Concentrations of Credit. Most of the Company’s lending activity occurs within the states of Texas and Oklahoma. Commercial real estate loans, 1-4 family residential loans and construction, land development and other land loans made up 80.0% and 81.8% of the Company’s total loan portfolio, excluding Warehouse Purchase Program loans, at March 31, 2026, and December 31, 2025, respectively. As of March 31, 2026, and December 31, 2025, excluding Warehouse Purchase Program loans, there were no concentrations of loans related to any single industry in excess of 10% of total loans.

Related Party Loans. As of March 31, 2026, and December 31, 2025, loans outstanding to directors, officers and their affiliates totaled $674 thousand and $272 thousand, respectively. All transactions between the Company and such related parties are conducted in the ordinary course of business and made on the same terms and conditions as similar transactions with unaffiliated persons.

Nonperforming Assets and Nonaccrual and Past Due Loans. The Company has several procedures in place to assist it in maintaining the overall quality of its loan portfolio. The Company has established underwriting guidelines to be followed by its officers, including requiring appraisals on loans collateralized by real estate. The Company also monitors its delinquency levels for any negative or adverse trends. Nevertheless, the Company’s loan portfolio could become subject to increasing pressures from deteriorating borrower credit due to general economic conditions.

The Company generally places a loan on nonaccrual status and ceases accruing interest when the payment of principal or interest is delinquent for 90 days, or earlier in some cases; unless the loan is in the process of collection and the underlying collateral fully supports the carrying value of the loan. A loan may be returned to accrual status when all the principal and interest amounts contractually due are brought current and future principal and interest amounts contractually due are reasonably assured, which is typically evidenced by a sustained period (at least six months) of repayment performance by the borrower.

With respect to potential problem loans, an evaluation of the borrower’s overall financial condition is made, together with an appraisal for loans collateralized by real estate, to determine the need, if any, for possible write-downs or appropriate additions to the allowance for credit losses.

An aging analysis of past due loans, segregated by category of loan, is presented below:


	March 31, 2026
	Loans Past Due and Still Accruing
	30-89 Days		90 or More Days		Total Past Due Loans		Nonaccrual Loans		Current Loans		Total Loans
	(Dollars in thousands)
Construction, land development and other land loans	$	18,843	$	237	$	19,080	$	484	$	3,233,825	$	3,253,389
Warehouse Purchase Program loans		—		—		—		—		1,433,152		1,433,152
Agriculture and agriculture real estate (includes farmland)		4,269		—		4,269		14,925		1,045,346		1,064,540
1-4 family (includes home equity) (1)		45,205		76		45,281		55,501		8,621,977		8,722,759
Commercial real estate (includes multi-family residential)		23,466		1,922		25,388		12,960		7,087,865		7,126,213
Commercial and industrial		28,046		6		28,052		21,590		3,231,611		3,281,253
Consumer and other		943		—		943		1,013		404,724		406,680
Total	$	120,772	$	2,241	$	123,013	$	106,473	$	25,058,500	$	25,287,986


	December 31, 2025
	Loans Past Due and Still Accruing
	30-89 Days		90 or More Days		Total Past Due Loans		Nonaccrual Loans		Current Loans		Total Loans
	(Dollars in thousands)
Construction, land development and other land loans	$	5,233	$	297	$	5,530	$	177	$	2,735,748	$	2,741,455
Warehouse Purchase Program loans		—		—		—		—		1,304,798		1,304,798
Agriculture and agriculture real estate (includes farmland)		4,834		—		4,834		15,378		1,007,692		1,027,904
1-4 family (includes home equity) (1)		47,057		—		47,057		53,932		8,173,648		8,274,637
Commercial real estate (includes multi-family residential)		13,386		—		13,386		5,326		5,757,685		5,776,397
Commercial and industrial		9,436		—		9,436		61,387		2,233,113		2,303,936
Consumer and other		1,159		20		1,179		1,017		374,045		376,241
Total	$	81,105	$	317	$	81,422	$	137,217	$	21,586,729	$	21,805,368

(1)

Includes $21.9 million and $14.2 million of residential mortgage loans held for sale at March 31, 2026, and December 31, 2025, respectively.

The Company had $122.1 million in nonperforming assets at March 31, 2026, compared with $150.8 million at December 31, 2025. Nonperforming assets were 0.48% of total loans and other real estate at March 31, 2026, and 0.69% of total loans and other real estate at December 31, 2025. The Company had $106.5 million in nonaccrual loans at March 31, 2026, compared with $137.2 million at December 31, 2025.

Acquired Loans. Acquired loans were preliminarily recorded at fair value based on a discounted cash flow valuation methodology that considers, among other things, interest rates, projected default rates, loss given default, and recovery rates. Projected default rates, loss given default, and recovery rates for PCD loans and PSLs primarily impact the related allowance, as opposed to the fair value mark. During the valuation process, the Company identified PCD and PSLs in the acquired loan portfolios. Loans acquired with evidence of credit quality deterioration since origination as of the acquisition date were accounted for as PCD. PCD loan identification considers the following factors: payment history and past due status, debt service coverage, loan grading, collateral values and other factors that may indicate deterioration of credit quality as of the acquisition date when compared to the origination date. PSL identification considers the following factors: account types, remaining terms, annual interest rates or coupons, current market rates, interest types, past delinquencies, timing of principal and interest payments, loan to value ratios, loss exposures and remaining balances. Accretion of purchased discounts on PCD and PSLs will be recognized based on payment structure and the contractual maturity of individual loans.

PCD Loans. The recorded investment in PCD loans included in the consolidated balance sheet and the related outstanding balance as of the dates indicated are presented in the table below. The outstanding balance represents the total amount owed as of March 31, 2026, and December 31, 2025.

Income recognition on PCD loans is subject to the timing and amount of future cash flows. PCD loans for which the Company is accruing interest income are not considered nonperforming or impaired. The PCD discount reflected above as of March 31, 2026, represents the amount of discount available to be recognized as income.

PSLs. The recorded investment in PSLs included in the consolidated balance sheet and the related outstanding balance as of the dates indicated are presented in the table below. The outstanding balance represents the total amount owed as of March 31, 2026, and December 31, 2025.

Credit Quality Indicators. As part of the ongoing monitoring of the credit quality of the Company’s loan portfolio and methodology for calculating the allowance for credit losses, management assigns and tracks loan grades to be used as credit quality indicators. The following is a general description of the loan grades used:

Grade 1—Credits in this category have risk potential that is virtually nonexistent. These loans may be secured by insured certificates of deposit, insured savings accounts, U.S. Government securities and highly rated municipal bonds.

Grade 2—Credits in this category are of the highest quality. These borrowers represent top rated companies and individuals with unquestionable financial standing with excellent global cash flow coverage, net worth, liquidity and collateral coverage.

Grade 3—Credits in this category are not immune from risk but are well protected by the collateral and paying capacity of the borrower. These loans may exhibit a minor unfavorable credit factor, but the overall credit is sufficiently strong to minimize the possibility of loss.

Grade 4—Credits in this category are considered to be of acceptable credit quality with moderately greater risk than Grade 3 and receive closer monitoring. Loans in this category have sources of repayment that remain sufficient to preclude a larger than normal probability of default and secondary sources are likewise currently of sufficient quantity, quality, and liquidity to protect the Company against loss of principal and interest. These borrowers have specific risk factors, but the overall strength of the credit is acceptable based on other mitigating credit and/or collateral factors and can repay the debt in the normal course of business.

Grade 5—Credits in this category constitute an undue and unwarranted credit risk; however, the factors do not rise to a level of substandard. These credits have potential weaknesses and/or declining trends that, if not corrected, could expose the Company to risk at a future date. These loans are monitored on the Company’s internally-generated watch list and evaluated on a quarterly basis.

Grade 6—Credits in this category are considered “substandard” but “non-impaired” loans in accordance with regulatory guidelines. Loans in this category have well-defined weakness that, if not corrected, could make default of principal and interest possible. Loans in this category are still accruing interest and may be dependent upon secondary sources of repayment and/or collateral liquidation.

Grade 7—Credits in this category are deemed “substandard” and “impaired” pursuant to regulatory guidelines. As such, the Company has determined that it is probable that less than 100% of the contractual principal and interest will be collected. These loans are individually evaluated for a specific reserve and will typically have the accrual of interest stopped.

Grade 8—Credits in this category include “doubtful” loans in accordance with regulatory guidance. Such loans are no longer accruing interest and factors indicate a loss is imminent. These loans are also deemed “impaired.” While a specific reserve may be in place while the loan and collateral are being evaluated, these loans are typically charged down to an amount the Company estimates is collectible.

Grade 9—Credits in this category are deemed a “loss” in accordance with regulatory guidelines and have been charged off or charged down. The Company may continue collection efforts and may have partial recovery in the future.

The following tables present loans by risk grade, by category of loan and by year of origination/renewal at March 31, 2026.


	Term Loans
	Amortized Cost Basis by Origination Year
	2026		2025		2024		2023		2022		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
	(Dollars in thousands)

Construction, Land Development and Other Land Loans
Grade 1	$	—	$	—	$	330	$	—	$	—	$	160	$	—	$	—	$	490
Grade 2		949		4,036		505		480		—		115		—		—		6,085
Grade 3		119,475		938,505		349,210		280,634		339,991		143,834		314,450		—		2,486,099
Grade 4		10,082		114,267		82,287		157,807		233,400		37,207		44,985		—		680,035
Grade 5		—		220		1,140		—		—		5,231		500		—		7,091
Grade 6		—		902		—		12		—		570		—		—		1,484
Grade 7		—		—		50		132		43		200		—		—		425
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		—		29,379		6,071		6,757		16,329		8,156		4,988		—		71,680
Total	$	130,506	$	1,087,309	$	439,593	$	445,822	$	589,763	$	195,473	$	364,923	$	—	$	3,253,389

Current-period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Agriculture and Agriculture Real Estate (includes Farmland)
Grade 1	$	1,373	$	3,545	$	338	$	150	$	4	$	—	$	8,481	$	—	$	13,891
Grade 2		—		60		—		4		2,283		1,002		—		—		3,349
Grade 3		47,020		119,093		76,602		55,259		156,828		170,898		194,335		233		820,268
Grade 4		8,737		35,523		11,664		14,914		26,112		38,307		46,118		1,374		182,749
Grade 5		2,555		3,490		1,123		639		544		2,776		—		—		11,127
Grade 6		—		—		2		—		—		—		—		—		2
Grade 7		—		—		370		—		223		903		—		250		1,746
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		392		286		13,068		1,832		2,058		7,882		5,890		—		31,408
Total	$	60,077	$	161,997	$	103,167	$	72,798	$	188,052	$	221,768	$	254,824	$	1,857	$	1,064,540

Current-period gross write-offs	$	—	$	39	$	—	$	—	$	—	$	23	$	—	$	—	$	62

1-4 Family (includes Home Equity) (1)
Grade 1	$	—	$	—	$	—	$	67	$	130	$	105	$	—	$	—	$	302
Grade 2		97		774		927		378		545		5,194		—		—		7,915
Grade 3		91,593		524,587		602,835		1,488,977		2,058,373		3,550,195		112,370		3,021		8,431,951
Grade 4		6,495		23,309		13,035		17,624		34,889		91,296		8,079		42		194,769
Grade 5		342		2,803		2,162		464		1,126		4,939		—		—		11,836
Grade 6		—		251		2,256		2,292		606		3,247		76		—		8,728
Grade 7		—		—		407		7,226		17,588		29,654		—		—		54,875
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		—		45		4,504		990		2,737		3,863		244		—		12,383
Total	$	98,527	$	551,769	$	626,126	$	1,518,018	$	2,115,994	$	3,688,493	$	120,769	$	3,063	$	8,722,759

Current-period gross write-offs	$	—	$	58	$	—	$	119	$	713	$	9	$	—	$	—	$	899


	Term Loans
	Amortized Cost Basis by Origination Year
	2026		2025		2024		2023		2022		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
	(Dollars in thousands)

Commercial Real Estate (includes Multi-Family Residential)
Grade 1	$	—	$	—	$	—	$	406	$	1,259	$	3,908	$	—	$	—	$	5,573
Grade 2		413		3,866		6,271		1,702		2,941		16,465		—		—		31,658
Grade 3		127,894		585,498		533,244		457,316		860,614		2,008,887		119,326		2,584		4,695,363
Grade 4		3,730		151,080		77,481		148,430		551,823		875,456		13,574		—		1,821,574
Grade 5		3,988		4,636		27,550		2,297		6,609		167,685		2,837		—		215,602
Grade 6		—		4,641		28,570		4,421		12,209		70,005		—		—		119,846
Grade 7		—		495		931		5,118		1,214		1,785		985		—		10,528
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		—		35,776		26,525		25,104		62,619		76,045		—		—		226,069
Total	$	136,025	$	785,992	$	700,572	$	644,794	$	1,499,288	$	3,220,236	$	136,722	$	2,584	$	7,126,213

Current-period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	221	$	—	$	—	$	221

Commercial and Industrial
Grade 1	$	17,272	$	29,419	$	14,163	$	3,465	$	829	$	4,756	$	62,032	$	118	$	132,054
Grade 2		5,788		3,018		4,564		1,905		6,826		548		42,989		—		65,638
Grade 3		100,819		521,239		232,816		186,223		117,886		293,785		1,227,165		2,919		2,682,852
Grade 4		9,475		36,264		23,631		28,575		29,269		25,917		82,507		3,072		238,710
Grade 5		400		531		430		573		20,680		41		4,472		—		27,127
Grade 6		—		1,943		1,856		2,691		2,660		375		5,666		24		15,215
Grade 7		12,101		533		3,068		402		—		2,582		59		—		18,745
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		—		23,048		6,955		3,339		3,463		32,425		30,546		1,136		100,912
Total	$	145,855	$	615,995	$	287,483	$	227,173	$	181,613	$	360,429	$	1,455,436	$	7,269	$	3,281,253

Current-period gross write-offs	$	—	$	740	$	151	$	1,634	$	2,269	$	299	$	28,498	$	6,085	$	39,676

Consumer and Other
Grade 1	$	8,098	$	19,080	$	4,979	$	2,008	$	551	$	1,090	$	1,690	$	—	$	37,496
Grade 2		258		12,439		90,059		14,182		20,091		1,937		984		—		139,950
Grade 3		26,376		25,209		24,482		21,243		22,685		29,237		51,491		—		200,723
Grade 4		25		138		528		189		32		17,850		6,306		—		25,068
Grade 5		—		345		—		24		—		—		211		—		580
Grade 6		—		—		16		50		—		2		—		8		76
Grade 7		—		—		—		22		—		129		860		—		1,011
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		—		—		—		—		—		1,769		7		—		1,776
Total	$	34,757	$	57,211	$	120,064	$	37,718	$	43,359	$	52,014	$	61,549	$	8	$	406,680

Current-period gross write-offs	$	1,452	$	74	$	7	$	—	$	—	$	19	$	70	$	—	$	1,622


	Term Loans
	Amortized Cost Basis by Origination Year
	2026		2025		2024		2023		2022		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
	(Dollars in thousands)

Warehouse Purchase Program
Grade 1	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Grade 2		—		—		—		—		—		—		—		—		—
Grade 3		1,433,152		—		—		—		—		—		—		—		1,433,152
Grade 4		—		—		—		—		—		—		—		—		—
Grade 5		—		—		—		—		—		—		—		—		—
Grade 6		—		—		—		—		—		—		—		—		—
Grade 7		—		—		—		—		—		—		—		—		—
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		—		—		—		—		—		—		—		—		—
Total	$	1,433,152	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	1,433,152

Current-period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Total
Grade 1	$	26,743	$	52,044	$	19,810	$	6,096	$	2,773	$	10,019	$	72,203	$	118	$	189,806
Grade 2		7,505		24,193		102,326		18,651		32,686		25,261		43,973		—		254,595
Grade 3		1,946,329		2,714,131		1,819,189		2,489,652		3,556,377		6,196,836		2,019,137		8,757		20,750,408
Grade 4		38,544		360,581		208,626		367,539		875,525		1,086,033		201,569		4,488		3,142,905
Grade 5		7,285		12,025		32,405		3,997		28,959		180,672		8,020		—		273,363
Grade 6		—		7,737		32,700		9,466		15,475		74,199		5,742		32		145,351
Grade 7		12,101		1,028		4,826		12,900		19,068		35,253		1,904		250		87,330
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		392		88,534		57,123		38,022		87,206		130,140		41,675		1,136		444,228
Total	$	2,038,899	$	3,260,273	$	2,277,005	$	2,946,323	$	4,618,069	$	7,738,413	$	2,394,223	$	14,781	$	25,287,986

Current-period gross write-offs	$	1,452	$	911	$	158	$	1,753	$	2,982	$	571	$	28,568	$	6,085	$	42,480

(1)

Includes $21.9 million of residential mortgage loans held for sale at March 31, 2026.

Allowance for Credit Losses on Loans. The allowance for credit losses is adjusted through charges to earnings in the form of a provision for credit losses. Management has established an allowance for credit losses that it believes is management’s best estimate of current expected credit losses on the Company’s loan portfolio as of March 31, 2026. The amount of the allowance for credit losses on loans is affected by the following: (1) charge-offs of loans that occur when loans are deemed uncollectible and decrease the allowance, (2) recoveries on loans previously charged off that increase the allowance, (3) provisions for credit losses charged to earnings that increase the allowance, (4) provision releases returned to earnings that decrease the allowance, and (5) increases in reserves related to acquired loans. Based on an evaluation of the loan portfolio and consideration of the factors listed below, management presents a quarterly review of the allowance for credit losses to the Bank’s Board of Directors, indicating any change in the allowance since the last review and any recommendations as to adjustments in the allowance. Although management believes it uses the best information available to make determinations with respect to the allowance for credit losses, future adjustments may be necessary if economic conditions or borrower performance differ from the assumptions used in making the initial determinations.

The Company’s allowance for credit losses on loans consists of two components: (1) a specific valuation allowance based on expected losses on specifically identified loans and (2) a general valuation allowance based on historical lifetime loan loss experience, current economic conditions, reasonable and supportable forecasted economic conditions and other qualitative risk factors both internal and external to the Company.

In setting the specific valuation allowance, the Company follows a loan review program to evaluate the credit risk in the total loan portfolio and assigns risk grades to each loan. Through this loan review process, the Company maintains an internal list of impaired loans, which, along with the delinquency list of loans, helps management assess the overall quality of the loan portfolio and the adequacy of the allowance for credit losses. All loans that have been identified as impaired are reviewed on a quarterly basis in order to determine whether a specific reserve is required. For certain impaired loans, the Company allocates a specific loan loss reserve primarily based on the value of the collateral securing the impaired loan in accordance with CECL. The specific reserves are determined on an individual loan basis. Loans for which specific reserves are provided are excluded from the general valuation allowance described below.

In connection with this review of the loan portfolio, the Company considers risk elements attributable to particular loan types or categories in assessing the quality of individual loans. Some of the risk elements include:

In addition, for each category, the Company considers secondary sources of income and the financial strength and credit history of the borrower and any guarantors.

In determining the amount of the general valuation allowance, management considers factors such as historical lifetime loan loss experience, concentration risk of specific loan types, the volume, growth and composition of the Company’s loan portfolio, current economic conditions and reasonable and supportable forecasted economic conditions that may affect borrower ability to pay and the value of collateral, the evaluation of the Company’s loan portfolio through its internal loan review process, other qualitative risk factors both internal and external to the Company and other relevant factors in accordance with CECL. Historical lifetime loan loss experience is determined by utilizing an open-pool (“cumulative loss rate”) methodology. Adjustments to the historical lifetime loan loss experience are made for differences in current loan pool risk characteristics, such as portfolio concentrations, delinquency, non-accrual, and watch list levels, as well as changes in current and forecasted economic conditions such as unemployment rates, property and collateral values, and other indices relating to economic activity. The utilization of reasonable and supportable forecasts includes an immediate reversion to lifetime historical loss rates. Based on a review of these factors for each loan type, the Company applies an estimated percentage to the outstanding balance of each loan type, excluding any loan that has a specific reserve. Allocation of a portion of the allowance to one category of loans does not preclude its availability to cover expected losses in other categories.

The following table details activity in the allowance for credit losses on loans by category of loan for the three months ended March 31, 2026 and 2025.


	Construction, Land Development and Other Land Loans			Agriculture and Agriculture Real Estate (includes Farmland)			1-4 Family (includes Home Equity)			Commercial Real Estate (includes Multi-Family Residential)			Commercial and Industrial			Consumer and Other			Total
	(Dollars in thousands)
Allowance for credit losses on loans:
Three Months Ended
Balance December 31, 2025	$	69,817		$	23,438		$	76,596		$	77,251		$	77,939		$	8,701		$	333,742
Allowance on PCD loans at acquisition		5,725			927			1,353			12,423			30,809			909			52,146
Allowance on PSLs at acquisition (1)		5,342			142			6,213			11,696			13,308			2,560			39,261
Provision for credit losses on loans		(4,757	)		(1,242	)		(8,166	)		(6,075	)		21,904			(1,664	)		—
Charge-offs		—			(62	)		(899	)		(221	)		(39,676	)		(1,622	)		(42,480	)
Recoveries		—			10			37			342			451			331			1,171
Net (charge-offs) recoveries		—			(52	)		(862	)		121			(39,225	)		(1,291	)		(41,309	)
Balance March 31, 2026	$	76,127		$	23,213		$	75,134		$	95,416		$	104,735		$	9,215		$	383,840

Allowance for credit losses on loans:
Three Months Ended
Balance December 31, 2024	$	77,984		$	27,693		$	80,735		$	92,147		$	65,500		$	7,746		$	351,805
Provision for credit losses on loans		2,440			(1,596	)		4,211			(1,662	)		(4,996	)		1,603			—
Charge-offs		—			—			(1,057	)		(387	)		(942	)		(1,557	)		(3,943	)
Recoveries		156			—			6			209			612			256			1,239
Net (charge-offs) recoveries		156			—			(1,051	)		(178	)		(330	)		(1,301	)		(2,704	)
Balance March 31, 2025	$	80,580		$	26,097		$	83,895		$	90,307		$	60,174		$	8,048		$	349,101

The allowance for credit losses on loans as of March 31, 2026, totaled $383.8 million or 1.52% of total loans, including acquired loans with discounts, an increase of $50.1 million or 15.0% compared to the allowance for credit losses on loans totaling $333.7 million or 1.53% of total loans, including acquired loans with discounts, as of December 31, 2025.

The Company adopted ASU 2025-08 as of January 1, 2026, which aligned the accounting for PSLs with the treatment of PCD loans’ gross-up approach at acquisition and eliminated the immediate recognition of day-one credit loss expense. Accordingly, the initial estimate of expected credit losses recognized in the allowance for credit losses on loans will include both PCD and PSLs. For the merger of American Bank Holding Corporation (“American”) into Bancshares and the subsequent merger of American’s wholly owned subsidiary American Bank, N.A. (“American Bank”), into the Bank (collectively, the “American Merger”), the Company recorded an allowance for credit losses on loans of $47.5 million, which included a $27.5 million allowance on PCD loans and a $20.0 million allowance on PSLs. For the merger of Southwest Bancshares, Inc. (“Southwest”) into Bancshares and the subsequent merger of Southwest’s wholly owned subsidiary Texas Partners Bank (“Texas Partners”) into the Bank (collectively, the “Southwest Merger”, together with the American Merger, the “Mergers”), the Company recorded an allowance for credit losses on loans of $43.9 million, which included a $24.6 million allowance on PCD loans and an $19.3 million allowance on PSLs.

There was no provision for credit losses for the three months ended March 31, 2026 and 2025.

Net charge-offs were $41.3 million for the three months ended March 31, 2026, compared with net charge-offs of $2.7 million for the three months ended March 31, 2025. Net charge-offs for the first quarter 2026 included a $33.9 million increase in net charge-offs for commercial and industrial loans. Net charge-offs for the first quarter of 2026 included $2.0 million related to resolved PCD loans, which had specific reserves that were allocated to the charge-offs. Additionally, due to the Mergers, reserves increased by Day One accounting for PCD loans of $52.1 million and Day One accounting for PSLs of $39.3 million. Further, $2.0 million of reserves on resolved PCD loans without any related charge-offs were released to the general reserve.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures. The allowance for credit losses on off-balance sheet credit exposures estimates expected credit losses over the contractual period in which there is exposure to credit risk via a contractual obligation to extend credit, except when an obligation is unconditionally cancellable by the Company. The allowance is adjusted by provisions for credit losses charged to earnings that increase the allowance, or by provision releases returned to earnings that decrease the allowance. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on the commitments expected to fund. The estimate of commitments expected to fund is affected by historical analysis of utilization rates. The expected credit loss rates applied to the commitments expected to fund are affected by the general valuation allowance utilized for outstanding balances with the same underlying assumptions and drivers. As of March 31, 2026, and December 31, 2025, the Company had $37.6 million in allowance for credit losses on off-balance sheet credit exposures. The allowance for credit losses on off-balance sheet credit exposures is a separate line item on the Company’s consolidated balance sheet. As of March 31, 2026, the Company had $1.65 billion in commitments expected to fund.

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

Modifications of loans made to borrowers experiencing financial difficulty may include but are not limited to changes in committed loan amount, interest rate, amortization, note maturity, borrower, guarantor, collateral, forbearance, forgiveness of principal or interest, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. The approval of modifications of loans for borrowers experiencing financial difficulty is handled on a case-by-case basis.

The financial effects of the modifications of loans made to borrowers experiencing financial difficulty were not significant during the three months ended March 31, 2026, and 2025. Furthermore, such modifications did not significantly impact the Company’s determination of the allowance for credit losses during those periods.

The Company did not have any loans made to borrowers experiencing financial difficulty that were modified during the three months ended March 31, 2026, that subsequently defaulted and were modified in the twelve months prior to default. Payment default is defined as movement to nonperforming status, foreclosure or charge-off, whichever occurs first.