ServisFirst Bancshares SFBS Form 10-Q filing Q2 FY2026

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• SERVISFIRST BANCSHARES, INC. AND SUBSIDIARIES
• CONSOLIDATED BALANCE SHEETS
• (In thousands, except share and per share amounts)

(1) Derived from audited financial statements.

See Notes to Consolidated Financial Statements.

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• SERVISFIRST BANCSHARES, INC.
• CONSOLIDATED STATEMENTS OF INCOME
• (In thousands, except per share amounts)
• (Unaudited)

See Notes to Consolidated Financial Statements.

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• SERVISFIRST BANCSHARES, INC. AND SUBSIDIARIES
• CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
• (In thousands)
• (Unaudited)

See Notes to Consolidated Financial Statements.

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• SERVISFIRST BANCSHARES, INC.
• CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
• (In thousands, except share amounts) (Unaudited)

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See Notes to Consolidated Financial Statements.

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• SERVISFIRST BANCSHARES, INC.
• CONSOLIDATED STATEMENTS OF CASH FLOWS
• (In thousands) (Unaudited)

See Notes to Consolidated Financial Statements.

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SERVISFIRST BANCSHARES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2026

(Unaudited)

NOTE 1 - GENERAL

The accompanying consolidated financial statements in this report have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission, including Regulation S-X and the instructions for Form 10-Q, and have not been audited. These consolidated financial statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. In the opinion of management, all adjustments necessary to present fairly the consolidated financial position and the consolidated results of operations for the interim periods have been made. All such adjustments are of a normal nature. The consolidated results of operations are not necessarily indicative of the consolidated results of operations that ServisFirst Bancshares, Inc. (the “Company”) may achieve for future interim periods or the entire year. For further information, refer to the consolidated financial statements and footnotes included in the Company’s Form 10-K for the year ended December 31, 2025.

All reported amounts are in thousands except share and per share data.

NOTE 2 - CASH AND CASH EQUIVALENTS

Cash on hand, cash items in process of collection, amounts due from banks, federal funds sold and securities purchased with agreement to resell are included in cash and cash equivalents.

NOTE 3 - EARNINGS PER COMMON SHARE

Basic earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable under stock options. The difference in earnings per share under the two-class method was not significant for both the three and six month periods ended June 30, 2026 and 2025.

Stock Split

On July 20, 2026, our Board of Directors declared a two-for-one common stock split of the Company's common stock, to be effected in the form of a 100% stock dividend (the "Stock Split"). Stockholders of record as of the close of business on August 5, 2026 will receive one additional share of common stock for every share held on that date. The additional shares are expected to be distributed on or about August 20, 2026, and the Company's common stock is expected to begin trading on a post-split basis on or about August 21, 2026. All references to share and per share amounts in the accompanying unaudited consolidated financial statements and related disclosures are presented on a pre-split basis, as the Stock Split has not become effective as of the date these financial statements were issued. As a result of the Stock Split, the number of shares of common stock issued and outstanding will increase from approximately 54.7 million to approximately 109.3 million. Historical per share data and weighted-average shares outstanding presented in future financial statements will be retroactively adjusted to reflect the Stock Split.

The following table illustrates the impact of the Stock Split on earnings per common share and diluted earnings per common share for the periods presented. The pro forma amounts reflect the retroactive application as if it has occurred at the beginning of each period presented.

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NOTE 4 - SECURITIES

The amortized cost and fair value of available-for-sale and held-to-maturity debt securities at June 30, 2026 and December 31, 2025 are summarized as follows:

The amortized cost and fair value of debt securities as of June 30, 2026 and December 31, 2025 by contractual maturity are shown below. Actual maturities may differ from contractual maturities of mortgage-backed securities since the mortgages underlying the securities may be called or prepaid with or without penalty. Therefore, these securities are not included in the maturity categories along with the other categories of debt securities.

All mortgage-backed securities are with government-sponsored enterprises such as Federal National Mortgage Association, Government National Mortgage Association, Federal Home Loan Bank, and Federal Home Loan Mortgage Corporation.

Restricted equity securities are comprised entirely of a restricted investment in Federal Home Loan Bank stock for membership requirements.

The carrying value of debt securities pledged to secure public funds on deposit and for other purposes as required by law was $1.17 billion and $1.23 billion as of June 30, 2026 and December 31, 2025, respectively.

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The following table identifies, as of June 30, 2026 and December 31, 2025, the Company’s debt securities that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 or more months.

At June 30, 2026 and December 31, 2025, no allowance for credit losses (“ACL”) has been recognized on available-for-sale debt securities in an unrealized loss position as the Company does not believe any of the debt securities are credit impaired. This is based on the Company’s analysis of the risk characteristics, including credit ratings, and other qualitative factors related to available-for-sale debt securities. The issuers of these debt securities continue to make timely principal and interest payments under the contractual terms of the securities. During the second quarter of 2025, the Company sold available-for-sale mortgage-backed securities with an amortized cost basis of $70.5 million and recorded a pre-tax loss of $8.6 million, as a result of a portfolio restructuring. The proceeds from the sale were reinvested into higher-yielding securities. The unrealized losses are due to increases in market interest rates over the yields available at the time the debt securities were purchased. Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major security type with each type sharing similar risk characteristics and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. With regard to U.S. Treasury and mortgage-backed securities issued by the U.S. government, or agencies thereof, it is expected that the securities will not be settled at prices less than the amortized cost bases of the securities as such securities are backed by the full faith and credit of and/or guaranteed by the U.S. government. Accordingly, no allowance for credit losses has been recorded for these securities. With regard to securities issued by states and municipal subdivisions and other held-to-maturity debt securities, management considers (i) issuer bond ratings, (ii) historical loss rates for given bond ratings, (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities, and (iv) internal forecasts. Historical loss rates associated with securities having similar grades as those in our portfolio have generally not been significant. Furthermore, as of June 30, 2026 and 2025, there were no past due principal or interest payments associated with these debt securities. Based upon (i) the issuer’s strong bond ratings and (ii) a zero historical loss rate, no allowance for credit losses has been recorded for held-to-maturity state and municipal securities as such amount is not material at June 30, 2026 and 2025. All debt securities in an unrealized loss position as of June 30, 2026 continue to perform as scheduled and the Company does not believe there is a possible credit loss or that an allowance for credit loss on these debt securities is necessary.

The following table summarizes information about sales of debt securities available-for-sale.

NOTE 5 - LOANS

The loan portfolio is classified based on the underlying collateral utilized to secure each loan for financial reporting purposes. This classification is consistent with the Quarterly Report of Condition and Income filed by ServisFirst Bank (the “Bank”) with the Federal Deposit Insurance Corporation (“FDIC”).

Commercial, financial and agricultural – Includes loans to business enterprises issued for commercial, industrial, agricultural production and/or other professional purposes. These loans are generally secured by equipment, inventory, and accounts receivable of the borrower and repayment is primarily dependent on business cash flows.

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Real estate – construction – Includes loans secured by real estate to finance land development or the construction of industrial, commercial or residential buildings. Repayment is dependent upon the completion and eventual sale, refinance or operation of the related real estate project.

Owner-occupied commercial real estate mortgage – Includes loans secured by nonresidential properties for which the primary source of repayment is the cash flow from the ongoing operations conducted by the party that owns the property.

1-4 family real estate mortgage – Includes loans secured by residential properties, including home equity lines of credit. Repayment is primarily dependent on the personal cash flow of the borrower.

Non-owner occupied commercial real estate mortgage – Includes loans secured by non-owner occupied properties, including office buildings, industrial buildings, warehouses, retail buildings, and multifamily residential properties. Repayment is primarily dependent on income generated from the underlying collateral.

Consumer – Includes loans to individuals not secured by real estate. Repayment is dependent upon the personal cash flow of the borrower.

The following table details the Company’s loans at June 30, 2026 and December 31, 2025:

The credit quality of the loan portfolio is summarized no less frequently than quarterly using categories similar to the standard asset classification system used by the federal banking agencies. The following table presents credit quality indicators for the credit loss portfolio segments and classes. These categories are utilized to develop the associated allowance for credit losses using historical losses adjusted for current economic conditions defined as follows:

• Pass – loans that are well protected by the current net worth and paying capacity of the obligor or obligors or by the fair value, less cost to acquire and sell, of any underlying collateral.
• Special Mention – loans with potential weakness that may, if not reversed or corrected, weaken the credit or inadequately protect the Company’s position at some future date. These loans are not adversely classified and do not expose an institution to sufficient risk to warrant an adverse classification.
• Substandard – loans that exhibit well-defined weakness or weaknesses that presently jeopardize debt repayment. These loans are characterized by the distinct possibility that the institution will sustain some loss if the weaknesses are not corrected.
• Doubtful – loans that have all the weaknesses inherent in loans classified substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable.

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The table below presents loan balances classified by credit quality indicator, loan type and based on year of origination as of June 30, 2026:

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Loans by credit quality indicator, loan type and based on year of origination as of December 31, 2025 were as follows:

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Loans by performance status as of June 30, 2026 and December 31, 2025 were as follows:

Loans by past due status as of June 30, 2026 and December 31, 2025 were as follows:

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Under the current expected credit losses methodology, the ACL is measured on a collective basis for pools of loans with similar risk characteristics. For loans that do not share similar risk characteristics with the collectively evaluated pools, evaluations are performed on an individual basis. For all loan segments collectively evaluated, losses are predicted over a period of time determined to be reasonable and supportable, and at the end of the reasonable and supportable forecast period losses are reverted to long-term historical averages. The estimated loan losses for all loan segments are adjusted for changes in qualitative factors not inherently considered in the quantitative analyses.

The Company uses the discounted cash flow (“DCF”) method to estimate ACL for all loan pools except for commercial and industrial (“C&I”) revolving lines of credit and credit cards. For all loan pools utilizing the DCF method, the Company utilizes and forecasts national unemployment rate as a loss driver. The Company also utilizes and forecasts the growth in gross domestic product (“GDP”) as a second loss driver for the majority of its loan pools. Consistent forecasts of the loss drivers are used across the loan segments. At June 30, 2026 and December 31, 2025, the Company utilized a reasonable and supportable forecast period of twelve months followed by a six-month straight-line reversion to long-term averages. The Company leveraged economic projections from reputable and independent sources to inform its loss driver forecasts. The Company expects the growth rates of both national unemployment and national GDP to improve compared to the December 31, 2025 forecast.

The Company uses a loss-rate method to estimate expected credit losses for its commercial revolving lines of credit and credit card pools. The commercial revolving lines of credit pool incorporates a probability of default (“PD”) and loss given default (“LGD”) modeling approach. This approach involves estimating the average life of the pool and then using historical correlations of default and loss experience over time to calculate the lifetime PD and LGD. These two inputs are then applied to the outstanding balance of the pool. The credit card pool incorporates a remaining life modeling approach, which utilizes an attrition-based method to estimate the remaining life of the pool. A quarterly average loss rate is then calculated using the Company’s historical loss data. The model reduces the balance of the pool quarterly on a straight-line basis over the estimated life of the pool. The quarterly loss rate is multiplied by the outstanding balance at the end of each reporting period resulting in an estimated loss for each quarter. The sum of estimated losses for all quarters is the total calculated reserve for the pool. Management has also applied the loss-rate method to C&I lines of credit and to credit cards due to their generally short-term nature. An expected loss rate is applied based on internal and peer historical losses.

Each loan pool is adjusted for qualitative factors not inherently considered in the quantitative analysis. The qualitative adjustments either increase or decrease the quantitative model estimation. The Company considers factors that are relevant within the qualitative framework, which include the following: lending policy, changes in nature and volume of loans, staff experience, changes in volume and trends of problem loans, concentration risk, trends in underlying collateral values, external factors, quality of loan review system and other economic conditions.

Inherent risks in the loan portfolio will differ based on type of loan. Specific risk characteristics of each loan portfolio segment is listed below:

Commercial and industrial loans include risks associated with the borrower’s cash flow, debt service coverage, and the borrower’s management expertise. These loans are subject to the risk that the Company may have difficulty converting collateral to a liquid asset if necessary, as well as risks associated with degree of specialization, mobility and general collectability in a default situation. These commercial loans may be subject to many different types of risks, including fraud, bankruptcy, economic downturn, deteriorated, obsolete or non-existent collateral, and changes in interest rates.

Real estate construction loans include risks associated with the borrower’s credit-worthiness, contractor’s qualifications, borrower and contractor performance, and the overall risk and complexity of the proposed project. Construction lending is also subject to risks associated with sub-market dynamics, including population, employment trends and household income. During times of economic stress, this type of loan has typically had a greater degree of risk than other loan types.

Real estate mortgage loans consist of loans secured by commercial and residential real estate. Commercial real estate lending is dependent upon successful management, marketing and expense supervision necessary to maintain the property. Repayment of these loans may be adversely affected by conditions in the real estate market or the general economy. Also, commercial real estate loans typically involve relatively large loan balances to a single borrower. Residential real estate lending risks are generally less significant than those of other loans. Real estate lending risks include fluctuations in the value of real estate, bankruptcies, economic downturns and borrower financial problems.

Consumer loans carry a moderate degree of risk compared to other loans. They are generally more risky than traditional residential real estate loans but less risky than commercial loans. Risk of default is usually dependent on the health of the local economy. During times of economic stress there is usually some level of job loss both nationally and locally, which directly affects the ability of the consumer to repay debt.

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The following table presents changes in the ACL, segregated by loan type, for the three and six months ended June 30, 2026 and 2025.

We maintain an ACL on unfunded commercial lending commitments and letters of credit to provide for the risk of loss inherent in these arrangements. The ACL is computed using a methodology similar to that used to determine the ACL for loans, modified to take into account the probability of a drawdown on the commitment. The ACL on unfunded loan commitments is classified as a liability account on the Consolidated Balance Sheets within other liabilities, while the corresponding provision for these credit losses is recorded as a component of provision for credit losses in the Consolidated Statements of Income. The ACL on unfunded commitments was $364,000 at June 30, 2026, and $572,000 at December 31, 2025. The benefit for unfunded commitments was ($283,000) and ($208,000) for the three and six months ended June 30, 2026, respectively. There was a $(113,000) benefit and a $47,000 provision expense for the three and six months ended June 30, 2025, respectively.

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Loans that no longer share similar risk characteristics with their respective collectively evaluated pools are estimated on an individual basis. A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The following table summarizes collateral-dependent gross loans held for investment by collateral type as of June 30, 2026 and December 31, 2025:

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The table below details the amortized cost basis at the end of the reporting period for loans made to borrowers experiencing financial difficulty that were modified during the three and six months ended June 30, 2026 and 2025:

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The following table summarizes the financial impact of loan modifications made to borrowers experiencing financial difficulty for the three and six months ended June 30, 2026 and 2025:

• (In months)
• (In Thousands)_

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There was one loan modified on or after June 30, 2025 that was past due greater than 30 days or on nonaccrual as of June 30, 2026.

As of June 30, 2026, the Company had no loans made to borrowers experiencing financial difficulty that were modified during the first or second quarters of 2026 that subsequently defaulted. For purposes of this disclosure, default is defined as 90 days past due and still accruing or placement on nonaccrual status.

NOTE 6 - LEASES

The Company leases space under non-cancelable operating leases for several of its banking offices and certain office equipment. The leases have remaining terms of up to 14 years. At June 30, 2026, the Company had lease right-of-use assets and lease liabilities totaling $26.2 million and $27.4 million, respectively, compared to $22.0 million and $23.1 million, respectively, at December 31, 2025, which are reflected in other assets and other liabilities, respectively, in the Company’s Consolidated Balance Sheets.

Maturities of operating lease liabilities are as follows:

As of June 30, 2026, the weighted average remaining term of operating leases and the weighted average discount rate used in the measurement of operating lease liabilities was 7.6 years and 3.93%, respectively, compared to 7.6 years and 3.81%, respectively, as of June 30, 2025.

Operating cash flows related to leases were $1.6 million and $3.1 million for the three and six months ended June 30, 2026, respectively, compared to $1.5 million and $3.0 million for the three and six months ended June 30, 2025, respectively.

Lease costs during the three and six months ended June 30, 2026 and June 30, 2025 were as follows (in thousands):

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NOTE 7 - EMPLOYEE AND DIRECTOR BENEFITS

Stock Incentive Plan

The Company has a stock incentive plan as described below. The compensation cost that has been charged to earnings for the plan was approximately $803,000 and $1.6 million for the three and six months ended June 30, 2026, respectively, and $836,000 and $1.7 million for the three and six months ended June 30, 2025, respectively.

The Company’s 2009 Amended and Restated Stock Incentive Plan authorizes the grant of up to 5,550,000 shares and allows for the issuance of Stock Appreciation Rights, Restricted Stock, Stock Options, Non-stock Share Equivalents, Performance Shares or Performance Units. The plan allows for the grant of incentive stock options and non-qualified stock options, and option awards are granted with an exercise price equal to the fair market value of the Company’s common stock at the date of grant. The maximum term of the options granted under the plan is ten years.

The following table summarizes stock option activity during the six months ended June 30, 2026 and 2025:

As of June 30, 2026, there were no unvested options.

Restricted Stock and Performance Shares

The Company grants restricted stock awards that vest upon time-based service conditions. Dividend payments are made during the vesting period. The value of restricted stock is determined to be the current value of the Company’s stock, and this total value will be recognized as compensation expense over the vesting period. As of June 30, 2026, there was $6.8 million of total unrecognized compensation cost related to unvested restricted stock. The cost is expected to be recognized evenly over the weighted average vesting period of 2.6 years for unvested restricted stock.

The Company grants performance shares that give plan participants the opportunity to earn between 0% and 150% of the number of performance shares granted based on achieving certain performance metrics. The Compensation Committee determined that beginning with the grants in 2026, it would use the metrics of increase in tangible book value per share plus dividends, along with a relative TSR modifier, over a three-year performance period beginning on January 1st of the year of the grant to determine the number of performance shares earned. These metrics were used to make grants to the participants in early 2026. As of June 30, 2026, there was $2.0 million of total unrecognized compensation cost related to unvested performance shares. As of June 30, 2026, unvested performance shares had a weighted average remaining time to vest of 2.7 years.

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NOTE 8 - DEPOSITS

Deposits at June 30, 2026 and December 31, 2025 were as follows:

The scheduled maturities of time deposits at June 30, 2026 were as follows:

NOTE 9 - DERIVATIVES

The Company has entered into forward loan sale commitments with secondary market investors to deliver loans on a “best efforts delivery” basis, which do not meet the definition of a derivative instrument. When a rate is committed to a borrower, it is based on the best price that day and locked with the investor for the customer for a 30-day period. In the event the loan is not delivered to the investor, the Company has no risk or exposure with the investor. The interest rate lock commitments related to loans that are originated for later sale are classified as derivatives. The fair values of the Company’s agreements with investors and rate lock commitments to customers as of June 30, 2026 and December 31, 2025 were not material.

NOTE 10 - RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023‑09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires enhanced annual income tax disclosures, including additional disaggregation within the effective tax rate reconciliation and income taxes paid by jurisdiction. The ASU is effective for public business entities for annual periods beginning after December 15, 2024, with early adoption permitted. Entities may apply the guidance either prospectively or retrospectively. In our Quarterly Report on Form 10‑Q for the period ending September 30, 2025, we previously disclosed that we had planned to adopt ASU 2023‑09 using a retrospective transition method. Upon further evaluation of the implementation considerations and in light of the optional transition methods permitted under ASU 2023‑09, management determined that prospective application would provide better decision-making information and reduce implementation complexity. Accordingly, effective January 1, 2025, the Company applied ASU 2023‑09 prospectively, and the enhanced income tax disclosures required by the ASU were first reflected in our Annual Report on Form 10‑K for the year ending December 31, 2025.

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NOTE 11 - RECENT ACCOUNTING PRONOUNCEMENTS

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). The amendments improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales and research and development). The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. We are currently evaluating the impact these changes may have on our consolidated financial statements.

In November 2025, the FASB issued ASU 2025-08, Financial Instruments - Credit Losses - Purchased Loans. The amendment expands the population of acquired financial assets accounted for using the gross-up approach and aims to enhance comparability and consistency, and better reflect the economics of acquiring financial assets. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted in an interim or annual reporting period in which financial statements have not been issued or made available for issuance. We will adopt the amendment, but it will have no impact on current assets.

NOTE 12 - FAIR VALUE MEASUREMENT

Measurement of fair value under U.S. GAAP establishes a hierarchy that prioritizes observable and unobservable inputs used to measure fair value, as of the measurement date, into three broad levels, which are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and also considers counterparty credit risk in its assessment of fair value.

Debt Securities. Where quoted prices are available in an active market, securities are classified within Level 1 of the hierarchy. Level 1 securities include highly liquid government securities such as U.S. Treasuries and exchange-traded equity securities. For securities traded in secondary markets for which quoted market prices are not available, the Company generally relies on pricing services provided by independent vendors. Such independent pricing services are to advise the Company on the carrying value of the securities available for sale portfolio. As part of the Company’s procedures, the price provided from the service is evaluated for reasonableness given market changes. When a questionable price exists, the Company investigates further to determine if the price is valid. If needed, other market participants may be utilized to determine the correct fair value. The Company has also reviewed and confirmed its determinations in discussions with the pricing service regarding their methods of price discovery. Securities measured with these techniques are classified within Level 2 of the hierarchy and often involve using quoted market prices for similar securities, pricing models or discounted cash flow calculations using inputs observable in the market where available. Examples include U.S. government agency securities, mortgage-backed securities, obligations of states and political subdivisions, and certain corporate, asset-backed and other securities. In cases where Level 1 or Level 2 inputs are not available, as in the case of certain corporate securities, these securities are classified in Level 3 of the hierarchy.

Derivative Instruments. The fair values of derivatives are determined based on a valuation pricing model using readily available observable market parameters such as interest rate curves, adjusted for counterparty credit risk. These measurements are classified as Level 2 within the valuation hierarchy.

Loans Individually Evaluated. Loans individually evaluated are measured and reported at fair value when full payment under the loan terms is not probable. Loans individually evaluated are carried at the present value of expected future cash flows using the loan’s existing rate in a discounted cash flow calculation, or the fair value of the collateral if the loan is collateral-dependent. Expected cash flows are based on internal inputs reflecting expected default rates on contractual cash flows. This method of estimating fair value does not incorporate the exit-price concept of fair value described in ASC 820-10 and would generally result in a higher value than the exit-price approach. For loans measured using the estimated fair value of collateral less costs to sell, fair value is generally determined based on appraisals performed by certified and licensed appraisers using inputs such as absorption rates, capitalization rates and market comparables, adjusted for estimated costs to sell. Management modifies the appraised values, if needed, to take into account recent developments in the market or other factors, such as changes in absorption rates or market conditions from the time of valuation, and anticipated sales values considering management’s plans for disposition. Such modifications to the appraised values could result in lower valuations of such collateral. Estimated costs to sell are based on current amounts of disposal costs for similar assets. These measurements are classified as Level 3 within the valuation hierarchy. Loans individually evaluated are subject to nonrecurring fair value adjustment upon initial recognition or subsequent individual evaluation. A portion of the ACL is allocated to loans individually evaluated if the value of such loans is deemed to be less than the unpaid balance. The range of fair value adjustments and weighted average adjustment as of June 30, 2026 was 0% to 80% and 30.3%, respectively. The range of fair value adjustments and weighted average adjustment as of December 31, 2025 was 0% to 70% and 17.1% respectively. Loans individually evaluated are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly based on the same factors identified above. The amount recognized to write-down individually evaluated loans that are measured at fair value on a nonrecurring basis was $9.5 million and $19.2 million during the three and six months ended June 30, 2026, respectively, and $1.2 million and $3.6 million during the three and six months ended June 30, 2025, respectively.

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Other Real Estate Owned. Other real estate assets (“OREO”) acquired through, or in lieu of, foreclosure are held for sale and are initially recorded at the lower of cost or fair value, less selling costs. Any write-downs to fair value at the time of transfer to OREO are charged to the ACL subsequent to foreclosure. Values are derived from appraisals of underlying collateral and discounted cash flow analysis. Appraisals are performed by certified and licensed appraisers. Subsequent to foreclosure, valuations are updated periodically and assets are marked to current fair value, not to exceed the new cost basis. In the determination of fair value subsequent to foreclosure, management also considers other factors or recent developments, such as changes in absorption rates and market conditions from the time of valuation, and anticipated sales values considering management’s plans for disposition, which could result in adjustment to lower the property value estimates indicated in the appraisals. The range of fair value adjustments and weighted average adjustment as of June 30, 2026 was 10% to 87% and 28.1%, respectively. The range of fair value adjustments and weighted average adjustment as of December 31, 2025 was 10% to 27% and 23.5%, respectively. These measurements are classified as Level 3 within the valuation hierarchy. A net gain (loss) on the sale and write-downs of OREO and repossessed assets of ($61,000) and ($83,000) was recognized for the three and six months ended June 30, 2026, respectively, and ($17,000) and $301,000 for the three and six months ended June 30, 2025. These charges were for write-downs in the value of OREO subsequent to foreclosure and losses on the disposal of OREO. OREO is classified within Level 3 of the hierarchy.

There were three residential real estate loans with an aggregate balance of $2.0 million foreclosed and classified as OREO as of June 30, 2026, compared to five residential real estate loan foreclosures for $2.5 million as of December 31, 2025.

There were seven residential real estate loans with a balance of $1.7 million in the process of foreclosure as of June 30, 2026, compared to one residential real estate loan foreclosure for $171,000 as of December 31, 2025.

The following table presents the Company’s financial assets carried at fair value on a recurring basis as of June 30, 2026 and December 31, 2025. There were no liabilities measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025.

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The following table presents the Company’s financial assets carried at fair value on a nonrecurring basis as of June 30, 2026 and December 31, 2025:

There were no liabilities measured at fair value on a nonrecurring basis as of June 30, 2026 and December 31, 2025.

In the case of the debt securities portfolio, the Company monitors the portfolio to ascertain when transfers between levels have been affected. For the six months ended June 30, 2026, there were no transfers out of Level 3 into Level 2.

The fair value of a financial instrument is the current amount that would be exchanged in a sale between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Current U.S. GAAP excludes certain financial instruments and all nonfinancial instruments from its fair value disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

The estimated fair values of the Company’s financial instruments not measured at fair value on a recurring or nonrecurring basis as of June 30, 2026 and December 31, 2025 were as follows:

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NOTE 13 - SEGMENT REPORTING

The Bank’s revenue is primarily derived from the business of banking. The Bank’s financial performance is monitored on consolidated basis by senior management, which is considered to be the Bank’s chief operating decision maker (“CODM”). Senior Management includes the following officers of the Company: Chairman of the Board and Chief Executive Officer; President; Executive Vice President, Chief Financial Officer; and Executive Vice President, Chief Operating Officer. Financial performance is reported to the CODM monthly, and the primary measure of performance is net income, net interest income, noninterest income, and key operating expenses. The allocation of resources throughout the Bank is based on consolidated profitability and efficiency metrics. The presentation of financial performance to the CODM is consistent with amounts and financial statement line items shown in the Bank’s consolidated balance sheets and consolidated statements of income. Additionally, the Bank’s significant expenses are adequately segmented by category and amount in the consolidated statements of income to include all significant items when considering both qualitative and quantitative factors. Significant expenses of the Company include salaries and employee benefits, equipment and occupancy expense, third-party processing and other services, and professional services.

All of the Bank’s financial results are similar and considered by management to be aggregated into one reportable operating segment. While the Company has assigned certain management responsibilities by region and business line, the Bank’s CODM evaluates financial performance on a Bank-wide basis. The majority of the Bank’s revenue is from the business of banking, and the Bank’s regions have similar economic characteristics, products, services and customers. Accordingly, all of the Bank’s operations are considered by management to be aggregated in one reportable operating segment.

Because we report on a single segment basis, our financial statements may not be directly comparable to financial institutions that present multiple reportable segments. Should future organizational changes in our management structure or business model necessitate more detailed segment disclosures, we will revise our segment reporting accordingly. As of the date of these consolidated financial statements, no such changes have occurred, and management continues to evaluate performance on a consolidated entity basis.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is designed to provide a better understanding of various factors relating to the results of operations and financial condition of ServisFirst Bancshares, Inc. (the “Company”) and its wholly-owned subsidiary, ServisFirst Bank (the “Bank”). This discussion is intended to supplement and highlight information contained in the accompanying unaudited consolidated balance sheets as of June 30, 2026 and December 31, 2025 and consolidated statements of income for the three and six months ended June 30, 2026 and June 30, 2025.

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Business

We are a bank holding company under the Bank Holding Company Act of 1956 and are headquartered in Birmingham, Alabama. Our wholly-owned subsidiary, ServisFirst Bank, an Alabama banking corporation, provides commercial banking services through full-service banking offices located in Alabama, Florida, Georgia, North and South Carolina, Tennessee, Texas and Virginia. The Bank recently entered the Houston, Texas market with plans of opening a new office there in the coming weeks. Through the Bank, we originate commercial, consumer and other loans and accept deposits, provide electronic banking services, such as online and mobile banking, including remote deposit capture, deliver treasury and cash management services and provide correspondent banking services to other financial institutions.

Our principal business is to accept deposits from the public and to make loans and other investments. Our principal sources of funds for loans and investments are demand, time, savings, and other deposits. Our principal sources of income are interest and fees collected on loans, interest and dividends collected on other investments and service charges. Our principal expenses are interest paid on savings and other deposits, interest paid on our other borrowings, employee compensation, office expenses and other overhead expenses.

Second Quarter Highlights

• Diluted earnings per common share of $1.57 for the second quarter of 2026, an increase of 40.2%, from the second quarter of 2025.
• Average loans of $14.22 billion for the second quarter of 2026, an increase of $1.21 billion, or 9.3%, from the second quarter of 2025.
• Average deposits of $14.32 billion for the second quarter of 2026, an increase of $423.0 million, or 3.0%, from the second quarter of 2025.
• Net interest income of $155.6 million for the second quarter of 2026, increased $23.9 million, or 18.2%, from the second quarter of 2025.
• Net interest margin of 3.63% for second quarter of 2026, increased 53 basis points from 3.10% in the second quarter of 2025.

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Overview

As of June 30, 2026, we had consolidated total assets of $18.35 billion, an increase of $618.3 million, or 3.5%, from $17.73 billion at December 31, 2025. Total loans were $14.48 billion at June 30, 2026, an increase of $781.6 million, or 5.7%, from $13.70 billion at December 31, 2025. Total deposits were $14.55 billion at June 30, 2026, an increase of $329.7 million, or 2.3%, from $14.22 billion at December 31, 2025. Noninterest-bearing demand deposits comprised most of the increase in deposits, increasing by $311.1 million.

We reported net income and net income available to common stockholders of $85.8 million for the quarter ended June 30, 2026, compared to net income and net income available to common stockholders of $61.4 million for the second quarter of 2025. Basic and diluted earnings per common share were both $1.57 for the three months ended June 30, 2026, compared to $1.12 in the corresponding period in 2025.

Net income was $168.8 million and net income available to common stockholders was $168.7 million for the six months ended June 30, 2026, compared to net income and net income available to common stockholders of $124.6 million for the six months ended June 30, 2025. Basic and diluted earnings per common share were both $3.09 for the six months ended June 30, 2026, compared to $2.28 for both for the corresponding period in 2025. Changes in income and expenses are more fully explained in “Results of Operations” below.

Performance Ratios

The following table presents select ratios of our results of operations for the three and six months ended June 30, 2026, and 2025.

(1) Net interest margin is the net yield on interest earning assets and is the difference between the interest yield earned on interest-earning assets and interest rate paid on interest-bearing liabilities, divided by average earning assets.

(2) Efficiency ratio is the result of noninterest expense divided by the sum of net interest income and noninterest income.

Financial Condition

Cash and Cash Equivalents

At June 30, 2026, we had $1.0 million in federal funds sold, compared to $6.1 million at December 31, 2025. We also maintain balances at the Federal Reserve Bank of Atlanta, which earn interest. At June 30, 2026, we had $1.08 billion in balances at the Federal Reserve, compared to $1.00 billion at December 31, 2025. At June 30, 2026, we had $250.4 million in securities purchased under agreements to resell, compared to $498.9 million at December 31, 2025.

Securities

Debt securities available-for-sale totaled $995.1 million at June 30, 2026 and $1.07 billion at December 31, 2025. During the three months ended June 30, 2025, the Company sold available-for-sale mortgage-backed securities with an amortized cost base of $70.5 million, and recorded a pre-tax loss of $8.6 million as a result of our portfolio restructuring during 2025. Debt securities held to maturity totaled $635.5 million at June 30, 2026 and $660.1 million at December 31, 2025. We had paydowns of $44.6 million on mortgage-backed securities and government agencies, maturities of $90.4 million on municipal bonds and treasury securities, and calls of $47.5 million on corporate securities during the six months ended June 30, 2026. We purchased $50.0 million in mortgage-backed securities and $33.7 million in corporate securities during the six months ended June 30, 2026. For a tabular presentation of debt securities available for sale and held to maturity at June 30, 2026 and December 31, 2025, see “Note 4 – Securities” in our Notes to Consolidated Financial Statements.

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The objective of our investment policy is to invest funds not otherwise needed to meet our loan demand to earn the maximum return, yet still maintain sufficient liquidity to meet fluctuations in our loan demand and deposit structure. In doing so, we seek to balance the market and credit risks against the potential investment return, make investments compatible with the pledge requirements of any deposits of public funds, maintain compliance with regulatory investment requirements, and assist certain public entities with their financial needs. The investment committee has full authority over the investment portfolio and makes decisions on purchases and sales of securities. The entire portfolio, along with all investment transactions occurring since the previous board of directors meeting, is reviewed by the board at each monthly meeting. The investment policy allows portfolio holdings to include short-term securities purchased to provide us with needed liquidity and longer-term securities purchased to generate level income for us over periods of interest rate fluctuations.

All debt securities in an unrealized loss position as of June 30, 2026 continue to perform as scheduled. We have evaluated the securities and have determined that the decline in fair value, relative to its amortized cost, is not due to credit-related factors. In addition, we have the ability to hold these securities within the portfolio until maturity or until the value recovers, and we believe that it is not likely that we will be required to sell these securities prior to recovery. We continue to monitor all of our securities with a high degree of scrutiny. There can be no assurance that we will not conclude in future periods that conditions existing at that time indicate some or all of its securities may be sold or would require a charge to earnings as a provision for credit losses in such periods.

We do not invest in collateralized debt obligations. As of June 30, 2026, we had $392.2 million of bank and bank holding company-issued debt. All such bonds, if rated, were rated BBB or better by Kroll Bond Rating Agency at the time of our initial investment, and all other corporate bonds held were rated A‑1 or better by Standard & Poor’s or Moody’s at the time of purchase The total investment portfolio has a combined average credit rating of AA as of June 30, 2026.

The carrying value of debt securities pledged to secure public funds on deposit and for other purposes as required by law was $1.17 billion and $1.23 billion as of June 30, 2026 and December 31, 2025, respectively.

Loans

At June 30, 2026, we had total loans of $14.48 billion, an increase of $781.6 million, or 5.7%, from $13.70 billion at December 31, 2025. The majority of this growth occurred in non-owner occupied commercial loans, increasing $520.2 million, or 11.3% since December 31, 2025.

The following table details our loan portfolio and the percentage composition by type at June 30, 2026 and December 31, 2025:

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The table below summarizes the Company’s commercial real estate portfolio at June 30, 2026 as segregated by industry concentrations based on North American Industry Classification System:

The table below summarizes the Company’s commercial real estate portfolio at June 30, 2026 as segregated by geographic region in which the property is located:

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Asset Quality

We assess the adequacy of our ACL at the end of each calendar quarter. The level of ACL is based on our evaluation of historical default and loss experience, current and projected economic conditions, asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect the borrowers' ability to repay a loan, the estimated value of any underlying collateral, composition of the loan portfolio and other relevant factors. The ACL is increased by a provision for credit losses, which is charged to expense, and reduced by charge-offs, net of recoveries. We believe the ACL is adequate to absorb all expected future losses to be recognized over the contractual life of the loans in the portfolio.

Loans with similar risk characteristics are evaluated in pools and, depending on the nature of each identified pool, we utilize a discounted cash flow, probability of default / loss given default or remaining life method. The historical loss experience estimate by pool is then adjusted by forecast factors that are quantitatively related to the Company’s historical credit loss experience, such as national unemployment rates and gross domestic product. Losses are predicted over a period of time determined to be reasonable and supportable, and at the end of the reasonable and supportable period losses are reverted to long-term historical averages. The reasonable and supportable period and reversion period are re-evaluated each quarter and are dependent on the current economic environment among other factors. See “Note 1 – General” in the Notes to Consolidated Financial Statements included in Item 1. Consolidated Financial Statements elsewhere in this report.

The expected credit losses for each loan pool are then adjusted for changes in qualitative factors not inherently considered in the quantitative analyses. The qualitative adjustments either increase or decrease the quantitative model estimation. We consider factors that are relevant within the qualitative framework, which include the following: lending policy, changes in nature and volume of loans, staff experience, changes in volume and trends of problem loans, concentration risk, trends in underlying collateral values, external factors, quality of loan review system and other economic conditions.

Loans that no longer share similar risk characteristics with the collectively evaluated pools are excluded from the collective evaluation and expected credit losses are estimated on an individual basis. Individual evaluations are performed for nonaccrual loans, loans rated substandard, and certain modified loans. The allowance for credit losses on these individually evaluated loans is calculated using methods, such as the estimated fair value of underlying collateral, observable market prices of comparable debt, or the present value of expected future cash flows.

The following table presents a summary of the allowance for credit losses, net charge-offs and certain credit ratios for the three and six months ended June 30, 2026 and 2025.

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The following table presents the allocation of the allowance for credit losses for each respective loan category with the corresponding percent of loans in each category to total loans:

Nonperforming Assets

Total nonperforming loans at June 30, 2026, which include nonaccrual loans and loans 90 or more days past due and still accruing, increased $2.1 million, or 1.3%, to $171.0 million from $168.8 million at December 31, 2025. Of this total, nonaccrual loans of $169.7 million at June 30, 2026 represented a net increase of $1.4 million from nonaccrual loans at December 31, 2025. The majority of the increase in non-performing assets is attributable to two relationships, both of which are secured by real estate. Excluding credit card accounts, there were four loans 90 or more days past due and still accruing totaling $1.1 million at June 30, 2026, compared to two loans totaling $323,000 at December 31, 2025. Loans made to borrowers experiencing financial difficulty that were modified during the three months ended June 30, 2026 and 2025 were $1.5 million and $494,000, respectively.

The following table details our nonperforming assets at June 30, 2026 and December 31, 2025:

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OREO and repossessed assets at June 30, 2026 were $4.8 million, an increase of $2.3 million, or 87.1%, from $2.6 million at December 31, 2025. The following table summarizes OREO and repossessed asset activity for the six months ended June 30, 2026 and 2025:

The balance of nonperforming assets can fluctuate due to changes in economic conditions. We have established a policy to discontinue accruing interest on a loan (i.e., place the loan on nonaccrual status) after it has become 90 days delinquent as to payment of principal or interest, unless the loan is considered to be well-collateralized and is actively in the process of collection. In addition, a loan will be placed on nonaccrual status before it becomes 90 days delinquent if management believes that the collection of interest is not expected. Interest previously accrued but uncollected on such loans is reversed and charged against current income when the receivable is determined to be uncollectible. Interest income on nonaccrual loans is recognized only as received. If we believe that a loan will not be collected in full, we will increase the ACL to reflect management’s estimate of any potential exposure or loss. Generally, payments received on nonaccrual loans are applied directly to principal.

Deposits

We rely on increasing our deposit base to fund loan and other asset growth. Each of our markets is highly competitive. We compete for local deposits by offering attractive products with competitive rates. We expect to have a higher average cost of funds for local deposits than competitor banks due to our lack of an extensive branch network. Our management’s strategy is to offset the higher cost of funding with a lower level of operating expense and firm pricing discipline for loan products. We have promoted electronic banking services by providing them without charge and by offering in-bank customer training. At June 30, 2026, our total deposits were $14.55 billion, an increase of $329.7 million, or 2.3%, from $14.22 billion at December 31, 2025.

The following table summarizes balances of our deposits and the percentage of each type to the total at June 30, 2026 and December 31, 2025:

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At June 30, 2026 and December 31, 2025, we estimate that we had approximately $9.68 billion and $9.69 billion, respectively, in uninsured deposits, which are the portion of deposit accounts that exceed the FDIC insurance limit. The uninsured deposit data for 2026 and 2025 reflects the deposit insurance impact of “combined ownership segregation” of escrow and other accounts at an aggregate level but does not reflect an evaluation of all of the account styling distinctions that would determine the availability of deposit insurance to individual accounts based on FDIC regulations.

Other Borrowings

Our borrowings consist of federal funds purchased and subordinated notes payable. We had $1.58 billion and $1.47 billion at June 30, 2026 and December 31, 2025, respectively, in federal funds purchased from correspondent banks that are clients of our correspondent banking unit. The average rate paid on these borrowings was 3.74% for the quarter ended June 30, 2026. Other borrowings consist of $34.75 million of the Company’s 4% Subordinated Notes due October 21, 2030, which were issued in a private placement in October 2020 and pay interest semi-annually. The Notes can be prepaid at any time.

Liquidity

Liquidity is defined as our ability to generate sufficient cash to fund current loan demand, deposit withdrawals, and other cash demands and disbursement needs, and otherwise to operate on an ongoing basis.

The retention of existing deposits and attraction of new deposit sources through new and existing customers is critical to our liquidity position. If our liquidity was to decline due to deposit withdrawals, we have procedures that provide for certain actions under varying liquidity conditions. These actions include borrowing from existing correspondent banks, selling or participating loans, and curtailing loan commitments and funding. At June 30, 2026, our liquid assets, represented by cash and due from banks, federal funds sold, securities purchased with agreements to resell and unpledged available-for-sale and held-to-maturity debt securities, totaled $1.72 billion. The Bank had loans pledged to both the Federal Home Loan Bank and the Federal Reserve Bank of Atlanta, which provided approximately $3.40 billion and $2.56 billion, respectively, in available funding. The Bank’s policy limits on brokered deposits would allow for up to $4.59 billion in available funding for brokered deposits. Additionally, the Bank had approximately $312.0 million in available unused federal funds lines of credit with regional banks, subject to certain restrictions and collateral requirements, to meet short term funding needs.

Our management meets on a quarterly basis to review sources and uses of funding to determine the appropriate strategy to ensure an appropriate level of liquidity. At the current time, our long-term liquidity needs primarily relate to funds required to support loan originations and commitments and deposit withdrawals. Our regular sources of funding are from the growth of our deposit base, repayment of principal and interest on loans, the sale of loans and the renewal of time deposits. In addition, we have issued debt as described above under “Other borrowings” and have various other sources of liquidity as discussed herein. We believe these sources of funding are adequate to meet both our immediate (within the next 12 months) and our longer term anticipated funding needs. However, we may need additional funding if we are able to maintain our current growth rate into the future.

We are subject to general FDIC guidelines that require a minimum level of liquidity. Management believes our liquidity ratios meet or exceed these guidelines.

The following table illustrates, during the periods presented, the mix of our funding sources and the assets in which those funds are invested as a percentage of our average total assets for the period indicated. Average assets totaled $18.01 billion and $17.89 billion, respectively, for the three and six months ended June 30, 2026.

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Capital Adequacy

Total stockholders' equity attributable to us at June 30, 2026 was $1.98 billion, or 10.78% of total assets. At December 31, 2025, total stockholders' equity attributable to us was $1.85 billion, or 10.44% of total assets.

As of June 30, 2026, our most recent notification from the FDIC categorized us as well-capitalized under the regulatory framework for prompt corrective action. To remain categorized as well-capitalized, we must maintain minimum Common Equity Tier 1, Tier 1 risk-based, total risk-based, and Tier 1 leverage ratios as disclosed in the table below. Our management believes that we are well-capitalized under the prompt corrective action provisions as of June 30, 2026.

The final rules implementing the Basel Committee on Banking Supervision's capital guidelines for U.S. banks (Basel III rules) became effective January 1, 2015, subject to a phase-in period for certain aspects of the new rules. In order to avoid restrictions on capital distributions and discretionary bonus payments to executives, under the Basel III rules a covered banking organization is required to maintain a “capital conservation buffer” in addition to its minimum risk-based capital requirements. This buffer is required to consist solely of common equity Tier 1 capital, and the buffer applies to all three risk-based measurements (CET1, Tier 1 capital and total capital). The capital conservation buffer became fully effective on January 1, 2019. As of January 1, 2019, an additional amount of common equity Tier 1 capital equal to 2.5% of risk-weighted assets is required for compliance with the capital conservation buffer. The ratios for the Company and the Bank are currently sufficient to satisfy the fully phased-in capital conservation buffer.

The following table sets forth (i) the capital ratios required by the FDIC and the Alabama Banking Department’s leverage ratio requirement and (ii) our actual ratios, not including the applicable 2.5% capital conservation buffer, of capital to total regulatory or risk-weighted assets, as of June 30, 2026, December 31, 2025 and June 30, 2025:

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• • This column reflects the minimum capital ratios under Basel III and does not include the 2.5% capital conservation buffer.

We are a legal entity separate and distinct from the Bank. Our principal source of cash flow, including cash flow to pay dividends to our stockholders, is dividends the Bank pays to us as the Bank’s sole shareholder. Statutory and regulatory limitations apply to the Bank’s payment of dividends to us as well as our payment of dividends to our stockholders. The requirement that a bank holding company must serve as a source of strength to its subsidiary banks also results in the position of the Federal Reserve that a bank holding company should not maintain a level of cash dividends to its stockholders that places undue pressure on the capital of its bank subsidiaries or that can be funded only through additional borrowings or other arrangements that may undermine the bank holding company’s ability to serve as such a source of strength. Our ability to pay dividends is also subject to the provisions of Delaware corporate law.

The Alabama Banking Department also regulates the Bank’s dividend payments. Under Alabama law, a state-chartered bank may not pay a dividend in excess of 90% of its net earnings until the Bank’s surplus is equal to at least 20% of its capital (our Bank’s surplus currently exceeds 20% of its capital). Moreover, our Bank is also required by Alabama law to obtain the prior approval of the Superintendent of Banks (“Superintendent”) for its payment of dividends if the total of all dividends declared by the Bank in any calendar year will exceed the total of (i) the Bank’s net earnings (as defined by statute) for that year, plus (ii) its retained net earnings for the preceding two years, less any required transfers to surplus. In addition, no dividends, withdrawals or transfers may be made from the Bank’s surplus without the prior written approval of the Superintendent.

The Bank’s payment of dividends may also be affected or limited by other factors, such as the requirement to maintain adequate capital above regulatory guidelines. The federal banking agencies have indicated that paying dividends that deplete a depository institution’s capital base to an inadequate level would be an unsafe and unsound banking practice. Under the Federal Deposit Insurance Corporation Improvement Act of 1991, a depository institution may not pay any dividends if payment would cause it to become undercapitalized or if it already is undercapitalized. Moreover, the federal agencies have issued policy statements that provide that bank holding companies and insured banks should generally only pay dividends out of current operating earnings. If, in the opinion of the federal banking regulators, the Bank were engaged in or about to engage in an unsafe or unsound practice, the federal banking regulators could require, after notice and a hearing, that the Bank stop or refrain from engaging in the questioned practice.

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Off-Balance Sheet Arrangements

In the normal course of business, we are a party to financial instruments with off-balance sheet risk to meet the financing needs of our customers. These financial instruments include commitments to extend credit beyond current fundings, credit card arrangements, standby letters of credit, and financial guarantees. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in our balance sheet. The contract or notional amounts of those instruments reflect the extent of involvement we have in those particular financial arrangements. All such financial instruments bear interest at variable rates and we have no such financial instruments that bear interest at fixed rates.

Our exposure to credit loss for commitments to extend credit, credit card arrangements and standby letters of credit is represented by the contractual or notional amount of these instruments in the event of non-performance by the other party to such financial instrument. We use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments.

As part of our mortgage operations, we originate and sell certain loans to investors in the secondary market. We continue to experience a manageable level of investor repurchase demands. For loans sold, we have an obligation to either repurchase the outstanding principal balance of a loan or make the purchaser whole for the economic benefits of a loan if it is determined that the loans sold were in violation of representations and warranties made by the Bank at the time of the sale. Representations and warranties typically include those made regarding loans that had missing or insufficient file documentation or loans obtained through fraud by borrowers or other third parties such as appraisers.

Financial instruments whose unfunded contract amounts represent credit risk at June 30, 2026 are as follows:

Commitments to extend credit beyond current funded amounts are agreements to lend to a customer as long as there is no violation of any condition established in the applicable loan agreement. Such commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. We evaluate each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by us upon extension of credit is based on our management’s credit evaluation. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties.

Standby letters of credit are conditional commitments issued by us to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. All letters of credit are due within one year or less of the original commitment date. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

Federal funds lines of credit are uncommitted lines issued to downstream correspondent banks for the purpose of providing liquidity to them. The lines are unsecured, and we have no obligation to sell federal funds to the correspondent, nor does the correspondent have any obligation to request or accept purchases of federal funds from us.

Results of Operations

Summary of Net Income

We reported net income and net income available to common stockholders of $85.8 million for the quarter ended June 30, 2026, compared to net income and net income available to common stockholders of $61.4 million for the second quarter of 2025. Net income was $168.8 million and net income available to common stockholders was $168.7 million for the six months ended June 30, 2026, compared to net income and net income available to common stockholders of $124.6 million for the six months ended June 30, 2025. The increase in net income for both the three and six months ended June 30, 2026 compared to 2025 was driven by growth in both net interest income and noninterest income, adjusted for $8.6 million of securities losses in the second quarter of 2025.

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Basic and diluted earnings per common share were both $1.57 for the three months ended June 30, 2026, compared to $1.12 in the corresponding period in 2025. Basic and diluted earnings per common share were both $3.09 for the six months ended June 30, 2026, compared to $2.28 for both in the corresponding period in 2025. Return on average assets for the three and six months ended June 30, 2026 was 1.91% and 1.90% compared to 1.40% and 1.42%, respectively, for the corresponding periods in 2025. Return on average common stockholders' equity for the three and six months ended June 30, 2026 was 17.71% and 17.81%, respectively, compared to 14.56% and 15.08%, respectively, for the corresponding periods in 2025.

Net Interest Income and Net Interest Margin Analysis

Net interest income is the difference between the income earned on interest-earning assets and interest paid on interest-bearing liabilities used to support such assets. The major factors that affect net interest income are changes in volumes, the yield on interest-earning assets and the cost of interest-bearing liabilities. Management’s ability to respond to changes in interest rates by effective asset-liability management techniques is critical to maintaining the stability of the net interest margin and the momentum of our primary source of earnings.

Taxable-equivalent net interest income increased $24.4 million, or 18.5%, to $156.1 million for the three months ended June 30, 2026 compared to $131.8 million for the corresponding period in 2025, and increased $49.0 million, or 19.2%, to $304.4 million for the six months ended June 30, 2026 compared to $255.4 million for the corresponding period in 2025. The taxable-equivalent yield on interest-earning assets increased to 5.82% for the three months ended June 30, 2026 from 5.80% for the corresponding period in 2025, and increased to 5.79% for the six months ended June 30, 2026 from 5.76% for the corresponding period in 2025. The yield on loans for the three months ended June 30, 2026 was 6.23% compared to 6.37% for the corresponding period in 2025, and 6.21% compared to 6.34% for the six months ended June 30, 2026 and June 30, 2025, respectively. The cost of total interest-bearing liabilities decreased to 2.91% for the three months ended June 30, 2026 compared to 3.50% for the corresponding period in 2025, and decreased to 2.88% for the six months ended June 30, 2026 from 3.55% for the corresponding period in 2025. Net interest margin for the three months ended June 30, 2026 was 3.63% compared to 3.10% for the corresponding period in 2025, and 3.58% for the six months ended June 30, 2026 compared to 3.01% for the corresponding period in 2025.

The Federal Reserve Bank’s targeted federal funds rate was 4.25 – 4.50% at June 30, 2025 compared to its current range as of June 30, 2026 of 3.50 – 3.75%.

The following tables show, for the three and six months ended June 30, 2026 and June 30, 2025, the average balances of each principal category of our assets, liabilities and stockholders' equity, and an analysis of net interest revenue. The accompanying tables reflect changes in our net interest margin as a result of changes in the volume and rate of our interest-earning assets and interest-bearing liabilities for the same periods. Changes as a result of mix or the number of days in the periods have been allocated to the volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each. The tables are presented on a taxable-equivalent basis where applicable:

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• Average Balance Sheets and Net Interest Analysis
• On a Fully Taxable-Equivalent Basis
• For the Three Months Ended June 30,
• (In thousands, except Average Yields and Rates)

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Our growth in loans and interest-bearing balances with banks drove the favorable volume component change. The rate component was favorable as loan yields decreased 14 basis points and average rates paid on interest-bearing liabilities decreased 59 basis points for the three months ended June 30, 2026.

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• Average Balance Sheets and Net Interest Analysis
• On a Fully Taxable-Equivalent Basis
• For the Six Months Ended June 30,
• (In thousands, except Average Yields and Rates)

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Our growth in loans and interest-bearing balances with banks drove the favorable volume component change. While the overall rate component was favorable, loan yields decreased by 13 basis points, and the average rate paid on interest-bearing liabilities decreased by 67 basis points for the six months ended June 30, 2026.

Tax Credit Investments

We invest in certain affordable housing projects throughout our market area as a means of supporting local communities. We receive tax credits related to these investments, for which we typically act as a limited partner and therefore do not exert control over the operating or financial policies of the partnerships. We typically provide financing during the construction and development of the properties. Tax credits are subject to recapture by taxing authorities based on compliance features required to be met at the project level. Our maximum potential exposure to losses relative to investments in variable interest entities is generally limited to the sum of the outstanding balance, future funding commitments and any related loans to the entity, exclusive of any potential tax recapture associated with the investments. Loans to these entities are underwritten in substantially the same manner as the Company’s other loans and are generally secured. We invest as a limited partner in certain projects through the New Market Tax Credit program, which is a federal financial program aimed to stimulate business and real estate investment in underserved communities via a federal tax credit. We also invest in certain tax-advantaged projects promoting renewable energy sources designed to generate a return primarily through the realization of federal and state income tax credits, and other tax benefits, over specified time periods. We have investments in and future funding commitments related to private equity and certain other equity method investments. The risk exposure related to such commitments is generally limited to the amount of investments and future funding commitments made. The following table summarizes certain tax credit and certain equity investments.

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The following table presents a summary of tax credits and amortization expense associated with those investments accounted for using the proportional amortization method for the period indicated.

Provision for Credit Losses

The provision for credit losses on loans was $11.7 million for the three months ended June 30, 2026, an increase of $286,000 from $11.4 million for the three months ended June 30, 2025, and was $22.3 million for the six months ended June 30, 2026, an increase of $4.4 million from $17.9 million for the six months ended June 30, 2025. The ACL as of June 30, 2026, March 31, 2026, and June 30, 2025, totaled $181.9 million, $173.9 million, and $170.0 million, or 1.26%, 1.25%, and 1.28% of loans, net of unearned income, respectively. Annualized net credit charge-offs to quarter-to-date average loans were 0.11% for the three months ended June 30, 2026, a 9 basis points decrease compared to 0.20% for the second quarter of 2025. Annualized net credit charge-offs to year-to-date average loans were 0.17% for the six months ended June 30, 2026, compared to 0.19% for the corresponding period in 2025. Nonperforming loans increased to $171.0 million, or 1.18% of total loans, at June 30, 2026 from $168.8 million, or 1.23% of total loans at December 31, 2025, and increased compared to $72.2 million, or 0.55% of total loans, at June 30, 2025. See the section captioned “Asset Quality” located elsewhere in this item for additional discussion related to provision for credit losses.

Noninterest Income

Noninterest income totaled $12.9 million for the three months ended June 30, 2026, compared to $421,000 in the corresponding period in 2025, and totaled $23.7 million for the six months ended June 30, 2026, compared to $8.7 million in the corresponding period in 2025.

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Details of noninterest income are as follows:

• Service charges on deposit accounts increased $667,000, or 25.0%, to $3.3 million for the three months ended June 30, 2026 compared to $2.7 million for the same period in 2025, and increased $1.4 million, or 26.9%, to $6.6 million for the six months ended June 30, 2026 compared to $5.2 million for the same period in 2025. We increased our service charge rates on many of our checking account products in July of 2025.
• Mortgage banking income increased $898,000, or 67.9%, to $2.2 million for the three months ended June 30, 2026 compared to $1.3 million for the same period in 2025, and increased $2.2 million, or 112.4%, to $4.1 million for the six months ended June 30, 2026 compared to $1.9 million for the same period in 2025. The increase on a year-over-year basis was primarily due to an increase in loans sold into the secondary market. We also increased our per-loan administrative fee in the first quarter of 2026.
• Credit card income increased $373,000, or 17.6%, to $2.5 million for the three months ended June 30, 2026 compared to $2.1 million for the same period in 2025, and increased $607,000, or 14.9%, to $4.7 million for the six months ended June 30, 2026 compared to $4.1 million for the same period in 2025.
• During the second quarter of 2025, the Company sold available-for-sale mortgage-backed securities with an amortized cost basis of $70.5 million and recorded a pre-tax loss of $8.6 million, as a result of a portfolio restructuring.
• Bank-owned life insurance (“BOLI”) income increased $2.0 million, or 94.4%, to $4.1 million for the three months ended June 30, 2026 compared to $2.1 million for the same period in 2025, and increased $2.7 million, or 63.1%, to $7.0 million for the six months ended June 30, 2026 compared to $4.3 million for the same period in 2025. The increases were primarily due to our purchases of $150.0 million of new contracts in the third quarter of 2025 and $25.0 million of new contracts in the second quarter of 2026. Additionally, we had a $1.0 million adjustment in the first quarter of 2026 related to a correction of BOLI income in the fourth quarter of 2025.
• Other operating income decreased $37,000, or 5.0%, to $708,000 for the three months ended June 30, 2026 compared to $745,000 for the same period in 2025, and decreased $410,000, or 23.5%, to $1.3 million for the six months ended June 30, 2026 compared to $1.7 million for the same period in 2025. Merchant service revenue increased $114,000, or 19.0%, to $714,000 for the three months ended June 30, 2026 compared to $600,000 for the same period in 2025, and increased $176,000, or 15.9%, to $1.3 million for the six months ended June 30, 2026 compared to $1.1 million for the same period in 2025.

Noninterest Expense

Noninterest expense totaled $50.0 million for the three months ended June 30, 2026, an increase of $5.8 million, or 13.0%, compared to the corresponding period in 2025, and totaled $97.3 million for the six months ended June 30, 2026, an increase of $7.0 million, or 7.8%, from the corresponding period in 2025.

Details of noninterest expense are as follows:

• Salary and benefit expense increased $3.7 million, or 16.4%, to $26.3 million for the three months ended June 30, 2026 compared to $22.6 million for the same period in 2025, and increased $7.7 million, or 16.9%, to $53.1 million for the six months ended June 30, 2026 compared to $45.5 million for the same period in 2025. The number of FTE employees increased by 25, or 3.8%, to 684 at June 30, 2026 compared to 659 at June 30, 2025.
• Third party processing and other services decreased $43,000, or 0.5%, to $8.0 million for the three months ended June 30, 2026 compared to $8.0 million for the same period in 2025, and decreased $256,000, or 1.6%, to $15.5 million for the six months ended June 30, 2026 compared to $15.7 million for the same period in 2025.
• Professional services expense increased $323,000, or 17.0%, to $2.2 million for the three months ended June 30, 2026 compared to $1.9 million for the same period in 2025, and increased $333,000, or 8.7%, to $4.2 million for the six months ended June 30, 2026 compared to $3.8 million for the same period in 2025.
• FDIC and other regulatory assessments remained unchanged at $2.8 million for both the three months ended June 30, 2026, and June 30, 2025, and decreased $1.3 million, or 24.0%, to $4.3 million for the six months ended June 30, 2026 compared to $5.6 million for the same period in 2025.
• Other operating expenses increased $1.3 million, or 23.8%, to $6.7 million for the three months ended June 30, 2026 compared to $5.4 million for the same period in 2025, and decreased $69,000, or 0.6%, to $12.3 million for the six months ended June 30, 2026 compared to $12.4 million for the same period in 2025.

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Income Tax Expense

Income tax expense was $21.4 million for the three months ended June 30, 2026 compared to $15.2 million for the same period in 2025, and was $39.4 million for the six months ended June 30, 2026, compared to $31.1 million for the same period in 2025. Our effective tax rate for the three and six months ended June 30, 2026 was 19.94% and 18.91%, respectively, compared to 19.82% and 19.94% for the corresponding periods in 2025, respectively. During the first quarter of 2026, we purchased Investment Tax Credits, which reduced our tax expense. We recognized excess tax benefits as an income tax credit to our income tax expense from the exercise of stock options and vesting of restricted stock during the three and six months ended June 30, 2026 of $36,000 and $265,000, respectively, compared to $234,000 and $704,000 for three and six months ended June 30, 2025, respectively. Our primary permanent differences are related to tax exempt income on securities, state income tax benefit on real estate investment trust dividends, various qualifying tax credits and change in cash surrender value of bank-owned life insurance.

We own real estate investment trusts for the purpose of holding and managing participations in residential mortgages and commercial real estate loans originated by the Bank. The trusts are wholly-owned subsidiaries of a trust holding company, which in turn is an indirect wholly-owned subsidiary of the Bank. The trusts earn interest income on the loans they hold and incur operating expenses related to their activities. They pay their net earnings, in the form of dividends, to the Bank, which receives a deduction for state income taxes.

Critical Accounting Estimates

The accounting principles we follow and our methods for applying these principles conform to U.S. generally accepted accounting principles (“GAAP”) and to general practices within the banking industry. To prepare consolidated financial statements in conformity with GAAP, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and future results could differ. In management’s opinion, certain accounting policies have a more significant impact than others on the Company’s financial reporting. The allowance for credit losses and income taxes are particularly significant for the Company’s financial reporting. Information concerning our accounting policies and critical accounting estimates with respect to these items is available in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. There were no changes to the accounting policies for the allowance for credit losses or income taxes during the three and six months ended June 30, 2026.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Like all financial institutions, we are subject to market risk from changes in interest rates. Interest rate risk is inherent in the balance sheet due to the mismatch between the maturities of rate-sensitive assets and rate-sensitive liabilities. If rates are falling, and the level of rate-sensitive liabilities is greater than the level of rate-sensitive assets, the impact on the net interest margin will be favorable. Conversely, if rates are rising, and the level of rate-sensitive liabilities exceeds the level of rate-sensitive assets, the net interest margin will be negatively impacted. Managing interest rate risk is further complicated by the fact that all rates do not change at the same pace; in other words, short-term rates may be rising while longer-term rates remain stable. In addition, different types of rate-sensitive assets and rate-sensitive liabilities react differently to changes in rates.

To manage interest rate risk, we must take a position on the expected future trend of interest rates. Rates may rise, fall or remain the same. Our asset-liability committee develops its view of future rate trends and strives to manage rate risk within a targeted range by monitoring economic indicators, examining the views of economists and other experts, and understanding the current status of our balance sheet. Our annual budget reflects the anticipated rate environment for the next 12 months. The asset-liability committee conducts a quarterly analysis of the rate sensitivity position and reports its results to our board of directors.

The asset-liability committee thoroughly analyzes the maturities of rate-sensitive assets and liabilities. This analysis measures the “gap,” which is defined as the difference between the dollar amount of rate-sensitive assets repricing during a period and the volume of rate-sensitive liabilities repricing during the same period. The gap is also expressed as the ratio of rate-sensitive assets divided by rate-sensitive liabilities. If the ratio is greater than one, the dollar value of assets exceeds the dollar value of liabilities and the balance sheet is “asset-sensitive.” Conversely, if the value of liabilities exceeds the value of assets, the ratio is less than one and the balance sheet is “liability-sensitive.” Our internal policy requires management to maintain the gap such that net interest margins will not decrease more than 6% if interest rates change by 100 basis points or decrease more than 12% if interest rates change by 200 basis points. There have been no changes to our policies or procedures for analyzing our interest rate risk since December 31, 2025, and there have been no material changes to our sensitivity to changes in interest rates since December 31, 2025.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this Quarterly Report on Form 10-Q, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based on that evaluation, and after implementing the remediation activities described below, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of June 30, 2026.

Identification of a Material Weakness

Subsequent to the filing of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 on May 6, 2026 (the “First Quarter 10-Q”) an error was identified in the Consolidated Statement of Cash Flows for the quarter ended March 31, 2026.

Specifically, the First Quarter 10-Q Consolidated Statement of Cash Flows presented the line item of “Dividends paid on common stock” as $20,758,000, omitting the parenthetical indication of a cash outflow. The correct presentation should have been ($20,758,000), a $41,516,000 difference. The dollar amount of dividends actually paid was not affected — the error was one of sign/classification — and it resulted in a corresponding $41,516,000 error of an overstatement of cash flows from financing activities and an understatement of cash flows from operating activities.

The error was limited to the Consolidated Statement of Cash Flows in the First Quarter 10-Q, and did not impact the beginning, ending or change in cash and cash equivalents balance, nor did it impact the Company's Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Comprehensive Income, or Consolidated Statements of Changes in Shareholders' Equity. The Company concluded that the error was not material to the previously issued financial statements and that no amendment, restatement or refiling of the First Quarter 10-Q was required.

The error resulted from an inadvertent alteration of a formula in a compilation worksheet that was not identified during management's review of the classification of cash flows in the Consolidated Statement of Cash Flows.

Following the identification and evaluation of the deficiency, management has determined that it constituted a material weakness in internal control over financial reporting because the deficiency created a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements would not be prevented or detected on a timely basis. Further, management has determined that this material weakness existed as of March 31, 2026, and management would have concluded that our disclosure controls and procedures were not effective as of that date in our First Quarter 10-Q, notwithstanding the conclusion previously reported therein. Because this error was not identified until after the First Quarter 10-Q was filed, the underlying control deficiency and its effect on the effectiveness of our disclosure controls and procedures as of that date were not identified or disclosed in the First Quarter 10-Q.

Correction of the Error

In this Quarterly Report on Form 10-Q, the dividends paid have been properly presented in the Consolidated Statement of Cash Flows for the six months ended June 30, 2026. The misclassification related to the dividends paid will be corrected in the Consolidated Statement of Cash Flows for the three months ended March 31, 2026 that will be presented within the Quarterly Report on Form 10-Q for the three months ended March 31, 2027, with cash flows from financing activities decreased and cash flows from operating activities increased by the corresponding amount, and no change to total cash flows for the period. The correction will not affect the Company's Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Comprehensive Income, or Consolidated Statements of Changes in Shareholders' Equity.

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Remediation of Material Weakness

Following identification of the material weakness, management, under the oversight of the Audit Committee of the Board of Directors, designed and implemented a remediation plan addressing the precision of the control related to the classification of cash flows. This remediation plan included:

• enhancing a formal reconciliation and review process linking changes in equity accounts, including dividends declared and paid, to financing activities in the statement of cash flows, with documented review and approval by appropriate finance personnel; enhancing preparation and review controls over the statement of cash flows, including independent verification of the classification of dividends paid and other significant cash flows in accordance with the Company's accounting policies and ASC 230; and
• implementing key spreadsheet-level and system-based controls requiring the preparer and reviewer to validate the classification of dividend-related and other equity-related cash flows before finalizing the statement of cash flows and leveraging artificial intelligence‑enabled tools to support the identification, validation, and consistent classification of cash flow activities within our internal control procedures.

This remediation plan, along with the additional controls, were implemented prior to June 30, 2026. During the period from July 1, 2026 through the filing date of this Quarterly Report on Form 10-Q, management completed testing of the remediated controls. Based on this testing, management concluded that the material weakness described above had been remediated as of June 30, 2026. Accordingly, management has determined that the Company's internal control over financial reporting and disclosure controls and procedures were effective as of that date.

Changes in Internal Control Over Financial Reporting

Other than the remediation measures described above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may be a party to various legal proceedings arising in the ordinary course of business. Management does not believe the Company or the Bank is currently a party to any material legal proceedings.

ITEM 1A. RISK FACTORS

Our business is influenced by many factors that are difficult to predict, involve uncertainties that may materially affect actual results and are often beyond our control. We have identified these risk factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, which should be taken into consideration when reviewing the information contained in this report. Except as described below, there have been no material changes in the Company’s risk factors from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

We recently identified a material weakness in our internal control over financial reporting, which could impact the Company’s ability to report its results of operations and financial condition accurately and in a timely manner and may adversely affect our stock price.

Our management is responsible for establishing and maintaining effective internal control over financial reporting and disclosure controls and procedures. As described in “Part II, Item 4. Controls and Procedures,” we identified a material weakness in the Company’s internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements would not be prevented or detected in a timely manner.

Although the error that led to the identification of the material weakness was not material to our previously issued financial statements and did not require the restatement of those financial statements, management concluded that the control deficiency created a reasonable possibility that a material misstatement of our interim or annual financial statements could occur and not be prevented or detected in a timely manner.

While we have implemented remediation measures designed to address this material weakness and have concluded that the material weakness has been remediated, there can be no assurance that the controls we have implemented will continue to operate effectively or that additional material weaknesses or other control deficiencies will not be identified in the future. If our internal control over financial reporting is not effective, or if we are unable to maintain effective disclosure controls and procedures, we may be unable to prevent or detect misstatements in our financial statements in a timely manner.

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Any failure to maintain effective internal control over financial reporting could adversely affect our ability to accurately report our and results of operations and financial condition, result in restatements of our financial statements, cause us to fail to meet our reporting obligations, impair investor confidence in our reported financial information, subject us to regulatory scrutiny or enforcement actions, and adversely affect the market price of our common stock.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

During the quarter ended June 30, 2026, no director or officer of the Company adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as such terms are defined in Item 408(a) of Regulation S-K.

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ITEM 6. EXHIBITS

• Filed herewith

** Furnished herewith

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