SOUTH PLAINS FINANCIAL, INC. 10-K

Item 8. Financial Statements and Supplementary Data 59 Table of Contents Report of Independent Registered Public Accounting Firm Shareholders, Board of Directors, and Audit Committee South Plains Financial, Inc. Lubbock, Texas Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting We have audited the accompanying consolidated balance sheets of South Plains Financial, Inc. ("Company") as of December 31, 2025 and 2024, the related consolidated statements of comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively referred to as “financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework: (2013) , issued by COSO. Change in Accounting Principle As discussed in Notes 1 and 4 to the financial statements, the Company changed its method of accounting for the allowance for credit losses effective January 1, 2023, due to the adoption of Accounting Standards Codification Topic 326. Basis for Opinion The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting . Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“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, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements 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. Our audit of internal control over financial reporting 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 audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. 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. 60 Table of Contents Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Allowance for Credit Losses (ACL) on Loans As of December 31, 2025, the Company’s loan portfolio totaled $3.1 billion and the related ACL on loans was $45.1 million. The Company calculates its ACL in accordance with Topic 326, Financial Instruments – Credit Losses. As described in Notes 1 and 4 to the Company’s consolidated financial statements, the Company applied a dual credit risk rating methodology that estimates each loan’s probability of default and loss given default to calculate the expected credit loss to nonanalyzed loans. Qualitative adjustments are also made to ACL results for additional risk factors that are relevant in assessing the expected credit losses within each loan segment. Qualitative factor risk decisions consider concentrations of the loan portfolio, expected changes to the economic forecasts, large relationships, and other factors related to credit administration, such as borrower’s risk rating and the potential effect of delayed credit score migrations. Management quantifiably identifies segment percentage qualitative factor adjustments using a scorecard risk rating system scaled to historical loss experience within a segment and management’s perceived risk for that particular segment. We identified the Company’s estimate of the ACL as a critical audit matter. The principal considerations for our determination of the critical audit matter include the subjectivity and judgment involved in management’s determination of credit loss estimates and assumptions, specifically management’s determination of the delayed credit score migration qualitative factor adjustment and management’s determination of qualitative factor scorecard risk ratings assigned to each segment. Auditing these assumptions required an increased auditor effort and a high degree of auditor subjectivity and judgment. The primary audit procedures we performed to address this critical audit matter included the following: • Evaluated the design and tested the operating effectiveness of controls relating to the ACL, including: o Management’s review of the ACL, including review of the qualitative factor adjustments, specifically the determination of the delayed credit score migration factor adjustment and the qualitative factor scorecard risk rating assigned to each segment, o Management’s review of portfolio trends that might impact the calculation of the ACL, and o The completeness and accuracy of inputs into the model used to determine the ACL • Evaluated the reasonableness and adequacy of management’s qualitative factor adjustment framework and the application of qualitative factor adjustments within the framework including evaluating the appropriate establishment of the delayed credit score migration qualitative factor and the qualitative factor scorecard risk rating against third party or internal sources; • Evaluated the qualitative factors for appropriate application through analyzing overall trends in credit quality and subsequent events; and • Evaluated and tested the data and inputs utilized within the ACL calculation for completeness and accuracy including mathematical accuracy of the calculation. /s/ Forvis Mazars, LLP We have served as the Company’s auditor since 2022. Houston, Texas March 5, 2026 61 Table of Contents SOUTH PLAINS FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share data) December 31, 2025 2024 ASSETS Cash and due from banks $ 58,318 $ 54,114 Interest-bearing deposits in banks 494,121 304,968 Cash and cash equivalents 552,439 359,082 Securities available for sale 567,540 577,240 Loans held for sale ($ 7,796 and $ 13,791 at fair value at December 31, 2025 and 2024, respectively) 9,993 20,542 Loans held for investment 3,144,502 3,055,054 Allowance for credit losses on loans ( 45,131 ) ( 43,237 ) Loans held for investment, net 3,099,371 3,011,817 Accrued interest receivable 20,931 21,687 Premises and equipment, net 51,563 52,951 Bank-owned life insurance 77,694 76,054 Goodwill 19,315 19,315 Intangible assets, net 1,133 1,720 Mortgage servicing rights 24,041 26,292 Deferred tax asset, net 20,433 22,840 Other assets 36,047 42,699 Total assets $ 4,480,500 $ 4,232,239 LIABILITIES AND STOCKHOLDERS’ EQUITY Deposits: Noninterest-bearing $ 1,023,517 $ 935,510 Interest-bearing 2,850,560 2,685,366 Total deposits 3,874,077 3,620,876 Accrued expenses and other liabilities 52,093 62,060 Subordinated debt 14,100 63,961 Junior subordinated deferrable interest debentures 46,393 46,393 Total liabilities 3,986,663 3,793,290 Stockholders’ equity: Common stock, $ 1.00 par value per share, 30,000,000 shares authorized; 16,293,577 and 16,455,826 issued and outstanding at December 31, 2025 and 2024, respectively 16,294 16,456 Additional paid-in capital 91,065 97,287 Retained earnings 434,197 385,827 Accumulated other comprehensive loss ( 47,719 ) ( 60,621 ) Total stockholders’ equity 493,837 438,949 Total liabilities and stockholders’ equity $ 4,480,500 $ 4,232,239 The accompanying notes are an integral part of these consolidated financial statements. 62 Table of Contents SOUTH PLAINS FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Dollars in thousands, except per share data) Year Ended December 31, 2025 2024 2023 Interest income: Loans, including fees $ 211,202 $ 202,270 $ 176,598 Securities: Taxable 18,634 21,090 21,590 Non-taxable 3,315 3,220 3,872 Federal funds sold and interest-bearing deposits in banks 18,847 14,319 9,973 Total interest income 251,998 240,899 212,033 Interest expense: Deposits 79,355 87,081 64,987 Notes payable & other borrowings — — 5 Subordinated debt 2,730 3,339 4,018 Junior subordinated deferrable interest debentures 2,914 3,381 3,276 Total interest expense 84,999 93,801 72,286 Net interest income 166,999 147,098 139,747 Provision for credit losses 5,195 4,300 4,610 Net interest income, after provision for credit losses 161,804 142,798 135,137 Noninterest income: Service charges on deposit accounts 8,823 8,026 7,130 Net gain on sales of loans 9,605 10,524 11,027 Bank card services and interchange fees 13,912 13,640 13,323 Other mortgage banking income 1,079 3,662 2,790 Investment commissions 1,700 1,704 1,698 Fiduciary fees 2,932 2,719 2,433 Gain on sale of subsidiary — — 33,778 Other 6,838 7,797 7,047 Total noninterest income 44,889 48,072 79,226 Noninterest expense: Salaries and employee benefits 76,947 74,338 79,377 Occupancy and equipment, net 16,051 16,105 16,102 Professional services 7,310 6,583 6,433 Marketing and development 4,023 3,782 3,453 IT and data services 4,701 4,286 3,410 Bank card expenses 6,099 5,873 5,557 Realized loss on sale of securities — — 3,409 Other 17,489 16,611 17,205 Total noninterest expense 132,620 127,578 134,946 Income before income taxes 74,073 63,292 79,417 Income tax expense 15,602 13,575 16,672 Net income $ 58,471 $ 49,717 $ 62,745 The accompanying notes are an integral part of these consolidated financial statements. 63 Table of Contents SOUTH PLAINS FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (CONTINUED) (Dollars in thousands, except per share data) Year Ended December 31, 2025 2024 2023 Earnings per share: Basic $ 3.59 $ 3.03 $ 3.73 Diluted $ 3.44 $ 2.92 $ 3.62 Net income $ 58,471 $ 49,717 $ 62,745 Other comprehensive income (loss): Unrealized gains (losses) on securities available for sale 21,738 ( 9,706 ) 17,282 Less: Change in fair value on hedged state and municipal securities ( 5,406 ) ( 1,619 ) ( 3,686 ) Reclassification adjustment for loss on sale of securities — — 3,409 Tax effect ( 3,430 ) 2,378 ( 3,571 ) Other comprehensive income (loss) 12,902 ( 8,947 ) 13,434 Comprehensive income $ 71,373 $ 40,770 $ 76,179 The accompanying notes are an integral part of these consolidated financial statements. 64 Table of Contents SOUTH PLAINS FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Dollars in thousands, except per share data) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Total Shares Amount Balance at December 31, 2022 17,027,197 $ 17,027 $ 112,834 $ 292,261 $ ( 65,108 ) $ 357,014 Net income — — — 62,745 — 62,745 Cash dividends declared - $ 0.52 per share — — — ( 8,745 ) — ( 8,745 ) Other comprehensive income — — — — 13,434 13,434 Impact of adoption of ASU 2016-13 - CECL — — — ( 997 ) — ( 997 ) Net issuance of stock related to stock-based awards 75,540 76 ( 807 ) — — ( 731 ) Repurchases of common stock ( 685,638 ) ( 686 ) ( 17,077 ) — — ( 17,763 ) Stock-based compensation — — 2,157 — — 2,157 Balance at December 31, 2023 16,417,099 16,417 97,107 345,264 ( 51,674 ) 407,114 Net income — — — 49,717 — 49,717 Cash dividends declared - $ 0.56 per share — — — ( 9,154 ) — ( 9,154 ) Other comprehensive loss — — — — ( 8,947 ) ( 8,947 ) Net issuance of stock related to stock-based awards 92,526 93 ( 852 ) — — ( 759 ) Repurchases of common stock ( 53,799 ) ( 54 ) ( 1,286 ) — — ( 1,340 ) Stock-based compensation — — 2,318 — — 2,318 Balance at December 31, 2024 16,455,826 16,456 97,287 385,827 ( 60,621 ) 438,949 Net income — — — 58,471 — 58,471 Cash dividends declared - $ 0.62 per share — — — ( 10,101 ) — ( 10,101 ) Other comprehensive income — — — — 12,902 12,902 Net issuance of stock related to stock-based awards 80,872 81 ( 1,014 ) — — ( 933 ) Stock issued under employee stock purchase plan 15,925 16 435 — — 451 Repurchases of common stock ( 259,046 ) ( 259 ) ( 8,267 ) — — ( 8,526 ) Stock-based compensation — — 2,624 — — 2,624 Balance at December 31, 2025 16,293,577 $ 16,294 $ 91,065 $ 434,197 $ ( 47,719 ) $ 493,837 The accompanying notes are an integral part of these consolidated financial statements. 65 Table of Contents SOUTH PLAINS FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands,) Year Ended December 31, 2025 2024 2023 Cash flows from operating activities: Net income $ 58,471 $ 49,717 $ 62,745 Adjustments to reconcile net income to net cash from operating activities: Provision for credit losses 5,195 4,300 4,610 Provision for foreclosed asset losses 100 108 142 Depreciation and amortization 5,814 6,510 6,412 Accretion and amortization 2,713 2,844 3,381 Other gains, net ( 284 ) ( 216 ) ( 275 ) Gain on sale of subsidiary — — ( 33,778 ) Loss on sale of securities — — 3,409 Net gain on sales of loans ( 9,605 ) ( 10,524 ) ( 11,027 ) Proceeds from sales of loans held for sale 288,422 296,163 347,583 Loans originated for sale ( 269,348 ) ( 292,640 ) ( 322,122 ) Deferred income tax expense (benefit) ( 1,023 ) ( 1,049 ) 99 Earnings on bank-owned life insurance ( 1,640 ) ( 1,550 ) ( 1,330 ) Stock-based compensation 2,624 2,318 2,157 Change in valuation of mortgage servicing rights 3,331 1,235 2,375 Net change in: Accrued interest receivable and other assets 2,957 1,423 ( 8,502 ) Accrued expenses and other liabilities ( 10,237 ) 742 2,660 Net cash from operating activities 77,490 59,381 58,539 Cash flows from investing activities: Activity in securities available for sale: Purchases ( 420,944 ) ( 304,783 ) ( 199,898 ) Sales — — 52,828 Maturities, prepayments, and calls 449,808 337,941 240,106 Loan originations and principal collections, net ( 95,802 ) ( 46,287 ) ( 270,196 ) Purchases of premises and equipment ( 5,661 ) ( 3,354 ) ( 4,681 ) Proceeds from sales of premises and equipment 2,258 380 968 Proceeds from sale of subsidiary — — 36,080 Capital improvements to foreclosed assets ( 131 ) — — Proceeds from sales of foreclosed assets 2,247 2,176 1,417 Net cash from investing activities ( 68,225 ) ( 13,927 ) ( 143,376 ) Cash flows from financing activities: Net change in deposits 253,201 ( 5,277 ) 219,723 Proceeds from common stock issuance 451 — — Payments to tax authorities for stock-based compensation ( 933 ) ( 759 ) ( 731 ) Payments made on subordinated debt ( 50,000 ) — ( 12,372 ) Cash dividends paid on common stock ( 10,101 ) ( 9,154 ) ( 8,745 ) Payments to repurchase common stock ( 8,526 ) ( 1,340 ) ( 17,763 ) Net cash from financing activities 184,092 ( 16,530 ) 180,112 Net change in cash and cash equivalents $ 193,357 $ 28,924 $ 95,275 Beginning cash and cash equivalents 359,082 330,158 234,883 Ending cash and cash equivalents $ 552,439 $ 359,082 $ 330,158 Supplemental disclosures of cash flow information: Interest paid on deposits and borrowed funds $ 86,093 $ 92,750 $ 70,065 Supplemental schedule of noncash activities: Loans transferred to foreclosed assets 3,437 1,927 2,130 Premises and equipment transferred to foreclosed assets — — 172 Additions to mortgage servicing rights 1,080 958 1,470 The accompanying notes are an integral part of these consolidated financial statements. 66 Table of Contents SOUTH PLAINS FINANCIAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations – South Plains Financial, Inc. (“SPFI”) is a Texas corporation and registered bank holding company that conducts its principal activities through its subsidiaries from offices located throughout Texas and Eastern New Mexico. Principal activities include commercial and retail banking, along with investment, trust, and mortgage services. The following were subsidiaries of SPFI as of December 31, 2025: Wholly-Owned, Consolidated Subsidiaries: City Bank Bank subsidiary Ruidoso Retail, Inc. Non-bank subsidiary CB Provence, LLC Non-bank subsidiary CBT Brushy Creek, LLC Non-bank subsidiary CBT Properties, LLC Non-bank subsidiary Wholly-Owned, Equity Method Subsidiaries: South Plains Financial Capital Trusts (“SPFCT”) III-V Non-bank subsidiaries On April 1, 2023, SPFI entered into a Securities Purchase Agreement (“Agreement”) with Alliant Insurance Services, Inc. (“Alliant”), providing for the sale of Windmark Insurance Agency, Inc. (“Windmark”), City Bank’s wholly-owned subsidiary, through a sale of all of the outstanding shares of capital stock of Windmark to Alliant. The transaction was consummated on April 1, 2023. Pursuant to the terms and subject to the conditions of the Agreement, SPFI received an aggregate purchase price of $ 36.1 million in exchange for Windmark’s common shares, representing a pre-tax gain of $ 33.8 million. This transaction did not meet the criteria for discontinued operations reporting. Basis of Presentation and Consolidation – The consolidated financial statements include the accounts of SPFI and its wholly-owned consolidated subsidiaries (collectively referred to as the “Company”) identified above. All significant intercompany balances and transactions have been eliminated in consolidation. The Company’s consolidated financial statements are prepared and presented in accordance with generally accepted accounting principles (“GAAP”) in the U.S. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) constitutes GAAP for nongovernmental entities. Updates to the FASB ASC are prescribed in Accounting Standards Updates (“ASUs”), which are not authoritative until incorporated into the ASC. Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Determination of the adequacy of the allowance for credit losses (“ACL”) is a material estimate that is particularly susceptible to significant changes in the near term. Reclassifications – Certain amounts in the prior year consolidated financial statements have been reclassified to conform to the current presentation. Concentration of Credit Risk – The bank subsidiary is primarily involved in real estate, commercial, agricultural, and consumer lending activities with customers throughout Texas and Eastern New Mexico. Although the bank subsidiary has a diversified portfolio, its debtors’ ability to honor their contracts is substantially dependent upon the general economic conditions of the region which consist primarily of agribusiness, wholesale/retail, oil and gas and related business, healthcare industries, and institutions of higher education. Comprehensive Income (Loss) – Comprehensive income (loss) is comprised of net income or loss and other comprehensive income or loss (“OCI”). Relevant examples of OCI items are unrealized holding gains and losses on securities available for sale and net gains and losses on fair value hedges. Cash and Cash Equivalents – The Company includes all cash on hand, balances due from other banks, and federal funds sold, all of which have original maturities within three months, as cash and cash equivalents in the accompanying consolidated financial statements. On March 15, 2020, the Federal Reserve Bank announced that it had reduced regulatory reserve requirements to zero percent effective on March 26, 2020; therefore, no cash is required to be maintained to satisfy regulatory reserve requirements. 67 Table of Contents Securities – Investment securities may be classified into trading, held to maturity (“HTM”) or available for sale (“AFS”) portfolios. Securities that are held principally for resale in the near term are classified as trading. Securities that management has the ability and positive intent to hold to maturity are classified as HTM and recorded at amortized cost. Securities not classified as trading or HTM are AFS and are carried at fair value with unrealized gains and losses reported as a component of OCI, net of tax. Management uses these assets as part of its asset/liability management strategy; they may be sold in response to changes in liquidity needs, interest rates, resultant prepayment risk changes, and other factors. Management determines the appropriate classification of securities at the time of purchase. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Gains and losses on sales are recorded on the trade date, are derived from the amortized cost of the security sold and are determined using the specific identification method. A security is placed on nonaccrual status if principal or interest has been in default for a period of 90 days or more, or if full payment of principal and interest is not expected. The Company has made a policy election to exclude accrued interest receivable from the amortized cost basis of AFS securities and report the accrued interest in accrued interest receivable in the Consolidated Balance Sheets. Interest accrued but not received for a security placed on nonaccrual status is reversed against interest income. ACL (AFS Securities) – For AFS securities in an unrealized loss position, the Company first assesses whether it intends to sell, or 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 the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For AFS securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that 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 ACL is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an ACL is recognized in OCI. Changes in the ACL are recorded as provision for credit losses. 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. Accrued interest is excluded from the estimate of credit losses. Nonmarketable Equity Securities – Securities with limited marketability, such as stock in the Federal Home Loan Bank of Dallas (“FHLB”), are carried at cost and are reported in other assets. The Company monitors its investment in FHLB stock for impairment through a review of recent financial results of the FHLB including reviewing the capital adequacy and liquidity position. The Company has not identified any indicators of impairment of FHLB stock. Small Business Investment Company (“SBIC”) investments are equity interests in limited partnerships. The SBIC investments do not have readily determinable fair values and are recorded under the equity method of accounting. Adjustments to the cost basis occur as a result of capital contributions, distributions, the Company’s share of earnings, or changes in the value of the Company’s equity position. The Company’s share of earnings is included in noninterest income with a one-quarter lag period. Loans – Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their amortized cost. Amortized cost is the outstanding unpaid principal balances, net of any unearned income, charge-offs, unamortized deferred fees and costs on originated loans, and unamortized premiums or discounts on purchased loans. 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 in accrued interest receivable on the Consolidated Balance Sheets. Accrued interest receivable is excluded from the estimate of credit losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the straight-line method, which is not materially different from the effective interest method required by GAAP. Loans are placed on nonaccrual status when, in management’s opinion, collection of interest is unlikely, which typically occurs when principal or interest payments are more than ninety days past due. When interest accrual is discontinued, all unpaid accrued interest is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. ACL (Loans) – The ACL is a valuation account established by management as an estimate to cover expected credit losses through a provision for credit losses charged to earnings. Credit losses on loans are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. Expected losses are calculated using comparable and quantifiable information from both internal and external sources about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Expected credit losses are estimated over the contractual term of the loans and adjusted for expected prepayments. 68 Table of Contents The ACL is evaluated on a quarterly basis by management. The Company applied a dual credit risk rating (“DCRR”) methodology that estimates each loan’s probability of default and loss given default to calculate the expected credit loss to non-analyzed loans. The DCRR process quantifies the expected credit loss at the loan level for the entire loan portfolio. Loan grades are assigned by a customized scorecard that risk rates each loan based on multiple probability of default and loss given default elements to measure the credit risk of the loan portfolio. The ACL estimate incorporates the Company’s DCRR loan level risk rating methodology and the expected default rate frequency term structure to derive loan level life of loan estimates of credit losses for every loan in the portfolio. The estimated credit loss for each loan is adjusted based on its one-year through the cycle estimate of expected credit loss to a life of loan measurement that reflects current conditions and reasonable and supportable forecasts. The life of loan expected loss is determined using the contractual weighted average life of the loan adjusted for prepayments. Prepayment speeds are determined by grouping the loans into pools based on segments and risk rating. After the life of loan expected losses are determined, they are adjusted to reflect the Company’s reasonable and supportable economic forecast over a selected range of one to two years . The Company has developed regression models to project net charge-off rates based on macroeconomic variables (“MEVs”), typically a one-year forecast period is used. MEV’s considered in the analysis consist of data gathered from the St. Louis Federal Reserve Research Database (“FRED”), such as, federal funds rate, 10-year treasury rates, 30-year mortgage rates, crude oil prices, consumer price index, housing price index, unemployment rates, housing starts, gross domestic product, and disposable personal income. These regression models are applied to the Company’s economic forecast to determine the corresponding net charge-off rates. The projected net charge-off rates for the given economic scenario are used to adjust the life of loan expected losses. Qualitative adjustments are also made to ACL results for additional risk factors that are relevant in assessing the expected credit losses within our loan segments. These qualitative factor (“Q-Factor”) adjustments may increase or decrease management’s estimate of the ACL by a calculated percentage based upon the estimated level of risk within a particular segment. Q-Factor risk decisions consider concentrations of the loan portfolio, expected changes to the economic forecasts, large relationships, and other factors related to credit administration, such as borrower’s risk rating and the potential effect of delayed credit score migrations. Management quantifiably identifies segment percentage Q-Factor adjustments using a scorecard risk rating system scaled to historical loss experience within a segment and management’s perceived risk for that particular segment. While management uses available information to recognize credit losses on loans, further reductions in the carrying amounts of loans may be necessary based on various factors. In addition, regulatory agencies, as an integral part of their examination process, periodically review the estimated credit losses on loans. Such agencies may require the bank subsidiary to recognize additional credit losses based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the estimated credit losses on loans may change materially in the near term. However, the amount of the change that is reasonably possible cannot be estimated. Loans that exhibit characteristics different from their pool characteristics are evaluated on an individual basis. Loans evaluated individually are not included in the collective ACL evaluation. When management determines that foreclosure is probable, or if certain of these loans are considered to be collateral dependent with the borrower experiencing financial difficulty, the Company elects the fair value of collateral practical expedient, whereby the allowance is calculated as the amount by which the amortized cost exceeds the fair value of collateral, less estimated costs to sell. ACL (Off-Balance Sheet Credit Exposures) – The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The ACL for off-balance sheet credit exposures is adjusted through provision for credit losses. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The likelihood of funding is based on utilization rates, which are determined based on a two-year rolling average of historical usage. Expected loss rates for all pass rated loans are used to determine the ACL for off-balance sheet credit exposures. The ACL for off-balance sheet credit exposures is included in accrued expenses and other liabilities on the Consolidated Balance Sheets. Acquired Loans – Loans that the Company acquires in connection with business combinations are recorded at fair value with no carryover of the acquired entity’s related ACL. The fair value of the acquired loans involves estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest, adjusted for estimated prepayments and credit losses. In accordance with Topic 326, the fair value adjustment is recorded as premium or discount to the unpaid principal balance of each acquired loan. In addition, the Company also records an ACL on each acquired loan. Any acquired loans the Company determines have evidence of a more than insignificant deterioration in credit quality since origination, are considered to be purchase credit deteriorated (“PCD”) loans. The Company evaluates acquired loans for deterioration in credit quality based on any of, but not limited to, the following: (i) non-accrual status; (ii) risk rating, (iii) watchlist credits; and (iv) delinquency status. An ACL is determined using the same methodology as other individually evaluated loans. The sum of the PCD loan’s purchase price and ACL becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a non-credit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the ACL are recorded through provision for credit losses. Mortgage Servicing Rights – When mortgage loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income statement effect recorded in net gain on sale of loans. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates present value of estimated future servicing income. 69 Table of Contents Under the fair value measurement method, the Company measures servicing rights at fair value at each reporting date and reports changes in the fair value of servicing rights in earnings in the period in which the changes occur, and are included with Other mortgage banking income in the consolidated financial statements. The fair value of servicing rights is subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses. Servicing fee income, which is reported in the consolidated financial statements as Other mortgage banking income, is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and recorded when income is earned. Servicing income was $ 3.8 million, $ 4.0 million, and $ 4.2 million for the years ended December 31, 2025, 2024, and 2023, respectively. Transfers of Financial Assets – Transfers of financial assets are accounted for as sales, when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before maturity. Loans Held for Sale – Loans held for sale are comprised of residential mortgage loans. Loans that are originated for best efforts delivery are carried at the lower of aggregate cost or fair value as determined by aggregate outstanding commitments from investors or current investor yield requirements. All other loans held for sale are carried at fair value under the fair value option. Loans sold are typically subject to certain indemnification provisions with the investor; management does not believe these provisions will have any significant consequences. Premises and Equipment – Land is carried at cost. Buildings and equipment are carried at cost, less accumulated depreciation computed on the straight-line method. Buildings and improvements are depreciated on a useful life up to 40 years. Furniture and equipment are depreciated on a useful life between 3 to 10 years. Foreclosed Assets – Assets acquired through, or in lieu of, loan foreclosure or repossession are held for sale and are initially recorded at fair value less estimated selling costs when acquired, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of the cost basis or fair value less estimated costs to sell. Revenue and expenses from operations and changes in the valuation allowance are included in other noninterest expense. Bank-Owned Life Insurance – The bank subsidiary has purchased life insurance policies on various officers and also is the beneficiary. These policies are issued by third party insurance companies. Assets are carried at the cash surrender value and changes in the cash surrender values are recognized in other noninterest income in the accompanying consolidated financial statements. Goodwill and Other Intangible Assets – Goodwill resulting from business combinations is generally determined as the excess of the fair value of the consideration transferred over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill is not amortized, but is tested for impairment on October 31 of each year or more frequently if events and circumstances exist that indicate that an impairment test should be performed. There was no impairment recorded for the years ended December 31, 2025, 2024 and 2023. Core deposit intangible (“CDI”) is a measure of the value of checking and savings deposit relationships acquired in a business combination. The fair value of the CDI stemming from any given business combination is based on the present value of the expected cost savings attributable to the core deposit funding relative to an alternative source of funding. CDI is amortized over the estimated useful lives of the existing deposit relationships acquired, but does not exceed 10 years. Substantially all CDI is amortized using the sum of the years’ digits method. Mortgage Banking Derivatives – Commitments to fund mortgage loans (interest rate locks) to be sold into the secondary market, forward commitments for the future delivery of these mortgage loans, and forward sales of mortgage-backed securities are accounted for as free-standing derivatives. At the time of the interest rate lock, the Company determines whether the loan will be sold through a best efforts contract or a mandatory delivery contract. These mortgage banking derivatives are not designated in hedge relationships. In order to hedge the change in interest rates resulting from the commitments to fund the loans that will be sold through a best efforts contract, the Company enters into forward loans sales commitments for the future delivery of mortgage loans when interest rate locks are entered. At inception, these interest rate locks and the related forward loan sales commitments, adjusted for the expected exercise of the commitment before the loan is funded, are recorded with a zero value. Subsequent changes in fair value are estimated based on changes in mortgage interest rates from the date the interest rate on the loan is locked. In order to hedge the change in interest rates resulting from all other mortgage commitments to fund loans, the Company enters into forward sales of mortgage-backed securities contracts. At inception, these interest rate locks are recorded at fair value and are adjusted for the expected exercise of the commitment before the loan is funded. Subsequent changes in fair value are estimated based on changes in mortgage interest rates from the date the interest rate on the loan is locked. Changes in the fair values of these derivatives are included in net gain on sales of loans in the consolidated financial statements. 70 Table of Contents Derivatives – At the inception of a derivative contract, the Company designates the derivative as one of three types based on the Company’s intentions and belief as to likely effectiveness as a hedge. These three types are (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge”), (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”), or (3) an instrument with no hedging designation (“stand-alone derivative”). For a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item, are recognized in current earnings as fair values change. For a cash flow hedge, the gain or loss on the derivative is reported in OCI and is reclassified into earnings in the same periods during which the hedged transaction affects earnings. For both types of hedges, changes in the fair value of derivatives that are not highly effective in hedging the changes in fair value or expected cash flows of the hedged item are recognized immediately in current earnings. Changes in the fair value of derivatives that do not qualify for hedge accounting are reported currently in earnings, as noninterest income. Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Net cash settlements on derivatives that do not qualify for hedge accounting are reported in noninterest income. Cash flows on hedges are classified in the cash flow statement the same as the cash flows of the items being hedged. The Company formally documents the relationship between derivatives and hedged items, as well as the risk-management objective and the strategy for undertaking hedge transactions at the inception of the hedging relationship. This documentation includes linking fair value or cash flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used are highly effective in offsetting changes in fair values or cash flows of the hedged items. The Company discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative is settled or terminates, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or treatment of the derivative as a hedge is no longer appropriate or intended. When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as noninterest income. When a fair value hedge is discontinued, the hedged asset or liability is no longer adjusted for changes in fair value and the existing basis adjustment is amortized or accreted over the remaining life of the asset or liability. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in OCI are amortized into earnings over the same periods which the hedged transactions will affect earnings. Leases – The Company determines if an arrangement is a lease at inception. Operating leases with a term of greater than one year are included in other assets and other liabilities on the Company’s Consolidated Balance Sheets. Finance leases, if any, are included in premises and equipment and other liabilities on the Company’s Consolidated Balance Sheets. The Company has lease agreements with lease and nonlease components, which are generally accounted for as a single lease component. The Company has made an accounting policy election not to recognize short-term lease assets and liabilities (less than a 12-month term) or equipment leases (deemed not significant) on its Consolidated Balance Sheets; instead, the Company recognizes the lease expense for these leases on a straight-line basis over the life of the lease. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized on the lease commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses an estimated incremental collateralized borrowing rate at lease inception, on a collateralized basis, over a similar term, when determining the present value of lease payments . No significant judgments or assumptions were involved in developing the estimated operating lease liabilities as the Company’s operating lease liabilities largely represent the future rental expenses associated with operating leases, and the incremental borrowing rates are based on publicly available interest rates. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease. These options to extend or terminate are assessed on a lease-by-lease basis, and the ROU assets and lease liabilities are adjusted when it is reasonably certain that an option will be exercised. Rental expense for lease payments is recognized on a straight-line basis over the lease term and is included in occupancy and equipment, net within our Consolidated Statements of Comprehensive Income. Revenue Recognition – The majority of the Company’s revenues come from interest income and other sources, including loans, securities and derivatives, that are outside the scope of Topic 606. The Company’s services that fall within the scope of Topic 606 are presented within Noninterest Income and are recognized as revenue as the Company satisfies its obligation to the customer. Services within the scope of Topic 606 include service charges on deposit accounts, bank card services and interchange fees, investment commissions, fiduciary fees, and the sale of other real estate owned (“OREO”). Substantially all of the Company’s revenue is generated from contracts with customers. Noninterest income streams within the scope of Topic 606 are discussed below. 71 Table of Contents Service Charges on Deposit Accounts The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance. Bank Card Services and Interchange Fees The Company earns bank card service and interchange fees from debit and credit cardholder transactions conducted through card payment networks. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. Bank card services income mainly represents fees charged to merchants to process their debit and credit card transactions, in addition to account management fees and service fees such as ATM use fees and are recognized at the time the transaction is executed. Investment Commissions and Fiduciary Trust Fees The Company earns investment commissions and fiduciary trust fees from its contracts with trust customers to manage assets for investment, and/or to transact on their accounts. These fees are primarily earned over time as the Company provides the contracted monthly or quarterly services and are generally assessed based on a tiered scale of the market value of assets under management (AUM) at month-end. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed, i.e., the trade date. Other related services provided include financial planning services and the fees the Company earns, which are based on a fixed fee schedule, are recognized when the services are rendered. In addition, certain trust customers have contracted with the Company to provide trust dissolution services, which are based on a unitary management fee treated as a single performance obligation. The Company’s performance obligation is satisfied over time-based on the customer simultaneously receiving and consuming the benefits of the Company’s service. The unitary management fee is treated as variable consideration and is evaluated and included in the transaction price at the end of each reporting period (quarterly). Revenue is recognized based on a reasonable time-based measure of progress towards the Company’s complete satisfaction of the performance obligation at the end of each respective reporting period, with the unearned amount based on progress measure being included in deferred contract liability. This variable consideration and the amount of revenue recognized is evaluated quarterly until the Company has entirely fulfilled its performance obligation, at which time the remaining unearned revenue is recognized. Gains/Losses on Sales of OREO The Company records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of OREO to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present. Contract Balances A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). A contract liability balance is an entity’s obligation to transfer a service to a customer for which the entity has already received payment (or payment is due) from the customer. The Company’s noninterest revenue streams are largely based on transactional activity, or standard month-end revenue accruals. Consideration is often received immediately or shortly after the Company satisfies its performance obligation and revenue is recognized. The Company does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances. The Company did not have any significant contract balances at December 31, 2025 and 2024. Contract Acquisition Costs In connection with the adoption of Topic 606, an entity is required to capitalize, and subsequently amortize into expense, certain incremental costs of obtaining a contract with a customer if these costs are expected to be recovered. The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (for example, sales commission). The Company utilizes the practical expedient which allows entities to immediately expense contract acquisition costs when the asset that would have resulted from capitalizing these costs would have been amortized in one year or less. Upon adoption of Topic 606, the Company did not capitalize any contract acquisition cost. Stock-Based Compensation – The Company sponsors an equity incentive plan under which options to acquire shares of the Company’s common stock may be granted periodically to all full-time employees and directors of the Company or its affiliates at a specific exercise price. Shares are issued out of authorized and unissued common shares that have been reserved for issuance under such plan. Compensation cost is measured based on the estimated fair value of the award at the grant date and is recognized in earnings on a straight-line basis over the requisite service period. The fair value of stock options is estimated at the date of grant using a closed form option valuation (“Black-Scholes”) option pricing model. This model requires assumptions as to the expected stock volatility, dividends, terms and risk-free rates. The expected volatility is based on the combination of the Company’s historical volatility and the volatility of comparable peer banks. The expected term represents the period of time that options are expected to be outstanding from the grant date. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the appropriate life of each stock option. 72 Table of Contents Advertising – Advertising costs are recognized when incurred. Advertising costs during 2025, 2024, and 2023 were approximately $ 3.4 million, $ 3.3 million, and $ 2.9 million, respectively. Income Taxes – The Company files a consolidated federal income tax return including the results of its wholly owned subsidiary, the Bank. The Company estimates income taxes payable based on the amount it expects to owe. Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities (excluding deferred tax assets and liabilities related to components of OCI). Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the expected amount most likely to be realized. Realization of deferred tax assets is dependent upon the generation of a sufficient level of future taxable income. Although realization is not assured, management believes it is more likely than not that all of the deferred tax assets will be realized. Interest and/or penalties related to income taxes are reported as a component of income tax expense. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The State of Texas franchise tax is an income tax for financial reporting purposes under GAAP and the Company and its subsidiaries are subject to the modified tax as a combined group. Earnings per Share – Basic earnings per share is net income divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share includes the dilutive effect of additional potential shares issuable under stock options. Earnings and dividends per share are restated for all stock splits and stock dividends through the date of issuance of the consolidated financial statements. Fair Values of Financial Instruments – Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully described in Note 23. Fair value estimates involve uncertainties and matters of significant judgment. Changes in assumptions or in market conditions could significantly affect estimates. Trust Assets – Custodial assets of City Bank’s trust department, other than cash on deposit at City Bank, if any, are not included in the accompanying consolidated financial statements because they are not assets of City Bank. Accounting Changes and Recent Accounting Pronouncements – ASU 2016-13 Financial Instruments - Credit Losses (Topic 326). The FASB issued guidance to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (“CECL”) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables and held to maturity debt securities. The CECL model also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in sales type and direct financing leases recognized by a lessor in accordance with Topic 842 on leases. In addition, Topic 326 made changes to the accounting for securities available for sale. One such change is to require credit losses to be presented as an allowance rather than as a write-down on securities available for sale management does not intend to sell or believes that it is more likely than not they will be required to sell. The Company adopted the CECL model effective January 1, 2023 using the modified retrospective approach. As a result, the Company recognized a one-time, after tax cumulative effect adjustment of $ 997 thousand that reduced retained earnings, increased the ACL for loans by approximately $100 thousand and increased the ACL for off-balance sheet credit exposures by approximately $ 1.2 million. The Company made the following policy elections related to the adoption of the CECL model. First, accrued interest will be written off against interest income when financial assets are placed into nonaccrual status. Therefore, accrued interest will be excluded from the amortized cost basis for purposes of calculating the ACL. Accrued interest receivable is presented in a separate line item in the Consolidated Balance Sheets. Second, the fair value of collateral practical expedient has been elected on certain loans in determining the ACL, for which the repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty. 73 Table of Contents The impact on the ACL resulting from the adoption of the CECL model is shown below. (Dollars in thousands) January 1, 2023 Pre-Adoption Impact of Adoption Post-Adoption Commercial real estate $ 13,029 $ 827 $ 13,856 Commercial – specialized 3,425 33 3,458 Commercial - general 9,215 ( 2,574 ) 6,641 Consumer: 1-4 family residential 6,194 1,700 7,894 Auto loans 3,926 ( 332 ) 3,594 Other consumer 1,376 ( 235 ) 1,141 Construction 2,123 683 2,806 Total allowance for credit losses on loans $ 39,288 $ 102 $ 39,390 Allowance for credit losses for off-balance sheet exposures $ 580 $ 1,160 $ 1,740 ASU 2022-02 Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. This ASU eliminates guidance for troubled debt restructurings by creditors and enhances disclosure requirements for certain loan modifications by creditors for borrowers experiencing financial distress. This ASU defines types of modifications as principal forgiveness, interest rate reduction, other than insignificant payment delays, or a term extension. In addition, the ASU requires disclosure of current-period gross charge-offs, by year of origination, in the vintage disclosure. The Company adopted the provisions of ASU 2022-02 as of January 1, 2023 on a prospective basis. The adoption of this amendment did not have a material impact on the consolidated financial statements. ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 . ASU 2022-06 extended the period of time preparers can utilize the reference rate reform relief guidance provided by ASU 2020-04 and ASU 2021-01. ASU 2022-06, which was effective upon issuance, deferred the sunset date of this prior guidance from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief guidance in Topic 848. The adoption of ASU 2022-06 did not significantly impact the consolidated financial statements and the Company has fully transitioned all products tied to LIBOR. ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this Update require public entities to disclose information about reportable segments’ significant expenses on an interim and annual basis. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The adoption of ASU 2023-07 did not have a material effect on the Company’s consolidated financial statements. ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. The amendments in this Update modify the disclosure or presentation requirements of a variety of Topics in the Codification. Certain of the amendments represent clarifications to, or technical corrections of the current requirements. Each amendment in the ASU will only become effective if the SEC removes the related disclosure or presentation requirement from its existing regulations by June 30, 2027. The amendments in this ASU are not expected to have a material impact on the results of operations or financial position. ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this Update are intended to improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments intended to improve the effectiveness of income tax disclosures. This update was effective for fiscal years beginning after December 15, 2024. ASU 2023-09 was adopted using the retrospective method and did not have a material effect on the Company’s consolidated financial statements. ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires public companies to disclose in tabular format, in the notes to the financial statements, specific disaggregated information about certain prescribed categories of expenses at each interim and annual reporting period. The prescribed categories include, among other things, employee compensation, depreciation, and intangible asset amortization. This ASU is effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Implementation of this ASU may be applied prospectively or retrospectively. The Company does not expect the adoption of this ASU to have a material impact on the Company’s consolidated financial statements. 74 Table of Contents ASU 2025-08 Financial Instruments - Credit Losses (Topic 326): Purchased Loans. This ASU amends the guidance in ASC 326 on the accounting for certain purchased loans. Under the ASU, entities must account for acquired loans (excluding credit cards) that meet certain criteria at acquisition (“purchased seasoned loans”) by recognizing them at their purchase price plus an allowance for expected credit losses (the "gross-up" approach). The ASU’s amendments align the accounting for purchased seasoned loans with the treatment of financial assets purchased with more-than-insignificant credit deterioration since origination (“PCD assets”). Purchased seasoned loans are defined under the ASU as non-PCD loans that are obtained in a business combination, or non-PCD loans that 1) are obtained in an asset acquisition or upon consolidation of a variable interest entity that is not a business and 2) are acquired more than 90 days after their origination date by a transferee that was not involved in their origination. The ASU also introduces an accounting policy election related to the subsequent measurement of expected credit losses for entities that use a method other than a discounted cash flow analysis to estimate credit losses on purchased seasoned loans. If this accounting policy is elected, entities can use the amortized cost basis of the asset to subsequently measure their credit loss allowance. Accordingly, they can aggregate purchased and originated loans when adjusting estimates of credit losses for assets that share similar risk characteristics. This update is effective for annual reporting periods beginning after December 15, 2026, including interim reporting periods, and the adoption of the ASU must be applied prospectively. Early adoption is permitted in an interim or annual reporting period in which financial statements have not yet been issued or made available for issuance. An entity that adopts the amendments in an interim reporting period may apply them “as of the beginning of that interim reporting period or the beginning of the annual reporting period that includes that interim reporting period.” The Company expects to early adopt ASU 2025-08 and is currently evaluating the impact from adoption. ASU 2025-11 Interim Reporting (Topic 270): Narrow-Scope Improvements. This ASU is intended to improve the navigability of the guidance in ASC 270 and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides “interim financial statements and notes in accordance with GAAP.” The ASU also addresses the form and content of such financial statements, adds lists to ASC 270 of the interim disclosures required by all other Codification topics, and establishes a principle under which an entity must “disclose events since the end of the last annual reporting period that have a material impact on the entity.” As the Board stated in the proposed guidance and reiterates in the ASU, the amendments are not intended to “change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements.” This update is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, early adoption is permitted. The amendments in this ASU are not expected to have a material impact on the results of operations or financial position. Subsequent Events – The Company has evaluated subsequent events and transactions from December 31, 2025 through the date this Form 10-K was filed with the SEC for potential recognition or disclosure as required by GAAP. 2. MERGERS AND ACQUISITIONS On December 1, 2025, SPFI and BOH Holdings, Inc., a Texas corporation (“BOH”), entered into an Agreement and Plan of Reorganization (the “Reorganization Agreement”), providing for the acquisition by SPFI of BOH through the merger of BOH with and into SPFI, with SPFI surviving the merger (the “Merger”). At December 31, 2025, BOH had $ 745.1 million in assets (unaudited), $ 624.5 million in total gross loans (unaudited), and $ 603.0 million in deposits (unaudited). Pursuant to the terms and subject to the conditions of the Reorganization Agreement, which has been unanimously approved by the boards of directors of each of SPFI and BOH, each share of BOH common stock issued and outstanding immediately prior to the effective time of the Merger (the “effective time”) will be converted into the right to receive, without interest, 0.1925 shares of SPFI common stock, subject to adjustment pursuant to the terms of the Reorganization Agreement (the “Exchange Ratio”), plus cash in lieu of any fractional shares. Based on the closing price of $ 37.79 for SPFI common stock on November 28, 2025, the Merger would have an aggregate value of approximately $ 105.9 million, though the transaction value is likely to change until closing due to fluctuations in the price of SPFI common stock. Immediately following the consummation of the Merger, Bank of Houston, a Texas state banking association and wholly-owned subsidiary of BOH, will merge with and into City Bank, with City Bank surviving the merger. The Merger is expected to close during the second quarter of 2026, subject to the satisfaction of customary closing conditions, including the receipt of all required regulatory approvals and the approval of BOH’s shareholders. 3. SECURITIES The amortized cost, related gross unrealized gains and losses, allowance for credit losses, and estimated fair value of securities available for sale at year-end follows (dollars in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Fair Value December 31, 2025 Available for sale: State and municipal $ 199,417 $ 388 $ ( 23,500 ) $ — $ 176,305 Residential mortgage-backed securities 302,711 130 ( 42,081 ) — 260,760 Commercial mortgage-backed securities 48,769 — ( 3,983 ) — 44,786 Commercial collateralized mortgage obligations 67,708 77 ( 188 ) — 67,597 Asset-backed and other amortizing securities 13,972 — ( 840 ) — 13,132 Other securities 5,000 — ( 40 ) — 4,960 $ 637,577 $ 595 $ ( 70,632 ) $ — $ 567,540 75 Table of Contents December 31, 2024 Available for sale: State and municipal $ 199,588 $ 1 $ ( 26,292 ) $ — $ 173,297 Residential mortgage-backed securities 321,021 — ( 56,925 ) — 264,096 Commercial mortgage-backed securities 46,601 — ( 6,241 ) — 40,360 Commercial collateralized mortgage obligations 73,697 — ( 214 ) — 73,483 Asset-backed and other amortizing securities 16,107 — ( 1,526 ) — 14,581 Other securities 12,000 — ( 577 ) — 11,423 $ 669,014 $ 1 $ ( 91,775 ) $ — $ 577,240 The amortized cost and estimated fair value of securities at December 31, 2025 are presented below by contractual maturity (dollars in thousands). Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Declining-balance securities are shown separately since they are not due at a single maturity date. Available for Sale Amortized Cost Fair Value Within 1 year $ 545 $ 546 After 1 year through 5 years 10,080 9,985 After 5 years through 10 years 12,841 12,185 After 10 years 180,951 158,549 Declining-balance securities 433,160 386,275 $ 637,577 $ 567,540 At December 31, 2025 and 2024, there were no holdings of securities of any one issuer, other than the U.S. government, its agencies, or its sponsored enterprises, in an amount greater than 10% of stockholders’ equity. Securities with a carrying value of approximately $ 413.7 million and $ 309.0 million at December 31, 2025 and 2024, respectively, were pledged to collateralize public deposits and for other purposes as required or permitted by law. The Company sold $ 56.2 million of available for sale securities in the second quarter of 2023. This resulted in realized losses on sale of $ 3.4 million. The following table segregates securities with unrealized losses at year-end, by the duration they have been in a loss position for which an allowance for credit losses has not been recorded (dollars in thousands): Less than 12 Months 12 Months or More Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss December 31, 2025 State and municipal $ 205 $ — $ 165,618 $ 23,500 $ 165,823 $ 23,500 Residential mortgage-backed securities 3,132 48 249,710 42,033 252,842 42,081 Commercial mortgage-backed securities 3,503 7 41,284 3,976 44,787 3,983 Commercial collateralized mortgage obligations 63,210 188 — — 63,210 188 Asset-backed and other amortizing securities — — 13,132 840 13,132 840 Other securities — — 4,961 40 4,961 40 $ 70,050 $ 243 $ 474,705 $ 70,389 $ 544,755 $ 70,632 December 31, 2024 State and municipal $ 205 $ 1 $ 171,306 $ 26,291 $ 171,511 $ 26,292 Residential mortgage-backed securities 8 — 264,088 56,925 264,096 56,925 Commercial mortgage-backed securities — — 40,360 6,241 40,360 6,241 Commercial collateralized mortgage obligations 73,483 214 — — 73,483 214 Asset-backed and other amortizing securities — — 14,581 1,526 14,581 1,526 Other securities — — 11,423 577 11,423 577 $ 73,696 $ 215 $ 501,758 $ 91,560 $ 575,454 $ 91,775 76 Table of Contents There were 131 securities with an unrealized loss at December 31, 2025, generally due to a continuation of the elevated market interest rate environment. Management evaluates AFS securities in unrealized loss positions to determine whether the impairment is due to credit-related factors or non-credit related factors. Consideration is given to the extent to which the fair value is less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for the anticipated recovery in fair value. Management does not have the intent to sell any of the securities in an unrealized loss position as there are adequate liquidity sources to meet expected and unexpected funding needs. The fair value of these securities is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Accordingly, as of December 31, 2025, management believes the unrealized loss positions detailed in the previous table are due to non-credit related factors, including changes in interest rates and other market conditions, and therefore no ACL for AFS securities or losses have been recognized or realized in the consolidated financial statements. 4. LOANS HELD FOR INVESTMENT Loans held for investment are summarized by category at year-end as follows (dollars in thousands): December 31, 2025 December 31, 2024 Commercial real estate $ 1,064,625 $ 1,119,063 Commercial - specialized 409,351 388,955 Commercial - general 659,323 557,371 Consumer: 1-4 family residential 589,851 566,400 Auto loans 259,157 254,474 Other consumer 62,092 64,936 Construction 100,103 103,855 3,144,502 3,055,054 Allowance for credit losses on loans ( 45,131 ) ( 43,237 ) Loans, net $ 3,099,371 $ 3,011,817 The Company has certain lending policies, underwriting standards, and procedures in place that are designed to maximize loan income with an acceptable level of risk. Management reviews and approves these policies, underwriting standards, and procedures on a regular basis and makes changes as appropriate. Management receives frequent reports related to loan originations, quality, concentrations, delinquencies, non-performing, and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions, both by type of loan and geography. Commercial Real Estate – Underwriting standards have been designed to determine whether the borrower possesses sound business ethics and practices, evaluate current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed and ensure appropriate collateral is obtained to secure the loan. Commercial real estate loans are underwritten primarily based on projected cash flows for income-producing properties and collateral values for non-income-producing properties. The repayment of these loans is generally dependent on the successful operation of the property securing the loans or the sale or refinancing of the property. Real estate loans may be adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s real estate portfolio are diversified by type and geographic location. This diversity helps reduce the exposure to adverse economic events that affect any single market or industry. Commercial – General and Specialized – Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably. Underwriting standards have been designed to determine whether the borrower possesses sound business ethics and practices, evaluate current and projected cash flows to determine the ability of the borrower to repay their obligations, as agreed and ensure appropriate collateral is obtained to secure the loan. Commercial loans are primarily made based on the identified cash flows of the borrower and, secondarily, on the underlying collateral provided by the borrower. Most commercial loans are secured by the assets being financed or other business assets, such as real estate, accounts receivable, or inventory, and typically include personal guarantees. Owner-occupied real estate is included in commercial loans, as the repayment of these loans is generally dependent on the operations of the commercial borrower’s business rather than on income-producing properties or the sale of the properties. Commercial loans are grouped into two distinct sub-categories: specialized and general. Commercial related segments that are considered “specialized” include agricultural production and real estate loans, energy loans, and finance, investment, and insurance loans. Commercial related segments that contain a broader diversity of borrowers, sub-industries, or serviced industries are grouped into the “general category.” These include goods, services, restaurant & retail, construction, and other industries. Performance of these loans is subject to operating and cash flow results of the borrower, with risk in the volatility of operating results for particular industries. 77 Table of Contents Consumer – Loans to consumers include 1-4 family residential loans, auto loans, and other loans for recreational vehicles or other purposes. The Company utilizes a computer-based credit scoring analysis to supplement its policies and procedures in underwriting consumer loans. The Company’s loan policy addresses types of consumer loans that may be originated and the collateral, if secured, which must be perfected. The relatively smaller individual dollar amounts of consumer loans that are spread over numerous individual borrowers also minimizes the Company’s risk. The Company generally requires mortgage title insurance and hazard insurance on 1-4 family residential loans. All consumer loans are generally dependent on the risk characteristics of the borrower’s ability to repay the loan, a consideration of the debt to income ratio, employment and income stability, the loan-to-value ratio, and the age, condition and marketability of the collateral. Construction – Loans for residential construction are for single-family properties to developers, builders, or end-users. These loans are underwritten based on estimates of costs and completed value of the project. Funds are advanced based on estimated percentage of completion for the project. Performance of these loans is affected by economic conditions as well as the ability to control costs of the projects. The commercial real estate and construction categories comprise the Company’s nonowner-occupied real estate loans. Total nonowner-occupied real estate loans were $ 1.16 billion at December 31, 2025, and $ 1.22 billion at December 31, 2024. The following tables detail the activity in the ACL for loans for the years ended December 31, 2025, 2024, and 2023 (dollars in thousands). Allocation of a portion of the ACL to one category of loans does not preclude its availability to absorb losses in other categories. Beginning Balance Provision for Credit Losses Charge- offs Recoveries Ending Balance For the year ended December 31, 2025 Commercial real estate $ 15,973 $ ( 218 ) $ ( 541 ) $ — $ 15,214 Commercial - specialized 4,640 464 — 127 5,231 Commercial - general 6,874 1,050 ( 883 ) 407 7,448 Consumer: 1-4 family residential 9,677 1,592 ( 307 ) 141 11,103 Auto loans 3,015 1,165 ( 1,349 ) 202 3,033 Other consumer 1,115 868 ( 1,066 ) 233 1,150 Construction 1,943 4 — 5 1,952 $ 43,237 $ 4,925 $ ( 4,146 ) $ 1,115 $ 45,131 For the year ended December 31, 2024 Commercial real estate $ 15,808 $ 207 $ ( 87 ) $ 45 $ 15,973 Commercial - specialized 4,020 540 — 80 4,640 Commercial - general 6,391 1,393 ( 1,082 ) 172 6,874 Consumer: 1-4 family residential 9,177 669 ( 175 ) 6 9,677 Auto loans 3,601 465 ( 1,186 ) 135 3,015 Other consumer 968 1,204 ( 1,257 ) 200 1,115 Construction 2,391 ( 138 ) ( 315 ) 5 1,943 $ 42,356 $ 4,340 $ ( 4,102 ) $ 643 $ 43,237 Beginning Balance Impact of CECL Adoption Provision for Credit Losses Charge- offs Recoveries Ending Balance For the year ended December 31, 2023 Commercial real estate $ 13,029 $ 827 $ 1,952 $ — $ — $ 15,808 Commercial - specialized 3,425 33 398 ( 11 ) 175 4,020 Commercial - general 9,215 ( 2,574 ) 42 ( 469 ) 177 6,391 Consumer: 1-4 family residential 6,194 1,700 1,278 ( 1 ) 6 9,177 Auto loans 3,926 ( 332 ) 698 ( 888 ) 197 3,601 Other consumer 1,376 ( 235 ) 688 ( 1,140 ) 279 968 Construction 2,123 683 ( 96 ) ( 319 ) — 2,391 $ 39,288 $ 102 $ 4,960 $ ( 2,828 ) $ 834 $ 42,356 During the years ended December 31, 2025, 2024, and 2023 the Company recorded a provision for credit loss of $ 5.2 million, $ 4.3 and $ 4.6 million, respectively, which was comprised of a provision for credit losses on loans of $ 4.9 million, $ 4.3 million, and $ 5.0 respectively, and a provision for off-balance sheet credit exposures of $ 270 thousand, $( 40 ) thousand, and $( 350 ) thousand, respectively. 78 Table of Contents The following table shows the Company’s amortized cost and related ACL for individually evaluated collateral dependent loans by class using the fair value of collateral loss estimation methodology of evaluating expected credit losses at the dates indicated (dollars in thousands). Equipment Real Estate Accounts Receivable Total Loans Individually Evaluated Total ACL for Individually Evaluated Loans December 31, 2025 Commercial real estate $ 462 $ 941 $ — $ 1,403 $ 112 Commercial - specialized 289 255 — 544 — Commercial - general 1,086 2,869 — 3,955 275 Consumer: 1-4 family residential — — — — — Auto loans — — — — — Other consumer — — — — — Construction — — — — — $ 1,837 $ 4,065 $ — $ 5,902 $ 387 December 31, 2024 Commercial real estate $ — $ 19,543 $ — $ 19,543 $ 552 Commercial - specialized — — — — — Commercial - general — — — — — Consumer: 1-4 family residential — — — — — Auto loans — — — — — Other consumer — — — — — Construction — 1,575 — 1,575 — $ — $ 21,118 $ — $ 21,118 $ 552 The table below provides an age analysis on accruing past-due loans and nonaccrual loans at the dates indicated (dollars in thousands): 30-89 Days Past Due 90 Days or More Past Due Total Nonaccrual Nonaccrual with no ACL December 31, 2025 Commercial real estate $ 2,241 $ 206 $ 1,402 $ 54 Commercial - specialized 264 50 699 544 Commercial - general 1,173 31 4,108 — Consumer: 1-4 Family residential 1,221 1,750 845 — Auto loans 395 40 — — Other consumer 765 80 16 — Construction 455 578 — — $ 6,514 $ 2,735 $ 7,070 $ 598 December 31, 2024 Commercial real estate $ 594 $ 96 $ 19,543 $ — Commercial - specialized 1,770 240 105 — Commercial - general 1,374 244 180 — Consumer: 1-4 Family residential 1,966 1,042 676 — Auto loans 1,004 114 — — Other consumer 1,125 185 23 — Construction 95 — 1,575 1,575 $ 7,928 $ 1,921 $ 22,102 $ 1,575 79 Table of Contents Credit Quality Indicators The Company grades its loans on a thirteen-point grading scale. These grades fit in one of the following categories: (i) pass, (ii) special mention, (iii) substandard, (iv) doubtful, or (v) loss. Loans categorized as loss are charged-off immediately. The grading of loans reflects a judgment by the Company about the risks of default associated with the loan. The Company reviews the grades on loans as part of the Company’s on-going monitoring of the credit quality of the loan portfolio. These risk ratings are assigned based on relevant information about the ability of the borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Pass loans have financial factors or nature of collateral that are considered reasonable credit risks in the normal course of lending and encompass several grades that are assigned based on varying levels of risk, ranging from credits that are secured by cash or marketable securities, to watch credits which have all the characteristics of an acceptable credit risk but warrant more than the normal level of monitoring. Special mention loans have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of repayment prospects for the loans at some future date. Substandard loans are inadequately protected by the current net worth and paying capacity of the borrower or by the collateral pledged, if any. These loans have a well-defined weakness or weaknesses that jeopardize collection and present the distinct possibility that some loss will be sustained if the deficiencies are not corrected. A protracted workout on these credits is a distinct possibility. Prompt corrective action is therefore required to strengthen the Company’s position, and/or to reduce exposure and to assure that adequate remedial measures are taken by the borrower. Credit exposure becomes more likely in such credits and a serious evaluation of the secondary support to the credit is performed. Substandard loans can be accruing or can be nonaccrual depending on the circumstances of the individual loans. Doubtful loans have all the weaknesses inherent in substandard loans with the added characteristics that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable. All doubtful loans are on nonaccrual. In connection with the review of the Company’s loan portfolio, management considers risk elements attributable to particular loan type or categories in assessing the quality of individual loans. The list of loans to be analyzed for individual evaluation consists of non-accrual loans over $ 250 thousand. Interest income recognized using a cash-basis method on non-accrual loans for the year ended December 31, 2025 was not significant. In addition, the Company closely monitors substandard accruing loans over $ 1 million, and past due accruing loans over $ 100 thousand for possible individual evaluation. All other loans will be evaluated collectively in designated pools unless a loss exposure has been identified. Additional funds committed to be advanced on individually analyzed loans are not significant. The following tables reflect the amortized cost basis in loans by credit quality indicator and origination year at the dates indicated, and gross charge-offs for the years ended December 31, 2025 and 2024, excluding loans held for sale. Loans acquired are shown in the table by origination year. The Company had an immaterial amount of revolving loans converted to term loans at December 31, 2025 and 2024. Term Loans Amortized Cost Basis by Origination Year December 31, 2025 (Dollars in thousands) 2025 2024 2023 2022 2021 Prior Revolving Loans Total Commercial real estate: Pass $ 209,948 $ 137,602 $ 195,747 $ 245,012 $ 95,319 $ 143,422 $ 5,372 $ 1,032,422 Special mention — 2,825 7,343 81 166 1,095 483 11,993 Substandard 360 62 5,101 1,613 7,095 5,979 — 20,210 Total commercial real estate loans $ 210,308 $ 140,489 $ 208,191 $ 246,706 $ 102,580 $ 150,496 $ 5,855 $ 1,064,625 Year-to-date gross charge-offs $ — $ — $ 541 $ — $ — $ — $ — $ 541 Commercial - specialized: Pass $ 122,003 $ 35,559 $ 38,159 $ 24,081 $ 32,943 $ 29,452 $ 103,491 $ 385,688 Special mention 4,572 8,076 799 1,042 1,734 830 3,770 20,823 Substandard — 194 570 811 1,206 59 — 2,840 Total commercial - specialized loans $ 126,575 $ 43,829 $ 39,528 $ 25,934 $ 35,883 $ 30,341 $ 107,261 $ 409,351 Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Commercial - general: Pass $ 178,827 $ 103,310 $ 51,335 $ 84,327 $ 43,179 $ 79,605 $ 92,158 $ 632,741 Special mention 60 2,110 12,127 — 1,011 473 — 15,781 Substandard 40 758 1,615 1,281 5,749 1,116 242 10,801 Total commercial - general loans $ 178,927 $ 106,178 $ 65,077 $ 85,608 $ 49,939 $ 81,194 $ 92,400 $ 659,323 Year-to-date gross charge-offs $ — $ 245 $ 164 $ 116 $ 63 $ 245 $ 50 $ 883 Consumer: 1-4 family residential: Pass $ 95,677 $ 69,844 $ 92,148 $ 137,702 $ 77,474 $ 96,393 $ 4,010 $ 573,248 Special mention — — 621 428 5,061 — — 6,110 Substandard 214 3,095 1,573 1,067 604 3,940 — 10,493 Total consumer: 1-4 family residential loans $ 95,891 $ 72,939 $ 94,342 $ 139,197 $ 83,139 $ 100,333 $ 4,010 $ 589,851 Year-to-date gross charge-offs $ — $ — $ 31 $ — $ 215 $ 61 $ — $ 307 Consumer: auto loans: Pass $ 115,240 $ 48,236 $ 42,397 $ 39,896 $ 11,045 $ 2,015 $ — $ 258,829 Special mention — — — — — — — — Substandard — 44 70 122 75 17 — 328 Total consumer: auto loans $ 115,240 $ 48,280 $ 42,467 $ 40,018 $ 11,120 $ 2,032 $ — $ 259,157 Year-to-date gross charge-offs $ 29 $ 243 $ 367 $ 477 $ 198 $ 35 $ — $ 1,349 Consumer: other consumer: Pass $ 27,912 $ 12,521 $ 6,704 $ 7,014 $ 2,223 $ 4,096 $ 1,534 $ 62,004 Special mention — — — — — — — — Substandard 16 13 — 16 10 33 — 88 Total consumer: other consumer loans $ 27,928 $ 12,534 $ 6,704 $ 7,030 $ 2,233 $ 4,129 $ 1,534 $ 62,092 Year-to-date gross charge-offs (1) $ 510 $ 203 $ 44 $ 107 $ 49 $ 152 $ 1 $ 1,066 Construction: Pass $ 71,154 $ 24,768 $ 2,505 $ 570 $ — $ — $ — $ 98,997 Special mention — — — — — — — — Substandard — — 1,106 — — — — 1,106 Total construction loans $ 71,154 $ 24,768 $ 3,611 $ 570 $ — $ — $ — $ 100,103 Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — (1) Includes $ 498 thousand in charged-off demand deposit overdrafts reported as 2025 originations. 80 Table of Contents Term Loans Amortized Cost Basis by Origination Year December 31, 2024 (Dollars in thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Total Commercial real estate: Pass $ 164,205 $ 233,047 $ 300,828 $ 126,548 $ 43,628 $ 175,319 $ 6,417 $ 1,049,992 Special mention — — — 32,243 441 5,464 483 38,631 Substandard — — 147 25,164 3,125 2,004 — 30,440 Total commercial real estate loans $ 164,205 $ 233,047 $ 300,975 $ 183,955 $ 47,194 $ 182,787 $ 6,900 $ 1,119,063 Current period gross charge-offs $ — $ — $ 65 $ — $ — $ 22 $ — $ 87 Commercial - specialized: Pass $ 103,288 $ 60,881 $ 37,940 $ 41,721 $ 15,678 $ 28,488 $ 98,092 $ 386,088 Special mention 214 — 1,600 — — — — 1,814 Substandard 510 — 85 84 297 77 — 1,053 Total commercial - specialized loans $ 104,012 $ 60,881 $ 39,625 $ 41,805 $ 15,975 $ 28,565 $ 98,092 $ 388,955 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — Commercial - general: Pass $ 107,947 $ 72,500 $ 109,808 $ 65,564 $ 29,808 $ 82,909 $ 78,321 $ 546,857 Special mention — — 960 554 — 499 200 2,213 Substandard 98 463 2,405 4,427 19 805 84 8,301 Total commercial - general loans $ 108,045 $ 72,963 $ 113,173 $ 70,545 $ 29,827 $ 84,213 $ 78,605 $ 557,371 Year-to-date gross charge-offs $ — $ 199 $ 466 $ 17 $ — $ 134 $ 266 $ 1,082 Consumer: 1-4 family residential: Pass $ 87,266 $ 101,022 $ 150,358 $ 91,929 $ 49,057 $ 73,730 $ 5,800 $ 559,162 Special mention — — — — — — — — Substandard — 810 284 1,057 225 4,812 50 7,238 Total consumer: 1-4 family residential loans $ 87,266 $ 101,832 $ 150,642 $ 92,986 $ 49,282 $ 78,542 $ 5,850 $ 566,400 Year-to-date gross charge-offs $ — $ — $ 121 $ 51 $ — $ 3 $ — $ 175 Consumer: auto loans: Pass $ 70,621 $ 72,009 $ 76,412 $ 25,869 $ 7,293 $ 1,931 $ — $ 254,135 Special mention — — — — — — — — Substandard 21 28 82 179 4 25 — 339 Total consumer: auto loans $ 70,642 $ 72,037 $ 76,494 $ 26,048 $ 7,297 $ 1,956 $ — $ 254,474 Year-to-date gross charge-offs $ 23 $ 386 $ 519 $ 198 $ 25 $ 35 $ — $ 1,186 Consumer: other consumer: Pass $ 23,665 $ 12,969 $ 14,790 $ 5,477 $ 1,232 $ 5,382 $ 1,324 $ 64,839 Special mention — — — — — — — — Substandard — — 8 47 — 42 — 97 Total consumer: other consumer loans $ 23,665 $ 12,969 $ 14,798 $ 5,524 $ 1,232 $ 5,424 $ 1,324 $ 64,936 Year-to-date gross charge-offs (1) $ 469 $ 308 $ 245 $ 43 $ 29 $ 145 $ 18 $ 1,257 Construction: Pass $ 65,920 $ 30,572 $ 2,172 $ 2,630 $ — $ — $ 891 $ 102,185 Special mention — — — — — — — — Substandard — 1,190 480 — — — — 1,670 Total construction loans $ 65,920 $ 31,762 $ 2,652 $ 2,630 $ — $ — $ 891 $ 103,855 Year-to-date gross charge-offs $ — $ 315 $ — $ — $ — $ — $ — $ 315 (1) Includes $ 457 thousand in charged-off demand deposit overdrafts reported as 2024 originations. Occasionally, the Company modifies loans to borrowers in financial distress by providing principal forgiveness, term extensions, an other than insignificant payment delay, or interest rate reduction. When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses. Typically, one type of concession, such as term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted. In some cases, the Company provides multiple types of concessions on one loan. 81 Table of Contents The following table presents the amortized cost basis of loans at the dates indicated that were both experiencing financial difficulty and modified during the years ended December 31, 2025 and 2024, by class and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below (dollars in thousands): Payment Delay Term Extension Rate Reduction Term Extension and Payment Delay Term Extension and Interest Rate Reduction Payment Delay, Term Extension, and Interest Rate Reduction Total % Class of Financing Receivable December 31, 2025 Commercial real estate $ — $ 124 $ — $ 601 $ — $ — 0.07 % Commercial - specialized — — — 95 — — 0.02 % Commercial - general — 900 403 4,048 — 7 0.81 % Consumer: 1-4 family — 131 — — 30 — 0.03 % Auto loans 41 30 — 29 — 3 0.04 % Other consumer — — — 14 — — 0.02 % Construction — 527 — — — — 0.53 % $ 41 $ 1,712 $ 403 $ 4,787 $ 30 $ 10 0.22 % December 31, 2024 Commercial real estate $ 74 $ 65 $ — $ — $ — $ — 0.01 % Commercial - specialized 13 — — — — — — Commercial - general — 428 — 11 29 47 0.09 % Consumer: 1-4 family 322 — — 187 — — 0.09 % Auto loans — — — — — — — Other consumer — — — — — — — Construction — — 818 1,670 — — 2.40 % $ 409 $ 493 $ 818 $ 1,868 $ 29 $ 47 0.12 % The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following presents the performance of such loans at the dates indicated that have been modified in the years ended December 31, 2025 and 2024 (dollars in thousands): 30-89 Days Past Due 90 Days or More Past Due and Still Accruing Nonaccrual December 31, 2025 Commercial real estate $ 725 $ — $ — Commercial - specialized — — 95 Commercial - general 577 — 3,998 Consumer: 1-4 Family residential — — — Auto loans 30 — — Other consumer — — — Construction — — — $ 1,332 $ — $ 4,093 December 31, 2024 Commercial real estate $ 74 $ — $ — Commercial - specialized — — 13 Commercial - general 59 82 — Consumer: 1-4 Family residential — 60 — Auto loans — — — Other consumer — — — Construction 95 — 1,575 $ 228 $ 142 $ 1,588 82 Table of Contents The following table presents the financial effects of the loan modifications presented above to borrowers experiencing financial difficulty for the years ended December 31, 2025 and 2024 (dollars in thousands): Weighted- Average Interest Rate Reduction Weighted- Average Term Extension (Months) December 31, 2025 Commercial real estate — 9 Commercial - specialized — 11 Commercial - general 9.10 % 7 Consumer: 1-4 Family residential 0.25 % 3 Auto loans 1.20 % 18 Other consumer — 5 Construction — 3 December 31, 2024 Commercial real estate — 12 Commercial - specialized — — Commercial - general 0.82 % 14 Consumer: 1-4 Family residential — 10 Auto loans — — Other consumer — — Construction 4.25 % 5 On an ongoing basis, the performance of modified loans is monitored for subsequent payment default. Payment default is defined as movement to nonperforming status, foreclosure, or charge-off. During the year ended December 31, 2025, the Company had $ 108 thousand in loans made to borrowers experiencing financial difficulty that were modified during the year that subsequently defaulted. During the year ended December 31, 2024, the Company had no loans made to borrowers experiencing financial difficulty that were modified during the year that subsequently defaulted. During the year ended December 31, 2023, the Company had $ 297 thousand in loans made to borrowers experiencing financial difficulty that were modified during the year that subsequently defaulted. Upon the Company’s determination that a modified loan has subsequently been deemed to not be fully collectible, the uncollectible amount is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. 5. FORECLOSED ASSETS Foreclosed assets activity was as follows for the periods presented below (dollars in thousands): For the Year Ended December 31, 2025 2024 2023 Beginning balance $ 530 $ 912 $ 169 Additions 3,568 1,927 2,302 Sales, net ( 2,249 ) ( 2,201 ) ( 1,417 ) Current year valuation write-down ( 100 ) ( 108 ) ( 142 ) Ending balance $ 1,749 $ 530 $ 912 Activity in the valuation allowance was as follows (dollars in thousands): For the Year Ended December 31, 2025 2024 2023 Beginning balance $ 108 $ 142 $ — Current year valuation write-down 100 108 142 Reduction from sales — ( 142 ) — Ending balance $ 208 $ 108 $ 142 Net expenses related to foreclosed assets include the following for the periods presented below (dollars in thousands): For the Year Ended December 31, 2025 2024 2023 Net loss on sales $ 2 $ 25 $ — Current year valuation write-down 100 108 142 Operating expenses, net of rental income 61 136 42 Foreclosed assets expense, net $ 163 $ 269 $ 184 83 Table of Contents 6. PREMISES AND EQUIPMENT Detail of premises and equipment at year-end follows (dollars in thousands): December 31, 2025 2024 Land $ 9,304 $ 9,514 Buildings and improvements 66,476 66,707 Furniture and equipment 48,435 47,166 Construction in process 2,422 1,365 126,637 124,752 Less accumulated depreciation ( 75,074 ) ( 71,801 ) Premises and equipment, net $ 51,563 $ 52,951 Depreciation expense for the years ended December 31, 2025, 2024 and 2023 was approximately $ 5.1 million, $ 5.3 million, and $ 5.1 million, respectively. 7. LEASES Lessee Arrangements The Company leases space, primarily for branch facilities and small equipment under operating leases. The Company’s leases often include one or more options to renew at the Company’s discretion, and some of the Company’s leases include options to terminate within one year . When it is reasonably certain that the Company will exercise the option to renew or extend the lease term, that option is included in estimating the value of the ROU asset and lease liability. The Company’s leases contain customary restrictions and covenants and do not contain any residual value guarantees. The Company has certain intercompany leases and subleases between its subsidiaries, and these transactions and balances have been eliminated in consolidation and are not reflected in the tables and information presented below. As of December 31, 2025 and 2024, the Company had no finance leases. The balance sheet components of the Company’s leases at year-end are as follows (in thousands): December 31, 2025 December 31, 2024 Operating lease right of use assets (included in Other assets) $ 6,961 $ 7,968 Operating lease liabilities (included in Accrued expenses and other liabilities) 7,933 8,906 The Company does not generally enter into leases which contain variable payments, other than due to the passage of time. Operating lease costs, including short-term lease costs were $ 2.4 million , $ 2.4 million and $ 2.9 million, respectively, for the years ended December 31, 2025, 2024 and 2023, respectively. Supplemental cash flow information related to leases is as follows (in thousands): Year Ended December 31, 2025 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used in operating leases $ 1,685 $ 1,906 Right-of-use assets obtained in exchange for new lease obligations: Operating leases $ 237 $ 636 For operating leases, the Company’s weighted average remaining lease terms and weighted average discount rate was 8.79 years and 5.65 %, respectively, as of December 31, 2025, and 9.22 years and 5.64 %, respectively, as of December 31, 2024. Future undiscounted lease payments at December 31, 2025, under operating lease agreements, are presented below (in thousands). 2026 $ 1,621 2027 1,498 2028 1,320 2029 1,151 2030 844 Thereafter 3,669 Total minimum lease payments 10,103 Less: Amount representing interest ( 2,170 ) Lease liabilities $ 7,933 84 Table of Contents As of December 31, 2025, the Company had no significant additional operating leases that have not yet commenced. Lessor Arrangements The Company leases certain facilities and office space under operating lease agreements to outside parties. Operating lease income for the years ended December 31, 2025, 2024, and 2023 was $ 895 thousand, $ 883 thousand, and $ 839 thousand, respectively, and is included in occupancy and equipment, net in the Consolidated Statements of Comprehensive Income. 8. GOODWILL AND INTANGIBLES The Company had goodwill of $ 19.3 million at December 31, 2025 and 2024. Other intangible assets, which consisted of core deposit intangibles at the dates indicated are summarized below (dollars in thousands): December 31, 2025 2024 Amortized intangible assets: Core deposit intangible $ 6,679 $ 6,679 Less: Accumulated amortization ( 5,546 ) ( 4,959 ) Other intangible assets, net $ 1,133 $ 1,720 Amortization expense for other intangibles for the years ended December 31, 2025, 2024, and 2023 totaled $ 0.6 million, $ 0.7 million, and $ 1.0 million, respectively. The estimated amount of amortization expense for core deposit intangibles to be recognized over the next five years is as follows (dollars in thousands): 2026 $ 465 2027 344 2028 223 2029 101 2030 — 9. MORTGAGE SERVICING RIGHTS The following table reflects the changes in fair value of the Company’s mortgage servicing rights asset included in the Consolidated Balance Sheets, and other information related to the serviced portfolio for the periods or dates presented (dollars in thousands): Year Ended December 31, 2025 2024 2023 Beginning balance $ 26,292 $ 26,569 $ 27,474 Additions 1,080 958 1,470 Valuation adjustment ( 3,331 ) ( 1,235 ) ( 2,375 ) Ending balance $ 24,041 $ 26,292 $ 26,569 December 31, 2025 2024 Mortgage loans serviced for others $ 1,810,579 $ 1,903,854 Mortgage servicing rights assets as a percentage of serviced mortgage loans 1.33 % 1.38 % The following table reflects the key assumptions used in measuring the fair value of the Company ’ s mortgage servicing rights as of the dates indicated: December 31, 2025 2024 Weighted average constant prepayment rate 8.81 % 7.16 % Weighted average discount rate 9.70 % 10.17 % Weighted average life in years 7.43 8.09 85 Table of Contents 10. DEPOSITS Time deposits that met or exceeded the Federal Deposit Insurance Corporation (“FDIC”) Insurance limit of $250,000 were $ 200.6 million and $ 208.8 million at December 31, 2025 and 2024, respectively. The scheduled maturities of time deposits at December 31, 2025 follows (dollars in thousands): 2026 $ 411,974 2027 11,066 2028 4,339 2029 1,776 2030 2,208 Thereafter 72 $ 431,435 11. BORROWING ARRANGEMENTS Short-term Borrowings There were no balances as of December 31, 2025 and 2024 related to federal funds purchased or FHLB short-term advances. Federal funds purchased are short-term borrowings that generally have one-day maturities. Lines of Credit The bank subsidiary has a line of credit with FHLB. The amount of the line is determined by FHLB on a quarterly basis. The line is primarily used to purchase Federal funds or to secure letters of credit to pledge as collateral against certain public deposits. The line is collateralized by a blanket floating lien on all first mortgage loans and commercial real estate loans as well as all FHLB stock, which has a carrying amount of $ 2.2 million and $ 3.1 million at December 31, 2025 and 2024. The available capacity of the line was $ 1.3 billion and $ 1.1 billion with no outstanding borrowings at December 31, 2025 and 2024, respectively. The bank subsidiary also has a line of credit with the Federal Reserve Bank of Dallas (“FRB”). The amount of the line is determined on a monthly basis by FRB. The line is collateralized by a blanket floating lien on all agriculture, commercial, and consumer loans. The amount of the line was $ 659.7 million and $ 654.0 million at December 31, 2025 and 2024, respectively. This line was not used at December 31, 2025 or 2024. The bank subsidiary also has uncollateralized lines of credit with multiple banks. The total amount of the lines was $ 140.0 million as of December 31, 2025 and 2024. These lines were not used at December 31, 2025 or 2024. Notes Payable and Other Borrowings The bank had no FHLB advances outstanding at December 31, 2025 or 2024. Junior Subordinated Deferrable Interest Debentures and Trust Preferred Securities The Company established grantor trusts (“trusts”) that issued obligated mandatorily redeemable preferred securities (“TPS”); the Company issued junior subordinated deferrable interest debentures (debentures) to the trusts. The trusts are not consolidated and the debentures issued by the Company to the trusts are reflected in the Consolidated Balance Sheets. The Company records interest expense on the debentures in its consolidated financial statements. The common capital securities issued by the trusts ($ 1.4 million) are included in other assets in the Consolidated Balance Sheets under the equity method of accounting. The amount of the capital securities represents the Company’s maximum exposure to loss. The Company is required by the Federal Reserve to maintain certain levels of capital for bank regulatory purposes. The debentures issued by the trusts to the Company, less the common capital securities of the trusts, continue to qualify as Tier 1 capital, subject to limitation to 25% of Tier 1 capital, under guidance issued by the Federal Reserve. Although the trusts are not consolidated in these consolidated financial statements, the TPS remain outstanding with terms substantially the same as the debentures. The Company’s interest payments on its debentures are the sole source of repayment for the TPS. Additionally, the Company guarantees payment of interest and principal on the TPS. The terms of the debentures and TPS allow for interest to be deferred for up to five years consecutively. During this time, shareholder dividends are not allowed to be paid. 86 Table of Contents The following table is a detail of the debentures and TPS at December 31, 2025 (dollars in thousands): Issue Date Amount of TPS Amount of Debentures Stated Maturity Date of TPS and Debentures (1) Interest Rate of TPS and Debentures (2)(3) SPFCT III 2004 $ 10,000 $ 10,310 2034 3 -mo. CME Term SOFR + 291bps ; 6.77 % SPFCT IV 2005 20,000 20,619 2035 3 -mo. CME Term SOFR + 165bps ; 5.37 % SPFCT V 2007 15,000 15,464 2037 3 -mo. CME Term SOFR + 176bps ; 5.48 % Total $ 45,000 $ 46,393 (1) May be redeemed five years from the issue date, the Company has no current plans to redeem; (2) Interest payable quarterly with principal due at maturity; (3) Rate as of last reset date. Subordinated Debt In December 2018, the Company issued $ 26.5 million in subordinated notes. Notes totaling $ 12.4 million (the “2028 Notes”) had a maturity date of December 2028 and a weighted average fixed rate of 5.74 % for the first five years . The remaining $ 14.1 million of notes have a maturity date of December 2030 and a weighted average fixed rate of 6.41 % for the first seven years . After the fixed rate period, all notes will float at the Wall Street Journal prime rate, with a floor of 4.0 % and a ceiling of 7.5 %. These notes pay interest quarterly, are unsecured, and may be called by the Company at any time after the remaining maturity is five years or less. Additionally, these notes are intended to qualify for Tier 2 capital treatment, subject to regulatory limitations. On November 8, 2023, the Company notified holders of its 2028 Notes that it had elected to redeem all the outstanding 2028 Notes effective on December 15, 2023 (the “Redemption Date”). Each of the 2028 Notes were redeemed pursuant to the terms of the Indenture, dated as of December 14, 2018, between the Company and Argent Trust Company, N.A., as trustee for the 2028 Notes (the “Trustee”), at the redemption price totaling approximately $ 12.4 million in aggregate principal amount, plus accrued and unpaid interest. As provided in the redemption notice, on the Redemption Date, the Trustee paid the relevant Redemption Price to the holders of 2028 Notes appearing on the books and records of the Trustee on the Redemption Date. The 2028 Notes ceased to represent the right to payment of principal and interest upon the payment to the holders of 2028 Notes by the Trustee representing the Redemption Price. The Company received all necessary regulatory approvals for the redemption of the 2028 Notes. On September 29, 2020, the Company issued $ 50.0 million in subordinated notes. Proceeds were reduced by approximately $ 926 thousand in debt issuance costs. The notes had a maturity date of September 2030 with a fixed rate of 4.50 % for the first five years . On August 25, 2025, the Company notified holders (the “Redemption Notice”) of these notes that it had elected to redeem all of these outstanding notes effective on September 30, 2025 (the “Redemption Date”). Each of these notes were redeemed pursuant to the terms of the Indenture, dated as of September 29, 2020, between the Company and UMB Bank, National Association, as trustee for these notes (the “Trustee”), at the redemption price totaling $ 50.0 million in aggregate principal amount, plus accrued and unpaid interest (the “Redemption Price”). As provided in the Redemption Notice, on the Redemption Date, the Trustee paid the relevant Redemption Price to the holders of these notes appearing on the books and records of the Trustee on the Redemption Date. The notes ceased to represent the right to payment of principal and interest upon the payment to the holders of the notes by the Trustee representing the Redemption Price. The Company received all necessary regulatory approvals for the redemption of these notes. As of December 31, 2025, the total amount of subordinated notes outstanding was $ 14.1 million. As of December 31, 2024, the total amount of subordinated notes outstanding was $ 64.1 million less approximately $ 139 thousand of remaining debt issuance costs for a total balance of $ 64.0 million. 12. EMPLOYEE BENEFITS The Company sponsors the City Bank 401(k) Plan (the “401(k) Plan”). Under the provisions of the 401(k) Plan, participants may elect to contribute pre-tax salary deferrals and direct investment of those salary deferrals among investments offered in the 401(k) Plan. The Company may elect to contribute a safe harbor match equal to 100 % of the first 5 % of the participants’ compensation contributed. The expense for Company contributions to the 401(k) Plan was $ 1.9 million in 2025, $ 1.8 million in 2024, and $ 1.8 million in 2023 . Employee Health Benefits – The Company has a self-insured welfare benefit plan which provides health and dental benefits. For officers of the Company, there is no waiting period to be eligible, while there is a 60 -day waiting period for all other employees. In addition, to be eligible, an employee must be scheduled to work on a full-time basis (at least 30 hours per week). The Company periodically evaluates the costs of the plan and determines the amount to be contributed by the Company and the amount, if any, to be contributed by the employee. Welfare benefit expense was approximately $ 4.8 million, $ 4.5 million, and $ 4.4 million for the years ended December 31, 2025, 2024, and 2023, respectively. In addition, benefit obligations have been accrued and include reported claims payable and claims incurred but not reported, for approximately $ 957 thousand and $ 746 thousand as of December 31, 2025 and 2024, respectively. The Company has limited its risk exposure for these benefits through a stop-loss policy with an independent third party insurer which reimburses benefits paid that exceed $ 200 thousand per participant per year. 87 Table of Contents Non-Qualified Plans – Certain Company executives, as determined by the Company’s Board from time-to-time, have post-retirement salary continuation agreements under an Executive Salary Continuation Plan. Retirement ages and retirement salary amounts are specified in each agreement. The Company accrues actuarial estimates of the costs of these benefits over the respective service periods; approximately $ 13.9 million and $ 13.7 million was accrued at December 31, 2025 and 2024, respectively. This plan is nonqualified , noncontributory, and unfunded . The charge to income for this plan during 2025, 2024, and 2023 was approximately $ 1.0 million, $ 1.1 million and, $ 1.1 million, respectively. 13. STOCK-BASED COMPENSATION Equity Incentive Plan The 2019 Equity Incentive Plan (“Plan”) was approved by the Company’s Board of Directors on January 16, 2019 and by its shareholders on March 6, 2019. The purpose of the Plan is to: (i) attract and retain the best available personnel for positions of substantial responsibility, (ii) provide additional incentive to employees, directors and consultants, and (iii) promote the success of the Company’s business. This Plan permits the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares, and other stock-based awards. The maximum aggregate number of shares of common stock that may be issued pursuant to all awards under the Plan was 5,413,184 at December 31, 2025. The maximum aggregate number of shares that may be issued under the Plan may be increased annually by up to 3 % of the total issued and outstanding common shares of the Company at the beginning of each fiscal year. The fair value of each option award is estimated on the date of grant using the Black-Scholes model that uses the assumptions noted in the table below. Expected volatilities are based on historical volatilities of the Company’s common stock and similar peer company averages. The Company uses historical data to estimate option exercise and post-vesting termination behavior. The expected term of options granted represents the period of time that options granted are expected to be outstanding, which takes in to account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. Options A summary of activity in the Plan during the year indicated is presented in the table below (dollars in thousands, except per share data): Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life in Years Aggregate Intrinsic Value Year Ended December 31, 2025 Outstanding at beginning of year: 1,175,787 $ 17.83 Granted 30,024 34.01 Exercised ( 129,138 ) 12.54 Forfeited — — Expired — — Balance at end of year 1,076,673 $ 18.92 4.04 $ 21,406 Exercisable at end of period 1,010,403 $ 18.13 3.77 $ 20,888 Vested at end of period 1,010,403 $ 18.13 3.77 $ 20,888 A summary of assumptions used to calculate the fair values of the awards granted during the periods noted is presented below: Year Ended December 31, 2025 2024 2023 Expected volatility 41.21 % 40.45 % 39.13 % to 39.68 % Expected dividend yield 1.80 % 1.80 % 1.74 % to 1.90 % Expected term (years) 6.1 6.1 6.1 to 6.3 Risk-free interest rate 4.43 % 3.94 % 3.91 % to 3.98 % Weighted average grant date fair value $ 13.35 $ 11.10 $ 10.26 The total intrinsic value of options exercised during the years ended December 31, 2025, 2024, and 2023 was $ 3.3 million, $ 3.3 million, and $ 1.8 million, respectively. 88 Table of Contents Restricted Stock Awards and Units A summary of activity in the Plan during the year indicated is presented in the table below: Number of Shares Weighted-Average Grant Date Fair Value Year Ended December 31, 2025 Outstanding at beginning of year: 187,895 $ 26.51 Granted 73,488 34.30 Exercised ( 18,271 ) 29.86 Forfeited ( 2,077 ) 28.99 Balance at end of year 241,035 $ 28.60 Restricted stock units granted under the Plan typically vest from one to four years , but vesting periods may vary. Compensation expense for these grants will be recognized over the vesting period of the awards based on the fair value of the stock at the issue date. The total fair value of restricted stock units vested during the years ended December 31, 2025, 2024, and 2023 was $ 546 thousand, $ 643 thousand, and $ 931 thousand, respectively. For the years ended December 31, 2025, 2024, and 2023 the Company recorded stock-based compensation expense related to the Plan of $ 2.6 million, $ 2.3 million and $ 2.2 million, respectively. The total unrecognized compensation cost for the awards outstanding under the Plan at December 31, 2025 was $ 3.6 million and will be recognized over a weighted average remaining period of 1.63 years. Employee Stock Purchase Plan – The Company maintains the South Plains Financial, Inc. 2023 Employee Stock Purchase Plan (the “ESPP”) offering eligible employees an opportunity to purchase shares of Company common stock at a 15 % discount from the lesser of fair market value on the first or last day of each six-month offering period, beginning August 1, 2024. The ESPP provides for the purchase of up to an aggregate of one million shares of the Company’s common stock by the employees. A maximum of 1,200 shares per employee may be purchased per offering period. The ESPP benefit is treated as compensation to the employee, and the compensation expense will be recognized over the service period based on the grant date fair value of the rights determined at the beginning of the purchase period, adjusted for forfeitures and certain modifications. Stock-based compensation expense related to the ESPP was $ 124 thousand and $ 53 thousand for the years ended December 31, 2025 and 2024. At December 31, 2025 there was $ 10 thousand of total unrecognized compensation expense related to estimated ESPP shares. These costs are expected to be recognized over a period of one month . As of December 31, 2025, 15,925 shares were issued under the ESPP. A summary of assumptions used to calculate the grant date fair value of the ESPP rights for the period indicated during is presented below: Year Ended December 31, 2025 2024 Expected volatility 29.24 % 31.31 % Expected dividend yield 1.78 % 1.89 % Expected term (years) 0.5 0.5 Risk-free interest rate 4.12 % 5.02 % 14. INCOME TAXES The components of income tax expense (benefit) were as follows for the periods indicated (dollars in thousands): Year Ended December 31, 2025 2024 2023 Current expense Federal $ 16,105 $ 14,184 $ 16,192 State 520 440 381 Deferred expense Federal ( 1,023 ) ( 1,049 ) 99 Total $ 15,602 $ 13,575 $ 16,672 89 Table of Contents Effective tax rates differ from the federal statutory rate of 21 % applied to income before income taxes due to the following for the periods indicated (dollars in thousands): Year Ended December 31, 2025 2024 2023 Amount Rate Amount Rate Amount Rate Federal statutory rate times financial statement income $ 15,555 21.0 % $ 13,291 21.0 % $ 16,678 21.0 % Effect of: Tax-exempt income ( 718 ) ( 1.0 )% ( 701 ) ( 1.1 )% ( 836 ) ( 1.1 )% State taxes, net of federal benefit 411 0.6 % 348 0.6 % 301 0.4 % Earnings from bank owned life insurance ( 343 ) ( 0.5 )% ( 326 ) ( 0.5 )% ( 279 ) ( 0.4 )% Non-deductible expenses 499 0.7 % 648 1.0 % 675 0.8 % Other, net 198 0.3 % 315 0.5 % 133 0.2 % Total $ 15,602 21.1 % $ 13,575 21.5 % $ 16,672 20.9 % Income taxes paid, net of refunds received, were as follows for the periods indicated (dollars in thousands): Year Ended December 31, 2025 2024 2023 Federal $ 16,721 $ 12,104 $ 19,102 State 472 431 286 Year-end deferred tax assets and liabilities were due to the following at year-end (dollars in thousands): December 31, 2025 2024 Deferred tax assets Allowance for credit losses $ 9,478 $ 9,080 Deferred compensation 6,038 5,884 Leases 204 197 Other real estate owned 44 23 Nonaccrual loans 111 320 Unrealized gain on available-for-sale securities 14,708 19,273 Other 568 446 Total deferred tax assets 31,151 35,223 Deferred tax liabilities Depreciation ( 2,629 ) ( 2,457 ) Intangibles ( 260 ) ( 401 ) Prepaid expenses ( 625 ) ( 704 ) Mortgage servicing rights ( 5,049 ) ( 5,521 ) Other ( 2,155 ) ( 3,300 ) Total deferred tax liabilities ( 10,718 ) ( 12,383 ) Net deferred tax asset $ 20,433 $ 22,840 There was no valuation allowance for deferred tax assets recorded at December 31, 2025 and 2024 as management believed it was more likely than not that all of the deferred tax assets will be realized against deferred tax liabilities and projected future taxable income. There were no unrecognized tax benefits during any of the reported periods. We file income tax returns in the U.S. federal jurisdiction. We are no longer subject to U.S. federal income tax examinations by tax authorities for years before 2022. 15. RELATED-PARTY TRANSACTIONS Direct and indirect loans to executive officers, directors, significant stockholders and their related affiliates as of December 31, 2025 and 2024 aggregated approximately $ 48.9 million and $ 44.3 million, respectively. There were no charge-offs related to these loans in 2025 or 2024 and any advance and repayment activity was routine. Deposits from these related parties in the consolidated financial statements were not significant. 16. OFF-BALANCE-SHEET ACTIVITIES, COMMITMENTS AND CONTINGENCIES Financial instruments with off-balance-sheet risk – The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Company’s consolidated financial statements. The Company’s exposure to credit loss is represented by the contractual amount of these commitments. The Company follows the same credit policies in making commitments as it does for recorded instruments. 90 Table of Contents Financial instruments whose contract amounts represent credit risk outstanding at year-end follow (dollars in thousands): December 31, 2025 2024 Commitments to grant loans and unfunded commitments under lines of credit $ 554,286 $ 537,688 Standby letters-of-credit 30,681 18,696 Commitments to grant loans and 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. The commitments for lines of credit may expire without being drawn upon. Therefore, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Company, is based on management’s credit evaluation of the customer. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those letters of credit are primarily issued to support public and private borrowing arrangements. Essentially all letters of credit issued have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company requires collateral supporting those commitments if deemed necessary. Litigation – The Company is a defendant in legal actions arising from time to time in the normal course of business. Management believes that the ultimate liability, if any, arising from these matters will not materially affect the consolidated financial statements, based on information known as of the date the consolidated financial statements were available to be issued. FHLB Letters of Credit – The Company may use FHLB letters of credit to pledge to certain public deposits. There were no FHLB letters of credit outstanding at December 31, 2025. At December 31, 2024, there was 75.0 million of FHLB letters of credit outstanding. 17. CAPITAL AND REGULATORY MATTERS The Company and its bank subsidiary are subject to various regulatory capital requirements administered by its banking regulators. 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 and its bank subsidiary’s financial statements. Under capital 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 capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies. Quantitative measures established by regulation to ensure capital adequacy require the Company and its bank subsidiary to maintain minimum amounts and ratios (set forth in the following table) of total and 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). Management believes, as of December 31, 2025 and 2024, that the Company and its bank subsidiary met all capital adequacy requirements to which they are subject. As of December 31, 2025 and 2024, the Company met the definition of “well-capitalized” under the applicable regulations of the Board of Governors of the Federal Reserve System and the bank subsidiary was “well capitalized” under the FDIC’s regulatory framework for prompt corrective action and the Basel III capital guidelines. To be categorized as well capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following tables. There are no conditions or events since December 31, 2025 that management believes have changed the bank subsidiary’s category. 91 Table of Contents The Company and its bank subsidiary’s actual capital amounts and ratios at the dates indicated follows (dollars in thousands): Actual Minimum Required Under BASEL III Fully Phased-In To Be Well Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio December 31, 2025: Total Capital to Risk Weighted Assets: Consolidated $ 622,485 17.26 % $ 378,645 10.50 % N/A N/A City Bank 537,444 14.91 % 378,576 10.50 % $ 360,549 10.00 % Tier I Capital to Risk Weighted Assets: Consolidated 566,107 15.70 % 306,522 8.50 % N/A N/A City Bank 492,355 13.66 % 306,466 8.50 % 288,439 8.00 % Common Equity Tier 1 to Risk Weighted Assets: Consolidated 521,107 14.45 % 252,430 7.00 % N/A N/A City Bank 492,355 13.66 % 252,384 7.00 % 234,357 6.50 % Tier I Capital to Average Assets: Consolidated 566,107 12.53 % 181,591 4.00 % N/A N/A City Bank 492,355 10.90 % 181,512 4.00 % 225,868 5.00 % December 31, 2024: Total Capital to Risk Weighted Assets: Consolidated $ 631,713 17.86 % $ 371,426 10.50 % N/A N/A City Bank 520,788 14.73 % 371,351 10.50 % $ 353,667 10.00 % Tier I Capital to Risk Weighted Assets: Consolidated 523,535 14.80 % 300,678 8.50 % N/A N/A City Bank 476,574 13.48 % 300,617 8.50 % 282,934 8.00 % Common Equity Tier 1 to Risk Weighted Assets: Consolidated 478,535 13.53 % 247,617 7.00 % N/A N/A City Bank 476,574 13.48 % 247,567 7.00 % 229,884 6.50 % Tier I Capital to Average Assets: Consolidated 523,535 12.04 % 174,777 4.00 % N/A N/A City Bank 476,574 10.96 % 174,710 4.00 % 217,336 5.00 % The Company is subject to the Basel III capital ratio requirements which include a “capital conservation buffer” of 2.50% above the regulatory minimum risk-based capital adequacy requirements. This 2.50% capital conservation buffer is reflected in the table above. Both the Company’s and the Bank’s actual ratios, as outlined in the table above, exceeded the Basel III risk-based capital requirement with the capital conservation buffer as of December 31, 2025. State banking regulations place certain restrictions on dividends paid by banks to their shareholders. Dividends paid by the Company’s bank subsidiary would be prohibited if the effect thereof would cause the bank subsidiary’s capital to be reduced below applicable minimum capital requirements. 18. DERIVATIVES The Company utilizes interest rate swap agreements as part of its asset-liability management strategy to help manage its interest rate risk position. These interest rate swaps are designated and qualify as fair value hedges and are entered into to reduce exposure to changes in fair value of fixed rate financial instruments. The notional amounts of the interest rate swaps do not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amounts and the other terms of the individual interest rate swap agreements. The following table reflects the changes in fair value hedges included in the Consolidated Statements of Comprehensive Income for the periods indicated (dollars in thousands): Year Ended December 31, Interest Rate Contracts Location 2025 2024 2023 Change in fair value of interest rate swaps hedging investment securities Other noninterest expense $ ( 5,765 ) $ ( 1,133 ) $ ( 3,497 ) Change in fair value of hedged investment securities Other noninterest expense 5,406 1,619 3,685 Change in fair value of interest rate swaps hedging fixed rate loans Interest income - Loans ( 181 ) 57 ( 334 ) Change in fair value of hedged fixed rate loans Interest income - Loans 181 24 335 92 Table of Contents The following table reflects the fair value hedges included in the Consolidated Balance Sheets as of December 31 (dollars in thousands): 2025 2024 Notional Amount Fair Value Notional Amount Fair Value Included in other liabilities: Interest rate swaps related to fixed rate loans $ — $ — $ — $ — Interest rate swaps related to state and municipal securities — — — — Included in other assets: Interest rate swaps related to fixed rate loans $ 2,030 $ 24 $ 11,803 $ 205 Interest rate swaps related to state and municipal securities 117,860 9,730 123,760 15,495 Mortgage banking derivatives The net gains (losses) relating to free standing derivative instruments used for risk management are summarized below for the periods indicated (dollars in thousands): For the Year Ended December 31, Location 2025 2024 2023 Gain (loss) on mortgage banking derivatives Net gain (loss) on sales of loans $ ( 135 ) $ 264 $ ( 405 ) The following table reflects the amount and fair value of mortgage banking derivatives in the Consolidated Balance Sheets as of December 31 (dollars in thousands): December 31, 2025 December 31, 2024 Notional Amount Fair Value Notional Amount Fair Value Included in other assets: Forward contracts related to mortgage loans held for sale $ — $ — $ 16,000 $ 76 Interest rate lock commitments 16,127 216 12,937 222 Included in other liabilities: Forward contracts related to mortgage loans held for sale $ 15,746 $ 65 $ 1,277 $ 12 Interest rate lock commitments — — — — The Company had received cash collateral of $ 10.5 million and $ 17.0 million to offset asset derivative positions on its interest rate swaps at December 31, 2025 and 2024, respectively. This amount is reported in other liabilities in the Consolidated Balance Sheets. The Company had advanced $ 1.1 million and $ 1.1 million to offset liability derivative positions on its interest rate swaps at December 31, 2025 and 2024, respectively. Additionally, the Company had advanced $ 270 thousand and $ 270 thousand on its mortgage forward contracts at December 31, 2025 and 2024, respectively. The advanced cash collateral amounts are reported in cash and due from banks in the Consolidated Balance Sheets. 19. PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION Condensed financial information of South Plains Financial, Inc. follows (dollars in thousands): CONDENSED BALANCE SHEETS December 31, 2025 2024 ASSETS Cash and cash equivalents $ 80,159 $ 104,856 Investment in banking subsidiary 465,084 436,989 Investment in other subsidiary 51 51 Other assets 11,036 9,060 Total assets $ 556,330 $ 550,956 LIABILITIES AND STOCKHOLDERS’ EQUITY Debt $ 60,493 $ 110,354 Accrued expenses and other liabilities 2,000 1,653 Stockholders’ equity 493,837 438,949 Total liabilities and stockholders’ equity $ 556,330 $ 550,956 93 Table of Contents CONDENSED STATEMENTS OF INCOME Year Ended December 31, 2025 2024 2023 Dividends $ 49,550 $ 31,400 $ 35,000 Other income 88 102 100 Interest expense ( 5,644 ) ( 6,721 ) ( 7,294 ) Other expense ( 2,383 ) ( 2,168 ) ( 1,897 ) Income before income tax and undistributed subsidiary income 41,611 22,613 25,909 Income tax benefit ( 1,667 ) ( 1,845 ) ( 1,904 ) Equity in undistributed subsidiary income 15,193 25,259 34,932 Net income $ 58,471 $ 49,717 $ 62,745 CONDENSED STATEMENTS OF CASH FLOWS Year Ended December 31, 2025 2024 2023 Cash flows from operating activities: Net income $ 58,471 $ 49,717 $ 62,745 Adjustments: Equity in undistributed subsidiary income ( 15,193 ) ( 25,259 ) ( 34,932 ) Amortization of debt issuance costs 139 186 186 Stock based compensation 2,624 2,318 2,157 Change in other assets ( 1,976 ) 3,532 ( 3,378 ) Change in other liabilities 347 ( 1,552 ) 1,004 Net cash from operating activities 44,412 28,942 27,782 Cash flows from financing activities: Repayments of long-term borrowings ( 50,000 ) — ( 12,372 ) Proceeds from common stock issuance 451 — — Payments to tax authorities for stock-based compensation ( 933 ) ( 759 ) ( 731 ) Payments to repurchase common stock ( 8,526 ) ( 1,340 ) ( 17,763 ) Cash dividends paid on common stock ( 10,101 ) ( 9,154 ) ( 8,745 ) Net cash from financing activities ( 69,109 ) ( 11,253 ) ( 39,611 ) Net change in cash and cash equivalents ( 24,697 ) 17,689 ( 11,829 ) Beginning cash and cash equivalents 104,856 87,167 98,996 Ending cash and cash equivalents $ 80,159 $ 104,856 $ 87,167 20. EARNINGS PER SHARE The factors used in the earnings per share computation follow (dollars in thousands, except per share data): December 31, 2025 2024 2023 Net income $ 58,471 $ 49,717 $ 62,745 Weighted average common shares outstanding - basic 16,283,804 16,410,336 16,843,753 Effect of dilutive securities: Stock based compensation awards 699,263 621,002 489,459 Weighted average common shares outstanding - diluted 16,983,067 17,031,338 17,333,212 Basic earnings per share $ 3.59 $ 3.03 $ 3.73 Diluted earnings per share $ 3.44 $ 2.92 $ 3.62 94 Table of Contents 21. SEGMENT INFORMATION Operating segments are components of a business about which separate financial information is available that is evaluated regularly by the chief operating decision-maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company's reportable banking segment is determined by its President, who is the designated CODM. City Bank is the only significant subsidiary upon which the CODM makes decisions regarding how to allocate resources and assess performance. Individual bank branches offer a group of similar services, including commercial, real estate and consumer loans, time deposits, checking and savings accounts, all with similar operating and economic characteristics. While the CODM monitors the revenue streams of the various products, services, and branch locations, operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the community banking services and branch locations are considered by management to be aggregated into one reportable operating segment, banking. Loans, investments, and deposits provide the significant revenues and interest expense, provision for credit losses and salaries and employee benefits comprise the significant expenses within the banking segment. All significant revenues and expenses mentioned above are shown individually on the Consolidated Statements of Comprehensive Income. 22. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following table details the changes in accumulated other comprehensive income (loss) by component, net of tax for the periods indicated (dollars in thousands): Gains and (Losses) on Fair Value Hedges Unrealized Gains and (Losses) on Securities Available for Sale Total For the Year Ended December 31, 2025 Beginning balance $ 11,881 $ ( 72,502 ) $ ( 60,621 ) Other comprehensive income (loss) before reclassification ( 4,271 ) 17,173 12,902 Amounts reclassified from other comprehensive — — — Net current period other comprehensive income (loss) ( 4,271 ) 17,173 12,902 Ending balance $ 7,610 $ ( 55,329 ) $ ( 47,719 ) For the Year Ended December 31, 2024 Beginning balance $ 13,160 $ ( 64,834 ) $ ( 51,674 ) Other comprehensive loss before reclassification ( 1,279 ) ( 7,668 ) ( 8,947 ) Amounts reclassified from other comprehensive — — — Net current period other comprehensive loss ( 1,279 ) ( 7,668 ) ( 8,947 ) Ending balance $ 11,881 $ ( 72,502 ) $ ( 60,621 ) For the Year Ended December 31, 2023 Beginning balance $ 16,072 $ ( 81,180 ) $ ( 65,108 ) Other comprehensive income (loss) before reclassification ( 2,912 ) 13,653 10,741 Amounts reclassified from other comprehensive — 2,693 2,693 Net current period other comprehensive income (loss) ( 2,912 ) 16,346 13,434 Ending balance $ 13,160 $ ( 64,834 ) $ ( 51,674 ) Amounts reclassified are shown on the Consolidated Statements of Comprehensive Income. 23. FAIR VALUE DISCLOSURES Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability is not adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact. 95 Table of Contents Valuation techniques that are consistent with the market approach, the income approach and/or the cost approach are required by GAAP. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset. Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy for valuation inputs gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows: ● Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. ● Level 2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means. ● Level 3 Inputs - Significant unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities. The following table summarizes fair value measurements as of the dates indicated below (dollars in thousands): Level 1 Level 2 Level 3 Total December 31, 2025 Assets (liabilities) measured at fair value on a recurring basis: Securities available for sale: State and municipal $ — $ 176,305 $ — $ 176,305 Residential mortgage-backed securities — 260,760 — 260,760 Commercial mortgage-backed securities — 44,786 — 44,786 Commercial collateralized mortgage obligations — 67,597 — 67,597 Asset-backed and other amortizing securities — 13,132 — 13,132 Other securities — 4,960 — 4,960 Loans held for sale (mandatory) — 7,796 — 7,796 Mortgage servicing rights — — 24,041 24,041 Asset derivatives — 9,970 — 9,970 Liability derivatives — ( 65 ) — ( 65 ) Assets measured at fair value on a non-recurring basis: Loans held for investment — — 5,515 5,515 Level 1 Level 2 Level 3 Total December 31, 2024 Assets (liabilities) measured at fair value on a recurring basis: Securities available for sale: State and municipal $ — $ 173,297 $ — $ 173,297 Residential mortgage-backed securities — 264,096 — 264,096 Commercial mortgage-backed securities — 40,360 — 40,360 Commercial collateralized mortgage obligations — 73,483 — 73,483 Asset-backed and other amortizing securities — 14,581 — 14,581 Other securities — 11,423 — 11,423 Loans held for sale (mandatory) — 13,791 — 13,791 Mortgage servicing rights — — 26,292 26,292 Asset derivatives — 15,998 — 15,998 Liability derivatives — ( 12 ) — ( 12 ) Assets measured at fair value on a non-recurring basis: Loans held for investment — — 20,566 20,566 Securities – Fair value is calculated based on market prices of similar securities using matrix pricing. Matrix pricing is a mathematical technique commonly used to price debt securities that are not actively traded. 96 Table of Contents Mortgage servicing rights – Mortgage servicing rights are reported at fair value using Level 3 inputs. The mortgage servicing rights asset is valued by projecting net servicing cash flows, which are then discounted to estimate the fair value. The fair value of the mortgage servicing rights asset is impacted by a variety of factors, including prepayment speeds, default rates, and discount rates, which are significant unobservable inputs. Mortgage servicing rights are the only Level 3 asset measured at fair value on a recurring basis, see Note 9 for the Level 3 change activity for the years ended December 31, 2025, 2024 and 2023. Derivatives – Fair value of derivatives is based on valuation models using observable market data as of the measurement date. Loans held for investment – Includes certain collateral-dependent loans which are reported at fair value, for which a specific allocation of the allowance for credit losses is based off of the underlying collateral, less estimated disposal costs, if repayment is expected solely from the sale of the collateral. Collateral values are estimated using Level 2 inputs based on observable market data or Level 3 inputs based on customized discounting criteria. Fair Values of Assets Recorded on a Recurring Basis for which the Fair Value Option has been Elected Loans held for sale (mandatory) – Loans held for sale originated for mandatory delivery are reported at fair value on a recurring basis due to the Company’s election to adopt fair value accounting treatment for these assets. This election allows for a more effective offset of the changes in fair values of the assets and the derivative instruments used to economically hedge them without the burden of complying with the requirements for hedge accounting under ASC Topic 815, Derivatives and Hedging. For assets for which the fair value option has been elected, the earned current contractual interest payment is recognized in interest income, loan origination costs and fees on fair value option loans are recognized in earnings as incurred and not deferred. At December 31, 2025, and 2024, there were no gains or losses recorded attributable to changes in instrument-specific credit risk. Fair value is determined using quoted prices for similar assets, adjusted for specific attributes of that loan. At December 31, 2025 and 2024 the aggregate fair value of loans held for sale for mandatory delivery was $ 7.8 million and $ 13.8 million, respectively. The aggregate unpaid principal balance as of the same dates was $ 7.6 million and $ 13.5 million, respectively, representing differences between fair value and unpaid principal balance of $ 152 thousand and $ 271 thousand, respectively. The Company had no loans held for sale for mandatory delivery designated as nonaccrual or 90 days or more past due at December 31, 2025 and 2024. The total fair value option impact on noninterest income for loans held for sale for mandatory delivery is included in Net gain on sales of loans in the Consolidated Statements of Comprehensive Income. For the years ended December 31, 2025, 2024, and 2023 this amount totaled $( 254 ) thousand, $ 345 thousand, and $( 424 ) thousand, respectively. The following table presents quantitative information about recurring and non-recurring Level 3 fair value measurements at December 31 (dollars in thousands): Fair Value Valuation Techniques Unobservable Inputs Range of Discounts December 31, 2025 Non-recurring Loans held for investment $ 5,515 Third party appraisals or inspections Collateral discounts and selling costs 20 %- 60 % Recurring: Mortgage servicing rights 24,041 Discounted cash flows Constant prepayment rate 8.81 % Discount rate 9.70 % December 31, 2024 Non-recurring Loans held for investment $ 20,566 Third party appraisals or inspections Collateral discounts and selling costs 20 % Recurring: Mortgage servicing rights 26,292 Discounted cash flows Constant prepayment rate 7.16 % Discount rate 10.17 % 97 Table of Contents The estimated fair values, and related carrying amounts, of the Company’s financial instruments that are not previously disclosed in the recurring fair values section are as follows as of December 31 (dollars in thousands): Carrying Amount Level 1 Level 2 Level 3 Total December 31, 2025 Financial assets: Cash and cash equivalents $ 552,439 $ 552,439 $ — $ — $ 552,439 Loans held for investment, net 3,099,371 — — 3,082,072 3,082,072 Loans held for sale (best efforts) 2,197 — 2,237 — 2,237 Accrued interest receivable 20,931 — 20,931 — 20,931 Financial liabilities: Deposits 3,874,077 — 3,873,806 — 3,873,806 Accrued interest payable 5,014 — 5,014 — 5,014 Junior subordinated deferrable interest debentures 46,393 — 35,213 — 35,213 Subordinated debt 14,100 — 13,907 — 13,907 Carrying Amount Level 1 Level 2 Level 3 Total December 31, 2024 Financial assets: Cash and cash equivalents $ 359,082 $ 359,082 $ — $ — $ 359,082 Loans held for investment, net 3,011,817 — — 2,937,678 2,937,678 Loans held for sale (best efforts) 6,751 — 6,875 — 6,875 Accrued interest receivable 21,687 — 21,687 — 21,687 Financial liabilities: Deposits 3,620,876 — 3,621,106 — 3,621,106 Accrued interest payable 6,108 — 6,108 — 6,108 Junior subordinated deferrable interest debentures 46,393 — 34,285 — 34,285 Subordinated debt 63,961 — 60,969 — 60,969 24. SUBSEQUENT EVENTS Dividend Declaration On January 22, 2026 , the Company declared a cash dividend of $ 0.17 per share of common stock to be paid on February 17, 2026 to all shareholders of record as of the close of business on February 2, 2026 . Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.