Hancock Whitney Corporation HWC Form 10-Q filing Q2 FY2026

Hancock Whitney Corporation

Glossary of Defined Terms

Entities:

Hancock Whitney Corporation – a financial holding company registered with the Securities and Exchange Commission

Hancock Whitney Bank – a wholly-owned subsidiary of Hancock Whitney Corporation through which Hancock Whitney Corporation conducts its banking operations

Company – Hancock Whitney Corporation and its consolidated subsidiaries

Parent – Hancock Whitney Corporation, exclusive of its subsidiaries

Bank – Hancock Whitney Bank

Other Terms:

ACL – allowance for credit losses

AFS – available for sale securities

AI – Artificial Intelligence

ALCO – Asset Liability Management Committee

ALLL – allowance for loan and lease losses

AML – Anti-money laundering

AOCI – accumulated other comprehensive income or loss

ASC – Accounting Standards Codification

ASU – Accounting Standards Update

ATM – automated teller machine

Basel III – Basel Committee's 2010 Regulatory Capital Framework (Third Accord)

Beta – amount by which deposit or loan costs change in response to movement in short-term interest rates

BOLI – bank-owned life insurance

bp(s) – basis point(s)

C&I – commercial and industrial loans

CD – certificate of deposit

CDE – Community Development Entity

CECL – Current Expected Credit Losses

CEO – Chief Executive Officer

CFPB – Consumer Financial Protection Bureau

CFO – Chief Financial Officer

CISO – Chief Information Security Officer

CMO – collateralized mortgage obligation

Core client deposits – total deposits excluding public funds and brokered deposits

Core deposits – total deposits excluding certificates of deposits of $250,000 or more and brokered deposits

CRE – commercial real estate

CET1 – Common equity tier 1 capital as defined by Basel III capital rules

DIF – Deposit Insurance Fund

EVE – Economic Value of Equity

Excess Liquidity – deposits held at the Federal Reserve above normal levels

FASB – Financial Accounting Standards Board

FDIC – Federal Deposit Insurance Corporation

FDICIA – Federal Deposit Insurance Corporation Improvement Act of 1991

Federal Reserve Board – The 7-member Board of Governors that oversees the Federal Reserve System, establishes

monetary policy (interest rates, credit, etc.), and monitors the economic health of the country. Its members are appointed

by the President subject to Senate confirmation, and serve 14-year terms.

Federal Reserve System – The 12 Federal Reserve Banks, with each one serving member banks in its own district. This system, supervised by the Federal Reserve Board, has broad regulatory powers over the money supply and the

credit structure. They implement the policies of the Federal Reserve Board and also conduct economic research.

FFIEC – Federal Financial Institutions Examination Council

FHA – Federal Housing Administration

FHLB – Federal Home Loan Bank

GAAP – Generally Accepted Accounting Principles in the United States of America

HTM – held to maturity securities

ICS – Insured cash sweep

IRR – Interest rate risk

IRS – Internal Revenue Service

IT – Information Technology

LIHTC – Low Income Housing Tax Credit

LTIP – long-term incentive plan

MBS – mortgage-backed securities

MD&A – Management’s discussion and analysis of financial condition and results of operations

MDBCF – Mississippi Department of Banking and Consumer Finance

MEFD – reportable modified loans to borrowers experiencing financial difficulty

NAICS – North American Industry Classification System

NII – net interest income

n/m – not meaningful

NSF – Non-sufficient funds

OBBBA – “An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14,” more commonly referred to as the “One Big Beautiful Bill Act,” enacted on July 4, 2025

OCI – other comprehensive income or loss

OD – Overdraft

OFB – OFB Bancshares, Inc., on a consolidated basis with its subsidiary One Florida Bank; an entity acquired on August 1, 2026

ORE – other real estate defined as foreclosed and surplus real estate

PCD – purchased credit deteriorated loans, as defined by ASC 326

Pension Plan – the Hancock Whitney Corporation Pension Plan and Trust Agreement

PPNR – Pre-provision net revenue

QSCB – Qualified School Construction Bonds

QZAB – Qualified Zone Academy Bonds

Repos – securities sold under agreements to repurchase

RSA – Restricted share awards

RSU – Restricted stock units

Sabal – Sabal Trust Company, an entity acquired on May 2, 2025

SBA – Small Business Administration

SBIC – Small Business Investment Company

SEC – U.S. Securities and Exchange Commission

Securities Act – Securities Act of 1933, as amended

Short-term Investments – the sum of Interest-bearing bank deposits and Federal funds sold

SOFR – Secured Overnight Financing Rate

Supplemental disclosure items – certain highlighted items that are outside of our principal business and/or are not indicative of forward-looking trends

TBA – To Be Announced security contracts

te – taxable equivalent adjustment, or the term used to indicate that a financial measure is presented on a fully taxable equivalent basis

TSR – total shareholder return

U.S. Treasury – The United States Department of the Treasury

401(k) Plan – the Hancock Whitney Corporation 401(k) Savings Plan and Trust Agreement

Part I. Financial Information

Item 1. Financial Statements

See notes to unaudited consolidated financial statements.

See notes to unaudited consolidated financial statements.

See notes to unaudited consolidated financial statements.

See notes to unaudited consolidated financial statements.

See notes to unaudited consolidated financial statements.

HANCOCK WHITNEY CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The consolidated financial statements include the accounts of Hancock Whitney Corporation and all other entities in which it has a controlling interest (the “Company”). The financial statements include all adjustments that are, in the opinion of management, necessary to fairly state the Company’s financial condition, results of operations, changes in stockholders’ equity and cash flows for the interim periods presented. The Company has also evaluated all subsequent events for potential recognition and disclosure through the date of the filing of this Quarterly Report on Form 10-Q (this “Report” or “report”). Some financial information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) have been condensed or omitted in this Quarterly Report on Form 10-Q pursuant to Securities and Exchange Commission rules and regulations. These financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Financial information reported in these financial statements is not necessarily indicative of the Company’s financial condition, results of operations, or cash flows for any other interim or annual period.

Certain prior period amounts have been reclassified to conform to the current period presentation. These changes in presentation did not have a material impact on the Company's financial condition or operating results.

Use of Estimates

The accounting principles the Company follows and the methods for applying these principles conform to GAAP and general practices followed by the banking industry. These accounting principles require management to make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results could differ from those estimates.

Accounting Policies

There were no material changes or developments during the reporting period with respect to methodologies that the Company uses when applying what management believes are critical accounting policies and developing critical accounting estimates as disclosed in its Annual Report on Form 10-K for the year ended December 31, 2025.

Refer to Note 16 – Recent Accounting Pronouncements for a discussion of the prospective adoption of ASU 2025-08, “Financial Instruments – Credit Losses (Topic 326): Purchased Loans,” as of January 1, 2026 and a description of changes to our acquired loan accounting policy.

2. Securities

The following tables set forth the amortized cost, gross unrealized gains and losses, and estimated fair value of debt securities classified as available for sale and held to maturity at June 30, 2026 and December 31, 2025. Amortized cost of securities does not include accrued interest which is reflected in the accrued interest line item on the consolidated balance sheets totaling $31.9 million at June 30, 2026 and $31.7 million at December 31, 2025, respectively.

The following tables present the amortized cost and fair value of debt securities available for sale and held to maturity at June 30, 2026 by contractual maturity. Actual maturities will differ from contractual maturities because of rights to call or repay obligations with or without penalties and scheduled and unscheduled principal payments on mortgage-backed securities and collateral mortgage obligations.

The Company held no securities classified as trading at June 30, 2026 and December 31, 2025.

In January 2026, the Company completed a restructuring of its available for sale investment securities portfolio, whereby lower-yielding securities with an amortized cost of $1.5 billion were sold and the proceeds were reinvested in higher-yielding securities. Certain securities that were sold were previously hedged in derivative instruments designated as fair value hedges of interest rate risk that were subsequently terminated. At the time of termination, the value of the swap was recorded as basis adjustment to the amortized cost of the underlying security. The basis adjustment is amortized as yield adjustment while the security is held, and affects the net gain or loss realized by the remaining unamortized basis adjustment when sold. The unamortized basis adjustment recognized in connection with this portfolio restructure reduced the net loss by approximately $50.4 million, resulting in a net realized loss of $98.6 million. Refer to Note 6 – Derivatives for a discussion of fair value hedges of interest rate risk.

The following table presents the proceeds from, gross gains on, and gross losses on sales of securities during the six months ended June 30, 2026 and 2025. Net gains or losses are reflected in the "Securities transactions, net" line item on the Consolidated Statements of Income.

Securities with carrying values totaling approximately $3.3 billion and $3.9 billion were pledged as collateral at June 30, 2026 and December 31, 2025, respectively, primarily to secure public deposits or securities sold under agreements to repurchase.

Credit Quality

The Company’s policy is to invest only in securities of investment grade quality. These investments are largely limited to U.S. agency securities and municipal securities. Management has concluded, based on the long history of no credit losses, that the expectation of nonpayment of the held to maturity securities carried at amortized cost is zero for securities that are backed by the full faith and credit of and/or guaranteed by the U.S. government. As such, no allowance for credit losses has been recorded for these securities. The municipal portfolio is analyzed separately for allowance for credit loss in accordance with the applicable guidance for each portfolio as noted below.

The Company evaluates credit impairment for individual securities available for sale whose fair value is below amortized cost with a more than inconsequential risk of default and where the Company has assessed whether the decline in fair value is significant enough to suggest a credit event has occurred. The Company did not identified any securities with a material credit loss event and, therefore, no allowance for credit loss was recorded in any period presented.

The fair value and gross unrealized losses for securities classified as available for sale with unrealized losses for the periods indicated follow.

At each reporting period, the Company evaluated its held to maturity municipal obligation portfolio for credit loss using probability of default and loss given default models. The models were run using a long-term average probability of default migration and with a probability weighting of Moody’s economic forecasts. The resulting credit losses, if any, were negligible and no allowance for credit loss was recorded.

The fair value and gross unrealized losses for securities classified as held to maturity with unrealized losses for the periods indicated follow.

As of June 30, 2026 and December 31, 2025, the Company had 588 and 604 securities, respectively, with market values below their cost basis. There were no material unrealized losses related to the marketability of the securities or the issuer’s ability to meet contractual obligations. In all cases, the indicated impairment on these debt securities would be recovered no later than the security’s maturity date or possibly earlier if the market price for the security increases with a reduction in the yield required by the market. The unrealized losses were deemed to be non-credit related at June 30, 2026 and December 31, 2025. At June 30, 2026, the Company had adequate liquidity and, therefore, neither planned nor expected to be required to liquidate these securities before recovery of the amortized cost basis.

3. Loans and Allowance for Credit Losses

The Company generally makes loans in its market areas of southern and central Mississippi; southern and central Alabama; northwest, central and southern Louisiana; the northern, central and panhandle regions of Florida; certain areas of east and northeast Texas; and the metropolitan areas of Nashville, Tennessee, Atlanta, Georgia and Charlotte, North Carolina. In addition, and to a lesser degree, the Bank makes loans both regionally and nationally, generally through its specialty lines of business, including the equipment finance, commercial real estate and healthcare segments, often with sponsors in our market areas.

The following table presents loans at their amortized cost basis by portfolio class at June 30, 2026 and December 31, 2025. The amortized cost basis is net of unearned income and excludes accrued interest totaling $108.0 million and $105.1 million at June 30, 2026 and December 31, 2025, respectively. Accrued interest is reflected in the accrued interest line item in the Consolidated Balance Sheets.

The following briefly describes the composition of each loan category and portfolio class.

Commercial and industrial

Commercial and industrial loans are made available to businesses for working capital (including financing of inventory and receivables), for business expansion, facilitating the acquisition of a business, and for the purchase of equipment and machinery, including equipment leasing. These loans are primarily made based on the identified cash flows of the borrower and, when secured, have the added strength of the underlying collateral.

Commercial non-real estate loans may be secured by the assets being financed or other tangible or intangible business assets such as accounts receivable, inventory, ownership, enterprise value or commodity interests, and may incorporate a personal or corporate guarantee; however, some short-term loans may be made on an unsecured basis, including a small portfolio of corporate credit cards, generally issued as a part of overall customer relationships.

Commercial real estate – owner occupied loans consist of commercial mortgages on properties where repayment is generally dependent on the cash flow from the ongoing operations and activities of the borrower. Like commercial non-real estate, these loans are primarily made based on the identified cash flows of the borrower, but they also have the added strength of the value of underlying real estate collateral.

Commercial real estate – income producing

Commercial real estate – income producing loans consist of loans secured by commercial mortgages on properties where the loan is made to real estate developers or investors and repayment is dependent on the sale, refinance, or income generated from the operation of the property. Properties financed include multifamily, retail, healthcare related facilities, industrial, office, hotel/motel and restaurants, and other commercial properties.

Construction and land development

Construction and land development loans are made to facilitate the acquisition, development, improvement and construction of both commercial and residential-purpose properties. Such loans are made to builders and investors where repayment is expected to be made from the sale, refinance or operation of the property or to businesses to be used in their business operations. This portfolio also includes residential construction loans and loans secured by raw land not yet under development.

Residential mortgages

Residential mortgages consist of closed-end loans secured by first liens on 1-4 family residential properties. The portfolio includes both fixed and adjustable rate loans, although most longer-term, fixed rate loans originated are sold in the secondary mortgage market.

Consumer

Consumer loans include second lien mortgage home loans, home equity lines of credit and nonresidential consumer purpose loans. Nonresidential consumer loans are made to finance the purchase of personal property, including automobiles, recreational vehicles and boats, and for other personal purposes (secured and unsecured), and also include deposit account secured loans. Consumer loans also include a small portfolio of credit card receivables issued on the basis of applications received through referrals from the Bank’s branches, online and other marketing efforts.

Allowance for Credit Losses

The calculation of the allowance for credit losses is performed using two primary approaches: a collective approach using a loss rate analysis for pools of loans that have similar risk characteristics, and a specific reserve analysis for credits individually evaluated. The allowance for credit losses for collectively evaluated portfolios is developed using multiple Moody’s macroeconomic forecasts applied in internally developed credit models for a two-year reasonable and supportable period. For additional information on our allowance for credit loss methodology, refer to Note 1 – Summary of Significant Accounting Policies and Recent Accounting Pronouncements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

The following tables present activity in the allowance for credit losses by portfolio class for the six months ended June 30, 2026 and 2025, as well as the allowance for credit loss by primary calculation method at the end of each period.

The allowance for credit losses at June 30, 2026 reflects a modest net increase in the funded and unfunded reserves, largely driven by the growth in the commercial loan portfolios and reflecting relatively stable credit metrics when compared to year-end. In arriving at the allowance for credit losses at June 30, 2026, the Company weighted Moody’s June 2026 baseline economic forecast at 50% and the downside mild recessionary S-2 scenario at 50%. The June 2026 baseline scenario, which Moody’s defines as the most likely outcome of where the economy is headed based on current conditions, reflects the potential impacts of current geopolitical conflicts and continued elevated inflation, and projects moderate GDP growth and gradually rising unemployment in the near term. The S-2 scenario assumes heightened geopolitical and trade disruptions, higher and sustained tariffs, elevated oil prices, and increased global uncertainty, triggering a mild recession beginning in the third quarter of 2026, and lasting for three quarters.

The allowance for credit losses at June 30, 2025 was down modestly on a net basis compared to December 31, 2024, largely driven by the declines in the commercial real estate - income producing and the construction and land development portfolios, that was partially offset by increases in certain other portfolios due to the expected impact of continued stress of market conditions on our borrowers. In arriving at the allowance for credit losses at June 30, 2025, the Company weighted the baseline economic forecast at 50% and the downside mild recessionary S-2 scenario at 50%.

Nonaccrual Loans and Certain Reportable Modified Loan Disclosures

The following table shows the composition of nonaccrual loans and those without an allowance for loan losses, by portfolio class at June 30, 2026 and December 31, 2025.

As a part of our loss mitigation efforts, we may provide modifications to borrowers experiencing financial difficulty to improve long-term collectability of the loans and to avoid the need for repossession or foreclosure of collateral. Nonaccrual loans include reportable nonaccruing modified loans to borrowers experiencing financial difficulty (“MEFDs”) totaling $11.4 million and $5.8 million at June 30, 2026 and December 31, 2025, respectively. Total reportable MEFDs, both accruing and nonaccruing, were $154.3 million and $162.8 million at June 30, 2026 and December 31, 2025, respectively. Unfunded commitments to borrowers whose terms have been modified as a reportable MEFD were $3.1 million and $7.2 million at June 30, 2026 and December 31, 2025, respectively.

The tables below provide detail by portfolio class for reportable MEFDs entered into during the three and six months ended June 30, 2026 and 2025. Modified facilities are reported using the balance at the end of each period reported and are reflected only once in each table based on the type of modification or combination of modification.

(1)

Includes a combination of interest rate reduction and term extension.

For the three months ended June 30, 2026, reportable modifications to borrowers experiencing financial difficulty consisted of weighted average term extensions totaling approximately one year for commercial loans, two years for residential mortgage loans and four years for consumer loans. Reportable modifications to borrowers experiencing financial difficulty during the six months ended June 30, 2026 consisted of weighted average term extensions totaling approximately 13 months for commercial loans, two years for residential mortgage loans and five years for consumer loans. The weighted average term of other than insignificant payment delays for the three months ended June 30, 2026 was two months for commercial loans. The weighted average term of other than insignificant payment delays for the six months ended June 30, 2026 was 11 months for commercial loans. In addition, the weighted-average interest rate reduction for residential loans during the six months ended June 30, 2026 was 164 basis points. Term extensions and payment delays are considered other than insignificant when they exceed six months when considering other modifications made in the prior twelve months.

Reportable modifications to borrowers experiencing financial difficulty during the three months ended June 30, 2025 consisted of weighted average term extensions totaling approximately two months for commercial loans and 17 months for residential mortgage loans. Reportable modifications to borrowers experiencing financial difficulty during the six months ended June 30, 2025 consisted of weighted average term extensions totaling approximately three months for commercial loans and 13 months for residential mortgage loans. The weighted average term of other than insignificant payment delays for the three months ended June 30, 2025 was four months for commercial loans. The weighted average term of other than insignificant payment delays for the six months ended June 30, 2025 was four months for commercial loans and one month for residential mortgage loans.

The tables that follow present the aging analysis of reportable modifications to borrowers experiencing financial difficulty by portfolio class at June 30, 2026 and December 31, 2025.

There were loans to four commercial borrowers totaling $32.8 million and two residential borrowers totaling $2.2 million with reportable term extensions and/or significant payment delays that had post modification payment defaults during the three months ended June 30, 2026. For the six month period ended June 30, 2026, there were loans to eight commercial borrowers totaling $72.9 million and three residential borrowers totaling $2.3 million with reportable term extensions and/or significant payment delays that had post modification payment defaults. There were loans to six commercial borrowers totaling $18.9 million with reportable term extensions and/or significant payment delays that had post modification payment defaults during the three months ended June 30, 2025. For the six month period ended June 30, 2025, there were loans to eight commercial borrowers totaling $20.8 million with reportable term extensions, significant payment delays and/or interest rate reductions that had post modification payment defaults. A payment default occurs if the loan is either 90 days or more delinquent or has been charged off as of the end of the period presented.

Aging Analysis

The tables below present the aging analysis of past due loans by portfolio class at June 30, 2026 and December 31, 2025.

Credit Quality Indicators

The following tables present the credit quality indicators by segment and portfolio class of loans at June 30, 2026 and December 31, 2025.

The Company routinely assesses the ratings of loans in its portfolio through an established and comprehensive portfolio management process. Below are the definitions of the Company’s internally assigned grades:

Commercial:

• Pass – loans properly approved, documented, collateralized, and performing which do not reflect an abnormal credit risk.
• Pass-Watch – credits in this category are of sufficient risk to cause concern. This category is reserved for credits that display negative performance trends. The “Watch” grade should be regarded as a transition category.
• Special Mention – a criticized asset category defined as having potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may, at some future date, result in the deterioration of the repayment prospects for the credit or the institution’s credit position. Special mention credits are not considered part of the classified credit categories and do not expose the institution to sufficient risk to warrant adverse classification.
• Substandard – an asset that is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
• Doubtful – an asset that has all the weaknesses inherent in one classified substandard with 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.
• Loss – credits classified as loss are considered uncollectable and are charged off promptly once so classified.

Residential and Consumer:

• Performing – accruing loans.
• Nonperforming – loans for which there are good reasons to doubt that payments will be made in full. Nonperforming loans include all loans with nonaccrual status.

Vintage Analysis

The following tables present credit quality disclosures of amortized cost by class and vintage for term loans and by revolving and revolving converted to amortizing at June 30, 2026 and December 31, 2025. The Company defines vintage as the later of origination, renewal or modification date. The gross charge-offs presented in the tables that follow are for the six months ended June 30, 2026 and the year ended December 31, 2025.

Residential Mortgage Loans in Process of Foreclosure

Loans in process of foreclosure include those for which formal foreclosure proceedings are in process according to local requirements of the applicable jurisdiction. Included in loans at June 30, 2026 and December 31, 2025 were $18.0 million and $12.0 million, respectively, of loans secured by single family residential real estate that were in process of foreclosure. In addition to the single family residential real estate loans in process of foreclosure, the Company also held foreclosed single family residential properties in other real estate owned totaling $4.4 million and $5.1 million at June 30, 2026 and December 31, 2025, respectively.

Loans Held for Sale

Loans held for sale totaled $52.9 million and $33.2 million at June 30, 2026 and December 31, 2025, respectively. Loans held for sale is composed primarily of residential mortgage loans originated for sale in the secondary market and, at certain times, other loans originated for sale, generally through syndications. At June 30, 2026, residential mortgage loans carried at the fair value option totaled $42.9 million with an unpaid principal balance of $41.8 million. At December 31, 2025, residential mortgage loans carried at the fair value option totaled $33.2 million with an unpaid principal balance of $32.3 million. All other loans held for sale are carried at the lower of cost or market.

4. Investments in Low Income Housing Tax Credit Entities

The Company invests in certain affordable housing project limited partnerships that are qualified low-income housing tax credit developments. These investments are considered variable interest entities for which the Company is not the primary beneficiary and, therefore, are not consolidated. These partnerships generate low-income tax credits that are earned over a 10-year period, beginning with the year the rental activity begins. The Company has elected to use the practical expedient method of amortization, which approximates the proportional amortization method, whereby the investment cost is amortized in proportion to the allocated tax credits over the 10 year tax credit period. Additionally, the Company recognizes deferred taxes on the basis difference of the tax equity investment to reflect the financial impact of other tax benefits (e.g., tax operating losses) not included in the practical expedient amortization. The tax credits, when realized, are reflected in the consolidated statements of income as a reduction of income tax expense. The Company’s investments in affordable housing limited partnerships totaled $37.5 million at both June 30, 2026 and December 31, 2025, with a balance net of accumulated amortization included in the other assets line item on our Consolidated Balance Sheets totaling $20.0 million and $21.8 million, respectively, for those same periods. The net impact of the low-income housing tax credit program was not material to our Consolidated Statements of Income or Cash Flows for the three or six months ended June 30, 2026 and 2025.

5. Short-term Borrowings

Short-term borrowings include Federal Home Loan Bank (FHLB) advances totaling $950 million as of June 30, 2026 and $400 million as of December 31, 2025. At June 30, 2026, FHLB advances outstanding consisted of seven fixed-rate notes with a weighted average interest rate of 3.89% and maturity dates ranging from September 23, 2026 through April 29, 2027. At December 31, 2025, FHLB advances outstanding consisted of one fixed-rate note bearing interest at 3.62% entered into on December 31, 2025, that matured on January 2, 2026. As short-term advances mature, they are generally paid off and replaced with new short-term FHLB advances, if warranted, depending on funding needs.

Also included in short-term borrowings are securities sold under agreements to repurchase that mature daily and are secured by U.S. agency securities totaling $620.6 million and $546.9 million at June 30, 2026 and December 31, 2025, respectively. The Company borrows funds on a secured basis by selling securities under agreements to repurchase, mainly in connection with treasury management services offered to its deposit customers. As the Company maintains effective control over assets sold under agreements to repurchase, the securities continue to be carried on the consolidated statements of financial condition. Because the Company acts as borrower transferring assets to the counterparty, and the agreements mature daily, the Company’s risk is limited.

The remaining balances in short-term borrowings of $0.3 million at June 30, 2026 and $70.4 million at December 31, 2025, are federal funds purchased, which are unsecured borrowings from other banks, generally on an overnight basis.

6. Derivatives

Risk Management Objective of Using Derivatives

The Company enters into derivative financial instruments to manage risks related to differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments. The Bank also enters into interest rate derivative agreements as a service to certain qualifying customers. The Bank manages a matched book with respect to these customer derivatives in order to minimize its net interest rate risk exposure resulting from such agreements. In addition, the Bank also enters into risk participation agreements under which it may either sell or buy credit risk associated with a customer’s performance under certain interest rate derivative contracts related to loans in which participation interests have been sold to or purchased from other banks.

Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the notional or contractual amounts and fair values of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets at June 30, 2026 and December 31, 2025.

(1)

Derivative assets and liabilities are reported in other assets and other liabilities, respectively, in the consolidated balance sheets.

(2)

Represents balance sheet netting of derivative assets and liabilities for variation margin collateral held or placed with the same central clearing counterparty. See offsetting assets and liabilities for further information.

Cash Flow Hedges of Interest Rate Risk

The Company is party to various interest rate swap agreements designated and qualifying as cash flow hedges of the Company’s forecasted variable cash flows for pools of variable rate loans. For each agreement, the Company receives interest at a fixed rate and pays interest at a variable rate. The Company has terminated certain interest rate swaps designated as cash flow hedges prior to maturity. The net cash received/paid for these transactions was recorded as accumulated other comprehensive income (loss) and is being amortized into earnings through the original maturity dates of the respective contracts. The Company expects to reclassify into earnings approximately $18.7 million in pre-tax losses due to the net receipt/payment of interest and amortization on all cash flow hedges within the next twelve months. See Note 7 – Stockholders’ Equity for the impact of cash flow hedges on the consolidated statements of income related to realized gains (losses) reclassified from accumulated other comprehensive income (loss) to net income.

The notional amounts of the active interest rate swap agreements at June 30, 2026 expire as follows: $250 million in 2026; $825 million in 2027; $50 million in 2028; $275 million in 2029 and $425 million in 2030.

Fair Value Hedges of Interest Rate Risk

Interest rate swaps on securities available for sale

The Company is party to forward-starting fixed payer swaps that convert the latter portion of the term of certain available for sale securities to a floating rate. These derivative instruments are designated as fair value hedges of interest rate risk. This strategy provides the Company with a fixed rate coupon during the front-end unhedged tenor of the bonds and results in a floating rate security during the back-end hedged tenor. At June 30, 2026, these single layer instruments have hedge start dates between February 2025 and July 2026, and maturity dates from March 2030 through March 2031. The change in the fair value of the hedged item attributable to interest rate risk and the net hedge income from effective hedges is presented in interest income along with the change in the fair value of the hedging instrument.

The notional amount of fair value hedges that are effective totaled $265.0 million and $203.5 million at June 30, 2026 and 2025, respectively. Once effective, fair value hedges synthetically convert the notional portion of the hedged asset to a variable rate over the life of the hedge that is indexed to the federal funds effective rate, with the resulting net earnings recorded in interest income on the "Securities-taxable" line item on the Consolidated Statements of Income.

The hedged available for sale securities are part of closed portfolios of pre-payable commercial mortgage backed securities. In accordance with ASC 815, prepayment risk may be excluded when measuring the change in fair value of such hedged items attributable to interest rate risk under the portfolio layer method. At June 30, 2026, the amortized cost basis of the closed portfolio of pre-payable commercial mortgage backed securities totaled $387.8 million, excluding any basis adjustment. The amount representing the hedged items was $332.0 million, and the basis adjustment associated with those hedged items was a loss of $27.0 million.

The Company terminated one swap agreement designated as a fair value hedge during the six months ended June 30, 2026 and received cash of approximately $1.7 million and also sold the underlying security. There were no fair value swap agreements terminated during the six months ended June 30, 2025.

Derivatives Not Designated as Hedges

Customer interest rate derivative program

The Bank enters into interest rate derivative agreements, primarily rate swaps, with commercial banking customers to facilitate their risk management strategies. The Bank enters into offsetting agreements with unrelated financial institutions, thereby mitigating its net risk exposure resulting from such transactions. Because the interest rate derivatives associated with this program do not meet hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings.

Risk participation agreements

The Bank also enters into risk participation agreements under which it may either assume or sell credit risk associated with a borrower’s performance under certain interest rate derivative contracts. In those instances where the Bank has assumed credit risk, it is not a direct counterparty to the derivative contract with the borrower and has entered into the risk participation agreement because it is a party to the related loan agreement with the borrower. In those instances in which the Bank has sold credit risk, it is the sole counterparty to the derivative contract with the borrower and has entered into the risk participation agreement because other banks participate in the related loan agreement. The Bank manages its credit risk under risk participation agreements by monitoring the creditworthiness of the borrower, based on the Bank’s normal credit review process.

Mortgage banking derivatives

The Bank also enters into certain derivative agreements as part of its mortgage banking activities. These agreements include interest rate lock commitments on prospective residential mortgage loans and forward commitments to sell loans to investors on either a best efforts or a mandatory delivery basis. The Company uses these forward sales commitments, which may include To Be Announced (“TBA”) security contracts, on the open market to protect the value of its rate locks and mortgage loans held for sale from changes in interest rates and pricing between the origination of the rate lock and the final sale of these loans. These instruments meet the definition of derivative financial instruments and are reflected in other assets and other liabilities in the Consolidated Balance Sheets, with changes to the fair value recorded in noninterest income within the secondary mortgage market operations line item in the Consolidated Statements of Income.

The loans sold on a mandatory basis commit the Company to deliver a specific principal amount of mortgage loans to an investor at a specified price, by a specified date. If the Company fails to deliver the amount of mortgages necessary to fulfill the commitment by the specified date, we may be obligated to pay a pair-off fee, based on then-current market prices, to the investor/counterparty to compensate the investor for the shortfall. Mandatory delivery forward commitments include TBA security contracts on the open market to provide protection against changes in interest rates on the locked mortgage pipeline. The Company expects that mandatory delivery contracts, including TBA security contracts, will experience changes in fair value opposite to the changes in the fair value of derivative loan commitments. Certain assumptions, including pull through rates and rate lock periods, are used in managing the existing and future hedges. The accuracy of underlying assumptions could impact the ultimate effectiveness of any hedging strategies.

Forward commitments under best effort contracts commit the Company to deliver a specific individual mortgage loan to an investor if the loan to the underlying borrower closes. Generally, best efforts cash contracts have no pair-off risk regardless of market movement. The price the investor will pay the seller for an individual loan is specified prior to the loan being funded, generally the same day the Company enters into the interest rate lock commitment with the potential borrower. The Company expects that these best efforts forward loan sale commitments will experience a net neutral shift in fair value with related derivative loan commitments.

At the closing of the loan, the rate lock commitment derivative expires and the Company generally records a loan held for sale at fair value under the election of fair value option.

Customer foreign exchange forward contract derivatives

The Company enters into foreign exchange forward derivative agreements, primarily forward foreign currency contracts, with commercial banking customers to facilitate their risk management strategies. The Bank manages its risk exposure from such transactions by entering into offsetting agreements with unrelated financial institutions. The Bank has not elected to designate these foreign exchange forward contract derivatives as hedges; as such, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings.

Visa Class B derivative contract

The Company is a member of Visa USA. In 2018, the Company sold the majority of its Visa Class B holdings, at which time it entered into a derivative agreement with the purchaser whereby the Company will make or receive cash payments whenever the conversion ratio of the Visa Class B shares into Visa Class A shares is adjusted. The conversion ratio changes when Visa deposits funds to a litigation escrow established by Visa to pay settlements for certain litigation, for which Visa is indemnified by Visa USA members. The Company is also required to make periodic financing payments to the purchaser until all of Visa’s covered litigation matters are resolved. Thus, the derivative contract extends until the end of Visa’s covered litigation matters, the timing of which is uncertain.

During the second quarter of 2024, Visa allowed Class B holders to convert some but not all of their Class B shares to Class A shares. As a result of this conversion event, the Bank and its counterparty agreed to modify the transaction agreement to reflect the partial exchange and include certain provisions related to conversion rate changes. The conversion plan approved by Visa requires a minimum of 12 months before another exchange event and thus extends the expected time for a full resolution of the matter.

The contract includes a contingent accelerated termination clause based on the credit ratings of the Company. The fair value of the liability associated with this contract was $1.0 million at June 30, 2026 and $1.3 million at December 31, 2025. Refer to Note 15 – Fair Value of Financial Instruments for discussion of the valuation inputs and process for this derivative liability.

Effect of Derivative Instruments on the Statements of Income

The effects of derivative instruments on the Consolidated Statements of Income for the three and six months ended June 30, 2026 and 2025 are presented in the table below. Amounts in parentheses indicate a reduction of net income.

(1)

Includes the effects of both active derivative instruments and the impact from realization of basis adjustments to hedged assets resulting from previously terminated hedges.

Credit Risk-Related Contingent Features

Certain of the Bank’s derivative instruments contain provisions allowing the financial institution counterparty to terminate the contracts in certain circumstances, such as the downgrade of the Bank’s credit ratings below specified levels, a default by the Bank on its indebtedness, or the failure of the Bank to maintain specified minimum regulatory capital ratios or its regulatory status as a well-capitalized institution. These derivative agreements also contain provisions regarding the posting of collateral by each party. At June 30, 2026, the Company was not in violation of any such provisions. The aggregate fair value of derivative instruments with credit risk-related contingent features that were in a net liability position was $14.3 million and $13.2 million at June 30, 2026 and December 31, 2025, respectively, for which the Company had posted collateral of $13.4 million and $13.0 million, respectively.

Offsetting Assets and Liabilities

The Bank’s derivative instruments with certain counterparties contain legally enforceable netting provisions that allow for net settlement of multiple transactions to a single amount, which may be positive, negative, or zero. Agreements with certain bilateral counterparties require both parties to maintain collateral in the event that the fair values of derivative instruments exceed established exposure thresholds. For centrally cleared derivatives, the Company is subject to initial margin posting and daily variation margin exchange with the central clearinghouses. Offsetting information in regards to all derivative assets and liabilities, including accrued interest, subject to these master netting agreements at June 30, 2026 and December 31, 2025 is presented in the following tables.

The Company has excess posted collateral compared to total exposure due to initial margin requirements for day-to-day rate volatility.

7. Stockholders’ Equity

Common Shares Outstanding

Common shares outstanding excludes treasury shares totaling 12.5 million and 10.7 million at June 30, 2026 and December 31, 2025, respectively, with a first-in-first-out cost basis of $639.2 million and $502.9 million at June 30, 2026 and December 31, 2025, respectively. Shares outstanding also excludes unvested restricted share awards totaling 5,682 at June 30, 2026 and 8,520 at December 31, 2025.

Stock Buyback Programs

On December 10, 2025, the Company’s Board of Directors approved a stock buyback program, effective January 1, 2026, whereby the Company is authorized to repurchase up to 5% of the shares of the Company's common stock outstanding as of December 31, 2025, or approximately 4.1 million shares, through the program’s expiration date of December 31, 2026. The program allows the Company to repurchase its common shares in the open market, by block purchase, through accelerated share repurchase programs, in privately negotiated transactions, or otherwise, in one or more transactions, from time to time, depending on market conditions and other factors, and in accordance with applicable regulations of the Securities and Exchange Commission. The Company is not obligated to purchase any shares under this program, and the Board of Directors has the ability to terminate or amend the program at any time prior to the expiration date. During the six months ended June 30, 2026, the Company repurchased 2.1 million shares of its outstanding common stock at an average cost of $67.82 per share, inclusive of commissions, under this program. The Company has accrued $1.3 million of estimated excise tax associated with share repurchases during the six months ended June 30, 2026.

Prior to its completion in December 2025, the Company had in place a stock repurchase program authorized by the Board of Directors on December 9, 2024, whereby the Company was authorized to repurchase up to 5% of the Company's common stock outstanding at December 31, 2024, or approximately 4.3 million shares, with the same terms described above through the program's expiration date of December 31, 2026. During the six months ended June 30, 2025, the Company repurchased 1.1 million shares of its outstanding common stock at an average cost of $54.58 per share, inclusive of commissions.

Accumulated Other Comprehensive Income (Loss)

A rollforward of the components of Accumulated Other Comprehensive Income (Loss) is presented in the table that follows:

Accumulated Other Comprehensive Income or Loss (“AOCI”) is reported as a component of stockholders’ equity. AOCI can include, among other items, unrealized holding gains and losses on securities available for sale (“AFS”), including the Company’s share of unrealized gains and losses reported by a partnership accounted for under the equity method, gains and losses associated with pension or other post-retirement benefits that are not recognized immediately as a component of net periodic benefit cost, and gains and losses on derivative instruments that are designated as, and qualify as, cash flow hedges. Net unrealized gains and losses on AFS securities reclassified as securities held to maturity (“HTM”) also continue to be reported as a component of AOCI and will be amortized over the estimated remaining life of the securities as an adjustment to interest income. Subject to certain thresholds, unrealized losses on employee benefit plans will be reclassified into income as pension and post-retirement costs are recognized over the remaining service period of plan participants. Accumulated gains or losses on cash flow hedges of variable rate loans described in Note 6 - Derivatives will be reclassified into income over the life of the hedge. Accumulated other comprehensive loss resulting from terminated interest rate swaps are being amortized over the remaining maturities of the designated instruments. Gains and losses within AOCI are net of deferred income taxes, where applicable.

The following table shows the line items in the consolidated statements of income affected by amounts reclassified from AOCI.

(a)

Amounts in parentheses indicate reduction in net income.

(b)

These AOCI components are included in the computation of net periodic pension and post-retirement cost that is reported with other noninterest
expense (see Note 12 – Retirement Plans for additional details).

8. Other Noninterest Income

Components of other noninterest income are as follows:

9. Other Noninterest Expense

Components of other noninterest expense are as follows:

10. Earnings Per Common Share

The Company calculates earnings per common share using the two-class method. The two-class method allocates net income to each class of common stock and participating security according to common dividends declared and participation rights in undistributed earnings. Participating securities consist of nonvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents.

A summary of the information used in the computation of earnings per common share follows.

Potential common shares consist of nonvested performance-based awards, nonvested restricted stock units, and restricted share awards deferred under the Company’s nonqualified deferred compensation plan. These potential common shares do not enter into the calculation of diluted earnings per share if the impact would be antidilutive, i.e., increase earnings per share or reduce a loss per share. The weighted average of potentially dilutive common shares that were anti-dilutive totaled 1,749 and 3,152 for the three and six months ended June 30, 2026, respectively, and 142,030 and 3,008 for the three and six months ended June 30, 2025, respectively, and were excluded from the calculation of diluted earnings per share for the respective periods.

11. Segment Reporting

U.S. GAAP requires that information be reported about a company’s operating segments using a “management approach.” Reportable segments are identified in these standards as those revenue-producing components for which discrete financial information is produced internally and which are subject to evaluation by our chief operating decision maker in deciding how to allocate resources to segments. The Company has identified the Capital Committee as the chief operating decision maker. Consistent with the Company’s strategy that is focused on providing a consistent package of banking products and services across all markets, the Company has identified its overall banking operations as its only reportable segment. There have been no changes in the basis of segmentation or basis of measurement of segment profit or loss since our last annual filing as of December 31, 2025.

Because the overall banking operations comprise substantially all of the Company’s consolidated operations, no separate financial segment disclosures are presented. The significant segment expenses included in net income are presented in the financial statement captions shown on the face of the Consolidated Statements of Income and in Note 9 – Other Noninterest Expense, and align materially with those reported to the Capital Committee. There are no other segment items that are required to reconcile expenses included in net income to significant expenses reviewed by the Capital Committee.

12. Retirement Plans

The Company offers a qualified defined benefit pension plan, the Hancock Whitney Corporation Pension Plan and Trust Agreement (“Pension Plan”), that covers certain eligible associates and is closed to new entrants. The Company makes contributions to the Pension Plan in amounts sufficient to meet funding requirements set forth in federal employee benefit and tax laws, plus such additional amounts as the Company may determine to be appropriate. The Company made no contributions to the Pension Plan during the three and six months ended June 30, 2026 and 2025, and does not anticipate being required to make a contribution during 2026. The Company also sponsors a nonqualified defined benefit plan covering certain associates, under which accrued benefits were frozen and no future benefits are accrued under this plan.

The Company sponsors defined benefit post-retirement plans for certain associates that provide health care and life insurance benefits. These plans are closed to new entrants.

The following table shows the components of net periodic benefit cost included in expense for the periods indicated.

Service cost is reflected in the “Benefit expense” line item of the Consolidated Statements of Income. Components other than service cost in the in the table above are reflected in “Net other retirement expense” in Note 9 – Other Noninterest Expense, and reported in the “Other expense” line item of the Consolidated Statements of Income.

Additional information related to the Company’s retirement plans, including a defined contribution 401(k) plan, is provided in Note 18 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

13. Share-Based Payment Arrangements

The Company maintains incentive compensation plans that incorporate share-based payment arrangements for associates and directors. These plans have been approved by the Company's shareholders. Descriptions of these plans were included in Note 19 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

The Company’s restricted and performance-based share awards to certain employees and directors are subject to service requirements. A summary of the status of the Company’s nonvested restricted stock units and restricted and performance-based share awards at June 30, 2026 are presented in the following table.

At June 30, 2026, there was $67.9 million of total unrecognized compensation expense related to nonvested restricted and performance share awards and units expected to vest in the future. This compensation is expected to be recognized in expense over a weighted average period of 3.2 years. The total fair value of shares that vested during the six months ended June 30, 2026 was $20.7 million.

During the six months ended June 30, 2026, the Company granted 425,386 restricted stock units (RSUs) to certain eligible employees. The holders of unvested RSUs have no rights as a shareholder of the Company, including voting or dividend rights. The Company has elected to award dividend equivalents on each RSU not deferred under the Company's nonqualified deferred compensation plan. Such dividend equivalents are forfeited should the employee terminate employment prior to the vesting of the RSU.

During the six months ended June 30, 2026, the Company granted to key members of executive management 25,278 performance share awards subject to a total shareholder return (“TSR”) performance metric with a grant date fair value of $70.83 per share. The fair value of the performance share units subject to TSR at the grant date was determined using a Monte Carlo simulation method. The number of performance share units subject to TSR that ultimately vest at the end of the three-year performance period, if any, will be based on the relative rank of the Company’s three-year TSR among the TSRs of a peer group of 49 regional banks. The Company also granted 24,535 performance share awards subject to a return on average assets (ROAA) performance metric and 24,535 performance share awards subject to a return on average tangible common equity (ROATCE) performance metric with a grant date fair value of $60.08 per share for both performance share awards. The number of performance shares subject to ROAA and ROATCE that ultimately vest, if any, will be based on the rank of the Company’s three-year ROAA and ROATCE relative to the KBW Regional Bank index. The maximum number of performance share units that could vest is 200% of the target award. Compensation expense for these performance shares is recognized on a straight-line basis over the three-year service period.

14. Commitments and Contingencies

In the normal course of business, the Bank enters into financial instruments, such as commitments to extend credit and letters of credit, to meet the financing needs of its customers. Such instruments are not reflected in the accompanying consolidated financial statements until they are funded, although they expose the Bank to varying degrees of credit risk and interest rate risk in much the same way as funded loans. Under regulatory capital guidelines, the Company and Bank must include unfunded commitments meeting certain criteria in risk-weighted capital calculations.

Commitments to extend credit include revolving commercial credit lines, nonrevolving loan commitments issued mainly to finance the acquisition and development or construction of real property or equipment, and credit card and personal credit lines. The availability of funds under commercial credit lines and loan commitments generally depends on whether the borrower continues to meet credit standards established in the underlying contract and other contractual conditions. Loan commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee by the borrower. Credit card and personal credit lines are generally subject to cancellation if the borrower’s credit quality deteriorates. A number of commercial and personal credit lines are used only partially or, in some cases, not at all before they expire, and the total commitment amounts do not necessarily represent future cash requirements of the Company.

A substantial majority of the letters of credit are standby agreements that obligate the Bank to fulfill a customer’s financial commitments to a third party if the customer is unable to perform. The Bank issues standby letters of credit primarily to provide credit enhancement to its customers’ other commercial or public financing arrangements and to help them demonstrate financial capacity to vendors of essential goods and services.

The contractual amounts of these instruments reflect the Company’s exposure to credit risk. The Company undertakes the same credit evaluation in making loan commitments and assuming conditional obligations as it does for on-balance sheet instruments and may require collateral or other credit support. The Company had a reserve for unfunded lending commitments of $35.4 million and $33.9 million at June 30, 2026 and December 31, 2025, respectively.

The following table presents a summary of the Company’s off-balance sheet financial instruments as of June 30, 2026 and December 31, 2025:

Legal Proceedings

The Company is party to various legal proceedings arising in the ordinary course of business. Management does not believe that loss contingencies, if any, arising from pending litigation and regulatory matters will have a material adverse effect on the consolidated financial position or liquidity of the Company.

Federal Deposit Insurance Corporation (FDIC) Special Assessment

In November 2023, the FDIC approved a final rule to implement a special deposit insurance assessment to recover losses to the Deposit Insurance Fund (DIF) arising from the full protection of uninsured depositors under the systemic risk exception following the receiverships of Silicon Valley Bank and Signature Bank in the spring of 2023. To-date, the Company has expensed $27.6 million related to this special assessment based on loss estimate information provided by the FDIC.

The loss estimates resulting from the failures of these institutions may be subject to further change pending the projected and actual outcome of loss share agreements, joint ventures, and outstanding litigation. The exact amount of losses incurred will not be determined until the FDIC terminates the receiverships of these banks; therefore, the Company's exact exposure for FDIC special assessment remains unknown.

15. Fair Value Measurements

The FASB defines fair value as the exchange price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The FASB’s guidance also establishes a fair value hierarchy that prioritizes the inputs to these valuation techniques used to measure fair value, giving preference to quoted prices in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs such as a reporting entity’s own data (level 3). Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in markets that are not active, observable inputs other than quoted prices, such as interest rates and yield curves, and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Fair Value of Assets and Liabilities Measured on a Recurring Basis

The following tables present the fair value hierarchy levels for the Company’s financial assets and liabilities that are measured at fair value on a recurring basis on the consolidated balance sheets at June 30, 2026 and December 31, 2025:

(1) For further disaggregation of derivative assets and liabilities, see Note 6 - Derivatives.

(1) For further disaggregation of derivative assets and liabilities, see Note 6 - Derivatives.

Securities classified as level 2 include obligations of U.S. Government agencies and U.S. Government-sponsored agencies, including U.S. Treasury securities, residential and commercial mortgage-backed securities and collateralized mortgage obligations that are issued or guaranteed by U.S. government agencies, and state and municipal bonds. The level 2 fair value measurements for investment securities are obtained quarterly from a third-party pricing service that uses industry-standard pricing models. Substantially all of the model inputs are observable in the marketplace or can be supported by observable data.

The Company invests only in securities of investment grade quality with a targeted duration, for the overall portfolio, generally between two and five and a half years. Company policies generally limit U.S. investments to agency securities and municipal securities determined to be investment grade according to an internally generated score which generally includes a rating of not less than “Baa” or its equivalent by a nationally recognized statistical rating agency.

Loans held for sale consist of residential mortgage loans carried under the fair value option. The fair value for these instruments is classified as level 2 based on market prices obtained from potential buyers.

For the Company’s derivative financial instruments designated as hedges and those under the customer interest rate program, the fair value is obtained from a third-party pricing service that uses an industry-standard discounted cash flow model that relies on inputs, Overnight Index swap rate curves and SOFR swap curves (where applicable); all observable in the marketplace. To comply with the accounting guidance, credit valuation adjustments are incorporated in the fair values to appropriately reflect nonperformance risk for both the Company and the counterparties. Although the Company has determined that the majority of the inputs used to value these derivative instruments fall within level 2 of the fair value hierarchy, the credit value adjustments utilize level 3 inputs, such as estimates of current credit spreads. The Company has determined that the impact of the credit valuation adjustments is not significant to the overall valuation of these derivatives. As a result, the Company has classified its derivative valuations for these instruments in level 2 of the fair value hierarchy. The Company’s policy is to measure counterparty credit risk quarterly for derivative instruments, which are all subject to master netting arrangements, consistent with how market participants would price the net risk exposure at the measurement date.

The Company also has certain derivative instruments associated with the Bank’s mortgage-banking activities. These derivative instruments include interest rate lock commitments on prospective residential mortgage loans and forward commitments to sell these loans to investors on a best efforts delivery basis and To Be Announced securities for mandatory delivery contracts. The fair value of these derivative instruments is measured using observable market prices for similar instruments and is classified as a level 2 measurement.

The Company’s level 3 liability consists of a derivative contract with the purchaser of 192,163 shares of Visa Class B common stock. Pursuant to the agreement, the Company retains the risks associated with the ultimate conversion of the Visa Class B common shares into shares of Visa Class A common stock, such that the counterparty will be compensated for any dilutive adjustments to the conversion ratio and the Company will be compensated for any anti-dilutive adjustments to the ratio. The agreement also requires periodic payments by the Company to the counterparty calculated by reference to the market price of Visa Class A common shares at the time of sale and a fixed rate of interest that stepped up once after the eighth scheduled quarterly payment. The fair value of the liability is determined using a discounted cash flow methodology. The significant unobservable inputs used in the fair value measurement are the Company’s own assumptions about estimated changes in the conversion rate of the Visa Class B common shares into Visa Class A common shares, the date on which such conversion is expected to occur and the estimated growth rate of the Visa Class A common share price. Refer to Note 6 – Derivatives for information about the derivative contract with the counterparty.

The Company believes its valuation methods for its assets and liabilities carried at fair value are appropriate; however, the use of different methodologies or assumptions, particularly as applied to level 3 assets and liabilities, could have a material effect on the computation of their estimated fair values.

Changes in Level 3 Fair Value Measurements and Quantitative Information about Level 3 Fair Value Measurements

The nominal changes in the fair value of level 3 financial instruments is due to the net impact of cash settlements and losses included in earnings. The level 3 fair value measurement was based on discounted cash flows, with a Visa Class B common share conversion ratio range of 1.55x to 1.54x and an estimated time to resolution of 15 to 27 months. The range of sensitivities that management utilized in its fair value calculations is deemed acceptable in the industry with respect to the identified financial instrument

The Company’s policy is to recognize transfers between valuation hierarchy levels as of the end of a reporting period.

Fair Value of Assets Measured on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis. Collateral-dependent loans individually evaluated for credit loss are measured at the fair value of the underlying collateral based on independent third-party appraisals that take into consideration market-based information such as recent sales activity for similar assets in the property’s market.

Other real estate owned and foreclosed assets, including both foreclosed property and surplus banking property, are level 3 assets that are adjusted to fair value, less estimated selling costs, upon transfer from loans or property and equipment. Subsequently, other real estate owned and foreclosed assets are carried at the lower of carrying value or fair value less estimated selling costs. Fair values are determined by sales agreement or third-party appraisals as discounted for estimated selling costs, information from comparable sales, and marketability of the assets.

The fair value information presented below is not as of the period end, rather it was as of the date the fair value adjustment was recorded during the twelve months for each of the dates presented below, and excludes nonrecurring fair value measurements of assets no longer on the balance sheet.

The following tables present the Company’s financial assets that are measured at fair value on a nonrecurring basis for each of the fair value hierarchy levels.

Accounting guidance from the FASB requires the disclosure of estimated fair value information about certain on- and off-balance sheet financial instruments, including those financial instruments that are not measured and reported at fair value on a recurring basis. The significant methods and assumptions used by the Company to estimate the fair value of financial instruments are discussed below.

Cash, Short-Term Investments and Federal Funds Sold – For these short-term instruments, the carrying amount is a reasonable estimate of fair value.

Securities – The fair value measurement for securities available for sale is discussed earlier in this note. The same measurement techniques were applied to the valuation of securities held to maturity.

Loans, Net – The fair value measurement for certain collateral dependent loans that are individually evaluated for credit loss was described earlier in this note. For the remaining portfolio, fair values were generally determined by discounting scheduled cash flows using discount rates determined with reference to current market rates at which loans with similar terms would be made to borrowers of similar credit quality.

Loans Held For Sale – These loans are either carried under the fair value option or at the lower of cost or market. Given the short duration of these instruments, the carrying amount is considered a reasonable estimate of fair value.

Deposits – The accounting guidance requires that the fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, and interest-bearing checking and savings accounts, be assigned fair values equal to amounts payable upon demand (carrying amounts). The fair value of fixed maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities.

Federal Funds Purchased and Securities Sold under Agreements to Repurchase – For these short-term liabilities, the carrying amount is a reasonable estimate of fair value.

Short-Term FHLB Borrowings – At June 30, 2026, short-term FHLB borrowings consisted of seven short-term fixed-rate borrowings for which the fair value was estimated by discounting contractual cash flows using current market rates at which borrowing with similar terms could be obtained. At December 31, 2025, FHLB borrowings consisted of one short-term fixed rate borrowing (two calendar days outstanding); as such, the carrying amount of the instrument was a reasonable fair value.

Long-Term Debt – The fair value is estimated by discounting the future contractual cash flows using current market rates at which debt with similar terms could be obtained.

Derivative Financial Instruments – The fair value measurement for derivative financial instruments is described earlier in this note.

The following tables present the estimated fair values of the Company’s financial instruments by fair value hierarchy levels and the corresponding carrying amounts.

16. Recent Accounting Pronouncements

Accounting Standards Adopted during the Six Months Ended June 30, 2026

In November 2025, the FASB issued ASU 2025-08, “Financial Instruments – Credit Losses (Topic 326): Purchased Loans,” to expand the population of acquired assets subject to the gross-up approach in Topic 326. Under the amendments in this update, loans (excluding credit cards) acquired without credit deterioration that are deemed “seasoned” are considered purchased seasoned loans and accounted for using the gross-up approach at acquisition. Non-purchased credit deteriorated loans (excluding credit cards) are seasoned if they are acquired in a business combination or were purchased at least 90 days after origination and the acquirer was not involved in the origination of the loans. Under the gross-up approach, the fair value discount is bifurcated between the credit and noncredit components, and the credit portion of the fair value discount is added to the initial amortized cost basis with a corresponding increase in the allowance for credit losses at the date of acquisition. Any noncredit premium or discount resulting from acquiring these seasoned loans is allocated to each individual asset and accreted or amortized to interest income using the effective yield method. Prior to this amendment, all non-purchased credit deteriorated loans acquired were recorded at the estimated fair value of the loan at acquisition, with the estimated allowance for credit loss recorded as a provision for credit losses through earnings in the period in which the acquisition occurred. The amendments in this update are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The amendments should be applied prospectively to loans that are acquired on or after the initial application date. Early adoption is permitted in an interim or annual reporting period in which financial statements have not yet been issued or made available for issuance. The Company elected to early adopt this standard on January 1, 2026. As of June 30, 2026, the Company had not acquired any financial assets to which the amendments would apply, and therefore, the early adoption of this standard did not have an impact on the Company’s consolidated results of operations or financial condition for the periods presented in this filing. Subsequent to quarter-end, on August 1, 2026, the Company completed its acquisition of OFB Bancshares, Inc. The accounting for loans acquired in that transaction will reflect the provisions of ASU 2025-08, as applicable. The Company is currently evaluating the fair values of the acquired assets and liabilities and, accordingly, has not yet determined the impact the adoption of the standard will have on the accounting for this transaction.

Accounting Standards Issued But Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40),” to improve the disclosures about a public business entity’s expenses in commonly presented expense captions. The amendments in this update require disclosure of specified information about certain costs and expenses in the notes to financial statements. Disclosure requirements also include a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, among other items. An entity is not precluded from providing additional voluntary disclosures that may provide investors with additional decision-useful information. This update, as amended, is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this update should be applied either prospectively to financial statements issued for reporting periods after the effective date of this update, or retrospectively to any or all prior periods presented in the financial statements. The Company is currently assessing the provisions of this guidance. As the update contains only amendments to disclosure requirements, adoption will have no impact on the Company’s consolidated results of operations or financial condition.

In September 2025, the FASB issued ASU 2025-06, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software,” to modernize the accounting for software costs that are accounted for under Subtopic 350-40. The amendments in this update remove all references to prescriptive and sequential software development stages in Subtopic 350-40 and instead require an entity to begin capitalizing software costs when both of the following occur: (1) management has authorized and committed to funding the software project, and (2) it is probable that the project will be completed and the software will be used to perform the function. The amendment also provides factors to consider when evaluating probable-to-complete recognition thresholds and specifies that the disclosures in Subtopic 360-10, “Property, Plant and Equipment,” are required for all capitalized internal-use software. Further, the amendment supersedes website development costs guidance and incorporates the recognition requirements in this subtopic. The amendments in this update are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. Entities may apply a prospective transition approach, a modified transition approach or a retrospective approach. The Company is currently assessing the provisions of this guidance but does not expect adoption to have a material impact on the Company’s consolidated results of operations or financial condition.

In November 2025, the FASB issued ASU 2025-09, “Derivative and Hedging (Topic 815): Hedge Accounting Improvements,” to clarify certain aspects of the guidance on hedge accounting and to address several incremental hedge accounting issues arising from the global reference rate reform initiative. The update addresses five issues: (1) the ability to group individual forecasted transactions in a cash flow hedge, modifying the term “shared risk exposure” to “similar risk exposure;” (2) the ability to apply cash flow hedge accounting to “choose your rate” debt instruments; (3) the application of cash flow hedge accounting to forecasted purchases and sales of nonfinancial assets; (4) the use of net written options has hedging instruments; and (5) the mechanics of assessing hedge effectiveness for foreign-currency-denominated dual hedge strategies. This update is effective for public business entities in the interim and annual reporting periods beginning after December 15, 2026, with early adoptions permitted. Entities should apply the amendments on a prospective basis for all hedging relationships. An entity may elect to adopt the amendments for hedging relationships that exist as of the date of adoption. Upon adoption, entities are permitted to modify certain critical terms of certain existing hedging relationships without dedesignating the hedge. The Company is currently assessing the provisions of this guidance but does not expect adoption to have a material impact on the Company’s consolidated results of operations or financial condition.

In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow Scope Improvements," to improve interim reporting guidance in Topic 270 by improving the navigability of the required interim disclosures, clarifying when that guidance is applicable, and providing additional guidance on what disclosures should be provided in interim reporting periods. This update reorganizes and clarifies interim reporting guidance without expanding disclosure requirements. Key provisions include clarification of entities in the scope of ASC 270, updates to the form and content requirements for condensed interim financial statements, and a new disclosure principle requiring disclosure of material events since year-end. This update is effective for public entities for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The amendments in this update can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently assessing the provisions of this guidance. As the update contains only clarification of disclosure requirements, adoption will have no impact on the Company's consolidated results of operations or financial condition.

17. Subsequent Event

On August 1, 2026, subsequent to the June 30, 2026 balance sheet date and prior to the issuance of these consolidated financial statements, the Company completed its previously announced acquisition of OFB Bancshares, Inc., the parent company of One Florida Bank, pursuant to the Agreement and Plan of Merger, dated May 15, 2026, (the "Merger Agreement"). The total purchase consideration was approximately $377.6 million for all outstanding OFB Bancshares, Inc. common stock and stock options. Pursuant to the terms of the Merger Agreement, holders of OFB Bancshares, Inc. common stock received aggregate cash consideration of approximately $355.1 million. In addition, each holder of outstanding OFB Bancshares, Inc. stock options received cash equal to the per-share value of the merger consideration over the per-share exercise price resulting in aggregate cash consideration of approximately $22.5 million that was paid by OFB Bancshares, Inc. on behalf of the Company. Outstanding OFB Bancshares, Inc. stock options with a per-share exercise price equal to or greater than the per-share value of the merger consideration were cancelled for no consideration.

One Florida Bank operated five financial centers in the greater Orlando, Florida market and one financial center in the Florida Panhandle. The acquisition expands the Company's presence in Florida and establishes a significant position in the high-growth Orlando metropolitan market.

The acquisition will be accounted for as a business combination under ASC 805, Business Combinations. As the acquisition was completed subsequent to June 30, 2026, the results of operations of OFB Bancshares, Inc. are not included in the Company's consolidated financial statements as of or for the three and six months ended June 30, 2026.

The Company is in the process of determining the fair values of assets acquired and liabilities assumed; as such, the initial accounting for the acquisition is incomplete as of the date these consolidated financial statements were issued, and the disclosures required by ASC 805, including the preliminary allocation of the purchase price and other disclosure information, have not yet been finalized. The Company will provide the required acquisition-related disclosures in subsequent filings as the preliminary purchase accounting and related valuation analysis are completed, which is expected to occur during the third quarter of 2026.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW

Non-GAAP Financial Measures

Management’s Discussion and Analysis of Financial Condition and Results of Operations includes non-GAAP measures used to describe our performance. These non-GAAP financial measures have inherent limitations as analytical tools and should not be considered on a standalone basis or as a substitute for analyses of financial condition and results as reported under GAAP. Non-GAAP financial measures are not standardized and therefore, it may not be possible to compare these measures with other companies that present measures having the same or similar names. These disclosures should not be considered an alternative to GAAP.

A reconciliation of those measures to GAAP measures are provided in the Consolidated Financial Results table later in this item. The following is a summary of these non-GAAP measures and an explanation as to why they are deemed useful.

Consistent with the provisions of subpart 229.1400 of the Securities and Exchange Commission’s Regulation S-K, “Disclosures by Bank and Savings and Loan Registrants,” we present net interest income, net interest margin and efficiency ratios on a fully taxable equivalent ("te") basis. The te basis adjusts for the tax-favored status of net interest income from certain loans and investments using a statutory federal tax rate of 21% to increase tax-exempt interest income to a taxable equivalent basis. We believe this measure to be the preferred industry measurement of net interest income, and that it enhances comparability of net interest income arising from taxable and tax-exempt sources.

We present certain additional non-GAAP financial measures to assist the reader with a better understanding of the Company’s performance period over period, and to provide investors with assistance in understanding the success management has experienced in executing its strategic initiatives. The Company highlights certain items that are outside of our principal business and/or are not indicative of forward-looking trends in supplemental disclosure items below our GAAP financial data and presents certain "Adjusted" ratios that exclude these disclosed items. These adjusted ratios provide management and the reader with a measure that may be more indicative of forward-looking trends in our business, as well as demonstrate the effects of significant gains or losses and changes.

We define Adjusted Pre-Provision Net Revenue as net income excluding provision expense and income tax expense, plus the taxable equivalent adjustment (as defined above), less supplemental disclosure items (as defined above). Management believes that adjusted pre-provision net revenue is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle. We define Adjusted Revenue as net interest income (te) and noninterest income less supplemental disclosure items. We define Adjusted Noninterest Expense as noninterest expense less supplemental disclosure items. We define our Efficiency Ratio as noninterest expense to total net interest income (te) and noninterest income, excluding amortization of purchased intangibles and supplemental disclosure items, if applicable. Management believes adjusted revenue, adjusted noninterest expense and the efficiency ratio are useful measures as they provide a greater understanding of ongoing operations and enhance comparability with prior periods.

Acquisition of OFB Bancshares, Inc.

Subsequent to the end of the second quarter of 2026, on August 1, 2026, we acquired OFB Bancshares, Inc., parent company of One Florida Bank, in an all-cash transaction. One Florida Bank operated five financial centers in the greater Orlando, Florida area and one in the Florida Panhandle. At June 30, 2026, OFB Bancshares, Inc., on a consolidated basis, had total assets of $2.1 billion, total loans of $1.7 billion, and total deposits of $1.8 billion. The acquisition enhances our existing financial center footprint by establishing a meaningful presence in the high growth Orlando market and is expected to be immediately accretive to earnings per share, exclusive of one-time transaction costs. Full integration and system conversion activities are expected to be finalized in the fourth quarter of 2026.

Securities Portfolio Restructuring

In January 2026, we executed a restructuring of our available for sale securities portfolio whereby we sold securities with an amortized cost of $1.5 billion and average yield of 2.49% and reinvested the $1.4 billion of proceeds with the purchase of securities with an average yield of 4.35%. We anticipate a 50 month payback period to cover the $98.5 million pre-tax loss associated with the sale, or approximately $0.95 per diluted share after tax. The restructure is expected to contribute approximately $23.8 million to net interest income, or $0.23 per diluted share, resulting in increases of 32 basis points (bps) to the securities portfolio yield and 7 bps to net interest margin on an annual basis.

Current Economic Environment

The U.S. – Iran conflict continues to contribute to heightened volatility and supply concerns in global energy markets. Rising energy prices were a significant contributor to inflation, with the consumer price index reaching 4.2% on an annualized basis in May 2026 before declining to 3.5% in June as energy prices retreated. Despite ongoing geopolitical and policy uncertainty, global equity markets rebounded sharply during the second quarter of 2026, and the U.S. economy proved more resilient through the energy shock than many had anticipated. The labor market saw an unexpected rebound in job creation in the latter part of the first quarter and into the second, and the unemployment rate dropped to 4.2% in June 2026. While energy prices likely hampered consumer spending, activity remained strong. Positive labor market and consumer spending indicators, coupled with continued business investments in artificial intelligence technology, drove real gross domestic product (GDP) growth of 1.5% on an annualized basis in the second quarter of 2026. In terms of monetary policy, the sharp rise in already persistent inflation has come to the forefront of the agenda. During the second quarter of 2026, the Federal Reserve announced no change in monetary policy and appears to have taken a hawkish position, emphasizing its commitment to price stability. As such, market expectations shifted in recent months from anticipation of multiple rate cuts in 2026 toward the notion that monetary policy could remain restrictive for a longer period.

In the second quarter of 2026, conditions in the financial services industry remained generally favorable despite persistent economic pressures and uncertainty with respect to fiscal and monetary policy. Within our markets, we experienced robust loan production, and deposit cost pressures continued to moderate, contributing favorably to our net interest margin and profitability.

Economic Outlook

We utilize economic forecasts produced by Moody’s Analytics (Moody’s) that provide various scenarios to assist in the development of our economic outlook. This outlook discussion utilizes the June 2026 Moody’s forecast, the most current available at June 30, 2026. The forecasts are anchored on a baseline forecast scenario, which Moody’s defines as the “most likely outcome” of where the economy is headed based on current conditions. Several upside and downside scenarios are produced that are derived from the baseline scenario and incorporate varying degrees of favorable and unfavorable adjustments to economic indicators and circumstances as compared to the baseline.

The baseline scenario maintains a mostly optimistic tenor with respect to economic outcomes, though the outlook has softened as energy prices remain elevated. Key variables underlying the June 2026 baseline forecast include the following: (1) the conflict with Iran will be resolved in the near-term; (2) the effective tariff rate of about 8% is expected to remain for the duration of the current administration before eventually falling back to about 2% late in the decade or early in the next; (3) above target inflation caused by the Iran conflict, oil price shock, tariffs and migration policy headwinds will preclude Federal Reserve interest rate cuts for the remainder of 2026 and 2027; (4) the combination of a slowdown in labor force growth and monthly job growth will remain a headwind to the labor market, prompting the unemployment rate to resume a gradual climb, peaking at 4.6% in the second quarter of 2027; (5) GDP is forecasted at 2.1% in 2026 and then slow to 1.9% in 2027 and 2.0% in 2028 before rebounding to 2.5% in 2029; (6) the 10-year U.S. Treasury yield is forecasted to average 4.4% in the second quarter of 2026 and remain near that level through the end of the decade due to elevated inflation and fiscal uncertainty.

The S-2 scenario presents a downside alternative to the baseline. The S-2 scenario assumes the negotiations between the U.S. and Iran take longer than expected and that the damage to energy infrastructure is worse than expected and takes longer to repair. As a result, oil prices decline at a slower rate than assumed in the baseline. The effective tariff rate increases to about 11% and remains elevated through the end of 2028. The impacts on the economy from tariffs, deportations and elevated oil prices are worse than expected, causing inflation to rise. Further, there is longer and farther-reaching disturbance from other geopolitical conflict. The scenario assumes the unemployment rate will rise considerably to a peak of 7.3% in the second quarter of 2027 and remain elevated before returning to full employment in late 2028. The combination of higher oil prices, rising inflation, tariffs, still elevated interest rates and reduced credit availability causes the U.S. economy to fall into a mild recession beginning in the third quarter of 2026 that lasts for three quarters, with a peak-to-trough decline in GDP of 1% and the stock market contracting 22%. The recession and rising inflation prompts the Federal Reserve to lower its benchmark interest rate only slightly below what is forecasted in the baseline scenario before making more significant cuts as inflation subsides.

Management has deemed certain assumptions underlying the baseline scenario and the downside S-2 scenario to have an equal likelihood to occur in the near term, and, as such, the baseline and S-2 scenarios were each given probability weightings of 50% in the calculation of our allowance for credit losses at June 30, 2026. The weighting of scenarios has changed from the March 31, 2026 calculation of allowance for credit losses, where the baseline scenario was weighted at 40% and the downside S-2 scenario was weighted at 60%. The change in weighting does not represent a significant shift in our outlook, but rather is a function of a shift in the assumptions underlying the baseline forecast to reflect the downside risks of the U.S. – Iran conflict.

The credit loss outlook for our portfolio as a whole has not changed materially since March 31, 2026. We continue to closely monitor our portfolio for customers that are sensitive to prolonged inflation, the elevated interest rate environment, tariffs, labor market conditions and/or other economic circumstances that may impact credit quality.

Rapidly evolving changes in geopolitical, fiscal and other policies have created heightened uncertainty as to the impact on the U.S. and global economies. The duration and scope of the conflict in the Middle East is expected to play a pivotal role in economic conditions. The impact of continued inflation, a softening labor market and the Federal Reserve's actions to counter those effects, as well as to respond to other economic concerns, could reduce economic growth in the near term. The full extent of the impact of the conflict in the Middle East and other influential factors are uncertain and may have an adverse effect on the U.S. economy, including the possibility of an economic recession or slower growth in the near or midterm.

Highlights of the Second Quarter 2026

We reported net income for the second quarter of 2026 of $127.0 million, or $1.55 per diluted common share, compared to $47.4 million, or $0.57 per diluted common share, in the first quarter of 2026 and $113.5 million, or $1.32 per diluted common share, in the second quarter of 2025. The first quarter of 2026 included a supplemental disclosure item attributable to a net loss on the restructuring of the available for sale securities portfolio totaling $98.6 million pre-tax, or $0.95 per diluted share after tax, and the second quarter of 2025 included supplemental disclosure items $5.9 million pre-tax, or $0.05 per diluted share, attributable to costs associated with the acquisition of Sabal Trust Company.

Second quarter 2026 results compared to first quarter 2026:

• Net income of $127.0 million, or $1.55 per diluted share
• Adjusted pre-provision net revenue, a non-GAAP measure, totaled $178.1 million, up $5.2 million, or 3%
• Period-end loans totaled $24.6 billion, up $588.3 million, or 2%
• Period-end deposits totaled $29.6 billion, up $547.6 million, or 2%
• Criticized commercial loans decreased while total nonaccrual loans remained relatively flat; annualized net charge-offs to average loans was 0.16%, down from 0.19%
• Allowance for credit losses coverage to total loans remains solid at 1.42%, down 1 basis point (bp) from March 31, 2026
• Net interest margin of 3.56%, up 1 bp from prior quarter
• Tangible common equity ratio of 9.78%, down 15 bps; common equity tier 1 ratio of 13.19%, down 10 bps; and total risk-based capital ratio of 14.98%, down 12 bps; all reflective of capital deployment to enhance shareholder value
• Efficiency ratio, a non-GAAP measure, improved to 55.31%, compared to 55.43%

Our results for the second quarter of 2026 reflect continued strong performance, profitability and enhanced shareholder value. We experienced solid loan and deposit growth during the quarter, reflecting continued progress on our organic growth plan. We continued to invest in our growth strategy with the hiring of a net 15 new bankers in the second quarter, bringing the year to date total to 42. We also returned capital to shareholders with the repurchase of 712,966 shares of our common stock, bringing year-to-date repurchases to 2.1 million shares. Noninterest income grew, expenses remained on target and our efficiency ratio improved. Credit metrics remained stable and we maintained a robust allowance for credit losses coverage of 1.42%. Looking ahead, our acquisition of One Florida Bank, completed on August 1, 2026, will enhance our ability to bring our relationship-based approach to banking to customers across an expanded footprint in the Central Florida area. We remain encouraged by the momentum across our franchise. While the operating environment continues to present challenges, we believe our solid balance sheet, strong customer relationships and disciplined execution position us well to deliver on our objectives for the remainder of this year and over the longer term.

Consolidated Financial Results

The following table contains the consolidated financial results for the periods indicated.

(a)

For analytical purposes, management adjusts interest income and net interest income for tax-exempt items to a taxable equivalent basis using a federal income tax rate of 21%.

(b)

The tangible common equity ratio is common stockholders’ equity less intangible assets divided by total assets less intangible assets.

(c)

The efficiency ratio, a non-GAAP financial measure, is noninterest expense to total net interest (te) and noninterest income, excluding amortization of purchased intangibles and supplemental disclosure items.

(d)

Refer to the non-GAAP financial measures section of this analysis for a discussion of these measures.

RESULTS OF OPERATIONS

Net Interest Income

Net interest income (te) for the second quarter of 2026 totaled $295.2 million, up $7.7 million, or 3%, from the first quarter of 2026, and $582.8 million for the first six months of 2026, up $30.6 million, or 6%, from the same period in 2025.

The $7.7 million increase in net interest income (te) from the first quarter of 2026 is comprised of an increase in interest income (te) of $11.3 million partially offset by an increase in interest expense of $3.6 million. The increase in interest income (te) was driven primarily by loan growth, an additional accrual day and an increase in interest income from securities as a result of the full-quarter impact of the portfolio restructuring completed in late January 2026. The increase in interest expense was primarily attributable to an increase in average short-term borrowings to support growth in the loan portfolio and an additional accrual day, partially offset by a decrease in the cost of deposits, reflecting a continued shift in the mix of average interest-bearing deposits from time deposits to transaction and savings deposits. The net interest margin for the second quarter of 2026 was 3.56%, up 1 bp from the first quarter of

2026, driven primarily by higher securities yields as a result of the bond portfolio restructuring, up 12 bps, and a lower cost of interest on deposits, down 5 bps, partially offset by lower loan yields, down 2 bps, and an increase in borrowing costs, up 26 bps.

The $30.6 million increase in net interest income (te) for the six months ended June 30, 2026 from the same period in 2025 is comprised of a $15.7 million increase in interest income (te) and a $14.9 million decrease in interest expense. The increase in interest income (te) was primarily attributable to an increase in interest income from securities, as the impact of loan growth was largely offset by a decline in loan yields. The decrease in interest expense was driven by a decline in interest expense on deposits that was largely a product of the interest rate environment, which also fostered a favorable shift in the mix of average interest-bearing deposits from time deposits to transaction and savings deposits, partially offset by an increase in average short-term borrowings. The net interest margin for the six months ended June 30, 2026 was 3.55%, up 9 bps from the same period in 2025, largely attributable to the impact of higher securities yields of 47 bps, a lower cost of interest-bearing deposits of 37 bps, partially offset by a decline in loan yields of 24 bps and an increase in borrowing costs of 40 bps.

The following tables detail the components of our net interest income (te) and net interest margin.

(a)

Taxable equivalent (te) amounts were calculated using a federal income tax rate of 21%.

(b)

Includes nonaccrual loans.

(c)

Average securities do not include unrealized holding gains/losses on available for sale securities.

(a)

Taxable equivalent (te) amounts were calculated using a federal income tax rate of 21%.

(b)

Includes nonaccrual loans.

(c)

Average securities do not include unrealized holding gains/losses on available for sale securities.

Provision for Credit Losses

During the second quarter of 2026, we recorded a provision for credit losses of $13.8 million, compared to $13.2 million in the first quarter of 2026. The provision for credit losses in the second quarter of 2026 included net charge-offs of $9.4 million and a reserve build of $4.4 million, compared to net charge-offs of $11.1 million and a reserve build of $2.1 million in the first quarter of 2026. The provisions for credit losses in both periods reflect mostly stable credit quality and modest builds attributable to loan growth.

Annualized net charge-offs as a percentage of average loans in the second quarter of 2026 were 0.16%, down from 0.19%, in the first quarter of 2026. Net charge-offs in the second quarter of 2026 included $6.6 million in the commercial portfolio, $2.7 million in the consumer portfolio and $0.1 million in the residential mortgage portfolio. Net charge-offs in the first quarter of 2026 included $7.4 million in the commercial portfolio, $3.5 million in the consumer portfolio and $0.2 million in the residential mortgage portfolio.

For the six months ended June 30, 2026, we recorded a provision for credit losses of $26.9 million compared to $25.4 million for the same period in 2025. The provision for credit losses for the six months ended June 30, 2026 included net charge-offs of $20.6 million and a reserve build of $6.3 million, compared to net charge-offs of $28.0 million and a reserve release of $2.6 million in the same period in 2025. Net charge-offs for the six months ended June 30, 2026 were 0.17% of average loans, comprised of net charge-offs of $14.1 million in the commercial portfolio, $6.2 million in the consumer portfolio and $0.3 million in the residential mortgage portfolio. Net charge-offs for the six months ended June 30, 2025 were 0.24% of average loans, comprised of net charge-offs of $21.8 million in the commercial portfolio and $6.3 million in the consumer portfolio, partially offset by net recoveries of less than $0.1 million in the residential mortgage portfolio.

The discussion labeled "Allowance for Credit Losses and Asset Quality" that appears later in this Item provides additional information on these changes and on general credit quality.

Noninterest Income

Noninterest income totaled $108.4 million for the second quarter of 2026, up $100.9 million from the first quarter of 2026. Included in noninterest income in the first quarter of 2026 was a $98.6 million loss identified as a supplemental disclosure item attributable to the restructuring of the available for sales securities portfolio. Excluding the supplemental disclosure item, noninterest income was up $2.3 million, or 2%, from the first quarter of 2026, driven primarily by increases in investment and annuity fees, trust fees, bank card and ATM fees and income from secondary mortgage market operations, partially offset by a decline in other miscellaneous income. For the six months ended June 30, 2026, noninterest income totaled $115.8 million, down $77.5 million from the same period in 2025. Excluding the supplemental disclosure item described above, noninterest income was up $21.1 million, or 11%, from the same period in 2025, with increases across most lines. A detailed discussion of noninterest income variances follows.

The components of noninterest income are presented in the following table for the indicated periods.

Service charges on deposit accounts include consumer, business, and corporate deposit account servicing fees, as well as nonsufficient funds fees on non-consumer accounts, overdraft and overdraft protection fees, and other customer transaction-related fees. Service charges on deposits totaled $25.9 million for the second quarter of 2026, virtually flat compared to the first quarter of 2026. For the six months ended June 30, 2026, service charges on deposits totaled $51.8 million, up $3.4 million, or 7%, from the same period in 2025, primarily attributable to consumer overdraft fees and analysis fees on commercial accounts.

Trust fee income represents revenue generated from a full range of trust services, including asset management and custody services provided to individuals, businesses and institutions. Trust fees totaled $26.0 million for the second quarter of 2026, up $1.5 million, or 6%, from the first quarter of 2026, driven in part by seasonal tax preparation fees. For the six months ended June 30, 2026, trust fees totaled $50.6 million, up $9.8 million, or 24%, from the same period in 2025. The year-over-year increase is mostly attributable to personal trust, resulting from both a full period contribution from the Sabal acquisition and organic and market value-driven growth in our legacy business.

Bank card and ATM fees include interchange and other income from credit and debit card transactions, fees earned from processing card transactions for merchants, and fees earned from ATM transactions. Bank card and ATM fees totaled $23.2 million for the second quarter of 2026, up $1.1 million, or 5%, from the first quarter of 2026, reflecting higher activity across all fee lines. Bank card and ATM fees for the six months ended June 30, 2026 totaled $45.3 million, up $2.6 million, or 6%, from the same period in 2025. The year-over-year increase is mostly attributable to interchange fees, due in part to card-focused marketing campaigns, and ATM fees, reflecting a marketing adjustment on certain fees.

Investment and annuity fees and insurance commissions includes both fees earned from sales of annuity and insurance products, as well as managed account fees. Investment and annuity fees and insurance commissions totaled $14.6 million for the second quarter of 2026, up $2.0 million, or 16%, from the first quarter of 2026. The linked quarter increase was largely driven by annuity sales, corporate underwriting fees and investment management fees. For the six months ended June 30, 2026, investment and annuity fees and insurance commissions totaled $27.2 million, up $5.2 million, or 23%, from the same period in 2025. The year-over-year increase was largely driven by fixed income trading and investment management fees, partially offset by a decline in annuity sales. Investment and annuity fee income can vary from period to period depending on market conditions, impacting demand for products and services and related fees.

Income from secondary mortgage market operations is comprised of income produced from the origination and sales of residential mortgage loans in the secondary market. We offer a full range of mortgage products to our customers and typically sell longer-term fixed-rate loans while retaining the majority of adjustable-rate loans, as well as loans generated through programs to support customer relationships. Secondary mortgage market operations income will vary based on mortgage application volume, pull through rates, the percentage of loans ultimately sold in the secondary market and the timing of such sales. Income from secondary mortgage market operations was $4.1 million in the second quarter of 2026, up $0.5 million, or 15%, from the first quarter of 2026. The linked quarter increase was primarily attributable to an increase in mortgage production. For the six months ended June 30, 2026, income from secondary mortgage market operations totaled $7.6 million, virtually flat compared to the same period in 2025, as the impact of an increase in mortgage production was offset by a decline in the percentage of loans sold in the secondary market.

There was no net gain or loss on securities transactions during the second quarter of 2026, compared to a net loss on securities transactions of $98.6 million in the first quarter of 2026 that resulted from the sale of $1.5 billion of available for sale securities. The sale reflects a strategic decision to restructure the portfolio to enhance future net interest income through deployment of the proceeds into higher-yielding instruments.

Income from bank-owned life insurance (BOLI) is typically generated through insurance benefit proceeds as well as the growth of the cash surrender value of insurance contracts held. Income from BOLI was $6.3 million for the second quarter of 2026, up $1.0 million, or 20%, from the first quarter of 2026. The linked quarter increase was driven primarily by an increase in mortality gains and also reflects an increase in income from changes in cash surrender value. For the six months ended June 30, 2026, income from BOLI totaled $11.6 million, up $1.4 million, or 14%, from the same period in 2025, driven by an increase in income from changes in cash surrender value that was partially offset by a decline in mortality gains.

Credit related fees include fees assessed on letters of credit and unused portions of loan commitments. For the three and six months ended June 30, 2026, credit related fees totaled $2.8 million and $5.6 million, respectively. The linked quarter and year-over-year variances were virtually flat in relation to the respective comparative periods.

Income or loss from customer and other derivatives is largely from our customer interest rate derivative program. Income from customer and other derivatives totaled $0.4 million for the second quarter of 2026, down $0.6 million from the first quarter of 2026. The linked quarter decrease was largely attributable to the customer derivative program and is a product of volume and interest rate movement, partially offset by lower losses associated with assumption changes to the Visa Class B derivative liability. For the six months ended June 30, 2026, income from customer and other derivatives totaled $1.4 million, down $0.3 million from the same period in 2025. The year-over-year decrease was also driven by the customer derivative program. Derivative income can be volatile and is dependent upon the composition of the portfolio, volume and mix of sales and termination activity, and market value adjustments due to market interest rate movement.

Net gains on sales of premises, equipment and other assets consist primarily of net revenue earned from sales of excess-bank owned facilities and equipment no longer in use, gains on sales of Small Business Administration (SBA) and other non-residential mortgage loans, and leases and other assets associated with the equipment finance line of business. Net gains on sales of premises, equipment and other assets for the second quarter of 2026 totaled $1.6 million, down $0.4 million, or 20%, from the first quarter of 2026. For the six months ended June 30, 2026, net gains on sales of premises, equipment and other assets totaled $3.7 million, up $0.8 million, or 27%, from the same period in 2025. The level of net gains or losses on sales of these assets in a given reporting period will vary based on a variety of circumstances.

Other miscellaneous income is comprised of various items, including income from investments in small business investment companies (SBIC), dividends on Federal Home Loan Bank (FHLB) stock, and fees from loan syndication and other specialty lines of business. Other miscellaneous income totaled $3.4 million, down $2.9 million from the first quarter of 2026. The linked quarter decrease reflects declines in income from SBICs, syndication income and dividends on FHLB stock. For the six months ended June 30, 2026, other miscellaneous income totaled $9.7 million, down $1.8 million from the same period in 2025. The year over year decrease was driven primarily by a decline in income from SBICs that was partially offset by an increase in dividends on FHLB stock. SBIC income and syndication fees will vary from period to period, depending on activity.

Noninterest Expense

Noninterest expense for the second quarter of 2026 was $225.4 million, up $4.7 million, or 2%, from the first quarter of 2026, driven by personnel, other miscellaneous, professional services and occupancy and equipment expenses, partially offset by a decrease in data processing expense. For the six months ended June 30, 2026, noninterest expense totaled $446.2 million, up $25.1 million, or 6%, from the same period in 2025. Included in noninterest expense for six months ended June 30, 2025 were supplemental disclosure items totaling $5.9 million attributable to costs associated with the Sabal acquisition. Excluding the supplemental disclosure items, noninterest expense was up $31.1 million, or 7%, from the same period in 2025, largely driven by increases in personnel, business development, data processing and professional services expenses. A more detailed discussion of noninterest expense variances follows.

The components of noninterest expense are presented in the following table for the indicated periods.

Personnel expense consists of salaries, incentive compensation, long-term incentives, payroll taxes, and other employee benefits such as 401(k), pension, and insurance for medical, life and disability. Personnel expense totaled $130.2 million for the second quarter of 2026, up $3.0 million, or 2%, from the first quarter of 2026. The linked quarter increase was driven primarily by increases in salary expense as a result of annual merit increases and increased headcount, commissions and incentives associated with production, share-based compensation and certain employee benefits. These increases were partially offset by seasonal declines in payroll tax and certain other employee benefits, and a favorable benefit from salary deferrals associated with lending activity. For the six months ended June 30, 2026, personnel expense totaled $257.3 million, up $26.5 million, or 11%, from the same period in 2025. The six months ended June 30, 2025 included $1.4 million of Sabal acquisition costs highlighted as supplemental disclosure items. Excluding the Sabal acquisition costs, personnel expense for the six months ended June 30, 2026 was up $27.9 million, or 12%, from the same period in 2025. The year-over-year increase reflects increases in most components of this category, and reflects both expected annual increases in salary, incentives, bonus and associated benefit costs, and incremental expense associated with increased headcount that includes both Sabal associates and additional hires of revenue-producing and facility management associates.

Occupancy and equipment expenses are primarily composed of lease expenses, depreciation, maintenance and repairs, rent, property taxes, and other equipment expenses. Occupancy and equipment expenses totaled $18.3 million for the second quarter of 2026, up $1.0 million, or 6%, from the first quarter of 2026, primarily attributable to increases in building repair and maintenance and leased facility expense. For the six months ended June 30, 2026, occupancy and equipment expenses totaled $35.6 million, down $0.5 million, or 1%, compared to the same period in 2025. The year-over-year decrease was driven by decreases in facility repair and maintenance and outsourced facility management that were partially offset by an increase in leased facility expense.

Data processing expense includes expenses related to third party technology processing and servicing costs, technology project costs and fees associated with bank card and ATM transactions, and credit card reward expenses. Data processing expense was $31.7 million for the second quarter of 2026, down $1.1 million, or 3%, from the first quarter of 2026. The linked quarter decrease was driven primarily by declines in maintenance on bank owned software and certain third-party technology processing expenses, partially offset by an increase in activity-based card processing and rewards and rebate expenses. For the six months ended June 30, 2026, data processing expense totaled $64.5 million, down $0.2 million, or less than 1%, from the same period in 2025. The six months ended June 30, 2025 included $2.0 million of Sabal acquisition costs highlighted as supplemental disclosure items. Excluding the Sabal acquisition costs, data processing expense for the six months ended June 30, 2026 was up $1.8 million, or 3%, from the same period in 2025. The year over year increase was largely attributable to increases in certain third-party technology processing and activity-based card processing and rewards and rebates expenses, partially offset by a decrease in amortization and maintenance on bank owned software. Data processing expense can vary from period to period, depending on business needs and technology enhancement initiatives.

Professional services expense includes accounting and audit, legal, consulting and certain outsourced service expense. Professional services expense for the second quarter of 2026 totaled $14.5 million, up $0.9 million, or 7%, from the first quarter of 2026. The linked quarter increase was mostly attributable to legal fees, consulting fees, expenses associated with problem loan collections and outsourced service expenses. For the six months ended June 30, 2026, professional services expense totaled $28.1 million, down $0.5 million, or 2%, from the same period in 2025. The six months ended June 30, 2025 included $1.5 million of Sabal acquisition costs highlighted as supplemental disclosure items. Excluding the Sabal acquisition costs, professional services expense for the six months ended June 30, 2026 was up $1.1 million, or 4%, from the same period in 2025. The year-over-year increase was largely attributable to costs associated with consulting and other professional services associated with stand-alone engagements, including process improvement projects. Professional services expense may vary from period to period, generally related to the timing of external service needs.

Deposit insurance and regulatory fees for the second quarter of 2026 totaled $5.0 million, virtually flat compared to the first quarter of 2026. For the six months ended June 30, 2026, deposit insurance and regulatory fees totaled $10.0 million, up $0.2 million, or 2%, from the same period in 2025.

Other real estate and foreclosed assets expense totaled $0.2 million in the second quarter of 2026, down $0.2 million from the first quarter of 2026. For the six months ended June 30, 2026, other real estate and foreclosed assets expense totaled $0.7 million, down $2.3 million from the same period in 2025. Gains or losses on the sale of other real estate and foreclosed assets may occur periodically and are dependent on the number and type of assets for sale and current market conditions.

Corporate value, franchise and other non-income tax expense for the second quarter of 2026 totaled $4.5 million, up $0.1 million, or 3%, from the first quarter of 2026. The linked quarter increase was largely attributable to bank share tax. For the six months ended June 30, 2026, corporate value, franchise and other non-income tax expense totaled $9.0 million down $0.1 million, or 1%, from the same period in 2025. The year-over-year decline was driven by a decrease in bank share tax that was mostly offset by an increase in

franchise tax. The calculation of bank share tax is based on multiple variables, including average quarterly assets, earnings and stockholders’ equity to determine the taxable assessment value and can vary from period to period.

Business development-related expenses (including advertising, travel, entertainment and contributions) totaled $10.0 million for the second quarter of 2026, virtually flat compared to the first quarter of 2026, as increases in advertising and promotion and travel expenses were offset by decreases in contributions, sponsorships and promotional campaign expenses. For the six months ended June 30, 2026, business development-related expenses totaled $20.1 million, up $4.2 million, or 27%, from the same period in 2025. The year-over-year increase was attributable to most components of this category but driven primarily by advertising and promotion expenses.

All other expenses, excluding amortization of intangibles, is comprised of a variety of other operational expenses and losses, tax credit investment amortization, and net other retirement expense. All other expenses totaled $8.7 million for the second quarter of 2026, up $1.2 million, or 16%, from the first quarter of 2026. The linked quarter increase was driven largely by other operational losses. For the six months ended June 30, 2026, all other expenses totaled $16.2 million, down $2.3 million, or 12%, from the same period in 2025. The six months ended June 30, 2025 included $1.0 million of Sabal acquisition costs highlighted as supplemental disclosure items. Excluding the Sabal acquisition costs, all other expenses for the six months ended June 30, 2026 was down $1.3 million, or 8%, from the same period in 2025, driven primarily by net other retirement expense as a result of changes in actuarial assumptions for our pension plan, partially offset by an increase in other operational losses.

Income Taxes

The effective income tax rate for the second quarter of 2026 was 21.7%, compared to 19.3% in the first quarter of 2026. The linked-quarter increase in the effective tax rate was due primarily to a $1.4 million income tax benefit in the first quarter of 2026 related to various discrete items, such as share-based compensation. The effective tax rate for the six months ended June 30, 2026 was 21.1%, compared to 20.7% for the same period in 2025.

Many factors impact the effective income tax rate including, but not limited to, the level of pre-tax income and relative impact of net tax benefits related to tax credit investments, tax-exempt interest income, bank-owned life insurance, and nondeductible expenses. Additionally, discrete tax items recognized in any given period affect the comparability of the effective income tax rate between periods. Such items include share-based compensation, valuation allowance changes, uncertain tax position changes and tax law changes.

Our effective tax rate has historically varied from the federal statutory rate primarily because of tax-exempt income and tax credits. Interest income on bonds issued by or loans to state and municipal governments and authorities, and earnings from the bank-owned life insurance program are the major components of tax-exempt income. The main source of tax credits has been investments in tax-advantaged securities and tax credit projects. These investments are made primarily in the markets we serve and are directed at tax credits issued under the Federal and State New Market Tax Credit (“NMTC”) programs, Low-Income Housing Tax Credit (“LIHTC”) programs, as well as pre-2018 Qualified Zone Academy Bonds (“QZAB”) and Qualified School Construction Bonds (“QSCB”). These investments generate tax credits, which reduce current and future taxes and are recognized when earned as a benefit in the provision for income taxes.

We have invested in NMTC projects through investments in our own Community Development Entities (“CDE”), as well as other unrelated CDEs. Federal tax credits from NMTC investments are recognized over a seven-year period, while recognition of the benefits from state tax credits varies from three to five years. We have also invested in affordable housing projects that generate federal LIHTC tax credits that are recognized over a ten-year period, beginning in the year the rental activity begins. The amortization of the LIHTC investment cost is recognized as a component of income tax expense in proportion to the tax credits recognized over the ten-year credit period.

Based on tax credit investments that have been made to date in 2026, we expect to realize benefits from federal and state tax credits over the next three years totaling $8.0 million, $5.5 million, and $4.4 million in 2027, 2028, and 2029, respectively. We may continue making investments in tax credit projects; however, our ability to access new credits will depend upon, among other factors, federal and state tax policies and the level of competition for such credits.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Liquidity management ensures that funds are available to meet the cash flow requirements of our depositors and borrowers, while also meeting the operating, capital and strategic cash flow needs of the Company, the Bank and other subsidiaries. As part of the overall asset and liability management process, liquidity management strategies and measurements have been developed to manage and monitor liquidity risk. The following table summarizes available liquidity at June 30, 2026:

(a) Amount used includes letters of credit.

Liquidity levels of financial institutions continue to be in heightened focus since the failure of several major regional U.S. banks that experienced large-scale deposit runs in early 2023. At June 30, 2026, our available on and off-balance sheet liquidity of $19.5 billion is well in excess of our estimated uninsured, noncollateralized deposits of approximately $12.4 billion.

The asset portion of the balance sheet provides liquidity primarily through loan principal repayments, maturities and repayments of investment securities and occasional sales of various assets. Short-term investments such as federal funds sold, securities purchased under agreements to resell and interest-bearing deposits with the Federal Reserve Bank or with other commercial banks are additional sources of liquidity to meet cash flow requirements. Free securities represent unpledged securities that can be sold or used as collateral for borrowings, and include unpledged securities assigned to short-term dealer repurchase agreements or to the Federal Reserve Bank discount window. Total pledged securities were $3.3 billion at June 30, 2026, down $619 million from December 31, 2025. The decrease in pledged securities compared to December 31, 2025 is largely attributable to pledges that were released in response to a decrease in public funds deposits. Both securities and FHLB letters of credit are pledged as collateral related to public funds and repurchase agreements. Management has established an internal target for the ratio of free securities to total securities of 20% or greater. As shown in the table below, our ratio of free securities to total securities was 58.76% at June 30, 2026, compared to 56.35% at March 31, 2026, and 51.97% at December 31, 2025.

The liability portion of the balance sheet provides liquidity mainly through the ability to use cash sourced from customer deposit accounts. At June 30, 2026, deposits totaled $29.6 billion, up $547.6 million, or 2%, from March 31, 2026 and $350.0 million, or 1%, from December 31, 2025, due primarily to growth in transaction and savings deposits that was partially offset by retail time deposit maturities and typical seasonal movement in public funds deposits. There were no brokered time deposits at June 30, 2026, March 31, 2026 or December 31, 2025. The use of brokered deposits as a funding source is subject to certain policies regarding the amount, term and interest rate.

Core deposits consist of total deposits excluding certificates of deposit of $250,000 or more and brokered deposits. Core deposits totaled $28.3 billion at June 30, 2026, up $621.0 million from March 31, 2026 and $484.3 million from December 31, 2025. Changes

in the level of core deposits will vary based on the level of total deposits and the mix therein. The ratio of core deposits to total deposits was 95.50% at June 30, 2026, compared to 95.17% at March 31, 2026 and 94.99% at December 31, 2025.

Purchases of federal funds, securities sold under agreements to repurchase and other short-term borrowings from customers provide additional sources of liquidity to meet short-term funding requirements. Besides funding from customer sources, the Bank has a line of credit with the FHLB that is secured by blanket pledges of certain mortgage loans. At June 30, 2026, the bank had $950 million in borrowings and approximately $4.8 billion available under this line. At June 30, 2026, the unused borrowing capacity at the Federal Reserve’s discount window was approximately $3.4 billion. There were no outstanding borrowings with the Federal Reserve at any date during any period covered by this report.

Wholesale funds, which are comprised of short-term borrowings, long-term debt and brokered deposits were 6.24% of core deposits at June 30, 2026, compared to 5.62% at March 31, 2026 and 4.37% at December 31, 2025. At June 30, 2026, wholesale funds totaled $1.8 billion, an increase of $210.6 million from March 31 2026 and $548.1 million from December 31, 2025, largely driven by an increase in FHLB borrowings. The amount of wholesale funds outstanding will vary based on retail deposit levels and current funding needs. The Company has established an internal target for wholesale funds to be less than 25% of core deposits.

Other key measures used to monitor liquidity include the liquid asset ratio and the loan-to-deposit ratio. The liquid asset ratio (liquid assets, consisting of cash, short-term investments and free securities, divided by total liabilities) measures our ability to meet short-term obligations. Our liquid asset ratio was 17.72% at June 30, 2026, compared to 16.85% at March 31, 2026 and 15.63% at December 31, 2025. Management has established a minimum liquid asset ratio of 7.5% and an internal target of 12% or greater. The loan to deposit ratio (average loans outstanding for the reporting period divided by average deposits outstanding) measures the amount of funds the Bank lends for each dollar of deposits on hand. Our average loan-to-deposit ratio for the second quarter of 2026 was 84.57%, compared to 83.11% for the first quarter of 2026, and 82.30% for the fourth quarter of 2025. Management has an established target range for the loan-to-deposit ratio of 87% to 89%, but will operate outside that range under certain circumstances.

Cash generated from operations is another important source of funds to meet liquidity needs. The Consolidated Statements of Cash Flows included in Part I, Item 1 of this document present operating cash flows and summarize all significant sources and uses of funds during the six months ended June 30, 2026 and 2025.

Dividends received from the Bank have been the primary source of funds available to the Parent for the payment of dividends to our stockholders, repurchasing our common stock in the open market, servicing its debt and for acquisitions with cash consideration. The liquidity management process takes into account the various regulatory provisions that can limit the amount of dividends the Bank can distribute to the Parent. The Parent targets cash and other liquid assets to provide liquidity in an amount sufficient to fund approximately six quarters of ongoing cash or liquid asset needs, consisting primarily of common stockholder dividends, debt service requirements, and any expected early extinguishment of debt. The Parent may operate below the target level on a temporary basis if a return to the target can be achieved within a reasonable amount of time. The Parent had cash and liquid assets of $244.2 million at June 30, 2026.

Capital Resources

Stockholders’ equity totaled $4.4 billion at June 30, 2026, down $16.0 million, or less than 1%, from December 31, 2025. The decrease from December 31, 2025 is primarily attributable to common stock repurchases of $144.5 million, dividends of $82.5 million, partially offset by net income of $174.4 million, other comprehensive income of $30.8 million and long-term incentive plan and dividend reinvestment activity of $5.9 million.

The tangible common equity (TCE) ratio was 9.78% at June 30, 2026, down 28 bps from 10.06% at December 31, 2025, driven by common stock repurchases (-42 bps), tangible asset growth (-25 bps) and dividends (-24 bps), partially offset by tangible net earnings (+52 bps) and other comprehensive income (+9 bps) and stock-based compensation and other (+2 bps).

The regulatory capital ratios of the Company and the Bank at June 30, 2026 remained well in excess of current regulatory minimum requirements, including capital conservation buffers, by at least $1.0 billion. The Company and the Bank have been categorized as “well-capitalized” in the most recent notices received from our regulators. Refer to the Supervision and Regulation section in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for further discussion of our capital requirements.

The following table shows the regulatory capital ratios for the Company and the Bank for the indicated periods.

On April 30, 2026, our board of directors declared a regular quarterly common stock cash dividend of $0.50 per share. The quarterly common stock cash dividend was paid on June 15, 2026 to shareholders of record on June 5, 2026. The Company has paid uninterrupted dividends to its shareholders since 1967.

In December 2025, our Board of Directors authorized a stock repurchase program, effective January 1, 2026, to repurchase up to 5% of the shares of common stock outstanding as of December 31, 2025, or 4.1 million shares. The authorization is set to expire on December 31, 2026. The shares may be repurchased in the open market, by block purchase, through accelerated share repurchase plans, in privately negotiated transactions or otherwise, in one or more transactions, from time to time, depending upon market conditions and other factors, and in accordance with applicable regulations of the Securities and Exchange Commission. The Company is not obligated to purchase any shares under this program and the repurchase authorization may be terminated or amended by the Board of Directors at any time prior to the expiration date. During the second quarter of 2026, the Company repurchased 712,966 shares under this program at an average price of $68.31 per share, inclusive of commissions. To date, 2,112,966 shares have been repurchased under this program. The Company has accrued an estimated excise tax liability on net share repurchases under this plan of $1.3 million at June 30, 2026.

On March 19, 2026, the federal bank regulatory agencies requested comment on three proposals to modernize the regulatory capital framework for banks of all sizes. The proposals are intended to streamline capital requirements and better align regulatory capital with risk while maintaining the safety and soundness of the banking system. While the agencies anticipate that the amount of overall capital in the banking system will modestly decrease as a result of these proposals, they expect capital levels will still be substantially higher than they were before the 2008 financial crisis. In aggregate, the proposals would modestly reduce capital requirements for large banks and moderately reduce requirements for smaller banks, reflecting their more traditional lending activities.

Comments on all three proposals were due by June 18, 2026, and there is not yet a proposed timeline for issuance of a final rule or an implementation date. The Company is in process of evaluating the proposed rules and, based on a preliminary estimate, expects the rules as proposed would have a favorable impact on our capital levels.

BALANCE SHEET ANALYSIS

Short-Term Investments

Short-term investments are held so that funds are available to meet the cash flow needs of both borrowers and depositors. Short-term investments, including interest-bearing bank deposits and federal funds sold, totaled $515.1 million at June 30, 2026, up $291.4 million from March 31, 2026 and $382.8 million from December 31, 2025. Average short-term investments of $532.4 million for the second quarter of 2026 were up $92.9 million from the first quarter of 2026. Typically, the balance of short-term investments will change on a daily basis depending upon movement in customer loan and deposit accounts.

Securities

The purpose of the securities portfolio is to increase profitability, mitigate interest rate risk, provide liquidity and comply with regulatory pledging requirements. Our securities portfolio includes securities categorized as available for sale and held to maturity. Available for sale securities are carried at fair value and may be sold prior to maturity. Unrealized gains or losses on available for sale securities, net of deferred taxes, are recorded as accumulated other comprehensive income or loss in stockholders' equity.

Investment in securities totaled $7.9 billion at June 30, 2026, down $136.7 million, or 2%, from March 31, 2026 and $203.4 million, or 3%, from December 31, 2025. The linked quarter decrease is primarily attributable to net paydowns and maturities, a portion of which was used to fund growth in the loan portfolio. The decrease from December 31, 2025 is also due to net paydowns and

maturities as well as the impact of the portfolio restructure described below. At June 30, 2026, securities available for sale totaled $6.0 billion and securities held to maturity totaled $1.9 billion.

In January 2026, we executed a restructuring of the available for sale securities portfolio to enhance net interest income whereby we sold securities with an amortized cost of $1.5 billion and an average yield of 2.49% and reinvested the $1.4 billion of proceeds with the purchase of securities with an average yield of 4.35%.

Our securities portfolio consists mainly of residential and commercial mortgage-backed securities and collateralized mortgage obligations that are issued or guaranteed by U.S. government agencies. We invest only in high quality investment grade securities with a targeted portfolio effective duration generally between two and five and a half years. At June 30, 2026, the average expected maturity of the portfolio was 5.44 years with an effective duration of 4.08 years and a nominal weighted-average yield of 3.26%. Under an immediate, parallel rate shock using increases of 100 bps and 200 bps, the effective durations would be 4.12 years and 4.09 years, respectively. At December 31, 2025, the average expected maturity of the portfolio was 5.18 years with an effective duration of 3.89 years and a nominal weighted-average yield of 2.87%. The changes in expected maturity, effective duration, and nominal weighted-average yield from December 31, 2025 were largely the result of the portfolio restructuring and reinvestment in the portfolio during the period. At June 30, 2026, approximately $387.8 million of our available for sale securities are hedged with $359.0 million in fair value hedges in order to provide protection and flexibility to reposition and/or reprice the portfolio, effectively reducing the duration (market price risk) on the hedged securities. Once effective, fair value hedges synthetically convert the notional amount of the hedged asset over the life of the hedge to a variable rate instrument that is indexed to the federal funds effective rate. At June 30, 2026, fair value hedges with notional amounts totaling $265.0 million are effective, with the remaining $94.0 million of notional amount effective beginning July 1, 2026.

At the end of each reporting period, we evaluate the securities portfolio for credit loss. Based on our assessments, expected credit loss was not material for any period presented, and therefore no allowance for credit loss was recorded.

Loans

Total loans at June 30, 2026, were $24.6 billion, up $588.3 million, or 2%, from March 31, 2026 and $621.7 million, or 3%, from December 31, 2025. Linked-quarter, loan growth was largely driven by commercial non-real estate, healthcare and commercial real estate lending across multiple products. A more detailed discussion of loan portfolio activity follows.

The following table shows the composition of our loan portfolio at each date indicated.

Our commercial customer base is diversified over a range of industries. We lend mainly to middle-market and smaller commercial entities, although we do participate in larger shared-credit loan facilities generally with businesses/sponsors operating in our market areas that are well known to the relationship officers. Shared national credits outstanding at June 30, 2026 totaled approximately $2.4 billion, or 9.6% of total loans, up $323.1 million from December 31, 2025. At June 30, 2026, our largest industry concentrations in shared national credits included approximately $373 million in real estate rental and leasing, $336 million in finance and insurance, $259 million in manufacturing, $253 million in information, $226 million in healthcare and social assistance, and $207 million in professional, scientific and technical services, with the remainder of the balance in other diverse industries.

Commercial and industrial (“C&I”) loans include both non-real estate and owner occupied real estate secured loans. C&I loans totaled $13.3 billion at June 30, 2026, up $304.2 million, or 2%, from March 31, 2026 and up $235.9 million, or 2%, from December 31, 2025, reflecting increased demand and upward momentum in loan production from our new bankers.

Our C&I loan portfolio is well diversified by product, client, and geography throughout our footprint. Nevertheless, we may be exposed to certain concentrations of credit risk which exist in relation to different borrowers or groups of borrowers, specific types of

collateral, industries, loan products, or regions. The following table provides detail of the more significant industry concentrations for our commercial and industrial loan portfolio, which is based on NAICS codes for all industries, with the exception of energy, which is based on the borrower’s source of revenue (i.e. a manufacturer whose income is derived from energy-related business is reported as energy).

Commercial real estate - income producing loans totaled approximately $4.6 billion at June 30, 2026, up $220.1 million, or 5%, from March 31, 2026 and $319.6 million, or 7%, from December 31, 2025. Construction and land development loans totaled approximately $1.4 billion at June 30, 2026, up $85.2 million, or 6%, from March 31, 2026 and $166.4 million, or 13%, from December 31, 2025. The growth from both comparative periods reflect increased demand and early success in our organic growth plan. The following table details the end-of-period aggregated commercial real estate - income producing and construction loan balances by property type. Loans reflected in 1-4 family residential construction include both loans to construction builders as well as single family borrowers.

The residential mortgage loan portfolio totaled $3.9 billion at June 30, 2026, down $41.1 million, or 1%, compared to March 31, 2026 and $107.8 million, or 3%, compared to December 31, 2025. The composition of the residential mortgage loan portfolio will depend on the volume of loans originated and the percentage ultimately sold in the secondary market.

The consumer loan portfolio totaled $1.3 billion at June 30, 2026, up $19.8 million, or 1%, from March 31, 2026 and $7.7 million, or 1%, from December 31, 2025.

Average loans for the second quarter of 2026 of $24.3 billion were up $373.9 million, or 2%, compared to the first quarter of 2026.

Allowance for Credit Losses and Asset Quality

Our allowance for credit losses was $348.0 million at June 30, 2026, an increase of $4.4 million from March 31, 2026, and is comprised of a $1.3 million increase in the allowance for loan losses and a $3.0 million increase in the reserve for unfunded lending commitments. The increase in the allowance for credit losses from March 31, 2026 is attributable to a $13.8 million provision for

credit losses, partially offset by $9.4 million of net charge-offs. Our overall credit loss outlook is not significantly different from that at March 31, 2026. Uncertainty remains related to geopolitical conflict and economic conditions, which continues to influence our reserve levels. The increase in the allowance for credit losses at June 30, 2026 compared to March 31, 2026 includes a $9.0 million build in our collectively evaluated reserves, commensurate with portfolio growth, partially offset by a decrease in individually evaluated reserves on problem loans of $4.6 million. The level of reserves on individually evaluated credits can vary from period to period based on instrument-specific circumstances.

Our June 30, 2026 allowance for credit losses increased $6.3 million compared to December 31, 2025, and is comprised of a $4.8 million increase in the allowance for loan losses and a $1.5 million increase in the reserve for unfunded lending commitments. The increase in the allowance for credit losses from December 31, 2025 is attributable to a $26.9 million provision for credit losses, partially offset by $20.6 million of net charge-offs. The net increase in the allowance for credit losses compared to December 31, 2025 was largely due to portfolio growth and was concentrated in the commercial portfolio, partially offset by declines in residential mortgage and consumer portfolios.

We utilized the June 2026 Moody's economic scenarios in our allowance for credit losses calculation at June 30, 2026. After considering the variables underlying each of the Moody's economic scenarios, management probability-weighted both the baseline scenario and the downside S-2 mild recessionary scenario at 50% in the computation of the allowance for credit losses at June 30, 2026, compared to probability-weighting the baseline scenario at 40% and the downside S-2 mild recessionary scenario at 60% in the computation of the allowance for credit losses at March 31, 2026. The change in the probability weightings from those used at March 31, 2026 does not indicate a significant shift in our overall credit loss outlook, but rather, is a response to a shift in the assumptions underlying the baseline forecast to reflect the downside risks of the conflict in Iran, which were not reflected in the March 2026 Moody's forecast scenarios. Each of the scenarios considered have varying degrees of severity and duration of impacts to forecasted market conditions, economic indicators, monetary and other governmental policies and geopolitical conditions, among other variables. Refer to the Economic Outlook section of this discussion and analysis for further information on the Moody’s scenarios and our weighting assumptions.

Our allowance for credit losses coverage to total loans was 1.42% at June 30, 2026, compared to 1.43% at both March 31, 2026 and December 31, 2025. The allowance for credit losses on the commercial portfolio totaled $280.6 million, or 1.45% of that portfolio, at June 30, 2026, compared to $276.6 million, or 1.48%, at March 31, 2026. The allowance for credit losses on the residential mortgage portfolio totaled $42.3 million, or 1.08% of that portfolio, at June 30, 2026, compared to $41.6 million, or 1.05%, at March 31, 2026. The allowance for credit losses on the consumer portfolio totaled $25.2 million, or 1.87% of that portfolio, at June 30, 2026, compared to $25.6 million, or 1.92%, at March 31, 2026.

Criticized commercial loans totaled $492.0 million at June 30, 2026, down $30.2 million, or 6%, from $522.2 million at March 31, 2026, and $43.4 million, or 8%, from $535.4 million at December 31, 2025. Criticized loans are defined as those having potential weaknesses that deserve management’s close attention (risk-rated as special mention, substandard and doubtful), including both accruing and nonaccruing loans. The Company routinely assesses the ratings of loans in its portfolio through an established and comprehensive portfolio management process. In addition, the Company often reviews portfolios of loans to determine if there are areas of risk not specifically identified in its loan by loan approach. Criticized commercial loans comprised 2.55% of that portfolio at June 30, 2026, down from 2.79% at March 31, 2026 and from 2.88% at December 31, 2025. We remain focused on identifying specific and broader risk indicators that may be impacting certain segments in our portfolio, and we have not seen signs of significant weakening in any particular industry, sector or geographic segment beyond what we believe has been experienced by the banking industry as a whole. Our criticized commercial loans at June 30, 2026 are diversified across many industries, with the largest concentrations as follows: $86.5 million in real estate, rental and leasing; $72.1 million in accommodation, food service and entertainment; $70.0 million in healthcare and social assistance; $67.3 million in retail trade; $54.0 million in manufacturing; $46.0 million in transportation and warehousing; and $27.7 million in wholesale trade. Commercial loans risk rated pass-watch totaled $457.2 million at June 30, 2026, down $93.5 million, or 17%, from March 31, 2026, and $157.6 million, or 26%, from December 31, 2025. The pass-watch risk rating includes credits with performance trends that reflect sufficient risk to cause concern but have not risen to the level of criticized.

Net charge-offs were $9.4 million, or 0.16% of average total loans on an annualized basis in the second quarter of 2026, compared to $11.1 million, or 0.19% of average total loans on an annualized basis in the first quarter of 2026. Net charge-offs in the second quarter of 2026 included $6.6 million in the commercial portfolio, $2.7 million in the consumer portfolio and $0.1 million in the residential mortgage portfolio. Net charge-offs in the first quarter of 2026 included $7.4 million in the commercial portfolio, $3.5 million in the consumer portfolio and $0.2 million in the residential mortgage portfolio.

The following table provides a rollforward of the allowance for credit losses, coverage ratios and net charge-off ratios for the periods indicated.

The following table sets forth for the periods indicated nonaccrual loans and reportable loan modifications to borrowers experiencing financial difficulty by type, and foreclosed and surplus ORE and other foreclosed assets. The table also includes loans past due 90 days or more and still accruing.

Nonaccrual loans plus ORE and foreclosed assets totaled $126.5 million at June 30, 2026, up $1.9 million from March 31, 2026 and $4.9 million from December 31, 2025. Nonaccrual loans of $113.7 million were up $0.3 million from March 31, 2026, and $6.8 million from December 31, 2025. The ratio of nonaccrual loans to total loans remains relatively low at 0.46% of the total portfolio. ORE and foreclosed assets were $12.9 million at June 30, 2026, up $1.6 million from March 31, 2026 and down $1.9 million from December 31, 2025. Nonaccrual loans plus ORE and other foreclosed assets as a percentage of total loans, ORE and other foreclosed assets was 0.51% at June 30, 2026.

Deposits

Deposits provide the most significant source of funding for our interest earning assets. Generally, our ability to compete for market share depends on our deposit pricing and our wide range of products and services that are focused on customer needs, among other factors. We offer high-quality banking services with convenient delivery channels, including online and mobile banking. We provide specialized services to our commercial customers to promote commercial deposit growth. These services include treasury management, industry expertise and lockbox services.

Lack of diversity in concentration within a deposit base may increase the risk of events or trends that could prompt a larger-scale demand for deposits outflow. Concerns over a financial institution's ability to protect deposit balances in excess of the federally insured limit may increase the risk of a deposit run. We consider our deposit base to be seasoned, stable and well-diversified. We also offer our customers an insured cash sweep product (ICS) that allows customers to secure deposits above FDIC insured limits. We continue to see demand for the ICS product, with the balance totaling $263.3 million at June 30, 2026, compared to $326.6 million at March 31, 2026 and $322.2 million at December 31, 2025. At June 30, 2026, we have calculated our average deposit account size by dividing period-end deposits by the population of accounts with balances to be approximately $38,200, which includes $212,200 in

our commercial and small business lines (excluding public funds), $118,000 in our wealth management business line, and $17,900 in our consumer business line.

Further, at June 30, 2026, our sources of liquidity exceed uninsured deposits. We have estimated the Bank’s amount of uninsured deposits using the methodologies and assumptions required for FDIC regulatory reporting to be approximately $15.5 billion at June 30, 2026. Our uninsured deposit total at June 30, 2026, includes approximately $3.2 billion of public funds that have pledged securities as collateral, leaving approximately $12.4 billion of noncollateralized, uninsured deposits compared to total liquidity of $19.5 billion. Our ratio of noncollateralized, uninsured deposits to total deposits was approximately 41.8% at June 30, 2026, compared to 39.2% at March 31, 2026 and 38.6% at December 31, 2025.

Total deposits were $29.6 billion at June 30, 2026, up $547.6 million, or 2%, from March 31, 2026 and $350.0 million, or 1%, from December 31, 2025, due primarily to growth in transaction and savings deposits that was partially offset by retail time deposit maturities and typical seasonal movement in public funds deposits. Average deposits for the second quarter of 2026 were $28.8 billion, down $53.8 million, or less than 1%, from the first quarter of 2026.

The following table shows the composition of our deposits at each date indicated.

Noninterest-bearing demand deposits totaled $10.3 billion at June 30, 2026, down $8.0 million, or less than 1%, from March 31, 2026 and $38.1 million, or less than 1%, from December 31, 2025. Noninterest-bearing demand deposits comprised 35% of total deposits at June 30, 2026, compared to 36% at March 31, 2026 and 35% in December 31, 2025.

Interest-bearing transaction and savings accounts totaled $13.0 billion at June 30, 2026, up $784.8 million, or 6%, from March 31, 2026 and up $1.0 billion, or 9%, from December 31, 2025, reflective of growth and shifting in mix within interest-bearing deposits, driven in part by promotional money market product offerings to new and certain existing customers. Interest-bearing public fund deposits totaled $2.9 billion at June 30, 2026, down $56.9 million, or 2%, from March 31, 2026, and down $337.0 million, or 10%, from December 31, 2025, mostly attributable to seasonal outflows. Retail time deposits totaled $3.4 billion at June 30, 2026, down $172.2 million, or 5%, from March 31, 2026, and $320.3 million, or 9%, from December 31, 2025. The decline in retail time deposits is mostly attributable to maturities that did not renew, reflective of the interest rate environment. We had no brokered time deposits at June 30, 2026, March 31, 2026 or December 31, 2025. The Company uses brokered deposits as one component of its funding strategy, subject to certain policies regarding the amount, term and interest rate.

The rate paid on interest-bearing deposits for the second quarter of 2026 was 2.20%, down 5 bps from 2.25% in the first quarter of 2026, reflective of the interest rate environment and product pricing, both of which may have fostered a favorable shift in the mix of interest-bearing deposits. Rates paid on deposits will vary based on prevailing interest rates and promotional rate offerings on the various product types. The following table sets forth average balances and weighted-average rates paid on deposits for the second and first quarters of 2026 and the second quarter of 2025.

The following sets forth the maturities of time certificates of deposit greater than $250,000 at June 30, 2026.

Short-Term Borrowings

At June 30, 2026, short-term borrowings totaled $1.6 billion, up $210.5 million from March 31, 2026 and $553.7 million from December 31, 2025, driven primarily by FHLB borrowings and reflective of funding needs for the quarter. Average short-term borrowings of $2.0 billion in the second quarter of 2026 were up $553.9 million from the first quarter of 2026.

Short-term borrowings are a core portion of the Company’s funding strategy and can fluctuate depending on our funding needs and the sources utilized. Customer repurchase agreements and borrowings from the Federal Home Loan Bank (FHLB) are the major sources of short-term borrowings. Customer repurchase agreements are offered mainly to commercial customers to assist them with their cash management strategies or to provide a temporary investment vehicle for their excess liquidity pending redeployment for corporate or investment purposes. While customer repurchase agreements provide a recurring source of funds to the Bank, amounts available will vary. FHLB borrowings are collateralized by certain residential mortgage and commercial real estate loans included in the Bank’s loan portfolio, subject to specific criteria. FHLB borrowings totaled $950 million at June 30, 2026 compared to $700 million at March 31, 2026 and $400 million at December 31, 2025.

Long-Term Debt

Long-term debt totaled $193.8 million at June 30, 2026, virtually unchanged from March 31, 2026 and down $5.6 million, or 3%, from December 31, 2025, due to tax credit entity activity.

Long-term debt at June 30, 2026 includes subordinated notes payable with an aggregate principal amount of $172.5 million, a stated maturity of June 15, 2060, and a fixed rate of 6.25% per annum that qualify as Tier 2 capital of certain regulatory capital ratios. Subject to prior approval by the Federal Reserve, the Company may redeem these notes in whole or in part on any of its quarterly interest payment dates.

OFF-BALANCE SHEET ARRANGEMENTS

Loan Commitments and Letters of Credit

In the normal course of business, the Bank enters into financial instruments, such as commitments to extend credit and letters of credit, to meet the financing needs of its customers. Such instruments are not reflected in the accompanying consolidated financial statements until they are funded, although they expose the Bank to varying degrees of credit risk and interest rate risk in much the same way as funded loans. Under regulatory capital guidelines, the Company and Bank must include unfunded commitments meeting certain criteria in risk-weighted capital calculations.

Commitments to extend credit include revolving commercial credit lines, non-revolving loan commitments issued mainly to finance the acquisition and development or construction of real property or equipment, and credit card and personal credit lines. The

availability of funds under commercial credit lines and loan commitments generally depends on whether the borrower continues to meet credit standards established in the underlying contract and other contractual conditions. Loan commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee by the borrower. Credit card and personal credit lines are generally subject to cancellation if the borrower’s credit quality deteriorates. A number of commercial and personal credit lines are used only partially or, in some cases, not at all before they expire, and the total commitment amounts do not necessarily represent our future cash requirements.

A substantial majority of the letters of credit are standby agreements that obligate the Bank to fulfill a customer’s financial commitments to a third party if the customer is unable to perform. The Bank issues standby letters of credit primarily to provide credit enhancement to its customers’ other commercial or public financing arrangements and to help them demonstrate financial capacity to vendors of essential goods and services.

The contractual amounts of these instruments reflect our exposure to credit risk. The Bank undertakes the same credit evaluation in making loan commitments and assuming conditional obligations as it does for on-balance sheet instruments and may require collateral or other credit support. At June 30, 2026, the Company had a reserve for credit losses on unfunded lending commitments totaling $35.4 million.

The following table shows the commitments to extend credit and letters of credit at June 30, 2026 according to expiration date.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There were no material changes or developments during the reporting period with respect to methodologies that the Company uses when applying what management believes are critical accounting policies and developing critical accounting estimates as disclosed in its Annual Report on Form 10-K for the year ended December 31, 2025.

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and with those generally practiced within the banking industry which require management to make estimates and assumptions about future events. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, and the resulting estimates form the basis for making judgments about the carrying values of certain assets and liabilities not readily apparent from other sources. Actual results could differ significantly from those estimates.

NEW ACCOUNTING PRONOUNCEMENTS

Refer to Note 16 to our consolidated financial statements included elsewhere in this report.