# EDGAR Filing Document

**Accession Number:** 0001473844
**File Stem:** 0001473844-26-000025
**Filing Date:** 2026-4
**Character Count:** 230073
**Document Hash:** ce5391e4276adeb7cad5babb99edc443
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001473844-26-000025.hdr.sgml**: 20260428

**ACCESSION NUMBER**: 0001473844-26-000025

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 103

**CONFORMED PERIOD OF REPORT**: 20260331

**FILED AS OF DATE**: 20260428

**DATE AS OF CHANGE**: 20260428

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Stellar Bancorp, Inc.
- **CENTRAL INDEX KEY:** 0001473844
- **STANDARD INDUSTRIAL CLASSIFICATION:** NATIONAL COMMERCIAL BANKS [6021]
- **ORGANIZATION NAME:** 02 Finance
- **EIN:** 208339782
- **STATE OF INCORPORATION:** TX
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-38280
- **FILM NUMBER:** 26907512

**BUSINESS ADDRESS:**
- **STREET 1:** 9 GREENWAY PLAZA, SUITE 110
- **CITY:** HOUSTON
- **STATE:** TX
- **ZIP:** 77046
- **BUSINESS PHONE:** (713) 210-7600

**MAIL ADDRESS:**
- **STREET 1:** 9 GREENWAY PLAZA, SUITE 110
- **CITY:** HOUSTON
- **STATE:** TX
- **ZIP:** 77046

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Stellar Bancorp. Inc.
- **DATE OF NAME CHANGE:** 20221003

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** CBTX, Inc.
- **DATE OF NAME CHANGE:** 20171011

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** CBFH, Inc.
- **DATE OF NAME CHANGE:** 20091005

?xml version='1.0' encoding='ASCII'? stel-20260331

<u>[**Table of Contents**](#i6dd69a6fa1b94936a68236768936d61e_7)</u>

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**______________________________________________**

**FORM 10-Q**

**_______________________________________________**

☒ **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026**

**OR**

---

| | |
|:---|:---|
| ⬜ | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

---

**FOR THE TRANSITION PERIOD FROM TO**

**COMMISSION FILE NUMBER: 001-38280**

**_______________________________________________**

**Stellar Bancorp, Inc.**

**(Exact name of registrant as specified in its charter)**

**_______________________________________________**

---

| | |
|:---|:---|
| **Texas** | **20-8339782** |
| **(State or other jurisdiction**<br>**of incorporation or organization)** | **(I.R.S. Employer**<br>**Identification No.)** |

---

**9 Greenway Plaza, Suite 110**

**Houston, Texas 77046**

(Address of principal executive offices, including zip code)

**(713) 210-7600**

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading<br>Symbol(s)** | **Name of each exchange on which registered** |
| Common Stock, par value, $0.01 per share | STEL | New York Stock Exchange  |
|  |  | NYSE Texas |

---

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ⬜

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ⬜

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting," and "emerging growth company" in Rule 12b-2 of the Exchange Act:

---

| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☒ | Accelerated filer | ⬜ |
| Non-accelerated filer | ⬜ | Smaller reporting company | ⬜ |
| | | Emerging growth company | ⬜ |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ⬜

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ⬜ No ☒

As of April 24, 2026, the registrant had 50,920,698 shares of common stock, $0.01 par value per share, outstanding.

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

**STELLAR BANCORP, INC.**

**INDEX TO FORM 10-Q**

**March 31, 2026**

---

| | | |
|:---|:---|:---|
| <u>[PART I—FINANCIAL INFORMATION](#i6dd69a6fa1b94936a68236768936d61e_10)</u> | <u>[PART I—FINANCIAL INFORMATION](#i6dd69a6fa1b94936a68236768936d61e_10)</u> |  |
| [Item 1.](#i6dd69a6fa1b94936a68236768936d61e_13) | <u>[Interim Consolidated Financial Statements](#i6dd69a6fa1b94936a68236768936d61e_13)</u> | [3](#i6dd69a6fa1b94936a68236768936d61e_13) |
|  | <u>[Consolidated Balance Sheets (unaudited)](#i6dd69a6fa1b94936a68236768936d61e_16)</u> | [3](#i6dd69a6fa1b94936a68236768936d61e_16) |
|  | <u>[Consolidated Statements of Income (unaudited)](#i6dd69a6fa1b94936a68236768936d61e_19)</u> | [4](#i6dd69a6fa1b94936a68236768936d61e_19) |
|  | <u>[Consolidated Statements of Comprehensive Income (unaudited)](#i6dd69a6fa1b94936a68236768936d61e_22)</u> | [5](#i6dd69a6fa1b94936a68236768936d61e_22) |
|  | <u>[Consolidated Statements of Changes in Shareholders](#i6dd69a6fa1b94936a68236768936d61e_25)</u>**<u>['](#i6dd69a6fa1b94936a68236768936d61e_25)</u>**<u>[Equity (unaudited)](#i6dd69a6fa1b94936a68236768936d61e_25)</u> | [6](#i6dd69a6fa1b94936a68236768936d61e_25) |
|  | <u>[Consolidated Statements of Cash Flows (unaudited)](#i6dd69a6fa1b94936a68236768936d61e_28)</u> | [7](#i6dd69a6fa1b94936a68236768936d61e_28) |
|  | <u>[Condensed Notes to Interim Consolidated Financial Statements (unaudited)](#i6dd69a6fa1b94936a68236768936d61e_31)</u> | [8](#i6dd69a6fa1b94936a68236768936d61e_31) |
| [Item 2.](#i6dd69a6fa1b94936a68236768936d61e_82) | <u>[Management's Discussion and Analysis of Financial Condition and Results of Operations](#i6dd69a6fa1b94936a68236768936d61e_82)</u> | [32](#i6dd69a6fa1b94936a68236768936d61e_82) |
| [Item 3.](#i6dd69a6fa1b94936a68236768936d61e_85) | <u>[Quantitative and Qualitative Disclosures about Market Risk](#i6dd69a6fa1b94936a68236768936d61e_85)</u> | [51](#i6dd69a6fa1b94936a68236768936d61e_85) |
| [Item 4.](#i6dd69a6fa1b94936a68236768936d61e_88) | <u>[Controls and Procedures](#i6dd69a6fa1b94936a68236768936d61e_88)</u> | [52](#i6dd69a6fa1b94936a68236768936d61e_88) |
| <u>[PART II—OTHER INFORMATION](#i6dd69a6fa1b94936a68236768936d61e_91)</u> | <u>[PART II—OTHER INFORMATION](#i6dd69a6fa1b94936a68236768936d61e_91)</u> |  |
| [Item 1.](#i6dd69a6fa1b94936a68236768936d61e_94) | <u>[Legal Proceedings](#i6dd69a6fa1b94936a68236768936d61e_94)</u> | [52](#i6dd69a6fa1b94936a68236768936d61e_94) |
| [Item 1A.](#i6dd69a6fa1b94936a68236768936d61e_97) | <u>[Risk Factors](#i6dd69a6fa1b94936a68236768936d61e_97)</u> | [52](#i6dd69a6fa1b94936a68236768936d61e_97) |
| [Item 2.](#i6dd69a6fa1b94936a68236768936d61e_100) | <u>[Unregistered Sales of Equity Securities and Use of Proceeds](#i6dd69a6fa1b94936a68236768936d61e_100)</u> | [53](#i6dd69a6fa1b94936a68236768936d61e_100) |
| [Item 3.](#i6dd69a6fa1b94936a68236768936d61e_103) | <u>[Defaults upon Senior Securities](#i6dd69a6fa1b94936a68236768936d61e_103)</u> | [53](#i6dd69a6fa1b94936a68236768936d61e_103) |
| [Item 4.](#i6dd69a6fa1b94936a68236768936d61e_106) | <u>[Mine Safety Disclosures](#i6dd69a6fa1b94936a68236768936d61e_106)</u> | [53](#i6dd69a6fa1b94936a68236768936d61e_106) |
| [Item 5.](#i6dd69a6fa1b94936a68236768936d61e_109) | <u>[Other Information](#i6dd69a6fa1b94936a68236768936d61e_109)</u> | [53](#i6dd69a6fa1b94936a68236768936d61e_109) |
| [Item 6.](#i6dd69a6fa1b94936a68236768936d61e_112) | <u>[Exhibits](#i6dd69a6fa1b94936a68236768936d61e_112)</u> | [54](#i6dd69a6fa1b94936a68236768936d61e_112) |
| [Signatures](#i6dd69a6fa1b94936a68236768936d61e_115) |  | [55](#i6dd69a6fa1b94936a68236768936d61e_115) |

---

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

**PART I—FINANCIAL INFORMATION**

**ITEM 1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS** 

**STELLAR BANCORP, INC.**

**CONSOLIDATED BALANCE SHEETS**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
| | **March 31,<br>2026** | **December 31,<br>2025** |
| | **(Dollars in thousands, except shares and par value)** | **(Dollars in thousands, except shares and par value)** |
| **ASSETS:** | | |
| Cash and due from banks | $107736 | $94331 |
| Interest-bearing deposits at other financial institutions | 441834 | 325122 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total cash and cash equivalents | 549570 | 419453 |
| Available for sale securities, at fair value | 1864710 | 2198459 |
| Loans held for investment | 7587952 | 7300591 |
| Less: allowance for credit losses on loans | (85431) | (83629) |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans, net | 7502521 | 7216962 |
| Accrued interest receivable | 36589 | 35869 |
| Premises and equipment, net | 99861 | 106118 |
| Federal Reserve Bank and Federal Home Loan Bank stock | 51105 | 45532 |
| Bank-owned life insurance | 110103 | 109477 |
| Goodwill | 497318 | 497318 |
| Core deposit intangibles, net | 66137 | 71018 |
| Other assets | 111442 | 106388 |
| TOTAL ASSETS | $10889356 | $10806594 |
| **LIABILITIES:** |  |  |
| Deposits: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Noninterest-bearing | $3210579 | $3407865 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest-bearing |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Demand | 2171968 | 2114997 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Money market and savings | 2596972 | 2469845 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certificates and other time | 1002491 | 1028759 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest-bearing deposits | 5771431 | 5613601 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total deposits | 8982010 | 9021466 |
| Accrued interest payable | 5240 | 5508 |
| Borrowed funds | 135000 |  |
| Subordinated debt | 40256 | 40226 |
| Other liabilities | 59085 | 70740 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 9221591 | 9137940 |
| **SHAREHOLDERS' EQUITY:** |  |  |
| Preferred stock, $0.01 par value; 10,000,000 shares authorized; no shares issued or outstanding at March 31, 2026 and December 31, 2025 |  |  |
| Common stock, $0.01 par value; 140,000,000 shares authorized; 50,911,515 shares issued and outstanding at March 31, 2026 and 50,902,024 shares issued and outstanding at December 31, 2025 | 509 | 509 |
| Capital surplus | 1170867 | 1174894 |
| Retained earnings | 585403 | 566216 |
| Accumulated other comprehensive loss | (89014) | (72965) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total shareholders' equity | 1667765 | 1668654 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $10889356 | $10806594 |

---

See condensed notes to interim consolidated financial statements.

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

**STELLAR BANCORP, INC.**

**CONSOLIDATED STATEMENTS OF INCOME**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| | **(Dollars in thousands, except per share data)** | **(Dollars in thousands, except per share data)** |
| INTEREST INCOME: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans, including fees | $119783 | $120640 |
| &nbsp;&nbsp;&nbsp;&nbsp;Securities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxable | 19623 | 16148 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax-exempt | 805 | 812 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deposits in other financial institutions | 4884 | 4720 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest income | 145095 | 142320 |
| INTEREST EXPENSE: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Demand, money market and savings deposits | 29644 | 27574 |
| &nbsp;&nbsp;&nbsp;&nbsp;Certificates and other time deposits | 8624 | 13527 |
| &nbsp;&nbsp;&nbsp;&nbsp;Borrowed funds | 149 | 517 |
| &nbsp;&nbsp;&nbsp;&nbsp;Subordinated debt | 747 | 1444 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest expense | 39164 | 43062 |
| NET INTEREST INCOME | 105931 | 99258 |
| &nbsp;&nbsp;&nbsp;Provision for credit losses | 2497 | 3632 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net interest income after provision for credit losses | 103434 | 95626 |
| NONINTEREST INCOME: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Service charges on deposit accounts | 1635 | 1584 |
| &nbsp;&nbsp;&nbsp;&nbsp;(Loss) gain on sale/write-down of assets | (37) | 417 |
| &nbsp;&nbsp;&nbsp;&nbsp;Bank-owned life insurance income | 626 | 610 |
| &nbsp;&nbsp;&nbsp;&nbsp;Debit card and interchange income | 547 | 520 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | 2339 | 2374 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total noninterest income | 5110 | 5505 |
| NONINTEREST EXPENSE: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Salaries and employee benefits | 43931 | 41792 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net occupancy and equipment | 4575 | 3926 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation | 1971 | 1995 |
| &nbsp;&nbsp;&nbsp;&nbsp;Data processing and software amortization | 6073 | 5682 |
| &nbsp;&nbsp;&nbsp;&nbsp;Professional fees | 886 | 1786 |
| &nbsp;&nbsp;&nbsp;&nbsp;Regulatory assessments and FDIC insurance | 1639 | 1733 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of intangibles | 4886 | 5548 |
| &nbsp;&nbsp;&nbsp;&nbsp;Communications | 759 | 847 |
| &nbsp;&nbsp;&nbsp;&nbsp;Advertising | 799 | 782 |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisition and merger-related expenses | 3307 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | 6338 | 6075 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total noninterest expense | 75164 | 70166 |
| INCOME BEFORE INCOME TAXES | 33380 | 30965 |
| &nbsp;&nbsp;&nbsp;&nbsp;Provision for income taxes | 6414 | 6263 |
| NET INCOME | $26966 | $24702 |
| EARNINGS PER SHARE: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic | $0.53 | $0.46 |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted | $0.53 | $0.46 |
| DIVIDENDS PER SHARE | $0.15 | $0.14 |

---

See condensed notes to interim consolidated financial statements.

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

**STELLAR BANCORP, INC.**

**CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| | **(Dollars in thousands)** | **(Dollars in thousands)** |
| Net income | $26966 | $24702 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive (loss) income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unrealized (loss) gain on securities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in unrealized holding (loss) gain on available for sale securities during the period | (20323) | 29097 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reclassification of loss realized through the sale of securities |  | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other comprehensive (loss) income | (20323) | 29100 |
| &nbsp;&nbsp;&nbsp;Deferred tax benefit (expense) related to other comprehensive (loss) income | 4274 | (6125) |
| &nbsp;&nbsp;&nbsp;Other comprehensive (loss) income, net of tax | (16049) | 22975 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Comprehensive income | $10917 | $47677 |

---

See condensed notes to interim consolidated financial statements.

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

**STELLAR BANCORP, INC.**

**CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY**

**(Unaudited)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Common Stock** | **Common Stock** | **Capital<br>Surplus** | **Retained<br>Earnings** | **Accumulated<br>Other Comprehensive<br>(Loss) Income** | **Total Shareholders'<br>Equity** |
| | **Shares** | **Amount** | **Capital<br>Surplus** | **Retained<br>Earnings** | **Accumulated<br>Other Comprehensive<br>(Loss) Income** | **Total Shareholders'<br>Equity** |
| | **(Dollars in thousands, except per share data)** | **(Dollars in thousands, except per share data)** | **(Dollars in thousands, except per share data)** | **(Dollars in thousands, except per share data)** | **(Dollars in thousands, except per share data)** | **(Dollars in thousands, except per share data)** |
| BALANCE AT DECEMBER 31, 2024 | 53428699 | $534 | $1240050 | $492640 | $(125364) | $1607860 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income |  |  |  | 24702 |  | 24702 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive income |  |  |  |  | 22975 | 22975 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash dividends declared, $0.14 per share |  |  |  | (7270) |  | (7270) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock issued in connection<br>with the exercise of stock options<br>and restricted stock awards | 91192 | 1 | (800) |  |  | (799) |
| &nbsp;&nbsp;&nbsp;&nbsp;Repurchase of common stock | (1378962) | (14) | (38588) |  |  | (38602) |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense |  |  | 1966 |  |  | 1966 |
| BALANCE AT MARCH 31, 2025 | 52140929 | $521 | $1202628 | $510072 | $(102389) | $1610832 |
| BALANCE AT DECEMBER 31, 2025 | 50902024 | $509 | $1174894 | $566216 | $(72965) | $1668654 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income |  |  |  | 26966 |  | 26966 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other comprehensive loss |  |  |  |  | (16049) | (16049) |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash dividends declared, $0.15 per share |  |  |  | (7779) |  | (7779) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock issued in connection<br>with the exercise of stock options<br>and restricted stock awards | 143853 | 1 | (1811) |  |  | (1810) |
| &nbsp;&nbsp;&nbsp;&nbsp;Repurchase of common stock | (134362) | (1) | (4172) |  |  | (4173) |
| &nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense |  |  | 1956 |  |  | 1956 |
| BALANCE AT MARCH 31, 2026 | 50911515 | $509 | $1170867 | $585403 | $(89014) | $1667765 |

---

See condensed notes to interim consolidated financial statements.

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

**STELLAR BANCORP, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| | **(In thousands)** | **(In thousands)** |
| CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income | $26966 | $24702 |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and intangibles amortization | 6857 | 7543 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net accretion of discount on loans | (3561) | (5397) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net accretion of discount on securities | (2769) | (1299) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for credit losses | 2497 | 3632 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax expense | 889 | 1008 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense | 1956 | 1966 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net change in operating leases | 1105 | 823 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bank-owned life insurance income | (626) | (610) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Federal Reserve Bank and Federal Home Loan Bank stock dividends | (73) | (238) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss (gain) on sale/write-down of assets | 37 | (417) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Excess tax benefit from stock-based compensation | (480) | 539 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Decrease in accrued interest receivable and other assets | (4941) | (8946) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Decrease in accrued interest payable and other liabilities | (11349) | (28985) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) operating activities | 16508 | (5679) |
| CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Purchase of available for sale securities | (1237330) | (1511027) |
| &nbsp;&nbsp;&nbsp;Proceeds from maturities and principal paydowns of available for sale securities | 1553525 | 1392366 |
| &nbsp;&nbsp;&nbsp;Proceeds from sales and calls of available for sale securities |  | 102705 |
| &nbsp;&nbsp;&nbsp;Net change in total loans | (287409) | 170741 |
| &nbsp;&nbsp;&nbsp;Purchase of bank premises and equipment | (268) | (770) |
| &nbsp;&nbsp;&nbsp;Proceeds from sale of bank premises, equipment and other real estate | 3310 | 5820 |
| &nbsp;&nbsp;&nbsp;Net purchase of Federal Reserve Bank and Federal Home Loan Bank stock |  | (12455) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by investing activities | 31828 | 147380 |
| CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |
| &nbsp;&nbsp;&nbsp;Net decrease in noninterest-bearing deposits | (197287) | (370587) |
| &nbsp;&nbsp;&nbsp;Net increase (decrease) in interest-bearing deposits | 157830 | (195084) |
| &nbsp;&nbsp;&nbsp;Net change in borrowed funds | 135000 | 120000 |
| &nbsp;&nbsp;&nbsp;Dividends paid to common shareholders | (7779) | (7270) |
| &nbsp;&nbsp;&nbsp;Payments made the issuance of restricted stock and stock option exercises | (1810) | (799) |
| &nbsp;&nbsp;&nbsp;Repurchase of common stock | (4173) | (38602) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used) in financing activities | 81781 | (492342) |
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 130117 | (350641) |
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 419453 | 911216 |
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $549570 | $560575 |

---

See condensed notes to interim consolidated financial statements.

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

**STELLAR BANCORP, INC.**

**CONDENSED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS**

**March 31, 2026**

**(Unaudited)**

**1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES**

**Nature of Operations**—Stellar Bancorp, Inc. ("Stellar") through its wholly-owned subsidiary, Stellar Bank (the "Bank" and together with Stellar, collectively referred to herein as "we," "us," "our" and the "Company"), provides a diversified range of commercial banking services primarily to small-to medium-sized businesses. Stellar derives substantially all of its revenues and income from the operation of the Bank.

&nbsp;&nbsp;&nbsp;&nbsp;The Company is focused on delivering a wide variety of relationship-driven commercial banking products and community-oriented services tailored to meet the needs of small-to medium-sized businesses, professionals and individuals through its 52 banking centers with 35 banking centers in the Houston metropolitan statistical area ("MSA"), 16 banking centers in the Beaumont MSA and one banking center in Dallas, Texas.

**Basis of Presentation**—The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and in accordance with guidance provided by the Securities and Exchange Commission ("SEC"). Accordingly, the condensed consolidated financial statements do not include all the information and footnotes required by GAAP for complete financial statements. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments considered necessary for a fair presentation of the financial position, results of operations and cash flows of the Company on a consolidated basis, and all such adjustments are of a normal recurring nature. Transactions between Stellar and the Bank have been eliminated. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.

**Reclassifications**—Certain items in the prior year's financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior year net income or shareholders' equity.

**Significant Accounting and Reporting Policies**—The Company's significant accounting and reporting policies can be found in Note 1 of the Company's annual financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

**Cash Flow Reporting—**Net cash flows are reported for loan and deposit transactions. See below for additional cash flow information.

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| | **(In thousands)** | **(In thousands)** |
| Cash paid for: |  |  |
| &nbsp;&nbsp;&nbsp;Interest | $39432 | $50258 |
| &nbsp;&nbsp;&nbsp;U.S. federal income taxes, net of refunds received |  |  |
| &nbsp;&nbsp;&nbsp;State income/franchise taxes, net of refunds received |  | (49) |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | 1083 | 1051 |
| Significant non-cash transactions: |  |  |
| &nbsp;&nbsp;&nbsp;Loans transferred to other real estate | 2251 | 8786 |
| &nbsp;&nbsp;&nbsp;Lease right-of-use assets obtained in exchange for lessee operating lease liabilities | 120 |  |

---

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

**Recent Accounting Standards**

*Accounting Standards Update ("ASU") 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses."* This update requires that public businesses disclose in tabular format, disaggregating information about prescribed categories underlying any relevant income statement expense caption. The prescribed categories include, among other things, employee compensation, depreciation and intangible asset amortization. ASU 2024-03 will be effective for the Company, on a prospective basis, for annual reporting periods beginning after December 15, 2026. Early adoption and retrospective application is permitted. ASU 2024-03 is not expected to have a significant impact on the Company's financial statements.

*ASU 2025-08, "Financial Instruments - Credit Losses (Topic 326): Purchased Loans."* ASU 2025-08 expands the scope of the "gross-up" method, formerly applicable only to purchased credit-deteriorated ("PCD") assets, to include acquired non-PCD loans that meet certain criteria, now referred to as purchased seasoned loans ("PSLs"). Under this model, an allowance for expected credit losses is recognized at acquisition, offsetting the loan's amortized cost basis, thereby eliminating the day-one credit-loss expense previously required for non-PCD assets. PSLs are defined as non-PCD loans acquired either (i) through a business combination, or (ii) purchased more than 90 days after origination when the acquirer was not involved in origination. ASU 2025-08 will be effective for the Company on a prospective basis for loans acquired on or after the adoption date, for interim and annual reporting periods beginning in 2027, though early adoption is permitted. ASU 2025-08 is not expected to have a significant impact on the Company's financial statements.

**2. GOODWILL AND OTHER INTANGIBLE ASSETS**

Changes in the carrying amount of the Company's goodwill and core deposit intangible assets were as follows:

---

| | | | |
|:---|:---|:---|:---|
| | **Goodwill** | **Core Deposit <br>Intangibles** | **Servicing Assets** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Balance as of December 31, 2025 | $497318 | $71018 | $70 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization |  | (4881) | (5) |
| &nbsp;&nbsp;&nbsp;&nbsp;Decrease due to payoff of serviced loans |  |  | (1) |
| Balance as of March 31, 2026 | $497318 | $66137 | $64 |

---

Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired recorded on the acquisition date of an entity. Goodwill is subject to impairment testing, which must be conducted at least annually or upon the occurrence of a triggering event. Various factors, such as the Company's results of operations, the trading price of the Company's common stock relative to the book value per share, macroeconomic conditions and conditions in the banking sector, inform whether a triggering event for an interim goodwill impairment test has occurred. Goodwill is recorded and evaluated for impairment at its reporting unit, the Company. The Company's policy is to test goodwill for impairment annually as of October 1st, or on an interim basis if an event triggering an impairment assessment is determined to have occurred.

The estimated aggregate future amortization expense for core deposit intangible assets remaining as of March 31, 2026 is as follows (in thousands):

---

| | |
|:---|:---|
| 2026 | $14015 |
| 2027 | 16272 |
| 2028 | 13244 |
| 2029 | 9419 |
| Thereafter | 13187 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $66137 |

---

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

**3. SECURITIES**

The amortized cost and fair value of securities available for sale were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
| | **Amortized<br>Cost** | **Gross<br>Unrealized<br>Gains** | **Gross<br>Unrealized<br>Losses** | **Fair<br>Value** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| **Available for Sale** | | | | |
| U.S. government and agency securities | $89315 | $546 | $(2216) | $87645 |
| Municipal securities | 217653 | 355 | (24389) | 193619 |
| Agency mortgage-backed pass-through securities | 839002 | 2252 | (35367) | 805887 |
| Agency collateralized mortgage obligations | 723509 | 1483 | (51007) | 673985 |
| Corporate bonds and other | 107861 | 678 | (4965) | 103574 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $1977340 | $5314 | $(117944) | $1864710 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
| | **Amortized<br>Cost** | **Gross<br>Unrealized<br>Gains** | **Gross <br>Unrealized<br>Losses** | **Fair<br>Value** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| **Available for Sale** | | | | |
| U.S. government and agency securities | $394361 | $497 | $(2383) | $392475 |
| Municipal securities | 218143 | 627 | (22569) | 196201 |
| Agency mortgage-backed pass-through securities | 831815 | 5548 | (29377) | 807986 |
| Agency collateralized mortgage obligations | 737627 | 3375 | (43937) | 697065 |
| Corporate bonds and other | 108820 | 564 | (4652) | 104732 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $2290766 | $10611 | $(102918) | $2198459 |

---

As of March 31, 2026, no allowance for credit losses has been recognized on available for sale securities in an unrealized loss position as management does not believe any of the securities are impaired due to reasons of credit quality. This belief is based upon our analysis of the underlying risk characteristics, including credit ratings, and other qualitative factors related to our available for sale securities and in consideration of our historical credit loss experience and internal forecasts. The issuers of these securities continue to make timely principal and interest payments under the contractual terms of the securities. Furthermore, management does not have the intent to sell any of the securities classified as available for sale in the table above and believes that it is more likely than not that we will not have to sell any such securities before a recovery of cost. The unrealized losses are due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline.

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

The amortized cost and fair value of investment securities at March 31, 2026, by contractual maturity, are shown below. Expected maturity may differ from contractual maturity if borrowers have the right to call or prepay obligations at any time with or without call or prepayment penalties.

---

| | | |
|:---|:---|:---|
| | **Amortized<br>Cost** | **Fair<br>Value** |
| | **(In thousands)** | **(In thousands)** |
| Due in one year or less | $2963 | $3011 |
| Due after one year through five years | 22651 | 21303 |
| Due after five years through ten years | 153598 | 142929 |
| Due after ten years | 235617 | 217595 |
| &nbsp;&nbsp;&nbsp;&nbsp;Subtotal | 414829 | 384838 |
| Agency mortgage-backed pass-through securities and collateralized mortgage obligations | 1562511 | 1479872 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $1977340 | $1864710 |

---

Securities with unrealized losses segregated by length of time in a continuous loss position were as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
| | **Less than 12 Months** | **Less than 12 Months** | **More than 12 Months** | **More than 12 Months** | **Total** | **Total** |
| | **Estimated<br>Fair Value** | **Unrealized<br>Losses** | **Estimated<br>Fair Value** | **Unrealized<br>Losses** | **Estimated<br>Fair Value** | **Unrealized<br>Losses** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| **Available for Sale** | | | | | | |
| U.S. government and agency securities | $11911 | $(184) | $47236 | $(2032) | $59147 | $(2216) |
| Municipal securities | 12226 | (889) | 165897 | (23500) | 178123 | (24389) |
| Agency mortgage-backed pass-through securities | 338489 | (5617) | 234061 | (29750) | 572550 | (35367) |
| Agency collateralized mortgage obligations | 147257 | (2430) | 338541 | (48577) | 485798 | (51007) |
| Corporate bonds and other | 21533 | (468) | 49370 | (4497) | 70903 | (4965) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $531416 | $(9588) | $835105 | $(108356) | $1366521 | $(117944) |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
| | **Less than 12 Months** | **Less than 12 Months** | **More than 12 Months** | **More than 12 Months** | **Total** | **Total** |
| | **Estimated<br>Fair Value** | **Unrealized<br>Losses** | **Estimated<br>Fair Value** | **Unrealized<br>Losses** | **Estimated<br>Fair Value** | **Unrealized<br>Losses** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| **Available for Sale** | | | | | | |
| U.S. government and agency securities | $185275 | $(180) | $51684 | $(2203) | $236959 | $(2383) |
| Municipal securities | 6091 | (725) | 170400 | (21844) | 176491 | (22569) |
| Agency mortgage-backed pass-through securities | 157352 | (1390) | 279693 | (27987) | 437045 | (29377) |
| Agency collateralized mortgage obligations | 65444 | (1006) | 357857 | (42931) | 423301 | (43937) |
| Corporate bonds and other | 21255 | (193) | 50384 | (4459) | 71639 | (4652) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $435417 | $(3494) | $910018 | $(99424) | $1345435 | $(102918) |

---

During the three months ended March 31, 2026, the Company had no sales and calls of securities. During the three months ended March 31, 2025, the Company had sales and calls of securities of $102.7 million with a loss of $3 thousand.

At March 31, 2026 and December 31, 2025, the Company did not own securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of consolidated shareholders' equity at such respective dates.

The carrying value of pledged securities was $1.86 billion at March 31, 2026 and $828.5 million at December 31, 2025. The majority of the securities in each case were pledged to collateralize public fund deposits.

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

**4. LOANS AND ALLOWANCE FOR CREDIT LOSSES**

The loan portfolio balances, net of unearned income and fees, consist of various types of loans primarily made to borrowers located within Texas, and segregated by class of loan were as follows:

---

| | | |
|:---|:---|:---|
| | **March 31, 2026** | **December 31, 2025** |
| | **(In thousands)** | **(In thousands)** |
| Commercial and industrial | $1563421 | $1476559 |
| Real estate: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate (including multi-family residential) | 3844629 | 3766294 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate construction and land development | 821723 | 720779 |
| &nbsp;&nbsp;&nbsp;&nbsp;1-4 family residential (including home equity) | 1167436 | 1136227 |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential construction | 102609 | 124653 |
| Consumer and other | 88134 | 76079 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total loans | 7587952 | 7300591 |
| Allowance for credit losses on loans | (85431) | (83629) |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans, net | $7502521 | $7216962 |

---

**Nonaccrual and Past Due Loans**

An aging analysis of the recorded investment in past due loans, segregated by class of loans, is included below. The Company defines recorded investment as the outstanding loan balances including net deferred loan fees and excluding accrued interest receivable of $28.4 million and $27.6 million as of March 31, 2026 and December 31, 2025, respectively, due to immateriality.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
| | **Loans Past Due and Still Accruing** | **Loans Past Due and Still Accruing** | **Loans Past Due and Still Accruing** | **Nonaccrual<br>Loans** | **Current<br>Loans** | **Total<br>Loans** |
| | **30-89<br>Days** | **90 or More<br>Days** | **Total Past<br>Due Loans** | **Nonaccrual<br>Loans** | **Current<br>Loans** | **Total<br>Loans** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Commercial and industrial | $4224 | $— | $4224 | $10488 | $1548709 | $1563421 |
| Real estate: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate (including<br>&nbsp;&nbsp;&nbsp;&nbsp; multi-family residential) | 11423 |  | 11423 | 32939 | 3800267 | 3844629 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate construction<br>&nbsp;&nbsp;&nbsp;&nbsp;and land development | 793 |  | 793 | 905 | 820025 | 821723 |
| &nbsp;&nbsp;&nbsp;&nbsp;1-4 family residential (including<br>&nbsp;&nbsp;&nbsp;&nbsp;home equity) | 8689 |  | 8689 | 15920 | 1142827 | 1167436 |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential construction | 980 |  | 980 | 292 | 101337 | 102609 |
| Consumer and other | 229 |  | 229 | 46 | 87859 | 88134 |
| &nbsp;&nbsp;&nbsp;Total loans | $26338 | $— | $26338 | $60590 | $7501024 | $7587952 |

---

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
| | **Loans Past Due and Still Accruing** | **Loans Past Due and Still Accruing** | **Loans Past Due and Still Accruing** | **Nonaccrual<br>Loans** | **Current<br>Loans** | **Total<br>Loans** |
| | **30-89<br>Days** | **90 or More<br>Days** | **Total Past<br>Due Loans** | **Nonaccrual<br>Loans** | **Current<br>Loans** | **Total<br>Loans** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Commercial and industrial | $6789 | $— | $6789 | $7616 | $1462154 | $1476559 |
| Real estate: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate (including <br>&nbsp;&nbsp;&nbsp;&nbsp;multi-family residential) | 8790 |  | 8790 | 29271 | 3728233 | 3766294 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate construction <br>&nbsp;&nbsp;&nbsp;&nbsp;and land development | 2129 |  | 2129 | 1838 | 716812 | 720779 |
| &nbsp;&nbsp;&nbsp;&nbsp;1-4 family residential (including <br>&nbsp;&nbsp;&nbsp;&nbsp;home equity) | 9285 |  | 9285 | 13333 | 1113609 | 1136227 |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential construction |  |  |  | 448 | 124205 | 124653 |
| Consumer and other | 35 |  | 35 | 42 | 76002 | 76079 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total loans | $27028 | $— | $27028 | $52548 | $7221015 | $7300591 |

---

**Credit Quality Indicators**

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt. The Company utilizes a risk rating matrix to assign a risk rating to each of its loans. Risk ratings are updated on an ongoing basis and are subject to change by continuous loan monitoring processes including lending management monitoring, executive management and board committee oversight, and independent credit review. As part of the ongoing monitoring of the credit quality of the Company's loan portfolio and methodology for calculating the allowance for credit losses, management assigns and tracks certain risk ratings to be used as credit quality indicators including trends related to (1) the weighted-average risk grade of loans, (2) the level of classified loans, (3) the delinquency status of loans, (4) nonperforming loans and (5) the general economic conditions in our market. On an annual basis, individual bankers, under the oversight of credit administration, review updated financial information for pass grade commercial loans over a defined threshold to reassess the risk grade. When a loan reaches a set of internally designated criteria, including Substandard or higher, a special assets officer will be involved in the monitoring of the loan on an on-going basis.

The following is a general description of the risk ratings used by the Company:

**Pass**—Credits in this category contain an acceptable amount of risk.

**Special Mention**—Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the loan or of the institution's credit position at some future date. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

**Substandard**—Loans classified as substandard have well-defined weaknesses on a continuing basis and are inadequately protected by the current net worth and paying capacity of the borrower, declining collateral values, or a continuing downturn in their industry which is reducing their profits to below zero and having a significantly negative impact on their cash flow. These loans so classified are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

**Doubtful**—Loans classified as doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full based on currently existing facts, conditions and values, highly questionable and improbable.

**Loss**—Loans classified as loss are to be charged-off or charged-down when payment is acknowledged to be uncertain or when the timing or value of payments cannot be determined. "Loss" is not intended to imply that the loan or some portion of it will never be paid, nor does it in any way imply that there has been a forgiveness of debt.

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

The following table presents risk ratings by category and the gross charge-offs by primary loan type and year of origination or renewal. Generally, current period renewals of credit are re-underwritten at the point of renewal and considered current period originations for purposes of the table below. The following summarizes the amortized cost basis of loans by year of origination/renewal and credit quality indicator by class of loan as of March 31, 2026 and December 31, 2025:

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **December 31, 2025** |
| | **Term Loans Amortized Cost Basis by Origination Year** | **Term Loans Amortized Cost Basis by Origination Year** | **Term Loans Amortized Cost Basis by Origination Year** | **Term Loans Amortized Cost Basis by Origination Year** | **Term Loans Amortized Cost Basis by Origination Year** | **Term Loans Amortized Cost Basis by Origination Year** | **Revolving<br>Loans** | **Revolving Loans<br>Converted to Term Loans** | **Total** | **Total** |
| | **2026** | **2025** | **2024** | **2023** | **2022** | **Prior** | **Revolving<br>Loans** | **Revolving Loans<br>Converted to Term Loans** | **Total** | **Total** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Commercial and industrial |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | $95859 | $346524 | $141096 | $117445 | $86892 | $76134 | $622711 | $34231 | $1520892 | $1438641 |
| &nbsp;&nbsp;Special Mention |  |  | 1167 | 1411 | 48 | 152 | 11 | 7183 | 9972 | 4828 |
| &nbsp;&nbsp;Substandard |  | 1314 | 1708 | 1629 | 7706 | 10166 | 2589 | 7445 | 32557 | 33090 |
| &nbsp;&nbsp;Doubtful |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total commercial and industrial&nbsp;&nbsp;&nbsp;&nbsp;loans | $95859 | $347838 | $143971 | $120485 | $94646 | $86452 | $625311 | $48859 | $1563421 | $1476559 |
| Current period gross charge-offs | $— | $28 | $141 | $50 | $— | $210 | $56 | $268 | $753 |  |
| Commercial real estate&nbsp;&nbsp;&nbsp;&nbsp;(including multi-family residential) |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | $276520 | $628474 | $268451 | $298813 | $1096248 | $943669 | $123891 | $27338 | $3663404 | $3580264 |
| &nbsp;&nbsp;Special Mention |  | 5796 | 121 | 9045 | 24500 | 19782 | 297 |  | 59541 | 76560 |
| &nbsp;&nbsp;Substandard | 10608 | 13463 | 13690 | 11292 | 24622 | 47383 | 145 | 481 | 121684 | 109470 |
| &nbsp;&nbsp;Doubtful |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total commercial real estate&nbsp;&nbsp;&nbsp;&nbsp;(including multi-family<br>&nbsp;&nbsp;&nbsp;&nbsp;residential) loans | $287128 | $647733 | $282262 | $319150 | $1145370 | $1010834 | $124333 | $27819 | $3844629 | $3766294 |
| Current period gross charge-offs | $— | $— | $— | $— | $851 | $— | $— | $— | $851 |  |
| Commercial real estate construction and land development |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | $63531 | $377523 | $151255 | $50730 | $61818 | $39813 | $58408 | $4007 | $807085 | $703735 |
| &nbsp;&nbsp;Special Mention |  | 9642 |  | 551 | 793 | 693 |  |  | 11679 | 12551 |
| &nbsp;&nbsp;Substandard |  | 76 | 566 | 1093 | 312 | 740 |  | 172 | 2959 | 4493 |
| &nbsp;&nbsp;Doubtful |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total commercial real estate construction and land development | $63531 | $387241 | $151821 | $52374 | $62923 | $41246 | $58408 | $4179 | $821723 | $720779 |
| Current period gross charge-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |  |

---

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **December 31, 2025** |
| | **Term Loans Amortized Cost Basis by Origination Year** | **Term Loans Amortized Cost Basis by Origination Year** | **Term Loans Amortized Cost Basis by Origination Year** | **Term Loans Amortized Cost Basis by Origination Year** | **Term Loans Amortized Cost Basis by Origination Year** | **Term Loans Amortized Cost Basis by Origination Year** | **Revolving Loans** | **Revolving Loans<br>Converted to Term Loans** | | |
| | **2026** | **2025** | **2024** | **2023** | **2022** | **Prior** | **Revolving Loans** | **Revolving Loans<br>Converted to Term Loans** |<br>**Total** |<br>**Total** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| 1-4 family residential (including <br>&nbsp;&nbsp;&nbsp;&nbsp;home equity) |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | $33271 | $157791 | $143934 | $170019 | $237472 | $291605 | $77011 | $16959 | $1128062 | $1095589 |
| &nbsp;&nbsp;Special Mention | 227 |  | 360 | 1373 | 1731 | 997 | 157 | 150 | 4995 | 11405 |
| &nbsp;&nbsp;Substandard |  | 1512 | 575 | 2195 | 8781 | 14669 | 3662 | 2985 | 34379 | 29233 |
| &nbsp;&nbsp;Doubtful |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total 1-4 family residential&nbsp;&nbsp;&nbsp;&nbsp;(including home equity) | $33498 | $159303 | $144869 | $173587 | $247984 | $307271 | $80830 | $20094 | $1167436 | $1136227 |
| &nbsp;&nbsp;&nbsp;&nbsp;Current period gross charge-offs | $— | $— | $— | $2 | $— | $— | $— | $— | $2 |  |
| Residential construction |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | $4503 | $78472 | $14629 | $3356 | $— | $— | $— | $— | $100960 | $123828 |
| &nbsp;&nbsp;Special Mention |  | 980 |  |  |  | 377 |  |  | 1357 | 377 |
| &nbsp;&nbsp;Substandard |  |  | 292 |  |  |  |  |  | 292 | 448 |
| &nbsp;&nbsp;Doubtful |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total residential construction | $4503 | $79452 | $14921 | $3356 | $— | $377 | $— | $— | $102609 | $124653 |
| Current period gross charge-offs | $— | $— | $— | $— | $— | $— | $— | $— | $— |  |
| Consumer and other |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | $28203 | $28548 | $6247 | $4802 | $2988 | $1307 | $14752 | $1183 | $88030 | $75979 |
| &nbsp;&nbsp;Special Mention |  |  |  |  |  | 4 |  |  | 4 | 6 |
| &nbsp;&nbsp;Substandard |  | 27 | 34 | 16 | 23 |  |  |  | 100 | 94 |
| &nbsp;&nbsp;Doubtful |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total consumer and other | $28203 | $28575 | $6281 | $4818 | $3011 | $1311 | $14752 | $1183 | $88134 | $76079 |
| Current period gross charge-offs | $— | $— | $— | $5 | $— | $— | $5 | $— | $10 |  |
| Total loans |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Pass | $501887 | $1617332 | $725612 | $645165 | $1485418 | $1352528 | $896773 | $83718 | $7308433 | $7018036 |
| &nbsp;&nbsp;Special Mention | 227 | 16418 | 1648 | 12380 | 27072 | 22005 | 465 | 7333 | 87548 | 105727 |
| &nbsp;&nbsp;Substandard | 10608 | 16392 | 16865 | 16225 | 41444 | 72958 | 6396 | 11083 | 191971 | 176828 |
| &nbsp;&nbsp;Doubtful |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total loans | $512722 | $1650142 | $744125 | $673770 | $1553934 | $1447491 | $903634 | $102134 | $7587952 | $7300591 |
| Current period gross charge-offs | $— | $28 | $141 | $57 | $851 | $210 | $61 | $268 | $1616 |  |

---

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

The following table presents the activity in the allowance for credit losses on loans by portfolio type for the three months ended March 31, 2026 and 2025:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Commercial**<br>**and Industrial** | **Commercial Real**<br>**Estate (Including Multi-family**<br>**Residential)** | **Commercial Real**<br>**Estate Construction and Land**<br>**Development** | **1-4 Family Residential**<br>**(Including**<br>**Home Equity)** | **Residential**<br>**Construction** | **Consumer**<br>**and Other** | **Total** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| &nbsp;&nbsp;**Three Months Ended** | | | | | | | |
| &nbsp;&nbsp;&nbsp;&nbsp;Balance December 31, 2025 | $33182 | $31873 | $13220 | $3214 | $1222 | $918 | $83629 |
| &nbsp;&nbsp;&nbsp;&nbsp;Provision for (reversal of) credit losses on loans | (259) | 1353 | 1999 | 57 | (222) | 232 | 3160 |
| &nbsp;&nbsp;&nbsp;&nbsp;Charge-offs | (753) | (851) |  | (2) |  | (10) | (1616) |
| &nbsp;&nbsp;&nbsp;&nbsp;Recoveries | 240 |  |  | 16 |  | 2 | 258 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net charge-offs | (513) | (851) |  | 14 |  | (8) | (1358) |
| &nbsp;&nbsp;&nbsp;&nbsp;Balance March 31, 2026 | $32410 | $32375 | $15219 | $3285 | $1000 | $1142 | $85431 |
| &nbsp;&nbsp;**Three Months Ended** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Balance December 31, 2024 | $28847 | $29833 | $16383 | $3320 | $1565 | $1110 | $81058 |
| &nbsp;&nbsp;&nbsp;&nbsp;Provision for (reversal of) credit losses on loans | 1166 | 4175 | (2423) | 271 | (169) | (169) | 2851 |
| &nbsp;&nbsp;&nbsp;&nbsp;Charge-offs | (45) |  | (310) | (224) |  | (3) | (582) |
| &nbsp;&nbsp;&nbsp;&nbsp;Recoveries | 416 |  |  |  |  | 3 | 419 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net charge-offs | 371 |  | (310) | (224) |  |  | (163) |
| &nbsp;&nbsp;&nbsp;&nbsp;Balance March 31, 2025 | $30384 | $34008 | $13650 | $3367 | $1396 | $941 | $83746 |

---

**Collateral Dependent Loans**

Collateral dependent loans are secured by real estate assets, accounts receivable, inventory and equipment. For a collateral dependent loan, the Company's evaluation process includes a valuation by appraisal or other collateral analysis adjusted for selling costs, when appropriate. This valuation is compared to the remaining outstanding principal balance of the loan and any loss is included in the allowance for credit losses on loans as a specific allocation. The allowance for credit losses on collateral dependent loans was $6.4 million and $7.0 million, as of March 31, 2026 and December 31, 2025, respectively.

The following tables present the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses as of March 31, 2026 and December 31, 2025:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
| | **Real Estate** | **Business Assets** | **Other** | **Total** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Commercial and industrial | $— | $5066 | $— | $5066 |
| Real estate: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate (including multi-family residential) | 31883 |  |  | 31883 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate construction and land development | 905 |  |  | 905 |
| &nbsp;&nbsp;&nbsp;&nbsp;1-4 family residential (including home equity) | 13567 |  |  | 13567 |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential construction | 292 |  |  | 292 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total | $46647 | $5066 | $— | $51713 |

---

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
| | **Real Estate** | **Business Assets** | **Other** | **Total** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Commercial and industrial | $— | $4390 | $— | $4390 |
| Real estate: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate (including multi-family residential) | 28194 |  |  | 28194 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate construction and land development | 1838 |  |  | 1838 |
| &nbsp;&nbsp;&nbsp;&nbsp;1-4 family residential (including home equity) | 10944 |  |  | 10944 |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential construction | 448 |  |  | 448 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $41424 | $4390 | $— | $45814 |

---

**Nonaccrual Loans**

The following tables present additional information regarding nonaccrual loans. No interest income was recognized on nonaccrual loans as of March 31, 2026 and December 31, 2025:

---

| | | | |
|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
| | **Nonaccrual Loans with No Related Allowance** | **Nonaccrual Loans with Related Allowance** | **Total Nonaccrual Loans** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Commercial and industrial | $3144 | $7344 | $10488 |
| Real estate: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate (including multi-family residential) | 16868 | 16071 | 32939 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate construction and land development | 905 |  | 905 |
| &nbsp;&nbsp;&nbsp;&nbsp;1-4 family residential (including home equity) | 9426 | 6494 | 15920 |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential construction | 292 |  | 292 |
| Consumer and other |  | 46 | 46 |
| &nbsp;&nbsp;&nbsp;Total | $30635 | $29955 | $60590 |

---

---

| | | | |
|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
| | **Nonaccrual Loans with No Related Allowance** | **Nonaccrual Loans with Related Allowance** | **Total Nonaccrual Loans** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Commercial and industrial | $2291 | $5325 | $7616 |
| Real estate: |  |  |  |
| &nbsp;&nbsp;&nbsp;Commercial real estate (including multi-family residential) | 15489 | 13782 | 29271 |
| &nbsp;&nbsp;&nbsp;Commercial real estate construction and land development | 1838 |  | 1838 |
| &nbsp;&nbsp;&nbsp;1-4 family residential (including home equity) | 8170 | 5163 | 13333 |
| &nbsp;&nbsp;&nbsp;Residential construction | 448 |  | 448 |
| Consumer and other |  | 42 | 42 |
| &nbsp;&nbsp;&nbsp;Total | $28236 | $24312 | $52548 |

---

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

**Loan Modifications** 

Loan modifications are reported if concessions have been granted to borrowers that are experiencing financial difficulty. The percentage of loans modified comprised less than 1% of their respective classes of loan portfolios at March 31, 2026. The following table presents information regarding the period end balance of loans that were modified to borrowers experiencing financial difficulty during the three months ended March 31, 2026 and 2025. As of March 31, 2026, the Company had no commitments to lend additional funds to these borrowers.

The following tables present information regarding loans that were modified due to the borrowers experiencing financial difficulty during the three months ended March 31, 2026 and 2025:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** |
| | **Interest Rate Reduction** | **Term Extension** | **Payment Delay** | **Principal Forgiveness** | **Combination Term Extension and Payment Delay** | **Combination Term Extension and Interest Rate Reduction** | **Total** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Real estate: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate (including multi-family residential) | $— | $10842 | $— | $— | $— | $— | $10842 |
| &nbsp;&nbsp;&nbsp;&nbsp;1-4 family residential (including home equity) |  | 227 | 1642 |  |  |  | 1869 |
| &nbsp;&nbsp;&nbsp;Total | $— | $11069 | $1642 | $— | $— | $— | $12711 |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** |
| | **Interest Rate Reduction** | **Term Extension** | **Payment Delay** | **Principal Forgiveness** | **Combination Term Extension and Payment Delay** | **Combination Term Extension and Interest Rate Reduction** | **Total** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Commercial and industrial | $— | $1586 | $— | $— | $— | $— | $1586 |
| Real estate: |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate (including multi-family residential) |  | 904 |  |  |  |  | 904 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate construction and land development |  | 49 |  |  | 1428 |  | 1477 |
| &nbsp;&nbsp;&nbsp;Total | $— | $2539 | $— | $— | $1428 | $— | $3967 |

---

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

The following tables present, by loan portfolio, the financial effect of the Company's loan modifications for the periods indicated:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** |
| | **Weighted-Average Term Extension** | **Weighted-Average Interest Rate Reduction** | **Weighted-Average Term Extension** | **Weighted-Average Interest Rate Reduction** |
| | **(months)** | | **(months)** | |
| Commercial and industrial |  | —% | 15 | —% |
| Real estate: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate (including multi-family residential) | 6 | —% | 12 | —% |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate construction and land development |  | —% | 3 | —% |
| &nbsp;&nbsp;&nbsp;&nbsp;1-4 family residential (including home equity) | 6 | —% |  | —% |

---

The following table presents modified loans that had a payment default, determined as 90 or more days past due, that were modified due to the borrowers experiencing financial difficulty during the periods indicated:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Twelve Months Ended March 31, 2026** | **Twelve Months Ended March 31, 2026** | **Twelve Months Ended March 31, 2026** | **Twelve Months Ended March 31, 2025** | **Twelve Months Ended March 31, 2025** | **Twelve Months Ended March 31, 2025** |
| | **Term Extension** | **Payment Delay** | **Combination** | **Term Extension** | **Payment Delay** | **Combination** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Commercial and industrial | $375 | $— | $— | $— | $— | $— |
| Real estate: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate (including multi-family residential) | 154 |  |  | 904 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate construction and land development | 172 |  |  | 290 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;1-4 family residential (including home equity) |  | 1641 |  | 1077 |  |  |
| &nbsp;&nbsp;&nbsp;Total | $701 | $1641 | $— | $2271 | $— | $— |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5. LEASES**

At March 31, 2026, the Company had 30 operating leases consisting of branch locations, office facilities and equipment. The lease right-of-use asset is classified within premises and equipment and the lease liability is included in other liabilities on the balance sheet. The Company also owns certain office facilities which it leases to outside parties under operating lessor leases; however, such leases are not significant. There were no sale and leaseback transactions, leveraged leases or lease transactions with related parties during the three months ended March 31, 2026 and 2025.

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

Supplemental lease information at the dates indicated was as follows:

---

| | | |
|:---|:---|:---|
| | **March 31, 2026** | **December 31, 2025** |
| | **(Dollars in thousands)** | **(Dollars in thousands)** |
| **Balance Sheet:** | | |
| &nbsp;&nbsp;Operating lease right-of-use asset classified as premises and equipment | $14342 | $15327 |
| &nbsp;&nbsp;Operating lease liability classified as other liabilities | $15511 | $16308 |
| &nbsp;&nbsp;Weighted-average lease term, in years | 6.64 | 6.74 |
| &nbsp;&nbsp;Weighted-average discount rate | 4.37% | 4.35% |

---

Lease costs for the dates indicated were as follows:

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| | **(In thousands)** | **(In thousands)** |
| **Income Statement:** |  |  |
| Operating lease cost | $1706 | $1763 |
| Short-term lease cost | 7 | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total operating lease costs | $1713 | $1769 |

---

The following table summarizes the contractual maturity of the Company's lease liabilities as of the dates indicated below:

---

| | | |
|:---|:---|:---|
| | **March 31, 2026** | **December 31, 2025** |
| | **(In thousands)** | **(In thousands)** |
| **Lease payments due:** | | |
| &nbsp;&nbsp; Within one year | $3133 | $4095 |
| &nbsp;&nbsp; After one but within two years | 3917 | 3917 |
| &nbsp;&nbsp; After two but within three years | 3756 | 3756 |
| &nbsp;&nbsp; After three but within four years | 2000 | 2000 |
| &nbsp;&nbsp; After four but within five years | 1030 | 1030 |
| &nbsp;&nbsp; After five years | 4409 | 4410 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total lease payments | 18245 | 19208 |
| Less: discount on cash flows | (2734) | (2900) |
| &nbsp;&nbsp;&nbsp;&nbsp; Total lease liability | $15511 | $16308 |

---

**6. FAIR VALUE**

The Company uses fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Fair value represents the estimated exchange price that would be received from selling an asset or paid to transfer a liability, otherwise known as an "exit price," in the principal or most advantageous market available to the entity in an orderly transaction between market participants on the measurement date.

**Fair Value Hierarchy**

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company groups financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 1—Quoted prices for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 2—Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Level 3—Significant unobservable inputs that reflect management's judgment and assumptions that market participants would use in pricing an asset or liability that are supported by little or no market activity.

In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and our creditworthiness, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over time. Our valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. While management believes our valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. Furthermore, the reported fair value amounts have not been comprehensively revalued since the presentation dates, and therefore, estimates of fair value after the balance sheet date may differ significantly from the amounts presented herein. A more detailed description of the valuation methodologies used for certain assets and liabilities measured at fair value is set forth below.

The carrying amounts and estimated fair values of financial instruments that are reported on the balance sheet were as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
| | **Carrying<br>Amount** | **Estimated Fair Value** | **Estimated Fair Value** | **Estimated Fair Value** | **Estimated Fair Value** |
| | **Carrying<br>Amount** | **Level 1** | **Level 2** | **Level 3** | **Total** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Financial assets |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $549570 | $549570 | $— | $— | $549570 |
| &nbsp;&nbsp;&nbsp;&nbsp;Available for sale securities | 1864710 |  | 1864710 |  | 1864710 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans held for investment, net of allowance | 7502521 |  |  | 7471807 | 7471807 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued interest receivable | 36589 | 499 | 7687 | 28403 | 36589 |
| Financial liabilities |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Deposits | $8982010 | $— | $8979347 | $— | $8979347 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued interest payable | 5240 |  | 5240 |  | 5240 |
| &nbsp;&nbsp;&nbsp;&nbsp;Borrowed funds | 135000 |  | 135000 |  | 135000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Subordinated debt | 40256 |  | 40239 |  | 40239 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
| | **Carrying<br>Amount** | **Estimated Fair Value** | **Estimated Fair Value** | **Estimated Fair Value** | **Estimated Fair Value** |
| | **Carrying<br>Amount** | **Level 1** | **Level 2** | **Level 3** | **Total** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Financial assets |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $419453 | $419453 | $— | $— | $419453 |
| &nbsp;&nbsp;&nbsp;&nbsp;Available for sale securities | 2198459 |  | 2198459 |  | 2198459 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans held for investment, net of allowance | 7216962 |  |  | 7203747 | 7203747 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued interest receivable | 35869 | 294 | 7950 | 27625 | 35869 |
| Financial liabilities |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Deposits | $9021466 | $— | $9019219 | $— | $9019219 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued interest payable | 5508 |  | 5508 |  | 5508 |
| &nbsp;&nbsp;&nbsp;&nbsp;Subordinated debt | 40226 |  | 40473 |  | 40473 |

---

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

The following tables present fair values for assets and liabilities measured on a recurring basis:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
| | **Level 1** | **Level 2** | **Level 3** | **Total** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Financial assets |  |  |  |  |
| Available for sale securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;U.S. government and agency securities | $— | $87645 | $— | $87645 |
| &nbsp;&nbsp;&nbsp;&nbsp;Municipal securities |  | 193619 |  | 193619 |
| &nbsp;&nbsp;&nbsp;&nbsp;Agency mortgage-backed pass-through securities |  | 805887 |  | 805887 |
| &nbsp;&nbsp;&nbsp;&nbsp;Agency collateralized mortgage obligations |  | 673985 |  | 673985 |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate bonds and other |  | 103574 |  | 103574 |
| Interest rate swaps and caps |  | 4114 |  | 4114 |
| Credit risk participation agreements |  |  | 6 | 6 |
| &nbsp;&nbsp;&nbsp;Total fair value of financial assets | $— | $1868824 | $6 | $1868830 |
| Financial liabilities |  |  |  |  |
| Interest rate swaps and caps | $— | $4114 | $— | $4114 |
| &nbsp;&nbsp;&nbsp;Total fair value of financial liabilities | $— | $4114 | $— | $4114 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
| | **Level 1** | **Level 2** | **Level 3** | **Total** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Financial assets |  |  |  |  |
| Available for sale securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;U.S. government and agency securities | $— | $392475 | $— | $392475 |
| &nbsp;&nbsp;&nbsp;&nbsp;Municipal securities |  | 196201 |  | 196201 |
| &nbsp;&nbsp;&nbsp;&nbsp;Agency mortgage-backed pass-through securities |  | 807986 |  | 807986 |
| &nbsp;&nbsp;&nbsp;&nbsp;Agency collateralized mortgage obligations |  | 697065 |  | 697065 |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate bonds and other |  | 104732 |  | 104732 |
| Interest rate swaps and caps |  | 4252 |  | 4252 |
| Credit risk participation agreements |  |  | 6 | 6 |
| &nbsp;&nbsp;&nbsp;Total fair value of financial assets | $— | $2202711 | $6 | $2202717 |
| Financial liabilities |  |  |  |  |
| Interest rate swaps and caps | $— | $4252 | $— | $4252 |
| &nbsp;&nbsp;&nbsp;Total fair value of financial liabilities | $— | $4252 | $— | $4252 |

---

There were no transfers between levels during the three months ended March 31, 2026 or 2025.

Certain assets, including purchase credit deteriorated and individually evaluated loans with allowances for credit losses and foreclosed assets and branch assets held for sale, are measured at fair value on a nonrecurring basis. These assets are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances such as impairment. There were no liabilities measured at fair value on a nonrecurring basis at March 31, 2026 and December 31, 2025.

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

Assets measured on a nonrecurring basis for the periods noted are summarized in the table below:

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| | | | |
|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
| | **Level 1** | **Level 2** | **Level 3** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Loans: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial and industrial | $— | $— | $11242 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate construction and land development |  |  | 12505 |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential construction |  |  | 5139 |
| Foreclosed assets |  |  | 9454 |
| &nbsp;&nbsp;&nbsp;Total | $— | $— | $38340 |

---

---

| | | | |
|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
| | **Level 1** | **Level 2** | **Level 3** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Loans: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial and industrial | $— | $— | $10528 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate construction and land development |  |  | 10377 |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer and other |  |  | 6203 |
| Foreclosed assets |  |  | 7492 |
| &nbsp;&nbsp;&nbsp;Total | $— | $— | $34600 |

---

**7. DEPOSITS**

Time deposits that met or exceeded the Federal Deposit Insurance Corporation ("FDIC") insurance limit of $250 thousand at March 31, 2026 and December 31, 2025 were $629.8 million and $638.0 million, respectively.

Scheduled maturities of time deposits as of March 31, 2026 were as follows (in thousands):

---

| | |
|:---|:---|
| 2026 | $873147 |
| 2027 | 100607 |
| 2028 | 10092 |
| 2029 | 6186 |
| Thereafter | 12459 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $1002491 |

---

As of March 31, 2026, the Company had brokered deposits of $4 thousand and $12.5 million, or 0.1% of total deposits, as of December 31, 2025. Also included within deposits are public funds which are deposits from governments and municipalities that are subject to seasonality and are fully collateralized by either securities pledged or Federal Home Loan Bank of Dallas ("FHLB") letters of credit. Public funds totaled $1.30 billion, or 14.5% of total deposits, as of March 31, 2026 compared to $1.22 billion, or 13.6% of total deposits, as of December 31, 2025.

**8. DERIVATIVE INSTRUMENTS**

The Company has outstanding interest rate swap contracts with certain customers and equal and offsetting interest rate swaps with other financial institutions entered into at the same time. These interest rate swap contracts are not designated as hedging instruments for mitigating interest rate risk. The objective of the transactions is to allow customers to effectively convert a variable rate loan to a fixed rate.

In connection with each swap transaction, the Company agreed to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. At the same time, the

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

Company agreed to pay a third-party financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. Because the Company acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts are designed to offset each other and do not significantly impact the Company's operating results except in certain situations where there is a significant deterioration in the customer's credit worthiness or that of the counterparties. At March 31, 2026, management determined there was no such deterioration.

At both March 31, 2026 and December 31, 2025, the Company had ten interest rate swap agreements outstanding with borrowers and financial institutions. Changes in the net fair value are recognized in other noninterest income. Fair value amounts are included in other assets and other liabilities.

At both March 31, 2026 and December 31, 2025, the Company had one outstanding interest cap contract with a borrower and a financial institution that was entered into at the same time. This interest rate cap contract is not designated as a hedging instruments for mitigating interest rate risk. The objective of the transactions is to allow customers to effectively cap the interest rate on a variable rate loan.

At both March 31, 2026 and December 31, 2025, the Company had three credit risk participation agreements with another financial institution that are associated with interest rate swaps related to loans for which the Company is the lead agent bank and the other financial institution provides credit protection to the Company should the borrower fail to perform under the terms of the interest rate swap agreements. The fair value of the agreements is determined based on the market value of the underlying interest rate swaps adjusted for credit spreads and recovery rates.

Derivative instruments not designated as hedges as of the periods indicated below were as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | **March 31, 2026** | **March 31, 2026** | **December 31, 2025** | **December 31, 2025** |
| |<br>**Classification** | **Notional Amounts** | **Fair Value** | **Notional Amounts** | **Fair Value** |
| | | (In thousands) | (In thousands) | (In thousands) | (In thousands) |
| Financial institution counterparties: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest rate swaps | Other assets | $64456 | $3774 | $65290 | $3684 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest rate swaps | Other liabilities | 39357 | (186) | 39357 | (421) |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest rate caps | Other assets | 2800 | 154 | 2800 | 147 |
| Customer counterparties: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest rate swaps | Other liabilities | $64456 | $(3774) | $65290 | $(3684) |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest rate swaps | Other assets | 39357 | 186 | 39357 | 421 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest rate caps | Other liabilities | 2800 | (154) | 2800 | (147) |
| Credit risk participation agreements: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Financial institutions | Other assets | 18846 | 6 | 19064 | 6 |

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

The weighted-average rates paid and received for interest rate swaps outstanding at March 31, 2026 and December 31, 2025 were as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **December 31, 2025** | **December 31, 2025** |
| | **Weighted-Average** | **Weighted-Average** | **Weighted-Average** | **Weighted-Average** |
| | **Interest Rate**<br>**Received** | **Interest Rate**<br>**Paid** | **Interest Rate**<br>**Received** | **Interest Rate**<br>**Paid** |
| Financial institution counterparties | 5.90% | 5.05% | 6.01% | 5.04% |
| Customer counterparties | 5.05% | 5.90% | 5.04% | 6.01% |

---

**9. BORROWINGS AND BORROWING CAPACITY**

The Company has an available line of credit with the FHLB, which allows the Company to borrow on a collateralized basis. FHLB advances are used to manage liquidity as needed. The advances are secured by blanket liens on certain loans. Maturing advances are replaced by drawing on available cash, making additional borrowings or through increased customer deposits. At March 31, 2026, the Company had total borrowing capacity of $3.17 billion, of which $1.81 billion was available under this agreement, $1.23 billion was outstanding pursuant to FHLB letters of credit and $135.0 million was outstanding pursuant to FHLB advances. The FHLB advances outstanding at March 31, 2026 have a weighted-average rate of 3.77% and matured on April 1, 2026.

At March 31, 2026, the Company had FHLB letters of credit pledged as collateral for public and other deposits of state and local government agencies which expire in the following periods (in thousands):

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| | |
|:---|:---|
| 2026 | $294550 |
| 2027 | 752030 |
| 2028 | 46000 |
| 2029 | 84000 |
| Thereafter | 55000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $1231580 |

---

On December 13, 2024, the Company renewed its loan agreement with another financial institution (the "Loan Agreement") that provides for a $75.0 million revolving line of credit. At March 31, 2026, there were no outstanding borrowings on this line of credit and no draws were taken on this line of credit during the three months ended March 31, 2026. Interest accrues on outstanding borrowings at a per annum rate equal to 3-month SOFR plus 2.75%, calculated in accordance with the terms of the revolving promissory note and payable quarterly through the first 24 months. The entire outstanding balance and unpaid interest is payable in full on December 13, 2033, the maturity date. The Company may prepay the principal amount of the line of credit without premium or penalty. The obligations of the Company under the Loan Agreement are secured by a pledge of all of the issued and outstanding shares of capital stock of the Bank.

Covenants made under the Loan Agreement include, among other things, while there are obligations outstanding under Loan Agreement, the Company shall maintain a cash flow to debt service (as defined in the Loan Agreement) of not less than 1.25, the Bank's Texas Ratio (as defined in the Loan Agreement) not to exceed 20.0%, the Bank shall maintain a Tier 1 Leverage Ratio (as defined under the Loan Agreement) of at least 8.0% and includes restrictions on the ability of the Company and its subsidiaries to incur certain additional debt. As of March 31, 2026, the Company believes it was in compliance with all such debt covenants and had not been made aware of any noncompliance by the lender.

**10. SUBORDINATED DEBT**

***Junior Subordinated Debentures***

In connection with the acquisition of F&M Bancshares, Inc. in 2015, the Company assumed Farmers & Merchants Capital Trust II and Farmers & Merchants Capital Trust III. Each of the trusts is a capital or statutory business trust organized for the sole purpose of issuing trust securities and investing the proceeds in the Company's junior subordinated debentures. The preferred trust securities of each trust represent preferred beneficial interests in the assets of the respective trusts and are subject to mandatory

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

redemption upon payment of the junior subordinated debentures held by the trust. The common securities of each trust are wholly owned by the Company. Each trust's ability to pay amounts due on the trust preferred securities is solely dependent upon Stellar making payment on the related junior subordinated debentures. The debentures, which are the only assets of each trust, are subordinate and junior in right of payment to all of the Company's present and future senior indebtedness. The Company has fully and unconditionally guaranteed each trust's obligations under the trust securities issued by each trust to the extent not paid or made by such trust, provided such trust has funds available for such obligations. The trust preferred securities bear a floating rate of interest equal to 3-Month SOFR plus a spread adjustment. The junior subordinated debentures are included in Tier 1 capital under current regulatory guidelines and interpretations. Under the provisions of each issue of the debentures, the Company has the right to defer payment of interest on the debentures at any time, or from time to time, for periods not exceeding five years. If interest payments on either issue of the debentures are deferred, the distributions on the applicable trust preferred securities and common securities will also be deferred.

A summary of pertinent information related to the Company's junior subordinated debentures outstanding at March 31, 2026 is set forth in the table below:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Description** | **Issuance Date** | **Trust**<br>**Preferred**<br>**Securities**<br>**Outstanding** | **Junior**<br>**Subordinated**<br>**Debt Owed**<br>**to Trusts** | **Maturity Date**<sup>(1)</sup> |
| **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** |
| Farmers & Merchants Capital Trust II | November 13, 2003 | $7500 | $7732 | November 8, 2033 |
| Farmers & Merchants Capital Trust III | June 30, 2005 | 3500 | 3609 | July 7, 2035 |
|  |  |  | $11341 |  |

---

(1) All debentures were callable as of March 31, 2026.

***Subordinated Notes***

In December 2017, the Bank issued $40.0 million aggregate principal amount of Fixed-to-Floating Rate Subordinated Notes (the "Bank Notes") due December 15, 2027 and bore a floating rate of interest equal to 3-Month SOFR plus 3.03% spread adjustment. In December 2024, the Bank redeemed the Bank Notes at a redemption price equal to 100% of the principal amount of Bank Notes plus accrued and unpaid interest.

In September 2019, the Company issued $60.0 million aggregate principal amount of Fixed-to-Floating Rate Subordinated Notes (the "Company Notes") due October 1, 2029. As of March 31, 2026, the Company Notes bore interest at a floating rate equal to 3-Month SOFR plus 3.13% and a spread adjustment for each quarterly interest period, payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each year. On October 1, 2025, the Company redeemed $30.0 million of the Company Notes. Any future redemptions will be at a redemption price equal to 100% of the principal amount of Company Notes being redeemed, plus accrued and unpaid interest, and will be subject to, and require, prior regulatory approval. The Company Notes are not subject to redemption at the option of the holders. On April 1, 2026, the Company redeemed all outstanding Company Notes. See Note 17 - Subsequent Events.

**11. INCOME TAXES**

The amount of the Company's income tax expense is influenced by the amount of pre-tax income, tax-exempt income and other non-deductible items.

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| | | |
|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** |
| | **March 31, 2026** | **March 31, 2025** |
| | **(Dollars in thousands)** | **(Dollars in thousands)** |
| Income tax expense | $6414 | $6263 |
| Effective income tax rate | 19.2% | 20.2% |

---

Interest and penalties related to tax positions are recognized in the period in which they begin accruing or when the entity claims the position that does not meet the minimum statutory thresholds. The Company does not have any material uncertain tax positions and does not have any interest or penalties recorded in the income statement for the three months ended March 31, 2026 and 2025.

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

**12. STOCK-BASED COMPENSATION**

During 2025, the Company increased the maximum shares authorized to be issued under the 2022 Omnibus Incentive Plan (the "2022 Plan") to 3,100,000 shares of common stock. All restricted stock and performance share units outstanding at March 31, 2026 were issued under the 2022 Plan. At March 31, 2026, there were 1,553,287 shares reserved and available for issuance under the 2022 Plan.

The Company accounts for stock-based employee compensation plans using the fair value-based method of accounting. The Company recognized total stock-based compensation expense of $2.0 million for the both of the three months ended March 31, 2026 and 2025.

***Stock Options***

Stock options outstanding at March 31, 2026 were issued under equity compensation plans that are no longer active. No additional shares may be issued under these compensation plans. Stock option activity during the three months ended March 31, 2026 was as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Number of <br>Options** | **Weighted-<br>Average<br>Exercise<br>Price** | **Weighted-<br>Average<br>Remaining<br>Contractual Term** | **Aggregate<br>Intrinsic<br>Value** |
| | **(In thousands)** | | **(In years)** | **(In thousands)** |
| Options outstanding, January 1, 2026 | 72 | $22.10 | 1.55 | $634 |
| &nbsp;&nbsp;&nbsp;&nbsp;Options granted |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Options exercised | (15) | 23.48 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Options forfeited |  |  |  |  |
| Options outstanding, March 31, 2026 | 57 | $21.73 | 1.27 | $845 |
| Options vested and exercisable, March 31, 2026 | 57 | $21.73 | 1.27 | $845 |

---

***Restricted Stock Awards***

The fair value of the Company's restricted stock awards is estimated based on the market value of the Company's common stock at the date of grant, which is the closing price of the Company's common stock on the day before the grant date. The shares of restricted stock granted generally vest over a period of two or three years from the date of grant and the Company accounts for shares of restricted stock by recording the fair value of the grant on the award date as compensation expense over the vesting period. Restricted stock awards are non-transferable and subject to forfeiture until the restricted stock awards vest and any dividends with respect to the restricted stock awards are subject to the same restrictions, including the risk of forfeiture.

Nonvested shares of restricted stock activity during the three months ended March 31, 2026 was as follows:

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| | | |
|:---|:---|:---|
| | **Number of<br>Shares** | **Weighted-<br>Average Grant<br>Date Fair Value** |
| | **(In thousands)** | |
| Nonvested share awards outstanding, January 1, 2026 | 460 | $26.63 |
| &nbsp;&nbsp;&nbsp;&nbsp;Share awards granted | 195 | 37.66 |
| &nbsp;&nbsp;&nbsp;&nbsp;Share awards vested | (193) | 26.07 |
| &nbsp;&nbsp;&nbsp;&nbsp;Unvested share awards forfeited or cancelled | (9) | 27.34 |
| Nonvested share awards outstanding, March 31, 2026 | 453 | $31.59 |

---

As of March 31, 2026, there was $12.9 million of unrecognized compensation expense related to restricted stock awards which is expected to be recognized over a weighted-average period of 2.34 years.

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

***Performance Share Units (***"***PSUs***"***) and Performance Share Awards (***"***PSAs***"***)***

The Company's PSUs and PSAs are earned subject to certain performance goals being met after a specified performance period and are settled in shares of Company common stock. There were 53,088 PSUs awarded during the three months ended March 31, 2026, which were granted with a three-year performance period and will vest in March 2029. The grant date fair value of the PSUs and PSAs is based on the probable outcome of the applicable performance conditions and is calculated at target based on a combination of the closing market price of our common stock on the grant date and a Monte Carlo simulated fair value in accordance with accounting standards codification ("ASC") 718. At March 31, 2026, there was $4.0 million of unrecognized compensation expense related to the PSUs, which is expected to be recognized over a weighted-average period of 2.23 years.

**13. OFF-BALANCE SHEET ARRANGEMENTS, COMMITMENTS AND CONTINGENCIES**

In the normal course of business, the Company enters into various transactions, which, in accordance with accounting principles generally accepted in the United States are not included in the Company's consolidated balance sheets. The Company enters into these transactions to meet the financing needs of its customers. These transactions include commitments to extend credit and standby and commercial letters of credit, which involve to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. The Company uses the same credit policies in making commitments and conditional obligations as it does for on balance sheet instruments.

The contractual amounts of financial instruments with off-balance sheet risk are as follows:

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| | | |
|:---|:---|:---|
| | **March 31, 2026** | **December 31, 2025** |
| | **(In thousands)** | **(In thousands)** |
| Commitments to extend credit | $2064820 | $2102646 |
| Standby letters of credit | 186179 | 64616 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $2250999 | $2167262 |

---

&nbsp;&nbsp;&nbsp;&nbsp;At March 31, 2026 and December 31, 2025, the Company had FHLB letters of credit in the amount of $1.23 billion and $2.17 billion, respectively, pledged as collateral for public and other deposits of state and local government agencies. For more information on FHLB borrowings, see Note 9 – Borrowings and Borrowing Capacity.

***Commitments to Extend Credit***

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being fully drawn upon, the total commitment amounts disclosed do not necessarily represent future cash funding requirements. The Company evaluates each customer's creditworthiness on a case-by-case basis. The Company minimizes its exposure to loss under these commitments by subjecting them to credit approval and monitoring procedures. Management assesses the credit risk associated with certain commitments to extend credit in determining the level of the allowance for credit losses. The amount and type of collateral, if deemed necessary by the Company upon extension of credit, is based on management's credit evaluation of the customer.

***Standby Letters of Credit***

Standby letters of credit are written conditional commitments issued by the Company to guarantee the performance of a customer to a third party. In the event of nonperformance by the customer, the Company has the rights to the underlying collateral. The credit risk to the Company in issuing letters of credit is substantially similar to that involved in extending loan facilities to its customers. The Company's policy for obtaining collateral, and the nature of such collateral, is substantially similar to that involved in making commitments to extend credit.

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

***Allowance for Credit Losses on Unfunded Commitments***

In addition to the allowance for credit losses on loans, the Company has established an allowance for credit losses on unfunded commitments to extend credit, which is classified in other liabilities and adjusted through a provision for (or reversal of) credit loss charged to expense. The allowance represents estimates of expected credit losses over the contractual period in which there is exposure to credit risk via a contractual obligation to extend credit unless that obligation is unconditionally cancellable by the Company. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on the commitments expected to be funded. The estimate of commitments expected to fund is based on historical analysis looking at utilization rates. The expected credit loss rates applied to the commitments expected to fund are based on the general valuation allowance utilized for outstanding balances with the same underlying assumptions and drivers. The allowance for credit losses on unfunded commitments as of March 31, 2026 and December 31, 2025 was $15.5 million and $16.2 million, respectively. This reserve is maintained at a level management believes to be sufficient to absorb losses arising from unfunded loan commitments. The Company recorded a provision on unfunded commitments of $663 thousand during the three months ended March 31, 2026 compared to a provision on unfunded commitments of $781 thousand for the three months ended March 31, 2025.

***Litigation***

The Company is subject to potential and asserted claims, inquiries, investigations and lawsuits which arise in the ordinary course of business. The process of resolving matters through litigation or other means is inherently uncertain, and it is possible that an unfavorable resolution of such matters will adversely affect the financial position or results of operations of the Company. The Company's regular practice is to expense legal fees as services are rendered in connection with legal matters, and to accrue for liabilities when payment is estimable and probable.

**14. REGULATORY CAPITAL MATTERS**

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Capital adequacy guidelines, and for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities and certain off balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other factors. The Company and the Bank's Common Equity Tier 1 capital includes common stock and related paid-in capital and retained earnings. In connection with the adoption of the Basel III Capital Rules, we elected to opt-out of the requirement to include accumulated other comprehensive income in Common Equity Tier 1.

Failure to meet minimum capital requirements can initiate actions by regulators that, if undertaken, could have a direct material effect on the Company's consolidated financial statements. Management believes as of March 31, 2026 and December 31, 2025, the Company and the Bank met all capital adequacy requirements to which they were then subject.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If less than well capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At March 31, 2026 and December 31, 2025, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution's category.

The Bank's capital ratios as of March 31, 2026 exceed the minimum levels necessary to be considered "well-capitalized" under the prompt corrective action regulatory framework.

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

The following is a summary of the Company's and the Bank's actual and required capital ratios as of March 31, 2026 and December 31, 2025:

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Actual** | **Actual** | **Minimum Required for Capital**<br>**Adequacy Purposes** | **Minimum Required for Capital**<br>**Adequacy Purposes** | **Minimum Required Plus**<br>**Capital Conservation Buffer** | **Minimum Required Plus**<br>**Capital Conservation Buffer** | **To Be Categorized As Well-Capitalized Under<br>Prompt Corrective Action Provisions** | **To Be Categorized As Well-Capitalized Under<br>Prompt Corrective Action Provisions** |
| | **Amount** | **Ratio** | **Amount** | **Ratio** | **Amount** | **Ratio** | **Amount** | **Ratio** |
| | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** |
| **STELLAR BANCORP, INC. (Consolidated)** | | | | | | | | |
| **March 31, 2026** | | | | | | | | |
| &nbsp;&nbsp;&nbsp;Total Capital (to risk-weighted assets) | $1322183 | 15.48% | $683464 | 8.00% | $897046 | 10.50% | N/A | N/A |
| &nbsp;&nbsp;&nbsp;Common Equity Tier 1 Capital (to <br>&nbsp;&nbsp;&nbsp;&nbsp;risk-weighted assets) | 1193324 | 13.97% | 384448 | 4.50% | 598031 | 7.00% | N/A | N/A |
| &nbsp;&nbsp;&nbsp;Tier 1 Capital (to risk-weighted assets) | 1203580 | 14.09% | 512598 | 6.00% | 726180 | 8.50% | N/A | N/A |
| &nbsp;&nbsp;&nbsp;Tier 1 Leverage (to average tangible assets) | 1203580 | 11.29% | 426520 | 4.00% | 426520 | 4.00% | N/A | N/A |
| **December 31, 2025** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Total Capital (to risk-weighted assets) | $1301075 | 15.73% | $661851 | 8.00% | $868679 | 10.50% | N/A | N/A |
| &nbsp;&nbsp;&nbsp;Common Equity Tier 1 Capital (to <br>&nbsp;&nbsp;&nbsp;&nbsp;risk-weighted assets) | 1173283 | 14.18% | 372291 | 4.50% | 579119 | 7.00% | N/A | N/A |
| &nbsp;&nbsp;&nbsp;Tier 1 Capital (to risk-weighted assets) | 1183509 | 14.31% | 496388 | 6.00% | 703216 | 8.50% | N/A | N/A |
| &nbsp;&nbsp;&nbsp;Tier 1 Leverage (to average tangible assets) | 1183509 | 11.52% | 410785 | 4.00% | 410785 | 4.00% | N/A | N/A |
| **STELLAR BANK** |  |  |  |  |  |  |  |  |
| **March 31, 2026** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Total Capital (to risk-weighted assets) | $1256576 | 14.74% | $682062 | 8.00% | $895206 | 10.50% | $852577 | 10.00% |
| &nbsp;&nbsp;&nbsp;Common Equity Tier 1 Capital (to <br>&nbsp;&nbsp;&nbsp;&nbsp;risk-weighted assets) | 1155974 | 13.56% | 383660 | 4.50% | 596804 | 7.00% | 554175 | 6.50% |
| &nbsp;&nbsp;&nbsp;Tier 1 Capital (to risk-weighted assets) | 1155974 | 13.56% | 511546 | 6.00% | 724691 | 8.50% | 682062 | 8.00% |
| &nbsp;&nbsp;&nbsp;Tier 1 Leverage (to average tangible assets) | 1155974 | 10.86% | 425814 | 4.00% | 425814 | 4.00% | 532267 | 5.00% |
| **December 31, 2025** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Total Capital (to risk-weighted assets) | $1241007 | 15.03% | $660452 | 8.00% | $866844 | 10.50% | $825566 | 10.00% |
| &nbsp;&nbsp;&nbsp;Common Equity Tier 1 Capital (to <br>&nbsp;&nbsp;&nbsp;&nbsp;risk-weighted assets) | 1141442 | 13.83% | 371504 | 4.50% | 577896 | 7.00% | 536618 | 6.50% |
| &nbsp;&nbsp;&nbsp;Tier 1 Capital (to risk-weighted assets) | 1141442 | 13.83% | 495339 | 6.00% | 701731 | 8.50% | 660452 | 8.00% |
| &nbsp;&nbsp;&nbsp;Tier 1 Leverage (to average tangible assets) | 1141442 | 11.14% | 410038 | 4.00% | 410038 | 4.00% | 512548 | 5.00% |

---

***Dividend Restrictions***

The Company's principal source of funds for dividend payments is dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. In addition, the Company's credit agreement with another financial institution also limits its ability to pay dividends. Under applicable banking regulations, the amount of dividends that may be paid by the Bank in any calendar year is limited to the current year's net profits combined with the retained net profits of the preceding two years, subject to the capital requirements described above.

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**15. EARNINGS PER COMMON SHARE**

Basic earnings per common share is calculated as net income divided by the weighted-average number of common shares outstanding during the period. All restricted shares and performance share awards are considered outstanding at the date of grant. Diluted earnings per common share is computed using the weighted-average number of common shares determined for the basic earnings per common share computation plus the potential diluted effect of outstanding stock options and performance share units using the treasury stock method. A reconciliation of the weighted-average shares used in calculating basic earnings per common share and the weighted-average common shares used in calculating diluted earnings per common share and for the reported periods is provided below.

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2026** | **2025** | **2025** |
| | **Amount** | **Per Share<br>Amount** | **Amount** | **Per Share<br>Amount** |
| | **(Dollars in thousands, except per share data)** | **(Dollars in thousands, except per share data)** | **(Dollars in thousands, except per share data)** | **(Dollars in thousands, except per share data)** |
| Net income attributable to shareholders | $26966 |  | $24702 |  |
| Basic: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Weighted-average shares outstanding | 50829 | $0.53 | 53146 | $0.46 |
| Diluted: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Add incremental shares for: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dilutive effect of stock option exercises and performance share units | 115 |  | 51 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 50944 | $0.53 | 53197 | $0.46 |

---

There were 18,286 and 93,905 shares not considered in computing diluted earnings per share as of March 31, 2026 and 2025, respectively, as they were antidilutive.

**16. SEGMENT INFORMATION**

The Company's reportable segment is determined by the Chief Financial Officer, who is the designated chief operating decision maker, based upon information provided about the Company's services offered, primarily banking operations. The segment is also distinguished by the level of information provided to the chief operating decision maker, who uses such information to evaluate the financial performance of the Company's business by evaluating consolidated net income, significant expenses and budget to actual results in assessing the Company's segment and in the determination of allocating resources. The chief operating decision maker uses consolidated net income to benchmark the Company against its competitors. The benchmarking analysis coupled with monitoring of budget to actual results are used in assessment performance and in establishing compensation. The presentation of financial performance to the chief operating decision maker is consistent with amounts and financial statement lines shown on the Company's consolidated balance sheets and consolidated statements of income. Loans, investments and deposits in other financial institutions provide income in the banking operation. Interest expense, provisions for credit losses and salaries and benefits are the significant expenses in the banking operation. All of the Company's financial results are similar and considered by management to be aggregated into one reportable operating segment.

1**7. SUBSEQUENT EVENTS**

On April 1, 2026, the Company redeemed the remaining $30.0 million of its aggregate principal amount 4.70% Fixed-to-Floating Rate Subordinated Notes due 2029 (the "Company Notes"). The redemption price for the Company Notes was equal to 100% of the principal amount of the Company Notes redeemed, plus $529 thousand for accrued and unpaid interest to, but excluding, the redemption date. The redemption on April 1, 2026 resulted in the redemption of all of the outstanding Company Notes.

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

Except where the context otherwise requires or where otherwise indicated in this Quarterly Report on Form 10-Q, the term "Stellar" refers to Stellar Bancorp, Inc., the terms "we," "us," "our," "Company" and "our business" refer to Stellar Bancorp, Inc. and our wholly owned banking subsidiary, Stellar Bank, a Texas banking association.

**Cautionary Notice Regarding Forward-Looking Statements** 

This Quarterly Report on Form 10-Q contains forward-looking statements. These forward-looking statements reflect the Company's current views with respect to, among other things, future events and the Company's financial performance. These statements are often, but not always, made through the use of words or phrases such as "may," "should," "could," "predict," "potential," "believe," "will likely result," "expect," "continue," "will," "anticipate," "seek," "estimate," "intend," "plan," "projection," "would" and "outlook," or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about the Company's industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company's control. Accordingly, the Company cautions that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

There are or will be important factors that could cause the Company's actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the risks described in "Part I— Item 1A.—Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 and the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the proposed transaction with Prosperity, including the likelihood of the satisfaction of the conditions to the completion of the transaction and whether and when the transaction will be consummated;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• disruptions to the economy and the U.S. banking system caused by recent bank failures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks associated with uninsured deposits and responsive measures by federal or state governments or banking regulators, including increases in our deposit insurance assessments and other actions of the Board of Governors of the Federal Reserve System, FDIC and Texas Department of Banking, legislative and regulatory actions and reforms and executive orders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board and the imposition of tariffs and retaliatory tariffs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• inflation, interest rate, capital and securities markets and monetary fluctuations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in the interest rate environment, the value of the Company's assets and obligations and the availability of capital and liquidity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• general competitive, economic, political and market conditions and other factors that may affect future results of the Company including changes in asset quality and credit risk;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• local, regional, national and international economic conditions and the impact they may have on the Company and our customers and the Company's assessment of that impact;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the inability to sustain revenue and earnings growth;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• impairment of the Company's goodwill or other intangible assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the composition of the Company's loan portfolio and the concentration of loans in commercial real estate and commercial real estate construction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the geographic concentration of the Company's market;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the accuracy and sufficiency of the assumptions and estimates the Company makes in establishing reserves for potential loan losses and other estimates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the amount of nonperforming and classified assets that the Company holds and the time and effort necessary to resolve nonperforming assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• deterioration of asset quality;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• customer borrowing, repayment, investment and deposit practices;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the ability to maintain important deposit customer relationships;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in the value of collateral securing the Company's loans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• natural disasters, climate change and adverse weather in the Company's market area;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impact of pandemics, epidemics or any other health-related crisis;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• acts of terrorism, an outbreak of hostilities, such as the conflicts in Ukraine or the Middle East, or other international or domestic calamities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the ability to maintain effective internal control over financial reporting;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***•*** the cost and effects of cyber incidents or other failures, interruptions or security breaches of the Company's systems or those of the Company's customers or third-party providers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the failure of certain third or fourth-party vendors to perform;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impact, extent and timing of technological changes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the institution and outcome of litigation and other legal proceedings against the Company or to which it may become subject;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the costs, effects and results of regulatory examinations, investigations, or reviews or the ability to obtain required regulatory approvals or meet conditions associated with the same;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in the laws, rules, regulations, interpretations or policies relating to financial institution, accounting, tax, trade, monetary and fiscal matters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• other risks, uncertainties, and factors that are discussed from time to time in the Company's reports and documents filed with the SEC.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this Quarterly Report on Form 10-Q. This discussion and analysis includes forward-looking statements that are subject to certain risks and uncertainties and are based on certain assumptions that the Company believes are reasonable but may prove to be inaccurate. Certain risks, uncertainties and other factors, including those set forth above may cause actual results to differ materially from projected results discussed in the forward-looking statements appearing in this discussion and analysis.

The Company disclaims any obligation and does not intend to update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

**Pending Merger with Prosperity**

On January 27, 2026, the Company entered into the Agreement and Plan of Merger (the "Merger Agreement") with Prosperity Bancshares, Inc., a Texas corporation ("Prosperity"). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, the Company will merge with and into Prosperity (the "Merger"), with Prosperity continuing as the surviving corporation in the Merger. Immediately following the Merger, Stellar Bank will merge with and into Prosperity's wholly owned banking subsidiary, Prosperity Bank (the "Bank Merger"). Prosperity Bank will continue as the surviving bank in the Bank Merger. Upon the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the "Effective Time"), each share of common stock, par value $0.01 per share, of the Company ("Stellar Common Stock") outstanding immediately prior to the Effective Time, other than certain shares held by Prosperity or Stellar and shares held by a holder of Stellar Common Stock who has properly exercised applicable dissenters' rights in respect of such share, will be converted into the right to receive (i) 0.3803 shares of common stock, par value $1.00 per share, of Prosperity and (ii) an amount in cash equal to $11.36. Stellar and Prosperity have received all regulatory approvals necessary to complete the Merger and the Bank Merger. In connection with the Merger, Stellar has called a special meeting of its shareholders to be held on May 27, 2026. Stellar shareholders of record as of the close of business on April 10, 2026 are entitled to vote at the special meeting. Completion of the Merger and the Bank Merger remains subject to Stellar shareholder approval and satisfaction of remaining customary closing conditions. The Merger is expected to be completed on or about July 1, 2026, subject to approval by Stellar shareholders and the satisfaction or waiver of other customary closing conditions set forth in the Merger Agreement. See Part I, Item 1A, "Risk Factors," and Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

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**Overview**

We generate a majority of our income from interest income on loans, interest income from investments in securities and service charges on customer accounts. We incur interest expense on deposits and other borrowed funds and noninterest expenses such as salaries and employee benefits and occupancy expenses. Net interest income is the difference between interest income on earning assets such as loans and securities and interest expense on liabilities such as deposits and borrowings that are used to fund those assets. Net interest income is our largest source of revenue. To evaluate net interest income, we measure and monitor (1) yields on our loans and other interest-earning assets, (2) the interest expenses of our deposits and other funding sources, (3) our net interest spread and (4) our net interest margin. Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin is calculated as net interest income divided by average interest-earning assets. Because noninterest-bearing sources of funds, such as noninterest-bearing deposits and shareholders' equity, also fund interest-earning assets, net interest margin includes the benefit of these noninterest-bearing sources.

Our net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, referred to as a "volume change." Periodic changes in the volume and types of loans in our loan portfolio are affected by, among other factors, economic and competitive conditions in Texas and specifically in our market, as well as developments affecting the real estate, technology, financial services, insurance, transportation, manufacturing and energy sectors within our market and throughout the state of Texas.

Our net interest income is also affected by changes in yields earned on interest-earning assets and rates paid on interest-bearing deposits and borrowed funds, referred to as a "rate change." Fluctuations in market interest rates are driven by many factors, including governmental monetary policies, inflation, deflation, macroeconomic developments, changes in unemployment, the money supply, political and international conditions and conditions in domestic and foreign financial markets.

**Critical Accounting Policies** 

Certain of our accounting estimates are important to the portrayal of our financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances that could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy and changes in the financial condition of borrowers. Management believes that determining the allowance for credit losses is its most critical accounting estimate. Our accounting policies are discussed in detail in Note 1– Nature of Operations and Summary of Significant Accounting and Reporting Policies in our Annual Report on Form 10-K for the year ended December 31, 2025.

**Allowance for Credit Losses**

The allowance for credit losses is a valuation account which represents management's best estimate of lifetime expected losses based on reasonable and supportable forecasts, historical loss experience, and other qualitative considerations. Management considers the policies related to the allowance for credit losses as the most critical to the financial statement presentation. The Company bases its estimates of credit losses on three primary components: (1) estimates of expected losses that exist in various segments of performing loans over the remaining life of the loan portfolio using a reasonable and supportable economic forecast, (2) specifically identified losses in individually analyzed credits which are collateral-dependent, which generally include nonaccrual loans and purchased credit deteriorated ("PCD") loans and (3) qualitative factors related to economic conditions, portfolio concentrations, regulatory policy updates, and other relevant factors that address estimates of expected losses. Estimating the timing and amounts of future losses is subject to management's judgment as these projected cash flows rely upon the estimates discussed above and factors that are reflective of current or future expected conditions using analytical and forecasting models and tools. Volatility in certain credit metrics and differences between expected and actual outcomes are to be expected. For example, customers may not repay their loans according to the original terms, and the collateral securing the payment of those loans may be insufficient to pay any remaining loan balance.

Loans with similar risk characteristics are aggregated into homogenous pools and are collectively evaluated by applying reserve factors, such as historical lifetime loss, concentration risk, volume, growth and composition of the loan portfolio, current and forecasted economic conditions to amortized cost balances over the remaining contractual life of the collectively evaluated portfolio. Historical lifetime loss is determined by utilizing an open-pool cumulative loss rate methodology, adjusted for credit risk characteristics and current and forecasted economic conditions. Losses are predicted over a reasonable and supportable period of one year for all loan pools, followed by an immediate reversion to long-term historical averages. The reasonable and supportable period and reversion period are re-evaluated as needed by the Company and are dependent on the current economic environment among other factors.

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Loans that no longer share risk characteristics with the collectively evaluated loan pools are evaluated on an individual basis and are excluded from the collectively evaluated pools. In order to assess which loans are to be individually evaluated, the Company follows a loan review program to evaluate the credit risk in the total loan portfolio and assigns risk grades to each loan. Individual credit loss estimates are typically performed for nonaccrual loans and all other loans identified by management. All loans deemed as being individually evaluated are reviewed on a quarterly basis in order to determine whether a specific reserve is required. The Company considers certain loans to be collateral dependent if the borrower is experiencing financial difficulty and management expects repayment for the loan to be substantially through the operation or sale of the collateral. For collateral dependent loans, loss estimates are based on the fair value of collateral, less estimated cost to sell (if applicable). Collateral values supporting individually evaluated loans are assessed quarterly and appraisals are typically obtained at least annually. The Company allocates a specific loan loss reserve on an individual loan basis primarily based on the value of the collateral securing the individually evaluated loan. Through this loan review process, the Company assesses the overall quality of the loan portfolio and the adequacy of the allowance for credit losses on loans while considering risk elements attributable to particular loan types in assessing the quality of individual loans. In addition, for each category of loans, the Company considers secondary sources of income and the financial strength and credit history of the borrower and any guarantors.

A change in the allowance for credit losses on loans can be attributable to several factors, most notably historical lifetime loss, specific reserves for individually evaluated loans, changes in qualitative factors and growth within the loan portfolio. The estimated loan losses for all loan pools are adjusted for changes in qualitative factors not inherently considered in the quantitative analyses to bring the allowance to the level management believes is appropriate based on factors that have not otherwise been fully accounted for, including adjustments for foresight risk, input imprecision and model imprecision. The qualitative categories and the measurements used to quantify the risks within each of these categories are subjectively selected by management, but measured by objective measurements period over period. The data for each measurement may be obtained from internal or external sources. The current period measurements are evaluated and assigned a factor commensurate with the current level of risk relative to past measurements over time. The resulting qualitative adjustments are applied to the relevant collectively evaluated loan portfolios. These adjustments are based upon quarterly trend assessments in portfolio concentrations, changes in lending policies and procedures, policy exceptions, independent loan review results, internal risk ratings and peer group credit quality trends. Additional qualitative considerations are made for any identified risk which did not exist within our portfolio historically and therefore may not be adequately addressed through evaluation of such risk factors based on historical portfolio trends. Qualitative adjustments also include current and forecasted economic conditions primarily measured by local and national economic metrics, such as GDP, unemployment rates, interest rates and oil and gas prices based on historical and forecasted economic research scenarios provided by industry-leading financial intelligence and analytical solutions, which the Company has subscribed to. The qualitative allowance allocation is increased or decreased for each loan pool based on the assessment of these various qualitative factors. Management recognizes the sensitivity of various assumptions made in the quantitative modeling of expected losses and may adjust reserves depending upon the level of uncertainty that currently exists in one or more assumptions.

As of March 31, 2026, based on sensitivity analyses across all segments of the performing loan portfolio, a 5% increase in historical loss rates would have increased funded reserves by $1.1 million. On the other hand, a 5% increase in each qualitative risk factor across all segments (where assigned) would have increased funded reserves by $2.9 million. Increasing estimated loss rates by 5% (i.e., quantitative and qualitative) would have a $3.6 million impact.

The allowance for credit losses could be affected by significant downturns in circumstances relating to loan quality and economic conditions and as such may not be sufficient to cover expected losses in the loan portfolio which could necessitate additional provisions or a reduction in the allowance for credit losses if our assumption prove to be incorrect. Unanticipated changes and events could have a significant impact on the financial performance of borrowers and their ability to perform as agreed. We may experience significant credit losses if borrowers experience financial difficulties, which could have a material adverse effect on our operating results.

**Goodwill**

Goodwill represents the excess of the consideration paid over the fair value of the net assets acquired in a business combination. During the measurement period, the Company may record subsequent adjustments to goodwill for provisional amounts recorded at the acquisition date.

Goodwill is subject to impairment testing, which must be conducted at least annually or upon the occurrence of a triggering event. Goodwill is recorded and evaluated for impairment at its reporting unit, the Company. The Company's policy is to test goodwill for impairment at least annually as of October 1st, or on an interim basis if an event triggering an impairment assessment is determined to have occurred. Various factors, such as the Company's results of operations, the trading price of the Company's common stock relative to the book value per share, macroeconomic conditions and conditions in the banking sector, inform whether a triggering event for an interim goodwill impairment test has occurred. The impairment test compares the estimated fair value of each

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reporting unit with its net book value. If the unit's fair value is less than its carrying value, an impairment loss is recognized in our results of operations in the periods in which they become known in an amount equal to this excess.

See Note 2 – Goodwill and Other Intangible Assets to the consolidated financial statements for additional information on the Company's goodwill.

**Recently Issued Accounting Pronouncements** 

We have evaluated new accounting pronouncements that have recently been issued. Refer to Note 1 - Nature of Operations and Summary of Significant Accounting and Reporting Policies in the accompanying notes to the consolidated financial statements for a discussion of recent accounting pronouncements that have been adopted by the Company or that will require enhanced disclosures in the Company's financial statements in future periods.

**Results of Operations**

Net income was $27.0 million, or $0.53 per diluted share, for the three months ended March 31, 2026 compared to $24.7 million, or $0.46 per diluted share, for the three months ended March 31, 2025. The increase in net income was primarily due to a $6.7 million increase in net interest income and a $1.1 million decrease in the provision for credit losses partially offset by a $5.0 million increase in noninterest expense.

Annualized return on average assets, return on average equity and efficiency ratios were 0.98%, 6.51% and 63.27% for the three months ended March 31, 2026, respectively, compared to 0.94%, 6.21% and 61.93% for the three months ended March 31, 2025, respectively. The efficiency ratio is calculated by dividing total noninterest expense, excluding amortization of core deposit intangibles, by the sum of net interest income plus noninterest income, excluding net gains and losses on the sale/write-down of assets. Additionally, taxes and provisions for credit losses are not part of the efficiency ratio calculation.

***Net Interest Income***

*Three months ended March 31, 2026 compared with three months ended March 31, 2025.* Net interest income before the provision for credit losses for the three months ended March 31, 2026 was $105.9 million compared with $99.3 million for the three months ended March 31, 2025, an increase of $6.7 million, or 6.7%, primarily due to the increase in average securities along with the decrease in interest expense due to lower rates on interest-bearing liabilities.

Interest income was $145.1 million for the three months ended March 31, 2026, an increase of $2.8 million, or 1.9%, compared with $142.3 million for the three months ended March 31, 2025, primarily due to the increase in average securities, as a result of short-term investments made to support public funds seasonality during the first quarter of 2026, and the yield on securities partially offset by a decrease in the yield on loans and deposits in other financial institutions. The yield on the securities portfolio increased to 3.86% for the three months ended March 31, 2026 from 3.78% for the same period in 2025. Average interest-earning assets increased $547.0 million, or 5.7%, for the three months ended March 31, 2026 compared with the three months ended March 31, 2025, primarily due the increase in average securities, average loans and average deposits in other financial institutions while the average yield decreased to 5.80% for the three months ended March 31, 2026 compared with 6.02% for the three months ended March 31, 2025 due to a decrease in the yield on loans and deposits in other financial institutions. Interest income from purchase accounting adjustments was $3.6 million for the three months ended March 31, 2026 compared to $5.4 million for the three months ended March 31, 2025.

Interest expense was $39.2 million for the three months ended March 31, 2026, a decrease of $3.9 million, or 9.1%, compared with $43.1 million for the three months ended March 31, 2025. This decrease was primarily due to lower interest rates, a decrease in higher rate certificates and time deposits and a decrease in average borrowed funds and average subordinated debt. The cost of average interest-bearing liabilities decreased to 2.65% for the three months ended March 31, 2026 from 3.14% for the same period in 2025. Average interest-bearing liabilities increased $437.8 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to an increase in average interest-bearing demand deposits and money market and savings deposits, partially offset by decreases in certificates and other time deposits, borrowed funds and subordinated debt.

Tax equivalent net interest margin, defined as net interest income adjusted for tax-free income divided by average interest-earning assets for the three months ended March 31, 2026 was 4.24%, an increase of 4 basis points compared to 4.20% for the three months ended March 31, 2025. The increase in the net interest margin on a tax equivalent basis was primarily due to decreased funding costs and higher interest-earning assets partially offset by lower purchase accounting accretion and changes in the earning asset mix. The average rate paid on interest-bearing liabilities of 2.65% and the average yield on interest-earning assets of 5.80% for

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the three months ended March 31, 2026 decreased by 49 basis points and 22 basis points, respectively, over the same period in 2025. Tax equivalent adjustments to net interest margin are the result of increasing income from tax-free securities and loans by an amount equal to the taxes that would have been paid if the income were fully taxable based on a 21% federal tax rate for the three months ended March 31, 2026 and 2025, thus making tax-exempt yields comparable to taxable asset yields.

The following table presents, for the periods indicated, the total dollar amount of average balances, interest income from average interest-earning assets and the annualized resultant yields, as well as the interest expense on average interest-bearing liabilities, expressed in both dollars and rates. Average loans include loans on nonaccrual status carrying a zero yield.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2026** | **2026** | **2025** | **2025** | **2025** |
| | **Average<br>Balance** | **Interest<br>Earned/<br>Interest Paid** | **Average<br>Yield/ Rate** | **Average<br>Balance** | **Interest<br>Earned/<br>Interest Paid** | **Average<br>Yield/ Rate** |
| | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** |
| **Assets** |  |  |  |  |  |  |
| Interest-earning assets: |  |  |  |  |  |  |
| Loans | $7462404 | $119783 | 6.51% | $7344298 | $120640 | 6.66% |
| Securities | 2145882 | 20428 | 3.86% | 1817286 | 16960 | 3.78% |
| Deposits in other financial institutions | 530947 | 4884 | 3.73% | 430621 | 4720 | 4.45% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total interest-earning assets | 10139233 | $145095 | 5.80% | 9592205 | $142320 | 6.02% |
| Allowance for credit losses on loans | (83396) |  |  | (81166) |  |  |
| Noninterest-earning assets | 1087991 |  |  | 1100652 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total assets | $11143828 |  |  | $10611691 |  |  |
| **Liabilities and Shareholders' Equity** |  |  |  |  |  |  |
| Interest-bearing liabilities: |  |  |  |  |  |  |
| Interest-bearing demand deposits | $2333522 | $13860 | 2.41% | $1911625 | $12392 | 2.63% |
| Money market and savings deposits | 2594999 | 15784 | 2.47% | 2234571 | 15182 | 2.76% |
| Certificates and other time deposits | 1011031 | 8624 | 3.46% | 1296972 | 13527 | 4.23% |
| Borrowed funds | 17056 | 149 | 3.54% | 45795 | 517 | 4.58% |
| Subordinated debt | 40242 | 747 | 7.53% | 70121 | 1444 | 8.35% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total interest-bearing liabilities | 5996850 | $39164 | 2.65% | 5559084 | $43062 | 3.14% |
| Noninterest-bearing liabilities: |  |  |  |  |  |  |
| Noninterest-bearing demand deposits | 3387638 |  |  | 3346066 |  |  |
| Other liabilities | 79940 |  |  | 92299 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 9464428 |  |  | 8997449 |  |  |
| Shareholders' equity | 1679400 |  |  | 1614242 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and shareholders' equity | $11143828 |  |  | $10611691 |  |  |
| Net interest rate spread |  |  | 3.15% |  |  | 2.88% |
| Net interest income and margin<sup>(1)</sup> |  | $105931 | 4.24% |  | $99258 | 4.20% |
| Net interest income and margin (tax equivalent)<sup>(2)</sup> |  | $106041 | 4.24% |  | $99353 | 4.20% |
| Cost of funds |  |  | 1.69% |  |  | 1.96% |
| Cost of deposits |  |  | 1.66% |  |  | 1.90% |

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(1)The net interest margin is equal to annualized net interest income divided by average interest-earning assets.

(2)Tax-equivalent adjustments have been computed using a federal income tax rate of 21% for the three months ended March 31, 2026 and 2025.

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

The following table presents information regarding the dollar amount of changes in interest income and interest expense for the periods indicated for each major component of interest-earnings assets and interest-bearing liabilities and distinguishes between the changes attributable to changes in volume and changes in interest rates. For purposes of this table, changes attributable to both rate and volume that cannot be segregated have been allocated to rate.

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| | | | |
|:---|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026 vs. 2025** | **2026 vs. 2025** | **2026 vs. 2025** |
| | **Increase (Decrease)<br>Due to Change in** | **Increase (Decrease)<br>Due to Change in** | |
| | **Volume** | **Rate** |<br>**Total** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Interest-earning assets: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans | $1940 | $(2797) | $(857) |
| &nbsp;&nbsp;&nbsp;&nbsp;Securities | 3067 | 401 | 3468 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deposits in other financial institutions | 1100 | (936) | 164 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total increase (decrease) in interest income | 6107 | (3332) | 2775 |
| Interest-bearing liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest-bearing demand deposits | 2735 | (1267) | 1468 |
| &nbsp;&nbsp;&nbsp;&nbsp;Money market and savings deposits | 2449 | (1847) | 602 |
| &nbsp;&nbsp;&nbsp;&nbsp;Certificates and other time deposits | (2982) | (1921) | (4903) |
| &nbsp;&nbsp;&nbsp;&nbsp;Borrowed funds | (324) | (44) | (368) |
| &nbsp;&nbsp;&nbsp;&nbsp;Subordinated debt | (615) | (82) | (697) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total increase (decrease) in interest expense | 1263 | (5161) | (3898) |
| Increase in net interest income | $4844 | $1829 | $6673 |

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***Provision for Credit Losses***

Our allowance for credit losses is established through charges to income in the form of the provision to bring our allowance for credit losses for various types of financial instruments including loans, unfunded commitments and securities to a level deemed appropriate by management. We recorded a provision for credit losses of $2.5 million and $3.6 million for the three months ended March 31, 2026 and 2025, respectively. The provision for credit losses for the three months ended March 31, 2026 was primarily due to the increase in loan balances and specific reserves within the allowance for credit losses model, among other things, compared to the same period in the prior year.

***Noninterest Income***

Our primary sources of noninterest income are service charges on deposit accounts, bank-owned life insurance income and debit card and interchange income. Noninterest income does not include loan origination fees which are recognized over the life of the related loan as an adjustment to yield using the interest method.

*Three months ended March 31, 2026 compared with three months ended March 31, 2025*. Noninterest income totaled $5.1 million for the three months ended March 31, 2026 compared with $5.5 million for the same period in 2025, a decrease of $395 thousand, or 7.2%, primarily due to $417 thousand of net gains on the sale/write-down of assets in the first quarter of 2025, compared to a net loss of $37 thousand on the sale/write-down of assets in the first quarter of 2026.

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

The following table presents, for the periods indicated, the major categories of noninterest income:

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| | | | |
|:---|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Increase<br>(Decrease)** |
| | **2026** | **2025** | **Increase<br>(Decrease)** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Service charges on deposit accounts | $1635 | $1584 | $51 |
| (Loss) gain on sale/write-down of assets | (37) | 417 | (454) |
| Bank-owned life insurance income | 626 | 610 | 16 |
| Debit card and interchange income | 547 | 520 | 27 |
| Other<sup>(1)</sup> | 2339 | 2374 | (35) |
| Total noninterest income | $5110 | $5505 | $(395) |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Other includes small business investment company income, FHLB dividends, FRB dividends and wire transfer fees among other items.

***Noninterest Expense***

*Three months ended March 31, 2026 compared with three months ended March 31, 2025.* Noninterest expense was $75.2 million for the three months ended March 31, 2026 compared to $70.2 million for the three months ended March 31, 2025 an increase of $5.0 million, or 7.1%, primarily due to $3.3 million of acquisition and merger-related expenses attributable to the pending Merger with Prosperity along with an increase in annual salaries and employee benefits partially offset by decreases in professional fees and amortization of intangibles.

The following table presents, for the periods indicated, the major categories of noninterest expense:

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| | | | |
|:---|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Increase<br>(Decrease)** |
| | **2026** | **2025** | **Increase<br>(Decrease)** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Salaries and employee benefits<sup>(1)</sup> | $43931 | $41792 | $2139 |
| Net occupancy and equipment | 4575 | 3926 | 649 |
| Depreciation | 1971 | 1995 | (24) |
| Data processing and software amortization | 6073 | 5682 | 391 |
| Professional fees | 886 | 1786 | (900) |
| Regulatory assessments and FDIC insurance | 1639 | 1733 | (94) |
| Amortization of intangibles | 4886 | 5548 | (662) |
| Communications | 759 | 847 | (88) |
| Advertising | 799 | 782 | 17 |
| Acquisition and merger-related expenses | 3307 |  | 3307 |
| Other | 6338 | 6075 | 263 |
| &nbsp;&nbsp;Total noninterest expense | $75164 | $70166 | $4998 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Total salaries and employee benefits includes $2.0 million for both of the three months ended March 31, 2026 and 2025, respectively, of stock-based compensation expense.

*Acquisition and merger-related expenses.* Acquisition and merger-related expenses of $3.3 million incurred during the three months ended March 31, 2026 were primarily related to legal and advisory fees associated with the pending Merger.

*Salaries and employee benefits.* Salaries and benefits increased $2.1 million during the three months ended March 31, 2026 compared to the same period in 2025 primarily due to annual salary increases and the increase in full-time equivalent employees.

*Professional fees.* Professional fees decreased $900 thousand during the three months ended March 31, 2026 compared to the same period in 2025 primarily due to consulting fees incurred related to various projects in 2025.

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

*Amortization of intangibles*. Amortization of intangibles decreased $662 thousand during the three months ended March 31, 2026 compared to the same period in 2025.

***Efficiency Ratio***

The efficiency ratio is a supplemental financial measure utilized in management's internal evaluation of our performance. We calculate our efficiency ratio by dividing total noninterest expense, excluding the amortization of core deposits intangibles, by the sum of net interest income and noninterest income, excluding net gains and losses on the sale/write-down of assets. Additionally, taxes and provision for credit losses are not part of this calculation. An increase in the efficiency ratio indicates that more resources are being utilized to generate the same volume of income, while a decrease would indicate a more efficient allocation of resources. Our efficiency ratio was 63.27% for the three months ended March 31, 2026 compared to 61.93% for the three months ended March 31, 2025.

We monitor the efficiency ratio in comparison with changes in our total assets and loans, and we believe that maintaining or reducing the efficiency ratio during periods of growth demonstrates the scalability of our operating platform. We expect to continue to benefit from our scalable platform in future periods as we continue to monitor overhead expenses necessary to support our growth.

***Income Taxes***

The amount of federal and state income tax expense is influenced by the amount of pre-tax income, tax-exempt income and other non-deductible expenses. Income tax expense increased $151 thousand for the three months ended March 31, 2026 compared with the same period in 2025 primarily due to the changes in pre-tax net income. Our effective tax rate was 19.2% for the three months ended March 31, 2026 compared to 20.2% for the three months ended March 31, 2025.

The One Big Beautiful Bill Act ("OBBBA") was enacted on July 4, 2025. Among other things, the new law makes permanent certain expiring business tax provisions of the Tax Cuts and Jobs Act ("TCJA"). The OBBBA did not have a significant impact on our financial statements, though some minor operational changes were necessary to support new information reporting requirements. The OBBBA also significantly changes U.S. tax law related to foreign operations and certain tax credits; however, such changes do not currently impact us as the Company does not have foreign operations.

**Financial Condition**

***Loan Portfolio***

At March 31, 2026, total loans were $7.59 billion, an increase of $287.4 million, or 3.9%, compared with December 31, 2025. Total loans as a percentage of deposits were 84.5% and 80.9% as of March 31, 2026 and December 31, 2025, respectively. Total loans as a percentage of assets were 69.7% and 67.6% as of March 31, 2026 and December 31, 2025, respectively.

The following table summarizes our loan portfolio by type of loan as of the dates indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **December 31, 2025** | **December 31, 2025** |
| | **Amount** | **Percent** | **Amount** | **Percent** |
| | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** |
| Commercial and industrial | $1563421 | 20.6% | $1476559 | 20.2% |
| Real estate: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate (including multi-family residential) | 3844629 | 50.7% | 3766294 | 51.6% |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate construction and land development | 821723 | 10.8% | 720779 | 9.9% |
| &nbsp;&nbsp;&nbsp;&nbsp;1-4 family residential (including home equity) | 1167436 | 15.4% | 1136227 | 15.6% |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential construction | 102609 | 1.3% | 124653 | 1.7% |
| Consumer and other | 88134 | 1.2% | 76079 | 1.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total loans | 7587952 | 100.0% | 7300591 | 100.0% |
| Allowance for credit losses on loans | (85431) |  | (83629) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans, net | $7502521 |  | $7216962 |  |

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

Our lending activities originate from the efforts of our bankers with an emphasis on lending to individuals, professionals, small- to medium-sized businesses and commercial companies generally located in our market. Our strategy for credit risk management generally includes well-defined, centralized credit policies, uniform underwriting criteria and ongoing risk monitoring and review processes for credit exposures. The strategy generally emphasizes regular credit examinations and management reviews of loans. We have certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. We maintain an independent loan review department which includes third-party loan review services to review the credit risk on a periodic basis. The internal loan review department focuses on credits not reviewed by the third-party loan reviewer to ensure more complete coverage of credit risk. Results of these reviews are presented to management and the risk committee of the Board of Directors. The loan review process complements and reinforces the risk identification and assessment decisions made by bankers and credit personnel and contained in our policies and procedures. The principal categories of our loan portfolio are discussed below:

***Commercial and Industrial.*** We make commercial and industrial loans in our market area that are underwritten on the basis of the borrower's ability to service the debt from income. The increased risk in these loans derives from the expectation that commercial and industrial loans generally are serviced principally from the operations of the business, which may not be successful and from the type of collateral securing these loans. Commercial and industrial loans are typically collateralized by general business assets including, among other things, accounts receivable, inventory and equipment and are generally backed by a personal guaranty of the borrower or principal. This collateral may decline in value more rapidly than we anticipate, exposing us to increased credit risk. As a result, commercial and industrial loans require more extensive underwriting and servicing than other types of loans. Our commercial and industrial loan portfolio increased $86.9 million, or 5.9%, to $1.56 billion as of March 31, 2026 from $1.48 billion as of December 31, 2025.

***Commercial Real Estate (Including Multi-Family Residential)***. We make loans to finance the purchase or ownership of commercial real estate. As of March 31, 2026, our commercial real estate loans comprised 50.7% of our loan portfolio. Repayment is generally dependent on the successful operations of the property and may be impacted by general economic conditions, including fluctuations in the value of real estate, vacancy rates and unemployment trends. The collateral securing these loans is typically more difficult to liquidate due to the fluctuation of real estate values. As of March 31, 2026 and December 31, 2025, 47.2% and 47.7%, respectively, of our commercial real estate loans were owner-occupied. Our commercial real estate loan portfolio increased $78.3 million, or 2.1%, to $3.84 billion as of March 31, 2026 from $3.77 billion as of December 31, 2025.

The following table summarizes our commercial real estate loan portfolio by type of property securing the loans at March 31, 2026.

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| | | | |
|:---|:---|:---|:---|
| **Property Type** | **Amount** | **Average Loan Size** | **Percent of Total** |
| | **(Dollars in thousands)** | **(Dollars in thousands)** | |
| Warehouse | $645366 | $908 | 16.8% |
| Retail | 596395 | 1368 | 15.5% |
| Multi-family | 492987 | 2441 | 12.8% |
| Office | 365292 | 817 | 9.5% |
| Convenience Store | 359348 | 1372 | 9.4% |
| Industrial | 235420 | 2264 | 6.1% |
| Restaurant / Bar | 139178 | 1039 | 3.6% |
| Church | 128176 | 929 | 3.3% |
| Auto Sales / Repair | 124048 | 738 | 3.2% |
| Healthcare | 95165 | 1094 | 2.5% |
| Hotel / Motel | 87525 | 3242 | 2.3% |
| Other | 575729 | 1254 | 15.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $3844629 | 1182 | 100.0% |

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As of March 31, 2026, our commercial real estate loan (including multi-family residential loans) portfolio included $289.5 million of multi-family community development loans with associated tax credits, which fund Texas based projects to promote affordable housing compared to $286.3 million as of December 31, 2025.

***Commercial Real Estate Construction and Land Development.*** We make commercial real estate construction and land development loans to fund commercial construction, land acquisition and real estate development construction. Construction loans involve additional risks as they often involve the disbursement of funds with the repayment dependent on the ultimate success of the

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

project's completion. Sources of repayment for these loans may be pre-committed permanent financing or sale of the developed property. The loans in this portfolio are monitored closely by management. Due to uncertainties inherent in estimating construction costs, the market value of the completed project and the effects of governmental regulation on real property, it can be difficult to accurately evaluate the total funds required to complete a project and the related loan to value ratio. As a result of these uncertainties, construction lending often includes the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project rather than the ability of a borrower or guarantor to repay the loan. As of March 31, 2026 and December 31, 2025, 18.3% and 14.6%, respectively, of our commercial real estate construction and land development loans were owner-occupied. Our commercial real estate construction and land development loans increased $100.9 million, or 14.0%, to $822 million as of March 31, 2026 compared to $720.8 million as of December 31, 2025.

As of March 31, 2026, our commercial real estate construction and land development loan portfolio included $111.3 million of construction and development loans to support multi-family community development loans with associated tax credits, which fund Texas based projects to promote affordable housing compared to $102.4 million as of December 31, 2025.

***1-4 Family Residential (Including Home Equity).*** Our residential real estate loans include the origination of 1-4 family residential mortgage loans (including home equity and home improvement loans and home equity lines of credit) collateralized by owner-occupied residential properties located in our market areas. Our residential real estate portfolio (including home equity) increased $31.2 million, or 2.7%, to $1.17 billion as of March 31, 2026 from $1.14 billion as of December 31, 2025.

***Residential Construction.*** We make residential construction loans to home builders and individuals to fund the construction of single-family residences with the understanding that such loans will be repaid from the proceeds of the sale of the homes by builders or with the proceeds of a mortgage loan. These loans are secured by the real property being built and are made based on our assessment of the value of the property on an as-completed basis. Our residential construction loans portfolio decreased $22.0 million, or 17.7%, to $102.6 million as of March 31, 2026 from $124.7 million as of December 31, 2025.

***Consumer and Other.*** Our consumer and other loan portfolio is made up of loans made to individuals for personal purposes and deferred fees and costs on all loan types. Generally, consumer loans entail greater risk than residential real estate loans because they may be unsecured or if secured the value of the collateral, such as an automobile or boat, may be more difficult to assess and more likely to decrease in value than real estate. In such cases, any repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan balance. The remaining deficiency often does not warrant further substantial collection efforts against the borrower beyond obtaining a deficiency judgment. In addition, consumer loan collections are dependent on the borrower's continuing financial stability and thus are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy. Furthermore, the application of various federal and state laws may limit the amount which can be recovered on such loans. Our consumer and other loan portfolio increased $12.1 million, or 15.8%, to $88.1 million as of March 31, 2026 from $76.1 million as of December 31, 2025.

***Concentrations of Credit***

The vast majority of our lending activity occurs in the Houston and Beaumont MSAs. Our loans are primarily secured by real estate, including commercial and residential construction, owner-occupied and nonowner-occupied and multi-family commercial real estate, raw land and other real estate based loans located in the Houston and Beaumont MSAs. As of March 31, 2026 and December 31, 2025, commercial real estate and commercial construction loans represented 61.5% of our total loans.

**Asset Quality**

We have procedures in place to assist us in maintaining the overall quality of our loan portfolio. We have established underwriting guidelines to be followed by our officers and monitor our delinquency levels for any negative or adverse trends.

***Nonperforming Assets***

Nonperforming assets totaled $70.1 million, or 0.64%, of total assets, at March 31, 2026 compared to $60.0 million, or 0.56%, of total assets at December 31, 2025. Nonaccrual loans consisted of 160 separate credits at March 31, 2026 compared to 171 separate credits at December 31, 2025.

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

The following table presents information regarding nonperforming assets as of the dates indicated:

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| | | |
|:---|:---|:---|
| | **March 31, 2026** | **December 31, 2025** |
| | **(Dollars in thousands)** | **(Dollars in thousands)** |
| Nonaccrual loans: |  |  |
| Commercial and industrial | $10488 | $7616 |
| Real estate: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate (including multi-family residential) | 32939 | 29271 |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate construction and land development | 905 | 1838 |
| &nbsp;&nbsp;&nbsp;&nbsp;1-4 family residential (including home equity) | 15920 | 13333 |
| &nbsp;&nbsp;&nbsp;&nbsp;Residential construction | 292 | 448 |
| Consumer and other | 46 | 42 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total nonaccrual loans | 60590 | 52548 |
| Accruing loans 90 or more days past due |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total nonperforming loans | 60590 | 52548 |
| Foreclosed assets | 9489 | 7492 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total nonperforming assets | $70079 | $60040 |
| Troubled loan modifications<sup>(1)</sup> | $10916 | $2085 |
| Nonperforming assets to total assets | 0.64% | 0.56% |
| Nonperforming loans to total loans | 0.80% | 0.72% |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Troubled loan modifications in the table above represent the balance at the end of the respective period for those loans that are not already presented as a nonperforming loan.

***Allowance for Credit Losses***

The allowance for credit losses is a valuation allowance that is established through charges to earnings in the form of a provision for (or reversal of) credit losses calculated in accordance with Accounting Standards Codification ("ASC") Topic 326- Measurement of Credit Losses on Financial Instruments ("ASC 326") that is deducted from the amortized cost basis of certain assets to present the net amount expected to be collected. The amount of each allowance account represents management's best estimate of current expected credit losses on these financial instruments considering available information, from internal and external sources, relevant to assessing exposure to credit loss over the contractual term of the instrument. Relevant available information includes historical credit loss experience, current conditions and reasonable and supportable forecasts. While historical credit loss experience provides the basis for the estimation of expected credit losses, adjustments to historical loss information may be made for differences in current portfolio-specific risk characteristics, environmental conditions or other relevant factors. While management utilizes its best judgment and information available, the ultimate adequacy of our allowance accounts is dependent upon a variety of factors beyond our control, including the performance of our portfolios, the economy, changes in interest rates and the view of the regulatory authorities toward classification of assets. For additional information regarding critical accounting estimates and policies, refer to "Critical Accounting Estimates" in this section, Note 1 – Nature of Operations and Summary of Significant Accounting and Reporting Policies and Note 4 – Loans and Allowance for Credit Losses in the accompanying notes to the consolidated financial statements.

***Allowance for Credit Losses on Loans***

The allowance for credit losses on loans represents management's estimates of current expected credit losses in the loan portfolio. Pools of loans with similar risk characteristics are collectively evaluated, while loans that no longer share risk characteristics with loan pools are evaluated individually.

At March 31, 2026, our allowance for credit losses on loans was $85.4 million, or 1.13% of total loans, compared with $83.6 million, or 1.15% of total loans, as of December 31, 2025. The increase in the allowance for credit losses on loans during the first quarter of 2026 primarily resulted from the increase in loan balances and specific reserves, among other things, within the allowance for credit losses model.

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

The following table presents an analysis of the allowance for loan losses and other related data as of and for the periods indicated:

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| | | |
|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
|  | **2026** | **2025** |
|  | **(Dollars in thousands)** | **(Dollars in thousands)** |
| Average loans outstanding | $7462404 | $7344298 |
| Gross loans outstanding at end of period | 7587952 | 7283133 |
| Allowance for credit losses on loans at beginning of period | 83629 | 81058 |
| Provision for credit losses on loans | 3160 | 2851 |
| Charge-offs: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial and industrial loans | (753) | (45) |
| &nbsp;&nbsp;&nbsp;&nbsp;Real estate: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate (including multi-family residential) | (851) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial real estate construction and land development |  | (310) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1-4 family residential (including home equity) | (2) | (224) |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer and other | (10) | (3) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total charge-offs for all loan types | (1616) | (582) |
| Recoveries: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Commercial and industrial loans | 240 | 416 |
| &nbsp;&nbsp;&nbsp;&nbsp;Real estate: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1-4 family residential (including home equity) | 16 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Consumer and other | 2 | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total recoveries for all loan types | 258 | 419 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net charge-offs | (1358) | (163) |
| Allowance for credit losses on loans at end of period | $85431 | $83746 |
| Allowance for credit losses on loans to total loans | 1.13% | 1.15% |
| Net charge-offs to average loans<sup>(1)</sup> | 0.07% | 0.01% |
| Allowance for credit losses on loans to nonperforming loans | 141.00% | 153.61% |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)Annualized.

See Note 4 – Loans and Allowance for Credit Losses in the accompanying notes to the consolidated financial statement for additional information regarding how we estimate and evaluate the credit risk in our loan portfolio.

***Allowance for Credit Losses on Unfunded Commitments***

The allowance for credit losses on unfunded commitments to extend credit estimates current expected credit losses over the contractual period in which there is exposure to credit risk via a contractual obligation to extend credit unless that obligation is unconditionally cancellable by us. The allowance for credit losses on unfunded commitments is a liability account reported as a component of other liabilities in our consolidated balance sheets and is adjusted through a provision for (or reversal of) credit loss charged to expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on the commitments expected to be funded. The estimate of commitments expected to fund is affected by historical analysis looking at utilization rates. The expected credit loss rates applied to the commitments expected to be funded are affected by the general valuation allowance utilized for outstanding balances with the same underlying assumptions and drivers. At March 31, 2026, our allowance for credit losses on unfunded commitments decreased to $15.5 million compared to $16.2 million at December 31, 2025 primarily due to a decrease in unfunded commitments.

See Note 13 – Off-Balance Sheet Arrangements, Commitments and Contingencies in the accompanying notes to the consolidated financial statement for additional information regarding unfunded commitments to extend credit.

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

***Available for Sale Securities***

We use our securities portfolio to provide a source of liquidity, to provide an appropriate return on funds invested, to manage interest rate risk and to meet pledging and regulatory capital requirements. As of March 31, 2026, the carrying amount of investment securities totaled $1.86 billion, a decrease of $333.7 million, or 15.2%, compared with $2.20 billion as of December 31, 2025. The balance of investment securities at December 31, 2025 was higher than usual due to short-term investments made due to public funds seasonality. Securities represented 17.1% and 20.3% of total assets as of March 31, 2026 and December 31, 2025, respectively.

All of the securities in our securities portfolio are classified as available for sale. Securities classified as available for sale are measured at fair value in the financial statements with unrealized gains and losses reported, net of tax, as accumulated comprehensive income or loss until realized. Interest earned on securities is included in interest income. The following tables summarize the amortized cost and fair value of the securities in our securities portfolio as of the dates shown:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
| | **Amortized<br>Cost** | **Gross<br>Unrealized<br>Gains** | **Gross<br>Unrealized<br>Losses** | **Fair <br>Value** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| **Available for Sale** | | | | |
| U.S. government and agency securities | $89315 | $546 | $(2216) | $87645 |
| Municipal securities | 217653 | 355 | (24389) | 193619 |
| Agency mortgage-backed pass-through securities | 839002 | 2252 | (35367) | 805887 |
| Agency collateralized mortgage obligations | 723509 | 1483 | (51007) | 673985 |
| Corporate bonds and other | 107861 | 678 | (4965) | 103574 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $1977340 | $5314 | $(117944) | $1864710 |

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| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
| | **Amortized<br> Cost** | **Gross<br>Unrealized<br>Gains** | **Gross<br>Unrealized<br>Losses** | **Fair <br>Value** |
| | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| **Available for Sale** | | | | |
| U.S. government and agency securities | $394361 | $497 | $(2383) | $392475 |
| Municipal securities | 218143 | 627 | (22569) | 196201 |
| Agency mortgage-backed pass-through securities | 831815 | 5548 | (29377) | 807986 |
| Agency collateralized mortgage obligations | 737627 | 3375 | (43937) | 697065 |
| Corporate bonds and other | 108820 | 564 | (4652) | 104732 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $2290766 | $10611 | $(102918) | $2198459 |

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Investment securities classified as available for sale or held to maturity are evaluated for expected credit losses under ASC Topic 326. See Note 3 – Securities in the accompanying notes to the consolidated financial statements for additional information. Management does not have the intent to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Accordingly, as of March 31, 2026, management believes that the unrealized losses detailed in the previous table are due to noncredit-related factors, including changes in interest rates and other market conditions, and therefore, no losses have been recognized in the Company's consolidated statements of income.

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

The following tables summarize the contractual maturity of securities and their weighted-average yields as of the dates indicated. The contractual maturity of a mortgage-backed security is the date at which the last underlying mortgage matures. Available for sale securities are shown at amortized cost. For purposes of the tables below, the yields on municipal securities were calculated on a tax equivalent basis.

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
| | **Within One Year** | **Within One Year** | **After One Year but Within Five Years** | **After One Year but Within Five Years** | **After Five Years but Within Ten Years** | **After Five Years but Within Ten Years** | **After Ten Years** | **After Ten Years** | **Total** | **Total** |
| | **Amount** | **Yield** | **Amount** | **Yield** | **Amount** | **Yield** | **Amount** | **Yield** | **Total** | **Yield** |
| | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** |
| **Available for Sale** | | | | | | | | | | |
| U.S. government and agency securities | $— | 0.00% | $3900 | 4.82% | $392 | 2.68% | $85023 | 4.24% | $89315 | 4.26% |
| Municipal securities | 1809 | 4.74% | 16752 | 2.28% | 79365 | 2.36% | 119727 | 2.45% | 217653 | 2.42% |
| Agency mortgage-backed pass-through securities | 14 | 2.70% | 8586 | 4.06% | 16924 | 2.56% | 813478 | 4.32% | 839002 | 4.29% |
| Agency collateralized mortgage obligations | 10902 | 2.83% | 28191 | 3.73% | 46110 | 4.23% | 638306 | 3.30% | 723509 | 3.37% |
| Corporate bonds and other | 1154 | 0.80% | 2000 | 8.33% | 73840 | 5.74% | 30867 | 2.26% | 107861 | 4.74% |
| Total | $13879 | 2.91% | $59429 | 3.59% | $216631 | 3.93% | $1687401 | 3.76% | $1977340 | 3.77% |

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
| | **Within One Year** | **Within One Year** | **After One Year but Within Five Years** | **After One Year but Within Five Years** | **After Five Years but Within Ten Years** | **After Five Years but Within Ten Years** | **After Ten Years** | **After Ten Years** | **Total** | **Total** |
| | **Amount** | **Yield** | **Amount** | **Yield** | **Amount** | **Yield** | **Amount** | **Yield** | **Total** | **Yield** |
| | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** |
| **Available for Sale** | | | | | | | | | | |
| U.S. government and agency securities | $298792 | 3.59% | $2571 | 5.86% | $2229 | 3.78% | $90769 | 4.51% | $394361 | 3.82% |
| Municipal securities |  | 0.00% | 14660 | 2.76% | 76295 | 2.34% | 127188 | 2.50% | 218143 | 2.46% |
| Agency mortgage-backed pass-through securities | 14 | 2.74% | 8684 | 4.05% | 10606 | 3.37% | 812511 | 4.29% | 831815 | 4.28% |
| Agency collateralized mortgage obligations | 4991 | 2.80% | 34743 | 3.65% | 35170 | 4.33% | 662723 | 3.37% | 738627 | 3.43% |
| Corporate bonds and other | 1145 | 3.07% |  | 0.00% | 71832 | 5.65% | 35843 | 2.81% | 108820 | 4.69% |
| Total | $304942 | 3.57% | $60658 | 3.59% | $196132 | 3.98% | $1729034 | 3.79% | $2290766 | 3.77% |

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The contractual maturity of mortgage-backed securities and collateralized mortgage obligations is not a reliable indicator of their expected life because borrowers may have the right to prepay their obligations. Mortgage-backed securities and collateralized mortgage obligations are typically issued with stated principal amounts and are backed by pools of mortgage loans with varying maturities. The terms of the underlying mortgages and loans may vary significantly due to the ability of a borrower to prepay and, in particular, monthly pay downs on mortgage-backed securities tend to cause the average life of the securities to be much different than the stated contractual maturity. During a period of increasing interest rates, fixed rate mortgage-backed securities do not tend to experience heavy prepayments of principal and, consequently, the average life of this security will be lengthened. If interest rates begin to fall, prepayments may increase, thereby shortening the estimated life of the security.

As of March 31, 2026 and December 31, 2025, we did not own securities of any one issuer (other than the U.S. government and its agencies or sponsored entities) for which the aggregate adjusted cost exceeded 10% of our consolidated shareholders' equity.

The average yield of our securities portfolio was 3.86% for the three months ended March 31, 2026 compared with 3.78% for the three months ended March 31, 2025. The increase in average yield during the three months ended March 31, 2026 compared to the same period in 2025 was primarily due to security purchases during the quarter increasing the mix of higher-yielding securities within the portfolio.

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

***Goodwill and Core Deposit Intangibles***

Goodwill was $497.3 million as of March 31, 2026 and December 31, 2025. Goodwill resulting from business combinations represents the excess of the consideration paid over the fair value of the net assets acquired. Goodwill is assessed annually for impairment and on an interim basis if an event occurs or circumstances change that would indicate that the carrying amount of the asset may not be recoverable.

Core deposit intangibles, net, as of March 31, 2026 was $66.1 million and $71.0 million as of December 31, 2025. Core deposit intangibles are amortized using the straight-line or an accelerated method over the estimated useful life of seven to ten years.

***Deposits***

Our lending and investing activities are primarily funded by deposits. We offer a variety of deposit accounts having a wide range of interest rates and terms including demand, savings, money market and certificates and other time accounts. We rely primarily on convenient locations, personalized service and our customer relationships to attract and retain these deposits. We seek customers that will engage in both a lending and deposit relationship with us.

Total deposits at March 31, 2026 were $8.98 billion, a decrease of $39.5 million, or 0.4%, compared with $9.02 billion at December 31, 2025 primarily driven by seasonality, industry-wide pressures and the maintenance of pricing discipline in an intensely competitive market for deposits. Noninterest-bearing deposits at March 31, 2026 were $3.21 billion, a decrease of $197.3 million, or 5.8%, compared with $3.41 billion at December 31, 2025. Interest-bearing deposits at March 31, 2026 were $5.77 billion, an increase of $157.8 million, or 2.8%, compared with $5.61 billion at December 31, 2025. Our ratio of noninterest-bearing deposits to total deposits was 35.7% and 37.8% at March 31, 2026 and December 31, 2025, respectively. Deposits include fully collateralized public funds of $1.20 billion and $1.11 billion at March 31, 2026 and December 31, 2025, respectively.

The following table sets forth the amount of time deposits that met or exceeded the FDIC insurance limit of $250 thousand by time remaining until maturity at March 31, 2026 (in thousands):

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| | |
|:---|:---|
| Three months or less | $203329 |
| Over three months through six months | 360556 |
| Over six months through 12 months | 47860 |
| Over 12 months | 18015 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $629760 |

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***Borrowings***

The Company has an available line of credit with the Federal Home Loan Bank of Dallas ("FHLB"), which allows the Company to borrow on a collateralized basis. FHLB advances are used to manage liquidity as needed. The advances are secured by blanket liens on certain loans. Maturing advances are replaced by drawing on available cash, making additional borrowings or through increased customer deposits. At March 31, 2026, the Company had a total borrowing capacity of $3.17 billion, of which $1.81 billion was available under this agreement, $1.23 billion was outstanding pursuant to FHLB letters of credit and $135.0 million was outstanding pursuant to FHLB advances. The FHLB advances outstanding at March 31, 2026 have a weighted-average rate of 3.77% and matured on April 1, 2026.

At March 31, 2026, the Company had FHLB letters of credit pledged as collateral for public and other deposits of state and local government agencies which expire in the following periods (in thousands):

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| | |
|:---|:---|
| 2026 | $294550 |
| 2027 | 752030 |
| 2028 | 46000 |
| 2029 | 84000 |
| Thereafter | 55000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $1231580 |

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

***Subordinated Debt***

***Junior Subordinated Debentures***

In connection with the acquisition of F&M Bancshares, Inc. in 2015, the Company assumed Farmers & Merchants Capital Trust II and Farmers & Merchants Capital Trust III. Each of the trusts is a capital or statutory business trust organized for the sole purpose of issuing trust securities and investing the proceeds in the Company's junior subordinated debentures. The preferred trust securities of each trust represent preferred beneficial interests in the assets of the respective trusts and are subject to mandatory redemption upon payment of the junior subordinated debentures held by the trust. The common securities of each trust are wholly owned by the Company. Each trust's ability to pay amounts due on the trust preferred securities is solely dependent upon Stellar making payment on the related junior subordinated debentures. The debentures, which are the only assets of each trust, are subordinate and junior in right of payment to all of the Company's present and future senior indebtedness. The Company has fully and unconditionally guaranteed each trust's obligations under the trust securities issued by each trust to the extent not paid or made by such trust, provided such trust has funds available for such obligations. The trust preferred securities bear a floating rate of interest equal to 3-Month SOFR plus a spread adjustment. The junior subordinated debentures are included in Tier 1 capital under current regulatory guidelines and interpretations. Under the provisions of each issue of the debentures, the Company has the right to defer payment of interest on the debentures at any time, or from time to time, for periods not exceeding five years. If interest payments on either issue of the debentures are deferred, the distributions on the applicable trust preferred securities and common securities will also be deferred.

A summary of pertinent information related to the Company's issuances of junior subordinated debentures outstanding at March 31, 2026 is set forth in the table below:&nbsp;&nbsp;&nbsp;&nbsp;

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| | | | | |
|:---|:---|:---|:---|:---|
| **Description** | **Issuance Date** | **Trust**<br>**Preferred**<br>**Securities**<br>**Outstanding** | **Junior**<br>**Subordinated**<br>**Debt Owed**<br>**to Trusts** | **Maturity Date**<sup>(1)</sup> |
| **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** | **(Dollars in thousands)** |
| Farmers & Merchants Capital Trust II | November 13, 2003 | $7500 | $7732 | November 8, 2033 |
| Farmers & Merchants Capital Trust III | June 30, 2005 | 3500 | 3609 | July 7, 2035 |
|  |  |  | $11341 |  |

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(1) All junior subordinated debentures were callable at March 31, 2026.

***Subordinated Notes***

In December 2017, the Bank issued $40.0 million aggregate principal amount of Fixed-to-Floating Rate Subordinated Notes (the "Bank Notes") due December 15, 2027 and bore a floating rate of interest equal to 3-Month SOFR plus 3.03% spread adjustment. In December 2024, the Bank redeemed the Bank Notes at a redemption price equal to 100% of the principal amount of Bank Notes plus accrued and unpaid interest.

In September 2019, the Company issued $60.0 million aggregate principal amount of Fixed-to-Floating Rate Subordinated Notes (the "Company Notes") due October 1, 2029. As of March 31, 2026, the Company Notes bear interest at a floating rate equal to 3-Month SOFR plus 3.13% and a spread adjustment for each quarterly interest period, payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each year. On October 1, 2025, the Company redeemed $30.0 million of the Company notes. Any redemptions will be at a redemption price equal to 100% of the principal amount of Company Notes being redeemed, plus accrued and unpaid interest, and will be subject to, and require, prior regulatory approval. The Company Notes are not subject to redemption at the option of the holders.

On April 1, 2026, the Company redeemed the remaining $30.0 million of its Company Notes. The redemption price for the Company Notes was equal to 100% of the principal amount of the Company Notes redeemed, plus $529 thousand for accrued and unpaid interest to, but excluding, the redemption date. The redemption on April 1, 2026 resulted in the redemption of all of the outstanding Company Notes.

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

***Credit Agreement***

On December 13, 2024, the Company renewed its loan agreement with another financial institution (the "Loan Agreement") that provides for a $75.0 million revolving line of credit. At March 31, 2026, there were no outstanding borrowings on this line of credit and no draws were taken on this line of credit during the three months ended March 31, 2026. Interest accrues on outstanding borrowings at a per annum rate equal to 3-month SOFR plus 2.75%, calculated in accordance with the terms of the revolving promissory note and payable quarterly through the first 24 months. The entire outstanding balance and unpaid interest is payable in full on December 13, 2033, the maturity date. The Company may prepay the principal amount of the line of credit without premium or penalty. The obligations of the Company under the Loan Agreement are secured by a pledge of all of the issued and outstanding shares of capital stock of the Bank.

Covenants made under the Loan Agreement include, among other things, while there are obligations outstanding under Loan Agreement, the Company shall maintain a cash flow to debt service (as defined in the Loan Agreement) of not less than 1.25, the Bank's Texas Ratio (as defined in the Loan Agreement) not to exceed 20.0%, the Bank shall maintain a Tier 1 Leverage Ratio (as defined under the Loan Agreement) of at least 8.0% and includes restrictions on the ability of the Company and its subsidiaries to incur certain additional debt. As of March 31, 2026, the Company believes it was in compliance with all such debt covenants and had not been made aware of any noncompliance by the lender.

**Liquidity and Capital Resources**

***Liquidity***

Liquidity is the measure of our ability to meet the cash flow requirements of depositors and borrowers, while at the same time meeting our operating, capital and strategic cash flow needs and to maintain reserve requirements to operate on an ongoing basis and manage unexpected events, all at a reasonable cost. During the three months ended March 31, 2026 and the year ended December 31, 2025, our liquidity needs have primarily been met by deposits, borrowed funds and securities. The Bank has access to purchased funds from correspondent banks, the Federal Reserve discount window and advances from the FHLB, on a collateralized basis, are available under a security and pledge agreement to take advantage of investment opportunities.

Liquidity risk management is an important element in our asset/liability management process. Our liquidity position is continuously monitored and adjustments are made to the balance between sources and uses of funds as deemed appropriate. We regularly model liquidity stress scenarios to assess potential liquidity outflows or funding problems resulting from economic disruptions, volatility in the financial markets, unexpected credit events or other significant occurrences deemed problematic by management. Liquidity stress scenarios are incorporated into our contingency funding plan, which provides the basis for the identification of our liquidity needs.

Our largest source of funds is deposits and our largest use of funds is loans. Average total deposits increased $538.0 million, or 6.1%, and average loans increased $118.1 million, or 1.6%, during the three months ended March 31, 2026 compared to the three months ended March 31, 2025. We predominantly invest excess deposits in Federal Reserve Bank of Dallas balances, securities, interest-bearing deposits at other banks or other short-term liquid investments until the funds are needed to fund loan growth. Our securities portfolio had a weighted-average life of 7.4 years and 6.4 years at March 31, 2026 and December 31, 2025, respectively.

As of March 31, 2026 and December 31, 2025, we had outstanding commitments to extend credit of $2.06 billion and $2.10 billion, respectively, and commitments associated with outstanding letters of credit of $186.2 million and $65.6 million, respectively. Since commitments associated with commitments to extend credit and outstanding letters of credit may expire unused, the total outstanding may not necessarily reflect the actual future cash funding requirements. At March 31, 2026 and December 31, 2025, we had FHLB letters of credit in the amount of $1.23 billion and $2.17 billion, respectively, pledged as collateral for public and other deposits of state and local government agencies. See Note 9 – Borrowings and Borrowing Capacity to the accompanying consolidated financial statements.

Total immediate contingent funding sources, including unrestricted cash, available-for-sale securities that are not pledged and total available borrowing capacity was $3.48 billion, or 39%, of total deposits at March 31, 2026. As of March 31, 2026, estimated uninsured deposits net of collateralized deposits were 45.0% of total deposits compared to 45.7% at December 31, 2025. Including policy-driven capacity for brokered deposits, the Bank would have been able to add approximately $2.26 billion to its contingent sources of liquidity, bringing total contingent funding sources to approximately $5.74 billion, or 64.0%, of deposits at March 31, 2026.

As of March 31, 2026 and December 31, 2025, we had no exposure to future cash requirements associated with known uncertainties or capital expenditures of a material nature.

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

In the ordinary course of business, we have entered into contractual obligations and have made other commitments to make future payments. Refer to the accompanying notes to accompanying consolidated financial statements for the expected timing of such payments as of March 31, 2026. These include payments related to (1) operating leases (Note 5 – Leases), (2) time deposits with stated maturity dates (Note 7 – Deposits), (3) borrowings (Note 9 – Borrowings and Borrowing Capacity) and (4) commitments to extend credit and standby letters of credit (Note 13 – Off-Balance Sheet Arrangements, Commitments and Contingencies).

*Commitments to Extend Credit*. We enter into contractual commitments to extend credit, normally with fixed expiration dates or termination clauses, at specified rates and for specific purposes. Substantially all of our commitments to extend credit are contingent upon customers maintaining specific credit standards at the time of loan funding. We minimize our exposure to loss under these commitments by subjecting them to credit approval and monitoring procedures. The amount and type of collateral obtained, if considered necessary by us, upon extension of credit, is based on management's credit evaluation of the customer. Management assesses the credit risk associated with certain commitments to extend credit in determining the level of the allowance for credit losses.

*Standby Letters of Credit.* Standby letters of credit are written conditional commitments issued by the Company to guarantee the performance of a customer to a third-party. In the event of nonperformance by the customer, the Company has the rights to the underlying collateral. The credit risk to the Company in issuing letters of credit is substantially similar to that involved in extending loan facilities to its customers. The Company's policy for obtaining collateral, and the nature of such collateral, is substantially similar to that involved in making commitments to extend credit.

***Capital Resources***

Capital management consists of providing equity to support our current and future operations. We are subject to capital adequacy requirements imposed by the Federal Reserve. The Federal Reserve has adopted risk-based to capital requirements for assessing bank holding company and bank capital adequacy. These standards define capital and establish minimum capital requirements in relation to assets and off-balance sheet exposure, adjusted for credit risk. The risk-based capital standards currently in effect are designed to make regulatory capital requirements more sensitive to differences in risk profiles among bank holding companies and banks, to account for off-balance sheet exposure and to minimize disincentives for holding liquid assets. Assets and off-balance sheet items are assigned to broad risk categories, each with appropriate relative risk weights. The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance sheet items.

Under current guidelines, the minimum ratio of total capital to risk-weighted assets (which are primarily the credit risk equivalents of balance sheet assets and certain off-balance sheet items such as standby letters of credit) is 8.0%. At least half of total capital must be composed of Tier 1 capital, which includes common shareholders' equity (including retained earnings), less goodwill, other disallowed intangible assets and disallowed deferred tax assets, among other items. The Federal Reserve also has adopted a minimum leverage ratio, requiring Tier 1 capital of at least 4.0% of average quarterly total consolidated assets, net of goodwill and certain other intangible assets, for all but the most highly rated bank holding companies. The federal banking agencies have also established risk-based and leverage capital guidelines that FDIC-insured depository institutions are required to meet. These regulations are generally similar to those established by the Federal Reserve for bank holding companies.

Under the Federal Deposit Insurance Act, the federal bank regulatory agencies must take "prompt corrective action" against undercapitalized U.S. depository institutions. U.S. depository institutions are assigned one of five capital categories: "well- capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized" and "critically undercapitalized," and are subjected to different regulation corresponding to the capital category within which the institution falls. A depository institution is deemed to be "well capitalized" if the banking institution has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a common equity Tier 1 capital ratio of 6.5% and a leverage ratio of 5.0% or greater, and the institution is not subject to an order, written agreement, capital directive or prompt corrective action directive to meet and maintain a specific level for any capital measure. Under certain circumstances, a well-capitalized, adequately capitalized or undercapitalized institution may be treated as if the institution were in the next lower capital category.

Failure to meet capital guidelines could subject the institution to a variety of enforcement remedies by federal bank regulatory agencies, including termination of deposit insurance by the FDIC, restrictions on certain business activities and appointment of the FDIC as conservator or receiver. As of March 31, 2026 and December 31, 2025, the Bank was well-capitalized. Total shareholders' equity was $1.67 billion at both March 31, 2026 and December 31, 2025. Shareholders' equity increased during the three months ended March 31, 2026 due to net income of $27.0 million partially offset by an increase of $16.0 million of other comprehensive loss, dividends paid of $7.8 million, or $0.15 per common share, and $4.2 million paid to repurchase common stock at a weighted-average price per share of $31.06.

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

The following is a summary of the Company's and the Bank's actual and required capital ratios as of March 31, 2026:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Actual<br>Ratio** | **Minimum<br>Required<br>For Capital<br>Adequacy<br>Purposes** | **Minimum<br>Required<br>Plus Capital<br>Conservation<br>Buffer** | **To Be<br>Categorized As<br>Well-Capitalized<br>Under Prompt<br>Corrective<br>Action Provisions** |
| **Stellar Bancorp, Inc. (Consolidated)** | | | | |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Capital (to risk-weighted assets) | 15.48% | 8.00% | 10.50% | N/A |
| &nbsp;&nbsp;&nbsp;&nbsp;Common Equity Tier 1 Capital (to risk-weighted assets) | 13.97% | 4.50% | 7.00% | N/A |
| &nbsp;&nbsp;&nbsp;&nbsp;Tier 1 Capital (to risk-weighted assets) | 14.09% | 6.00% | 8.50% | N/A |
| &nbsp;&nbsp;&nbsp;&nbsp;Tier 1 Leverage (to average tangible assets) | 11.29% | 4.00% | 4.00% | N/A |
| **Stellar Bank** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Capital (to risk-weighted assets) | 14.74% | 8.00% | 10.50% | 10.00% |
| &nbsp;&nbsp;&nbsp;&nbsp;Common Equity Tier 1 Capital (to risk-weighted assets) | 13.56% | 4.50% | 7.00% | 6.50% |
| &nbsp;&nbsp;&nbsp;&nbsp;Tier 1 Capital (to risk-weighted assets) | 13.56% | 6.00% | 8.50% | 8.00% |
| &nbsp;&nbsp;&nbsp;&nbsp;Tier 1 Leverage (to average tangible assets) | 10.86% | 4.00% | 4.00% | 5.00% |

---

**ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

**Asset/Liability Management and Interest Rate Risk**

Our asset liability and interest rate risk policy provides management with guidelines for effective balance sheet management. We have established a measurement system for monitoring our net interest rate sensitivity position. We seek to manage our sensitivity position within our established guidelines.

As a financial institution, a component of the market risk that we face is interest rate volatility. Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on most of our assets and liabilities, and the market value of all interest-earning assets and interest-bearing liabilities, other than those which have a short term to maturity. Interest rate risk is the potential for economic losses due to future interest rate changes. These economic losses can be reflected as a loss of future net interest income and/or a loss of current fair market values. The objective is to measure the effect on net interest income and to adjust the balance sheet to minimize the inherent risk while at the same time maximizing income.

Based upon the nature of our operations, we are not subject to foreign exchange rate or commodity price risk. We do not own any trading assets. We manage our exposure to interest rates by structuring our balance sheet in the ordinary course of a community banking business. The Company enters into interest rate swaps as an accommodation to customers.

Our exposure to interest rate risk is managed by our Asset Liability Committee ("ALCO"). The ALCO formulates strategies based on appropriate levels of interest rate risk. In determining the appropriate level of interest rate risk, the ALCO considers the impact on earnings and capital of the current outlook on interest rates, potential changes in interest rates, regional economies, liquidity, business strategies and other factors. The ALCO meets regularly to review, among other things, the sensitivity of assets and liabilities to interest rate changes, the book and market values of assets and liabilities, unrealized gains and losses, purchase and sale activities, commitments to originate loans and the maturities of investments and borrowings. Additionally, the ALCO reviews liquidity, cash flow flexibility, maturities of deposits and consumer and commercial deposit activity.

We use an interest rate risk simulation model and shock analysis to test the interest rate sensitivity of net interest income and the balance sheet, respectively. Where applicable, instruments on the balance sheet are modeled at the instrument level, incorporating all relevant attributes such as next reset date, reset frequency and call dates, as well as prepayment assumptions for loans and securities and decay rates for nonmaturity deposits. Assumptions based on past experience are incorporated into the model for nonmaturity deposit account decay rates. The assumptions used are inherently uncertain and, as a result, the model cannot precisely measure future net interest income or precisely predict the impact of fluctuations in market interest rates on net interest income. Actual results will differ from the model's simulated results due to timing, magnitude and frequency of interest rate changes as well as changes in market conditions and the application and timing of various management strategies.

We utilize static balance sheet rate shocks to estimate the potential impact on net interest income of changes in interest rates under various rate scenarios. This analysis estimates a percentage of change in the metric from the stable rate base scenario versus alternative scenarios of rising and falling market interest rates by instantaneously shocking a static balance sheet.

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<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

The following table summarizes the simulated change in net interest income over a 12-month horizon and the economic value of equity as of the dates indicated:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Change in Interest<br>Rates (Basis Points)** | **Percent Change in Net Interest Income** | **Percent Change in Net Interest Income** | **Percent Change in Economic Value of Equity** | **Percent Change in Economic Value of Equity** |
| **Change in Interest<br>Rates (Basis Points)** | **March 31, 2026** | **December 31, 2025** | **March 31, 2026** | **December 31, 2025** |
| +300 | 8.8% | 9.2% | (10.3)% | (1.0)% |
| +200 | 6.4% | 6.5% | (4.7)% | 1.5% |
| +100 | 3.4% | 3.4% | (1.2)% | 1.8% |
| Base | 0.0% | 0.0% | 0.0% | 0.0% |
| -100 | (3.1)% | (3.2)% | (1.2)% | (4.0)% |
| -200 | (5.5)% | (5.9)% | (5.6)% | (10.5)% |
| -300 | (6.6)% | (7.6)% | (13.4)% | (19.5)% |

---

These results are primarily due to the size of our cash position, the size and duration of our loan and securities portfolio, the duration of our borrowings and the expected behavior of demand, money market and savings deposits during such rate fluctuations. During the three months ended March 31, 2026, changes in our overall interest rate profile were driven by the increase in cash and decrease in loans, noninterest-bearing deposits and certificates of deposits.

**ITEM 4. CONTROLS AND PROCEDURES**

***Evaluation of disclosure controls and procedures.*** As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures. In designing and evaluating the disclosure controls and procedures, management recognizes that controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply judgment in evaluating its controls and procedures. Based on this evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) were effective as of the end of the period covered by this Quarterly Report on Form 10-Q. See Exhibits 31.1 and 31.2 for the Certification statements issued by the Company's Chief Executive Officer and Chief Financial Officer, respectively.

***Changes in internal control over financial reporting***. There were no changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

**PART II—OTHER INFORMATION**

**ITEM 1. LEGAL PROCEEDINGS**

From time to time, we are subject to claims and litigation arising in the ordinary course of business. In the opinion of management, we are not party to any legal proceedings the resolution of which we believe would have a material adverse effect on our business, prospects, financial condition, liquidity, results of operation, cash flows or capital levels. However, one or more unfavorable outcomes in any claim or litigation against us could have a material adverse effect for the period in which such claim or litigation is resolved. In addition, regardless of their merits or their ultimate outcomes, such matters are costly, divert management's attention and may materially adversely affect our reputation, even if resolved in our favor. We intend to defend ourselves vigorously against any future claims or litigation.

**ITEM 1A. RISK FACTORS**

There have been no material changes in the risk factors previously disclosed by the Company. Investors should carefully consider the risks, including risks relating to the Merger, described in "Part I—Item 1A.—Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 and the Company's other SEC filings.

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

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

On April 23, 2025, the Company announced that its Board of Directors authorized a share repurchase program under which the Company may repurchase up to $65 million of the Company's common stock through May 31, 2026 (the "2025-2026 Repurchase Program"). Repurchases under the 2025-2026 Repurchase Program may be made from time to time at the Company's discretion in open market transactions, through block trades, in privately negotiated transactions, and pursuant to any trading plan that may be adopted by the Company's management in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, or otherwise. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities. The 2025-2026 Repurchase Program does not obligate the Company to acquire a specific dollar amount or number of shares and may be modified, suspended or discontinued at any time. As of March 31, 2026, the number of shares that may be repurchased under 2025-2026 plan was 1,191,820 based on the closing share price of the Company's common stock. The Company repurchased 134 thousand shares at a weighted-average price of $31.06 per share during the first quarter of 2026 under the 2025-2026 Repurchase Program. All shares repurchased were retired.

The following table summarizes the shares repurchased by the Company:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Period** | **Number of Shares Purchased**<sup>(1)</sup> | **Weighted Average Price Paid Per Share** | **Shares Purchased as Part of Publicly Announced Plan** | **Number of Shares That May Yet be Purchased Under the Plan**<sup>(2)</sup> |
| January 1, 2026 to January 31, 2026 | 6157 | $31.08 | 134362 | 1174813 |
| February 1, 2026 to February 28, 2026 |  | $— |  | 1158591 |
| March 1, 2026 to March 31, 2026 | 54260 | $36.43 |  | 1191820 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 60417 | $32.57 | 134362 |  |

---

(1)&nbsp;&nbsp;&nbsp;&nbsp;Shares employees elected to have withheld to satisfy their tax liabilities related to options exercised or restricted stock vested or to pay the exercise price of the options as allowed under the Company's stock compensation plans. When this settlement method is elected by the employee, the Company repurchases the shares withheld upon vesting of the award stock.

(2)&nbsp;&nbsp;&nbsp;&nbsp;Computed based on the closing price of the Company's common stock as of the end of each period shown.

**ITEM 3. DEFAULTS UPON SENIOR SECURITIES**

None.

**ITEM 4. MINE SAFETY DISCLOSURES**

Not applicable.

**ITEM 5. OTHER INFORMATION**

None of the Company's directors or officers adopted, modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company's quarter ended March 31, 2026, as such terms are defined under Item 408(a) of Regulation S-K.

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

**ITEM 6. EXHIBITS**

---

| | |
|:---|:---|
| **Exhibit<br>Number** | **Description** |
| 2.1 | <u>[Agreement and Plan of Merger, dated January 27, 2026, by and between Prosperity Bancshares, Inc. and Stellar Bancorp, Inc. (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on January 29, 2026)](https://www.sec.gov/Archives/edgar/data/1473844/000110465926007678/tm264235d6_ex2-1.htm)</u> |
| 3.1 | <u>[Second Amended and Restated Certificate of Formation of Stellar Bancorp, Inc. (incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on October 3, 2022)](https://www.sec.gov/Archives/edgar/data/1473844/000110465922104952/tm2227178d1_ex3-1.htm)</u> |
| 3.2 | <u>[Amended and Restated Bylaws of Stellar Bancorp, Inc. (incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on March 4, 2025](https://www.sec.gov/Archives/edgar/data/1473844/000147384425000021/stellarbancorpinc-amende.htm)</u>) |
| 10.1 | <u>[Form of Voting Agreement, dated as of January 27, 2026, by and between Prosperity Bancshares, Inc. and each director of Stellar Bancorp, Inc. (Incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on January 29, 2026)](https://www.sec.gov/Archives/edgar/data/1473844/000110465926007678/tm264235d6_ex10-1.htm)</u> |
| 10.2 | <u>[Form of Director Support Agreement, dated as of January 27, 2026, by and among Prosperity Bancshares, Inc., Prosperity Bank, Stellar Bancorp, Inc., Stellar Bank and directors of Stellar Bancorp, Inc. (incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on January 29, 2026](https://www.sec.gov/Archives/edgar/data/1473844/000110465926007678/tm264235d6_ex10-2.htm)</u>)  |
| 31.1\* | <u>[Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended](stel2026q110qex311.htm)</u> |
| 31.2\* | <u>[Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended](stel2026q110qex312.htm)</u> |
| 32.1\*\* | <u>[Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](stel2026q110qex321.htm)</u> |
| 32.2\*\* | <u>[Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](stel2026q110qex322.htm)</u> |
| 101.INS\* | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
| 101.SCH\* | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL\* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF\* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB\* | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE\* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

\*&nbsp;&nbsp;&nbsp;&nbsp;Filed with this Quarterly Report on Form 10-Q.

\*\*&nbsp;&nbsp;&nbsp;&nbsp;Furnished with this Quarterly Report on Form 10-Q.

------

<u>[Table of Content](#i6dd69a6fa1b94936a68236768936d61e_7)s</u>

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

---

| | |
|:---|:---|
| | Stellar Bancorp, Inc.<br>(Registrant) |
| Date: April 28, 2026 | /s/ Robert R. Franklin, Jr. |
| | Robert R. Franklin, Jr. |
| | Chief Executive Officer |
| Date: April 28, 2026 | /s/ Paul P. Egge |
| | Paul P. Egge |
| | Chief Financial Officer |

---

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a) OF**

**THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED**

I, Robert R. Franklin, Jr., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Stellar Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| |
|:---|
| Date: April 28, 2026 |
| /s/ Robert R. Franklin, Jr. |
| Robert R. Franklin, Jr.<br>Chief Executive Officer |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a) OF**

**THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED**

I, Paul P. Egge, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Stellar Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| |
|:---|
| Date: April 28, 2026 |
| /s/ Paul P. Egge |
| Paul P. Egge<br>Chief Financial Officer |

---

## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 (AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)**

In connection with the Quarterly Report of Stellar Bancorp, Inc. (the "Company") on Form 10-Q for the period ending March 31, 2026 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Robert R. Franklin, Jr., Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and operating results of the Company as of the dates and for the periods expressed in the Report.

IN WITNESS WHEREOF, the undersigned has executed this Certificate, effective as of April 28, 2026.

---

| |
|:---|
| /s/ Robert R. Franklin, Jr. |
| Robert R. Franklin, Jr.<br>Chief Executive Officer |

---

## Exhibit 32.2

**Exhibit 32.2**

**CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 (AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)**

In connection with the Quarterly Report of Stellar Bancorp, Inc. (the "Company") on Form 10-Q for the period ending March 31, 2026 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Paul P. Egge, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and operating results of the Company as of the dates and for the periods expressed in the Report.

IN WITNESS WHEREOF, the undersigned has executed this Certificate, effective as of April 28, 2026.

---

| |
|:---|
| /s/ Paul P. Egge |
| Paul P. Egge<br>Chief Financial Officer |

---

<br>