to the chief operating decision maker, extend certain annual disclosures to interim periods, clarify that single reportable segment entities must apply Topic 280 in its entirety, permit more than one measure of segment profit or loss to be reported under certain conditions and require disclosure of the title and position of the chief operating decision maker. ASU 2023-07 was effective for public business entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The adoption of ASU 2023-07 did not have a material impact on the Company’s operations, financial position or disclosures. See Note 1, Summary of Significant Accounting Policies, for additional information. 125 Investment-Income Taxes - In March 2023, the FASB issued ASU No. 2023-02, Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (“ASU 2023-02”), that introduced the option to apply the proportional amortization method to account for investments made primarily for the purpose of receiving income tax credits and other income tax benefits when certain requirements are met. The proportional amortization method results in the cost of the investment being amortized in proportion to the income tax credits and other income tax benefits received, with the amortization of the investment and the income tax credits being presented net in the income statement as a component of income tax expense (benefit). ASU 2023-02 was effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 31, 2023, with early adoption permitted. The Company elected to early adopt ASU 2023-02 and apply the proportional amortization method for all income tax credits during the first quarter of 2023 by utilizing the modified retrospective method. The adoption of ASU 2023-02 did not have a material impact on the Company’s results of operations, financial position or disclosures. Credit Losses on Financial Instruments - In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”), which eliminated the accounting guidance on troubled debt restructurings (“TDRs”) for creditors in ASC 310-40 and amended the guidance on “vintage disclosures” to require disclosure of current-period gross write-offs by year of origination. The ASU also updated the requirements related to accounting for credit losses under ASC 326 and added enhanced disclosures for creditors with respect to loan refinancings and restructurings made to borrowers experiencing financial difficulty. ASU 2022-02 was effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The Company adopted ASU 2022-02 effective January 1, 2023 on a prospective basis. The adoption of ASU 2022-02 did not have a material impact on the Company’s results of operations or financial position. See Note 4, Loans and Allowance for Credit Losses, for additional information. Fair Value Hedging - In March 2022, the FASB issued ASU No. 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method (“ASU 2022-01”), which clarified the guidance on fair value hedge accounting of interest rate risk for portfolios of financial assets. This ASU amended the guidance in ASU 2017-12 that, among other things, established the “last-of-layer” method for making the fair value hedge accounting for these portfolios more accessible. ASU 2022-01 renamed that method the “portfolio layer” method and expanded the scope of this guidance to allow entities to apply the portfolio layer method to portfolios of all financial assets, including both prepayable and nonprepayable financial assets. This scope expansion was consistent with the FASB’s efforts to simplify hedge accounting and allowed entities to apply the same method to similar hedging strategies. ASU 2022-01 was effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The adoption of 2022-01 did not have a material impact on the Company’s results of operations, financial position or disclosures. Reference Rate Reform – In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provided relief for companies preparing for discontinuation of interest rates such as LIBOR. LIBOR is a benchmark interest rate referenced in a variety of agreements that are used by numerous entities. On March 5, 2021, the U.K. Financial Conduct Authority (“FCA”) announced that the majority of LIBOR rates will no longer be published after December 31, 2021. Effective January 1, 2022, the ICE Benchmark Administration Limited, the administrator of the LIBOR, ceased the publication of one-week and two-month USD LIBOR and as of June 30, 2023, ceased the publications of the remaining tenors of USD LIBOR (one, three, six and 12-month). Other interest rates used globally could also be discontinued for similar reasons. ASU 2020-04 provided optional expedients and exceptions to contracts, hedging relationships and other transactions affected by reference rate reform. The main provisions for contract modifications include optional relief by allowing the modification as a continuation of the existing contract without additional analysis and other optional expedients regarding embedded features. Optional expedients for hedge accounting permitted changes to critical terms of hedging relationships and to the designated benchmark interest rate in a fair value hedge and also provided relief for assessing hedge effectiveness for cash flow hedges. Companies were able to apply ASU 2020-04 immediately; however, the guidance will only be available for a limited time (generally through December 31, 2022). The Company formed a LIBOR Transition Team in 2020, has created standard LIBOR replacement language for new and modified loan notes, and is monitoring the remaining loans with LIBOR rates monthly to ensure progress in updating these loans with acceptable LIBOR replacement language or converting them to other interest rates. 126 During 2021, the Company did not offer LIBOR-indexed rates on loans which it originated, although it did participate in some shared credit agreements originated by other banks subject to the Company’s determination that the LIBOR replacement language in the loan documents met the Company’s standards. Pursuant to the Joint Regulatory Statement on LIBOR transition issued in October 2021, the Company’s policy, as of January 1, 2022, is not to enter into any new LIBOR-based credit agreements and not extend, renew, or modify prior LIBOR credit agreements without requiring conversion of the agreements to other interest rates. The adoption of ASU 2020-04 did not have a material impact on the Company’s financial position or results of operations. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”), which clarified that certain optional expedients and exceptions in ASC 848 for contract modifications and hedge accounting apply to derivatives that are affected by the changes in the interest rates used for margining, discounting, or contract price alignment for derivative instruments that are being implemented as part of the market-wide transition to new reference rates (commonly referred to as the “discounting transition”). ASU 2021-01 also amended the expedients and exceptions in ASC 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition. ASU 2021-01 was effective upon issuance and generally can be applied through December 31, 2022. ASU 2021-01 did not have a material impact on the Company’s financial position or results of operations. In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”). ASU 2022-06 deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. Leases - In July 2021, the FASB issued ASU No. 2021-05, Leases (Topic 842): Lessors-Certain Leases with Variable Lease Payments (“ASU 2021-05”), that amended lease classification requirements for lessors. In accordance with ASU 2021-05, lessors should classify and account for a lease that have variable lease payments that do not depend on a reference index rate as an operating lease if both of the following criteria are met: i) the lease would have been classified as a sales-type lease or a direct financing lease under the previous lease classification criteria and ii) sales-type or direct financing lease classification would result in a Day 1 loss. ASU 2021-05 was effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted. The adoption of ASU 2021-05 did not have a material impact on the Company’s results of operations, financial position or disclosures. Recently Issued Accounting Standards Disaggregation of Income Statement Expenses - In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), that requires footnote disclosure about specific expenses by requiring companies to disaggregate, in a tabular presentation, each relevant expense caption on the face of the income statement that includes any of the following natural expenses: (i) purchases of inventory, (ii) employee compensation, (iii) depreciation, (iv) intangible asset amortization and (v) depreciation, depletion and amortization recognized as part of oil- and gas-producing activities. The tabular disclosure would also include certain other expenses, when applicable. ASU 2024-03 does not change or remove existing expense disclosure requirements; however, it may affect where that information appears in the footnotes to the financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact ASU 2024-03 will have on its results of operations, financial position or disclosures. Stock Compensation - In March 2024, the FASB issued ASU No. 2024-01, Compensation-Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards (“ASU 2024-01”), in response to feedback received by the FASB requesting guidance on how entities should determine the appropriate guidance to apply when accounting for the issuance of profits interest units and similar types of awards. ASU 2024-01 added an example with four fact patterns to ASC 718-10 to assist preparers of financial statements in determining whether profits interest and similar awards should be accounted for within the scope of the guidance. ASU 2024-01 only addresses the scope determination and does not amend the recognition, classification or measurement guidance. ASU 2024-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024, with early adoption permitted for interim or annual financial statements that have not yet been issued or made available for issuance. Entities may choose to adopt 2024-01 on a prospective or retrospective basis. The adoption of ASU 2024-01 is not expected to have a material impact on the Company’s operations, financial position or disclosures. 127 Income Taxes - In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), primarily focused on income tax disclosures regarding effective tax rates and cash income taxes paid. ASU 2023-09 requires public business entities, on an annual basis, to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income by the applicable statutory income tax rate). ASU 2023-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024, with early adoption permitted. The adoption of ASU 2023-09 is not expected to have a material impact on the Company’s operations, financial position or disclosures. Presently, the Company is not aware of any other changes to the Accounting Standards Codification that will have a material impact on the Company’s present or future financial position or results of operations. NOTE 20: DERIVATIVE INSTRUMENTS The Company utilizes derivative instruments to manage exposure to various types of interest rate risk for itself and its customers within policy guidelines. Transactions should only be entered into with an associated underlying exposure. All derivative instruments are carried at fair value. Derivative contracts involve the risk of dealing with institutional derivative counterparties and their ability to meet contractual terms. Institutional counterparties must have an investment grade credit rating and be approved by the Company’s asset/liability management committee. In arranging these products for its customers, the Company assumes additional credit risk from the customer and from the dealer counterparty with whom the transaction is undertaken. Credit risk exists due to the default credit risk created in the exchange of the payments over a period of time. Credit exposure on interest rate swaps is limited to the net favorable value and interest payments of all swaps with each counterparty. Access to collateral in the event of default is reasonably assured. Therefore, credit exposure may be reduced by the amount of collateral pledged by the counterparty. Hedge Structures The Company will seek to enter derivative structures that most effectively address the risk exposure and structural terms of the underlying position being hedged. The term and notional principal amount of a hedge transaction will not exceed the term or principal amount of the underlying exposure. In addition, the Company will use hedge indices which are the same as, or highly correlated to, the index or rate on the underlying exposure. Derivative credit exposure is monitored on an ongoing basis for each customer transaction and aggregate exposure to each counterparty is tracked. The Company has set a maximum outstanding notional contract amount at 25 % of the Company’s assets. Fair Value Hedges For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged asset or liability attributable to the hedged risk are recognized in current earnings. The gain or loss on the derivative instrument is presented on the same income statement line item as the earnings effect of the hedged item. During the third quarter of 2021, the Company began utilizing interest rate swaps designated as fair value hedges to mitigate the effect of changing interest rates on the fair values of fixed rate callable AFS securities. The hedging strategy converts the fixed interest rates to variable interest rates based on federal funds rates. The two year forward start date for these swaps occurred during late third quarter of 2023 and involves the payment of fixed interest rates with a weighted average of 1.21 % in exchange for variable interest rates based on federal funds rates. For the year ended December 31, 2024, the net amount included in interest income on investment securities in the consolidated statements of income related to fair value hedges was $ 42.9 million. The following table summarizes the fair value hedges recorded in the accompanying consolidated balance sheets. December 31, 2024 December 31, 2023 (In thousands) Balance Sheet Location Weighted Average Pay Rate Receive Rate Notional Fair Value Notional Fair Value Derivative assets Other assets 1.21 % Federal Funds $ 1,001,715 $ 103,366 $ 1,001,715 $ 102,644 128 The following amounts were recorded on the balance sheet related to carrying amounts and cumulative basis adjustments for fair value hedges. Carrying Amount of Hedged Assets Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of Hedged Assets Line Item on the Balance Sheet (In thousands) 2024 2023 2024 2023 Investment securities - Available-for-sale $ 934,132 $ 940,010 $ 103,595 $ 104,408 Customer Risk Management Interest Rate Swaps The Company’s qualified loan customers have the opportunity to participate in its interest rate swap program for the purpose of managing interest rate risk on their variable rate loans with the Company. The Company enters into such agreements with customers, then offsetting agreements are executed between the Company and an approved dealer counterparty to minimize market risk from changes in interest rates. The counterparty contracts are identical to customer contracts in terms of notional amounts, interest rates, and maturity dates, except for a fixed pricing spread or fee paid to the Company by the dealer counterparty. These interest rate swaps carry varying degrees of credit, interest rate and market or liquidity risks. The fair value of these derivative instruments is recognized as either derivative assets or liabilities in the accompanying consolidated balance sheets. The Company has a limited number of swaps that are standalone without a similar agreement with the loan customer. The following table summarizes the fair values of loan derivative contracts recorded in the accompanying consolidated balance sheets for the years ended December 31, 2024 and 2023. 2024 2023 (In thousands) Notional Fair Value Notional Fair Value Derivative assets $ 748,752 $ 24,108 $ 551,314 $ 27,627 Derivative liabilities 749,683 24,032 552,274 27,584 Risk Participation Agreements The Company has a limited number of Risk Participation Agreement swaps, that are associated with loan participations, where the Company is not the counterparty to the interest rate swaps that are associated with the risk participation sold. The interest rate swap mark to market only impacts the Company if the swap is in a liability position to the counterparty and the customer defaults on payments to the counterparty. The notional amount of these contingent agreements is $ 23.1 million as of December 31, 2024. Energy Hedging The Company, from time-to-time, has provided energy derivative services to qualifying, high quality oil and gas borrowers for hedging purposes. The Company has served as an intermediary on energy derivative products between the Company’s borrowers and dealers. The Company will only enter into back-to-back trades, thus maintaining a balanced book between the dealer and the borrower. The energy hedging risk exposure to the Company’s customer would increase as energy prices for crude oil and natural gas rise. As prices decrease, exposure to the exchange would increase. These risks are mitigated by customer credit underwriting policies and establishing a predetermined hedge line for each borrower and by monitoring the exchange margin. During the second quarter of 2023, the Company’s remaining energy hedge swap contracts expired and there were no outstanding notional values related to these contracts as of December 31, 2024. Currently, the Company generally does not intend to offer hedging services to any remaining energy related customers. 129 NOTE 21: CONTINGENT LIABILITIES In the ordinary course of its operations, the Company and its subsidiaries are parties to various legal proceedings incidental to the conduct of its business, including proceedings based on breach of contract claims, lender liability claims, and other ordinary-course claims, some of which seek substantial relief or damages. The Company establishes reserves for legal proceedings when potential losses become probable and can be reasonably estimated. While the ultimate resolution (including amounts thereof) of any legal proceedings cannot be determined at this time, based on information presently available and after consultation with legal counsel, management believes that the ultimate outcome in such proceedings, either individually or in the aggregate, will not have a material adverse effect on the Company’s business, consolidated results of operations, financial condition, or cash flows. It is possible, however, that future developments could result in an unfavorable outcome for or resolution of any of these proceedings, which may be material to the Company’s results of operations for a given fiscal period. NOTE 22: STOCKHOLDERS’ EQUITY Simmons Bank, the Company’s subsidiary bank, is subject to legal limitations on dividends that can be paid to the parent company without prior approval of the applicable regulatory agencies. The approval of the Commissioner of the Arkansas State Bank Department is required if the total of all dividends declared by an Arkansas state bank in any calendar year exceeds seventy-five percent ( 75 %) of the total of its net profits, as defined, for that year combined with seventy-five percent ( 75 %) of its retained net profits of the preceding year. Under the foregoing dividend restrictions, and while maintaining its “well capitalized” status, at December 31, 2024, Simmons Bank had paid to the Company all available dividends. Past dividends are not necessarily indicative of amounts that may be paid, or available to be paid, in future periods. The Company’s bank subsidiary is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and its bank subsidiary must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. The risk-based capital guidelines of the Federal Reserve Board and the Arkansas State Bank Department include the definitions for (1) a well-capitalized institution, (2) an adequately-capitalized institution, and (3) an undercapitalized institution. Under the Basel III Rules effective January 1, 2015, the criteria for a well-capitalized institution are: a 5 % “Tier l leverage capital” ratio, an 8 % “Tier 1 risk-based capital” ratio, 10 % “total risk-based capital” ratio; and a 6.5 % “common equity Tier 1 (CET1)” ratio. CET1 generally consists of common stock; retained earnings; accumulated other comprehensive income and certain minority interests; all subject to applicable regulatory adjustments and deductions. The Company and Simmons Bank must hold a capital conservation buffer of 2.5 % composed of CET1 capital above its minimum risk-based capital requirements. Failure to meet this capital conservation buffer would result in additional limits on dividends, other distributions and discretionary bonuses. Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios (set forth in the table below) of total, Tier 1 and common equity Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined). As of December 31, 2024, the Company and its subsidiary bank met all capital adequacy requirements under the Basel III Capital Rules and exceeded the fully phased in capital conservation buffer. As of the most recent notification from regulatory agencies, Simmons Bank was well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Company and the Bank must maintain minimum total risk-based, Tier 1 risk-based, common equity Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed these categories. 130 The Company’s and the Bank’s actual capital amounts and ratios are presented in the following table. Actual Minimum For Capital Adequacy Purposes To Be Well Capitalized Under Prompt Corrective Action Provision (In thousands) Amount Ratio (%) Amount Ratio (%) Amount Ratio (%) December 31, 2024 Total Risk-Based Capital Ratio Simmons First National Corporation $ 2,992,132 14.6 $ 1,639,524 8.0 N/A Simmons Bank 2,795,430 13.7 1,632,368 8.0 2,040,460 10.0 Tier 1 Risk-Based Capital Ratio Simmons First National Corporation 2,535,527 12.4 1,226,868 6.0 N/A Simmons Bank 2,573,121 12.6 1,225,296 6.0 1,633,728 8.0 Common Equity Tier 1 Capital Ratio Simmons First National Corporation 2,535,527 12.4 920,151 4.5 N/A Simmons Bank 2,573,121 12.6 918,972 4.5 1,327,404 6.5 Tier 1 Leverage Ratio Simmons First National Corporation 2,535,527 9.7 1,045,578 4.0 N/A Simmons Bank 2,573,121 9.9 1,039,645 4.0 1,299,556 5.0 December 31, 2023 Total Risk-Based Capital Ratio Simmons First National Corporation $ 2,964,917 14.4 $ 1,647,176 8.0 N/A Simmons Bank 2,834,126 13.8 1,642,972 8.0 2,053,714 10.0 Tier 1 Risk-Based Capital Ratio Simmons First National Corporation 2,493,799 12.1 1,236,595 6.0 N/A Simmons Bank 2,663,153 13.0 1,229,148 6.0 1,638,863 8.0 Common Equity Tier 1 Capital Ratio Simmons First National Corporation 2,493,799 12.1 927,446 4.5 N/A Simmons Bank 2,663,153 13.0 921,861 4.5 1,331,577 6.5 Tier 1 Leverage Ratio Simmons First National Corporation 2,493,799 9.4 1,061,191 4.0 N/A Simmons Bank 2,663,153 10.0 1,065,261 4.0 1,331,577 5.0 131 NOTE 23: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) Condensed Balance Sheets December 31, 2024 and 2023 (In thousands) 2024 2023 ASSETS Cash and cash equivalents $ 287,066 $ 164,439 Investments in wholly-owned subsidiaries 3,570,446 3,603,066 Loans — 102 Intangible assets, net 133 133 Premises and equipment 18,929 20,498 Other assets 75,707 50,642 TOTAL ASSETS $ 3,952,281 $ 3,838,880 LIABILITIES Long-term debt $ 383,720 $ 385,285 Other liabilities 39,689 27,107 Total liabilities 423,409 412,392 STOCKHOLDERS’ EQUITY Common stock 1,257 1,252 Surplus 2,511,590 2,499,930 Undivided profits 1,376,935 1,329,681 Accumulated other comprehensive loss: Unrealized depreciation on available-for-sale securities, net of income taxes of $( 127,698 ) and $( 143,076 ) at December 31, 2024 and 2023, respectively ( 360,910 ) ( 404,375 ) Total stockholders’ equity 3,528,872 3,426,488 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 3,952,281 $ 3,838,880 132 Condensed Statements of Income Years Ended December 31, 2024 , 2023 and 2022 (In thousands) 2024 2023 2022 INCOME Dividends from subsidiaries $ 265,965 $ 166,874 $ 219,868 Other income 570 303 508 Income 266,535 167,177 220,376 EXPENSE 50,075 44,685 46,133 Income before income taxes and equity in undistributed net income of subsidiaries 216,460 122,492 174,243 Provision for income taxes ( 12,294 ) ( 10,790 ) ( 9,391 ) Income before equity in undistributed net income of subsidiaries 228,754 133,282 183,634 Equity in undistributed net income (loss) of subsidiaries ( 76,061 ) 41,775 72,778 NET INCOME $ 152,693 $ 175,057 $ 256,412 Condensed Statements of Comprehensive Income Years Ended December 31, 2024 , 2023 and 2022 (In thousands) 2024 2023 2022 NET INCOME $ 152,693 $ 175,057 $ 256,412 OTHER COMPREHENSIVE INCOME (LOSS) Equity in other comprehensive income (loss) of subsidiaries 43,465 113,185 ( 507,015 ) COMPREHENSIVE INCOME (LOSS) $ 196,158 $ 288,242 $ ( 250,603 ) 133 Condensed Statements of Cash Flows Years Ended December 31, 2024 , 2023 and 2022 (In thousands) 2024 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 152,693 $ 175,057 $ 256,412 Items not requiring (providing) cash Stock-based compensation expense 11,290 12,189 15,317 Depreciation and amortization 1,614 1,637 1,981 Deferred income taxes ( 1,628 ) ( 1,742 ) ( 652 ) Equity in undistributed net income (loss) of bank subsidiaries 76,061 ( 41,775 ) ( 72,778 ) Changes in: Other assets ( 23,437 ) 37,720 ( 26,775 ) Other liabilities 12,734 2,293 ( 28,745 ) Net cash provided by operating activities 229,327 185,379 144,760 CASH FLOWS FROM INVESTING ACTIVITIES Net collections of loans 102 1,310 1,198 Net purchases of premises and equipment ( 45 ) ( 52 ) ( 21 ) Cash acquired in business combinations — — 60,126 Other, net 24 5,856 1,688 Net cash provided by investing activities 81 7,114 62,991 CASH FLOWS FROM FINANCING ACTIVITIES Repayment of long-term debt, net ( 1,717 ) ( 1,664 ) ( 57,436 ) Issuance (cancellation) of common stock, net 375 ( 2,021 ) ( 3,882 ) Stock repurchases — ( 40,322 ) ( 111,133 ) Dividends paid on common stock ( 105,439 ) ( 100,962 ) ( 94,096 ) Net cash used in financing activities ( 106,781 ) ( 144,969 ) ( 266,547 ) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 122,627 47,524 ( 58,796 ) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 164,439 116,915 175,711 CASH AND CASH EQUIVALENTS, END OF YEAR $ 287,066 $ 164,439 $ 116,915 134 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.