First Financial Bankshares Q3 earnings rise to $74.3M

Available-for-sale securities had $620.602 million in gross unrealized losses at September 30, 2026; quarterly provision for credit losses was $2.034 million.

Available on EDGAR 11/05/2026 - 01:59 PM EST Accepted by SEC EDGAR 11/05/2026 - 01:58 PM EST Learn about SEC filing dates

Rhea-AI Filing Summary

First Financial Bankshares, Inc. reported third-quarter 2026 net earnings of $74.308 million, compared with $52.267 million a year earlier. Net interest income was $138.507 million versus $127.001 million, and the provision for credit losses was $2.034 million versus $24.435 million. Diluted earnings per share were $0.52 versus $0.36. For the first nine months, net earnings were $217.745 million, compared with $180.270 million, and net cash provided by operating activities was $278.281 million versus $224.560 million.

At September 30, 2026, loans held for investment were $8.539 billion and deposits were $13.148 billion, compared with $8.158 billion and $13.346 billion, respectively, at December 31, 2025. Available-for-sale securities had a fair value of $5.388 billion and amortized cost of $6.008 billion, with $620.602 million in gross unrealized losses. On July 28, 2026, the board renewed and increased its authorization to repurchase up to 7,200,000 common shares through July 31, 2027; no repurchases occurred during 2025 or through September 30, 2026.

1 point · 0 major

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Positive

• Moderate pointThird-quarter net earnings increased to $74.308 million from $52.267 million.

Negative

• None.

Filing Explained

Management attributes the securities’ unrealized losses to market rates, with no credit-loss allowance recorded.

Form 10-Q provides unaudited interim financial statements and updates on risks and liquidity; this filing reports First Financial Bankshares through September 30, 2026. At that date, cash and cash equivalents were $474,472 thousand, down from $1,077,988 thousand at December 31, 2025, while the bank reported available FHLB and Federal Reserve Discount Window lines of $2,277,461 thousand and $1,764,497 thousand, respectively.

$678,000 thousand was used on the FHLB line for undisbursed letters of credit, and there were no borrowings from the Federal Reserve Discount Window.

For available-for-sale securities in unrealized-loss positions, the company reports no credit-loss allowance and attributes the losses to increases in market interest rates; it says it does not intend to sell those securities and believes it is more likely than not it will not have to sell before recovery of cost.

Key Figures

Net earnings: $74.308 million Net interest income: $138.507 million Provision for credit losses: $2.034 million +5 more

8 metrics

Net earnings $74.308 million Three months ended September 30, 2026; $52.267 million in 2025

Net interest income $138.507 million Three months ended September 30, 2026; $127.001 million in 2025

Provision for credit losses $2.034 million Three months ended September 30, 2026; $24.435 million in 2025

Net earnings $217.745 million Nine months ended September 30, 2026; $180.270 million in 2025

Net cash provided by operating activities $278.281 million Nine months ended September 30, 2026; $224.560 million in 2025

Loans held for investment $8.539 billion At September 30, 2026; $8.158 billion at December 31, 2025

Total deposits $13.148 billion At September 30, 2026; $13.346 billion at December 31, 2025

Gross unrealized losses on available-for-sale securities $620.602 million At September 30, 2026

Key Terms

allowance for credit losses, amortized cost, nonaccrual status, anti-dilutive shares, +1 more

5 terms

allowance for credit losses financial

"Allowance for Credit Losses on Available-for-Sale Securities"

Allowance for credit losses is a reserve set aside by a financial institution to cover potential losses from borrowers who may not repay their loans. It acts like a safety net, helping the institution prepare for loans that might turn sour. For investors, it signals how cautious the institution is about the quality of its loans and potential risks to its financial health.

amortized cost financial

"amortized cost and estimated fair value of available-for-sale securities"

Amortized cost is an accounting method that shows the value of a loan or bond on a company’s books by starting with what was paid and then gradually adjusting that amount as principal is repaid and any extra fees or discounts are spread out over time. Think of it like tracking the remaining balance on a mortgage after each scheduled payment. For investors, it matters because it determines the reported value and earned interest of debt holdings, affecting income, balance sheet strength, and comparisons between companies.

nonaccrual status financial

"loans on nonaccrual status"

Nonaccrual status is when a lender stops recording interest income on a loan because payments are late or the borrower’s ability to pay is in serious doubt. For investors this is a red flag: it signals deteriorating loan quality, can reduce reported earnings and may require the lender to set aside more reserves, much like marking a damaged product off the books until its value is clear.

anti-dilutive shares financial

"There were 925,000 and 873,000 anti-dilutive shares"

collateralized mortgage obligations financial

"These securities include collateralized mortgage obligations (CMOs)"

Collateralized mortgage obligations are bonds made by pooling many home loans and dividing the pool’s cash flows into separate slices that pay investors at different times and with different risk profiles. Each slice has its own schedule for receiving principal and interest, so some slices get paid sooner with lower yield while others wait longer for higher yield. That matters to investors because these differences affect expected return, exposure to borrowers refinancing early, and sensitivity to interest-rate changes — like choosing a slice of a loaf that is cut to be eaten now or later.

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

How much did FFIN earn in the third quarter of 2026?

FFIN reported net earnings of $74.308 million for the three months ended September 30, 2026. Net earnings were $52.267 million in the comparable 2025 quarter, and diluted earnings per share were $0.52 versus $0.36.

What is FFIN's stock repurchase authorization?

The board renewed and increased the authorization on July 28, 2026, permitting repurchases of up to 7,200,000 common shares through July 31, 2027. No repurchases occurred during 2025 or through September 30, 2026.

Why does FFIN have unrealized losses on available-for-sale securities?

The company attributed the losses to increases in market interest rates over yields available when the securities were purchased. It said issuers continued timely principal and interest payments and no allowance for credit losses had been recognized on available-for-sale securities in unrealized-loss positions.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-07674

First Financial Bankshares, Inc.

(Exact name of registrant as specified in its charter)

Texas		75-0944023
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
400 Pine Street, Abilene, Texas		79601
(Address of principal executive offices)		(Zip Code)

(325) 627-7155

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.01 par value		FFIN		The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer		☒		Accelerated filer		☐
Non-accelerated filer		☐		Smaller reporting company		☐
				Emerging growth company		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Class		Outstanding at November 5, 2026
Common Stock, $0.01 par value per share		143,160,889

1

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item					Page
1.		Financial Statements - Unaudited			3
		Consolidated Balance Sheets			4
		Consolidated Statements of Earnings			5
		Consolidated Statements of Comprehensive Earnings (Loss)			6
		Consolidated Statements of Shareholders’ Equity			7
		Consolidated Statements of Cash Flows			9
		Notes to Consolidated Financial Statements			10
2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			31
3.		Quantitative and Qualitative Disclosures About Market Risk			47
4.		Controls and Procedures			48
PART II - OTHER INFORMATION
1.		Legal Proceedings			49
1A.		Risk Factors			49
2.		Unregistered Sales of Equity Securities and Use of Proceeds			49
3.		Defaults Upon Senior Securities			49
4.		Mine Safety Disclosures			49
5.		Other Information			49
6.		Exhibits			50
		Signatures			51

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

The consolidated balance sheets of First Financial Bankshares, Inc. and Subsidiaries (the “Company” or “we”) at September 30, 2026 (unaudited), and December 31, 2025, and the consolidated statements of earnings, comprehensive earnings (loss) and shareholders’ equity for the three and nine-months ended September 30, 2026 and 2025 (unaudited), and the consolidated statements of cash flows for the nine-months ended September 30, 2026 and 2025 (unaudited), and notes to consolidated financial statements (unaudited), follow on pages 4 through 30.

3

FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share and per share amounts)

		September 30,				December 31,
		2026				2025
		(Unaudited)
ASSETS
CASH AND DUE FROM BANKS		$	178,819			$	249,466
FEDERAL FUNDS SOLD			2,875				1,575
INTEREST-BEARING DEMAND DEPOSITS IN BANKS			292,778				826,947
Total cash and cash equivalents			474,472				1,077,988
SECURITIES AVAILABLE-FOR-SALE, at fair value (amortized cost of    these securities was $6,008,310 and $5,856,138 as of    September 30, 2026 and December 31, 2025, respectively)			5,388,083				5,514,113
LOANS:
Held-for-investment			8,538,788				8,158,276
Less—allowance for credit losses			(113,892	)			(105,536	)
Net loans held-for-investment			8,424,896				8,052,740
Held-for-sale ($21,100 and $25,431 at fair value at       September 30, 2026 and December 31, 2025, respectively)			25,521				29,992
BANK PREMISES AND EQUIPMENT, net			158,822				149,985
INTANGIBLE ASSETS, net			313,524				313,652
OTHER ASSETS			377,549				308,006
Total assets		$	15,162,867			$	15,446,476
LIABILITIES AND SHAREHOLDERS’ EQUITY
NONINTEREST-BEARING DEPOSITS		$	3,545,829			$	3,401,057
INTEREST-BEARING DEPOSITS			9,602,314				9,944,472
Total deposits			13,148,143				13,345,529
DIVIDENDS PAYABLE			31,596				27,223
REPURCHASE AGREEMENTS			43,088				62,956
BORROWINGS			21,854				21,680
OTHER LIABILITIES			85,626				71,771
Total liabilities			13,330,307				13,529,159
SHAREHOLDERS’ EQUITY:
COMMON STOCK — $0.01 par value, authorized 200,000,000 shares;    143,397,258 and 143,213,102 shares issued at    September 30, 2026 and December 31, 2025, respectively			1,434				1,432
CAPITAL SURPLUS			707,150				699,631
RETAINED EARNINGS			1,613,528				1,486,194
TREASURY STOCK (shares at cost: 946,478 and 936,268 at    September 30, 2026 and December 31, 2025, respectively)			(15,263	)			(14,274	)
DEFERRED COMPENSATION			15,263				14,274
ACCUMULATED OTHER COMPREHENSIVE EARNINGS (LOSS), net			(489,552	)			(269,940	)
Total shareholders’ equity			1,832,560				1,917,317
Total liabilities and shareholders’ equity		$	15,162,867			$	15,446,476

See notes to consolidated financial statements.

4

FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS—(UNAUDITED)

(Dollars in thousands, except per share amounts)

		Three-Months Ended September 30,								Nine-Months Ended September 30,
		2026				2025				2026				2025
INTEREST INCOME:
Interest and fees on loans		$	140,955			$	140,441			$	414,173			$	406,145
Interest on investment securities:
Taxable			35,024				26,539				100,973				76,815
Exempt from federal income tax			10,230				10,196				32,602				26,567
Interest on federal funds sold and interest-bearing demand    deposits in banks			2,836				2,516				10,202				10,085
Total interest income			189,045				179,692				557,950				519,612
INTEREST EXPENSE:
Interest on deposits			50,252				52,009				146,800				148,289
Interest on repurchase agreements and borrowings			286				682				938				1,803
Total interest expense			50,538				52,691				147,738				150,092
Net interest income			138,507				127,001				410,212				369,520
PROVISION FOR CREDIT LOSSES			2,034				24,435				8,508				31,095
Net interest income after provision for credit losses			136,473				102,566				401,704				338,425
NONINTEREST INCOME:
Wealth Management fees			14,492				12,950				41,815				38,349
Service charges on deposit accounts			6,693				6,447				19,033				18,749
Debit card fees			5,953				5,333				16,782				15,519
Credit card fees			721				699				2,106				1,983
Gain on sale and fees on mortgage loans			4,175				4,375				13,131				11,333
Net loss on sale of available-for-sale securities			(9	)			—				(9	)			—
Net (loss) gain on sale of foreclosed assets			(2	)			(122	)			(77	)			43
Net (loss) gain on sale of other assets			(1	)			—				(375	)			6
Other noninterest income			3,613				4,582				11,169				11,384
Total noninterest income			35,635				34,264				103,575				97,366
NONINTEREST EXPENSE:
Salaries, commissions and employee benefits			47,809				42,605				143,451				127,322
Net occupancy expense			3,837				3,545				11,195				10,865
Equipment expense			2,306				2,395				6,633				7,194
FDIC insurance premiums			1,709				1,635				5,036				4,795
Debit card expense			3,029				3,512				9,180				10,193
Professional and service fees			3,959				3,000				11,026				8,381
Printing, stationery and supplies			490				456				1,405				1,411
Operational and other losses			1,333				1,957				3,134				3,217
Software amortization and expense			5,067				4,280				14,714				12,032
Amortization of intangible assets			42				86				128				266
Other noninterest expense			11,471				10,195				33,024				30,060
Total noninterest expense			81,052				73,666				238,926				215,736
EARNINGS BEFORE INCOME TAXES			91,056				63,164				266,353				220,055
INCOME TAX EXPENSE			16,748				10,897				48,608				39,785
NET EARNINGS		$	74,308			$	52,267			$	217,745			$	180,270
NET EARNINGS PER SHARE, BASIC		$	0.52			$	0.37			$	1.52			$	1.26
NET EARNINGS PER SHARE, DILUTED		$	0.52			$	0.36			$	1.51			$	1.26
DIVIDENDS PER SHARE		$	0.22			$	0.19			$	0.63			$	0.56

See notes to consolidated financial statements.

5

FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS) —(UNAUDITED)

(Dollars in thousands)

		Three-Months Ended September 30,								Nine-Months Ended September 30,
		2026				2025				2026				2025
NET EARNINGS		$	74,308			$	52,267			$	217,745			$	180,270
OTHER ITEMS OF COMPREHENSIVE EARNINGS (LOSS):
Unrealized gain (loss) on investment securities available-for-sale:
Unrealized holding gain (loss) arising during the period			(265,689	)			82,122				(277,999	)			146,468
Reclassification for realized losses through the sale of securities			9				—				9				—
Other comprehensive (loss) income on securities, before tax			(265,680	)			82,122				(277,990	)			146,468
Income tax benefit (expense) related to:
Change in unrealized loss on investment securities available-for-sale			55,795				(17,245	)			58,380				(30,758	)
Reclassification adjustment for realized losses on investment    securities included in net earnings			(2	)			—				(2	)			—
Total income tax benefit (expense)			55,793				(17,245	)			58,378				(30,758	)
Other comprehensive income (loss), net of tax			(209,887	)			64,877				(219,612	)			115,710
TOTAL COMPREHENSIVE EARNINGS (LOSS)		$	(135,579	)		$	117,144			$	(1,867	)		$	295,980

See notes to consolidated financial statements.

6

FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY—(UNAUDITED)

(Dollars in thousands, except per share amounts)

		Common Stock								Capital				Retained				Treasury Stock								Deferred				Accumulated Other Comprehensive Earnings				Total Shareholders’
		Shares				Amount				Surplus				Earnings				Shares				Amounts				Compensation				(Loss)				Equity
Balances at June 30, 2025			143,077,619			$	1,431			$	694,273			$	1,415,104				(929,782	)		$	(13,594	)		$	13,594			$	(373,456	)		$	1,737,352
Net earnings			—				—				—				52,267				—				—				—				—				52,267
Stock option exercises/   stock unit conversions/   restricted stock activity			110,432				1				1,435				—				—				—				—				—				1,436
Cash dividends declared, $0.19    per share			—				—				—				(27,264	)			—				—				—				—				(27,264	)
Other comprehensive income (loss), net of tax			—				—				—				—				—				—				—				64,877				64,877
Shares purchased in connection    with directors’ deferred    compensation plan, net			—				—				—				—				(1,114	)			(390	)			390				—				—
Stock-based compensation expense			—				—				1,600				—				—				—				—				—				1,600
Balances at September 30, 2025			143,188,051			$	1,432			$	697,308			$	1,440,107				(930,896	)		$	(13,984	)		$	13,984			$	(308,579	)		$	1,830,268
Balances at June 30, 2026			143,319,824			$	1,433			$	704,302			$	1,570,817				(943,775	)		$	(14,947	)		$	14,947			$	(279,665	)		$	1,996,887
Net earnings			—				—				—				74,308				—				—				—				—				74,308
Stock option exercises/   stock unit conversions/   restricted stock activity			77,434				1				837				—				—				—				—				—				838
Cash dividends declared, $0.22    per share			—				—				—				(31,597	)			—				—				—				—				(31,597	)
Other comprehensive income (loss), net of tax			—				—				—				—				—				—				—				(209,887	)			(209,887	)
Shares purchased in connection    with directors’ deferred    compensation plan, net			—				—				—				—				(2,703	)			(316	)			316				—				—
Stock-based compensation expense			—				—				2,011				—				—				—				—				—				2,011
Balances at September 30, 2026			143,397,258			$	1,434			$	707,150			$	1,613,528				(946,478	)		$	(15,263	)		$	15,263			$	(489,552	)		$	1,832,560

See notes to consolidated financial statements.

7

FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY—(UNAUDITED)

(Dollars in thousands, except per share amounts)

		Common Stock								Capital				Retained				Treasury Stock								Deferred				Accumulated Other Comprehensive Earnings				Total Shareholders’
		Shares				Amount				Surplus				Earnings				Shares				Amounts				Compensation				(Loss)				Equity
Balances at December 31, 2024			142,944,704			$	1,429			$	689,338			$	1,340,082				(929,735	)		$	(12,905	)		$	12,905			$	(424,289	)		$	1,606,560
Net earnings			—				—				—				180,270				—				—				—				—				180,270
Stock option exercises/   stock unit conversions/   restricted stock activity			243,347				3				2,912				—				—				—				—				—				2,915
Cash dividends declared,    $0.56 per share			—				—				—				(80,245	)			—				—				—				—				(80,245	)
Other comprehensive income (loss), net of tax			—				—				—				—				—				—				—				115,710				115,710
Shares purchased in    connection with directors’    deferred compensation    plan, net			—				—				—				—				(1,161	)			(1,079	)			1,079				—				—
Stock-based compensation expense			—				—				5,058				—				—				—				—				—				5,058
Balances at September 30, 2025			143,188,051			$	1,432			$	697,308			$	1,440,107				(930,896	)		$	(13,984	)		$	13,984			$	(308,579	)		$	1,830,268
Balances at December 31, 2025			143,213,102			$	1,432			$	699,631			$	1,486,194				(936,268	)		$	(14,274	)		$	14,274			$	(269,940	)		$	1,917,317
Net earnings			—				—				—				217,745				—				—				—				—				217,745
Stock option exercises/   stock unit conversions/   restricted stock activity			184,156				2				1,609				—				—				—				—				—				1,611
Cash dividends declared,    $0.63 per share			—				—				—				(90,411	)			—				—				—				—				(90,411	)
Other comprehensive income (loss), net of tax			—				—				—				—				—				—				—				(219,612	)			(219,612	)
Shares purchased in    connection with directors’    deferred compensation    plan, net			—				—				—				—				(10,210	)			(989	)			989				—				—
Stock-based compensation expense			—				—				5,910				—				—				—				—				—				5,910
Balances at September 30, 2026			143,397,258			$	1,434			$	707,150			$	1,613,528				(946,478	)		$	(15,263	)		$	15,263			$	(489,552	)		$	1,832,560

See notes to consolidated financial statements.

8

FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS—(UNAUDITED)

(Dollars in thousands)

		Nine-Months Ended September 30,
		2026				2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings		$	217,745			$	180,270
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization			10,610				10,331
Provision for credit losses			8,508				31,095
Securities premium amortization, net			24,693				29,107
Loss (gain) on sale of foreclosed and other assets			461				(49	)
Deferred federal income tax expense			1,971				11,684
Stock-based compensation			5,910				5,058
Net tax benefit from stock-based compensation			475				335
Change in loans held-for-sale			4,471				(17,210	)
Change in other assets			(482	)			(39,796	)
Change in other liabilities			3,919				13,735
Total adjustments			60,536				44,290
Net cash provided by operating activities			278,281				224,560
CASH FLOWS FROM INVESTING ACTIVITIES:
Activity in available-for-sale securities:
Proceeds from maturities, calls, and paydowns			10,064,614				5,564,259
Proceeds from sales			121,284				—
Purchases			(10,362,772	)			(6,089,825	)
Net increase in loans held-for-investment			(384,433	)			(352,179	)
Purchases of bank premises, equipment and software			(19,272	)			(7,475	)
Proceeds from sale of bank premises, equipment, and other assets			289				1,206
Net cash used in investing activities			(580,290	)			(884,014	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in noninterest-bearing deposits			144,772				98,221
Net (decrease) increase in interest-bearing deposits			(342,158	)			648,853
Net repayments of repurchase agreements and other borrowings			(19,694	)			(124,417	)
Common stock transactions:
Proceeds from stock option exercises/stock unit conversions/restricted stock activity			1,611				2,915
Dividends paid			(86,038	)			(78,735	)
Net cash (used in) provided by financing activities			(301,507	)			546,837
NET DECREASE IN CASH AND CASH EQUIVALENTS			(603,516	)			(112,617	)
CASH AND CASH EQUIVALENTS, beginning of period			1,077,988				763,413
CASH AND CASH EQUIVALENTS, end of period		$	474,472			$	650,796
SUPPLEMENTAL INFORMATION AND NONCASH TRANSACTIONS:
Interest paid		$	147,937			$	150,942
Federal income taxes paid			41,889				45,473
Schedule of noncash investing and financing activities:
Increase in capital commitments relating to low-income housing project investments		$	10,000			$	—
Loans transferred to other real estate owned, net			3,230				2,215

See notes to consolidated financial statements.

9

FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 – Summary of Significant Accounting Policies

Nature of Operations

First Financial Bankshares, Inc., a Texas corporation (“Bankshares,” “Company,” “we” or “us”), is a financial holding company which owns all of the capital stock of First Financial Bank, which had 80 locations located in Texas as of September 30, 2026. The Company’s primary source of revenue is providing loans and banking services to consumers and commercial customers in the market areas in which First Financial Bank is located. In addition, the Company also owns First Financial Trust & Asset Management Company dba First Financial Wealth Management, First Financial Insurance Agency, Inc. (inactive), First Technology Services, Inc., FFB Investment Paris Fund, LLC, and FFB Portfolio Management, Inc.

Basis of Presentation

The unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, reporting practices prescribed by the banking industry, and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements and should be read in conjunction with the Company's annual consolidated financial statements for the year ended December 31, 2025 included in the Company's Annual Report on Form 10-K filed with the SEC on February 25, 2026.

In the opinion of management, all adjustments that were recurring in nature and considered necessary have been included for fair presentation of the Company’s financial position and results of operations. Operating results for the three and nine-months ended September 30, 2026 are not necessarily indicative of results that may be expected for the full year ending December 31, 2026. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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 significantly from those estimates.

The Company evaluated subsequent events for potential recognition through the date the consolidated financial statements were issued.

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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s significant estimates include its allowance for credit losses and its valuation of financial instruments.

Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All significant intercompany accounts and transactions have been eliminated.

Stock Repurchase

On July 28, 2026, the Company's Board of Directors renewed and increased the size of the authorization to repurchase up to 7,200,000 common shares through July 31, 2027. The prior authorization to repurchase up to 5,000,000 common shares had been in place since July 27, 2021. The stock repurchase plan authorizes management to repurchase and retire the stock at such time as repurchases and retirements are considered beneficial to the Company and shareholders. Any repurchase of stock will be made through the open market, block trades, or in privately negotiated transactions in accordance with applicable laws and regulations. Under the repurchase plan, there is no minimum number of shares that the Company is required to repurchase. There were no repurchases during 2025 or through September 30, 2026.

Segment Reporting

The Company has determined that its banking regions meet the aggregation criteria of ASC 280, since each of its banking regions offer similar products and services, operate in a similar manner, have similar customers and report to the same regulatory authority, and therefore operate one line of business (community banking) located in a single geographic area (Texas). The Company's Chief Executive Officer has been identified as the chief operating decision maker (“CODM”).

The CODM regularly assesses performance of the aggregated single operating and reporting segment and decides how to allocate resources based on the net income calculated on the same basis as the net income reported in the Company's consolidated statements of earnings and other comprehensive earnings. The CODM is also regularly provided with expense information at a level that is consistent with that disclosed in the Company's consolidated statements of earnings and other comprehensive earnings.

10

Per Share Data

Net earnings per share (“EPS”) are computed by dividing net earnings by the weighted average number of common shares outstanding during the period. The Company calculates dilutive EPS assuming all outstanding stock options to purchase common shares and unvested restricted stock shares and units have been exercised and/or vested at the beginning of the year (or the time of issuance, if later.) The dilutive effect of the outstanding options and restricted stock is determined by application of the treasury stock method, whereby the proceeds from the exercised options and unearned compensation for both restricted stock and stock options are assumed to be used to purchase common shares at the average market price during the respective period. There were 925,000 and 873,000 anti-dilutive shares for the three and nine-months ended September 30, 2026. There were 474,000 and 401,000 anti-dilutive shares for the three and nine-months ended September 30, 2025 respectively, that were excluded from the computation of EPS.

		Net				Weighted
		Earnings				Average				Per Share
		(in thousands)				Shares				Amount
For the three-months ended September 30, 2026:
Net earnings per share, basic		$	74,308				143,336,014			$	0.52
Effect of stock options and stock grants			—				390,653				—
Net earnings per share, diluted		$	74,308				143,726,667			$	0.52
For the three-months ended September 30, 2025:
Net earnings per share, basic		$	52,267				143,105,224			$	0.37
Effect of stock options and stock grants			—				368,945				(0.01	)
Net earnings per share, diluted		$	52,267				143,474,169			$	0.36

		Net				Weighted
		Earnings				Average				Per Share
		(in thousands)				Shares				Amount
For the nine-months ended September 30, 2026:
Net earnings per share, basic		$	217,745				143,276,199			$	1.52
Effect of stock options and stock grants			—				465,795				(0.01	)
Net earnings per share, diluted		$	217,745				143,741,994			$	1.51
For the nine-months ended September 30, 2025:
Net earnings per share, basic		$	180,270				143,026,664			$	1.26
Effect of stock options and stock grants			—				395,870				—
Net earnings per share, diluted		$	180,270				143,422,534			$	1.26

Other Recently Issued and Effective Authoritative Accounting Guidance

ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” ASU 2024-03 requires new financial statement disclosures in tabular format, disaggregating information about prescribed categories underlying any relevant income statement expense caption. The prescribed categories include, among other things, employee compensation, depreciation, and intangible asset amortization. Additionally, entities must disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. ASU 2024-03 will be effective, on a prospective basis, for our 2027 annual report and interim periods thereafter. The Company is evaluating the impact of this ASU and does not believe it will have a significant impact on the Company's financial statements.

ASU 2025-08, “Financial Instruments - Credit Losses (Topic 326): Purchased Loans.” ASU 2025-08 amends the guidance on the accounting for certain purchased loans. The new guidance makes significant changes to the accounting for certain acquired seasoned loans subject to the current expected credit loss model. The amendments in ASU 2025-08 apply prospectively and will be effective for the Company beginning January 1, 2027, with early adoption permitted, and is not expected to have a significant impact on the Company’s financial statements.

ASU 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements.” ASU 2025-11 is intended to provide clarity about the current interim reporting requirements, provides a list of the interim disclosures required by all other Codification topics and establishes a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 will be effective for the Company beginning January 1, 2028, with early adoption permitted, and is not expected to have a significant impact on the Company’s financial statements.

11

Note 2 - Securities

Debt securities have been classified in the consolidated balance sheets according to management’s intent. The amortized cost, related gross unrealized gains and losses and the fair value of available-for-sale securities are as follows:

						Gross				Gross
		Amortized				Unrealized				Unrealized				Estimated
(Dollars in thousands)		Cost Basis				Holding Gains				Holding Losses				Fair Value
September 30, 2026
Securities available-for-sale:
Obligations of states and political subdivisions		$	1,677,528			$	67			$	(203,380	)		$	1,474,215
Residential mortgage-backed securities			2,910,001				298				(374,747	)			2,535,552
Commercial mortgage-backed securities			1,315,365				10				(38,535	)			1,276,840
Corporate bonds and other			105,416				—				(3,940	)			101,476
		$	6,008,310			$	375			$	(620,602	)		$	5,388,083
December 31, 2025
Securities available-for-sale:
U.S. Treasury securities		$	61,136			$	1			$	(324	)		$	60,813
Obligations of states and political subdivisions			1,851,327				13,943				(113,897	)			1,751,373
Residential mortgage-backed securities			2,856,717				7,768				(253,075	)			2,611,410
Commercial mortgage-backed securities			982,567				9,801				(3,130	)			989,238
Corporate bonds and other			104,391				23				(3,135	)			101,279
		$	5,856,138			$	31,536			$	(373,561	)		$	5,514,113

The Company invests in mortgage-backed securities that have expected maturities that differ from their contractual maturities. These differences arise because borrowers may have the right to call or prepay obligations with or without a prepayment penalty. These securities include collateralized mortgage obligations (CMOs) and other asset backed securities. The expected maturities of these securities at September 30, 2026, and December 31, 2025, were computed by using scheduled amortization of balances and historical prepayment rates.

The amortized cost and estimated fair value of available-for-sale securities at September 30, 2026, by contractual and expected maturity, are shown below (dollars in thousands):

		Amortized				Estimated
		Cost				Fair Value
Due within one year		$	165,177			$	163,650
Due after one year through five years			2,440,721				2,275,990
Due after five years through ten years			2,003,706				1,771,947
Due after ten years			1,398,706				1,176,496
Total		$	6,008,310			$	5,388,083

12

The following table discloses as of September 30, 2026, and December 31, 2025, the Company’s investment securities that have been in a continuous unrealized-loss position for less than 12 months and for 12 or more months (dollars in thousands):

		Less than 12 Months								12 Months or Longer								Total
(Dollars in thousands)		Fair Value				Unrealized Loss				Fair Value				Unrealized Loss				Fair Value				Unrealized Loss
September 30, 2026
Securities available-for-sale
Obligations of states and political subdivisions		$	316,112			$	(12,026	)		$	1,155,998			$	(191,354	)		$	1,472,110			$	(203,380	)
Residential mortgage-backed securities			837,997				(44,815	)			1,628,589				(329,932	)			2,466,586				(374,747	)
Commercial mortgage-backed securities			1,098,384				(36,012	)			158,540				(2,523	)			1,256,924				(38,535	)
Corporate bonds and other			14,851				(92	)			47,268				(3,848	)			62,119				(3,940	)
Total		$	2,267,344			$	(92,945	)		$	2,990,395			$	(527,657	)		$	5,257,739			$	(620,602	)
December 31, 2025
Securities available-for-sale
U.S. Treasury securities		$	—			$	—			$	59,815			$	(324	)		$	59,815			$	(324	)
Obligations of states and political subdivisions			6,245				(387	)			1,363,145				(113,510	)			1,369,390				(113,897	)
Residential mortgage-backed securities			63,311				(120	)			1,996,200				(252,955	)			2,059,511				(253,075	)
Commercial mortgage-backed securities			188,241				(599	)			152,452				(2,531	)			340,693				(3,130	)
Corporate bonds and other			4,987				(1	)			63,382				(3,134	)			68,369				(3,135	)
Total		$	262,784			$	(1,107	)		$	3,634,994			$	(372,454	)		$	3,897,778			$	(373,561	)

Allowance for Credit Losses on Available-for-Sale Securities

For available-for-sale securities in an unrealized loss position, we first assess whether we intend to sell, or if it is more likely than not that we 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, any previously recognized allowances are charged-off and the security’s amortized cost basis is written down to fair value through income as a provision for credit losses. For available-for-sale securities that do not meet the aforementioned criteria, we evaluate 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 a 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 allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis.
 

The number of investments in an unrealized loss position totaled 885 at September 30, 2026. As of September 30, 2026 and December 31, 2025, no allowance for credit losses has been recognized on available-for-sale securities in an unrealized loss position as management does not believe any of the securities are impaired due to reasons of credit quality. This is based upon our analysis of the underlying risk characteristics, including credit ratings, and other qualitative factors related to our available-for-sale securities and in consideration of our historical credit loss experience and internal forecasts. The issuers of these securities continue to make timely principal and interest payments under the contractual terms of the securities. In addition, a portion of our investments are guaranteed by the U.S. Government, Treasury, or municipalities. Management does not have the intent to sell securities classified as available-for-sale in the table above and believes that it is more likely than not that we will not have to sell such securities before a recovery of cost. The unrealized losses are due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. At September 30, 2026, 70.0% of our available-for-sale securities that are obligations of states and political subdivisions were issued within the State of Texas, of which 55.7% are guaranteed by the Texas Permanent School Fund.

Securities, carried at approximately $3,058,894,000 on September 30, 2026, were pledged as collateral for public or trust fund deposits, repurchase agreements, borrowings and for other purposes required or permitted by law.

During the three and nine-months ended September 30, 2026, the Company had sales of available-for-sale securities totaling $121,284,000 and recognized gross gains of $2,511,000 and gross losses of $2,520,000 on sales and calls. There were no sales of investment securities that were classified as available-for-sale during the three and nine-months ended September 30, 2025.

The specific identification method was used to determine cost in order to compute the realized gains and losses.

13

Note 3 – Loans Held-for-Investment and Allowance for Credit Losses

For the periods ended September 30, 2026 and December 31, 2025, the following tables outline the Company’s loan portfolio by the ten portfolio segments where applicable.

Loans held-for-investment by portfolio segment are as follows (dollars in thousands):

		September 30,				December 31,
		2026				2025
Commercial:
Commercial & Industrial		$	1,164,597			$	1,116,461
Municipal			444,341				342,501
Total Commercial			1,608,938				1,458,962
Agricultural			79,796				95,776
Real Estate:
Construction & Development			1,089,540				1,157,865
Farm			349,484				327,625
Non-Owner Occupied CRE			919,847				832,816
Owner Occupied CRE			1,161,530				1,120,608
Residential			2,358,106				2,285,830
Total Real Estate			5,878,507				5,724,744
Consumer:
Auto			817,771				732,351
Non-Auto			153,776				146,443
Total Consumer			971,547				878,794
Total Loans			8,538,788				8,158,276
Less: Allowance for credit losses			(113,892	)			(105,536	)
Loans, net		$	8,424,896			$	8,052,740

Outstanding loan balances at September 30, 2026 and December 31, 2025, are net of unearned income, including net deferred loan fees.

Our subsidiary bank has established a line of credit with the Federal Home Loan Bank of Dallas (“FHLB”) and the Federal Reserve Discount Window to provide liquidity and to secure certain uninsured municipal deposits. At September 30, 2026, these available lines of credit were $2,277,461,000 and $1,764,497,000, respectively. At September 30, 2026, there was $678,000,000 used on the FHLB line for undisbursed commitments (letters of credit) used to secure public funds. At September 30, 2026, there were no borrowings from the Federal Reserve Discount Window. At September 30, 2026, $7,420,751,000 in loans held by our bank subsidiary were subject to blanket liens as security for these lines of credits.

The Company had $60,454,000 and $56,492,000 in nonaccrual, past due 90 days or more and still accruing, and foreclosed assets at September 30, 2026 and December 31, 2025, respectively.

The following tables present the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing as of September 30, 2026, and December 31, 2025:

	September 30, 2026												December 31, 2025
(Dollars in thousands)	Non-accrual				Non-accrual loans without a specific ACL				Accruing loans past due more than 90 days				Non-accrual				Non-accrual loans without a specific ACL				Accruing loans past due more than 90 days
Commercial:
Commercial & Industrial	$	5,299			$	2,240			$	16			$	3,639			$	110			$	—
Municipal		—				—				—				17				—				—
Agricultural		913				243				—				1,622				274				—
Real Estate:
Construction & Development		2,342				504				—				2,644				—				404
Farm		2,780				2,458				—				2,066				1,858				—
Non-Owner Occupied CRE		3,601				2,090				—				2,874				1,243				—
Owner Occupied CRE		21,394				13,858				—				26,606				15,939				488
Residential		19,982				6,481				—				14,558				4,827				—
Consumer:
Auto		667				3				3				871				—				—
Non-Auto		180				—				—				224				—				—
Total Loans	$	57,158			$	27,877			$	19			$	55,121			$	24,251			$	892

No significant additional funds are committed to be advanced in connection with nonaccrual loans as of September 30, 2026.

14

At September 30, 2026 and December 31, 2025, the Company’s past due loans are as follows (dollars in thousands):

September 30, 2026		15-59 Days Past Due*				60-89 Days Past Due				Greater Than 90 Days				Total Past Due				Current				Total Loans
Commercial:
Commercial & Industrial		$	3,243			$	1,881			$	3,527			$	8,651			$	1,155,946			$	1,164,597
Municipal			359				—				—				359				443,982				444,341
Agricultural			127				382				240				749				79,047				79,796
Real Estate:
Construction & Development			8,968				745				1,295				11,008				1,078,532				1,089,540
Farm			260				—				—				260				349,224				349,484
Non-Owner Occupied CRE			2,468				812				—				3,280				916,567				919,847
Owner Occupied CRE			807				14,131				6,978				21,916				1,139,614				1,161,530
Residential			23,533				5,276				4,333				33,142				2,324,964				2,358,106
Consumer:
Auto			605				162				17				784				816,987				817,771
Non-Auto			966				90				—				1,056				152,720				153,776
Total		$	41,336			$	23,479			$	16,390			$	81,205			$	8,457,583			$	8,538,788

December 31, 2025		15-59 Days Past Due*				60-89 Days Past Due				Greater Than 90 Days				Total Past Due				Current				Total Loans
Commercial:
Commercial & Industrial		$	3,760			$	850			$	876			$	5,486			$	1,110,975			$	1,116,461
Municipal			1,471				17				—				1,488				341,013				342,501
Agricultural			426				—				739				1,165				94,611				95,776
Real Estate:
Construction & Development			10,656				605				544				11,805				1,146,060				1,157,865
Farm			915				126				789				1,830				325,795				327,625
Non-Owner Occupied CRE			1,489				—				—				1,489				831,327				832,816
Owner Occupied CRE			9,582				13,631				1,536				24,749				1,095,859				1,120,608
Residential			21,505				3,493				3,340				28,338				2,257,492				2,285,830
Consumer:
Auto			1,161				92				—				1,253				731,098				732,351
Non-Auto			362				27				46				435				146,008				146,443
Total		$	51,327			$	18,841			$	7,870			$	78,038			$	8,080,238			$	8,158,276

* The Company monitors commercial, agricultural and real estate loans after such loans are 15 days past due. Consumer loans are monitored after such loans are 30 days past due.

A loan is considered to be collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. At September 30, 2026 and December 31, 2025, the Company had $2,240,000 and $110,000 in collateral-dependent commercial loans, collateralized by business assets, and $25,391,000 and $23,867,000 in collateral dependent commercial real estate loans, collateralized by real estate, respectively.

Allowance for Credit Losses

The allowance for credit losses (“allowance” or “ACL”) is a contra-asset valuation account, calculated in accordance with ASC 326, that is deducted from the amortized cost basis of loans. The ACL represents an amount which, in management’s judgment, is appropriate to absorb the lifetime expected credit losses that may be experienced on outstanding loans at the balance sheet date based on the evaluation of the size and current risk characteristics of the loan portfolio, past events, current conditions, reasonable and supportable forecasts of future economic conditions and prepayment experience. The allowance for credit losses is measured and recorded upon the initial recognition of a financial asset. Determination of the appropriateness of the allowance is inherently complex and requires the use of significant and highly subjective estimates. Loans are charged-off against the allowance when deemed uncollectible by management. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. Adjustments to the allowance are reported in our income statement as a component of the provision for credit losses. Management has made the accounting policy election to exclude accrued interest receivable on loans from the estimate of credit losses.

15

The Company’s methodology for estimating the allowance includes: (1) a collective quantified reserve that reflects the Company’s historical default and loss experience adjusted for expected economic conditions throughout a reasonable and supportable period and the Company’s prepayment and curtailment rates; (2) collective qualitative factors based on the risk perceived in concentrations of the loan portfolio, changes in economic conditions, early delinquencies, and factors related to credit administrations, including, among others, underwriting standards, loan-to-value ratios, and borrowers’ risk rating; and (3) individual allowances on loans where borrowers are experiencing financial difficulty or when the Company determines that the foreclosure is probable.

In calculating the allowance for credit losses, most loans are segmented into pools based upon similar characteristics and risk profiles. Common characteristics and risk profiles include the type/purpose of loan, underlying collateral, geographical similarity and historical/expected credit loss patterns. In developing these loan pools for the purposes of modeling expected credit losses, we also analyzed the degree of correlation in how loans within each portfolio respond when subjected to varying economic conditions and scenarios as well as other portfolio stress factors. For modeling purposes, our loan portfolio segments include Commercial & Industrial, Municipal, Agricultural, Construction and Development, Farm, Non-Owner Occupied and Owner Occupied CRE, Residential, Consumer Auto and Consumer Non-Auto. We periodically reassess each pool to ensure the loans within the pool continue to share similar characteristics and risk profiles and to determine whether further segmentation is necessary.

The Company applies two methodologies to estimate the allowance on its pooled portfolio segments; discounted cash flows method and weighted average remaining life method. We have elected to use the discounted cash flow method for estimated credit losses for all loans held for investment except for Agriculture, Consumer Auto and Consumer Non-Auto loans. The models related to these methodologies utilize the Company’s historical default and loss experience adjusted for future economic forecasts. The reasonable and supportable forecast period represents a one-year economic outlook for the applicable economic variables. Following the end of the reasonable and supportable forecast period, expected losses revert back to the historical mean over the next two years on a straight-line basis. Economic variables that have the most significant impact on the allowance include: Texas unemployment rate, Texas house price index and Texas retail sales index. Contractual loan level cash flows within the discounted cash flows methodology are adjusted for the Company’s historical prepayment and curtailment rate experience.

In some cases, management may determine that an individual loan exhibits unique risk characteristics which differentiate the loan from other loans within our loan pools. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk rating of the loan and economic conditions affecting the borrower’s industry, among other things. A loan is considered to be collateral dependent when, based upon management’s assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the sale of the collateral. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. We reevaluate the fair value of collateral supporting collateral dependent loans on an ongoing basis.

Management qualitatively adjusts model results for risk factors that are not considered within our modeling processes but are nonetheless relevant in assessing the expected credit losses within our loan pools. These qualitative factor (“Q-Factor”) adjustments may increase management’s estimate of expected credit losses based upon the estimated level of risk within the risk factor. The various risk factors that may be considered in making Q-Factor adjustments include, among other things, the impact of (i) changes in lending policies and procedures, including changes in underwriting standards and practices for collections, write-offs, and recoveries, (ii) actual and expected changes in national, regional, and local economic and business conditions and developments that affect the collectability of the loan pools, (iii) changes in the nature, volume and size of a loan or the loan pools and in the terms of the underlying loans, (iv) changes in the experience, ability, and depth of our lending management and staff, (v) changes in volume and severity of past due financial assets, the volume of nonaccrual assets, and the volume and severity of adversely classified or graded assets, (vi) changes in the quality of our credit review function, (vii) changes in the value of the underlying collateral for loans that are non-collateral dependent, (viii) the existence, growth, and effect of any concentrations of credit, and (ix) other factors such as the regulatory, legal and technological environments, competition, and events such as natural disasters or health pandemics.

Management believes it uses relevant information available to make determinations about the allowance and that it has established the existing allowance in accordance with GAAP. However, the determination of the allowance requires significant judgment, and estimates of expected lifetime losses in the loan portfolio can vary significantly from the amounts actually observed. While management uses available information to recognize expected losses, future additions to the allowance may be necessary based on changes in the loans comprising the portfolio, changes in the current and forecasted economic conditions, changes to the interest rate environment which may directly impact prepayment and curtailment rate assumptions, and changes in the financial condition of borrowers.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures.

The ACL on off-balance-sheet credit exposures is a liability account, calculated in accordance with ASC 326, representing expected credit losses over the contractual period for which we are exposed to credit risk resulting from a contractual obligation to extend credit. These obligations include unfunded lines of credit, commitments to extend credit and federal funds sold to correspondent banks and standby letters of credit. No allowance is recognized if we have the unconditional right to cancel the obligation. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on the commitments expected to fund. The estimate of commitments expected to fund is affected by historical analysis of utilization rates. The expected credit loss rates applied to the commitments expected to fund are affected by the general valuation allowance utilized for outstanding balances with the same underlying assumptions and drivers. The Company’s reserve for unfunded commitments totaled $5,848,000 and $6,387,000 at September 30, 2026 and December 31, 2025, respectively. The allowance is reported as a component of other liabilities in our consolidated balance sheets. Adjustments to the allowance are reported in our income statement as a component of the provision for credit loss expense. As of September 30, 2026, the Company had $1,825,954,000 in off-balance sheet commitments.

Summary information on the allowance for credit losses for the three-months ended September 30, 2026 and 2025, are outlined by portfolio segment in the following tables:

16

(Dollars in thousands)	Beginning balance				Provision for credit losses(1)				Charge-offs				Recoveries				Ending balance
Three-Months Ended September 30, 2026
Commercial:
Commercial & Industrial	$	19,679			$	1,976			$	(986	)		$	612			$	21,281
Municipal		282				190				—				—				472
Agricultural		174				(142	)			(32	)			75				75
Real Estate:
Construction & Development		17,815				(2,764	)			—				14				15,065
Farm		2,370				227				—				—				2,597
Non-Owner Occupied CRE		13,436				1,397				—				14				14,847
Owner Occupied CRE		23,130				(353	)			—				3				22,780
Residential		33,003				1,297				(148	)			15				34,167
Consumer:
Auto		1,977				423				(368	)			14				2,046
Non-Auto		567				143				(206	)			58				562
Total	$	112,433			$	2,394			$	(1,740	)		$	805			$	113,892
Three-Months Ended September 30, 2025
Commercial:
Commercial & Industrial	$	17,874			$	18,051			$	(17,696	)		$	108			$	18,337
Municipal		361				(23	)			—				—				338
Agricultural		937				(2	)			—				—				935
Real Estate:
Construction & Development		22,047				881				—				4				22,932
Farm		2,784				(94	)			—				—				2,690
Non-Owner Occupied CRE		14,008				1,175				—				14				15,197
Owner Occupied CRE		21,258				4,371				(4,230	)			5				21,404
Residential		21,477				713				(163	)			35				22,062
Consumer:
Auto		1,546				333				(384	)			103				1,598
Non-Auto		500				101				(139	)			3				465
Total	$	102,792			$	25,506			$	(22,612	)		$	272			$	105,958

(1) For the three-months ended September 30, 2026 and 2025, the provision for credit losses of $2,034,000 and $24,435,000, respectively, on the consolidated statements of earnings includes a provision for credit losses on loans of $2,394,000 and $25,506,000, respectively, and a provision reversal for off-balance sheet unfunded commitments of $360,000 and $1,072,000, respectively.

17

Summary information on the allowance for credit losses for the nine-months ended September 30, 2026 and 2025, is outlined by portfolio segment in the following table:

(Dollars in thousands)	Beginning balance				Provision for credit losses(1)				Charge-offs				Recoveries				Ending balance
Nine-Months Ended September 30, 2026
Commercial:
Commercial & Industrial	$	17,696			$	3,645			$	(1,532	)		$	1,472			$	21,281
Municipal		135				337				—				—				472
Agricultural		325				(288	)			(78	)			116				75
Real Estate:
Construction & Development		17,000				(1,898	)			(51	)			14				15,065
Farm		2,577				20				—				—				2,597
Non-Owner Occupied CRE		14,561				244				—				42				14,847
Owner Occupied CRE		25,368				(3,445	)			(150	)			1,007				22,780
Residential		25,614				9,146				(652	)			59				34,167
Consumer:
Auto		1,598				1,078				(886	)			256				2,046
Non-Auto		662				208				(526	)			218				562
Total	$	105,536			$	9,047			$	(3,875	)		$	3,184			$	113,892
Nine-Months Ended September 30, 2025
Commercial:
Commercial & Industrial	$	15,436			$	20,707			$	(18,107	)		$	301			$	18,337
Municipal		200				138				—				—				338
Agricultural		1,653				(792	)			—				74				935
Real Estate:
Construction & Development		19,861				3,105				(40	)			6				22,932
Farm		2,871				(182	)			—				1				2,690
Non-Owner Occupied CRE		14,664				761				(250	)			22				15,197
Owner Occupied CRE		21,413				4,084				(4,405	)			312				21,404
Residential		20,488				2,081				(567	)			60				22,062
Consumer:
Auto		1,186				982				(1,000	)			430				1,598
Non-Auto		553				45				(378	)			245				465
Total	$	98,325			$	30,929			$	(24,747	)		$	1,451			$	105,958

(1) For the nine-months ended September 30, 2026 and 2025, the provision for credit losses of $8,508,000 and $31,095,000, respectively, on the consolidated statements of earnings includes a provision for credit losses on loans of $9,047,000 and $30,929,000, respectively, and a provision reversal for off-balance sheet unfunded commitments of $539,000 and provision for off-balance sheet unfunded commitments of $165,000, respectively.

18

The Company’s loans that are individually evaluated for credit losses (both collateral and non-collateral dependent) and their related allowances as of September 30, 2026 and December 31, 2025, are summarized in the following tables by loan segment (dollars in thousands):

September 30, 2026		Collateral Dependent Loans Individually Evaluated for Credit Losses Without an Allowance				Collateral Dependent Loans Individually Evaluated for Credit Losses With an Allowance				Non-Collateral Dependent Loans Individually Evaluated for Credit Losses				Total Loans Individually Evaluated for Credit Losses				Related Allowance on Collateral Dependent Loans				Related Allowance on Non-Collateral Dependent Loans				Total Allowance for Credit Losses on Loans Individually Evaluated for Credit Losses
Commercial:
Commercial & Industrial		$	2,240			$	3,059			$	48,962			$	54,261			$	2,271			$	9,841			$	12,112
Municipal			—				—				9,643				9,643				—				308				308
Agricultural			243				670				820				1,733				30				44				74
Real Estate:
Construction & Development			504				1,838				19,061				21,403				174				1,762				1,936
Farm			2,458				322				2,658				5,438				29				465				494
Non-Owner Occupied CRE			2,090				1,511				32,956				36,557				347				2,543				2,890
Owner Occupied CRE			13,858				7,536				45,144				66,538				1,968				4,181				6,149
Residential			6,481				13,501				75,755				95,737				2,290				12,187				14,477
Consumer:
Auto			3				664				1,755				2,422				2				4				6
Non-Auto			—				180				573				753				1				2				3
Total		$	27,877			$	29,281			$	237,327			$	294,485			$	7,112			$	31,337			$	38,449

December 31, 2025		Collateral Dependent Loans Individually Evaluated for Credit Losses Without an Allowance				Collateral Dependent Loans Individually Evaluated for Credit Losses With an Allowance				Non-Collateral Dependent Loans Individually Evaluated for Credit Losses				Total Loans Individually Evaluated for Credit Losses				Related Allowance on Collateral Dependent Loans				Related Allowance on Non-Collateral Dependent Loans				Total Allowance for Credit Losses on Loans Individually Evaluated for Credit Losses
Commercial:
Commercial & Industrial		$	110			$	3,529			$	21,384			$	25,023			$	1,014			$	7,253			$	8,267
Municipal			—				17				—				17				—				—				—
Agricultural			274				1,348				525				2,147				198				125				323
Real Estate:
Construction & Development			—				2,644				17,439				20,083				171				1,790				1,961
Farm			1,858				208				5,348				7,414				6				211				217
Non-Owner Occupied CRE			1,243				1,631				33,134				36,008				431				2,897				3,328
Owner Occupied CRE			15,939				10,667				35,420				62,026				5,348				3,379				8,727
Residential			4,827				9,731				83,934				98,492				958				4,969				5,927
Consumer:
Auto			—				871				2,421				3,292				2				5				7
Non-Auto			—				224				880				1,104				1				2				3
Total		$	24,251			$	30,870			$	200,485			$	255,606			$	8,129			$	20,631			$	28,760

19

The Company’s allowance for loans and recorded investment that are individually evaluated for credit losses and collectively evaluated for credit losses as of September 30, 2026 and December 31, 2025, are summarized in the following table by loan segment (dollars in thousands). Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

(Dollars in thousands)		Commercial & Industrial				Municipal				Agricultural				Construction & Development				Farm				Non-Owner Occupied CRE				Owner Occupied CRE				Residential				Consumer Auto				Consumer Non-Auto				Total
September 30, 2026
Allowance for loan loss:
Individually evaluated		$	12,112			$	308			$	74			$	1,936			$	494			$	2,890			$	6,149			$	14,477			$	6			$	3			$	38,449
Collectively evaluated			9,169				164				1				13,129				2,103				11,957				16,631				19,690				2,040				559				75,443
Total ACL on loans		$	21,281			$	472			$	75			$	15,065			$	2,597			$	14,847			$	22,780			$	34,167			$	2,046			$	562			$	113,892
Portfolio loans:
Individually evaluated		$	54,261			$	9,643			$	1,733			$	21,403			$	5,438			$	36,557			$	66,538			$	95,737			$	2,422			$	753			$	294,485
Collectively evaluated			1,110,336				434,698				78,063				1,068,137				344,046				883,290				1,094,992				2,262,369				815,349				153,023				8,244,303
Total portfolio loans		$	1,164,597			$	444,341			$	79,796			$	1,089,540			$	349,484			$	919,847			$	1,161,530			$	2,358,106			$	817,771			$	153,776			$	8,538,788
December 31, 2025
Allowance for loan loss:
Individually evaluated		$	8,267			$	—			$	323			$	1,961			$	217			$	3,328			$	8,727			$	5,927			$	7			$	3			$	28,760
Collectively evaluated			9,429				135				2				15,039				2,360				11,233				16,641				19,687				1,591				659				76,776
Total ACL on loans		$	17,696			$	135			$	325			$	17,000			$	2,577			$	14,561			$	25,368			$	25,614			$	1,598			$	662			$	105,536
Portfolio loans:
Individually evaluated		$	25,023			$	17			$	2,147			$	20,083			$	7,414			$	36,008			$	62,026			$	98,492			$	3,292			$	1,104			$	255,606
Collectively evaluated			1,091,438				342,484				93,629				1,137,782				320,211				796,808				1,058,582				2,187,338				729,059				145,339				7,902,670
Total portfolio loans		$	1,116,461			$	342,501			$	95,776			$	1,157,865			$	327,625			$	832,816			$	1,120,608			$	2,285,830			$	732,351			$	146,443			$	8,158,276

Credit Quality Indicators

From a credit risk standpoint, the Company rates its loans in one of five categories: (i) pass, (ii) special mention, (iii) substandard, (iv) doubtful or (v) loss (which are charged-off).

The ratings of loans reflect a judgment about the risks of default and loss associated with the loan. The Company reviews the ratings on our credits as part of our ongoing monitoring of the credit quality of our loan portfolio. Ratings are adjusted to reflect the degree of risk and loss that are felt to be inherent in each credit as of each reporting period. Our methodology is structured so that specific allocations are increased in accordance with deterioration in credit quality (and a corresponding increase in risk and loss) or decreased in accordance with improvement in credit quality (and a corresponding decrease in risk and loss).

The Company has several pass credit grades that are assigned to loans based on varying levels of credits, ranging from credits that are secured by cash or marketable securities, to watch credits that have all the characteristics of an acceptable credit risk but warrant more than the normal level of supervision.

Credits rated special mention show clear signs of financial weaknesses or deterioration in credit worthiness, however, such concerns are not so pronounced that the Company generally expects to experience significant loss within the short-term. Such credits typically maintain the ability to perform within standard credit terms and credit exposure is not as prominent as credits rated more harshly.

Credits rated substandard are those in which the normal repayment of principal and interest may be, or has been, jeopardized by reason of adverse trends or developments of a financial, managerial, economic or political nature, or important weaknesses exist in collateral. 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.

Credits rated doubtful are those in which full collection of principal appears highly questionable, and which some degree of loss is anticipated, even though the ultimate amount of loss may not yet be certain and/or other factors exist which could affect collection of debt. Based upon available information, positive action by the Company is required to avert or minimize loss. Credits rated doubtful are generally also placed on nonaccrual.

20

The following table summarizes the Company’s loans held-for-investment by internal ratings, portfolio segments and vintage year at September 30, 2026 (dollars in thousands):

September 30, 2026		2026				2025				2024				2023				2022				Prior				Revolving Loans Amortized Cost Basis				Total
Commercial & Industrial
Pass		$	550,115			$	302,278			$	81,353			$	53,407			$	77,534			$	45,649			$	—			$	1,110,336
Special mention			335				22,660				677				263				14				44				—				23,993
Substandard			7,477				5,751				14,722				808				1,157				353				—				30,268
Total		$	557,927			$	330,689			$	96,752			$	54,478			$	78,705			$	46,046			$	—			$	1,164,597
Municipal
Pass		$	175,920			$	94,929			$	26,891			$	20,879			$	59,701			$	56,378			$	—			$	434,698
Substandard			—				—				—				—				1,659				7,984				—				9,643
Total		$	175,920			$	94,929			$	26,891			$	20,879			$	61,360			$	64,362			$	—			$	444,341
Agricultural
Pass		$	51,450			$	21,140			$	2,086			$	2,104			$	1,037			$	246			$	—			$	78,063
Special mention			—				—				—				—				15				—				—				15
Substandard			774				82				830				32				—				—				—				1,718
Total		$	52,224			$	21,222			$	2,916			$	2,136			$	1,052			$	246			$	—			$	79,796
Construction & Development
Pass		$	597,252			$	273,177			$	81,995			$	39,703			$	44,281			$	30,166			$	1,563			$	1,068,137
Special mention			—				3,881				91				347				218				47				—				4,584
Substandard			6,107				2,242				4,299				1,463				1,258				1,450				—				16,819
Total		$	603,359			$	279,300			$	86,385			$	41,513			$	45,757			$	31,663			$	1,563			$	1,089,540
Farm
Pass		$	95,679			$	75,309			$	39,869			$	21,987			$	49,045			$	62,157			$	—			$	344,046
Special mention			22				1,361				—				119				—				76				—				1,578
Substandard			12				—				321				375				331				2,821				—				3,860
Total		$	95,713			$	76,670			$	40,190			$	22,481			$	49,376			$	65,054			$	—			$	349,484
Non-Owner Occupied CRE
Pass		$	244,727			$	155,478			$	82,012			$	59,681			$	199,237			$	142,155			$	—			$	883,290
Special mention			6,639				1,538				—				15				333				285				—				8,810
Substandard			951				676				4,112				—				13,823				8,185				—				27,747
Total		$	252,317			$	157,692			$	86,124			$	59,696			$	213,393			$	150,625			$	—			$	919,847
Owner Occupied CRE
Pass		$	227,658			$	234,669			$	134,563			$	73,037			$	184,249			$	240,816			$	—			$	1,094,992
Special mention			93				4,752				3,832				1,094				1,206				79				—				11,056
Substandard			5,047				5,224				9,466				3,518				21,027				11,200				—				55,482
Total		$	232,798			$	244,645			$	147,861			$	77,649			$	206,482			$	252,095			$	—			$	1,161,530
Residential
Pass		$	423,235			$	371,025			$	327,065			$	251,587			$	261,792			$	394,430			$	233,235			$	2,262,369
Special mention			604				3,187				3,765				1,667				3,530				1,859				257				14,869
Substandard			4,073				5,364				12,404				9,566				31,007				11,768				6,686				80,868
Total		$	427,912			$	379,576			$	343,234			$	262,820			$	296,329			$	408,057			$	240,178			$	2,358,106
Consumer Auto
Pass		$	338,899			$	263,568			$	137,859			$	37,799			$	31,980			$	5,244			$	—			$	815,349
Special mention			—				40				—				55				48				18				—				161
Substandard			25				112				558				593				809				164				—				2,261
Total		$	338,924			$	263,720			$	138,417			$	38,447			$	32,837			$	5,426			$	—			$	817,771
Consumer Non-Auto
Pass		$	66,288			$	38,727			$	17,974			$	10,434			$	9,835			$	3,060			$	6,705			$	153,023
Special mention			—				—				4				—				—				10				—				14
Substandard			—				151				109				99				305				72				3				739
Total		$	66,288			$	38,878			$	18,087			$	10,533			$	10,140			$	3,142			$	6,708			$	153,776
Total Loans
Pass		$	2,771,223			$	1,830,300			$	931,667			$	570,618			$	918,691			$	980,301			$	241,503			$	8,244,303
Special mention			7,693				37,419				8,369				3,560				5,364				2,418				257				65,080
Substandard			24,466				19,602				46,821				16,454				71,376				43,997				6,689				229,405
Doubtful			—				—				—				—				—				—				—				—
Total Loans		$	2,803,382			$	1,887,321			$	986,857			$	590,632			$	995,431			$	1,026,716			$	248,449			$	8,538,788

21

The following table summarizes the Company’s loans held-for-investment by internal ratings, portfolio segments and vintage year at December 31, 2025 (dollars in thousands):

December 31, 2025		2025				2024				2023				2022				2021				Prior				Revolving Loans Amortized Cost Basis				Total
Commercial & Industrial
Pass		$	638,287			$	188,647			$	100,264			$	94,870			$	33,180			$	36,190			$	—			$	1,091,438
Special mention			2,194				755				229				672				129				279				—				4,258
Substandard			10,064				4,356				4,677				1,437				170				61				—				20,765
Total		$	650,545			$	193,758			$	105,170			$	96,979			$	33,479			$	36,530			$	—			$	1,116,461
Municipal
Pass		$	143,286			$	31,910			$	22,971			$	70,735			$	9,760			$	63,822			$	—			$	342,484
Substandard			—				—				—				—				—				17				—				17
Total		$	143,286			$	31,910			$	22,971			$	70,735			$	9,760			$	63,839			$	—			$	342,501
Agricultural
Pass		$	82,964			$	4,915			$	2,944			$	2,287			$	440			$	79			$	—			$	93,629
Special mention			—				—				—				34				—				—				—				34
Substandard			683				1,174				48				32				156				20				—				2,113
Total		$	83,647			$	6,089			$	2,992			$	2,353			$	596			$	99			$	—			$	95,776
Construction & Development
Pass		$	763,232			$	177,570			$	86,079			$	54,158			$	43,936			$	11,484			$	1,323			$	1,137,782
Special mention			1,490				—				368				—				—				—				—				1,858
Substandard			9,869				5,567				538				893				1,274				84				—				18,225
Total		$	774,591			$	183,137			$	86,985			$	55,051			$	45,210			$	11,568			$	1,323			$	1,157,865
Farm
Pass		$	91,475			$	57,560			$	31,535			$	56,390			$	52,887			$	30,364			$	—			$	320,211
Special mention			—				—				—				—				317				193				—				510
Substandard			824				350				382				3,541				394				1,413				—				6,904
Total		$	92,299			$	57,910			$	31,917			$	59,931			$	53,598			$	31,970			$	—			$	327,625
Non-Owner Occupied CRE
Pass		$	176,298			$	133,099			$	55,849			$	234,494			$	108,478			$	88,590			$	—			$	796,808
Special mention			—				274				1,867				3,651				3,164				654				—				9,610
Substandard			7,030				—				2,498				919				13,262				2,689				—				26,398
Total		$	183,328			$	133,373			$	60,214			$	239,064			$	124,904			$	91,933			$	—			$	832,816
Owner Occupied CRE
Pass		$	224,659			$	163,786			$	96,918			$	244,128			$	151,923			$	177,168			$	—			$	1,058,582
Special mention			1,666				9,690				654				1,261				3,974				154				—				17,399
Substandard			618				1,906				1,394				24,587				7,307				8,815				—				44,627
Total		$	226,943			$	175,382			$	98,966			$	269,976			$	163,204			$	186,137			$	—			$	1,120,608
Residential
Pass		$	489,167			$	385,921			$	297,128			$	311,207			$	214,343			$	260,915			$	228,657			$	2,187,338
Special mention			1,360				2,042				1,367				21,638				1,960				1,233				2,346				31,946
Substandard			4,958				9,400				9,420				20,245				5,218				13,310				3,995				66,546
Total		$	495,485			$	397,363			$	307,915			$	353,090			$	221,521			$	275,458			$	234,998			$	2,285,830
Consumer Auto
Pass		$	371,849			$	212,013			$	65,985			$	62,910			$	14,234			$	2,068			$	—			$	729,059
Special mention			41				61				189				85				27				6				—				409
Substandard			75				607				692				1,213				272				24				—				2,883
Total		$	371,965			$	212,681			$	66,866			$	64,208			$	14,533			$	2,098			$	—			$	732,351
Consumer Non-Auto
Pass		$	69,838			$	30,450			$	16,321			$	15,397			$	5,408			$	1,038			$	6,887			$	145,339
Special mention			9				—				—				9				—				16				—				34
Substandard			212				97				236				396				100				14				15				1,070
Total		$	70,059			$	30,547			$	16,557			$	15,802			$	5,508			$	1,068			$	6,902			$	146,443
Total Loans
Pass		$	3,051,055			$	1,385,871			$	775,994			$	1,146,576			$	634,589			$	671,718			$	236,867			$	7,902,670
Special mention			6,760				12,822				4,674				27,350				9,571				2,535				2,346				66,058
Substandard			34,333				23,457				19,885				53,263				28,153				26,447				4,010				189,548
Doubtful			—				—				—				—				—				—				—				—
Total Loans		$	3,092,148			$	1,422,150			$	800,553			$	1,227,189			$	672,313			$	700,700			$	243,223			$	8,158,276

22

The following tables summarize the Company's gross charge-offs by origination year and loan class for the nine-months ended September 30, 2026 and 2025:

		Nine-Months Ended September 30, 2026
(Dollars in thousands)		2026				2025				2024				2023				2022				Prior				Revolving Loans Amortized Cost Basis				Total
2026
Commercial & Industrial		$	—			$	95			$	1,174			$	39			$	23			$	201			$	—			$	1,532
Agricultural			—				—				40				—				32				6				—				78
Construction & Development			—				—				20				—				9				22				—				51
Owner occupied CRE			—				—				—				—				—				150				—				150
Residential			—				138				207				290				14				3				—				652
Auto			30				93				307				317				121				18				—				886
Non-auto			105				162				96				133				23				7				—				526
Total Charge-Offs		$	135			$	488			$	1,844			$	779			$	222			$	407			$	—			$	3,875

		Nine-Months Ended September 30, 2025
(Dollars in thousands)		2025				2024				2023				2022				2021				Prior				Revolving Loans Amortized Cost Basis				Total
2025
Commercial & Industrial		$	—			$	131			$	17,637			$	152			$	45			$	142			$	—			$	18,107
Construction & Development			—				40				—				—				—				—				—				40
Non-owner occupied CRE			—				—				250				—				—				—				—				250
Owner occupied CRE			—				—				4,230				175				—				—				—				4,405
Residential			2				56				203				290				5				11				—				567
Auto			58				210				232				313				163				24				—				1,000
Non-auto			33				85				78				92				56				34				—				378
Total Charge-Offs		$	93			$	522			$	22,630			$	1,022			$	269			$	211			$	—			$	24,747

Modifications of receivables to debtors experiencing financial difficulty

The Company evaluates all loan restructurings, including restructurings for borrowers experiencing financial difficulty, to determine whether they result in a new loan or a continuation of an existing loan. In accordance with ASC 326, the Company only establishes a specific reserve for modifications to borrowers experiencing financial difficulty when the loan is identified as impaired. The effect of most modifications of loans made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance. The Company adjusts the terms of loans for certain borrowers when it believes such changes will help its customers manage their loan obligations and increase the collectability of the loans.

During the three and nine-months ended September 30, 2026 and 2025, there were no significant loan modifications made to borrowers experiencing financial difficulty.

Note 4 - Loans Held-for-Sale

Loans held-for-sale totaled $25,521,000 and $29,992,000 at September 30, 2026 and December 31, 2025, respectively. At September 30, 2026 and December 31, 2025, $4,421,000 and $4,561,000, respectively, are valued at the lower of cost or fair value, and the remaining amounts are valued under the fair value option.

These loans, which are sold on a servicing released basis, are valued using a market approach by utilizing either: (i) the fair value of the securities backed by similar mortgage loans, adjusted for certain factors to approximate the fair value of a whole mortgage loan, including the value attributable to mortgage servicing and credit risk, (ii) current commitments to purchase loans or (iii) recent observable market trades for similar loans, adjusted for credit risk and other individual loan characteristics. As these prices are derived from market observable inputs, the Company classifies these valuations as Level 2 in the fair value disclosures (see Note 9). Interest income on mortgage loans held-for-sale is recognized based on the contractual rates and reflected in interest income on loans in the consolidated statements of earnings. The Company has no continuing ownership in any residential mortgage loans sold.

The Company originates certain mortgage loans for sale in the secondary market. The mortgage loan sales contracts contain indemnification clauses should the loans default, generally in the first three to six months, or if documentation is determined not to be in compliance with regulations. The Company’s historic losses as a result of these indemnities have been insignificant.

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Note 5 - Derivative Financial Instruments

The Company enters into interest rate lock commitments (“IRLCs”) with customers to originate residential mortgage loans at a specific interest rate that are ultimately sold in the secondary market. These commitments, which contain fixed expiration dates, offer the borrower an interest rate guarantee provided the loan meets underwriting guidelines and closes within the timeframe established by the Company.

The Company purchases forward mortgage-backed securities contracts to manage the changes in fair value associated with changes in interest rates related to a portion of the IRLCs. These instruments are typically entered into at the time the IRLC is made in the aggregate.

The fair values of IRLCs are based on current secondary market prices for underlying loans and estimated servicing value with similar coupons, maturity and credit quality, subject to the anticipated loan funding probability (pull-through rate) net of estimated costs to originate the loan. The fair value of IRLCs is subject to change primarily due to changes in interest rates and the estimated pull-through rate. These commitments are classified as Level 3 in the fair value disclosures (see Note 9).

Forward mortgage-backed securities contracts are exchange-traded or traded within highly active dealer markets. In order to determine the fair value of these instruments, the Company utilizes the exchange price or dealer market price for the particular derivative contract and these instruments are therefore classified as Level 2 in the fair value disclosures (see Note 9). The estimated fair values are subject to change primarily due to changes in interest rates. The impact of these forward contracts is included in gain on sale and fees on mortgage loans in the statement of earnings.

These financial instruments are not designated as hedging instruments for accounting purposes. All derivatives are carried at fair value in either other assets or other liabilities and are reflected in the gain on sale and fees on mortgage loans in the consolidated statement of earnings.

The following tables provide the outstanding notional balances and fair values of outstanding derivative positions (dollars in thousands):

(Dollars in thousands)		Outstanding Notional Balance				Asset Derivative Fair Value				Liability Derivative Fair Value
September 30, 2026:
IRLCs		$	50,207			$	—			$	29
Forward mortgage-backed securities trades			83,000				981				—
December 31, 2025:
IRLCs		$	38,185			$	579			$	—
Forward mortgage-backed securities trades			70,500				—				132

Note 6 – Borrowings and Repurchase Agreements

Borrowings and repurchase agreements consisted of the following (dollars in thousands):

		September 30,				December 31,
		2026				2025
Securities sold under agreements with customers to repurchase		$	43,088			$	62,956
Federal funds purchased			800				625
Other borrowings			21,054				21,055
Total		$	64,942			$	84,636

Securities sold under repurchase agreements are generally with significant customers of the Company that require short-term liquidity for their funds for which the Company pledges certain securities that have a fair value equal to at least the amount of the borrowings. The agreements mature daily and therefore the risk arising from a decline in the fair value of the collateral pledged is minimal. The securities pledged are mortgage-backed securities. These agreements do not include “right of set-off” provisions and therefore the Company does not offset such agreements for financial reporting purposes.

The Company renewed its loan agreement, effective June 30, 2025, with Frost Bank. Under the loan agreement, as renewed and amended, we are permitted to draw up to $50,000,000 on a revolving line of credit. There was no outstanding balance under the line of credit as of September 30, 2026.

During 2021, the Company began investing in qualifying Community Development Entities ("CDE") under the federal New Market Tax Credits ("NMTC") program. See Note 7 for further discussion of our activity and related balances on the consolidated balance sheets, including $21,053,000 within other borrowings shown above.

Note 7 - Income Taxes

Income tax expense was $16,748,000 for the third quarter of 2026 as compared to $10,897,000 for the same period in 2025. The Company’s effective tax rates on pretax income were 18.4% and 17.3% for the third quarters of 2026 and 2025, respectively. Income tax expense was $48,608,000 for the first nine months of 2026 as compared to $39,785,000 for the same period in 2025. The Company’s effective tax rates on pretax income were 18.2% and 18.1% for the first nine months of 2026 and 2025, respectively. The effective tax rates differ from the statutory federal tax rate of 21% primarily due to tax exempt interest income earned on certain investment securities and loans, the deductibility of dividends paid to our employee stock ownership plan, excess tax benefits for distributions under our deferred compensation plan and vesting of equity awards, New Market Tax Credits, Low Income Housing Tax Credits and the donation of a former branch facility.

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Low Income Housing Tax Credit Investments - The Company has investments in an affordable housing fund that will invest in real estate projects that qualify for the federal low-income housing tax credit ("LIHTC") program designed to promote private development of low income housing. The investments made by the fund will generate a return to the Company primarily through the realization of LIHTCs, and also through federal tax deductions generated from the ongoing operating losses from the investees of the fund. The Company's investment in the fund will be amortized through income tax expense using the proportional amortization method as related tax credits are utilized by the Company. The carrying values of investments in LIHTC's were $34,836,000 and $27,500,000 as of September 30, 2026 and December 31, 2025, respectively, and is included as a component of other assets on the consolidated balance sheets. Total unfunded contingent commitments related to the LIHTC investments totaled $29,321,000 and $21,114,000 at September 30, 2026 and December 31, 2025, respectively, a component of other liabilities on the consolidated balance sheets. The Company expects the remaining commitments to be funded by 2043. There were no impairment losses on the LIHTC investments during the three and nine-months ended September 30, 2026 and 2025.

New Market Tax Credit Investments - During 2021, the Company began investing in qualifying CDEs under the federal NMTC program. NMTC investments are made through the third-party CDEs which are qualified through the U.S. Department of Treasury and receive periodic allocation of amounts under the NMTC program. NMTCs are generated from qualified investments by the CDEs utilizing equity investments made by a taxpayer, like the Company. Through these equity investments, the Company will receive the tax benefits from the NMTCs equal to 39% of the qualified investment from the CDE to qualifying eligible projects over a seven year period. The Company's equity investments in the CDEs is amortized using the proportional amortization method and related tax credits are allocated to the Company. At September 30, 2026 and December 31, 2025, the consolidated balance sheet of the Company included an $18,000,000 loan to the investee in loans and the $21,053,000 leveraged loan from the investee within other borrowings (see Note 6). At September 30, 2026 and December 31, 2025, the consolidated balance sheet of the Company included CDE investments in other assets of $22,149,000 and $23,128,000, respectively.

Note 8 - Stock Based Compensation

On April 27, 2021, the Company’s shareholders approved the 2021 Omnibus Stock and Incentive Plan (“2021 Plan”) and reserved 2,500,000 shares of the Company’s common stock for issuance under this plan. At September 30, 2026, the Company had 605,607 shares of stock remaining for issuance under the plan. The 2021 Plan supersedes all prior stock option and restricted stock plans with shares previously reserved for issuance under such plans cancelled.

Restricted Stock Units

Under the 2021 Plan, the Company grants restricted stock units under compensation arrangements for the benefit of employees and senior and executive officers. Restricted stock unit grants are subject to time-based vesting. The total number of restricted stock units granted represents the maximum number of restricted stock units eligible to vest based upon the service conditions set forth in the grant agreements. The following table summarizes information about the changes in restricted stock units for the nine-months ended September 30, 2026 and 2025.

		For the Nine-Months Ended September 30,
		2026								2025
		Restricted Stock Units Outstanding				Weighted Average Grant Date Fair Value				Restricted Stock Units Outstanding				Weighted Average Grant Date Fair Value
Balance at beginning of period			81,707			$	34.91				71,656			$	34.36
Grants			49,441				35.28				43,923				36.43
Vesting			(37,692	)			33.97				(31,739	)			35.84
Forfeited/expired			(1,299	)			34.62				(971	)			33.63
Balance at end of period			92,157			$	35.49				82,869			$	34.90

Performance Stock Units

Also under the 2021 Plan, the Company awards performance-based restricted stock units (“PSUs”) to employees and senior and executive officers. Under the terms of the award, the number of units that will vest and convert to shares of common stock will be based on the extent to which the Company achieves specific performance criteria during the fixed three-year performance period. The number of shares issued upon vesting will range from 0% to 200% of the PSUs granted. The PSUs vest at the end of a three-year period based on either 50% each on average adjusted earnings per share growth and return on average assets, 100% return on average assets, or 50% each on return on average assets and relative total shareholder return, as reported, adjusted for unusual gains/losses, merger expenses, and other items as approved by the compensation committee of the Company's board of directors. Performance for each period is measured relative to other U.S. publicly traded banks with $10 billion to $50 billion in assets. Compensation expense for the PSUs that do not contain market-based conditions will be estimated each period based on the fair value of the stock at the grant date and the most probable outcome of the performance condition, adjusted for the passage of time within the vesting period of the awards. The value of PSUs that include a market-based condition is estimated on the grant date using a Monte Carlo simulation model.

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The following table summarizes information about the changes in PSUs as of and for the nine-months ended September 30, 2026 and 2025.

		For the Nine-Months Ended September 30,
		2026								2025
		Performance-Based Restricted Stock Units Outstanding				Weighted Average Grant Date Fair Value				Performance-Based Restricted Stock Units Outstanding				Weighted Average Grant Date Fair Value
Balance at beginning of period			115,681			$	33.93				96,206			$	35.83
Grants			49,441				35.28				43,923				36.43
Performance adjustment (1)			14,437				29.53				11,031				47.19
Vesting			(43,329	)			29.53				(33,104	)			47.19
Forfeited/expired			(1,268	)			35.48				(1,244	)			32.17
Balance at end of period			134,962			$	35.35				116,812			$	33.95

(1) PSUs are presented as outstanding, granted and forfeited in the table above assuming targets are met and the awards pay out at 100%. PSU awards are settled with payouts ranging from 0% to 200% of the target award value based on the Company's performance relative to a predefined peer group over a fixed three-year performance period. The performance adjustment represents the difference in shares ultimately awarded due to performance attainment above or below target.

Restricted Stock Awards

Under the 2021 Plan, the Company grants restricted stock awards under compensation arrangements for the benefit of directors. Restricted stock awards are subject to time-based vesting. The total number of restricted stock awards granted represents the maximum number of shares of restricted stock eligible to vest based upon the service conditions set forth in the grant agreements.

The following table summarizes information about vested and unvested restricted stock.

		For the Nine-Months Ended September 30,
		2026								2025
		Restricted Stock Outstanding				Weighted Average Grant Date Fair Value				Restricted Stock Outstanding				Weighted Average Grant Date Fair Value
Balance at beginning of period			24,876			$	33.78				24,348			$	30.91
Grants			25,704				32.68				24,876				33.78
Vesting			(24,876	)			33.78				(24,348	)			30.91
Forfeited/expired			—				—				—				—
Balance at end of period			25,704			$	32.68				24,876			$	33.78

The total fair value of restricted stock unit, performance stock unit, and restricted stock awards vested for the nine-months ended September 30, 2026 and 2025, was $3,424,000 and $2,808,000, respectively.

The Company recorded restricted stock unit and performance-based restricted stock unit expense for employees of $1,099,000 and $751,000 for the three-months ended September 30, 2026 and 2025, respectively. The Company recorded restricted stock unit and performance-based restricted stock unit expense for employees of $3,071,000 and $2,474,000 for the nine-months ended September 30, 2026 and 2025, respectively. The Company recorded director expense related to these restricted stock awards of $210,000 and $210,000, for the three-months ended September 30, 2026 and 2025, respectively. The Company recorded director expense related to these restricted stock awards of $630,000 and $607,000, for the nine-months ended September 30, 2026 and 2025, respectively.

As of September 30, 2026 there was $6,660,000 of total unrecognized compensation cost related to unvested restricted stock units, performance-based restricted stock units, and restricted stock awards, which is expected to be recognized over a weighted-average period of 1.40 years. At September 30, 2026 and December 31, 2025, there was $204,000 and $199,000, respectively, accrued in other liabilities related to dividends declared to be paid upon vesting.

Stock Option Plans

Prior to the approval of the 2021 Plan, the 2012 Incentive Stock Option Plan (the “2012 Plan”) provided for the granting of options to employees of the Company at prices not less than market value at the date of the grant. The 2012 Plan provided that options granted vest and are exercisable after two years from the date of grant and vest at a rate of 20% each year thereafter and have a 10-year term. The most recent grants from the 2021 Plan provided that 20% of the options granted vest and are exercisable after one year from the date of grant and the remaining options vest and are exercisable at a rate of 20% each year thereafter, or 33.3% of the options granted are vested and exercisable after one year from the date of the grant and the remaining options are vested and exercisable at a rate of 33.3% each year thereafter, and have a 10-year term. Shares are issued under the 2012 Plan and the 2021 Plan from available authorized shares.

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An analysis of stock option activity for the nine-months ended September 30, 2026 is presented in the table and narrative below:

		Shares				Weighted- Average Ex. Price
Outstanding, December 31, 2025			1,545,453			$	34.10
Granted			187,781				35.28
Exercised			(82,758	)			21.52
Cancelled			(71,963	)			34.87
Outstanding, September 30, 2026			1,578,513				34.86
Exercisable, September 30, 2026			1,126,802			$	34.25

The options outstanding at September 30, 2026 had exercise prices ranging between $21.18 and $48.91. Stock options have been adjusted retroactively for the effects of stock dividends and splits.

The Company grants incentive stock options for a fixed number of shares with an exercise price equal to the fair value of the shares at the date of grant to employees.

The Company recorded stock option expense totaling $702,000 and $639,000 for the three-months ended September 30, 2026 and 2025, respectively. The Company recorded stock option expense totaling $2,209,000 and $1,976,000 for the nine-months ended September 30, 2026 and 2025, respectively.

As of September 30, 2026, there was $4,018,000 of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the plans. That cost is expected to be recognized over a weighted-average period of 1.13 years. The total fair value of shares vested during the nine-months ended September 30, 2026 and 2025 was $3,022,000 and $2,791,000, respectively.

Note 9 - Fair Value Disclosures

The authoritative accounting guidance for fair value measurements defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. 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 shall not be 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.

The authoritative accounting guidance requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. 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 (replacement costs). 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. In that regard, the authoritative guidance establishes a fair value hierarchy for valuation inputs that 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 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 (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks and default rates) or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

•Level 3 Inputs – Significant unobservable inputs that reflect an entity’s own assumptions that market participants would use in pricing the assets or liabilities.

A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

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In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Financial assets and financial liabilities measured at fair value on a recurring and nonrecurring basis include the following:

Available-for-sale investment securities: Investment securities classified as available-for-sale are generally reported at fair value utilizing Levels 1 and 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayments speeds, credit information, and the bond’s terms and conditions, among other things.

Collateral dependent loans: The fair value of collateral-dependent loans with specific allocations of the allowance for credit losses is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available for similar loans and collateral underlying such loans. Collateral values are estimated using Level 2 inputs based on observable market data or independent appraisals using Level 3 inputs. Non-real estate collateral may be valued using an appraisal, net book value per the borrowers financial statements, or aging reports, adjusted or discounted based on management's historical knowledge, changes in market conditions from the time of the valuation, and managements expertise and knowledge of the client and clients' business, resulting in a Level 3 fair value classification. Collateral-dependent loans are evaluated on a quarterly basis and adjusted in accordance with the allowance policy.

See Notes 4 and 5 related to the determination of fair value for loans held-for-sale, IRLCs and forward mortgage-backed securities trades.

There were no transfers between Level 2 and Level 3 during the three and nine-months ended September 30, 2026 and 2025.

The following table summarizes the Company’s available-for-sale securities, loans held-for-sale, and derivatives which are measured at fair value on a recurring basis, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (dollars in thousands):

September 30, 2026		Level 1 Inputs				Level 2 Inputs				Level 3 Inputs				Total Fair Value
Available-for-sale investment securities:
Obligations of state and political subdivisions		$	—			$	1,474,215			$	—			$	1,474,215
Corporate bonds			—				57,767				—				57,767
Residential mortgage-backed securities			—				2,535,552				—				2,535,552
Commercial mortgage-backed securities			—				1,276,840				—				1,276,840
Other securities			43,709				—				—				43,709
Total		$	43,709			$	5,344,374			$	—			$	5,388,083
Loans held-for-sale		$	—			$	21,100			$	—			$	21,100
IRLCs		$	—			$	—			$	(29	)		$	(29	)
Forward mortgage-backed securities trades		$	—			$	981			$	—			$	981

December 31, 2025		Level 1 Inputs				Level 2 Inputs				Level 3 Inputs				Total Fair Value
Available-for-sale investment securities:
U.S. Treasury securities		$	60,813			$	—			$	—			$	60,813
Obligations of state and political subdivisions			—				1,751,373				—				1,751,373
Corporate bonds			—				78,709				—				78,709
Residential mortgage-backed securities			—				2,611,410				—				2,611,410
Commercial mortgage-backed securities			—				989,238				—				989,238
Other securities			22,570				—				—				22,570
Total		$	83,383			$	5,430,730			$	—			$	5,514,113
Loans held-for-sale		$	—			$	25,431			$	—			$	25,431
IRLCs		$	—			$	—			$	579			$	579
Forward mortgage-backed securities trades		$	—			$	(132	)		$	—			$	(132	)

The following table summarizes the Company’s loans held-for-sale at fair value and the net unrealized gains as of the balance sheet dates shown below (dollars in thousands):

		September 30,				December 31,
		2026				2025
Unpaid principal balance on loans held-for-sale		$	20,941			$	24,654
Net unrealized gains on loans held-for-sale			159				777
Loans held-for-sale at fair value		$	21,100			$	25,431

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The following table summarizes the Company’s gains on sale and fees of mortgage loans for the three and nine-months ended September 30, 2026 and 2025 (dollars in thousands):

		Three-Months Ended September 30,								Nine-Months Ended September 30,
		2026				2025				2026				2025
Realized gain on sale and fees on mortgage loans*		$	4,148			$	4,537			$	13,316			$	10,678
Change in fair value on loans held-for-sale and IRLCs			(1,095	)			(531	)			(1,298	)			954
Change in forward mortgage-backed securities trades			1,122				369				1,113				(299	)
Total gain on sale of mortgage loans		$	4,175			$	4,375			$	13,131			$	11,333

* This includes gains on loans held-for-sale carried under the fair value method and lower of cost or market.

No residential mortgage loans held-for-sale were 90 days or more past due or considered nonaccrual as of September 30, 2026 or December 31, 2025. No significant credit losses were recognized on mortgage loans held-for-sale for the three and nine-months ended September 30, 2026 and 2025.

Non-Financial Assets and Non-Financial Liabilities: We do not have any non-financial assets or non-financial liabilities measured at fair value on a recurring basis. From time to time, non-financial assets measured at fair value on a non-recurring basis may include certain foreclosed assets, which, upon initial recognition, were remeasured and reported at fair value through a charge-off to the allowance for credit losses on loans, and certain foreclosed assets which, subsequent to their initial recognition, were remeasured at fair value through a write-down included in other non-interest expense. During the reported periods, all fair value measurements for foreclosed assets utilized Level 2 inputs based on observable market data, generally third-party appraisals, or Level 3 inputs based on customized discounting criteria. These appraisals are evaluated individually and discounted as necessary due to the age of the appraisal, lack of comparable sales, expected holding periods of property or special use type of the property. Such discounts vary by appraisal based on the above factors but generally range from 5% to 25% of the appraised value. Re-evaluation of other real estate owned is performed at least annually as required by regulatory guidelines or more often if particular circumstances arise. There were no significant other real estate owned properties that were re-measured subsequent to their initial transfer to other real estate owned during the three and nine-months ended September 30, 2026 and 2025.

At September 30, 2026 and December 31, 2025, other real estate owned totaled $3,198,000 and $280,000, respectively.

For the Company, as for most financial institutions, substantially all of its assets and liabilities are considered financial instruments. Many of the Company’s financial instruments, however, lack an available trading market as characterized by a willing buyer and willing seller engaging in an exchange transaction.

The estimated fair value amounts of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. In addition, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates that must be made given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies also introduces a greater degree of subjectivity to these estimated fair values.

Financial instruments with stated maturities have been valued using a present value discounted cash flow with a discount rate approximating current market for similar assets and liabilities and are considered Levels 2 and 3 of the fair value hierarchy. Financial instrument liabilities with no stated maturities have an estimated fair value equal to both the amount payable on demand and the carrying value and are considered Level 1 of the fair value hierarchy. The carrying value and the estimated fair value of the Company’s contractual off-balance-sheet unfunded lines of credit, loan commitments and letters of credit, are generally priced at market at the time of funding.

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The estimated fair values and carrying values of all financial instruments under current authoritative guidance were as follows (dollars in thousands).

		September 30,								December 31,
		2026								2025
		Carrying Value				Estimated Fair Value				Carrying Value				Estimated Fair Value				Fair Value Hierarchy
Financial assets:
Cash and due from banks		$	178,819			$	178,819			$	249,466			$	249,466			Level 1
Federal funds sold			2,875				2,875				1,575				1,575			Level 1
Interest-bearing demand deposits    in banks			292,778				292,778				826,947				826,947			Level 1
Available-for-sale securities			5,388,083				5,388,083				5,514,113				5,514,113			Levels 1 and 2
Loans held-for-investment, net of    allowance for credit losses			8,424,896				8,579,039				8,052,740				8,061,186			Level 3
Loans held-for-sale			25,521				25,521				29,992				30,163			Level 2
Accrued interest receivable			62,514				62,514				68,470				68,470			Level 2
Financial liabilities:
Deposits with stated maturities		$	895,045			$	896,606			$	900,554			$	902,588			Level 2
Deposits with no stated maturities			12,253,098				12,253,098				12,444,975				12,444,975			Level 1
Repurchase Agreements			43,088				43,088				62,956				62,956			Level 2
Borrowings			21,854				21,854				21,680				21,680			Level 2
Accrued interest payable			5,474				5,474				5,673				5,673			Level 2
IRLCs			(29	)			(29	)			579				579			Level 3
Forward mortgage-backed securities    trades asset (liability)			981				981				(132	)			(132	)		Level 2

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

Forward-Looking Statements

This Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When used in this Form 10-Q, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “predict,” “project,” “could,” “may,” or “would” and similar expressions, as they relate to us or our management, identify forward-looking statements. These forward-looking statements are based on information currently available to our management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including, but not limited, to those discussed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, under the heading “Risk Factors,” and the following:

•general economic conditions, including the impact of government shutdowns, our local, state and national real estate markets, and employment trends;

•the effects of and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) and the implementation of tariffs and other protectionist trade policies;

•effect of severe weather conditions, including hurricanes, tornadoes, flooding and droughts;

•volatility and disruption in national and international financial and commodity markets;

•government intervention in the U.S. financial system including the effects of recent legislative, tax, accounting, tariffs, and regulatory actions and reforms, including the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the Jumpstart Our Business Startups Act, the Consumer Financial Protection Bureau (“CFPB”), the Inflation Reduction Act of 2022, the capital ratios of Basel III as adopted by the federal banking authorities and the Tax Cuts and Jobs Act, and the One Big Beautiful Bill Act (“OBBBA”);

•political or social unrest and economic instability;

•the ability of the federal government to address the national economy;

•changes in our competitive environment from other financial institutions and financial service providers;

•the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board (“PCAOB”), the Financial Accounting Standards Board (“FASB”) and other accounting standard setters;

•effect of a pandemic, epidemic, or highly contagious disease, on our Company, the communities where we have our branches, the state of Texas and the United States, related to the economy and overall financial stability, including disruptions to supply channels and labor availability;

•government and regulatory responses to a pandemic, epidemic, or highly contagious disease;

•the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which we and our subsidiaries must comply;

•the costs, effects and results of regulatory examinations, investigations or reviews and the ability to obtain required regulatory approvals;

•changes in the demand for loans, including loans originated for sale in the secondary market;

•fluctuations in the value of collateral securing our loan portfolio and in the level of the allowance for credit losses;

•the accuracy of our estimates of future credit losses;

•the accuracy of our estimates and assumptions regarding the performance of our securities portfolio, including securities with a current unrealized loss;

•inflation, interest rate, market and monetary fluctuations;

•soundness of other financial institutions with which we have transactions;

•changes in consumer spending, borrowing and savings habits;

•changes in commodity prices (e.g., oil and gas, cattle, and wind energy);

•our ability to attract deposits, maintain and/or increase market share;

•changes in our liquidity position, including a result of a reduction in the amount of sources of liquidity we currently have;

•fluctuations in the market value and liquidity of the investment securities we have classified as available-for-sale ("AFS"), including the effects of changes in market interest rates;

•changes in the reliability of our vendors, internal control system or information systems;

•cyber-attacks on our technology information systems, including fraud from our customers and external third-party vendors;

•our ability to attract and retain qualified employees;

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•acquisitions and integration of acquired businesses;

•the possible impairment of goodwill and other intangibles associated with our acquisitions;

•consequences of continued bank mergers and acquisitions in our market area, resulting in fewer but much larger and stronger competitors;

•expansion of operations, including branch openings, new product offerings and expansion into new markets;

•changes in our compensation and benefit plans;

•acts of God or of war or terrorism;

•the impact of changes to the global climate and its effect on our operations and customers;

•potential risk of environmental liability associated with lending activities;

•the rise of Artificial Intelligence as a commonly used resource; and

•our success at managing the risk involved in the foregoing items.

In addition, financial markets and global supply chains may continue to be adversely affected by the current or anticipated impact of military conflict, including the current Ukraine and Middle East conflicts and other world events, terrorism or other geopolitical events.

Such forward-looking statements reflect the current views of our management with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategies and liquidity. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this paragraph. We undertake no obligation to publicly update or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise (except as required by law).

Introduction

As a financial holding company, we generate most of our revenue from interest on loans and investments, wealth management fees, gain on sale of mortgage loans and service charges, interchange income and fees on deposit accounts. Our primary source of funding for our loans and investments are deposits held by our bank subsidiary, First Financial Bank. Our largest expenses are interest on deposits and salaries and related employee benefits. We measure our performance by calculating our return on average assets, return on average equity, regulatory capital ratios, net interest margin and efficiency ratio, which is calculated by dividing noninterest expense by the sum of net interest income on a tax equivalent basis and noninterest income.

The following discussion and analysis of operations and financial condition should be read in conjunction with the consolidated financial statements and accompanying footnotes included in Item 1 of this Form 10-Q as well as those included in the Company’s 2025 Annual Report on Form 10-K.

Critical Accounting Policies

We prepare consolidated financial statements based on generally accepted accounting principles (“GAAP”) and customary practices in the banking industry. These policies, in certain areas, require us to make significant estimates and assumptions.

We deem a policy critical if (i) the accounting estimate requires us to make assumptions about matters that are highly uncertain at the time we make the accounting estimate; and (ii) different estimates that reasonably could have been used in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, would have a material impact on the financial statements.

We deem our most critical accounting policies to be (i) our allowance for credit losses and our provision for credit losses and (ii) our valuation of financial instruments. We have other significant accounting policies and continue to evaluate the materiality of their impact on our consolidated financial statements, but we believe these other policies either do not generally require us to make estimates and judgments that are difficult or subjective, or it is less likely they would have a material impact on our reported results for a given period. A discussion of (i) our allowance for credit losses and our provision for credit losses and (ii) our valuation of financial instruments is included in Notes 1, 3, and 9 to our Consolidated Financial Statements.

It is difficult to estimate how potential changes in any one economic factor or input might affect the overall allowance because a wide variety of factors and inputs are considered in estimating the ACL and changes in those factors and inputs considered may not occur at the same rate and may not be consistent across all product types. Additionally, changes in factors and inputs may be directionally inconsistent, such that improvement in one factor may offset deterioration in others. A large driver to the ACL is the overall credit quality of the underlying credits. Deterioration or improvement in credit quality could have a significant impact on the overall level of ACL.

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Stock Repurchase

On July 28, 2026, the Company's Board of Directors renewed and increased the size of the authorization to repurchase up to 7.2 million common shares through July 31, 2027. The prior authorization to repurchase up to 5 million common shares had been in place since July 27, 2021. The stock repurchase plan authorizes management to repurchase and retire the stock at such time as repurchases and retirements are considered beneficial to the Company and shareholders. Any repurchase of stock will be made through the open market, block trades, or in privately negotiated transactions in accordance with applicable laws and regulations. Under the repurchase plan, there is no minimum number of shares that the Company is required to repurchase. There have been no repurchases during 2025 or through September 30, 2026.

Results of Operations

Performance Summary. Net earnings for the third quarter of 2026 were $74.3 million, an increase of 42.2% when compared to earnings of $52.3 million for the third quarter of 2025. Diluted earnings per share was $0.52 for the third quarter of 2026 and $0.36 for the third quarter of 2025.

The return on average assets was 1.93% for the third quarter of 2026, as compared to 1.44% for the third quarter of 2025, respectively. The return on average equity was 15.02% for the third quarter of 2026, as compared to 11.85% for the third quarter of 2025.

Net earnings for the nine-months ended September 30, 2026 were $217.7 million, an increase of 20.8% when compared to earnings of $180.3 million for the nine-months ended September 30, 2025. Diluted earnings per share was $1.51 for the first nine months of 2026 and $1.26 for the first nine months of 2025.

The return on average assets was 1.90% for the first nine months of 2026, as compared to 1.70% for the first nine months of 2025. The return on average equity was 14.85% for the first nine months of 2026, as compared to 14.22% for the first nine months of 2025.

Net Interest Income. Net interest income is the difference between interest income on earning assets and interest expense on liabilities incurred to fund those assets. Our earning assets consist primarily of loans and investment securities. Our liabilities to fund those assets consist primarily of noninterest-bearing and interest-bearing deposits.

Tax-equivalent net interest income was $142.1 million for the third quarter of 2026, as compared to $130.4 million for the same period last year. The increase in tax equivalent net interest income for the third quarter of 2026 compared to the same quarter in 2025 was largely attributable to the increases in average loans and the increase in average balance and the rate of return on taxable investment securities. Average earning assets were $14.4 billion for the third quarter of 2026, as compared to $13.6 billion during the third quarter of 2025. The increase of $828.3 million in average earning assets for the third quarter of 2026 when compared to the same period in 2025 was primarily a result of (i) an increase in taxable investment securities of $544.1 million, and (ii) an increase in loans of $219.6 million. Average interest-bearing liabilities were $9.7 billion for the third quarter of 2026, as compared to $9.2 billion in the same period in 2025. The yield on earning assets decreased 4 basis points while the rate paid on interest-bearing liabilities decreased 22 basis points for the third quarter of 2026 when compared to the third quarter of 2025.

Tax-equivalent net interest income was $421.4 million for the first nine months of 2026, as compared to $378.6 million for the same period last year. The increase in tax equivalent net interest income for the first nine months of 2026 compared to the same period in 2025 was largely attributable to the increase in average balance and the rate of return on taxable and tax-exempt investment securities, and increases in average loans. Average earning assets were $14.5 billion for the nine-months ended September 30, 2026, as compared to $13.4 billion during the nine-months ended September 30, 2025. The increase of $1.1 billion in average earning assets for the nine-months ended September 30, 2026 when compared to the same period in 2025 was primarily a result of (i) an increase in taxable investment securities of $578.6 million, (ii) an increase in loans of $270.6 million and (iii) an increase in tax-exempt investment securities of $198.6 million. Average interest-bearing liabilities were $9.8 billion for the nine-months ended September 30, 2026, as compared to $9.1 billion in the same period in 2025. The yield on earning assets decreased 3 basis points while the rate paid on interest-bearing liabilities decreased 20 basis points for the nine-months ended September 30, 2026 when compared to the same period in 2025.

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Table 1 allocates the change in tax-equivalent net interest income between the amount of change attributable to volume and to rate.

Table 1 - Changes in Interest Income and Interest Expense (dollars in thousands):

		Three-Months Ended September 30, 2026 Compared to Three-Months Ended September 30, 2025												Nine-Months Ended September 30, 2026 Compared to Nine-Months Ended September 30, 2025
		Change Attributable to								Total				Change Attributable to								Total
		Volume				Rate				Change				Volume				Rate				Change
Short-term investments		$	665			$	(347	)		$	318			$	1,988			$	(1,873	)		$	115
Taxable investment securities			4,056				4,429				8,485				12,654				11,503				24,157
Tax-exempt investment securities (1)			30				14				44				4,545				3,094				7,639
Loans (1) (2)			3,756				(3,030	)			726				13,660				(5,050	)			8,610
Interest income			8,507				1,066				9,573				32,847				7,674				40,521
Interest-bearing deposits			3,326				(5,084	)			(1,758	)			12,535				(14,026	)			(1,491	)
Repurchase agreements			33				(37	)			(4	)			92				(75	)			17
Borrowings			(281	)			(109	)			(390	)			(619	)			(261	)			(880	)
Interest expense			3,078				(5,230	)			(2,152	)			12,008				(14,362	)			(2,354	)
Net interest income		$	5,429			$	6,296			$	11,725			$	20,839			$	22,036			$	42,875

(1)Computed on a tax-equivalent basis assuming a marginal tax rate of 21%.

(2)Nonaccrual loans are included in loans.

The net interest margin, on a tax equivalent basis, was 3.91% for the third quarter of 2026, an increase of 11 basis points from the same period in 2025. The net interest margin, on a tax equivalent basis, was 3.89% for the nine-months ended September 30, 2026, an increase of 10 basis points from the same period in 2025. The net interest margin has expanded during the past year primarily due to (i) strong growth in deposits that has enabled the Company to deploy those funds into the higher yielding loans and securities portfolios, (ii) a reduction in cost of deposits, and (iii) investment of lower yielding securities cash flows into higher yielding bonds. The Federal Reserve decreased interest rates by 100 basis points in 2024 and 25 basis points in September, October, and December 2025, respectively. Most recently, the Federal Reserve increased interest rates by 25 basis points in September 2026, resulting in a target rate of 3.75% to 4.00% at September 30, 2026.

The net interest margin, which measures tax-equivalent net interest income as a percentage of average earning assets, is illustrated in Table 2.

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Table 2 - Average Balances and Average Yields and Rates (dollars in thousands, except percentages):

		Three-Months Ended September 30,
		2026												2025
		Average Balance				Income/ Expense				Yield/ Rate				Average Balance				Income/ Expense				Yield/ Rate
Assets
Short-term investments (1)		$	288,345			$	2,835				3.90	%		$	227,450			$	2,517				4.39	%
Taxable investment securities (2)			4,104,496				35,024				3.41				3,560,347				26,539				2.98
Tax-exempt investment securities (2)(3)			1,568,453				12,950				3.30				1,564,767				12,906				3.30
Loans (3)(4)			8,468,672				141,862				6.65				8,249,113				141,136				6.79
Total earning assets			14,429,966			$	192,671				5.30	%			13,601,677			$	183,098				5.34	%
Cash and due from banks			283,205												221,798
Bank premises and equipment, net			156,482												148,659
Other assets			230,405												244,934
Goodwill and other intangible assets, net			313,545												313,780
Allowance for credit losses			(112,051	)											(102,511	)
Total assets		$	15,301,552											$	14,428,337
Liabilities and Shareholders’ Equity
Interest-bearing deposits		$	9,630,365			$	50,252				2.07	%		$	9,051,463			$	52,010				2.28	%
Repurchase agreements			57,939				206				1.41				50,051				210				1.66
Borrowings			22,686				81				1.42				56,198				471				3.33
Total interest-bearing liabilities			9,710,990			$	50,539				2.06	%			9,157,712			$	52,691				2.28	%
Noninterest-bearing deposits			3,508,797												3,419,378
Other liabilities			118,844												101,268
Total liabilities			13,338,631												12,678,358
Shareholders’ equity			1,962,921												1,749,979
Total liabilities and shareholders’ equity		$	15,301,552											$	14,428,337
Net interest income (tax equivalent)						$	142,132											$	130,407
Rate Analysis:
Interest income/earning assets											5.30	%											5.34	%
Interest expense/earning assets											(1.39	)											(1.54	)
Net interest margin											3.91	%											3.80	%

(1)Short-term investments are comprised of federal funds sold, interest-bearing deposits in banks and interest-bearing time deposits in banks.

(2)Average balances include unrealized gains and losses on available-for-sale securities.

(3)Includes tax equivalent yield adjustment of approximately $3.6 million and $3.4 million in the third quarters of 2026 and 2025, respectively, using an effective tax rate of 21% for both periods.

(4)Includes nonaccrual loans.

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		Nine-Months Ended September 30,
		2026												2025
		Average Balance				Income/ Expense				Yield/ Rate				Average Balance				Income/ Expense				Yield/ Rate
Assets
Short-term investments (1)		$	363,512			$	10,201				3.75	%		$	303,224			$	10,086				4.45	%
Taxable investment securities (2)			4,090,870				100,973				3.29				3,512,304				76,816				2.92
Tax-exempt investment securities (2)(3)			1,667,729				41,268				3.30				1,469,158				33,629				3.05
Loans (3)(4)			8,354,207				416,723				6.67				8,083,638				408,113				6.75
Total earning assets			14,476,318			$	569,165				5.26	%			13,368,324			$	528,644				5.29	%
Cash and due from banks			266,297												221,826
Bank premises and equipment, net			152,935												149,614
Other assets			218,162												241,764
Goodwill and other intangible assets, net			313,587												313,865
Allowance for credit losses			(108,622	)											(100,620	)
Total assets		$	15,318,677											$	14,194,773
Liabilities and Shareholders’ Equity
Interest-bearing deposits		$	9,709,818			$	146,800				2.02	%		$	8,953,017			$	148,291				2.21	%
Repurchase agreements			60,379				658				1.46				52,801				641				1.62
Borrowings			24,436				280				1.53				52,380				1,160				2.96
Total interest-bearing liabilities			9,794,633			$	147,738				2.02	%			9,058,198			$	150,092				2.22	%
Noninterest-bearing deposits			3,452,035												3,356,999
Other liabilities			111,334												85,148
Total liabilities			13,358,002												12,500,345
Shareholders’ equity			1,960,675												1,694,428
Total liabilities and shareholders’ equity		$	15,318,677											$	14,194,773
Net interest income (tax equivalent)						$	421,427											$	378,552
Rate Analysis:
Interest income/earning assets											5.26	%											5.29	%
Interest expense/earning assets											(1.36	)											(1.50	)
Net interest margin											3.89	%											3.79	%

(1)Short-term investments are comprised of federal funds sold, interest-bearing deposits in banks and interest-bearing time deposits in banks.

(2)Average balances include unrealized gains and losses on available-for-sale securities.

(3)Includes tax equivalent yield adjustment of approximately $11.2 million and $9.0 million in the first nine months of 2026 and 2025, respectively, using an effective tax rate of 21% for both periods.

(4)Includes nonaccrual loans.

Noninterest Income. Noninterest income for the third quarter of 2026 was $35.6 million, an increase of $1.4 million, when compared to $34.3 million in the same quarter of 2025. Wealth management fee income increased to $14.5 million for the third quarter of 2026 compared to $13.0 million for the third quarter of 2025. Increases are related to new account growth and increased mineral fee income due to oil and gas prices. The market value of assets under management totaled $12.4 billion at September 30, 2026, compared to $12.1 billion at September 30, 2025. Service charges on deposits increased to $6.7 million for the third quarter of 2026 compared with $6.5 million for the third quarter of 2025, primarily driven by increases in net new accounts. Mortgage related income decreased to $4.2 million for the third quarter of 2026 compared to $4.4 million in the third quarter of 2025. Mortgage volume and margins were impacted by the spike in long term rates during the third quarter of 2026.

Noninterest income for the nine-months ended September 30, 2026 was $103.6 million, an increase of $6.2 million, when compared to $97.4 million in the same period in 2025. Wealth Management fee income increased to $41.8 million for the first nine months of 2026 compared to $38.3 million for the first nine months of 2025 mostly driven by the increase in market value of trust assets managed. Mortgage related income increased to $13.1 million for the first nine months of 2026 compared to $11.3 million for the same period in 2025 benefiting from the restructuring of the secondary mortgage department, new mortgage lenders and an increase in the volume of mortgage loans originated.

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Table 3 - Noninterest Income (dollars in thousands):

		Three-Months Ended September 30,												Nine-Months Ended September 30,
		2026				Increase (Decrease)				2025				2026				Increase (Decrease)				2025
Wealth Management fees		$	14,492			$	1,542			$	12,950			$	41,815			$	3,466			$	38,349
Service charges on deposit accounts			6,693				246				6,447				19,033				284				18,749
Debit card fees			5,953				620				5,333				16,782				1,263				15,519
Credit card fees			721				22				699				2,106				123				1,983
Gain on sale and fees on mortgage loans			4,175				(200	)			4,375				13,131				1,798				11,333
Net loss on sale of available-for-sale securities			(9	)			(9	)			—				(9	)			(9	)			—
Net gain (loss) on sale of foreclosed assets			(2	)			120				(122	)			(77	)			(120	)			43
Net gain on sale of assets			(1	)			(1	)			—				(375	)			(381	)			6
SERP market adjustment			16				(270	)			286				1,126				629				497
Other:
Check printing fees			36				3				33				68				(22	)			90
Safe deposit rental fees			167				(3	)			170				573				(18	)			591
Credit life fees			211				2				209				694				(209	)			903
Brokerage commissions			480				(10	)			490				1,419				156				1,263
Wire transfer fees			485				19				466				1,447				106				1,341
Miscellaneous income			2,218				(710	)			2,928				5,842				(857	)			6,699
Total other			3,597				(699	)			4,296				10,043				(844	)			10,887
Total Noninterest Income		$	35,635			$	1,371			$	34,264			$	103,575			$	6,209			$	97,366

Noninterest Expense. Total noninterest expense for the three-months ended September 30, 2026 was $81.1 million, compared to $73.7 million for the same period of 2025. An important measure in determining whether a financial institution effectively manages noninterest expense is the efficiency ratio, which is calculated by dividing noninterest expense by the sum of net interest income on a tax-equivalent basis and noninterest income. Lower ratios indicate better efficiency since more income is generated with a lower noninterest expense total. Our efficiency ratio was 45.59% for the third quarter of 2026 compared to 44.74% for the same quarter in 2025.

Salaries, commissions and employee benefits increased to $47.8 million for the third quarter of 2026 compared to $42.6 million for the same period in 2025. The increase from prior year is primarily resulting from annual merit-based and market-driven pay increases that were effective March 1st in the current year as well as additions to staff over the past year.

All other categories of noninterest expense for the third quarter of 2026 totaled $33.2 million, compared to $31.1 million in the same quarter a year ago. Noninterest expense, excluding salary related costs, for the three-months ended September 30, 2026 increased when compared to the same period in 2025 largely due to increases in professional fees, and software amortization and expense offset by decreases in operational and other losses and debit card expenses.

Total noninterest expense for the nine-months ended September 30, 2026 was $238.9 million, compared to $215.7 million for the same period of 2025. Our efficiency ratio was 45.51% for the first nine months of 2026 compared to 45.33% during the same period in 2025.

Salaries, commissions and employee benefits for the nine-months ended September 30, 2026 totaled $143.5 million, compared to $127.3 million for the same period in 2025. The increase from prior year is primarily resulting from annual merit-based and market-driven pay increases that were effective March 1st in the current year as well as additions to staff over the past year.

All other categories of noninterest expense for the nine-months ended September 30, 2026 totaled $95.5 million, compared to $88.4 million in the same period a year ago. Noninterest expense, excluding salary related costs, for the nine-months ended September 30, 2026 increased when compared to the same period in 2025 largely due to increases in software amortization and expense and professional and service fees partially offset by decreases in debit card expenses.

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Table 4 - Noninterest Expense (dollars in thousands):

		Three-Months Ended September 30,												Nine-Months Ended September 30,
		2026				Increase (Decrease)				2025				2026				Increase (Decrease)				2025
Salaries, commissions and incentives (excluding mortgage)		$	33,659			$	3,591			$	30,068			$	98,015			$	9,824			$	88,191
Mortgage salaries and incentives			2,820				2				2,818				8,523				1,066				7,457
Medical			3,057				97				2,960				9,802				808				8,994
Profit sharing			2,917				993				1,924				9,384				1,734				7,650
401(k) match expense			1,221				143				1,078				3,767				441				3,326
Payroll taxes			2,318				237				2,081				7,554				798				6,756
SERP market adjustment			16				(270	)			286				1,126				629				497
Stock based compensation			1,801				411				1,390				5,280				829				4,451
Total salaries and employee benefits			47,809				5,204				42,605				143,451				16,129				127,322
Net occupancy expense			3,837				292				3,545				11,195				330				10,865
Equipment expense			2,306				(89	)			2,395				6,633				(561	)			7,194
FDIC insurance premiums			1,709				74				1,635				5,036				241				4,795
Debit card expense			3,029				(483	)			3,512				9,180				(1,013	)			10,193
Professional and service fees			3,959				959				3,000				11,026				2,645				8,381
Printing, stationery and supplies			490				34				456				1,405				(6	)			1,411
Operational and other losses			1,333				(624	)			1,957				3,134				(83	)			3,217
Software amortization and expense			5,067				787				4,280				14,714				2,682				12,032
Amortization of intangible assets			42				(44	)			86				128				(138	)			266
Other:
Data processing fees			768				90				678				2,192				167				2,025
Postage			499				107				392				1,324				38				1,286
Advertising			911				167				744				2,590				300				2,290
Correspondent bank service charges			162				(58	)			220				659				(137	)			796
Telephone			703				8				695				2,142				168				1,974
Public relations and business development			1,139				169				970				3,010				253				2,757
Directors’ fees			907				81				826				2,721				157				2,564
Audit and accounting fees			496				(128	)			624				1,583				(130	)			1,713
Legal fees and other related costs			478				234				244				1,213				316				897
Regulatory exam fees			290				23				267				848				109				739
Travel			682				120				562				1,857				240				1,617
Courier expense			438				27				411				1,260				181				1,079
Other real estate owned			38				31				7				9				(27	)			36
Other miscellaneous expense			3,960				405				3,555				11,616				1,329				10,287
Total other			11,471				1,276				10,195				33,024				2,964				30,060
Total Noninterest Expense		$	81,052			$	7,386			$	73,666			$	238,926			$	23,190			$	215,736

Balance Sheet Review

Loans. The portfolio is comprised of loans made to businesses, professionals, municipalities, individuals, and farm and ranch operations primarily in the trade areas served by our subsidiary bank. As of September 30, 2026, total loans held-for-investment were $8.5 billion, an increase of $380.5 million, as compared to December 31, 2025 balances.

As compared to year-end 2025 balances, total real estate loans increased $153.8 million, total commercial loans increased $150.0 million, total consumer loans increased $92.8 million, and agricultural loans decreased $16.0 million. Loans averaged $8.5 billion for the third quarter of 2026, an increase of $219.6 million over the prior year third quarter average balances. Loans averaged $8.4 billion for the first nine months of 2026, an increase of $270.6 million from the average balance during the first nine months of 2025.

Loan portfolio segments include Commercial & Industrial, Municipal, Agricultural, Construction and Development, Farm, Non-Owner Occupied and Owner Occupied CRE, Residential, Consumer Auto and Consumer Non-Auto. This segmentation allows for a more precise pooling of loans with similar credit risk characteristics and credit monitor procedures for the Company’s calculation of its allowance for credit losses.

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Table 5 outlines the composition of the Company’s held-for-investment loans by portfolio segment.

Table 5 - Composition of Loans Held-for-Investment (dollars in thousands):

		September 30,				December 31,
		2026				2025
Commercial:
Commercial & Industrial		$	1,164,597			$	1,116,461
Municipal			444,341				342,501
Total Commercial			1,608,938				1,458,962
Agricultural			79,796				95,776
Real Estate:
Construction & Development			1,089,540				1,157,865
Farm			349,484				327,625
Non-Owner Occupied CRE			919,847				832,816
Owner Occupied CRE			1,161,530				1,120,608
Residential			2,358,106				2,285,830
Total Real Estate			5,878,507				5,724,744
Consumer:
Auto			817,771				732,351
Non-Auto			153,776				146,443
Total Consumer			971,547				878,794
Total		$	8,538,788			$	8,158,276

Loans held-for-sale, consisting of secondary market mortgage loans, totaled $25.5 million and $30.0 million at September 30, 2026 and December 31, 2025, respectively. At September 30, 2026 and December 31, 2025, $4.4 million and $4.6 million, respectively, are valued using the lower of cost or fair value, and the remaining amounts are valued under the fair value option.

Commercial real estate loans (owner and non-owner occupied CRE) represent 24.4% of the Company's total loan portfolio as of September 30, 2026. Non-owner occupied CRE represents $919.8 million, or 10.8%, of the Company's total loan portfolio as of September 30, 2026. The properties securing this portfolio are diverse as to geographic location in Texas as well as industry type. Collateral for CRE loans is located throughout the Company’s markets in central west Texas, the Dallas-Fort Worth metroplex and southeast Texas with less than 1% of properties located outside of the state. The largest concentrations in the CRE portfolio as to type are industrial/manufacturing at approximately 18.1% and multi-tenant retail at approximately 7.7% as of September 30, 2026. All additional property CRE portfolio property type categories are below the identified concentration levels. Credit underwriting standards are periodically reviewed and adjusted based upon observations from our ongoing monitoring of economic conditions in our lending areas. In response to the current interest rate environment, the Company has enhanced stress testing and loan review activities to mitigate interest rate reprice risk with a specific emphasis on borrowers’ abilities to absorb the impact of higher interest rates as loans that were made in a much lower rate environment renew.

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The following tables summarize maturity information of our loan portfolio as of September 30, 2026. The tables also present the portion of loans that have fixed interest rates or variable interest rates that fluctuate over the life of the loans in accordance with changes in an interest rate index.

Maturity Distribution and Interest Sensitivity of Loans at September 30, 2026 (dollars in thousands):

Total Loans Held-for-Investment:		Due in One Year or Less				After One but Within Five Years				After Five but Within Fifteen Years				After Fifteen Years				Total
Commercial:
Commercial & Industrial		$	482,027			$	593,636			$	82,849			$	6,085			$	1,164,597
Municipal			113,367				77,230				154,815				98,929				444,341
Total Commercial			595,394				670,866				237,664				105,014				1,608,938
Agricultural			62,817				15,456				1,523				—				79,796
Real Estate:
Construction & Development			534,501				190,033				255,155				109,851				1,089,540
Farm			12,299				73,707				144,943				118,535				349,484
Non-Owner Occupied CRE			103,656				420,849				295,105				100,237				919,847
Owner Occupied CRE			86,152				333,616				545,897				195,865				1,161,530
Residential			161,474				156,976				811,244				1,228,412				2,358,106
Total Real Estate			898,082				1,175,181				2,052,344				1,752,900				5,878,507
Consumer:
Auto			8,106				779,326				30,339				—				817,771
Non-Auto			34,234				88,179				28,456				2,907				153,776
Total Consumer			42,340				867,505				58,795				2,907				971,547
Total		$	1,598,633			$	2,729,008			$	2,350,326			$	1,860,821			$	8,538,788
% of Total Loans			18.7	%			32.0	%			27.5	%			21.8	%			100.0	%

Loans with fixed interest rates:		Due in One Year or Less				After One but Within Five Years				After Five but Within Fifteen Years				After Fifteen Years				Total
Commercial:
Commercial & Industrial		$	112,174			$	303,401			$	3,468			$	—			$	419,043
Municipal			15,102				76,788				96,840				52,525				241,255
Total Commercial			127,276				380,189				100,308				52,525				660,298
Agricultural			5,041				10,654				—				—				15,695
Real Estate:
Construction & Development			246,245				65,429				53,985				16,377				382,036
Farm			5,714				42,929				63,290				14,032				125,965
Non-Owner Occupied CRE			79,941				162,469				22,743				3,781				268,934
Owner Occupied CRE			51,760				190,680				6,727				746				249,913
Residential			128,965				118,797				463,274				267,240				978,276
Total Real Estate			512,625				580,304				610,019				302,176				2,005,124
Consumer:
Auto			8,106				779,326				30,339				—				817,771
Non-Auto			33,906				88,179				28,065				350				150,500
Total Consumer			42,012				867,505				58,404				350				968,271
Total		$	686,954			$	1,838,652			$	768,731			$	355,051			$	3,649,388
% of Total Loans			8.0	%			21.5	%			9.0	%			4.2	%			42.7	%

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Loans with variable interest rates:		Due in One Year or Less				After One but Within Five Years				After Five but Within Fifteen Years				After Fifteen Years				Total
Commercial:
Commercial & Industrial		$	369,853			$	290,235			$	79,381			$	6,085			$	745,554
Municipal			98,265				442				57,975				46,404				203,086
Total Commercial			468,118				290,677				137,356				52,489				948,640
Agricultural			57,776				4,802				1,523				—				64,101
Real Estate:
Construction & Development			288,256				124,604				201,170				93,474				707,504
Farm			6,585				30,778				81,653				104,503				223,519
Non-Owner Occupied CRE			23,715				258,380				272,362				96,456				650,913
Owner Occupied CRE			34,392				142,936				539,170				195,119				911,617
Residential			32,509				38,179				347,970				961,172				1,379,830
Total Real Estate			385,457				594,877				1,442,325				1,450,724				3,873,383
Consumer:
Auto			—				—				—				—				—
Non-Auto			328				—				391				2,557				3,276
Total Consumer			328				—				391				2,557				3,276
Total		$	911,679			$	890,356			$	1,581,595			$	1,505,770			$	4,889,400
% of Total Loans			10.7	%			10.4	%			18.5	%			17.6	%			57.3	%

Of the $4.9 billion of variable interest rate loans shown above, loans totaling $2.5 billion mature or reprice over the next twelve months.

Asset Quality. Our loan portfolio is subject to periodic reviews by our centralized independent loan review group, engaged third-parties, as well as periodic examinations by bank regulatory agencies. Loans are placed on nonaccrual status when, in the judgment of management, the collectability of principal or interest under the original terms becomes doubtful. Nonaccrual, past due 90 days or more and still accruing, and foreclosed assets were $60.5 million at September 30, 2026, as compared to $56.5 million at December 31, 2025. As a percent of loans held-for-investment and foreclosed assets, these assets were 0.71% at September 30, 2026 and 0.69% at December 31, 2025. As a percent of total assets, these assets were 0.40% at September 30, 2026, as compared to 0.37% at December 31, 2025, respectively. We believe the level of these assets to be manageable and are not aware of any material classified credits not properly disclosed as nonperforming at September 30, 2026.

Table 6 – Nonaccrual, Past Due 90 Days or More and Still Accruing, and Foreclosed Assets (dollars in thousands, except percentages):

		September 30,				December 31,
		2026				2025
Nonaccrual loans		$	57,158			$	55,121
Loans still accruing and past due 90 days or more			19				892
Total nonperforming loans			57,177				56,013
Foreclosed assets			3,277				479
Total nonperforming assets		$	60,454			$	56,492
As a % of loans held-for-investment and foreclosed assets			0.71	%			0.69	%
As a % of total assets			0.40				0.37

We record interest payments received on nonaccrual loans as reductions of principal. Prior to the loans being placed on nonaccrual, we recognized interest income on loans of approximately $795 thousand for the year ended December 31, 2025. Such amounts for the 2026 and 2025 interim periods were not significant. If interest on all nonaccrual loans had been recognized on a full accrual basis during the year ended December 31, 2025, such income would have been approximately $5.7 million.

Allowance for Credit Losses. The allowance for credit losses is the amount we determine as of a specific date to be appropriate to absorb current expected credit losses on existing loans. For a discussion of our methodology, see Note 3 to the Consolidated Financial Statements (unaudited).

The provision for loan losses of $2.4 million for the three-months ended September 30, 2026 is combined with the provision reversal for unfunded commitments of $360 thousand and reported in the net aggregate of $2.0 million under the provision for credit losses in the consolidated statements of earnings for the three-months ended September 30, 2026. The provision for loan losses of $9.0 million for the nine-months ended September 30, 2026 is combined with the provision reversal for unfunded commitments of $539 thousand and reported in the net aggregate of $8.5 million under the provision for credit losses in the consolidated statements of earnings for the nine-months ended September 30, 2026.

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The provision for loan losses of $25.5 million for the three-months ended September 30, 2025 is combined with the provision reversal for unfunded commitments of $1.1 million and reported in the net aggregate of $24.4 million under the provision for credit losses in the consolidated statements of earnings for the three-months ended September 30, 2025. The provision for loan losses of $30.9 million for the nine-months ended September 30, 2025 is combined with the provision for unfunded commitments of $165 thousand and reported in the net aggregate of $31.1 million under the provision for credit losses in the consolidated statements of earnings for the nine-months ended September 30, 2025.

As a percent of average loans, annualized net charge-offs were 0.04% for the three-months ended September 30, 2026, as compared to annualized net charge-offs of 1.07% for the three-months ended September 30, 2025. For the nine-months ended September 30, 2026 and 2025, annualized net charge-offs were 0.01% and 0.39%, respectively. The third quarter of 2025 was impacted by a $21.6 million credit loss due to borrower fraud. The allowance for credit losses as a percent of loans held-for-investment was 1.33% as of September 30, 2026, as compared to 1.29% for December 31, 2025.

Table 7 - Loan Loss Experience and Allowance for Credit Losses (dollars in thousands, except percentages):

		Three-Months Ended September 30,								Nine-Months Ended September 30,
		2026				2025				2026				2025
Allowance for credit losses at period-end		$	113,892			$	105,958			$	113,892			$	105,958
Loans held-for-investment at period-end			8,538,788				8,243,625				8,538,788				8,243,625
Average loans for period			8,468,672				8,249,113				8,354,207				8,083,638
Net charge-offs (recoveries)/average    loans (annualized)			0.04	%			1.07	%			0.01	%			0.39	%
Allowance for loan losses/period-end    loans held-for-investment			1.33	%			1.29	%			1.33	%			1.29	%
Allowance for loan losses/nonaccrual    loans, past due 90 days still accruing			199.19	%			187.39	%			199.19	%			187.39	%

Interest-Bearing Demand Deposits in Banks. The Company had interest-bearing deposits in banks of $292.8 million at September 30, 2026 compared to $826.9 million at December 31, 2025. At September 30, 2026, interest-bearing deposits in banks included $231.9 million maintained at the Federal Reserve Bank of Dallas and $60.9 million on deposit with the FHLB.

Available-for-Sale Securities. At September 30, 2026, securities with a fair value of $5.4 billion were classified as securities available-for-sale. As compared to December 31, 2025, the available-for-sale portfolio at September 30, 2026 reflected (i) an increase of $211.7 million in mortgage-backed securities, (ii) a decrease of $277.2 million in obligations of states and political subdivisions, (iii) a decrease of $60.8 million in U.S. Treasury securities, and (iv) an increase of $197 thousand in corporate bonds and other securities. Fluctuations in the available-for-sale securities portfolio balances were primarily driven by purchases and sales, calls or maturities, and changes in unrealized losses during the first nine-months of 2026. Our mortgage related securities are backed by GNMA, FNMA or FHLMC, or are collateralized by securities backed by these agencies.

See the below table and Note 2 to the Consolidated Financial Statements (unaudited) for additional disclosures relating to the maturities and fair values of the investment portfolio at September 30, 2026 and December 31, 2025.

Table 8 - Maturities and Yields of Available-for-Sale Securities Held at September 30, 2026 (dollars in thousands, except percentages):

		Maturing by Contractual Maturity
		One Year or Less								After One Year Through Five Years								After Five Years Through Ten Years								After Ten Years								Total
Available-for-Sale:		Amount				Yield				Amount				Yield				Amount				Yield				Amount				Yield				Amount				Yield
Obligations of states and    political subdivisions		$	9,322				2.04	%		$	172,720				2.39	%		$	308,220				4.81	%		$	983,953				2.84	%		$	1,474,215				3.20	%
Corporate bonds and    other securities			63,571				2.62				37,905				2.03				—				—				—				—				101,476				2.40
Mortgage-backed     securities			90,757				2.94				2,065,365				3.41				1,463,727				3.31				192,543				2.63				3,812,392				3.32
Total		$	163,650				2.76	%		$	2,275,990				3.31	%		$	1,771,947				3.57	%		$	1,176,496				2.81	%		$	5,388,083				3.27	%

All yields are computed on a tax-equivalent basis assuming a marginal tax rate of 21%. Yields on available-for-sale securities are based on amortized cost. Maturities of mortgage-backed securities are based on contractual maturities and could differ due to prepayments of underlying mortgages. The expected maturities of these securities were computed by using scheduled amortization of balances and historical prepayment rates. Maturities of other securities are reported at the earlier of maturity date or call date.

As of September 30, 2026, the investment portfolio had an overall tax equivalent yield of 3.27%, a weighted average life of 7.5 years and modified duration of 5.9 years.

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Deposits. Deposits held by our subsidiary bank represent our primary source of funding. Total deposits were $13.1 billion as of September 30, 2026, as compared to $13.3 billion as of December 31, 2025.

Table 9 provides a breakdown of average deposits and rates paid over the three and nine-months ended September 30, 2026 and 2025 respectively.

Table 9 - Composition of Average Deposits (dollars in thousands, except percentages):

		For the Three-Months Ended September 30,
		2026								2025
		Average Balance				Average Rate				Average Balance				Average Rate
Noninterest-bearing deposits		$	3,508,797			—%				$	3,419,378			—%
Interest-bearing deposits:
Interest-bearing checking			4,762,792				2.06				4,531,205				2.13
Savings and money market accounts			3,985,430				1.91				3,633,808				2.27
Time deposits under $250,000			568,699				2.75				559,783				3.02
Time deposits of $250,000 or more			313,444				3.02				326,667				3.28
Total interest-bearing deposits			9,630,365				2.07	%			9,051,463				2.28	%
Total average deposits		$	13,139,162							$	12,470,841
Total cost of deposits							1.52	%							1.65	%

		For the Nine-Months Ended September 30,
		2026								2025
		Average Balance				Average Rate				Average Balance				Average Rate
Noninterest-bearing deposits		$	3,452,035			—%				$	3,356,999			—%
Interest-bearing deposits:
Interest-bearing checking			4,857,349				1.93				4,570,115				2.13
Savings and money market accounts			3,962,513				1.95				3,484,177				2.08
Time deposits under $250,000			562,340				2.75				560,825				3.09
Time deposits of $250,000 or more			327,616				2.98				337,900				3.34
Total interest-bearing deposits			9,709,818				2.02	%			8,953,017				2.21	%
Total average deposits		$	13,161,853							$	12,310,016
Total cost of deposits							1.49	%							1.61	%

The estimated amount of uninsured and uncollateralized deposits including related accrued and unpaid interest is approximately $4.3 billion, or 32.9% of total deposits, as of September 30, 2026.

Borrowings. Included in borrowings were federal funds purchased, advances from the FHLB and other borrowings of $21.9 million and $21.7 million at September 30, 2026 and December 31, 2025, respectively. The average balance of federal funds purchased, advances from the FHLB and other borrowings were $22.7 million and $56.2 million in the third quarters of 2026 and 2025, respectively. The weighted average interest rates paid on these borrowings were 1.42% and 3.33% for the third quarters of 2026 and 2025, respectively. The average balance of federal funds purchased, advances from the FHLB and other borrowings were $24.4 million and $52.4 million in the first nine months of 2026 and 2025, respectively. The weighted average interest rates paid on these borrowings were 1.53% and 2.96% for the first nine months of 2026 and 2025, respectively.

Repurchase Agreements. Securities sold under repurchase agreements of $43.1 million and $63.0 million at September 30, 2026, and December 31, 2025, respectively. Securities sold under repurchase agreements are generally with significant customers of the Company that require short-term liquidity for their funds for which we pledge certain securities that have a fair value equal to at least the amount of the short-term borrowings. The average balances of securities sold under repurchase agreements were $57.9 million and $50.1 million for the third quarters of 2026 and 2025, respectively. The average rates paid on securities sold under repurchase agreements were 1.41% and 1.66% for the third quarters of 2026 and 2025, respectively. The average balances of securities sold under repurchase agreements were $60.4 million and $52.8 million for the first nine months of 2026 and 2025, respectively. The average rates paid on securities sold under repurchase agreements were 1.46% and 1.62% for the first nine months of 2026 and 2025, respectively.

Interest Rate Risk

Interest rate risk results when the maturity or repricing intervals of interest-earning assets and interest-bearing liabilities are different. Our exposure to interest rate risk is managed primarily through our strategy of selecting the types and terms of interest-earning assets and interest-bearing liabilities that generate favorable earnings while limiting the potential negative effects of changes in market interest rates. We use no off-balance-sheet financial instruments to manage interest rate risk.

Our subsidiary bank has an asset liability management committee that monitors interest rate risk and compliance with investment policies. The subsidiary bank utilizes an earnings simulation model as the primary quantitative tool in measuring the amount of interest rate risk associated with

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changing market rates. The model quantifies the effects of various interest rate scenarios on projected net interest income and net income over the next twelve months. The model measures the impact on net interest income relative to a base case scenario of hypothetical fluctuations in interest rates over the next twelve months. These simulations incorporate assumptions regarding balance sheet growth and mix, pricing and the re-pricing and maturity characteristics of the existing and projected balance sheet.

The following analysis depicts the estimated impact on net interest income of immediate changes in interest rates at the specified levels for the periods presented.

		Percentage change in net interest income:
Change in interest rates:		September 30,		December 31,
(in basis points)		2026		2025
+200		0.46%		3.45%
+100		0.95%		1.83%
-100		(2.84)%		(1.44)%
-200		(6.39)%		(2.86)%

The results for the net interest income simulations as of September 30, 2026 and December 31, 2025 resulted in an asset sensitive position. These are good faith estimates and assume that the composition of our interest sensitive assets and liabilities existing at each year-end will remain constant over the relevant twelve-month measurement period and that changes in market interest rates are instantaneous and sustained across the yield curve regardless of duration of pricing characteristics on specific assets or liabilities. Also, this analysis does not contemplate any actions that we might undertake in response to changes in market interest rates. We believe these estimates are not necessarily indicative of what actually could occur in the event of immediate interest rate increases or decreases of this magnitude. As interest-bearing assets and liabilities reprice in different time frames and proportions to market interest rate movements, various assumptions must be made based on historical relationships of these variables in reaching any conclusion. Since these correlations are based on competitive and market conditions, we anticipate that our future results will likely be different from the foregoing estimates, and such differences could be material.

Should we be unable to maintain a reasonable balance of maturities and repricing of our interest-earning assets and our interest-bearing liabilities, we could be required to dispose of our assets in an unfavorable manner or pay a higher than market rate to fund our activities. Our asset liability management committee oversees and monitors this risk.

The fair value of our investment securities classified as available-for-sale totaled $5.4 billion at September 30, 2026. During the nine months ended September 30, 2026, the corresponding net unrealized loss before taxes of $342.0 million at December 31, 2025, changed to a net unrealized loss before taxes of $620.2 million at September 30, 2026, which is recorded net of taxes in accumulated other comprehensive earnings (loss) in shareholders' equity. The unrealized gains or losses, net of taxes, on the portfolio are excluded from the calculation of all regulatory capital ratios. The changes in the fair value were driven by changes in interest rates based on expected actions by the Federal Reserve Board and other market conditions. The overall valuation of the portfolio is most correlated to the 5-year U.S. Treasury rates based on the composition and duration of the portfolio. At September 30, 2026, the 5-year U.S. Treasury rate was 5.09% compared to 3.72% at December 31, 2025, representing a 137 basis point increase during the first nine months of 2026. As of September 30, 2026, an increase of 100 basis points in the 5-year U.S. Treasury rate would result in an increase to unrealized losses by approximately $284 million before taxes, while a 100 basis point decrease in the same rate would result in a decrease to unrealized losses by approximately $262 million before taxes. Management does not have the intent to sell impaired available-for-sale securities before fair value recovers to the current amortized cost, and it is more-likely-than-not that the Company will not be required to sell impaired securities before the fair value recovers, which may be maturity.

Capital and Liquidity

Capital. We evaluate capital resources by our ability to maintain adequate regulatory capital ratios to do business in the banking industry. Issues related to capital resources arise primarily when we are growing at an accelerated rate but not retaining a significant amount of our profits or when we experience significant asset quality deterioration.

Total shareholders’ equity was $1.8 billion, or 12.1% of total assets at September 30, 2026, as compared to $1.9 billion, or 12.4% of total assets at December 31, 2025. Included in shareholders' equity at September 30, 2026 and December 31, 2025 were $489.6 million and $269.9 million, respectively, in unrealized losses on investment securities available-for-sale, net of related income taxes, although such amount is excluded from and does not impact regulatory capital. For the third quarter of 2026, total shareholders' equity averaged $2.0 billion, or 12.8% of average assets, as compared to $1.7 billion, or 12.1% of average assets, during the same period in 2025. For the first nine months of 2026, total shareholders' equity averaged $2.0 billion, or 12.8% of average assets, as compared to $1.7 billion or 11.9% of average assets, during the same period in 2025.

Banking regulators measure capital adequacy by means of the risk-based capital ratios and the leverage ratio under the Basel III rules and prompt corrective action regulations. The risk-based capital rules provide for the weighting of assets and off-balance-sheet commitments and contingencies according to prescribed risk categories. Regulatory capital is then divided by risk-weighted assets to determine the risk-adjusted capital ratios. The leverage ratio is computed by dividing shareholders’ equity less intangible assets by quarter-to-date average assets less intangible assets.

Under the Basel III rules, the Company must maintain a capital conservation buffer of 2.50%. The capital conservation buffer is designed to absorb losses during periods of economic stress and requires increased capital levels for the purpose of capital distributions and other payments. Failure to meet the amount of the buffer will result in restrictions on the Company’s ability to make capital distributions, including dividend payments and stock repurchases, and to pay discretionary bonuses to executive officers.

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As of September 30, 2026 and December 31, 2025, we had a total risk-based capital ratio of 21.66% and 21.17%, a Tier 1 capital to risk-weighted assets ratio of 20.45% and 19.99%, and a common equity Tier 1 to risk-weighted assets ratio of 20.45% and 19.99%, and a Tier 1 leverage ratio of 13.12% and 12.55%, respectively. The regulatory capital ratios as of September 30, 2026 and December 31, 2025 were calculated under Basel III rules.

The regulatory capital ratios of the Company and Bank under the Basel III regulatory capital framework are as follows:

		Actual								Minimum Capital Required-Basel III								Required to be Considered Well- Capitalized
As of September 30, 2026:		Amount				Ratio				Amount				Ratio				Amount				Ratio
First Financial Bankshares, Inc. (Consolidated)
Total Capital to Risk-Weighted Assets:		$	2,143,323				21.66	%		$	1,039,069				10.50	%		$	989,590				10.00	%
Tier 1 Capital to Risk-Weighted Assets:		$	2,023,582				20.45	%		$	841,151				8.50	%		$	593,754				6.00	%
Common Equity Tier 1 Capital to Risk-Weighted Assets:		$	2,023,582				20.45	%		$	692,713				7.00	%		$	—			N/A
Leverage Ratio:		$	2,023,582				13.12	%		$	616,774				4.00	%		$	—			N/A
First Financial Bank
Total Capital to Risk-Weighted Assets:		$	1,928,871				19.57	%		$	1,034,979				10.50	%		$	985,694				10.00	%
Tier 1 Capital to Risk-Weighted Assets:		$	1,809,131				18.35	%		$	837,840				8.50	%		$	788,555				8.00	%
Common Equity Tier 1 Capital to Risk-Weighted Assets:		$	1,809,131				18.35	%		$	689,986				7.00	%		$	640,701				6.50	%
Leverage Ratio:		$	1,809,131				11.79	%		$	613,696				4.00	%		$	767,120				5.00	%

		Actual								Minimum Capital Required Basel III								Required to be Considered Well- Capitalized
As of December 31, 2025:		Amount				Ratio				Amount				Ratio				Amount				Ratio
First Financial Bankshares, Inc. (Consolidated)
Total Capital to Risk-Weighted Assets:		$	2,000,262				21.17	%		$	991,973				10.50	%		$	944,736				10.00	%
Tier 1 Capital to Risk-Weighted Assets:		$	1,888,339				19.99	%		$	803,026				8.50	%		$	566,842				6.00	%
Common Equity Tier 1 Capital to Risk-Weighted Assets:		$	1,888,339				19.99	%		$	661,315				7.00	%		$	—			N/A
Leverage Ratio:		$	1,888,339				12.55	%		$	377,894				4.00	%		$	—			N/A
First Financial Bank
Total Capital to Risk-Weighted Assets:		$	1,823,770				19.36	%		$	989,005				10.50	%		$	941,909				10.00	%
Tier 1 Capital to Risk-Weighted Assets:		$	1,711,847				18.17	%		$	800,623				8.50	%		$	753,527				8.00	%
Common Equity Tier 1 Capital to Risk-Weighted Assets:		$	1,711,847				18.17	%		$	659,336				7.00	%		$	612,241				6.50	%
Leverage Ratio:		$	1,711,847				11.43	%		$	376,764				4.00	%		$	470,955				5.00	%

In connection with the adoption of the Basel III regulatory capital framework, our subsidiary bank made the election to continue to exclude accumulated other comprehensive income from available-for-sale securities (“AOCI”) from capital in connection with its quarterly financial filing and, in effect, to retain the AOCI treatment under the prior capital rules.

Liquidity. Liquidity management involves our ability to convert assets to cash to meet our current and future obligations to customers at any time. Such needs can develop from loan demand, deposit withdrawals or acquisition opportunities. Potential obligations resulting from the issuance of standby letters of credit and commitments to fund future borrowings to our loan customers are other factors affecting our liquidity needs. Many of these obligations and commitments are expected to expire without being drawn upon; therefore, the total commitment amounts do not necessarily represent future cash requirements affecting our liquidity position. The potential need for liquidity arising from these types of financial instruments is represented by the contractual notional amount of the instrument. Asset liquidity is provided by cash and assets which are readily marketable, or which will mature in the near future. Liquid assets include cash, federal funds sold, and short-term investments in time deposits in banks. Liquidity is also provided by access to funding sources, which include core depositors and correspondent banks that maintain accounts with and sell federal funds to our subsidiary bank. Other sources of funds include our ability to borrow from short-term sources, such as purchasing federal funds from correspondent banks, sales of securities under agreements to repurchase and other borrowings (see below) and an unfunded $50 million revolving line of credit established with Frost Bank, a nonaffiliated bank, which matures on June 30, 2027 (see next paragraph). Our subsidiary bank also has federal funds purchased lines of credit with two non-affiliated banks totaling $175 million. At September 30, 2026, there were no amounts drawn on these lines of credit. Our subsidiary bank also has (i) an available line of credit with the FHLB totaling $2.3 billion at September 30, 2026, secured by portions of our loan portfolio and certain investment securities, and (ii) access to approximately $1.8 billion at the Federal Reserve Bank of Dallas Discount Window lending program secured by portions of certain investment securities and portions of our loan portfolio. At September 30, 2026, there was $678.0 million used on the FHLB line advance for undisbursed commitments (letters of credit) used to secure public funds.

The Company renewed and amended its loan agreement, effective June 30, 2025, with Frost Bank. Under the loan agreement, as renewed and amended, we are permitted to draw up to $50 million on a revolving line of credit. Prior to June 30, 2027, interest is paid quarterly at the U.S. prime rate as quoted in the Money Rates section of The Wall Street Journal, and the line of credit matures June 30, 2027. If a balance exists at July 1, 2027, the principal balance converts to a term facility payable quarterly over five years and interest is paid quarterly at the U.S. prime rate as quoted in the Money Rates section of The Wall Street Journal. The line of credit is unsecured. Among other provisions in the Loan Agreement, the Company must satisfy certain financial covenants during the term of the Loan Agreement, including without limitation, covenants that require the Company to maintain certain capital, profitability, loan loss reserve, non-performing asset and debt service coverage ratios. In addition, the credit agreement contains certain operational covenants, which among others, restricts the payment of dividends above 55% of consolidated net income, limits the incurrence of debt (excluding any amounts acquired in an acquisition) and prohibits the disposal of assets except in the ordinary course of business. Since 1995, we have historically declared dividends as a percentage of our consolidated net income in a range of 36% (low) in 2021 and 2020 to 53% (high) in 2003 and

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2006. The Company was in compliance with the financial and operational covenants at September 30, 2026. There was no outstanding balance under the line of credit as of September 30, 2026.

In addition, we anticipate that future acquisitions of financial institutions, expansion of branch locations or offerings of new products could also place a demand on our cash resources. Available cash and cash equivalents at our parent company which totaled $171.4 million at September 30, 2026, investment securities which totaled $1.1 million at September 30, 2026 and mature over 3 to 4 years, available dividends from our subsidiaries which totaled $395.7 million at September 30, 2026, utilization of available lines of credit, and future debt or equity offerings are expected to be the source of funding for these potential acquisitions or expansions.

Our liquidity position is continuously monitored and adjustments are made to the balance between sources and uses of funds as deemed appropriate. Liquidity risk management is an important element in our asset/liability management process. We regularly model liquidity stress scenarios to assess potential liquidity outflows or funding problems resulting from economic disruptions, volatility in the financial markets, unexpected credit events or other significant occurrences deemed potentially problematic by management. These scenarios are incorporated into our contingency funding plan, which provides the basis for the identification of our liquidity needs. As of September 30, 2026, management is not aware of any events that are reasonably likely to have a material adverse effect on our liquidity, capital resources or operations. We are monitoring closely the impact to the financial system due to the past failures of several banks. Given the diversified core deposit base and relatively low loan to deposit ratios maintained at our subsidiary bank, we consider our current liquidity position to be adequate to meet our short-term and long-term liquidity needs. In addition, management is not aware of any regulatory recommendations regarding liquidity that would have a material adverse effect on us.

Off-Balance Sheet (“OBS”)/Reserve for Unfunded Commitments. We are a party to financial instruments with OBS risk in the normal course of business to meet the financing needs of our customers. These financial instruments include unfunded lines of credit, commitments to extend credit and federal funds sold to correspondent banks and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in our consolidated balance sheets. At September 30, 2026, the Company’s reserve for unfunded commitments totaled $5.8 million which is recorded in other liabilities.

Our exposure to credit loss in the event of nonperformance by the counterparty to the financial instrument for unfunded lines of credit, commitments to extend credit and standby letters of credit is represented by the contractual notional amount of these instruments. We generally use the same credit policies in making commitments and conditional obligations as we do for on-balance-sheet instruments.

Unfunded lines of credit and commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. These commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. We evaluate each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, as we deem necessary upon extension of credit, is based on our credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property, plant, and equipment and income-producing commercial properties.

Standby letters of credit are conditional commitments we issue to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The average collateral value held on letters of credit usually exceeds the contract amount.

Table 10 – Commitments as of September 30, 2026 and December 31, 2025 (dollars in thousands):

		Total Notional Amounts Committed
		September 30,				December 31,
		2026				2025
Unfunded lines of credit		$	1,140,114			$	1,099,205
Unfunded commitments to extend credit			624,049				638,136
Standby letters of credit			61,791				54,760
Total commercial commitments		$	1,825,954			$	1,792,101

We believe we have no other OBS arrangements or transactions with unconsolidated, special purpose entities that would expose us to liability that is not reflected in the financial statements. The above table does not include balances related to the Company’s forward mortgage-backed security trades. At September 30, 2026 and December 31, 2025, these credit exposures for mortgage loans sold with recourse approximated $31.6 million and $25.5 million, respectively. Total commercial commitments were approximately $1.8 billion at both September 30, 2026 and December 31, 2025.

Parent Company Funding. Our ability to fund various operating expenses, dividends, and cash acquisitions is generally dependent on our own earnings (without giving effect to our subsidiaries), cash reserves and funds derived from our subsidiaries. These funds historically have been produced by intercompany dividends and management fees that are limited to reimbursement of actual expenses. We anticipate that our recurring cash sources will continue to include dividends and management fees from our subsidiaries. At September 30, 2026, $395.7 million was available for the payment of intercompany dividends by our subsidiaries without the prior approval of regulatory agencies. Our subsidiaries paid aggregate dividends of $126.0 million and $106.2 million for the nine-months ended September 30, 2026 and 2025, respectively.

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Dividends. Our long-term dividend policy is to pay cash dividends to our shareholders of approximately 40% to 50% of annual net earnings while maintaining adequate capital to support growth. We are also restricted by a loan covenant within our line of credit agreement with Frost Bank to dividend no greater than 55% of net income, as defined in such loan agreement. The cash dividend payout ratios have amounted to 41.52% and 44.51% of net earnings for the first nine months of 2026 and 2025, respectively. Given our current capital position, projected earnings and asset growth rates, we do not anticipate any significant change in our current dividend policy.

To pay dividends, we and our subsidiary bank must maintain adequate capital above regulatory guidelines and comply with the general requirements applicable to a Texas corporation. Generally, a Texas corporation may not pay a dividend to its shareholders if (i) after giving effect to the dividend, the corporation would be insolvent, or (ii) the amount of the dividend would exceed the surplus of the corporation. In addition, if the applicable regulatory authority believes that a bank under its jurisdiction is engaged in or is about to engage in an unsafe or unsound practice (which, depending on the financial condition of the bank, could include the payment of dividends), the authority may require, after notice and hearing, that such bank cease and desist from the unsafe practice. As a member bank, First Financial Bank may not declare or pay a dividend if the total of all dividends declared during the calendar year, including the proposed dividend, exceeds the sum of the bank's net income (as reportable in its Reports of Condition and Income) during the current calendar year and the retained net income of the prior two calendar years, unless the dividend has been approved by the Federal Reserve Board.

The Federal Reserve Board, the FDIC, and the Texas Department of Banking have each indicated that paying dividends that deplete a bank’s capital base to an inadequate level would be an unsafe and unsound banking practice. The Federal Reserve Board, the Texas Department of Banking, and the FDIC expect that bank holding companies and insured banks should generally only pay dividends out of current operating earnings.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Management considers interest rate risk to be a significant market risk for the Company. See “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations — Interest Rate Risk” for disclosure regarding this market risk.

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Item 4. Controls and Procedures.

As of September 30, 2026, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934). Our management, which includes our principal executive officer and our principal financial officer, does not expect that our disclosure controls and procedures will prevent all errors and all fraud.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Our principal executive officer and principal financial officer have concluded, based on our evaluation of our disclosure controls and procedures, that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2026.

There were no changes in the Company's internal control over financial reporting that occurred during the quarter ended September 30, 2026, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we and our subsidiaries are parties to lawsuits arising in the ordinary course of our banking business. However, there are no material pending legal proceedings to which we, our subsidiaries, or any of their properties, are currently subject.

Item 1A. Risk Factors.

There has been no material change in the risk factors previously disclosed under Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Not Applicable

Item 3. Defaults Upon Senior Securities.

Not Applicable

Item 4. Mine Safety Disclosures.

Not Applicable

Item 5. Other Information.

Not Applicable

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Item 6. Exhibits.

	3.1			—		Amended and Restated Certificate of Formation (incorporated by reference from Exhibit 3.1 of the Registrant’s Form 10-Q filed July 30, 2019).
	3.2			—		Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed April 3, 2020).
	3.3			—		Amendment to the Amended and Restated Bylaws of the Registrant, dated July 27, 2021 (incorporated by reference from Exhibit 3.3 to the Registrant's Form 10-Q filed August 2, 2021).
	4.1			—		Specimen certificate of First Financial Common Stock (incorporated by reference from Exhibit 3 of the Registrant’s Amendment No. 1 to Form 8-A filed on Form 8-A/A No. 1 on January 7, 1994).
	4.2			—		Description of Registrant’s Securities (incorporated by reference from Exhibit 4.2 of the Registrant’s Form 10-K filed February 25, 2026).
	10.1			—		2012 Incentive Stock Option Plan (incorporated by reference from Appendix A of the Registrant’s Definitive Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 filed March 1, 2012).++
	10.2			—		2021 Omnibus Stock and Incentive Plan as Amended (incorporated by reference from Exhibit 10 of the Registrant’s Form 8-K filed April 28, 2021).++
	10.3			—		Amended and Restated Loan Agreement, dated June 30, 2023, by and between First Financial Bankshares, Inc. and Frost Bank (incorporated by reference from Exhibit 10.2 of the Registrant's Form 8-K filed July 7, 2023).
	10.4			—		First Amendment to Loan Agreement, dated June 30, 2025, between First Financial Bankshares, Inc. and Frost Bank (incorporated by reference from Exhibit 10.1 of the Registrant's Form 8-K filed July 7, 2025).
	10.5			—		Renewal Promissory Note (Revolving), dated June 30, 2025, between First Financial Bankshares, Inc. and Frost Bank (incorporated by reference from Exhibit 10.2 of the Registrant's Form 8-K filed July 7, 2025).
	10.6			—		Form of Executive Recognition Agreement (incorporated by reference from Exhibit 10.5 of the Registrant's Form 10-Q filed November 4, 2024)++
	10.7			—		First Financial Bankshares, Inc. Supplemental Executive Retirement Plan, as amended and restated effective July 26, 2022 (incorporated by reference from Exhibit 10.1 of the Registrant's Form 8-K filed July 29, 2022.)++
	10.8			—		Transition and Retirement Agreement (incorporated by reference from Exhibit 10.1 of the Registrant's Form 8-K filed January 29, 2026).++
	31.1			—		Rule 13a-14(a) / 15(d)-14(a) Certification of Chief Executive Officer of First Financial Bankshares, Inc.*
	31.2			—		Rule 13a-14(a) / 15(d)-14(a) Certification of Chief Financial Officer of First Financial Bankshares, Inc.*
	32.1			—		Section 1350 Certification of Chief Executive Officer of First Financial Bankshares, Inc.+
	32.2			—		Section 1350 Certification of Chief Financial Officer of First Financial Bankshares, Inc.+
	101.INS			—		Inline XBRL Instance Document.- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.*
	101.SCH			—		Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents.*
	104			—		Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith

+ Furnished herewith. This Exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

++ Management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

				FIRST FINANCIAL BANKSHARES, INC.
Date: November 5, 2026				By:		/s/ David W. Bailey
						David W. Bailey
						President and Chief Executive Officer
Date: November 5, 2026				By:		/s/ Michelle S. Hickox
						Michelle S. Hickox
						Executive Vice President and Chief Financial Officer

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