Home BancShares : Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

About this update from Home Bancshares, Inc.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our Form 10-K, filed with the Securities and Exchange Commission on February 27, 2026, which includes the audited financial statements for the year ended December 31, 2025. Unless the context requires otherwise, the terms "Company," "us," "we," and "our" refer to Home BancShares, Inc. on a consolidated basis. General We are a bank holding company headquartered in Conway, Arkansas, offering a broad array of financial services through our wholly-owned bank subsidiary, Centennial Bank (sometimes referred to as "Centennial" or the "Bank"). As of March 31, 2026, we had, on a consolidated basis, total assets of $23.20 billion, loans receivable, net of allowance for credit losses, of $15.34 billion, total deposits of $17.74 billion, and stockholders' equity of $4.35 billion. We generate the majority of our revenue from interest on loans and investments, service charges, and mortgage banking income. Deposits and Federal Home Loan Bank ("FHLB") and other borrowed funds are our primary sources of funding. Our largest expenses are interest on our funding sources, salaries and related employee benefits and occupancy and equipment. We measure our performance by calculating our return on average common equity, return on average assets and net interest margin. We also measure our performance by our efficiency ratio, which is calculated by dividing non-interest expense less amortization of core deposit intangibles by the sum of net interest income on a tax equivalent basis and non-interest income. The efficiency ratio, as adjusted, is a non-GAAP measure and is calculated by dividing non-interest expense less amortization of core deposit intangibles by the sum of net interest income on a tax equivalent basis and non-interest income excluding adjustments such as merger and acquisition expenses and/or certain gains, losses and other non-interest income and expenses. Table 1: Key Financial Measures As of or for the Three Months Ended March 31, 2026 2025 (Dollars in thousands, except per share data) Total assets $ 23,201,679 $ 22,992,203 Loans receivable 15,633,628 14,952,116 Allowance for credit losses (297,634) (279,944) Total deposits 17,738,275 17,541,491 Total stockholders' equity 4,349,585 4,042,555 Net income 118,209 115,209 Basic earnings per share 0.60 0.58 Diluted earnings per share 0.60 0.58 Book value per share 22.15 20.40 Tangible book value per share (non-GAAP) (1) 14.87 13.15 Annualized net interest margin - FTE 4.51% 4.44% Efficiency ratio 41.59 42.22 Efficiency ratio, as adjusted (non-GAAP) (2) 41.99 42.84 Return on average assets 2.09 2.07 Return on average common equity 11.09 11.75 (1) See Table 25 for the non-GAAP tabular reconciliation. (2) See Table 29 for the non-GAAP tabular reconciliation. Overview Results of Operations for the Three Months Ended March 31, 2026 and 2025 Our net income increased $3.0 million, or 2.6%, to $118.2 million for the three-month period ended March 31, 2026, from $115.2 million for the same period in 2025. On a diluted earnings per share basis, our earnings were $0.60 per share for the three-month period ended March 31, 2026 compared to $0.58 per share for the three-month period ended March 31, 2025. During the three months ended March 31, 2026, the Company recorded $1.5 million in provision for credit losses on loans, and the Company recorded a $1.0 million recovery of credit losses on unfunded commitments. As a result, total credit loss expense for the three-month period ended March 31, 2026 was $500,000. During the three months ended March 31, 2026, the Company recorded $1.7 million in income from an FDIC special assessment credit, $1.2 million in expense from the fair value adjustment for marketable securities and $394,000 in merger and acquisition expense. Total interest expense decreased $10.8 million, or 11.0%. This was partially offset by a $2.6 million, or 5.8%, decrease in non-interest income, a $1.5 million, or 0.5%, decrease in total interest income and a $1.0 million, or 0.9%, increase in non-interest expense. The decrease in interest expense was primarily due to a $7.6 million, or 8.8%, decrease in interest on deposits, a $1.8 million, or 42.9%, decrease in interest on subordinated debentures, and a $1.2 million, or 20.5%, decrease in interest on FHLB and other borrowed funds. The decrease in non-interest income was primarily due to a $2.3 million, or 20.5%, decrease in other income, a $1.7 million, or 382.4%, decrease in fair value adjustment for marketable securities and an $879,000, or 8.2%, decrease in other service charges and fees, which was partially offset by a $1.1 million, or 288.0%, increase in gain (loss) on OREO. Included within March 31, 2025 other income was $3.9 million in special income from equity investments. The decrease in interest income resulted from a $2.5 million, or 7.2%, decrease in investment interest income and a $1.7 million, or 25.3%, decrease in interest income on deposits at other banks, which were partially offset by a $2.7 million, or 1.0%, increase in loan interest income. The increase in non-interest expense was primarily due to a $1.4 million, or 2.2%, increase in salaries and employee benefits expense, $442,000, or 3.1%, increase in occupancy and equipment expense, $394,000 in merger and acquisition expense in the first quarter of 2026 compared to none in the prior year period, and a $326,000, or 3.8%, increase in data processing expense. These expenses were partially offset by a $1.5 million, or 5.33%, decrease in other operating expenses. Included within other operating expenses was the $1.7 million in FDIC special assessment credits. Our net interest margin increased from 4.44% for the three-month period ended March 31, 2025 to 4.51% for the three-month period ended March 31, 2026. The yield on interest earning assets decreased from 6.45% for the three-months ended March 31, 2025 to 6.25% for the three-months ended March 31, 2026, and average interest earning assets increased from $19.83 billion to $20.35 billion. The increase in average interest earning assets is primarily due to a $786.7 million increase in average loans receivable, partially offset by a $203.5 million decrease in average investment securities and a $54.5 million decrease in average interest-bearing balances due from banks. For the three months ended March 31, 2026 and 2025, we recognized $1.1 million and $1.4 million, respectively, in total net accretion for acquired loans and deposits. We recognized no event income for the three-months ended March 31, 2026 compared to $1.3 million for the three-months ended March 31, 2025. The cost of interest bearing liabilities decreased from 2.76% for the three-months ended March 31, 2025 to 2.42% for the three-months ended March 31, 2026, and average interest-bearing liabilities increased from $14.40 billion to $14.60 billion. The increase in average interest-bearing liabilities is primarily due to a $460.3 million increase in average interest-bearing deposits, which was partially offset by a $159.8 million decrease in average subordinated debentures and a $100.4 million decrease in FHLB and other borrowed funds. The reduction in subordinated debentures was due to the Company completing the payoff of its $140.0 million 5.50% Fixed-to-Floating Rate Subordinated Notes due 2030 and the Company also repurchasing $20.0 million of its $300.0 million Fixed-to-Floating Rate Subordinated Notes due 2032 during the third quarter of 2025. The two payoff events were accretive to the net interest margin by approximately four basis points. The overall increase in the net interest margin was due to an increase in interest income resulting from the increase in the average balance of interest-earning assets and a decrease in interest expense resulting from a decrease in interest rates paid on interest-bearing liabilities, which were partially offset by a decrease in interest income due to a reduction in asset yields and an increase in interest expense resulting from an increase in the average balance of interest-bearing liabilities. Our efficiency ratio was 41.59% for the three months ended March 31, 2026, compared to 42.22% for the same period in 2025. For the first quarter of 2026, our efficiency ratio, as adjusted (non-GAAP), was 41.99%, compared to 42.84% reported for the first quarter of 2025. (See Table 29 for the non-GAAP tabular reconciliation). Our annualized return on average assets was 2.09% for the three months ended March 31, 2026, compared to 2.07% for the same period in 2025. (See Table 26 for the related non-GAAP financial measures and tabular reconciliation). Our annualized return on average common equity was 11.09% and 11.75% for the three months ended March 31, 2026, and 2025, respectively. (See Table 27 for the related non-GAAP financial measures and tabular reconciliation). Financial Condition as of and for the Period Ended March 31, 2026 and December 31, 2025 Our total assets, as of March 31, 2026, increased $319.8 million to $23.20 billion from $22.88 billion reported as of December 31, 2025. Cash and cash equivalents increased $444.6 million for the three months ended March 31, 2026. Our loan portfolio balance decreased to $15.63 billion, as of March 31, 2026, from $15.69 billion at December 31, 2025. The decrease in loans was primarily due to $100.5 million of organic loan decline in our community banking footprint, which was partially offset by $47.9 million of loan growth from our Centennial Commercial Finance Group ("Centennial CFG") franchise. Investment securities decreased by $70.7 million resulting from paydowns and maturities during the first three months of 2026. Total deposits increased $258.3 million to $17.74 billion as of March 31, 2026 from $17.48 billion as of December 31, 2025. Stockholders' equity increased $52.7 million to $4.35 billion as of March 31, 2026, compared to $4.30 billion as of December 31, 2025. The $52.7 million increase in stockholders' equity is primarily associated with the $118.2 million in net income for the three months ended March 31, 2026, partially offset by the $13.5 million in other comprehensive loss, the $41.3 million in shareholder dividends paid and stock repurchases of $13.9 million. Our non-performing loans were $182.1 million, or 1.16% of total loans as of March 31, 2026, compared to $85.0 million, or 0.54% of total loans, as of December 31, 2025. The allowance for credit losses as a percentage of non-performing loans decreased to 163.43% as of March 31, 2026, from 350.17% as of December 31, 2025. As of March 31, 2026, our non-performing assets increased to $224.1 million, or 0.97% of total assets, from $124.8 million, or 0.55% of total assets, as of December 31, 2025. The increase in non-performing loans and assets was primarily due to one loan relationship with a balance of $92.1 million being placed on non-accrual status during the quarter ended March 31, 2026. Critical Accounting Policies and Estimates Overview. We prepare our consolidated financial statements based on the selection of certain accounting policies, generally accepted accounting principles and customary practices in the banking industry. These policies, in certain areas, require us to make significant estimates and assumptions. Our accounting policies are described in detail in the notes to our consolidated financial statements included as part of this document. We consider a policy critical if (i) the accounting estimate requires assumptions about matters that are highly uncertain at the time of the accounting estimate; and (ii) different estimates that could reasonably 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 our financial statements. Using these criteria, we believe that the accounting policies most critical to us are those associated with our lending practices, including the accounting for the allowance for credit losses, foreclosed assets, investments, intangible assets, income taxes and stock options. Credit Losses . We account for credit losses in accordance with ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASC 326" or "CECL"). The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842 on leases. Investments - Available-for-sale . Securities available-for-sale ("AFS") are reported at fair value with unrealized holding gains and losses reported as a separate component of stockholders' equity and other comprehensive income (loss), net of taxes. Securities that are held as available-for-sale are used as a part of our asset/liability management strategy. Securities that may be sold in response to interest rate changes, changes in prepayment risk, the need to increase regulatory capital, and other similar factors are classified as available-for-sale. The Company evaluates all securities quarterly to determine if any securities in a loss position require a provision for credit losses in accordance with ASC 326. The Company first assesses whether it intends to sell or is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income. For securities that do not meet these criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, and 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. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. The Company has made the election to exclude accrued interest receivable on AFS securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance when management believes the uncollectability of a security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Investments - Held-to-Maturity. Debt securities held-to-maturity ("HTM"), which include any security for which we have the positive intent and ability to hold until maturity, are reported at historical cost adjusted for amortization of premiums and accretion of discounts. Premiums and discounts are amortized/accreted to the call date to interest income using the constant effective yield method over the estimated life of the security. The Company evaluates all securities quarterly to determine if any securities in a loss position require a provision for credit losses in accordance with ASC 326. The Company measures expected credit losses on HTM securities on a collective basis by major security type, with each type sharing similar risk characteristics. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Company has made the election to exclude accrued interest receivable on HTM securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance when management believes the uncollectability of a security is confirmed. Loans Receivable and Allowance for Credit Losses . Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding principal balance adjusted for any charge-offs, deferred fees or costs on originated loans. Interest income on loans is accrued over the term of the loans based on the principal balance outstanding. Loan origination fees and direct origination costs are capitalized and recognized as adjustments to yield on the related loans. The allowance for credit losses on loans receivable is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the uncollectability of a loan balance is confirmed and expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. The Company uses the discounted cash flow ("DCF") method to estimate expected losses for all of the Company's loan pools. These pools are as follows: construction & land development; other commercial real estate; residential real estate; commercial & industrial; and consumer & other. The loan portfolio pools were selected in order to generally align with the loan categories specified in the quarterly call reports required to be filed with the Federal Financial Institutions Examination Council. For each of these loan pools, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, probability of default, and loss given default. The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on historical internal data. The Company uses regression analysis of historical internal and peer data to determine suitable loss drivers to utilize when modeling lifetime probability of default and loss given default. This analysis also determines how expected probability of default and loss given default will react to forecasted levels of the loss drivers. For all DCF models, management has determined that four quarters represents a reasonable and supportable forecast period and reverts to a historical loss rate over four quarters on a straight-line basis. Management leverages economic projections from a reputable and independent third party to inform its loss driver forecasts over the four-quarter forecast period. Other internal and external indicators of economic forecasts are also considered by management when developing the forecast metrics. Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions, such as changes in the national unemployment rate, gross domestic product, national retail sales index and the Federal Housing Finance Agency ("FHFA") housing price index. The allowance for credit losses is measured based on call report segment as these types of loans exhibit similar risk characteristics. The identified loan segments are as follows: • 1-4 family residential construction loans • Other construction loans and all land development and other land loans • Loans secured by farmland (including farm residential and other improvements) • Revolving, open-end loans secured by 1-4 family residential properties and extended under lines • Secured by first liens • Secured by junior liens • Secured by multifamily (5 or more) residential properties • Loans secured by owner-occupied, nonfarm nonresidential properties • Loans secured by other nonfarm nonresidential properties • Loans to finance agricultural production and other loans to farmers • Commercial and industrial loans • Other revolving credit plans • Automobile loans • Other consumer loans • Other consumer loans - Shore Premier Finance • Obligations (other than securities and leases) of states and political subdivisions in the US • Loans to nondepository financial institutions • Loans for purchasing or carrying securities • All other loans • Leases Loans considered to be collateral dependent, according to ASC 326, are loans for which repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty based on the Company's assessment as of the reporting date. The aggregate amount of collateral shortfall on such loans is utilized in evaluating the adequacy of the allowance for credit losses and amount of provisions thereto. Losses on collateral dependent loans are charged against the allowance for credit losses when in the process of collection, it appears likely that such losses will be realized. The accrual of interest on collateral dependent loans is discontinued when, in management's opinion the collection of interest is doubtful or generally when loans are 90 days or more past due. When accrual of interest is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Loans evaluated individually that are considered to be collateral dependent are not included in the collective evaluation. For these loans, where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the loan to be provided substantially through the sale of the collateral, the allowance for credit losses is measured based on the difference between the fair value of the collateral, net of estimated costs to sell, and the amortized cost basis of the loan as of the measurement date. When repayment is expected to be from the operation of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the loan exceeds the present value of expected cash flows from the operation of the collateral. The allowance for credit losses may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the loan, net of estimated costs to sell. For individually analyzed loans which are not considered to be collateral dependent, an allowance is recorded based on the loss rate for the respective pool within the collective evaluation. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments and curtailments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: • Management has a reasonable expectation at the reporting date that restructured loans made to borrowers experiencing financial difficulty will be executed with an individual borrower. • The extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company. 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 factors ("Q-Factors") and other qualitative adjustments may increase or decrease management's estimate of expected credit losses by a calculated percentage or amount based upon the estimated level of risk. The various risks that may be considered in making Q-Factor and other qualitative adjustments include, among other things, the impact of (i) changes in lending policies, procedures and strategies; (ii) changes in nature and volume of the portfolio; (iii) staff experience; (iv) changes in volume and trends in classified loans, delinquencies and nonaccruals; (v) concentration risk; (vi) trends in underlying collateral values; (vii) external factors such as competition, legal and regulatory environment; (viii) changes in the quality of the loan review system and (ix) economic conditions. Loans are placed on non-accrual status when management believes that the borrower's financial condition, after giving consideration to economic and business conditions and collection efforts, is such that collection of interest is doubtful, or generally when loans are 90 days or more past due. Loans are charged against the allowance for credit losses when management believes that the collectability of the principal is unlikely. Accrued interest related to non-accrual loans is generally charged against the allowance for credit losses when accrued in prior years and reversed from interest income if accrued in the current year. Interest income on non-accrual loans may be recognized to the extent cash payments are received, although the majority of payments received are usually applied to principal. Non-accrual loans are generally returned to accrual status when principal and interest payments are less than 90 days past due, the customer has made the required payments for at least six months, and we reasonably expect to collect all principal and interest. The Company has purchased loans, some of which have experienced more than insignificant credit deterioration since origination. Purchase credit deteriorated ("PCD") loans are recorded at the amount paid. An allowance for credit losses is determined using the same methodology as other loans. The initial allowance for credit losses determined on a collective basis is allocated to individual loans. The sum of the loan's purchase price and allowance for credit losses becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through the provision for credit loss. Allowance for Credit Losses on Off-Balance Sheet Credit Exposures. The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on off-balance sheet credit exposures is adjusted as a provision for or reversal of credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. Foreclosed Assets Held for Sale . Real estate and personal property acquired through or in lieu of loan foreclosure are to be sold and are initially recorded at fair value at the date of foreclosure, establishing a new cost basis. Valuations are periodically performed by management, and the real estate and personal property are carried at fair value less costs to sell. Gains and losses from the sale of other real estate and personal property are recorded in non-interest income, and expenses used to maintain the properties are included in non-interest expenses. Intangible Assets . Intangible assets consist of goodwill and core deposit intangibles. Goodwill represents the excess purchase price over the fair value of net assets acquired in business acquisitions. The core deposit intangible represents the excess intangible value of acquired deposit customer relationships as determined by valuation specialists. The core deposit intangibles are being amortized over 48 months to 120 months on a straight-line basis. Goodwill is not amortized but rather is evaluated for impairment on at least an annual basis. We perform an annual impairment test of goodwill and core deposit intangibles as required by FASB ASC 350, Intangibles - Goodwill and Other , in the fourth quarter or more often if events and circumstances indicate there may be an impairment. Income Taxes . We account for income taxes in accordance with income tax accounting guidance (ASC 740, Income Taxes ). The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. We determine deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax basis of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term "more likely than not" means a likelihood of more than 50 percent; the terms "examined" and "upon examination" also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances and information available at the reporting date and is subject to the management's judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized. Both we and our subsidiary file consolidated tax returns. Our subsidiary provides for income taxes on a separate return basis, and remits to us amounts determined to be currently payable. Stock Compensation . In accordance with FASB ASC 718, Compensation - Stock Compensation , and FASB ASC 505-50, Equity-Based Payments to Non-Employees , the fair value of each option award is estimated on the date of grant. We recognize compensation expense for the grant-date fair value of the option award over the vesting period of the award. Branches As opportunities arise, we will continue to open new (commonly referred to as de novo ) branches in our current markets and in other attractive market areas. As of March 31, 2026, we had 218 branch locations. There were 75 branches in Arkansas, 78 branches in Florida, 59 branches in Texas, five branches in Alabama and one branch in New York City. Results of Operations For the three months ended March 31, 2026 and 2025 Our net income increased $3.0 million, or 2.6%, to $118.2 million for the three-month period ended March 31, 2026, from $115.2 million for the same period in 2025. On a diluted earnings per share basis, our earnings were $0.60 per share for the three-month period ended March 31, 2026 compared to $0.58 per share for the three-month period ended March 31, 2025. During the three months ended March 31, 2026, the Company recorded $1.5 million in provision for credit losses on loans, and the Company recorded a $1.0 million recovery of credit losses on unfunded commitments. As a result, total credit loss expense for the three-month period ended March 31, 2026 was $500,000. During the three months ended March 31, 2026, the Company recorded $1.7 million in income from an FDIC special assessment credit, $1.2 million in expense from the fair value adjustment for marketable securities and $394,000 in merger and acquisition expense. Net Interest Income Net interest income, our principal source of earnings, is the difference between the interest income generated by earning assets and the total interest cost of the deposits and borrowings obtained to fund those assets. Factors affecting the level of net interest income include the volume of earning assets and interest-bearing liabilities, yields earned on loans and investments, rates paid on deposits and other borrowings, the level of non-performing loans and the amount of non-interest-bearing liabilities supporting earning assets. Net interest income is analyzed in the discussion and tables below on a fully taxable equivalent basis. The adjustment to convert certain income to a fully taxable equivalent basis consists of dividing tax-exempt income by one minus the combined federal and state income tax rate (24.359% and 24.433% for 2026 and 2025, respectively). The Federal Reserve Board sets various benchmark rates, including the Federal Funds rate, and thereby influences the general market rates of interest, including the deposit and loan rates offered by financial institutions. The Federal Reserve reduced the target rate three times during 2025. First, on September 17, 2025, the Federal Reserve reduced the target rate to 4.00% to 4.25%, second, on October 29, 2025, the target rate was reduced to 3.75% to 4.00% and third, on December 10, 2025, the target rate was reduced to 3.50% to 3.75%. The Federal Reserve has not changed the target rate during 2026. Our net interest margin increased from 4.44% for the three-month period ended March 31, 2025 to 4.51% for the three-month period ended March 31, 2026. The yield on interest earning assets decreased from 6.45% for the three-months ended March 31, 2025 to 6.25% for the three-months ended March 31, 2026, and average interest earning assets increased from $19.83 billion to $20.35 billion. The increase in average interest earning assets is primarily due to a $786.7 million increase in average loans receivable, partially offset by a $203.5 million decrease in average investment securities and a $54.5 million decrease in average interest-bearing balances due from banks. For the three months ended March 31, 2026 and 2025, we recognized $1.1 million and $1.4 million, respectively, in total net accretion for acquired loans and deposits. We recognized no event income for the three-months ended March 31, 2026 compared to $1.3 million for the three-months ended March 31, 2025. The cost of interest bearing liabilities decreased from 2.76% for the three-months ended March 31, 2025 to 2.42% for the three-months ended March 31, 2026, and average interest-bearing liabilities increased from $14.40 billion to $14.60 billion. The increase in average interest-bearing liabilities is primarily due to a $460.3 million increase in average interest-bearing deposits, which was partially offset by a $159.8 million decrease in average subordinated debentures and a $100.4 million decrease in FHLB and other borrowed funds. The reduction in subordinated debentures was due to the Company completing the payoff of its $140.0 million 5.50% Fixed-to-Floating Rate Subordinated Notes due 2030 and the Company also repurchasing $20.0 million of its $300.0 million Fixed-to-Floating Rate Subordinated Notes due 2032 during the third quarter of 2025. The two payoff events were accretive to the net interest margin by approximately four basis points. The overall increase in the net interest margin was due to an increase in interest income resulting from the increase in the average balance of interest-earning assets and a decrease in interest expense resulting from a decrease in interest rates paid on interest-bearing liabilities, which were partially offset by a decrease in interest income due to a reduction in asset yields and an increase in interest expense resulting from an increase in the average balance of interest-bearing liabilities. Net interest income on a fully taxable equivalent basis increased $9.4 million, or 4.3%, to $226.6 million for the three-month period ended March 31, 2026, from $217.2 million for the same period in 2025. This increase in net interest income for the three-month period ended March 31, 2026 was the result of a $10.8 million decrease in interest expense, which was partially offset by a $1.4 million decrease in interest income, on a fully taxable equivalent basis. The $10.8 million decrease in interest expense is primarily the result of the lower interest rate environment. The lower rates on interest bearing liabilities resulted in a decrease in interest expense of approximately $11.1 million, partially offset by an increase in average interest bearing liabilities which increased interest expense by approximately $347,000. The $1.4 million decrease in interest income was also primarily the result of the lower interest rate environment. The lower yield on earning assets resulted in a decrease in interest income of approximately $13.1 million, which was partially offset by an increase of $11.7 million in interest income due to the change in average interest earning asset balances. Tables 2 and 3 reflect an analysis of net interest income on a fully taxable equivalent basis for the three months ended March 31, 2026 and 2025, as well as changes in the fully taxable equivalent net interest margin for the three months ended March 31, 2026 compared to the same period in 2025. Table 2: Analysis of Net Interest Income Three Months Ended March 31, 2026 2025 (Dollars in thousands) Interest income $ 311,023 $ 312,542 Fully taxable equivalent adjustment 2,661 2,534 Interest income - fully taxable equivalent 313,684 315,076 Interest expense 87,119 97,886 Net interest income - fully taxable equivalent $ 226,565 $ 217,190 Yield on earning assets - fully taxable equivalent 6.25 % 6.45 % Cost of interest-bearing liabilities 2.42 2.76 Net interest spread - fully taxable equivalent 3.83 3.69 Net interest margin - fully taxable equivalent 4.51 4.44 Table 3: Changes in Fully Taxable Equivalent Net Interest Margin Three Months Ended March 31, 2026 vs. 2025 (In thousands) Increase in interest income due to change in earning assets $ 11,716 Decrease in interest income due to change in earning asset yields (13,108) Increase in interest expense due to change in interest-bearing liabilities (347) Decrease in interest expense due to change in interest rates paid on interest-bearing liabilities 11,114 Increase in net interest income $ 9,375 Table 4 shows, for each major category of earning assets and interest-bearing liabilities, the average amount outstanding, the interest income or expense on that amount and the average rate earned or expensed for the three months ended March 31, 2026 and 2025, respectively. The table also shows the average rate earned on all earning assets, the average rate expensed on all interest-bearing liabilities, the net interest spread and the net interest margin for the same periods. The analysis is presented on a fully taxable equivalent basis. Non-accrual loans were included in average loans for the purpose of calculating the rate earned on total loans. Table 4: Average Balance Sheets and Net Interest Income Analysis Three Months Ended March 31, 2026 2025 Average Balance Income / Expense Yield / Rate Average Balance Income / Expense Yield / Rate (Dollars in thousands) ASSETS Earnings assets Interest-bearing balances due from banks $ 557,451 $ 4,945 3.60 % $ 611,962 $ 6,620 4.39 % Federal funds sold 5,282 48 3.69 5,091 55 4.38 Investment securities - taxable 2,935,901 24,728 3.42 3,179,290 27,433 3.50 Investment securities - non-taxable 1,175,663 10,285 3.55 1,135,783 10,061 3.59 Loans receivable 15,680,598 273,678 7.08 14,893,912 270,907 7.38 Total interest-earning assets 20,354,895 313,684 6.25 % 19,826,038 315,076 6.45 % Non-earning assets 2,599,546 2,722,797 Total assets $ 22,954,441 $ 22,548,835 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Interest-bearing liabilities Savings and interest-bearing transaction accounts $ 11,868,976 $ 64,408 2.20 % $ 11,402,688 69,672 2.48 % Time deposits 1,795,501 14,737 3.33 1,801,503 17,114 3.85 Total interest-bearing deposits 13,664,477 79,145 2.35 13,204,191 86,786 2.67 Securities sold under agreement to repurchase 151,877 927 2.48 155,861 1,074 2.79 FHLB and other borrowed funds 500,250 4,692 3.80 600,681 5,902 3.98 Subordinated debentures 279,350 2,355 3.42 439,173 4,124 3.81 Total interest-bearing liabilities 14,595,954 87,119 2.42 % 14,399,906 97,886 2.76 % Non-interest-bearing liabilities Non-interest-bearing deposits 3,856,492 3,980,944 Other liabilities 177,275 190,314 Total liabilities 18,629,721 18,571,164 Stockholders' equity 4,324,720 3,977,671 Total liabilities and stockholders' equity $ 22,954,441 $ 22,548,835 Net interest spread 3.83 % 3.69 % Net interest income and margin $ 226,565 4.51 % $ 217,190 4.44 % Table 5 shows changes in interest income and interest expense resulting from changes in volume and changes in interest rates for the three months ended March 31, 2026 compared to the same period in 2025, on a fully taxable basis. The changes in interest rate and volume have been allocated to changes in average volume and changes in average rates, in proportion to the relationship of absolute dollar amounts of the changes in rates and volume. Table 5: Volume/Rate Analysis Three Months Ended March 31, 2026 over 2025 Volume Yield / Rate Total (In thousands) Increase (decrease) in: Interest income: Interest-bearing balances due from banks $ (555) $ (1,120) $ (1,675) Federal funds sold 2 (9) (7) Investment securities - taxable (2,062) (643) (2,705) Investment securities - non-taxable 350 (126) 224 Loans receivable 13,981 (11,210) 2,771 Total interest income 11,716 (13,108) (1,392) Interest expense: Interest-bearing transaction and savings deposits 2,764 (8,028) (5,264) Time deposits (57) (2,320) (2,377) Securities sold under agreement to repurchase (27) (120) (147) FHLB and other borrowed funds (952) (258) (1,210) Subordinated debentures (1,381) (388) (1,769) Total interest expense 347 (11,114) (10,767) Increase (decrease) in net interest income $ 11,369 $ (1,994) $ 9,375 Provision for Credit Losses Credit Loss Expense : During the three months ended March 31, 2026, the Company recorded $1.5 million in provision for credit losses on loans, and the Company recorded a $1.0 million recovery of credit losses on unfunded commitments. As a result, total credit loss expense for the three-month period ended March 31, 2026 was $500,000. During the three months ended March 31, 2026, the Company determined no allowance for credit losses on the available-for-sale portfolio was necessary. The Company also determined the $2.0 million allowance for credit losses on the held-to-maturity portfolio was adequate. Therefore, no provision was considered necessary for either portfolio. During the three months ended March 31, 2025, the Company did not record a provision for credit losses on loans primarily due to the $4.1 million in net recoveries experienced during the quarter. After considering the recoveries, management determined the level of the allowance for credit losses on loans was adequate. In addition, management determined that a provision was not necessary for the unfunded commitments as the current level of the reserve was considered adequate. During the three months ended March 31, 2025, the Company determined the $2.2 million allowance for credit losses on the available for sale portfolio and the $2.0 million allowance for credit losses on the held-to-maturity portfolio was adequate. Therefore, no additional provision was considered necessary. Net charge-offs (recoveries) to average total loans were 0.04% and (0.11)% for the three months ended March 31, 2026 and 2025, respectively. Non-Interest Income Total non-interest income was $42.8 million for the three months ended March 31, 2026, compared to $45.4 million for the same period in 2025. Our recurring non-interest income includes service charges on deposit accounts, other service charges and fees, trust fees, mortgage lending income, insurance commissions, increase in cash value of life insurance, fair value adjustment for marketable securities and dividends. Table 6 measures the various components of our non-interest income for the three months ended March 31, 2026 and 2025. Table 6: Non-Interest Income Three Months Ended March 31, 2026 Change from 2025 2026 2025 (Dollars in thousands) Service charges on deposit accounts $ 10,007 $ 9,650 $ 357 3.7 % Other service charges and fees 9,810 10,689 (879) (8.2) Trust fees 5,482 4,760 722 15.2 Mortgage lending income 4,430 3,599 831 23.1 Insurance commissions 536 535 1 0.2 Increase in cash value of life insurance 1,368 1,842 (474) (25.7) Dividends from FHLB, FRB, FNBB & other 2,536 2,718 (182) (6.7) Gain on sale of SBA loans 80 288 (208) (72.2) Loss on sale of branches, equipment and other assets, net (7) (163) 156 95.7 Gain (loss) on OREO, net 707 (376) 1,083 288.0 Fair value adjustment for marketable securities (1,248) 442 (1,690) (382.4) Other income 9,102 11,442 (2,340) (20.5) Total non-interest income $ 42,803 $ 45,426 $ (2,623) (5.8) % Non-interest income decreased $2.6 million, or 5.8%, to $42.8 million for the three months ended March 31, 2026 from $45.4 million for the same period in 2025. The primary factors in this decrease were the decreases in other service charges and fees, fair value adjustment for marketable securities and other income, which were partially offset by the increases in trust fees, mortgage lending income and the gain on OREO, net. Additional details for the three months ended March 31, 2026 on some of the more significant changes are as follows: • The $879,000 decrease in other service charges and fees is primarily related to a decrease in Centennial CFG property finance loan fees. • The $722,000 increase in trust fees is primarily due to an increase in personal trust and IRA fees. • The $831,000 increase in mortgage lending income is primarily due to an increase in volume of secondary market loans. • The $1.1 million increase in gain on OREO, net is primarily due to the gain on the sale of a building from our Florida region in 2026 and the loss on the sale of a building from our Florida region during 2025. • The $1.7 million decrease in the fair value adjustment for marketable securities is due to market fluctuations. • The $2.3 million decrease in other income is primarily due to a $3.6 million decrease in income from the fair value of equity securities and a $923,000 decrease in recoveries on historic losses, partially offset by a $1.9 million increase in miscellaneous income primarily from various tax refunds. Non-Interest Expense Non-interest expense consists of salaries and employee benefits, occupancy and equipment, data processing, merger and acquisition and other expenses such as advertising, amortization of intangibles, electronic banking expense, FDIC and state assessment, insurance, legal and accounting fees, other professional fees and other expenses. Table 7 below sets forth a summary of non-interest expense for the three months ended March 31, 2026 and 2025. Table 7: Non-Interest Expense Three Months Ended March 31, 2026 Change from 2025 2026 2025 (Dollars in thousands) Salaries and employee benefits $ 63,236 $ 61,855 $ 1,381 2.2 % Occupancy and equipment 14,867 14,425 442 3.1 Data processing expense 8,884 8,558 326 3.8 Merger and acquisition expenses 394 - 394 100.0 Other operating expenses: Advertising 2,227 1,928 299 15.5 Amortization of intangibles 1,938 2,047 (109) (5.3) Electronic banking expense 3,326 3,055 271 8.9 Directors' fees 518 452 66 14.6 Due from bank service charges 333 281 52 18.5 FDIC and state assessment 1,599 3,387 (1,788) (52.8) Insurance 1,074 999 75 7.5 Legal and accounting 914 3,641 (2,727) (74.9) Other professional fees 1,946 1,947 (1) (0.1) Operating supplies 748 711 37 5.2 Postage 543 503 40 8.0 Telephone 363 436 (73) (16.7) Other expense 11,065 8,703 2,362 27.1 Total non-interest expense $ 113,975 $ 112,928 $ 1,047 0.9 % Non-interest expense increased $1.0 million, or 0.9%, to $114.0 million for the three months ended March 31, 2026 from $112.9 million for the same period in 2025. The primary factors that resulted in this increase were the increases in salaries and employee benefits and in other expenses, which were partially offset by the decreases in FDIC and state assessment expense and legal and accounting expense. Additional details for the three months ended March 31, 2026 on some of the more significant changes are as follows: • The $1.4 million increase in salaries and employee benefits expense is primarily due to an increase in incentive compensation as a result of an increase in revenue for the Company combined with the additional costs of doing business, partially offset by a decrease in deferred loan costs. • The $1.8 million decrease in FDIC and state assessment expense is primarily due to a re-evaluation of our liability after Silicon Valley and Signature Bank failures which resulted in a $1.7 million special assessment credit. • The $2.7 million decrease in legal and accounting expense is primarily due to legal matters which occurred during 2025. • The $2.4 million increase in other expense is primarily due to increases in OREO expense, collection expense, GoldStar Trust storage fees and reimbursable loan fees. Income Taxes Income tax expense increased $2.1 million, or 6.5%, to $34.0 million for the three-month period ended March 31, 2026, from $31.9 million for the same period in 2025. The effective income tax rate was 22.35% for the three months ended March 31, 2026, compared to 21.71% for the same period in 2025. The marginal tax rate was 24.359% and 24.433% for 2026 and 2025, respectively. Financial Condition as of and for the Period Ended March 31, 2026 and December 31, 2025 Our total assets, as of March 31, 2026, increased $319.8 million to $23.20 billion from $22.88 billion reported as of December 31, 2025. Cash and cash equivalents increased $444.6 million for the three months ended March 31, 2026. Our loan portfolio balance decreased to $15.63 billion, as of March 31, 2026, from $15.69 billion at December 31, 2025. The decrease in loans was primarily due to $100.5 million of organic loan decline in our community banking footprint, which was partially offset by $47.9 million of loan growth from our Centennial CFG franchise. Investment securities decreased by $70.7 million resulting from paydowns and maturities during the first three months of 2026. Total deposits increased $258.3 million to $17.74 billion as of March 31, 2026 from $17.48 billion as of December 31, 2025. Stockholders' equity increased $52.7 million to $4.35 billion as of March 31, 2026, compared to $4.30 billion as of December 31, 2025. The $52.7 million increase in stockholders' equity is primarily associated with the $118.2 million in net income for the three months ended March 31, 2026, partially offset by the $13.5 million in other comprehensive loss, the $41.3 million in shareholder dividends paid and stock repurchases of $13.9 million. Loan Portfolio Loans Receivable Our loan portfolio averaged $15.68 billion and $14.89 billion during the three months ended March 31, 2026 and 2025, respectively. Loans receivable were $15.63 billion and $15.69 billion as of March 31, 2026 and December 31, 2025, respectively. From December 31, 2025 to March 31, 2026, the Company experienced a decline of approximately $52.6 million in loans. The decrease in loans was due to $100.5 million of organic loan decline in our community banking footprint partially offset by $47.9 million of loan growth from our Centennial CFG franchise. The most significant components of the loan portfolio were commercial real estate, residential real estate, consumer and commercial and industrial loans. These loans are generally secured by residential or commercial real estate or business or personal property. Although these loans are primarily originated within our franchises in Arkansas, Florida, Texas, Alabama and Centennial CFG, the property securing these loans may not physically be located within our market areas of Arkansas, Florida, Texas, Alabama and New York. Loans receivable were approximately $3.74 billion, $4.47 billion, $3.89 billion, $102.4 million, $1.37 billion and $2.06 billion as of March 31, 2026 in Arkansas, Florida, Texas, Alabama, SPF and Centennial CFG, respectively. Table 8 presents our loans receivable balances by category as of March 31, 2026 and December 31, 2025. Table 8: Loans Receivable March 31, 2026 December 31, 2025 (In thousands) Real estate: Commercial real estate loans: Non-farm/non-residential $ 5,395,529 $ 5,290,112 Construction/land development 2,613,604 2,726,993 Agricultural 321,046 332,412 Residential real estate loans: Residential 1-4 family 2,100,374 2,134,334 Multifamily residential 1,232,639 1,140,911 Total real estate 11,663,192 11,624,762 Consumer 1,254,936 1,253,746 Commercial and industrial 2,172,267 2,222,401 Agricultural 329,563 359,879 Other 213,670 225,421 Total loans receivable $ 15,633,628 $ 15,686,209 Commercial Real Estate Loans. We originate non-farm and non-residential loans (primarily secured by commercial real estate), construction/land development loans, and agricultural loans, which are generally secured by real estate located in our market areas. Our commercial mortgage loans are generally collateralized by first liens on real estate and amortized (where defined) over a 15 to 30-year period with balloon payments due at the end of one to five years. These loans are generally underwritten by assessing cash flow (debt service coverage), primary and secondary source of repayment, the financial strength of the borrower as well as any guarantors, the strength of the tenant (if any), the borrower's liquidity and leverage, management experience, ownership structure, economic conditions and industry specific trends and collateral. Generally, we will loan up to 85% of the value of improved property, 65% of the value of raw land and 75% of the value of land to be acquired and developed. A first lien on the property and assignment of lease is required if the collateral is rental property, with second lien positions considered on a case-by-case basis. As of March 31, 2026, commercial real estate ("CRE") loans totaled $8.33 billion, or 53.3%, of loans receivable, as compared to $8.35 billion, or 53.2%, of loans receivable, as of December 31, 2025. CRE loans originated in our Arkansas, Florida, Texas, Alabama, SPF and Centennial CFG markets were $2.25 billion, $2.65 billion, $1.93 billion, $50.7 million, zero and $1.45 billion at March 31, 2026, respectively. As of March 31, 2026, we had approximately $1.21 billion of construction/land development loans which were collateralized by land. This consisted of approximately $40.8 million for raw land and approximately $1.17 billion for land with commercial and/or residential lots. Table 9 presents the composition of the funded and unfunded balances of our CRE portfolio by loan type, as of March 31, 2026 and December 31, 2025, and their respective percentages of our total CRE portfolio. Table 9: CRE Loan Concentrations March 31, 2026 Funded Balance % of CRE Loans Unfunded Balance % of CRE Loans (Dollars in thousands) Non-Farm/Non-Residential: Single Purpose Building $ 731,761 8.8 % $ 71,465 3.5 % Office Building 1,020,084 12.2 92,249 4.6 Hotel 1,159,064 13.9 17,457 0.9 Industrial 382,385 4.6 51,043 2.5 Retail 517,005 6.2 18,757 0.9 Owner-Occupied (1) 1,585,230 19.1 112,141 5.5 Construction/Land Development: Construction Residential-Spec 299,216 3.6 251,699 12.4 Residential Land Development 392,666 4.7 88,765 4.4 Construction Commercial 257,434 3.1 277,664 13.8 Construction Multi Family 457,385 5.5 495,744 24.5 Commercial Land Development 775,451 9.3 96,973 4.8 Construction Residential-Presold 286,660 3.4 168,811 8.3 Construction Hotel 103,645 1.2 258,177 12.7 Raw Land 41,147 0.5 586 - Agricultural (1) 321,046 3.9 24,165 1.2 Total Commercial Real Estate (2) $ 8,330,179 100.0 % $ 2,025,696 100.0 % December 31, 2025 Funded Balance % of CRE Loans Unfunded Balance % of CRE Loans (Dollars in thousands) Non-Farm/Non-Residential: Single Purpose Building $ 706,177 8.5 % $ 71,063 3.3 % Office Building 1,008,629 12.1 96,027 4.4 Hotel 1,160,378 13.9 13,105 0.6 Industrial 310,376 3.7 36,695 1.7 Retail 503,907 6.0 16,513 0.8 Owner-Occupied (1) 1,600,645 19.2 113,429 5.2 Construction/Land Development: Construction Residential-Spec 403,058 4.8 289,133 13.2 Residential Land Development 414,542 5.0 168,976 7.7 Construction Commercial 267,719 3.2 309,536 14.1 Construction Multi Family 546,607 6.5 500,520 22.9 Commercial Land Development 777,853 9.3 115,489 5.3 Construction Residential-Presold 180,721 2.2 146,770 6.7 Construction Hotel 94,712 1.1 280,314 12.8 Raw Land 41,781 0.5 610 - Agricultural (1) 332,412 4.0 27,869 1.3 Total Commercial Real Estate (2) $ 8,349,517 100.0 % $ 2,186,049 100.0 % (1) Agriculture real estate loans and owner-occupied non-farm non-residential loans are not included within CRE for regulatory reporting purposes. (2) Excludes multi-family residential loans of $1.23 billion and $1.14 billion as of March 31, 2026 and December 31, 2025, respectively, which are included in the residential real estate loans throughout the filing. Multi-family residential loans are included in CRE for regulatory purposes. Table 10 presents the composition of our CRE loan portfolio by the ten largest geographical locations of the collateral as of March 31, 2026 and December 31, 2025. Table 10: Geographical Locations of CRE Loans (In thousands) Florida Texas Arkansas New York California Georgia Alabama Utah Tennessee Pennsylvania All Other Total As of March 31, 2026 Non-Farm/Non-Residential: Single Purpose Building $ 248,110 $ 160,521 $ 228,779 $ - $ 600 $ 12,184 $ 7,550 $ - $ 5,059 $ - $ 68,958 $ 731,761 Office Building 268,496 403,201 62,019 611 17,577 130,322 1,292 - - 18,633 117,933 1,020,084 Hotel 593,012 289,307 117,382 4,982 - 24,006 17,583 - - - 112,792 1,159,064 Industrial 53,822 188,320 56,854 - 52,135 - 29,491 - - - 1,763 382,385 Retail 132,850 235,937 39,341 - 35,952 692 11,655 - 397 - 60,181 517,005 Owner-Occupied (1) 442,252 494,100 356,974 - 6,511 17,050 28,840 - 6,532 77,521 155,450 1,585,230 Construction/Land Development: Construction Residential - Spec 145,347 101,691 35,430 - - - 474 - - - 16,274 299,216 Residential Land Development 147,986 88,678 47,865 - - 168 2,234 76,741 3,610 - 25,384 392,666 Construction Commercial 57,199 34,071 83,957 23,511 - - 20,234 14,637 14,918 - 8,907 257,434 Construction Multi Family 237,447 - 15,317 - 27,719 - - - 36,874 276 139,752 457,385 Commercial Land Development 202,380 63,343 25,710 148,358 112,180 19,352 17,037 38,340 11,616 - 137,135 775,451 Construction Residential - Presold 55,631 94,620 17,925 116,580 - - 1,904 - - - - 286,660 Construction Hotel 2,847 16,428 - - - - 17,148 - 19,429 - 47,793 103,645 Raw Land 10,632 11,178 18,711 - - - 242 - 195 - 189 41,147 Agricultural (1) 48,736 138,058 115,079 - - - 2,226 - - - 16,947 321,046 Total Commercial Real Estate (2) $ 2,646,747 $ 2,319,453 $ 1,221,343 $ 294,042 $ 252,674 $ 203,774 $ 157,910 $ 129,718 $ 98,630 $ 96,430 $ 909,458 $ 8,330,179 (In thousands) Florida Texas Arkansas New York California Georgia Alabama Utah Pennsylvania Tennessee All Other Total As of December 31, 2025 Non-Farm/Non-Residential: Single Purpose Building $ 221,682 $ 165,311 $ 227,874 $ - $ 600 $ 12,229 $ 7,554 $ - $ - $ 5,071 $ 65,856 $ 706,177 Office Building 256,836 404,755 64,001 622 17,562 130,687 9,086 - 19,229 - 105,851 1,008,629 Hotel 602,220 267,493 118,862 4,999 - 24,083 17,812 - - - 124,909 1,160,378 Industrial 60,891 148,448 35,640 - 20,751 - 42,875 - - - 1,771 310,376 Retail 140,082 241,732 41,756 - 35,936 1,022 11,760 - - 406 31,213 503,907 Owner-Occupied (1) 455,897 499,183 351,471 - 6,557 17,732 27,131 - 79,608 6,262 156,804 1,600,645 Construction/Land Development: - Construction Residential - Spec 136,751 103,726 41,319 118,698 - - 91 - - - 2,473 403,058 Residential Land Development 140,163 89,286 46,114 - 27,315 171 1,583 76,741 - 3,615 29,554 414,542 Construction Commercial 48,964 40,140 71,385 22,775 31,017 - 16,701 14,637 - 13,011 9,089 267,719 Construction Multi Family 289,314 508 924 104,942 - - - - 267 32,923 117,729 546,607 Commercial Land Development 194,889 70,052 26,108 121,137 119,335 19,133 15,749 38,332 - 11,640 161,478 777,853 Construction Residential - Presold 62,595 96,170 19,626 - - - 2,330 - - - - 180,721 Construction Hotel 2,424 32,064 - - - - 13,549 - - 18,813 27,862 94,712 Raw Land 10,581 10,618 20,158 - - - 232 - - - 192 41,781 Agricultural (1) 47,080 149,162 116,396 - - - 2,297 - - - 17,477 332,412 Total Commercial Real Estate (2) $ 2,670,369 $ 2,318,648 $ 1,181,634 $ 373,173 $ 259,073 $ 205,057 $ 168,750 $ 129,710 $ 99,104 $ 91,741 $ 852,258 $ 8,349,517 (1) Agriculture real estate loans and owner-occupied non-farm non-residential loans are not included within CRE for regulatory reporting purposes. (2) Excludes multi-family residential loans of $1.23 billion and $1.14 billion as of March 31, 2026 and December 31, 2025, respectively, which are included in the residential real estate loans throughout the filing. Multi-family residential loans are included in CRE for regulatory purposes. Our loan policy states that in order to achieve a well-balanced, diversified credit portfolio, concentrations containing inappropriate or excessive risk are to be avoided. It is the goal of the Company to maintain a prudent diversification of loans. We define a concentration of credit as direct or indirect obligations according to the following guidelines: (i) concentrations of 25% or more of total risk-based capital by individual borrower, small, interrelated group of individuals, single repayment source or individual project; (ii) concentrations of 100% or more of total risk-based capital by industry or product line. As of March 31, 2026, we have not met the threshold for the concentration limits. In addition, the Bank's Board of Directors monitors the CRE loan portfolio for concentrations related to geography, industry, and collateral type and determines applicable guidelines. The Chief Lending Officer also reviews the portfolio periodically to determine if any concentrations exist and makes recommendations with respect to setting internal guidelines. The Company also monitors key risk indicators ("KRIs") on a quarterly basis for the overall loan portfolio as well as specific KRIs for the CRE portfolio. The KRIs are tied to the Bank's appetite for credit risk which is reflected in the Bank's credit policy and underwriting criteria. The KRIs related to underwriting include loan downgrades by loan review, loan downgrades to classified levels and loan policy exceptions (loan to value, debt coverage ratio and credit score). The KRIs related to CRE loans include concentrations of construction and land loans, concentrations of total CRE loans, CRE loans in excess of loan to value guidelines and total real estate loans in excess of loan to value guidelines. The results of the KRI analysis are presented to the Bank's Asset Quality Committee on a quarterly basis. Any exceptions to established limits and thresholds are monitored and addressed in a timely manner as required by the Asset Quality Committee. The Company has a CRE strategy and contingency plan which outlines the principles required to adequately manage our CRE exposures. It discusses the inherent risks within CRE lending, as well as the risks unique to specific lending activities and property taxes. In addition, the plan outlines internal limits related to CRE lending, reasoning for operating outside those limits, and provides for a contingency plan to reduce the CRE exposures under adverse economic conditions or other situations where it is deemed necessary to do so. The responsibility for monitoring the CRE Strategy and Contingency Plan, and subsequent reporting to management and the Board of Directors lies with the Chief Lending Officer and the Asset Quality Committee of the Board of Directors. Within the CRE Strategy and Contingency Plan, we established four adverse economic triggers to measure on an ongoing basis to attempt to determine when a change in CRE strategy might be warranted, at least from an external economic perspective. If one or a combination of these triggers have exceeded Board approved thresholds, the Executive Risk Committee will determine which action or combination of actions, if any, to take based on the specific situation. If utilized, the required actions are likely to focus on tightening/loosening of underwriting criteria, potential capital raises or loan distribution actions such as selling or participating loans. However, other action steps may be considered necessary depending upon the specific situation. As of March 31, 2026, the Company believes our current underwriting standards and capital position remain adequate for addressing the risks to our CRE portfolio. Residential Real Estate Loans. We originate one to four family, residential mortgage loans generally secured by property located in our primary market areas. Approximately 58.1% and 34.4% of our residential mortgage loans consist of owner occupied 1-4 family properties and non-owner occupied 1-4 family properties (rental), respectively, as of March 31, 2026, with the remaining 7.5% relating to condominiums and mobile homes. Residential real estate loans generally have a loan-to-value ratio of up to 90%. These loans are underwritten by giving consideration to the borrower's ability to pay, stability of employment or source of income, debt-to-income ratio, credit history and loan-to-value ratio. As of March 31, 2026, residential real estate loans totaled $3.33 billion, or 21.3%, of loans receivable, compared to $3.28 billion, or 20.9%, of loans receivable, as of December 31, 2025. Residential real estate loans originated in our Arkansas, Florida, Texas, Alabama, SPF and Centennial CFG markets were $732.0 million, $1.20 billion, $866.6 million, $39.7 million, zero and $494.2 million at March 31, 2026, respectively. Consumer Loans. Our consumer loans are composed of secured and unsecured loans originated by our bank, the primary portion of which consists of loans to finance United States Coast Guard registered high-end sail and power boats within our SPF division. The performance of consumer loans will be affected by the local and regional economies as well as the rates of personal bankruptcies, job loss, divorce and other individual changes in circumstance. Consumer loans totaled $1.25 billion, or 8.0%, of loans receivable at both March 31, 2026 and December 31, 2025. Consumer loans originated in our Arkansas, Florida, Texas, Alabama, SPF and Centennial CFG markets were $17.3 million, $6.0 million, $7.8 million, $400,000, $1.22 billion and zero at March 31, 2026, respectively. Commercial and Industrial Loans. Commercial and industrial loans are made for a variety of business purposes, including working capital, inventory, equipment and capital expansion. The terms for commercial loans are generally one to seven years. Commercial loan applications must be supported by current financial information of the borrower and, where appropriate, by adequate collateral. Commercial loans are generally underwritten by addressing cash flow (debt service coverage), primary and secondary sources of repayment, the financial strength of the borrower as well as any guarantors, the borrower's liquidity and leverage, management experience, ownership structure, economic conditions and industry specific trends and collateral. The loan to value ratio depends on the type of collateral. Generally, accounts receivable are financed at between 50% and 80% of accounts receivable less than 60 days past due. Inventory financing will range between 50% and 80% (with no work in process) depending on the borrower and nature of inventory. We require a first lien position for those loans. As of March 31, 2026, commercial and industrial loans totaled $2.17 billion, or 13.9%, of loans receivable, compared to $2.22 billion, or 14.2%, of loans receivable, as of December 31, 2025. Commercial and industrial loans originated in our Arkansas, Florida, Texas, Alabama, SPF and Centennial CFG markets were $525.2 million, $585.1 million, $809.0 million, $11.6 million, $148.3 million and $93.1 million at March 31, 2026, respectively. Non-Performing Assets We classify our problem loans into three categories: past due loans, special mention loans and classified loans (accruing and non-accruing). When management determines that a loan is no longer performing, and that collection of interest appears doubtful, the loan is placed on non-accrual status. Loans that are 90 days past due are placed on non-accrual status unless they are adequately secured and there is reasonable assurance of full collection of both principal and interest. Our management closely monitors all loans that are contractually 90 days past due, treated as "special mention" or otherwise classified or on non-accrual status. Purchased loans that have experienced more than insignificant credit deterioration since origination are PCD loans. An allowance for credit losses is determined using the same methodology as other loans. The Company develops separate PCD models for each loan segment with PCD loans not individually analyzed for credit losses. The sum of the loan's purchase price and allowance for credit losses becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a non-credit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through the provision for credit losses. The Company held approximately $51.3 million and $52.2 million in PCD loans, as of March 31, 2026 and December 31, 2025, respectively. Table 11 sets forth information with respect to our non-performing assets as of March 31, 2026 and December 31, 2025. As of these dates, all non-performing restructured loans are included in non-accrual loans. Table 11: Non-performing Assets As of March 31, 2026 As of December 31, 2025 (Dollars in thousands) Non-accrual loans $ 179,639 $ 78,002 Loans past due 90 days or more (principal or interest payments) 2,481 6,980 Total non-performing loans 182,120 84,982 Other non-performing assets Foreclosed assets held for sale, net 40,874 39,831 Other non-performing assets 1,140 - Total other non-performing assets 42,014 39,831 Total non-performing assets $ 224,134 $ 124,813 Allowance for credit losses to non-accrual loans 165.68 % 381.51 % Allowance for credit losses to non-performing loans 163.43 350.17 Non-accrual loans to total loans 1.15 0.50 Non-performing loans to total loans 1.16 0.54 Non-performing assets to total assets 0.97 0.55 Our non-performing loans are comprised of non-accrual loans and accruing loans that are contractually past due 90 days. Our bank subsidiary recognizes income principally on the accrual basis of accounting. When loans are classified as non-accrual, the accrued interest is charged off and no further interest is accrued, unless the credit characteristics of the loan improve. If a loan is determined by management to be uncollectible, the portion of the loan determined to be uncollectible is then charged to the allowance for credit losses. Our non-performing loans were $182.1 million, or 1.16% of total loans as of March 31, 2026, compared to $85.0 million, or 0.54% of total loans, as of December 31, 2025. The allowance for credit losses as a percentage of non-performing loans decreased to 163.43% as of March 31, 2026, from 350.17% as of December 31, 2025. As of March 31, 2026, our non-performing assets increased to $224.1 million, or 0.97% of total assets, from $124.8 million, or 0.55% of total assets, as of December 31, 2025. The increase in non-performing loans and assets was primarily due to one loan relationship with a balance of $92.1 million being placed on non-accrual status during the quarter ended March 31, 2026. Table 12 below shows the non-performing loans and non-performing assets by region as of March 31, 2026 and December 31, 2025: Table 12: Non-performing Assets By Region As of March 31, 2026 (in thousands) Arkansas Florida Texas Alabama Shore Premier Finance Centennial CFG Total Non-accrual loans $ 21,833 $ 25,532 $ 119,333 $ 23 $ 12,131 $ 787 $ 179,639 Loans 90+ days past due 36 1,368 1,077 - - - 2,481 Total non-performing loans $ 21,869 $ 26,900 $ 120,410 $ 23 $ 12,131 $ 787 $ 182,120 Foreclosed assets held for sale 1,638 260 16,164 - - 22,812 40,874 Other non-performing assets - - - - 1,140 - 1,140 Total other non-performing assets $ 1,638 $ 260 $ 16,164 $ - $ 1,140 $ 22,812 $ 42,014 Total non-performing assets $ 23,507 $ 27,160 $ 136,574 $ 23 $ 13,271 $ 23,599 $ 224,134 As of December 31, 2025 (in thousands) Arkansas Florida Texas Alabama Shore Premier Finance Centennial CFG Total Non-accrual loans $ 18,234 $ 24,645 $ 24,234 $ 54 $ 10,048 $ 787 $ 78,002 Loans 90+ days past due 291 1,020 2,383 - 3,286 - 6,980 Total non-performing loans $ 18,525 $ 25,665 $ 26,617 $ 54 $ 13,334 $ 787 $ 84,982 Foreclosed assets held for sale 771 260 15,988 - - 22,812 39,831 Other non-performing assets - - - - - - - Total other non-performing assets $ 771 $ 260 $ 15,988 $ - $ - $ 22,812 $ 39,831 Total non-performing assets $ 19,296 $ 25,925 $ 42,605 $ 54 $ 13,334 $ 23,599 $ 124,813 Debt restructuring generally occurs when a borrower is experiencing, or is expected to experience, financial difficulties in the near term. As a result, we will work with the borrower to prevent further difficulties, and ultimately to improve the likelihood of recovery on the loan. In those circumstances it may be beneficial to restructure the terms of a loan and work with the borrower for the benefit of both parties, versus forcing the property into foreclosure and having to dispose of it in potentially an unfavorable and depressed real estate market. When we have modified the terms of a loan, we usually either reduce the monthly payment and/or interest rate for generally about three to twelve months. For our restructured loans that accrue interest at the time the loan is restructured, it would be a rare exception to have charged-off any portion of the loan. As of March 31, 2026, we had $4.7 million of restructured loans that are in compliance with the modified terms and are not reported as past due or non-accrual. Our Arkansas market contains $2.1 million, our Florida market contains $1.3 million and our Texas market contains $1.3 million of these restructured loans. A loan modification that might not otherwise be considered may be granted. These loans can involve loans remaining on non-accrual, moving to non-accrual, or continuing on an accrual status, depending on the individual facts and circumstances of the borrower. Generally, a non-accrual loan that is restructured remains on non-accrual for a period of three months to demonstrate that the borrower can meet the restructured terms. However, performance prior to the restructuring, or significant events that coincide with the restructuring, are considered in assessing whether the borrower can pay under the new terms and may result in the loan being returned to an accrual status after a shorter performance period. If the borrower's ability to meet the revised payment schedule is not reasonably assured, the loan will remain in a non-accrual status. The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The Company has modified 11 loans over the past 12 months to borrowers experiencing financial difficulty. The pre-modification balance of the loans was $1.2 million, and the ending balance as of March 31, 2026 was $1.1 million. The $1.1 million balance consists of $660,000 of non-accrual loans and $443,000 of current loans as of March 31, 2026. The Company had $220.3 million and $219.4 million in impaired loans (which includes loans individually analyzed for credit losses for which a specific reserve has been recorded, non-accrual loans, loans past due 90 days or more and restructured loans made to borrowers experiencing financial difficulty) for the periods ended March 31, 2026 and December 31, 2025, respectively. As of March 31, 2026, our Arkansas, Florida, Texas, Alabama, SPF and Centennial CFG markets accounted for approximately $27.6 million, $28.2 million, $151.6 million, $23,000, $12.1 million and $787,000 of the impaired loans, respectively. Total foreclosed assets held for sale were $40.9 million as of March 31, 2026, compared to $39.8 million as of December 31, 2025, for an increase of $1.0 million. The foreclosed assets held for sale as of March 31, 2026 are comprised of $1.6 million located in Arkansas, $260,000 located in Florida, $16.2 million located in Texas, zero in Alabama, zero in SPF and $22.8 million in Centennial CFG. The majority of the foreclosed assets held for sale is comprised of two properties. The first is an office building located in Santa Monica, California with a carrying value of $22.8 million. The second is an apartment complex in Gunter, Texas with a carrying value of $15.0 million. These two properties account for $37.8 million of the balance of foreclosed assets held for sale at March 31, 2026. Table 13 shows the summary of foreclosed assets held for sale as of March 31, 2026 and December 31, 2025. Table 13: Foreclosed Assets Held For Sale As of March 31, 2026 As of December 31, 2025 (In thousands) Commercial real estate loans Non-farm/non-residential $ 23,183 $ 23,433 Construction/land development 15,311 15,230 Residential real estate loans Residential 1-4 family 2,380 1,168 Total foreclosed assets held for sale $ 40,874 $ 39,831 Past Due and Non-Accrual Loans Table 14 shows the summary of non-accrual loans as of March 31, 2026 and December 31, 2025: Table 14: Total Non-Accrual Loans As of March 31, 2026 As of December 31, 2025 (In thousands) Real estate: Commercial real estate loans Non-farm/non-residential $ 56,767 $ 21,685 Construction/land development 7,856 5,444 Agricultural 398 489 Residential real estate loans Residential 1-4 family 24,890 24,149 Multifamily residential 11,175 10,925 Total real estate 101,086 62,692 Consumer 12,393 10,326 Commercial and industrial 64,941 3,760 Agricultural & other 1,219 1,224 Total non-accrual loans $ 179,639 $ 78,002 If non-accrual loans had been accruing interest in accordance with the original terms of their respective agreements, interest income of approximately $3.7 million and $1.7 million, respectively, would have been recorded for the three-month periods ended March 31, 2026 and 2025. The interest income recognized on non-accrual loans for the three months ended March 31, 2026 and 2025 was considered immaterial. Table 15 shows the summary of accruing past due loans 90 days or more as of March 31, 2026 and December 31, 2025: Table 15: Loans Accruing Past Due 90 Days or More As of March 31, 2026 As of December 31, 2025 (In thousands) Real estate: Commercial real estate loans Non-farm/non-residential $ 751 $ - Construction/land development 600 405 Residential real estate loans Residential 1-4 family 136 2,321 Total real estate 1,487 2,726 Consumer - 3,290 Commercial and industrial 982 964 Agricultural & Other 12 - Total loans accruing past due 90 days or more $ 2,481 $ 6,980 Our ratio of total loans accruing past due 90 days or more and non-accrual loans to total loans was 1.16% and 0.54% at March 31, 2026 and December 31, 2025, respectively. Allowance for Credit Losses Overview. The allowance for credit losses on loans receivable was $297.6 million at both March 31, 2026 and December 31, 2025. The specific reserve for loans individually analyzed for credit losses was $17.1 million on $189.6 million of individually analyzed loans as of March 31, 2026, compared to a specific reserve of $17.0 million on $186.5 million of individually analyzed loans as of December 31, 2025. The amortized cost balance for loans with a specific allocation decreased from $71.3 million to $71.1 million from December 31, 2025 to March 31, 2026. The allowance for credit losses as a percentage of loans was 1.90% at both March 31, 2026 and December 31, 2025. Loans Collectively Evaluated for Credit Loss. Loans receivable collectively evaluated for credit loss decreased by approximately $55.7 million from $15.50 billion at December 31, 2025 to $15.44 billion at March 31, 2026. The percentage of the allowance for credit losses allocated to loans receivable collectively evaluated for credit loss to the total loans collectively evaluated for credit loss was 1.82% and 1.81% at March 31, 2026 and December 31, 2025, respectively. Charge-offs and Recoveries. For the three months ended March 31, 2026, total charge-offs were $2.8 million and total recoveries were $1.4 million, for a net charge-off position of $1.4 million. For the three months ended March 31, 2025, total charge-offs were $3.5 million and total recoveries were $7.5 million, for a net recovery position of $4.1 million. Table 16 below shows charge-off and recovery detail by region for the three months ended March 31, 2026 and 2025. Table 16: Charge-Off and Recovery Detail By Region For the Three Months Ended March 31, 2026 (in thousands) Arkansas Florida Texas Alabama Shore Premier Finance Centennial CFG Total Charge-offs $ 982 $ 137 $ 1,720 $ 10 $ - $ - $ 2,849 Recoveries (278) (54) (788) (3) (277) - (1,400) Net charge-offs (recoveries) $ 704 $ 83 $ 932 $ 7 $ (277) $ - $ 1,449 For the Three Months Ended March 31, 2025 (in thousands) Arkansas Florida Texas Alabama Shore Premier Finance Centennial CFG Total Charge-offs $ 474 $ 2,480 $ 444 $ 8 $ 53 $ - $ 3,459 Recoveries (228) (117) (6,514) (2) (3) (658) (7,522) Net charge-offs (recoveries) $ 246 $ 2,363 $ (6,070) $ 6 $ 50 $ (658) $ (4,063) Loans partially charged-off are placed on non-accrual status until it is proven that the borrower's repayment ability with respect to the remaining principal balance can be reasonably assured. This is usually established over a period of 6-12 months of timely payment performance. Table 17 shows the allowance for credit losses, charge-offs and recoveries as of and for the three months ended March 31, 2026 and 2025. Table 17: Analysis of Allowance for Credit Losses Three Months Ended March 31, 2026 2025 (Dollars in thousands) Balance, beginning of period $ 297,583 $ 275,880 Loans charged off Real estate: Commercial real estate loans: Non-farm/non-residential 457 2,300 Agricultural 1 - Residential real estate loans: Residential 1-4 family 393 75 Total real estate 851 2,375 Consumer 77 230 Commercial and industrial 1,326 161 Other 595 692 Total loans charged off 2,849 3,458 Recoveries of loans previously charged off Real estate: Commercial real estate loans: Non-farm/non-residential 612 6,160 Construction/land development 20 125 Agricultural 5 - Residential real estate loans: Residential 1-4 family 18 51 Total real estate 655 6,336 Consumer 317 19 Commercial and industrial 191 958 Other 237 209 Total recoveries 1,400 7,522 Net loans charged off (recovered) 1,449 (4,064) Provision for credit loss 1,500 - Ending balance $ 297,634 $ 279,944 Net charge-offs (recoveries) to average loans receivable 0.04 % (0.11) % Allowance for credit losses to total loans 1.90 1.87 Allowance for credit losses to net charge-offs (recoveries) 5,064.82 (1,698.51) Table 18 presents the allocation of allowance for credit losses as of March 31, 2026 and December 31, 2025. Table 18: Allocation of Allowance for Credit Losses As of March 31, 2026 As of December 31, 2025 Allowance Amount % of loans (1) Allowance Amount % of loans (1) (Dollars in thousands) Real estate: Commercial real estate loans: Non-farm/non- residential $ 87,393 34.5 % $ 74,172 33.7 % Construction/land development 49,377 16.7 48,023 17.4 Agricultural residential real estate loans 3,157 2.1 3,048 2.1 Residential real estate loans: Residential 1-4 family 51,602 13.4 46,291 13.6 Multifamily residential 20,381 7.9 26,401 7.3 Total real estate 211,910 74.6 197,935 74.1 Consumer 24,546 8.0 28,993 8.0 Commercial and industrial 55,438 13.9 64,396 14.2 Agricultural 1,733 2.1 1,536 2.3 Other 4,007 1.4 4,723 1.4 Total $ 297,634 100.0 % $ 297,583 100.0 % (1) Percentage of loans in each category to total loans receivable. During the first quarter of 2026, the Company implemented updated allowance for credit loss models as part of the annual model review and challenge process. The allowance calculation called for a higher level of reserves for the CRE portfolio and a corresponding reduction in reserves for the commercial and industrial portfolio as well as the consumer portfolio. Investment Securities Our securities portfolio is the second largest component of earning assets and provides a significant source of revenue. Securities within the portfolio are classified as held-to-maturity, available-for-sale, or trading based on the intent and objective of the investment and the ability to hold to maturity. Fair values of securities are based on quoted market prices where available. If quoted market prices are not available, estimated fair values are based on quoted market prices of comparable securities. The estimated effective duration of our securities portfolio was 4.8 years as of March 31, 2026. Securities held-to-maturity, which include any security for which we have the positive intent and ability to hold until maturity, are reported at historical cost adjusted for amortization of premiums and accretion of discounts. Premiums and discounts are amortized/accreted to the call date to interest income using the constant effective yield method over the estimated life of the security. We had $1.26 billion of held-to-maturity securities at both March 31, 2026 and December 31, 2025. The detail of the held-to-maturity portfolio by carrying amount and percentage of the portfolio at March 31, 2026 and December 31, 2025 can be seen below. Table 19: Held to Maturity Securities March 31, 2026 December 31, 2025 Net Carrying Amount Percentage of Total Net Carrying Amount Percentage of Total (In Thousands) (In Thousands) U.S. government-sponsored enterprises $ 43,912 3.5 % $ 43,841 3.5 % U.S. government-sponsored mortgage-backed securities 112,717 9.0 % 114,813 9.1 % State and political subdivisions 1,100,006 87.5 % 1,100,608 87.4 % Total $ 1,256,635 100.0 % $ 1,259,262 100.0 % Securities available-for-sale are reported at fair value with unrealized holding gains and losses reported as a separate component of stockholders' equity as other comprehensive (loss) income. Securities that may be sold in response to interest rate changes, changes in prepayment risk, the need to increase regulatory capital, and other similar factors are classified as available-for-sale. Available-for-sale securities were $2.80 billion and $2.87 billion as of March 31, 2026 and December 31, 2025, respectively. The detail of the available-for-sale portfolio by estimated fair value and percentage of the portfolio at March 31, 2026 and December 31, 2025 can be seen below. Table 20: Available for Sale Securities March 31, 2026 December 31, 2025 Estimated Fair Value Percentage of Total Estimated Fair Value Percentage of Total (In Thousands) (In Thousands) U.S. government-sponsored enterprises $ 218,971 7.8 % $ 240,782 8.4 % U.S. government-sponsored mortgage-backed securities 1,177,874 42.0 % 1,212,948 42.2 % Private mortgage-backed securities 142,527 5.1 % 145,720 5.1 % Non-government-sponsored asset backed securities 154,826 5.5 % 157,844 5.5 % State and political subdivisions 878,978 31.4 % 887,838 30.9 % Other securities 230,671 8.2 % 226,799 7.9 % Total $ 2,803,847 100.0 % $ 2,871,931 100.0 % During the three months ended March 31, 2026, the Company determined no allowance for credit losses on the available-for-sale portfolio was necessary. The Company also determined the $2.0 million allowance for credit losses on the held-to-maturity portfolio was adequate. Therefore, no provision was considered necessary for either portfolio. See Note 3 to the Condensed Notes to Consolidated Financial Statements for the carrying value and fair value of investment securities. Deposits Our deposits averaged $17.52 billion and $17.19 billion for the three months ended March 31, 2026 and March 31, 2025, respectively. Total deposits were $17.74 billion as of March 31, 2026, and $17.48 billion as of December 31, 2025. Deposits are our primary source of funds. We offer a variety of products designed to attract and retain deposit customers. Those products consist of checking accounts, regular savings deposits, NOW accounts, money market accounts and certificates of deposit. Deposits are gathered from individuals, partnerships and corporations in our market areas. In addition, we obtain deposits from state and local entities and, to a lesser extent, U.S. Government and other depository institutions. Our policy also permits the acceptance of brokered deposits. From time to time, when appropriate in order to fund strong loan demand, we accept brokered time deposits, generally in denominations of less than $250,000, from a regional brokerage firm, and other national brokerage networks. We also participate in the One-Way Buy Insured Cash Sweep ("ICS") service and similar services, which provide for one-way buy transactions among banks for the purpose of purchasing cost-effective floating-rate funding without collateralization or stock purchase requirements. Management believes these sources represent a reliable and cost-efficient alternative funding source for the Company. However, to the extent that our condition or reputation deteriorates, or to the extent that there are significant changes in market interest rates which we do not elect to match, we may experience an outflow of brokered deposits. In that event we would be required to obtain alternate sources for funding. Table 21 reflects the classification of the brokered deposits as of March 31, 2026 and December 31, 2025. Table 21: Brokered Deposits March 31, 2026 December 31, 2025 (In thousands) Insured Cash Sweep and Other Transaction Accounts $ 439,322 $ 435,678 Total Brokered Deposits $ 439,322 $ 435,678 The interest rates paid are competitively priced for each particular deposit product and structured to meet our funding requirements. We will continue to manage interest expense through deposit pricing. We may allow higher rate deposits to run off during periods of limited loan demand. We believe that additional funds can be attracted, and deposit growth can be realized through deposit pricing if we experience increased loan demand or other liquidity needs. The Federal Reserve Board sets various benchmark rates, including the Federal Funds rate, and thereby influences the general market rates of interest, including the deposit and loan rates offered by financial institutions. The Federal Reserve reduced the target rate three times during 2025. First, on September 17, 2025, the Federal Reserve reduced the target rate to 4.00% to 4.25%, second, on October 29, 2025, the target rate was reduced to 3.75% to 4.00% and third, on December 10, 2025, the target rate was reduced to 3.50% to 3.75%. The Federal Reserve has not changed the target rate during 2026. Table 22 reflects the classification of the average deposits and the average rate paid on each deposit category, which are in excess of 10 percent of average total deposits, for the three months ended March 31, 2026 and 2025. Table 22: Average Deposit Balances and Rates Three Months Ended March 31, 2026 2025 Average Amount Average Rate Paid Average Amount Average Rate Paid (Dollars in thousands) Non-interest-bearing transaction accounts $ 3,856,492 - % $ 3,980,944 - % Interest-bearing transaction accounts 10,771,612 2.35 10,309,860 2.67 Savings deposits 1,097,364 0.69 1,092,828 0.71 Time deposits: $100,000 or more 1,269,759 3.48 1,214,785 4.03 Other time deposits 525,742 2.95 586,718 3.48 Total $ 17,520,969 1.83 % $ 17,185,135 2.05 % Securities Sold Under Agreements to Repurchase We enter into short-term purchases of securities under agreements to resell (resale agreements) and sales of securities under agreements to repurchase (repurchase agreements) of substantially identical securities. The amounts advanced under resale agreements and the amounts borrowed under repurchase agreements are carried on the balance sheet at the amount advanced. Interest incurred on repurchase agreements is reported as interest expense. Securities sold under agreements to repurchase increased $1.6 million, or 1.0%, from $155.8 million as of December 31, 2025 to $157.4 million as of March 31, 2026. FHLB and Other Borrowed Funds The Company's FHLB borrowed funds, which are secured by our loan portfolio, were $500.0 million at both March 31, 2026 and December 31, 2025. At both March 31, 2026 and December 31, 2025, $100.0 million and $400.0 million of the outstanding balances were classified as short-term and long-term advances, respectively. The FHLB advances mature from 2026 to 2037 with fixed interest rates ranging from 3.37% to 4.84%. Expected maturities could differ from contractual maturities because FHLB may have the right to call, or the Company may have the right to prepay certain obligations. Other borrowed funds were $250,000 at both March 31, 2026 and December 31, 2025. These were classified as short-term advances. Additionally, the Company had $1.51 billion and $1.48 billion at March 31, 2026 and December 31, 2025, respectively, in letters of credit under a FHLB blanket borrowing line of credit, which are used to collateralize public deposits. Subordinated Debentures Subordinated debentures were $279.4 million and $279.3 million as of March 31, 2026 and December 31, 2025, respectively. Subordinated Debt Securities . On January 18, 2022, the Company completed an underwritten public offering of $300.0 million in aggregate principal amount of its 3.125% Fixed-to-Floating Rate Subordinated Notes due 2032 (the "2032 Notes") for net proceeds, after underwriting discounts and issuance costs of approximately $296.4 million. The 2032 Notes are unsecured, subordinated debt obligations of the Company and will mature on January 30, 2032. From and including the date of issuance to, but excluding January 30, 2027 or the date of earlier redemption, the 2032 Notes will bear interest at an initial rate of 3.125% per annum, payable in arrears on January 30 and July 30 of each year. From and including January 30, 2027 to, but excluding, the maturity date or earlier redemption, the 2032 Notes will bear interest at a floating rate equal to the Benchmark rate (which is expected to be Three-Month Term SOFR), each as defined in and subject to the provisions of the applicable supplemental indenture for the 2032 Notes, plus 182 basis points, payable quarterly in arrears on January 30, April 30, July 30, and October 30 of each year, commencing on April 30, 2027. The Company may, beginning with the interest payment date of January 30, 2027, and on any interest payment date thereafter, redeem the 2032 Notes, in whole or in part, subject to prior approval of the Federal Reserve if then required, at a redemption price equal to 100% of the principal amount of the 2032 Notes to be redeemed plus accrued and unpaid interest to but excluding the date of redemption. The Company may also redeem the 2032 Notes at any time, including prior to January 30, 2027, at the Company's option, in whole but not in part, subject to prior approval of the Federal Reserve if then required, if certain events occur that could impact the Company's ability to deduct interest payable on the 2032 Notes for U.S. federal income tax purposes or preclude the 2032 Notes from being recognized as Tier 2 capital for regulatory capital purposes, or if the Company is required to register as an investment company under the Investment Company Act of 1940, as amended. In each case, the redemption would be at a redemption price equal to 100% of the principal amount of the 2032 Notes plus any accrued and unpaid interest to, but excluding, the redemption date. On September 4, 2025, the Company repurchased $20.0 million of the 2032 Notes in an open-market transaction. The repurchase resulted in a $1.9 million gain. Stockholders' Equity Stockholders' equity increased $52.7 million to $4.35 billion as of March 31, 2026, from $4.30 billion as of December 31, 2025. The $52.7 million increase in stockholders' equity is primarily associated with the $118.2 million in net income for the three months ended March 31, 2026, which was partially offset by the $13.5 million in other comprehensive loss, the $41.3 million in shareholder dividends paid and stock repurchases of $13.9 million in 2026. As of March 31, 2026 and December 31, 2025, our equity to asset ratio was 18.75% and 18.78%, respectively. Book value per share was $22.15 as of March 31, 2026, compared to $21.88 as of December 31, 2025, a 5.0% annualized increase. Common Stock Cash Dividends. We declared cash dividends on our common stock of $0.21 and $0.195 per share for the three months ended March 31, 2026 and 2025, respectively. The common stock dividend payout ratio for the three months ended March 31, 2026 and 2025 was 34.93% and 33.64%, respectively. On April 16, 2026, the Board of Directors declared a regular $0.21 per share quarterly cash dividend payable June 3, 2026, to shareholders of record May 13, 2026. Stock Repurchase Program. During the first three months of 2026, the Company repurchased a total of 507,622 shares with a weighted-average stock price of $27.34 per share. Shares repurchased under the program as of March 31, 2026 since its inception total 29,905,835 shares. The remaining balance available for repurchase was 16,601,672 shares at March 31, 2026. Liquidity and Capital Adequacy Requirements Risk-Based Capital. We, as well as our bank subsidiary, are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and other discretionary actions by regulators that, if enforced, could have a direct material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet...

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