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Note 20 — Small Business Administration (“SBA”) Loans Held for Sale

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During the third quarter of 2024, the Company began purchasing the guaranteed portions of SBA loans from third-party originators. The guaranteed portions of SBA loans purchased by the Company are aggregated into pools with similar characteristics to create a security representing an interest in those pools through the SBA’s fiscal transfer agent (“FTA”). The individual guaranteed portions of the SBA loans may also be sold prior to pooling into a security. Once the guaranteed portion of the SBA loans are pooled and securities representing interests in that pool are issued, the Company intends to sell those securities into the secondary market. These securities are carried at fair value and classified as trading instruments. Gains or losses on the sale of the securities and individual guaranteed portions of loans are both recorded in Correspondent Banking and Capital Markets Income in Noninterest Income on the Consolidated Statements of Income. Sales of the securities are accounted for as of the settlement date, which is the date the Company surrenders control over the transferred assets. The Company does not retain any interest in the securities once sold. The guaranteed portion of the SBA loans that have not been pooled or sold, are reported as Loans Held for Sale on the Consolidated Balance Sheet and recorded at the lower of cost or estimated fair value. The fair value of the purchased guaranteed portion of the SBA loans is determined based upon their committed sales price, and actual observable market color provided to secondary market participants from the originating banks who are selling their guaranteed portions of loans. These nonrecurring fair value measurements for purchased guaranteed portion of SBA loans are classified within Level 2 of the fair value hierarchy.

During the second quarter of 2025, the Company purchased approximately $235.7 million in guaranteed portions of SBA loans. During the second quarter of 2025, the Company pooled approximately $194.3 million of the guaranteed portions of SBA loans into securities selling approximately $160.2 million into the secondary market. The Company also sold approximately $43.4 million in individual loans during the quarter. During the first six months of 2025, the Company purchased approximately $686.6 million in guaranteed portions of SBA loans. During the first six months of 2025, the Company pooled approximately $507.1 million of the guaranteed portions of SBA loans into securities selling approximately $481.2 million into the secondary market. The Company also sold approximately $58.8 million in individual loans during the first half of 2025. The Company held approximately $247.9 million in the guaranteed portion of SBA loans for sale at June 30, 2025.

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The Company also separately originates SBA loans and sells the guaranteed portions of these loans into the secondary market. During the three months ended June 30, 2025, the Company sold approximately $20.0 million, in guaranteed portions of SBA loans originated at the Bank and recognized gains of $1.7 million. During the six months ended June 30, 2025, the Company sold approximately $42.6 million, in guaranteed portions of SBA loans originated at the Bank and recognized gains of $3.8 million.