BANF 10-K & 10-Q changes, risk factors and insider trading

The bank failures and related negative media attention in early 2023 have generated significant market trading volatility among publicly traded bank holding companies and, in particular, regional, as well as community banks like the Company. These developments have negatively impacted customer confidence in regional and community banks that arewere not considered too big to fail, which has prompted customers to move uninsured deposits to banks that are perceived as too big to fail. Further, competition for deposits has recently increased and available yields have similarly increased, causing non-interest-bearing deposits to move to interest-bearing deposits and off-balance sheet sweep accounts. If such movement is permanent, it will reduce our net interest margin going forward. The financial impact on the Company of ongoing market volatility, continued inflation and higher interest rates will depend on future developments which are highly uncertain and difficult to predict.

The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services.services, including products and services leveraging artificial intelligence (AI). In addition to better serving our customers, the effective use of technology increases our efficiency and enables us to reduce costs. Our future success will depend in part upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for convenience as well as to create additional efficiencies in our operations as we continue to grow and expand our market area. Many of our larger competitors have substantially greater resources to invest in technological improvements. As a result, they may be able to offer additional or superior products to those that we will be able to offer, which would put us at a competitive disadvantage. Accordingly, we cannot assure you that we will be able to effectively implement new technology-driven products and services or be successful in marketing such products and services to our customers.

We anticipate theThe current presidential administration willhas seeksought to implement regulatory reform. Changes in the regulatory environment for the banking industry, including rule-making, supervision, examination, enforcement and other executive and legislative changes add uncertainty, including timing and scope of potential changes. Additional changes in fiscal, monetary or regulatory policy may have adverse consequences including impacts to the labor market, tariffs and inflation which may impact our financial performance.

Our business requires the collection and retention of large volumes of customer data, including personally identifiable information in various information systems that we maintain and in those maintained by third parties with whom we contract to provide data services. We also maintain important internal company data such as personally identifiable information about our employees and information relating to our operations. The integrity and protection of that customer and company data is important to us. Our collection of such customer and company data is subject to extensive regulation and oversight, which may increase in complexity and extent in the future. Our customers and employees have been, and will continue to be, targeted by parties using fraudulent e-mails and other communications in attempts to misappropriate passwords, bank account information or other personal information or to introduce viruses or other malware through “Trojan horse” programs to our information systems and/or our customers' computers. Though we endeavor to mitigate these threats through product improvements, use of encryption and authentication technology and customer and employee education, such cyber-attacks against us or our merchants and our third party service providers remain a serious issue. The pervasiveness of cybersecurity incidents in general and the risks of cybercrime are complex and continue to evolve. More generally, publicized information concerning security and cyber-related problems could inhibit the use or growth of electronic or web-based applications or solutions as a means of conducting commercial transactions.

Oklahoma corporate law and our amended certificate of incorporation contain provisions that could delay, deter or prevent a change in control of our management or us. Together, these provisions may discourage transactions that otherwise could provide for the payment of a premium over prevailing market prices of our common stock, and also could limit the price that investors are willing to pay in the future for shares of our common stock. Additionally, provisions of federal banking laws, including regulatory approval requirements, could make it more difficult for a third party to acquire us, even if doing so would be perceived to be beneficial to our shareholders.stockholders. These provisions effectively inhibit a non-negotiated merger or other business combination, which, in turn, could adversely affect the market price of our common stock.

Potential impacts of the adverse developments in the banking industry driventhat bycould high-profile bank failures, including impacts onimpact customer confidence, demand deposit outflows and the regulatory response thereto.confidence.

In 2024,2025, net interest income increased to $446.9$490.5 million, compared to $424.5$446.9 million in 2023.2024. TheHigher loan volume and growth in other earning assets were the primary driverdrivers of the increasechange in net interest income was higher interest rates and loan volume. Higher interest rates and increasing loan volume were partially offset by the expense associated with the increase in rates on interest-bearing deposits.income. The Company’s net interest margin decreasedincreased to 3.74% for 2025 compared to 3.73% for 2024, compared to 3.79% for 2023.2024.

The Company recorded a provision for credit losses of $5.7 million in 2025 compared to $9.0 million in 2024 compared to a provision for credit losses of $7.5 million in 2023.2024. The Company's provision for credit losses increaseddecreased in 20242025 primarily due to loanthe growth.lower loss rates experienced in more recent periods and the impact on the vintage loss analysis.

Noninterest income totaled $200.1 million in 2025 compared to $184.6 million in 2024 compared to $185.4 million in 2023.2024. The decreaseincrease in noninterest income was primarilypartially due to ana approximategain $10.8on millionthe reductionsale of interchangeVisa feesB-1 related to the impactstock of the$4.5 Durbinmillion. Amendment,In which was offset by increases inaddition, trust revenue, treasury services income, sweep fees and insurance commissions.commissions Alsoeach contributingincreased toduring the period over period change was a $97,000 gain on equity securities recorded in 2024 compared to a loss of $1.8 million recorded in 2023.year.

Noninterest expense was $379.8 million in 2025 compared to $347.2 million in 2024 compared to $332.5 million in 2023.2024. Higher noninterest expenses in 20242025 were primarily related to growth in salaries and employee benefits of $12.0$14.0 million related to annual merit increases and new hires. DataAlso processingcontributing to noninterest expense increasedwas $2.4an millionincrease in 2024net compared to 2023. Expenseexpense from other real estate owned decreasedof $7.4 million, which largely consisted of an increase in 2024,write-downs toof $13.1other real estate of $4.1 million, other real estate expense of $1.8 million and a decrease in loss on sales of $1.5 million. Data processing expense increased $1.1 million in 2025 compared to $15.9 million during 2023.2024.

The Company’s assets at year-end 20242025 totaled $13.6$14.8 billion, an increase of $1.2$1.3 billion from December 31, 2023.2024. Loans grew $373.0$511.5 million from December 31, 2023,2024, totaling $8.0$8.5 billion at December 31, 2024.2025. Deposits totaled $11.7$12.7 billion at December 31, 20242025 an increase of $1.0$951.8 billionmillion from December 31, 2023.2024. Off-balance sheetOff-balance-sheet sweep accounts totaled $5.2$4.9 billion at December 31, 2024,2025, updown $871.6$262.6 million from December 31, 2023.2024. The Company’s total stockholders’ equity wastotaled $1.6$1.9 billion,billion an increase of $187.3 million fromat December 31, 2023.2025.

Asset quality was strong through the year. Nonaccrual loans totaledof $58.0$61.1 million,million representing 0.72% of total loans at December 31, 20242025 comparedrelatively tounchanged $24.6from $58.0 million or 0.32%0.72% of total loans at December 31, 2023.2024. The allowance for credit losses to total loans stoodwas 1.22% at December 31, 2025, down slightly from 1.24% at December 31, 2024, compared to 1.26% at December 31, 2023.2024. Net charge-offs were $6.3$8.5 million for the year or 0.08% of average loans,year, compared to $3.4$6.3 million or 0.05% of average loans for the year ended December 31, 2023.2024.

The allowance for credit losses is increased by provisions charged to operating expense and is reduced by net loan charge-offs. The amount of the allowance for credit losses is measured using relevant information about past events, including historical credit loss experience on financial assets with similar risk characteristics, current conditions,conditions and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual term of the financial assets.

To estimate expected losses using historical loss information, the Company elected to utilize a methodology known as vintage loss analysis for BancFirst, Pegasus, and Worthington.analysis. Vintage loss analysis measures impairment based on the age of the accounts and the historical performance of assets with similar risk characteristics. Vintage loss analysis determines expected losses by allowing the Company to calculate the cumulative loss rates of a given loan pool and, in so doing, determine the loan pool’s lifetime expected loss experience relative to the appropriate type of financial assets that share similar risk characteristics. Vintage loss analysis uses different “vintages” analyzed by year of origination through the weighted average maturity of each loan pool. The key quantitative inputs used in the Company’s estimate of the allowance for credit losses include 1) all available loan data tracked by year of origination, 2) total charge-offs for each specific loan pool recorded since year of origination, 3) recovery rate calculated by the average recovery over the previous seven years across all loan pools,pools and 4) a weighting factor biased to more recent loss experience. The quantitative expected credit loss is calculated by dividing each year’s net charge-offs by the original balance. The respective vintage’s original balance remains the denominator in each annual calculation, as it references the specific vintage’s initial balance. The loss experience of this original balance is tracked annually and summed over the life of the loan for each separate loan pool, leaving a cumulative life of credit loss rate based on historic averages weighted towards more recent loss experience. These key quantitative inputs change from period to period as new loans are originated,originated and charge-offs and recoveries are recognized. The recovery rate is revised on an annual basis, taking into consideration the most recent seven years. The weighting factor percentages remain static,static; however, the most recent year receives the highest weighting percentage.

The Senior Loan Committee (“the SLC”) setsapproves qualitative adjustments for each loan pool. In settingapproving the qualitative adjustments, they consider several factors, including external economic information, peer bank comparisons and experience with the loan portfolio, among others. The SLC also considers other current conditions adjustments and reasonable and supportable forecasts derived from third party information, primarily Moody’s Analytics economic scenarios. To determine the appropriateness of the economic scenarios, the Company uses judgment and statistical analysis which correlates charge-off history to the economic scenarios. The Company then forecasts future loss expectations based on the selected economic scenarios over the next 12-2412 months, which is driven by management’s judgment of a reasonable and supportable forecast period, to arrive at an estimated qualitative adjustment attributable to economic forecasts. For periods beyond which the Company is able to make or obtain reasonable and supportable forecasts of expected credit losses, the Company reverts to historical loss information.

Each quarter the SLC reviews the aggregate allowance and adjusts the appropriateness of the allowance. In addition, annually or more frequently as needed, the SLC evaluates the qualitative adjustments used in the allowance based on the information described above. To facilitate the SLC’s evaluation, the Asset Quality Department performs periodic reviews of business units and reports on the adequacy of management’s identification of collateral-dependent and adversely classified loans and their adherence to loan policies and procedures.

The amount of accrued current and deferred income taxes is based on estimates of taxes due or receivable from taxing authorities either currently or in the future. Changes in these accruals are reported as income tax expense or benefits, and involve estimates of the various components included in determining taxable income, tax credits, other taxes and temporary differences. Changes periodically occur in the estimates due to changes in tax rates, tax laws and regulations and implementation of new tax planning strategies. The process of determining the accruals for income taxes necessarily involves the exercise of considerable judgment and consideration of numerous subjective factors.

The Company reviews its portfolio of debt securities in an unrealized loss position at least quarterly. The Company first assesses whether it intends to sell, or it is more-likely-than-not that it will be required to sell, the securities before recovery of the amortized cost basis. If either of these criteria is met, the securitiessecurity's amortized cost basis is written down to fair value as a current period expense. If either of the above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors. In making this assessment, the Company considers, among other things, the performance of any underlying collateral and adverse conditions specifically related to the security. At December 31, 20242025 and December 31, 2023, 99%97.2% of the available for sale debt securities held by the Company were issued by the U.S. Treasury, or U.S. government-sponsored entities and agencies. The Company does not consider the unrealized position of these securities to be the result of credit factors, because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and the Company does not have the intent to sell these securities and it is likelyunlikely that it will not be required to sell the securities before their anticipated recovery. Therefore, the Company has not recorded an allowance for credit losses against its debt securities portfolio, as the credit risk is not material.

Average Balances, IncomeIncome, Expenses and Rates

The following tables present certain information related to the Company's consolidated average balance sheet, average yields on assets and average costs of liabilities. Such yields are derived by dividing income or expense by the average balance of the corresponding assets or liabilities. For these computations: (i) average balances are derived from daily averages, (ii) information is shown on a taxable-equivalent basis assuming a 21% tax rate,rate and (iii) nonaccrual loans are included in the average loan balances and any interest on such nonaccrual loans is recognized on a cash basis. Loan fees included in interest income were $20.9 million for the year ended December 31, 2025 compared to $20.8 million for the year ended December 31, 2024 compared toand $21.9 million for the year ended December 31, 2023 and $24.1 million for the year ended December 31, 2022.2023.

Net interest income, which is the Company’s principal source of operating revenue, increased $22.4$43.6 million in 2024.2025. The primary driver of the increase in net interest income was higher interest rates and loan volume. Higher interest rates and increasing loan volume wereand partially offset by the expense associated with the increasegrowth in ratesother onearning interest-bearing deposits.assets.

The Company's provision for credit losses increaseddecreased in 20242025 primarily due to loanthe growth.lower loss rates observed in more recent periods and the impact on the vintage loss analysis. The Company establishes an allowance as an estimate of the current expected credit losses in the loan portfolio at the balance sheet date. Management believes the allowance for credit losses is appropriate based upon management’s best estimate of expected losses within the existing loan portfolio. Should any of the factors considered by management in evaluating the appropriate level of the allowance for credit losses change, the Company’s estimate of expected credit losses could also change which could affect the amount of future provisions for credit losses.

Net loan charge-offs were $8.5 million for 2025 compared to $6.3 million for 2024 compared to $3.4 million for 2023 and $1.4 million for 2022.2024. The net charge-offs equated to 0.08%, 0.05%0.10% and 0.02%0.08% of average loans for 2024, 20232025 and 2022,2024, respectively. The rate of net charge-offs to average total loans continues to be at a low level. A more detailed discussion of the allowance for credit losses is provided under “Loans.”

Noninterest income included NSF and overdraft fees totaling $31.1 million, $27.9$31.6 million and $26.0$31.1 million in 2024, 20232025 and 2022,2024, respectively. This represents 16.8%, 15.1%,15.8% and 14.2%16.8% of the Company’s noninterest income for the years 2024, 20232025 and 2022,2024, respectively. In addition, the Company had debit card usage and interchange fees totaling $26.8 million, $37.6$27.2 million and $48.9$26.8 million for the years 2024, 20232025 and 2022,2024, respectively. This represents 14.5%, 20.3%13.6% and 26.6%14.5% of the Company’s noninterest income for the years 2024, 20232025 and 2022,2024, respectively. The decrease in interchange fees in 2024 and 2023 was due to the impact of the Durbin Amendments with took effect for the Company on July 1, 2023.

Noninterest expense included deposit insurance expense, which totaled $6.8 million for the year ended December 31, 2025, compared to $6.4 million for the year ended December 31, 2024, compared to $5.8 million for the year ended December 31, 2023 and $4.7 million for the year ended December 31, 2022.2024.

Cash consists of cash and cash items on hand, noninterest-bearing deposits and amounts due from other banks, reserves deposited with the Federal Reserve Bank, and interest-bearing deposits with other banks. Federal funds sold consist of overnight investments of excess funds with other financial institutions. The Company has continued to maintain the majority of its excess funds with the Federal Reserve Bank. The Federal Reserve Bank pays interest on these funds based upon the lowest target rate for the maintenance period, which decreased during the last four months of 20242025 from 4.40% to 3.65%. The rate decreased from 5.40% to 4.40%. The rate increased from 4.50% to 5.50%4.40% during 2023.the last four months of 2024.

The amount of cash, federal funds sold and interest-bearing deposits with the Federal Reserve Bank carried by the Company is a function of the availability of funds presented to other institutions for clearing and the Company’s liquidity and interest rate sensitivity management. Balances of these items can fluctuate widely based on these various factors. The aggregate of cash and due from banks, federal funds sold and interest-bearing deposits with banks increased by $1.2$941.6 billion,million, or 48.2%,26.5%, to $3.6$4.5 billion, from December 31, 20232024 to December 31, 2024.2025. The increase was related to an increase of interest-bearing deposits in addition to maturing securities.

The Company has historically generated loan growth from both internal originations and bank acquisitions. Total loans held for investment increased $368.5$507.7 million, or 4.8%6.3% in 2024,2025, as a result of internal loan growth.growth Ofand its acquisition of ABOK. The acquisition of ABOK added $243.1 million of the increase in loans held for investment. In addition, of the total increase in loans, residentialcommercial real estate loans made up the largest increase with $203.3$242.0 million, or 55.2%47.7%, ofresidential thereal increase,estate constructionloans increased $204.8 million, or 40.3% and consumer non-real estate loans increased $54.8 million, or 10.8%. Construction and development loans increaseddecreased $114.0$99.4 million, or 30.9%, and commercial non-real estate loans increasing $74.0 million, or 20.1%. Oil and gas loans decreased $76.8 million or 20.8%19.6% in 2024.2025. The preponderance of internal loan growth was from the Company's Oklahoma subsidiary BancFirst.

Nonaccrual loans increased $3.1 million during 2024, primarily nonaccrual construction and development loans with an approximate 58% increase and nonaccrual commercial real estate loans with an approximate 42% increase.2025. Although nonaccrual loans increased during 2024,2025, they represent only 0.72% of loans at December 31, 2024.2025. Nonaccrual loans negatively impact the Company’s net interest margin. A loan is placed on nonaccrual status when, in the opinion of management, the future collectability of both interest and principal is in serious doubt. Interest income is not recognized until the principal balance is fully collected. However, if the full collection of the remaining principal balance is not in doubt, interest income is recognized on certain of these loans on a cash basis. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of $4.9 million for 2025 and $3.5 million for 2024, $1.6 million for 2023 and $1.3 million for 2022.2024. Only a small amount of this interest is expected to be ultimately collected.

As of January 1, 2023, theThe Company adopted ASU No. 2022-02, which eliminates the Troubled Debt Restructurings (“TDR”) recognition and measurement guidance and, instead, requires that the Company evaluate,evaluates, based on the accounting for loan modifications, whether the modification represents a new loan or a continuation of an existing loan when a borrower is experiencing financial difficulty. The current and future financial effects of the recorded balance of loans considered to be modified during the period were not considered to be material. The recorded balance of loans modified during the year ended December 31, 20242025 was approximately $14.8$6.4 million. The recorded balance of loans modified during the year ended December 31, 20232024 was approximately $5.3$14.8 million.

Other real estate owned ("OREO") and repossessed assets decreasedincreased $535,000$15.5 million in 2024.2025. OREO consists of properties acquired through foreclosure proceedings or acceptance of a deed in lieu of foreclosure and premises held for sale. These properties are carried at the lower of the book values of the related loans or fair values based upon appraisals of the properties, less estimated costs to sell. Write-downs arising at the time of reclassification of such properties from loans to OREO are charged directly to the allowance for credit losses. Any losses on bank premises designated to be sold are charged to operating expense at the time of transfer from premises to OREO. Decreases in values of properties subsequent to their classification as OREO are charged to operating expense. The Company's write-downs in OREO totaled $8.2 million for 2025 and $4.0 million for 2024, $5.2 million for 2023 and $3.7 million for 2022.2024.

OREO included a larger commercial real estate property recorded at $28.1 million at December 31, 2024 and $29.4 million at December 31, 2023. Rental income for thisOREO propertyproperties is included in other noninterest income on the consolidated statements of comprehensive income. Operating expense for thisOREO propertyproperties is included in net expense from OREO in other noninterest expense on the consolidated statements of comprehensive income.

The fair value adjustment on acquired loans can consist of a credit component and a rate component to adjust for estimated credit exposures in the acquired loans. The credit component of the adjustment was a $841,000 discount at December 31, 2025 and a $1.1 million discount at December 31, 2024 and a $1.6 million discount at December 31, 2023.2024. The rate component was $417,000 at December 31, 2025 and $472,000 at December 31, 2024 and $568,000 at December 31, 2023.2024. These fair value adjustments will be accreted to income over the remaining life of the loans. The acquired loans outstanding were $262.2$504.0 million and $262.7$262.2 million, at December 31, 20242025 and 2023,2024, respectively.

Other assets include the cash surrender value of key-man life insurance policies totaling $94.2 million at December 31, 2025 and $84.4 million at December 31, 2024 and December 31, 2023.2024.

Equity securities are reported in other assets on the balance sheet. The Company invests in equity securities without readily determinable fair values. The realized and unrealized gains and losses are reported as securities transactions in the noninterest income section of the consolidated statements of comprehensive income. The balance of equity securities was $9.3 million at December 31, 2025 and $13.4 million at December 31, 20242024. andThe $13.1decrease millionin atequity Decembersecurities 31,was 2023.due to a disposition of certain equity investments no longer permissible under the Volcker Rule, which prohibits banks with more than $10 billion in assets from holding certain private equity investments. The Company reviews its portfolio of equity securities for impairment at least quarterly.

Low-Income Housing Tax Credit Investments

The Company invests in rehabilitation projects that qualify for Historic Tax Credits. Total Historic Tax Credit investments were $6.3$8.6 million and zero$6.3 million at December 31, 20242025 and 2023,2024, respectively, and are included in other assets on the consolidated balance sheet. Unfunded commitments to these investments as of December 31, 20242025 totaled $5.1$2.6 million.

Historically, BancFirst has more liquidity than its peers. This liquidity positions BancFirst to respond to increased loan demand and other requirements for funds, or to decreases in funding sources. The liquidity of BancFirst Corporation, however, is dependent upon dividend payments from BancFirst and its ability to obtain financing and or raise capital. Banking regulations limit bank dividends based upon net earnings retained by BancFirst and minimum capital requirements. Dividends in excess of these limits require regulatory approval. At January 1, 2025,2026, BancFirst had approximately $139.0$204.9 million of equity available for dividends to BancFirst Corporation without regulatory approval. During 2024,2025, BancFirst declared four common stock dividends totaling $67.9$75.8 million,million and two preferred stock dividends totaling $1.9 million andto oneBancFirst Corporation. During 2025, Pegasus declared special dividenddividends totaling $50.0$7.4 million to BancFirst Corporation. During 2024, Pegasus declared one special dividend totaling $3.6 million to BancFirst Corporation. There are no near-term plans for Worthington to pay dividends to BancFirst Corporation.

At December 31, 2024,2025, deposits totaled $11.7$12.7 billion, an increase of $1.0$951.8 billionmillion from December 31, 2023.2024. The increase was allprimarily related to organic growth in interest-bearing deposits.deposits as well as its acquisition of ABOK, which added $329.5 million at December 31, 2025. The Company’s core deposits provide it with a stable, low-cost funding source. The Company’s core deposits as a percentage of total deposits was 95.5%94.8% at December 31, 20242025 and 97.4%95.5% December 31, 2023.2024. Noninterest-bearing deposits to total deposits were 30.8% at December 31, 2025, compared to 33.3% at December 31, 2024, compared to 37.2% at December 31, 2023. Quantitative tightening by the Federal Reserve and competition for deposits has increased, and available yields have similarly increased, causing noninterest-bearing deposits to move to interest-bearing deposits and off-balance-sheet sweep account products.2024.

Uninsured deposits are defined as the portion of deposit accounts in U.S. offices that exceed the FDIC insurance limit and amounts in any other uninsured investment or deposit account that are classified as deposits and are not subject to any federal or state deposit insurance regimes. Total uninsured deposits were $4.0$4.3 billion and $3.2$4.0 billion at December 31, 20242025 and 2023,2024, respectively, as calculated per regulatory guidance. This was approximately 34% and 30% of deposits at both December 31, 20242025 and 2023, respectively.2024.

As of MarchJune 31,30, 2026, there have been no material changes from the risk factors previously disclosed in Part I, Item 1A, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

The following discussion and analysis of our financial condition as of MarchJune 31,30, 2026 and December 31, 2025 and results of operations for the three and six months ended MarchJune 31,30, 2026 should be read in conjunction with our consolidated financial statements and notes to the consolidated financial statements for the year ended December 31, 20252025, and the other information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Certain risks, uncertainties and other factors, including those set forth under "Risk Factors" in Part I, Item 1A of the 2025 Form 10-K, and "Item 1A, Risk Factors" in this Quarterly Report on Form 10-Q, may cause actual results to differ materially from the results discussed in the forward-looking statements appearing in this discussion and analysis.

Local, regional, national and international economic conditions, including the effect of a government shutdown,conditions and the impact they may have on the Company and its customers.

The Company’s net income for the first quarter of 2026 was $63.0 million, compared to $56.1 million for the first quarter of 2025. Diluted net income per common share was $1.85 and $1.66 for the first quarter of 2026 and 2025, respectively. The Company’s net interest income for the firstsecond quarter of 2026 increased to $127.6$133.5 million from $115.9$121.3 million for the firstsecond quarter of 2025. Higher loan volume along withand general growth in earning assets were the primary drivers of the change in net interest income. Net interest margin was 3.74%3.84% for the firstsecond quarter of 2026 compared to 3.70%3.75% for the firstsecond quarter of 2025. The Company recorded a provision for credit losses of $2.1$4.9 million in the firstsecond quarter of 2026 compared to $1.6$1.4 million for the firstsecond quarter of 2025.

Noninterest income for the quarter totaled $51.4$53.9 million compared to $49.0$48.0 million in the same quarter last year. Trust revenue, servicesservice charges on deposits, treasurysecurities income,transactions, and securitiestreasury transactionincome each increased when compared to firstthe second quarter of 20252025. The Company also recorded gains of $2.9 million related to bank owned life insurance claims during the quarter. The increase in noninterest income was partially offset by a decrease in insurance commissions.

Noninterest expense grew to $96.8$97.5 million for the quarter-endedquarter Marchended 31,June 30, 2026 compared to $92.2$88.2 million in the same quarter in 2025. The increase in noninterest expense was primarily attributablerelated to the growth in salaries and employee benefits of $4.3$5.2 million. The total salaries and employee benefits expenses recorded of $58.9$60.3 million for the period ended March 31, 2026 is after a favorable adjustment to the funded employee benefit trust of $1.8$828,000. million.Also Totaldriving the increase in noninterest expense forwas thenet firstexpense quarterfrom ofother 2026real alsoestate reflectsowned, conversionwhich expensesincreased related$1.6 million period to ABOK. For the first quarter of 2025 the Company recorded a $4.4 million expense related to the disposition of certain equity investments no longer permissible under the Volcker rule, no such equivalent expense was recorded in 2026.period.

At MarchJune 31,30, 2026, the Company’s total assets were $15.1 billion, an increase of $277.6$243.4 million from December 31, 2025. Loans grew $51.4$110.6 million from December 31, 2025, totaling $8.6$8.7 billion at MarchJune 31,30, 2026. Deposits totaled $12.9$12.8 billion, an increase of $230.7$155.9 million from year-end 2025. Sweep accounts totaled $5.1$5.0 billion at MarchJune 31,30, 2026, up $160.2$100.8 million from December 31, 2025. The Company’s total stockholders’ equity was $1.9$2.0 billion, an increase of $47.8$103.0 million over December 31, 2025.

The following tabletables presentspresent certain information related to the Company's consolidated average balance sheet, average yields on assets and average costs of liabilities. Such yields are derived by dividing income or expense by the average balance of the corresponding assets or liabilities. For these computations: (i) average balances are derived from daily averages, (ii) information is shown on a taxable-equivalent basis assuming a 21% tax rate, and (iii) nonaccrual loans are included in the average loan balances and any interest on such nonaccrual loans is recognized on a cash basis. Loan fees included in interest income were $6.2 million for the three months ended June 30, 2026 compared to $5.1 million for the three months ended MarchJune 31,30, 2025. Loan fees included in interest income were $11.3 million for the six months ended June 30, 2026 compared to $5.0$10.1 million for the threesix months ended MarchJune 31,30, 2025.

For the three months ended MarchJune 31,30, 2026, net interest income, which is the Company’s principal source of operating revenue, increased $11.7$12.3 million or 10.1% compared to the three months ended MarchJune 31,30, 2025. Higher loan volume along withand general growth in earning assets were the primary drivers of the change in net interest income. Net interest margin is the ratio of taxable-equivalent net interest income to average earning assets for the period.

Net loan charge-offs were $1.5$2.4 million for the firstsecond quarter of 2026 compared to net loan charge-offs of $503,000$4.7 million for the firstsecond quarter of 2025. The rate of net charge-offs to average total loans continues to be at a low level.

Noninterest income increased by $2.5$5.9 million for the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. Trust revenue, servicesservice charges on deposits, securities transactions, and treasury income and securities transactions each increased when compared to firstsecond quarter last year. The Company also recorded gains of 2025$2.9 million related to bank owned life insurance claims during the quarter. The increase in noninterest income was partially offset by a decrease in insurance commissions.

Noninterest income included non-sufficient funds ("NSF") and overdraft fees totaling $8.0$8.1 million and $7.4$7.6 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. This represents 15.5%15.1% and 15.1%15.8% of the Company’s noninterest income for the respective periods. In addition, the Company had debit card usage and interchange fees totaling $6.8$7.2 million and $6.5$6.9 million forduring the three months ended MarchJune 31,30, 2026 and 2025, respectively. This represents 13.3% and 14.3% of the Company’s noninterest income for boththe respective periods.

Noninterest expense increased by $4.6$9.3 million for firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. The increase in noninterest expenseexpenses was primarily attributablerelated to the growth in salaries and employee benefits of $4.3$5.2 million. The total salaries and employee benefits expenses recorded of $58.9$60.3 million for the periodsecond endedquarter March 31,of 2026 is after a favorable adjustment to the funded employee benefit trust of $1.8 million.$828,000. The total salaries and employee benefits expenses recorded of $54.6$55.1 million for the periodsecond endedquarter March 31,of 2025 is after a favorable adjustment to the funded employee benefit trust of $419,000.$231,000. TotalAlso driving the increase in noninterest expense forwas thenet firstexpense quarterfrom ofother 2026real alsoestate reflectsowned, conversionwhich expensesincreased related$1.6 million period to ABOK. For the first quarter of 2025 the Company recorded a $4.4 million expense related to the disposition of certain equity investments no longer permissible under the Volcker Rule, no such equivalent expense was recorded in 2026.period.

The Company’s effective tax rate was 21.3% for the first quarter of 2026, compared to 21.1% for the first quarter of 2025. The primary reasons for the difference between the Company’s effective tax rate and the federal statutory rate were tax-exempt income, nondeductible amortization, federal and state tax credits and state tax expense.

The aggregate of cash and due from banks, federal funds sold and interest-bearing deposits with banks increaseddecreased by $188.5$91.5 million or 4.2%,2.0%, to $4.7$4.4 billion from December 31, 2025 to MarchJune 31,30, 2026. The increasedecrease was related to an increase of interest-bearing deposits and maturing securities, somewhat offset by athe reduction of federal funds sold.

At MarchJune 31,30, 2026, total debt securities decreasedincreased $38.4$188.3 million, or 4.2%20.4% compared to December 31, 2025. The size of the Company’s securities portfolio is determined by the Company’s liquidity and asset/liability management. The net unrealized loss on debt securities available for sale, before taxes, was $14.0$10.8 million at Marchboth 31,June 2026,30, compared2026 to a net unrealized loss of $10.8 million atand December 31, 2025. These unrealized losses, netlosses of income taxes, of $10.7$8.2 million at MarchJune 31,30, 2026 and $8.3 million at December 31, 2025 are included in the Company’s stockholders’ equity as accumulated other comprehensive loss.loss, Thenet of income tax. During the six months ended June 30, 2026, the Company purchased $25.3$321.2 million of debt securities duringcompared theto quarter ended March 31, 2026. No purchases were made$233,000 during the firstsix quartermonths ofended June 30, 2025. The Company did not recognize a gain or loss on debt securities during the quarterssix months ended MarchJune 31,30, 2026 or 2025. The Company had maturities and paydowns of debt securities totaling $61.0$134.1 million during the quartersix months ended MarchJune 31,30, 2026 and $56.3$127.7 million during the quartersix months ended MarchJune 31,30, 2025.

At MarchJune 31,30, 2026, total loans increased $51.4$110.6 million or 0.6%1.3% compared to December 31, 2025 as a result of internal loan growth. Of the total increase in loans, commercial real estate made up the largest increase. The preponderance of internal loan growth was from the Company's Oklahoma subsidiary BancFirst.

Nonaccrual loans totaled $62.2$81.4 million at MarchJune 31,30, 2026 compared to $61.1 million at December 31, 2025. TheAt June 30, 2026, the Company’s nonaccrual commercial non-real estate loans made up 52% and nonaccrual commercial real estate loans made up 59%32% of nonaccrual loans. Nonaccrual loans negatively impact the Company’s net interest margin. A loan is placed on nonaccrual status when, in the opinion of management, the future collectability of both interest and principal is in serious doubt. Interest income is not recognized until the principal balance is fully collected. However, if the full collection of the remaining principal balance is not in doubt, interest income is recognized on certain of these loans on a cash basis. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $1.5$2.9 million for the threesix months ended MarchJune 31,30, 2026 and $1.0$2.3 million for the threesix months ended MarchJune 31,30, 2025. Only a small amount of this interest is expected to be ultimately collected. Approximately $10.8$7.9 million of nonaccrual loans were guaranteed by government agencies at MarchJune 31,30, 2026.

The classification of a loan as nonaccrual does not necessarily indicate that loan principal and interest will ultimately be uncollectible; although, in an economic downturn, the Company’s experience has been that the level of collectioncollections declines.decline. The above normal risk associated with nonaccrual loans has been considered in the determination of the allowance for credit losses. The level of nonaccrual loans and credit losses could rise over time as a result of adverse economic conditions.

The current and future financial effects of the recorded balance of loans considered to be modified during the period were not considered to be material. The recorded balance of loans modified during the periodsix months ended MarchJune 31,30, 2026 was approximately $3.3$3.7 million compared to $6.4 million during the year ended December 31, 2025.

Other real estate owned ("OREO") and repossessed assets increased $4.5$12.6 million during the period ended MarchJune 31,30, 2026. There was $1.4$1.8 million of tenant improvements related to bank owned OREO property. Additionally, asAs part of the ABOK conversion, $1.9 million of property previously held for bank operations was moved to OREO. Additionally, a commercial property was taken into OREO valued at $9.6 million. The remainder of the change in OREO and repossessed assets resulted from normal bank operations. OREO consists of properties acquired through foreclosure proceedings or acceptance of a deed in lieu of foreclosure and premises held for sale. These properties are carried at the lower of the book values of the related loans or fair values based upon appraisals of the properties, less estimated costs to sell. Write-downs arising at the time of reclassification of such properties from loans to OREO are charged directly to the allowance for credit losses. Any losses on bank premises designated to be sold are charged to operating expense at the time of transfer from premises to OREO. Decreases in values of properties subsequent to their classification as OREO are charged to operating expense. The Company did not have any write-downs in OREO for the three months ended March 31, 2026.

Identifiable intangible assets and goodwill totaled $203.8$202.8 million and $204.1 million at MarchJune 31,30, 2026 and December 31, 2025, respectively.

Other assets includesincluded the cash surrender value of key-man life insurance policies totaling $93.0$89.9 million at MarchJune 31,30, 2026 and $94.2 million at December 31, 2025.

Derivative financial instruments consisting of oil and gas swaps and option contracts are included in other assets and totaled $45.5$18.7 million at MarchJune 31,30, 2026 and $21.2 million at December 31, 2025. They require a daily margin to be posted, which fluctuates with oil and gas prices and customer activity. The Company had a margin asset included in other assets in the amount of $53.2$7.1 million at MarchJune 31,30, 2026 and a margin liability included in other liabilities in the amount of $7.4 million at December 31, 2025. See Note (11) of the Notes to Consolidated Financial Statements for a complete discussion of the Company’s derivative financial instruments.

Equity securities are reported in other assets on the Company’s consolidated balance sheet. The Company invests in equity securities without readily determinable fair values. The realized and unrealized gains and losses are reported as securities transactions in the noninterest income section of the consolidated statements of comprehensive income. The balance of equity securities was $10.3$10.1 million at MarchJune 31,30, 2026 and $9.3 million at December 31, 2025. The Company reviews its portfolio of equity securities for impairment at least quarterly.

Low-Income Housing Tax Credit Investments,Housing, New Market Tax Credit Investments and Historic Tax Credit Investments

The Company's tax credits all amortize off over the life of the investment. TheDuring 2026, the Company’s low-income housing tax credit ("LIHTC") investments decreasedincreased $2.6$23.6 million totaling $92.3$118.5 million at MarchJune 31,30, 2026, New Markets Tax Credits ("NMTC") investments decreased $413,000$826,000 totaling $8.5$8.1 million at MarchJune 31,30, 2026 and the Historic Tax Credit Investments decreased $1.1$2.2 million totaling $7.5$6.4 million at MarchJune 31,30, 2026, all of which are included in other assets on the Company’s consolidated balance sheet. Unfunded commitments related to these investments totaled $61.6$83.8 million at MarchJune 31,30, 2026, all of which are included in other liabilities on the Company’s consolidated balance sheet.

The Company’s principal source of liquidity and funding is its broad deposit base generated from customer relationships. The availability of deposits is affected by economic conditions, competition with other financial institutions and alternative investments available to customers. Through interest rates paid, service charge levels and services offered, the Company can affect its level of deposits to a limited extent. The level and maturity of funding necessary to support the Company’s lending and investment functions is determined through the Company’s asset/liability management process. The Company currently does not rely heavily on long-term borrowings and does not utilize brokered CDs. The Company maintains lines of credit from the Federal Home Loan Bank (“FHLB”), federal funds lines of credit with other banks and could also utilize the sale of loans, securities and liquidation of other assets as sources of liquidity and funding. The Company is highly liquid with percent of cash and due from banks, interest-bearing deposits with banks and federal funds sold to total assets of 31.0%29.2% at MarchJune 31,30, 2026, compared to 30.3% at December 31, 2025.

At MarchJune 31,30, 2026, deposits totaled $12.9$12.8 billion, an increase of $230.7$155.9 million from December 31, 2025. The Company’s core deposits provide it with a stable, low-cost funding source. The Company’s core deposits as a percentage of total deposits was 95.2% at MarchJune 31,30, 2026 and 94.8% at December 31, 2025. Noninterest-bearing deposits to total deposits were 31.8%32.5% at MarchJune 31,30, 2026 compared to 30.8% at December 31, 2025.

Uninsured deposits are defined as the portion of deposit accounts in U.S. offices that exceed the FDIC insurance limit and amounts in any other uninsured investment or deposit account that are classified as deposits and are not subject to any federal or state deposit insurance regimes. Total uninsured deposits were $4.4$4.2 billion at MarchJune 31,30, 2026 and $4.3 billion at December 31, 2025, as calculated per regulatory guidance. This was approximately 34%33% of deposits at bothJune March 31,30, 2026 and 34% at December 31, 2025.

Off-balance-sheet sweep accounts totaled $5.1$5.0 billion at MarchJune 31,30, 2026 compared to $4.9 billion at December 31, 2025. The movement of customers' funds into the Company's off-balance-sheet sweep accounts affected the balances of both cash and deposits.

The Company has several lines of credit available. At MarchJune 31,30, 2026, BancFirst had $995.3$1.1 millionbillion available on its line of credit from the FHLB of Topeka, Kansas. At MarchJune 31,30, 2026, BancFirst had no$6.0 million in advances outstanding under this line of credit. Pegasus had a Federal Reserve discount window capacity of $73.2$63.7 million. At MarchJune 31,30, 2026, Pegasus had no advances outstanding under this line of credit. Worthington had $10.5 million in lines of credit with other financial institutions that serve as overnight federal funds facilities, a Federal Reserve discount window capacity of $31.8$28.9 million and a $94.3$92.1 million line of credit from the FHLB of Dallas, Texas to use for liquidity or to match-fund certain long-term rate loans. Worthington had no advances outstanding at MarchJune 31,30, 2026 under any of these lines of credit.

Stockholders’ equity totaled $1.9$2.0 billion at MarchJune 31,30, 2026, an increase of $47.8$103.0 million from December 31, 2025. In addition to net income of $63.0$129.7 million, other increaseschanges in stockholders’ equity during the threesix months ended MarchJune 31,30, 2026 included $781,000$1.1 million in common stock issuances related to stock-based compensation plans, $2.1$3.4 million in common stock issuances related to the acquisition of ABOKABOK, and$1.6 $767,000million related to stock-based compensation arrangements,arrangements and a $42,000 increase in accumulated other comprehensive income that were partially offset by a $2.4 million decrease in accumulated other comprehensive income and $16.5$32.9 million in dividends. The Company’s leverage ratio and total risk-based capital ratios at MarchJune 31,30, 2026 were well in excess of the regulatory requirements.