Note 6 — Investment Securities, Equity Securities with Readily Determinable Fair Values and Other Investments

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We classify debt securities into one of three categories: held-to-maturity, available-for-sale, or trading. Such debt securities are reassessed for appropriate classification at each reporting date. Securities classified as “held-to-maturity” are carried at amortized cost for financial statement reporting, while securities classified as “available-for-sale” and “trading” are carried at their fair value. Unrealized holding gains and losses are included in net income for those securities classified as “trading,” while unrealized holding gains and losses related to those securities classified as “available-for-sale” are excluded from net income and reported net of tax as other comprehensive income (loss) and accumulated other comprehensive income (loss) until realized, or in the case of losses, when deemed other than temporary. Available-for-sale and held-to-maturity debt securities in an unrealized loss position are evaluated for the underlying cause of the loss. In the event that the deterioration in value is attributable to credit-related reasons, then the amount of credit-related impairment will be recorded as a charge to our ACL with subsequent changes in the amount of impairment, up or down, also recorded through our ACL. We have evaluated the debt securities classified as available-for-sale and held-to-maturity at June 30, 2026 and have determined that no debt securities in an unrealized loss position are arising from credit-related reasons and have therefore not recorded any allowances for debt securities in our ACL for the period.

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The amortized cost and estimated fair value by type of investment security at June 30, 2026 are as follows:

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The amortized cost and estimated fair value by type of investment security at December 31, 2025 are as follows:

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The amortized cost and estimated fair value of investment securities at June 30, 2026, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay obligations with or without prepayment penalties.

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Residential mortgage-backed securities are securities primarily issued by the Federal Home Loan Mortgage Corporation (“Freddie Mac”), Federal National Mortgage Association (“Fannie Mae”), or the Government National Mortgage Association (“Ginnie Mae”). Investments in residential mortgage-backed securities issued by Ginnie Mae are fully guaranteed by the U.S. Government. Investments in residential mortgage-backed securities issued by Freddie Mac and Fannie Mae are not fully guaranteed by the U.S. Government, however, we believe that the quality of the bonds is similar to other AAA rated bonds with limited credit risk, particularly given the placement of Fannie Mae and Freddie Mac into conservatorship by the federal government in early September 2008 and because securities issued by others that are collateralized by residential mortgage-backed securities issued by Fannie Mae or Freddie Mac are rated consistently as AAA rated securities. Obligations of states and political subdivisions are securities issued by public school districts and are guaranteed by the Permanent School Fund (“PSF”) of the State of Texas under the Texas Education Code. The PSF guarantee provides an unconditional and irrevocable guarantee of principal and interest payments.

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The amortized cost and fair value of available-for-sale debt investment securities pledged to qualify for fiduciary powers, to secure public monies as required by law, repurchase agreements and short-term fixed borrowings was $1,638,689,000 and $1,472,501,000, respectively, at June 30, 2026.

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Proceeds from the sales and calls of available-for-sale debt securities were $0 and $3,345,000 for the three and six months ended June 30, 2026, respectively, which included $0 and $0 of mortgage-backed securities, respectively. Gross gains of $0 and $0 and gross losses of $0 and $0 were realized on the sales and calls for the three and six months

ended June 30, 2026, respectively. Proceeds from the sales and calls of available-for-sale debt securities were $730,000 and $4,235,000 for the three and six months ended June 30, 2025, respectively, which included $0 and $0 of mortgage-backed securities. Gross gains of $0 and $0 and gross losses of $0 and $0 were realized on the sales and calls for the three and six months ended June 30, 2025, respectively.

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Gross unrealized losses on debt investment securities and the fair value of those related securities, aggregated by investment category and length of time that individual debt securities have been in a continuous unrealized loss position at June 30, 2026, were as follows:

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Gross unrealized losses on debt investment securities and the fair value of those related securities, aggregated by investment category and length of time that individual debt securities have been in a continuous unrealized loss position at December 31, 2025, were as follows:

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Equity securities with readily determinable fair values consist primarily of Community Reinvestment Act funds. At June 30, 2026 and December 31, 2025, the balance in equity securities with readily determinable fair values recorded at fair value were $5,545,000 and $5,573,000, respectively. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and six months ended June 30, 2026 and the three and six months ended June 30, 2025:

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Other investments include equity and merchant banking investments held by our Subsidiary Banks and non-banking subsidiary entities. We hold ownership interests in limited partnerships for the purpose of investing in low-income housing tax credit (“LIHTC”) projects. The partnerships may acquire, construct or rehabilitate housing for low- and moderate-income individuals. We realize a return primarily from federal tax credits and other federal tax deductions associated with the underlying LIHTC projects. We are a limited partner in the partnerships and are not required to consolidate the entities in our consolidated financial statements. Investments in LIHTC projects totaled $248,590,000 and $261,128,000 at June 30, 2026 and December 31, 2025, respectively, and are included in other investments on the consolidated financial statements. Unfunded commitments to LIHTC projects totaled $26,526,000 at June 30, 2026 and $37,200,000 at December 31, 2025 and are included in other liabilities on the consolidated financial statements. Tax credits and other tax benefits, as well as amortization expense associated with investments in qualified low-income housing partnerships are accounted for using the proportional amortization method of accounting. There was a total of $8,355,000 and $16,615,000 in estimated tax credits related to these investments for the three and six months ended June 30, 2026, respectively and $7,070,000 and $14,034 000 in estimated amortization related to these investments for the three and six months ended June 30, 2026, respectively. There was a total of $8,141,000 and $16,282,000 in estimated tax credits related to these investments for the three and six months ended June 30, 2025, respectively and $6,542,000 and $13,084,000 in estimated amortization related to these investments for the three and six months ended June 30, 2025. We monitor LIHTC investments for indicators of impairment and evaluate the recoverability of the carrying amount based on the expected realization of the remaining tax credits, tax benefits, and other economic benefits. There were no impairment losses recorded on tax equity investments during the six months ended June 30, 2026 or the twelve months ended December 31, 2025, respectively.