Note 3 Acquisition Activities

​

On January 7, 2026, the Company completed its acquisition of Vista Bancshares, Inc., the bank holding company of Texas-based Vista Bank. Pursuant to the merger agreement executed in September 2025, the Company paid $89.0 million of cash consideration and issued 7.3 million shares of the Company’s common stock in exchange for all of the outstanding common stock of Vista Bancshares, Inc. The transaction was valued at $377.7 million in the aggregate, based on the Company’s closing price of $39.51 on January 6, 2026. In addition, the Company held $45.0 million in debt of Vista that was effectively settled upon closing. The acquisition added 12 banking centers, including 11 within the Dallas/Ft. Worth, Austin and Lubbock regions of Texas and one banking center in Palm Beach, Florida. Acquisition-related costs of $25.2 million, pre-tax, were included in the Company’s consolidated statements of operations for the six months ended June 30, 2026. The financial results as of and for the six months ended June 30, 2026 include activity of the combined entity. The Company has made the determination of fair values using the best information available at the time; however, purchase accounting is not complete and the assumptions used are subject to change and, if changed, could have a material effect on the Company's financial position and results of operations.

​

The Company determined that this acquisition constitutes a business combination as defined in ASC Topic 805, Business Combinations. Accordingly, as of the date of the acquisition, the Company has recorded the assets acquired and liabilities assumed at fair value. The Company determined fair values in accordance with the guidance provided in ASC Topic 820, Fair Value Measurements and Disclosures. Fair value is established by discounting the expected future cash flows with a market discount rate for like maturities and risk instruments. The estimation of expected future cash flows, market conditions, other future events and actual results could differ materially from the original estimates. The determination of the fair values of fixed assets, loans, OREO and core deposit intangible involves a high degree of judgment and complexity.

​

The table below summarizes net assets acquired (at fair value) and consideration transferred in connection with the Vista acquisition. The fair value of the acquired assets and liabilities noted in the table may change during the provisional period, which may last up to twelve months subsequent to the acquisition date. The Company may obtain additional information to refine the valuation of the acquired assets and liabilities and adjust the recorded fair value.

​

​

In connection with the Vista acquisition, the Company recorded $149.4 million of goodwill. The amount of goodwill recorded reflects the expanded market presence, synergies and operational efficiencies that are expected to result from the acquisition. The following is a description of the methods used to determine the fair values of significant assets and liabilities presented above:

​

Cash and due from banks—The carrying amount of these assets was deemed a reasonable estimate of fair value based on the short-term nature of these assets.

​

Investment securities available-for-sale— The investment securities portfolio fair value was determined utilizing third-party pricing services.

​

Loans, net—The fair value of loans were based on a discounted cash flow methodology that considered the loans’ underlying characteristics including account type, remaining terms of loan, annual interest rates or coupon, interest types, past delinquencies, timing of principal and interest payments, current market rates, loan to value ratios, loss exposure and remaining balance. The discount rates applied were based upon a build-up approach considering the alternative cost of funds, capital charges, servicing costs, and a liquidity premium. Loans were aggregated according to similar characteristics when applying the valuation method.

​

Core deposit and other intangibles—The Company recorded a core deposit intangible asset of $20.5 million and a trade name intangible of $1.0 million. The core deposit intangible was valued utilizing a discounted cash flow methodology based upon assumptions regarding retained balances, such as account retention rate and growth rates, interest expense including maintenance costs, and alternative costs of funding. The discount rate applied is consistent to that applied to loans above. The trade name intangible was valued using the relief-from-royalty method, which estimates fair value based on projected revenues, an assumed market-based royalty rate, and a discount rate applied to the resulting cash flows.

​

The core deposit intangible and trade name intangible will be amortized straight-line over ten years.

​

Deposits—By definition, the fair value of demand and saving deposits equals the amount payable. For time deposits acquired, the Company utilized an income approach, discounting the contractual cash flows on the instruments over their remaining contractual lives at prevailing market rates.

​

Accounting for acquired loans

​

The Company adopted ASU 2025-08 as of January 1, 2026, which impacted the accounting for acquired loans. The Company grouped acquired loans according to similar characteristics. Loans that reflected a more-than-insignificant deterioration of credit were categorized as purchased credit deteriorated loans, and all other loans were categorized as purchased seasoned loans. For both PSLs and PCD loans, the initial estimate of expected credit losses was included in the balance of loans with an offsetting amount recorded to the ACL as of the date of acquisition.

​

The following table provides a summary of loans purchased as part of the Vista acquisition as of the acquisition date:

​

​

Unaudited Pro forma information

​

The following unaudited pro forma information combines the historical results of Vista and the Company. The pro forma financial information does not include the potential impacts of possible business model changes, current market conditions, revenue enhancements, expense efficiencies, or other factors. If the Vista acquisition had been completed on January 1, 2025, pro forma total revenue for the Company would have been approximately $129.1 million and $125.7 million for the three months ended June 30, 2026 and 2025, respectively. Pro forma net income for the Company would have been approximately $34.9 million and $30.4 million for the three months ended June 30, 2026 and 2025, respectively. Pro forma basic and dilutive earnings per share for the Company would have been $0.76 and $0.76 for the three months ended June 30, 2026, respectively, and $0.66 and $0.66 for the three months ended June 30, 2025, respectively. For the three months ended June 30, 2026, the pro forma information reflects adjustments made to exclude acquisition-related expenses of the Company totaling $10.9 million. Adjustments also included estimated net accretion of loan and investment marks of $1.4 million and estimated amortization of acquired identifiable intangibles of $0.5 million for the three months ended June 30, 2025.

​

For the six months ended June 30, 2026 and 2025, pro forma total revenue for the Company would have been approximately $255.8 million and $248.2 million, respectively. Pro forma net income for the Company would have been approximately $66.7 million and $47.2 million for the six months ended June 30, 2026 and 2025, respectively. Pro forma basic and dilutive earnings per share for the Company would have been $1.47 and $1.46 for the six months ended June 30, 2026, respectively, and $1.03 and $1.03 for the six months ended June 30, 2025, respectively. For the six months ended June 30, 2026, the pro forma information reflects adjustments made to exclude acquisition-related expenses of the Company totaling $25.2 million. Adjustments also included estimated net accretion of loan and investment marks of $2.8 million and estimated amortization of acquired identifiable intangibles of $1.1 million for the six months ended June 30, 2025.

​

The unaudited pro forma information is theoretical in nature and not necessarily indicative of future consolidated results of operations of the Company or the consolidated results of operations which would have resulted had the Company acquired Vista during the periods presented.