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

In response to inflation and its affectseffects on U.S. business and consumers, the Federal Reserve Board implemented a series of eleven interest rate increases beginning in March 2022. However, in response to recent slowing inflation, beginning in September 2024, the Federal Reserve Board reduced interest rates threesix times inthrough 2024.December 2025. Future economic developments and the Federal Reserve Board’s policies in response, however, cannot be predicted with certainty. At this time, it is unknown how future action by the Federal Reserve Board involving monetary policies will affect our business and the banking industry. There can be no assurance that any future actions by the Federal Reserve Board involving monetary policies will not cause any of the adverse effects described above on our deposit levels, loan demand or business and earnings.

The impacts of public health crises, including national or international pandemicspandemics, could materially and adversely affect our business, financial condition and results of operations.

Our operations and those of our customers and third-party service providers may be adversely affected by the widespread outbreak of contagious disease,disease suchand asother thepublic COVID-19health virus.emergencies. TheSuch COVID-19events pandemiccan disrupteddisrupt U.S. and global supply chains and alteredalter business and economic conditions; throughout the U.S. and globally. Its economic impacts loweredlower equity market valuations; createdcreate significant volatility and disruption in financial markets; contributedinfluence to a decrease in the ratesinterest-rate and yields on U.S. Treasury securities; resultedresult in ratings downgrades, credit deterioration, and defaults in many industries; increasedincrease demands on capital and liquidity; increasedelevate unemployment levels; and decreasedweaken consumer confidence. ThePublic pandemichealth crises may also causedresult us to recognizein credit losses in our loan portfolios and require increases in our allowance for credit losses.

The extent to which any future outbreaks of thecontagious COVID-19 virusdisease or other contagiouspublic diseaseshealth emergencies may impact general economic and business conditions is highly uncertain and unpredictable. As part of these uncertainties, we could be subject to a number of risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, results of operations, and ability to execute our growth strategy. These risks include, but are not limited to, increased loan losses or other impairments in our loan portfolios and increases in our allowance for loan losses; further volatility in the valuation of real estate and other collateral supporting loans; impairment of our goodwill and our financial assets; increased cost of capital; inability to satisfy our minimum regulatory capital ratios and other supervisory requirements; or a downgrade in our credit ratings. We could also face an increased risk of governmental and regulatory scrutiny as a result of the effects of a pandemicpublic health crises on market and economic conditions and actions governmental authorities take in response to those conditions. Any such occurrence could have a significant adverse impact on our business, financial condition, liquidity or results of operations.

During the fourth quarter of 2024, we completed a company-wide asset quality cleanup project, which resulted in net charge-offs for the quarter of $53.4 million and a reduction in our allowance for credit losses of $36.7 million from $312.6 million, or 2.11% of total loans, at September 30, 2024. The reduction resulting from charge-offs was partially offset by a $16.7 million provision for credit losses during the fourth quarter related to Hurricanes Helene and Milton. However, no additional provision for credit losses on loans was recorded for the quarter ended December 31, 2024, as the current level of reserves was considered adequate for the loan portfolio. If our assumptions are incorrect, our current allowance may be insufficient to absorb future loan losses, and we may determine that increased loan loss reserves may be needed to respond to different economic conditions or adverse developments in our loan portfolio. When there is an economic downturn, it is more difficult for us to estimate the losses that we will experience in our loan portfolio. In addition, federal and state regulators periodically review our allowance for credit losses and may require us to increase our allowance for credit losses or recognize further loan charge-offs based on judgments different than those of our management. Any increase in our allowance for credit losses or loan charge-offs could have a negative effect on our operating results.

Our success depends significantly on our Chairman,Chairman and Chief Executive Officer and President,Officer, John W. Allison, and our executive officers, especially Brian S. Davis, J. Stephen Tipton andTipton, Kevin D. Hester plusand CentennialDonna BankJ. Chairman, Tracy M. French,Townsell, as well as other key Centennial Bank personnel. Centennial Bank, in particular, relies heavily on its management team’s relationships in its local communities to generate business. The loss of services from a member of our current management team may materially and adversely affect our business, financial condition, results of operations and future prospects.

As of December 31, 2024,2025, we owned $3.07$2.87 billion of available-for-sale investment securities. The fair value of our available-for-sale investment securities may be adversely affected by market conditions, including changes in interest rates, and the occurrence of any events adversely affecting the issuer of particular securities in our investments portfolio. We evaluate all securities quarterly to determine if any securities in a loss position requires a provision for credit losses in accordance with ASC 326, Measurement of Credit Losses on Financial Instruments. The Company first assesses whether it intends to sell or is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities that do not meet these criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, and changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. Changes in the allowance for credit losses are recorded as provision for (or reversalrecovery of) credit loss expense. Losses are charged against the allowance when management believes the uncollectability of a security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Because of changing economic and market conditions affecting issuers, we may be required to record provisions for credit losses in future periods, which could have a material adverse effect on our business, financial condition or results of operations.

As of December 31, 2024,2025, we owned $1.28$1.26 billion of held-to-maturity investment securities. Securities held-to-maturity ("HTM"), which include any security for which we have the positive intent and ability to hold until maturity, are reported at historical cost adjusted for amortization of premiums and accretion of discounts. Premiums and discounts are amortized/accreted to the call date to interest income using the constant effective yield method over the estimated life of the security. The Company evaluates all securities quarterly to determine if any securities in a loss position require a provision for credit losses in accordance with ASC 326. The Company measures expected credit losses on HTM securities on a collective basis by major security type, with each type sharing similar risk characteristics. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Company has made the election to exclude accrued interest receivable on HTM securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or reversalrecovery of) credit loss expense. Losses are charged against the allowance when management believes the uncollectability of a security is confirmed. Because of changing economic and market conditions affecting issuers, we may be required to record provisions for credit losses in future periods, which could have a material adverse effect on our business, financial condition or results of operations.

Our growth strategy includes strategic acquisitions of banks or bank assets. We have acquired 23 banks since we started our first subsidiary bank in 1999, including a total of 18 banks since 2010. We currently anticipate completing our proposed acquisition of Mountain Commerce Bancorp, Inc., headquartered in Knoxville, Tennessee, during the second quarter of 2026. We will continue to consider future strategic acquisitions, with a primary focus on Tennessee, Texas, Arkansas, Florida, Alabama and other nearby markets. In most cases, our acquisition of a bank includes the acquisition of all or a substantial portion of the target bank’s assets and liabilities, including all or a substantial portion of its loan portfolio, although we have in the past acquired and may in the future acquire specific lending divisions or loan portfolios. There may be instances when we, under our normal operating procedures, may find after the acquisition that there may be additional losses or undisclosed liabilities with respect to the assets and liabilities of the target bank, and, with respect to its loan portfolio, that the ability of a borrower to repay a loan may have become impaired, the quality of the value of the collateral securing a loan may fall below our standards, or our determination of the fair value of any such loan may be inadequate. One or more of these factors might cause us to have additional losses or liabilities, additional loan charge-offs, or increases in our allowance for credit losses, which would have a negative impact upon our financial condition and results of operations.

We continually encounter technological change, and we may havenot fewerbe resources than many of our competitorsable to continuekeep topace investwith rapid technological change in technologicalthe improvementsfinancial andservices innovations.industry.

As illustrated by the impacts of Hurricanes Helene and Milton this past year, ourOur markets in Alabama and Florida, like other coastal areas, are susceptible to hurricanes and tropical storms. Such weather events can disrupt our operations, result in damage to our properties and negatively affect the local economies in which we operate. We cannot predict whether or to what extent damage that may be caused by future unforeseen catastrophic events, including hurricanes, other extreme weather events and natural disasters, will affect our operations or the economies in our market areas, but such events could result in a decline in loan originations, a decline in the value or destruction of properties or other collateral securing our loans and an increase in the delinquencies, foreclosures and loan losses. Our business or results of operations may be adversely affected by these and other negative effects of such events.

We currently have outstanding $300.0 million of 3.125% fixed-to-floating rate subordinated notes, which mature in 2032, and $140.0 million of subordinated notes, which mature in 20302032 and carry a fixed rate of 5.500% for the first five years. Thereafter, the notes bear interest at 3-month Secured Overnight Funding Rate (SOFR) plus 5.345%,182 basis points, resetting quarterly. Because these subordinated notes are senior to our shares of common stock, in the event of our bankruptcy, dissolution or liquidation, the holders of any such subordinated notes then outstanding must be satisfied before any distributions can be made to the holders of our common stock.

Our net income increased $9.3 million, or 2.4%, to $402.2 million for the year ended December 31, 2024, from $392.9 million for the same period in 2023. On a diluted earnings per share basis, our earnings were $2.01 per share for the year ended December 31, 2024 and $1.94 per share for the year ended December 31, 2023. The Company recorded $48.1 million in credit loss expense for the year ended December 31, 2024. This consisted of a $48.4 million provision for credit losses on loans, which was partially offset by a $330,000 recovery of credit losses on available-for-sale investments due to an improvement in the unrealized loss position for one of our subordinated debt investments. Of the $48.4 million provision for credit losses on loans recorded, $33.4 million aswas used to establish a hurricane reserve for loans located in the Federal Emergency Management Agency ("FEMA") disaster areas impacted by Hurricanes Helene and Milton, which made landfall during the third and fourth quarters of 2024. The hurricane related reserve had a $0.13 impact to diluted earnings per share. The remaining portion of the provision was related to loan growth. For the year ended December 31, 2024, the Company recorded a $3.0 million increase in the fair value of marketable securities, a $2.1 million gain on sale of a building from our Texas market, $257,000 in bank owned life insurance ("BOLI") death benefits and $2.3 million in Federal Deposit Insurance Corporation ("FDIC") special assessment expense.

Total interest income increased by $124.7 million, or 10.6%, and non-interest expense decreased by $25.9 million, or 5.5%. This was partially offset by a $102.9 million, or 29.6%, increase in interest expense and a $1.4 million, or 0.8%, decrease in non-interest income. The increase in interest income resulted from a $110.4 million, or 11.2%, increase in loan interest income and a $27.8 million, or 184.7%, increase in interest income on deposits at other banks, which was partially offset by a $13.4 million, or 7.9%, decrease in investment income. The decrease in non-interest expense was due to a $15.9 million, or 6.2%, decrease in salaries and employee benefits, a $7.9 million, or 6.6%, decrease in other operating expenses and a $2.3 million, or 3.8%, decrease in occupancy and equipment expense. The increase in interest expense was primarily due to an $80.7 million, or 27.3%, increase in interest on deposits, a $21.6 million, or 70.2%, increase in interest on FHLB and other borrowed funds and a $635,000, or 13.2%, increase in interest on securities sold under agreements to repurchase. The decrease in non-interest income was primarily due to an $8.5 million, or 22.2%, decrease in other income, a $2.6 million, or 784.3% decrease, in the gain/loss on OREO and a $1.2 million, or 2.7% decrease, in other service charges and fees, which were partially offset by a $5.1 million, or 47.0%, increase in mortgage lending income and a $4.1 million, or 371.6%, increase in income from the fair value adjustment for marketable securities.

Our return on average assets was 1.77% for the both the years ended December 31, 2024 and 2023, and our return on average assets, as adjusted (non-GAAP), was 1.77% for the year ended December 31, 2024, compared to 1.79% for the same period in 2023. (See Table 32 for the non-GAAP tabular reconciliation.) Our return on average common equity was 10.43% for the year ended December 31, 2024, compared to 10.82% for the same period in 2023.

Our total assets as of December 31, 2024 decreased $165.9 million to $22.49 billion from the $22.66 billion reported as of December 31, 2023. The decrease in total assets is primarily due to a $442.0 million decrease in investment securities resulting from paydowns and maturities and a $89.9 million decrease in cash and cash equivalents during the year. Our loan portfolio balance increased $339.8 million to $14.76 billion as of December 31, 2024, from $14.42 billion as of December 31, 2023. The increase in loans was due to $471.4 million in organic loan growth within our legacy footprint, which was partially offset by $131.7 million of organic loan decline from our Centennial Commercial Finance Group ("CFG") franchise during 2024. Total deposits increased $358.6 million to $17.15 billion as of December 31, 2024 compared to $16.79 billion as of December 31, 2023. Stockholders’ equity increased $170.0 million to $3.96 billion as of December 31, 2024, compared to $3.79 billion as of December 31, 2023. The increase in stockholders’ equity is primarily associated with the $402.2 million in net income, which was partially offset by the $150.0 million of shareholder dividends paid, the repurchase of $86.1 million of our common stock during 2024 and the $7.0 million decrease in accumulated other comprehensive income. The improvement in stockholders’ equity was 4.5% for the year ended December 31, 2024 compared to December 31, 2023.

Investments – Available-for-sale. Securities available-for-sale ("AFS") are reported at fair value with unrealized holding gains and losses reported as a separate component of stockholders’ equity and other comprehensive income (loss), net of taxes. Securities that are held as available-for-sale are used as a part of our asset/liability management strategy. Securities that may be sold in response to interest rate changes, changes in prepayment risk, the need to increase regulatory capital, and other similar factors are classified as available-for-sale. The Company evaluates all securities quarterly to determine if any securities in a loss position require a provision for credit losses in accordance with ASC 326. The Company first assesses whether it intends to sell or whether it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities that do not meet this criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, and changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. The Company has made the election to exclude accrued interest receivable on AFS securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or reversalrecovery of) credit loss expense. Losses are charged against the allowance when management believes the uncollectability of a security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Investments – Held-to-Maturity. Debt securities held-to-maturity ("HTM"), which include any security for which we have the positive intent and ability to hold until maturity, are reported at historical cost adjusted for amortization of premiums and accretion of discounts. Premiums and discounts are amortized/accreted to the call date to interest income using the constant effective yield method over the estimated life of the security. The Company evaluates all securities quarterly to determine if any securities in a loss position require a provision for credit losses in accordance with ASC 326. The Company measures expected credit losses on HTM securities on a collective basis by major security type, with each type sharing similar risk characteristics. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. The Company has made the election to exclude accrued interest receivable on HTM securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or reversalrecovery of) credit loss expense. Losses are charged against the allowance when management believes the uncollectability of a security is confirmed.

•1-4 family residential construction loans

•1-4Secured familyby seniorjunior liens

•Other consumer loans

•Other consumer loans - SPFShore Premier Finance

We are a bank holding company headquartered in Conway, Arkansas, offering a broad array of financial services through our wholly-owned bank subsidiary, Centennial Bank (sometimes referred to as "Centennial" or the "Bank"). As of MarchJune 31,30, 2026, we had, on a consolidated basis, total assets of $23.20$24.71 billion, loans receivable, net of allowance for credit losses, of $15.34$16.80 billion, total deposits of $17.74$19.11 billion, and stockholders’ equity of $4.35$4.55 billion.

Results of Operations for the Three Months Ended MarchJune 31,30, 2026 and 2025

Our net income increased $3.0 million,$924,000, or 2.6%,0.8%, to $118.2$119.3 million for the three-month period ended MarchJune 31,30, 2026, from $115.2$118.4 million for the same period in 2025. On a diluted earnings per share basis, our earnings were $0.59 per share for the three-month period ended June 30, 2026 compared to $0.60 per share for the three-month period ended MarchJune 31, 2026 compared to $0.58 per share for the three-month period ended March 31,30, 2025. During the three months ended MarchJune 31,30, 2026, the Company recorded $1.5$5.2 million in provision for credit losses on loans,loans. andAlso, the Company recorded a $1.0 million recovery of credit losses on unfunded commitments. As a result, total credit loss expense for the three-month period ended March 31, 2026 was $500,000. Duringduring the three months ended MarchJune 31,30, 2026, the Company recorded $1.7$274,000 millionin BOLI death benefit income, $817,000 in income from an FDIC special assessment credit, $1.2 million in expense from the fair value adjustment for marketable securities and $394,000$12.7 million in merger and acquisition expense.expense due to the completion of the previously announced acquisition of Mountain Commerce Bancorp, Inc ("MCBI") during the second quarter of 2026. The merger and acquisition expense reduced earnings per share by $0.05 per share for the three-month period ended June 30, 2026.

Total interest income increased $17.7 million, or 5.6%, total interest expense decreased $10.8$4.0 million, or 11.0%.4.0% and non-interest income increased $2.4 million, or 4.6%. This was partially offset by a $2.6$19.5 million, or 5.8%, decrease in non-interest income, a $1.5 million, or 0.5%, decrease in total interest income and a $1.0 million, or 0.9%,16.8%, increase in non-interest expense. The increase in interest income resulted from a $22.0 million, or 8.0%, increase in loan interest income, which was partially offset by a $3.8 million, or 42.6%, decrease in interest income on deposits at other banks and a $472,000, or 1.4%, decrease in investment interest income. The decrease in interest expense was primarily due to a $7.6 million, or 8.8%, decrease in interest on deposits, a $1.8 million, or 42.9%,42.8%, decrease in interest on subordinated debentures, and a $1.2 million, or 20.5%,21.5%, decrease in interest on FHLB and other borrowed funds.funds and a $1.1 million, or 1.2%, decrease in interest on deposits. The decreaseincrease in non-interest income was primarily due to a $2.3$1.1 million, or 20.5%,443.3%, decreaseincrease in other income, a $1.7 million, or 382.4%, decrease inthe fair value adjustment for marketable securities andsecurities, an $879,000,$875,000, or 8.2%,16.7%, decreaseincrease in trust fees, a $478,000, or 5.0%, increase in service charges on deposit accounts, a $330,000, or 2.6%, increase in other service charges and fees,fees and a $319,000, or 2,453.8%, increase in gain (loss) on OREO, which was partially offset by a $1.1 million,$969,000, or 288.0%,99.7%, increasedecrease in gain (loss) on OREO.sale Includedof withinbranches, Marchequipment 31, 2025and other incomeassets wasand $3.9a million$383,000, inor special income from equity investments. The2.8%, decrease in interest income resulted from a $2.5 million, or 7.2%, decrease in investment interest income and a $1.7 million, or 25.3%, decrease in interest income on deposits at other banks, which were partially offset by a $2.7 million, or 1.0%, increase in loan interest income. The increase in non-interest expense was primarily due to the $12.7 million increase in merger and acquisition expense as a $1.4result of the acquisition of MCBI, a $4.4 million, or 2.2%,6.9%, increase in salaries and employee benefits expense, $442,000,$1.8 million, or 3.1%,12.6%, increase in occupancy and equipment expense, $394,000 in merger and acquisition expense in the first quarter of 2026 compared to none in the prior year period, and a $326,000,$943,000, or 3.8%,11.3%, increase in data processing expense. These expenses were partially offset by a $1.5 million,$403,000, or 5.33%,1.4%, decrease in other operating expenses. Included within other operating expenses was the $1.7 million in FDIC special assessment credits.

Our net interest margin increased from 4.44% for the three-month period ended MarchJune 31,30, 2025 to 4.51% for the three-month period ended MarchJune 31,30, 2026. The yield on interest earning assets decreased from 6.45%6.42% for the three-monthsthree months ended MarchJune 31,30, 2025 to 6.25%6.26% for the three-monthsthree months ended MarchJune 31,30, 2026, and average interest earning assets increased from $19.83$20.08 billion to $20.35$21.74 billion. The increase in average interest earning assets is primarily due to a $786.7$2.03 millionbillion increase in average loans receivable, partially offset by a $203.5$258.6 million decrease in average interest bearing balances due from banks and a $106.9 million decrease in average investment securities and a $54.5 million decrease in average interest-bearing balances due from banks.securities. For the three months ended MarchJune 31,30, 2026 and 2025, we recognized $1.1$3.6 million and $1.4$1.2 million, respectively, in total net accretion for acquired loans and deposits.deposits, and average purchase accounting loan discounts were $42.0 million and $16.2 million for the three months ended June 30, 2026 and 2025, respectively. The increase in accretion income along with the increase in the purchase accounting loan discounts, both of which resulted from the acquisition of Mountain Commerce, increased the net interest margin by five basis points for the three-month period ended June 30, 2026. We recognized no$1.7 million in event income for the three-monthsthree months ended MarchJune 31,30, 2026 compared to $1.3 million$516,000 for the three-monthsthree months ended MarchJune 31,30, 2025. The increase in event income was accretive to the net interest margin by three basis points. The cost of interest bearing liabilities decreased from 2.76%2.73% for the three-monthsthree months ended MarchJune 31,30, 2025 to 2.42%2.45% for the three-monthsthree months ended MarchJune 31,30, 2026, and average interest-bearing liabilities increased from $14.40$14.58 billion to $14.60$15.61 billion. The increase in average interest-bearing liabilities is primarily due to a $460.3$1.27 millionbillion increase in average interest-bearing deposits, which was partially offset by a $159.8$159.5 million decrease in average subordinated debentures and a $100.4$100.3 million decrease in FHLB and other borrowed funds. The reduction in subordinated debentures was due to the Company completing the payoff of its $140.0 million 5.50% Fixed-to-Floating Rate Subordinated Notes due 2030 and the Company also repurchasing $20.0 million of its $300.0 million Fixed-to-Floating Rate Subordinated Notes due 2032 during the third quarter of 2025. The two payoff events were accretive to the net interest margin by approximately four basis points. The overall increase in the net interest margin was due to an increase in interest income resulting from the increase in the average balance of interest-earning assets and a decrease in interest expense resulting from a decrease in interest rates paid on interest-bearing liabilities, which were partially offset by a decrease in interest income due to a reduction in asset yields and an increase in interest expense resulting from an increase in the average balance of interest-bearing liabilities.

Our efficiency ratio was 41.59%44.54% for the three months ended MarchJune 31,30, 2026, compared to 42.22%41.68% for the same period in 2025. For the firstthree quartermonths ofended June 30, 2026, our efficiency ratio, as adjusted (non-GAAP), was 41.99%,40.46%, compared to 42.84%42.01% reported for the firstsame quarterperiod ofin 2025. (See Table 29 for the non-GAAP tabular reconciliation).

Our annualized return on average assets was 2.09%1.95% for the three months ended MarchJune 31,30, 2026, compared to 2.07%2.08% for the same period in 2025. (See Table 26 for the related non-GAAP financial measures and tabular reconciliation). Our annualized return on average common equity was 11.09%10.55% and 11.75%11.77% for the three months ended MarchJune 31,30, 2026, and 2025, respectively. (See Table 27 for the related non-GAAP financial measures and tabular reconciliation).

Financial Condition asResults of andOperations for the PeriodSix Months Ended MarchJune 31,30, 2026 and December 31, 2025

Our total assets, as of MarchJune 31,30, 2026, increased $319.8$1.83 millionbillion to $23.20$24.71 billion from $22.88 billion reported as of December 31, 2025. The increase in total assets is primarily due to the acquisition of $1.77 billion in total assets, net of purchase accounting adjustments, from MCBI during the second quarter of 2026. Cash and cash equivalents increased $444.6$385.2 million for the threesix months ended MarchJune 31,30, 2026. Our loan portfolio balance decreasedincreased to $15.63$17.13 billion, as of MarchJune 31,30, 2026, from $15.69 billion at December 31, 2025. The decreaseincrease in loans was primarily due to $100.5the acquisition of $1.47 billion in loans, net of purchase accounting adjustments, from MCBI during the second quarter of 2026 and $25.3 million of organic loan decline in our community banking footprint, which was partially offset by $47.9 million of loan growth from our Centennial Commercial Finance Group ("Centennial CFG") franchise.franchise , which was partially offset by $54.1 million of loan decline in our community banking footprint. Investment securities decreased by $70.7$100.2 million resulting from paydowns and maturities during the first threesix months of 2026. Total deposits increased $258.3$1.63 millionbillion to $17.74$19.11 billion as of MarchJune 31,30, 2026 from $17.48 billion as of December 31, 2025. The increase in deposits was primarily due to the acquisition of $1.54 billion in deposits, net of purchase accounting adjustments, from MCBI during the second quarter of 2026. Stockholders’ equity increased $52.7$250.6 million to $4.35$4.55 billion as of MarchJune 31,30, 2026, compared to $4.30 billion as of December 31, 2025. The $52.7$250.6 million increase in stockholders’ equity is primarily associated with the $118.2$146.0 million in common stock issued to MCBI shareholders for the acquisition of MCBI on April 1, 2026 and the $237.5 million in net income for the threesix months ended MarchJune 31,30, 2026, partially offset by the $13.5$83.5 million in shareholder dividends paid, stock repurchases of $54.7 million and $3.1 million in other comprehensive loss, the $41.3 million in shareholder dividends paid and stock repurchases of $13.9 million.loss.

Our non-performing loans were $182.1$185.3 million, or 1.16%1.08% of total loans as of MarchJune 31,30, 2026, compared to $85.0 million, or 0.54% of total loans, as of December 31, 2025. The allowance for credit losses as a percentage of non-performing loans decreased to 163.43%177.19% as of MarchJune 31,30, 2026, from 350.17% as of December 31, 2025. As of MarchJune 31,30, 2026, our non-performing assets increased to $224.1$228.6 million, or 0.97%0.93% of total assets, from $124.8 million, or 0.55% of total assets, as of December 31, 2025. The increase in non-performing loans and assets was primarily due to one loan relationship with a balance of $92.1 million being placed on non-accrual status during the quarter ended March 31, 2026.

Critical Accounting Policies and Estimates

Overview. We prepare our consolidated financial statements based on the selection of certain accounting policies, generally accepted accounting principles and customary practices in the banking industry. These policies, in certain areas, require us to make significant estimates and assumptions. Our accounting policies are described in detail in theNote notes1 to our consolidated financial statements included as part of this document.

We consider aan policyaccounting estimate to be critical if (i) the accounting estimate requires assumptions about matters that are highly uncertain at the time of the accounting estimate; and (ii) different estimates that could reasonably have been used in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, would have a material impact on our financial statements. UsingManagement thesehas criteria, we believe thatidentified the following accounting policiesestimates as the most critical to usthe areunderstanding those associated with our lending practices, includingof the accountingCompany's forfinancial the allowance for credit losses, foreclosed assets, investments, intangible assets, income taxes and stock options.statements.

Allowance for Credit Losses. We account for credit losses in accordance with ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASC 326" or "CECL"). The measurementallowance for credit losses ("ACL") represents management's estimate of expected credit losses underwithin the CECL methodology is applicable to financial assets measured at amortized cost, includingCompany's loan receivablesportfolio and held-to-maturity debt securities. It also applies tocertain off-balance sheet credit exposuresexposures. notThe accountedACL foris asinherently insurancesubjective (loanbecause commitments,it standbyrequires lettersmanagement ofto credit,make financialsignificant guarantees,assumptions regarding future economic conditions, borrower performance, collateral values, and other similarfactors instruments)that andmay netimpact investments in leases recognized by a lessor in accordance with Topic 842 on leases.collectability.