The following discussion and analysis is designed to provide a better understanding of various factors relating to the results of operations and financial condition of ServisFirst Bancshares, Inc. (the “Company”) and its wholly-owned subsidiary, ServisFirst Bank (the “Bank”). This discussion is intended to supplement and highlight information contained in the accompanying unaudited consolidated balance sheets as of June 30, 2026 and December 31, 2025 and consolidated statements of income for the three and six months ended June 30, 2026 and June 30, 2025. 27 Forward-Looking Statements Statements in this document that are not historical facts, including, but not limited to, statements concerning future operations, results or performance, are hereby identified as “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”). The words “believe,” “expect,” “anticipate,” “project,” “plan,” “intend,” “will,” “could,” “would,” “might” and similar expressions often signify forward-looking statements. Such statements involve inherent risks and uncertainties. The Company cautions that such forward-looking statements, wherever they occur in this quarterly report or in other statements attributable to the Company, are necessarily estimates reflecting the judgment of the Company’s senior management and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. A number of factors could cause actual results to differ materially from those contemplated by the forward-looking statements in this document. Many of those factors are beyond our ability to control or predict. These factors include, but are not limited to: general economic conditions, especially in the credit markets and in the Southeast; the impact of tariffs, trade wars and other conflicts on general economic conditions; performance of the capital markets; changes in interest rates, yield curves and interest rate spread relationships; changes in accounting and tax principles, policies or guidelines; changes in our loan portfolio and the deposit base; possible changes in laws and regulations and governmental monetary and fiscal policies, including, but not limited to, Federal Reserve policies in connection with continued or re-emerging inflationary pressures and the ability of the U.S. Congress to increase the U.S. statutory debt limit as needed; computer hacking or cyber-attacks resulting in unauthorized access to confidential or proprietary information; substantial, unexpected or prolonged changes in the level or cost of liquidity; the cost and other effects of legal and administrative cases and similar contingencies; possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans and the value of collateral; the effect of natural disasters, such as hurricanes and tornados, in our geographic markets; and increased competition from both banks and nonbank financial institutions. The foregoing list of factors is not exhaustive. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Cautionary Note Regarding Forward Looking Statements” and “Risk Factors” in our most recent Annual Report on Form 10-K, “Forward-Looking Statements” and “Risk Factors” in our subsequent Quarterly Reports on Form 10-Q and our other U.S. Securities and Exchange Commission (“SEC”) filings. If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements. Accordingly, you should not place undue reliance on any forward-looking statements, which speak only as of the date made. The Company assumes no obligation to update or revise any forward-looking statements that are made from time to time. Business We are a bank holding company under the Bank Holding Company Act of 1956 and are headquartered in Birmingham, Alabama. Our wholly-owned subsidiary, ServisFirst Bank, an Alabama banking corporation, provides commercial banking services through full-service banking offices located in Alabama, Florida, Georgia, North and South Carolina, Tennessee, Texas and Virginia. The Bank recently entered the Houston, Texas market with plans of opening a new office there in the coming weeks. Through the Bank, we originate commercial, consumer and other loans and accept deposits, provide electronic banking services, such as online and mobile banking, including remote deposit capture, deliver treasury and cash management services and provide correspondent banking services to other financial institutions. Our principal business is to accept deposits from the public and to make loans and other investments. Our principal sources of funds for loans and investments are demand, time, savings, and other deposits. Our principal sources of income are interest and fees collected on loans, interest and dividends collected on other investments and service charges. Our principal expenses are interest paid on savings and other deposits, interest paid on our other borrowings, employee compensation, office expenses and other overhead expenses. Second Quarter Highlights ● Diluted earnings per common share of $1.57 for the second quarter of 2026, an increase of 40.2%, from the second quarter of 2025. ● Average loans of $14.22 billion for the second quarter of 2026, an increase of $1.21 billion, or 9.3%, from the second quarter of 2025. ● Average deposits of $14.32 billion for the second quarter of 2026, an increase of $423.0 million, or 3.0%, from the second quarter of 2025. ● Net interest income of $155.6 million for the second quarter of 2026, increased $23.9 million, or 18.2%, from the second quarter of 2025. ● Net interest margin of 3.63% for second quarter of 2026, increased 53 basis points from 3.10% in the second quarter of 2025. 28 Overview As of June 30, 2026, we had consolidated total assets of $18.35 billion, an increase of $618.3 million, or 3.5%, from $17.73 billion at December 31, 2025. Total loans were $14.48 billion at June 30, 2026, an increase of $781.6 million, or 5.7%, from $13.70 billion at December 31, 2025. Total deposits were $14.55 billion at June 30, 2026, an increase of $329.7 million, or 2.3%, from $14.22 billion at December 31, 2025. Noninterest-bearing demand deposits comprised most of the increase in deposits, increasing by $311.1 million. We reported net income and net income available to common stockholders of $85.8 million for the quarter ended June 30, 2026, compared to net income and net income available to common stockholders of $61.4 million for the second quarter of 2025. Basic and diluted earnings per common share were both $1.57 for the three months ended June 30, 2026, compared to $1.12 in the corresponding period in 2025. Net income was $168.8 million and net income available to common stockholders was $168.7 million for the six months ended June 30, 2026, compared to net income and net income available to common stockholders of $124.6 million for the six months ended June 30, 2025. Basic and diluted earnings per common share were both $3.09 for the six months ended June 30, 2026, compared to $2.28 for both for the corresponding period in 2025. Changes in income and expenses are more fully explained in “Results of Operations” below. Performance Ratios The following table presents select ratios of our results of operations for the three and six months ended June 30, 2026, and 2025. Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Return on average assets 1.91 % 1.40 % 1.90 % 1.42 % Return on average common stockholders' equity 17.71 % 14.56 % 17.81 % 15.08 % Dividend payout ratio 24.24 % 29.83 % 24.64 % 29.39 % Net interest margin (1) 3.63 % 3.10 % 3.58 % 3.01 % Efficiency ratio (2) 29.65 % 33.46 % 29.72 % 34.22 % Average stockholders' equity to average total assets 10.78 % 9.59 % 10.68 % 9.43 % (1) Net interest margin is the net yield on interest earning assets and is the difference between the interest yield earned on interest-earning assets and interest rate paid on interest-bearing liabilities, divided by average earning assets. (2) Efficiency ratio is the result of noninterest expense divided by the sum of net interest income and noninterest income. Financial Condition Cash and Cash Equivalents At June 30, 2026, we had $1.0 million in federal funds sold, compared to $6.1 million at December 31, 2025. We also maintain balances at the Federal Reserve Bank of Atlanta, which earn interest. At June 30, 2026, we had $1.08 billion in balances at the Federal Reserve, compared to $1.00 billion at December 31, 2025. At June 30, 2026, we had $250.4 million in securities purchased under agreements to resell, compared to $498.9 million at December 31, 2025. Securities Debt securities available-for-sale totaled $995.1 million at June 30, 2026 and $1.07 billion at December 31, 2025. During the three months ended June 30, 2025, the Company sold available-for-sale mortgage-backed securities with an amortized cost base of $70.5 million, and recorded a pre-tax loss of $8.6 million as a result of our portfolio restructuring during 2025. Debt securities held to maturity totaled $635.5 million at June 30, 2026 and $660.1 million at December 31, 2025. We had paydowns of $44.6 million on mortgage-backed securities and government agencies, maturities of $90.4 million on municipal bonds and treasury securities, and calls of $47.5 million on corporate securities during the six months ended June 30, 2026. We purchased $50.0 million in mortgage-backed securities and $33.7 million in corporate securities during the six months ended June 30, 2026. For a tabular presentation of debt securities available for sale and held to maturity at June 30, 2026 and December 31, 2025, see “Note 4 – Securities” in our Notes to Consolidated Financial Statements. 29 The objective of our investment policy is to invest funds not otherwise needed to meet our loan demand to earn the maximum return, yet still maintain sufficient liquidity to meet fluctuations in our loan demand and deposit structure. In doing so, we seek to balance the market and credit risks against the potential investment return, make investments compatible with the pledge requirements of any deposits of public funds, maintain compliance with regulatory investment requirements, and assist certain public entities with their financial needs. The investment committee has full authority over the investment portfolio and makes decisions on purchases and sales of securities. The entire portfolio, along with all investment transactions occurring since the previous board of directors meeting, is reviewed by the board at each monthly meeting. The investment policy allows portfolio holdings to include short-term securities purchased to provide us with needed liquidity and longer-term securities purchased to generate level income for us over periods of interest rate fluctuations. All debt securities in an unrealized loss position as of June 30, 2026 continue to perform as scheduled. We have evaluated the securities and have determined that the decline in fair value, relative to its amortized cost, is not due to credit-related factors. In addition, we have the ability to hold these securities within the portfolio until maturity or until the value recovers, and we believe that it is not likely that we will be required to sell these securities prior to recovery. We continue to monitor all of our securities with a high degree of scrutiny. There can be no assurance that we will not conclude in future periods that conditions existing at that time indicate some or all of its securities may be sold or would require a charge to earnings as a provision for credit losses in such periods. We do not invest in collateralized debt obligations. As of June 30, 2026, we had $392.2 million of bank and bank holding company-issued debt. All such bonds, if rated, were rated BBB or better by Kroll Bond Rating Agency at the time of our initial investment, and all other corporate bonds held were rated A‑1 or better by Standard & Poor’s or Moody’s at the time of purchase The total investment portfolio has a combined average credit rating of AA as of June 30, 2026. The carrying value of debt securities pledged to secure public funds on deposit and for other purposes as required by law was $1.17 billion and $1.23 billion as of June 30, 2026 and December 31, 2025, respectively. Loans At June 30, 2026, we had total loans of $14.48 billion, an increase of $781.6 million, or 5.7%, from $13.70 billion at December 31, 2025. The majority of this growth occurred in non-owner occupied commercial loans, increasing $520.2 million, or 11.3% since December 31, 2025. The following table details our loan portfolio and the percentage composition by type at June 30, 2026 and December 31, 2025: June 30, 2026 December 31, 2025 (Dollars in Thousands) Commercial, financial and agricultural $ 3,252,437 $ 3,146,736 Real estate - construction 1,564,504 1,457,628 Real estate - mortgage: Owner-occupied commercial 2,781,375 2,739,823 1-4 family mortgage 1,685,723 1,671,713 Non-owner occupied commercial 5,123,635 4,603,389 Total real estate - mortgage 9,590,733 9,014,925 Consumer 70,815 77,623 Total Loans 14,478,489 13,696,912 Less: Allowance for credit losses (181,853 ) (171,683 ) Net Loans $ 14,296,636 $ 13,525,229 Commercial, financial and agricultural 22.46 % 22.97 % Real estate - construction 10.81 10.64 Real estate - mortgage: Owner-occupied commercial 19.21 20.00 1-4 family mortgage 11.64 12.21 Non-owner occupied commercial 35.39 33.61 Total real estate - mortgage 66.24 65.82 Consumer 0.49 0.57 Total Loans 100.00 % 100.00 % 30 The table below summarizes the Company’s commercial real estate portfolio at June 30, 2026 as segregated by industry concentrations based on North American Industry Classification System: June 30, 2026 Balance Percent of Total (Dollars in Thousands) Owner Occupied Real Estate Retail Trade $ 613,973 7.7 % Other Services (except Public Administration) 309,515 3.9 Health Care and Social Assistance 294,948 3.7 Accommodation and Food Services 277,337 3.5 Manufacturing 203,137 2.6 Professional, Scientific, and Technical Services 187,044 2.4 Real Estate and Rental and Leasing 155,870 2.0 Wholesale Trade 160,869 2.0 All Other Owner Occupied Real Estate 578,682 7.3 Total Owner Occupied Real Estate $ 2,781,375 35.1 % Non-Owner Occupied Real Estate Multifamily Permanent $ 1,401,264 17.7 % Shopping or Retail Center 776,372 9.8 Hotel or Motel 626,656 7.9 Office Building 574,295 7.3 Nursing Home or Assisted Living Facility 512,808 6.5 Office Warehouse 228,180 2.9 Warehouse 187,448 2.4 Self-Storage Facility 212,441 2.7 Gas Station or Convenience Store 116,750 1.5 Restaurant 77,599 1.0 All Other Income Property 409,822 5.2 Total Non-Owner Occupied Real Estate $ 5,123,635 64.9 % Total Commercial Real Estate $ 7,905,010 100.0 % The table below summarizes the Company’s commercial real estate portfolio at June 30, 2026 as segregated by geographic region in which the property is located: June 30, 2026 Balance Percent of Total (Dollars in Thousands) State: Alabama $ 2,382,447 30.1 % Florida 2,094,114 26.5 Georgia 953,166 12.1 North Carolina 320,977 4.1 South Carolina 375,167 4.7 Tennessee 652,734 8.3 Texas 311,185 3.9 Virginia 148,178 1.9 Other 667,042 8.4 Total commercial real estate loans $ 7,905,010 100.0 % 31 Asset Quality We assess the adequacy of our ACL at the end of each calendar quarter. The level of ACL is based on our evaluation of historical default and loss experience, current and projected economic conditions, asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect the borrowers' ability to repay a loan, the estimated value of any underlying collateral, composition of the loan portfolio and other relevant factors. The ACL is increased by a provision for credit losses, which is charged to expense, and reduced by charge-offs, net of recoveries. We believe the ACL is adequate to absorb all expected future losses to be recognized over the contractual life of the loans in the portfolio. Loans with similar risk characteristics are evaluated in pools and, depending on the nature of each identified pool, we utilize a discounted cash flow, probability of default / loss given default or remaining life method. The historical loss experience estimate by pool is then adjusted by forecast factors that are quantitatively related to the Company’s historical credit loss experience, such as national unemployment rates and gross domestic product. Losses are predicted over a period of time determined to be reasonable and supportable, and at the end of the reasonable and supportable period losses are reverted to long-term historical averages. The reasonable and supportable period and reversion period are re-evaluated each quarter and are dependent on the current economic environment among other factors. See “Note 1 – General” in the Notes to Consolidated Financial Statements included in Item 1. Consolidated Financial Statements elsewhere in this report. The expected credit losses for each loan pool are then adjusted for changes in qualitative factors not inherently considered in the quantitative analyses. The qualitative adjustments either increase or decrease the quantitative model estimation. We consider factors that are relevant within the qualitative framework, which include the following: lending policy, changes in nature and volume of loans, staff experience, changes in volume and trends of problem loans, concentration risk, trends in underlying collateral values, external factors, quality of loan review system and other economic conditions. Loans that no longer share similar risk characteristics with the collectively evaluated pools are excluded from the collective evaluation and expected credit losses are estimated on an individual basis. Individual evaluations are performed for nonaccrual loans, loans rated substandard, and certain modified loans. The allowance for credit losses on these individually evaluated loans is calculated using methods, such as the estimated fair value of underlying collateral, observable market prices of comparable debt, or the present value of expected future cash flows. The following table presents a summary of the allowance for credit losses, net charge-offs and certain credit ratios for the three and six months ended June 30, 2026 and 2025. As of and for the Three Months Ended As of and for the Six Months Ended June 30, June 30, 2026 2025 2026 2025 (Dollars in thousands) Total loans outstanding, net of unearned income $ 14,478,489 $ 13,232,560 $ 14,478,489 $ 13,232,560 Average loans outstanding, net of unearned income $ 14,224,521 $ 13,010,105 $ 14,005,688 $ 12,859,947 Allowance for credit losses at beginning of period 173,905 165,034 171,683 164,458 Charge-offs: Commercial, financial and agricultural loans 4,074 6,849 12,365 9,263 Real estate - construction 711 - 711 46 Real estate - mortgage 5 580 96 4,152 Consumer loans 79 73 250 133 Total charge-offs 4,869 7,502 13,422 13,594 Recoveries: Commercial, financial and agricultural loans 667 959 845 1,129 Real estate - construction - - - - Real estate - mortgage 396 1 396 1 Consumer loans 59 58 94 84 Total recoveries 1,122 1,018 1,335 1,214 Net charge-offs 3,747 6,484 12,087 12,380 Provision for credit losses on loans 11,695 11,409 22,257 17,881 Allowance for credit losses on loans at period end $ 181,853 $ 169,959 $ 181,853 $ 169,959 Allowance for credit losses on loans to period end loans 1.26 % 1.28 % 1.26 % 1.28 % Net charge-offs to average loans 0.11 % 0.20 % 0.17 % 0.19 % 32 The following table presents the allocation of the allowance for credit losses for each respective loan category with the corresponding percent of loans in each category to total loans: Percentage of loans in each category June 30, 2026 Amount to total loans (In Thousands) Commercial, financial and agricultural $ 57,245 22.46 % Real estate - construction 33,427 10.81 % Owner-occupied commercial 18,011 19.21 % 1-4 family mortgage 24,898 11.64 % Non-owner occupied commercial 45,507 35.39 % Consumer 2,765 0.49 % Total $ 181,853 100.00 % Percentage of loans in each category December 31, 2025 Amount to total loans (In Thousands) Commercial, financial and agricultural $ 63,620 22.97 % Real estate - construction 22,432 10.64 % Owner-occupied commercial 18,833 20.00 % 1-4 family mortgage 24,739 12.21 % Non-owner occupied commercial 38,971 33.61 % Consumer 3,088 0.57 % Total $ 171,683 100.00 % Nonperforming Assets Total nonperforming loans at June 30, 2026, which include nonaccrual loans and loans 90 or more days past due and still accruing, increased $2.1 million, or 1.3%, to $171.0 million from $168.8 million at December 31, 2025. Of this total, nonaccrual loans of $169.7 million at June 30, 2026 represented a net increase of $1.4 million from nonaccrual loans at December 31, 2025. The majority of the increase in non-performing assets is attributable to two relationships, both of which are secured by real estate. Excluding credit card accounts, there were four loans 90 or more days past due and still accruing totaling $1.1 million at June 30, 2026, compared to two loans totaling $323,000 at December 31, 2025. Loans made to borrowers experiencing financial difficulty that were modified during the three months ended June 30, 2026 and 2025 were $1.5 million and $494,000, respectively. The following table details our nonperforming assets at June 30, 2026 and December 31, 2025: June 30, 2026 December 31, 2025 Number of Number of Balance Loans Balance Loans (Dollar Amounts In Thousands) Nonaccrual loans: Commercial, financial and agricultural $ 23,905 58 $ 26,756 55 Real estate - construction 35,087 9 35,885 8 Real estate - mortgage: Owner-occupied commercial 22,411 26 13,578 17 1-4 family mortgage 9,897 36 9,440 34 Non-owner occupied commercial 77,740 13 81,977 13 Total real estate - mortgage 110,048 75 104,995 64 Consumer 671 1 715 2 Total Nonaccrual loans: $ 169,711 143 $ 168,351 129 90+ days past due and accruing: Commercial, financial and agricultural $ 43 3 $ 101 10 Real estate - construction - - - - Real estate - mortgage: Owner-occupied commercial - - - - 1-4 family mortgage 1,134 4 323 2 Non-owner occupied commercial - - - - Total real estate - mortgage 1,134 4 323 2 Consumer 65 21 54 28 Total 90+ days past due and accruing: $ 1,242 28 $ 478 40 Total Nonperforming Loans: $ 170,953 171 $ 168,829 169 Plus: Other real estate owned and repossessions 4,834 9 2,583 9 Total Nonperforming Assets $ 175,787 180 $ 171,412 178 Ratios: Nonperforming loans to total loans 1.18 % 1.23 % Nonperforming assets to total loans plus other real estate owned and repossessions 1.21 % 1.25 % Nonperforming assets plus restructured accruing loans to total loans plus other real estate owned and repossessions 1.21 % 1.25 % 33 OREO and repossessed assets at June 30, 2026 were $4.8 million, an increase of $2.3 million, or 87.1%, from $2.6 million at December 31, 2025. The following table summarizes OREO and repossessed asset activity for the six months ended June 30, 2026 and 2025: Six Months Ended June 30, 2026 2025 (In thousands) Balance at beginning of period $ 2,583 $ 2,531 Transfers from loans and capitalized expenses 2,876 235 Proceeds from sales (542 ) (2,756 ) Write-downs / net gain (loss) on sales (83 ) 301 Balance at end of period $ 4,834 $ 311 The balance of nonperforming assets can fluctuate due to changes in economic conditions. We have established a policy to discontinue accruing interest on a loan (i.e., place the loan on nonaccrual status) after it has become 90 days delinquent as to payment of principal or interest, unless the loan is considered to be well-collateralized and is actively in the process of collection. In addition, a loan will be placed on nonaccrual status before it becomes 90 days delinquent if management believes that the collection of interest is not expected. Interest previously accrued but uncollected on such loans is reversed and charged against current income when the receivable is determined to be uncollectible. Interest income on nonaccrual loans is recognized only as received. If we believe that a loan will not be collected in full, we will increase the ACL to reflect management’s estimate of any potential exposure or loss. Generally, payments received on nonaccrual loans are applied directly to principal. Deposits We rely on increasing our deposit base to fund loan and other asset growth. Each of our markets is highly competitive. We compete for local deposits by offering attractive products with competitive rates. We expect to have a higher average cost of funds for local deposits than competitor banks due to our lack of an extensive branch network. Our management’s strategy is to offset the higher cost of funding with a lower level of operating expense and firm pricing discipline for loan products. We have promoted electronic banking services by providing them without charge and by offering in-bank customer training. At June 30, 2026, our total deposits were $14.55 billion, an increase of $329.7 million, or 2.3%, from $14.22 billion at December 31, 2025. The following table summarizes balances of our deposits and the percentage of each type to the total at June 30, 2026 and December 31, 2025: June 30, 2026 December 31, 2025 Noninterest-bearing demand $ 2,995,402 20.59 % $ 2,684,272 18.88 % Interest-bearing demand 2,190,878 15.06 % 2,449,158 17.22 % Money market 8,001,712 55.00 % 7,585,555 53.35 % Savings 109,714 0.75 % 110,298 0.78 % Time deposits, $250,000 and under 333,495 2.29 % 369,855 2.60 % Time deposits, over $250,000 917,529 6.31 % 1,019,896 7.17 % $ 14,548,730 100.00 % $ 14,219,034 100.00 % 34 At June 30, 2026 and December 31, 2025, we estimate that we had approximately $9.68 billion and $9.69 billion, respectively, in uninsured deposits, which are the portion of deposit accounts that exceed the FDIC insurance limit. The uninsured deposit data for 2026 and 2025 reflects the deposit insurance impact of “combined ownership segregation” of escrow and other accounts at an aggregate level but does not reflect an evaluation of all of the account styling distinctions that would determine the availability of deposit insurance to individual accounts based on FDIC regulations. Portion of Time Deposits in Excess of Insurance Limit June 30, 2026 Time Deposits Otherwise Uninsured With a Maturity of: (In Thousands) 3 months or less $ 181,586 Over 3 months through 6 months 98,446 Over 6 months through 12 months 80,606 Over 12 months 14,315 Total $ 374,953 Other Borrowings Our borrowings consist of federal funds purchased and subordinated notes payable. We had $1.58 billion and $1.47 billion at June 30, 2026 and December 31, 2025, respectively, in federal funds purchased from correspondent banks that are clients of our correspondent banking unit. The average rate paid on these borrowings was 3.74% for the quarter ended June 30, 2026. Other borrowings consist of $34.75 million of the Company’s 4% Subordinated Notes due October 21, 2030, which were issued in a private placement in October 2020 and pay interest semi-annually. The Notes can be prepaid at any time. Liquidity Liquidity is defined as our ability to generate sufficient cash to fund current loan demand, deposit withdrawals, and other cash demands and disbursement needs, and otherwise to operate on an ongoing basis. The retention of existing deposits and attraction of new deposit sources through new and existing customers is critical to our liquidity position. If our liquidity was to decline due to deposit withdrawals, we have procedures that provide for certain actions under varying liquidity conditions. These actions include borrowing from existing correspondent banks, selling or participating loans, and curtailing loan commitments and funding. At June 30, 2026, our liquid assets, represented by cash and due from banks, federal funds sold, securities purchased with agreements to resell and unpledged available-for-sale and held-to-maturity debt securities, totaled $1.72 billion. The Bank had loans pledged to both the Federal Home Loan Bank and the Federal Reserve Bank of Atlanta, which provided approximately $3.40 billion and $2.56 billion, respectively, in available funding. The Bank’s policy limits on brokered deposits would allow for up to $4.59 billion in available funding for brokered deposits. Additionally, the Bank had approximately $312.0 million in available unused federal funds lines of credit with regional banks, subject to certain restrictions and collateral requirements, to meet short term funding needs. Our management meets on a quarterly basis to review sources and uses of funding to determine the appropriate strategy to ensure an appropriate level of liquidity. At the current time, our long-term liquidity needs primarily relate to funds required to support loan originations and commitments and deposit withdrawals. Our regular sources of funding are from the growth of our deposit base, repayment of principal and interest on loans, the sale of loans and the renewal of time deposits. In addition, we have issued debt as described above under “Other borrowings” and have various other sources of liquidity as discussed herein. We believe these sources of funding are adequate to meet both our immediate (within the next 12 months) and our longer term anticipated funding needs. However, we may need additional funding if we are able to maintain our current growth rate into the future. We are subject to general FDIC guidelines that require a minimum level of liquidity. Management believes our liquidity ratios meet or exceed these guidelines. The following table illustrates, during the periods presented, the mix of our funding sources and the assets in which those funds are invested as a percentage of our average total assets for the period indicated. Average assets totaled $18.01 billion and $17.89 billion, respectively, for the three and six months ended June 30, 2026. 35 For the Three Months Ended June 30, For the Six Months Ended June 30, 2026 2025 2026 2025 Sources of Funds: Deposits: Noninterest-bearing 16.2 % 14.9 % 15.6 % 14.7 % Interest-bearing 63.3 63.8 64.4 63.6 Federal funds purchased 8.6 10.5 8.8 10.9 Long term debt and other borrowings 0.2 0.4 0.2 0.4 Other liabilities 0.9 0.7 0.3 0.8 Equity capital 10.8 9.7 10.7 9.6 Total sources 100.0 % 100.0 % 100.0 % 100.0 % Uses of Funds: Loans 79.0 % 73.9 % 78.4 % 72.8 % Securities 9.2 11.2 9.4 11.1 Interest-bearing balances with banks 5.4 11.1 5.6 12.7 Federal funds sold 2.1 0.7 2.4 0.4 Other assets 4.3 3.1 4.2 3.0 Total uses 100.0 % 100.0 % 100.0 % 100.0 % Capital Adequacy Total stockholders' equity attributable to us at June 30, 2026 was $1.98 billion, or 10.78% of total assets. At December 31, 2025, total stockholders' equity attributable to us was $1.85 billion, or 10.44% of total assets. As of June 30, 2026, our most recent notification from the FDIC categorized us as well-capitalized under the regulatory framework for prompt corrective action. To remain categorized as well-capitalized, we must maintain minimum Common Equity Tier 1, Tier 1 risk-based, total risk-based, and Tier 1 leverage ratios as disclosed in the table below. Our management believes that we are well-capitalized under the prompt corrective action provisions as of June 30, 2026. The final rules implementing the Basel Committee on Banking Supervision's capital guidelines for U.S. banks (Basel III rules) became effective January 1, 2015, subject to a phase-in period for certain aspects of the new rules. In order to avoid restrictions on capital distributions and discretionary bonus payments to executives, under the Basel III rules a covered banking organization is required to maintain a “capital conservation buffer” in addition to its minimum risk-based capital requirements. This buffer is required to consist solely of common equity Tier 1 capital, and the buffer applies to all three risk-based measurements (CET1, Tier 1 capital and total capital). The capital conservation buffer became fully effective on January 1, 2019. As of January 1, 2019, an additional amount of common equity Tier 1 capital equal to 2.5% of risk-weighted assets is required for compliance with the capital conservation buffer. The ratios for the Company and the Bank are currently sufficient to satisfy the fully phased-in capital conservation buffer. The following table sets forth (i) the capital ratios required by the FDIC and the Alabama Banking Department’s leverage ratio requirement and (ii) our actual ratios, not including the applicable 2.5% capital conservation buffer, of capital to total regulatory or risk-weighted assets, as of June 30, 2026, December 31, 2025 and June 30, 2025: 36 Actual For Basel III Capital Adequacy Purposes* To Be Well Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio As of June 30, 2026 (Dollars in Thousands) CET 1 Capital to Risk-Weighted Assets: Consolidated $ 1,966,827 11.83 % $ 748,419 4.50 % N/A N/A ServisFirst Bank 1,996,344 12.00 % 748,357 4.50 % $ 1,080,960 6.50 % Tier 1 Capital to Risk-Weighted Assets: Consolidated 1,967,327 11.83 % 997,893 6.00 % N/A N/A ServisFirst Bank 1,996,844 12.01 % 997,809 6.00 % 1,330,413 8.00 % Total Capital to Risk-Weighted Assets: Consolidated 2,177,343 13.09 % 1,330,523 8.00 % N/A N/A ServisFirst Bank 2,179,061 13.10 % 1,330,413 8.00 % 1,663,016 10.00 % Tier 1 Capital to Average Assets: Consolidated 1,967,327 10.93 % 720,023 4.00 % N/A N/A ServisFirst Bank 1,996,844 11.09 % 720,064 4.00 % 900,080 5.00 % As of December 31, 2025 CET 1 Capital to Risk-Weighted Assets: Consolidated $ 1,838,024 11.65 % $ 709,755 4.50 % N/A N/A ServisFirst Bank 1,866,335 11.83 % 709,698 4.50 % $ 1,025,119 6.50 % Tier 1 Capital to Risk-Weighted Assets: Consolidated 1,838,524 11.66 % 946,340 6.00 % N/A N/A ServisFirst Bank 1,866,835 11.84 % 946,264 6.00 % 1,261,685 8.00 % Total Capital to Risk-Weighted Assets: Consolidated 2,038,579 12.93 % 1,261,787 8.00 % N/A N/A ServisFirst Bank 2,039,090 12.93 % 1,261,685 8.00 % 1,577,107 10.00 % Tier 1 Capital to Average Assets: Consolidated 1,838,524 10.26 % 717,027 4.00 % N/A N/A ServisFirst Bank 1,866,835 10.41 % 716,995 4.00 % 896,244 5.00 % As of June 30, 2025 CET 1 Capital to Risk-Weighted Assets: Consolidated $ 1,723,922 11.38 % $ 681,869 4.50 % N/A N/A ServisFirst Bank 1,783,330 11.77 % 681,818 4.50 % $ 984,848 6.50 % Tier 1 Capital to Risk-Weighted Assets: Consolidated 1,724,422 11.38 % 909,159 6.00 % N/A N/A ServisFirst Bank 1,783,830 11.77 % 909,091 6.00 % 1,212,121 8.00 % Total Capital to Risk-Weighted Assets: Consolidated 1,941,783 12.81 % 1,212,212 8.00 % N/A N/A ServisFirst Bank 1,954,444 12.90 % 1,212,121 8.00 % 1,515,151 10.00 % Tier 1 Capital to Average Assets: Consolidated 1,724,422 9.78 % 705,531 4.00 % N/A N/A ServisFirst Bank 1,783,830 10.11 % 705,511 4.00 % 881,889 5.00 % * This column reflects the minimum capital ratios under Basel III and does not include the 2.5% capital conservation buffer. We are a legal entity separate and distinct from the Bank. Our principal source of cash flow, including cash flow to pay dividends to our stockholders, is dividends the Bank pays to us as the Bank’s sole shareholder. Statutory and regulatory limitations apply to the Bank’s payment of dividends to us as well as our payment of dividends to our stockholders. The requirement that a bank holding company must serve as a source of strength to its subsidiary banks also results in the position of the Federal Reserve that a bank holding company should not maintain a level of cash dividends to its stockholders that places undue pressure on the capital of its bank subsidiaries or that can be funded only through additional borrowings or other arrangements that may undermine the bank holding company’s ability to serve as such a source of strength. Our ability to pay dividends is also subject to the provisions of Delaware corporate law. The Alabama Banking Department also regulates the Bank’s dividend payments. Under Alabama law, a state-chartered bank may not pay a dividend in excess of 90% of its net earnings until the Bank’s surplus is equal to at least 20% of its capital (our Bank’s surplus currently exceeds 20% of its capital). Moreover, our Bank is also required by Alabama law to obtain the prior approval of the Superintendent of Banks (“Superintendent”) for its payment of dividends if the total of all dividends declared by the Bank in any calendar year will exceed the total of (i) the Bank’s net earnings (as defined by statute) for that year, plus (ii) its retained net earnings for the preceding two years, less any required transfers to surplus. In addition, no dividends, withdrawals or transfers may be made from the Bank’s surplus without the prior written approval of the Superintendent. The Bank’s payment of dividends may also be affected or limited by other factors, such as the requirement to maintain adequate capital above regulatory guidelines. The federal banking agencies have indicated that paying dividends that deplete a depository institution’s capital base to an inadequate level would be an unsafe and unsound banking practice. Under the Federal Deposit Insurance Corporation Improvement Act of 1991, a depository institution may not pay any dividends if payment would cause it to become undercapitalized or if it already is undercapitalized. Moreover, the federal agencies have issued policy statements that provide that bank holding companies and insured banks should generally only pay dividends out of current operating earnings. If, in the opinion of the federal banking regulators, the Bank were engaged in or about to engage in an unsafe or unsound practice, the federal banking regulators could require, after notice and a hearing, that the Bank stop or refrain from engaging in the questioned practice. 37 Off-Balance Sheet Arrangements In the normal course of business, we are a party to financial instruments with off-balance sheet risk to meet the financing needs of our customers. These financial instruments include commitments to extend credit beyond current fundings, credit card arrangements, standby letters of credit, and financial guarantees. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in our balance sheet. The contract or notional amounts of those instruments reflect the extent of involvement we have in those particular financial arrangements. All such financial instruments bear interest at variable rates and we have no such financial instruments that bear interest at fixed rates. Our exposure to credit loss for commitments to extend credit, credit card arrangements and standby letters of credit is represented by the contractual or notional amount of these instruments in the event of non-performance by the other party to such financial instrument. We use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments. As part of our mortgage operations, we originate and sell certain loans to investors in the secondary market. We continue to experience a manageable level of investor repurchase demands. For loans sold, we have an obligation to either repurchase the outstanding principal balance of a loan or make the purchaser whole for the economic benefits of a loan if it is determined that the loans sold were in violation of representations and warranties made by the Bank at the time of the sale. Representations and warranties typically include those made regarding loans that had missing or insufficient file documentation or loans obtained through fraud by borrowers or other third parties such as appraisers. Financial instruments whose unfunded contract amounts represent credit risk at June 30, 2026 are as follows: June 30, 2026 (In Thousands) Commitments to extend credit $ 3,887,728 Credit card arrangements 412,127 Standby letters of credit 94,977 $ 4,394,832 Commitments to extend credit beyond current funded amounts are agreements to lend to a customer as long as there is no violation of any condition established in the applicable loan agreement. Such commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. We evaluate each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by us upon extension of credit is based on our management’s credit evaluation. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties. Standby letters of credit are conditional commitments issued by us to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. All letters of credit are due within one year or less of the original commitment date. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Federal funds lines of credit are uncommitted lines issued to downstream correspondent banks for the purpose of providing liquidity to them. The lines are unsecured, and we have no obligation to sell federal funds to the correspondent, nor does the correspondent have any obligation to request or accept purchases of federal funds from us. Results of Operations Summary of Net Income We reported net income and net income available to common stockholders of $85.8 million for the quarter ended June 30, 2026, compared to net income and net income available to common stockholders of $61.4 million for the second quarter of 2025. Net income was $168.8 million and net income available to common stockholders was $168.7 million for the six months ended June 30, 2026, compared to net income and net income available to common stockholders of $124.6 million for the six months ended June 30, 2025. The increase in net income for both the three and six months ended June 30, 2026 compared to 2025 was driven by growth in both net interest income and noninterest income, adjusted for $8.6 million of securities losses in the second quarter of 2025. 38 Basic and diluted earnings per common share were both $1.57 for the three months ended June 30, 2026, compared to $1.12 in the corresponding period in 2025. Basic and diluted earnings per common share were both $3.09 for the six months ended June 30, 2026, compared to $2.28 for both in the corresponding period in 2025. Return on average assets for the three and six months ended June 30, 2026 was 1.91% and 1.90% compared to 1.40% and 1.42%, respectively, for the corresponding periods in 2025. Return on average common stockholders' equity for the three and six months ended June 30, 2026 was 17.71% and 17.81%, respectively, compared to 14.56% and 15.08%, respectively, for the corresponding periods in 2025. Net Interest Income and Net Interest Margin Analysis Net interest income is the difference between the income earned on interest-earning assets and interest paid on interest-bearing liabilities used to support such assets. The major factors that affect net interest income are changes in volumes, the yield on interest-earning assets and the cost of interest-bearing liabilities. Management’s ability to respond to changes in interest rates by effective asset-liability management techniques is critical to maintaining the stability of the net interest margin and the momentum of our primary source of earnings. Taxable-equivalent net interest income increased $24.4 million, or 18.5%, to $156.1 million for the three months ended June 30, 2026 compared to $131.8 million for the corresponding period in 2025, and increased $49.0 million, or 19.2%, to $304.4 million for the six months ended June 30, 2026 compared to $255.4 million for the corresponding period in 2025. The taxable-equivalent yield on interest-earning assets increased to 5.82% for the three months ended June 30, 2026 from 5.80% for the corresponding period in 2025, and increased to 5.79% for the six months ended June 30, 2026 from 5.76% for the corresponding period in 2025. The yield on loans for the three months ended June 30, 2026 was 6.23% compared to 6.37% for the corresponding period in 2025, and 6.21% compared to 6.34% for the six months ended June 30, 2026 and June 30, 2025, respectively. The cost of total interest-bearing liabilities decreased to 2.91% for the three months ended June 30, 2026 compared to 3.50% for the corresponding period in 2025, and decreased to 2.88% for the six months ended June 30, 2026 from 3.55% for the corresponding period in 2025. Net interest margin for the three months ended June 30, 2026 was 3.63% compared to 3.10% for the corresponding period in 2025, and 3.58% for the six months ended June 30, 2026 compared to 3.01% for the corresponding period in 2025. The Federal Reserve Bank’s targeted federal funds rate was 4.25 – 4.50% at June 30, 2025 compared to its current range as of June 30, 2026 of 3.50 – 3.75%. The following tables show, for the three and six months ended June 30, 2026 and June 30, 2025, the average balances of each principal category of our assets, liabilities and stockholders' equity, and an analysis of net interest revenue. The accompanying tables reflect changes in our net interest margin as a result of changes in the volume and rate of our interest-earning assets and interest-bearing liabilities for the same periods. Changes as a result of mix or the number of days in the periods have been allocated to the volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each. The tables are presented on a taxable-equivalent basis where applicable: 39 Average Balance Sheets and Net Interest Analysis On a Fully Taxable-Equivalent Basis For the Three Months Ended June 30, (In thousands, except Average Yields and Rates) 2026 2025 Interest Average Interest Average Average Earned / Yield / Average Earned / Yield / Balance Paid Rate Balance Paid Rate Assets: Interest-earning assets: Loans, net of unearned income (1)(2): Taxable $ 14,198,439 $ 218,652 6.18 % $ 12,979,759 $ 206,040 6.37 % Tax-exempt (3) 26,082 2,408 37.03 30,346 417 5.51 Total loans, net of unearned income 14,224,521 221,060 6.23 13,010,105 206,457 6.37 Mortgage loans held for sale 13,327 176 5.30 11,739 153 5.23 Debt securities: Taxable 1,657,378 15,821 3.82 1,965,089 16,562 3.37 Tax-exempt (3) 444 6 5.41 492 6 4.88 Total debt securities (4) 1,657,822 15,827 3.82 1,965,581 16,568 3.37 Federal funds sold and securities with agreement to resell 372,645 4,147 4.46 124,303 1,592 5.14 Restricted equity securities 12,456 199 6.41 12,146 201 6.64 Interest-bearing balances with banks 964,808 8,977 3.73 1,952,479 21,754 4.47 Total interest-earning assets $ 17,245,579 $ 250,386 5.82 % $ 17,076,353 $ 246,725 5.80 % Noninterest-earning assets: Cash and due from banks 96,648 109,506 Net fixed assets and equipment 63,303 59,944 Allowance for credit losses, accrued interest and other assets 606,506 380,700 Total assets $ 18,012,036 $ 17,626,503 Liabilities and stockholders' equity: Interest-bearing liabilities: Interest-bearing demand deposits $ 2,050,758 $ 8,642 1.69 % $ 2,222,000 $ 9,860 1.78 % Savings deposits 112,077 394 1.41 101,506 413 1.63 Money market accounts 7,956,884 60,051 3.03 7,616,747 69,739 3.67 Time deposits 1,274,496 10,353 3.26 1,321,404 13,476 4.09 Total interest-bearing deposits 11,394,215 79,440 2.80 11,261,657 93,488 3.33 Federal funds purchased 1,549,520 14,455 3.74 1,855,860 20,773 4.49 Other borrowings 34,750 348 4.02 64,750 687 4.26 Total interest-bearing liabilities $ 12,978,485 $ 94,243 2.91 % $ 13,182,267 $ 114,948 3.50 % Noninterest-bearing liabilities: Noninterest-bearing demand deposits 2,923,956 2,633,552 Other liabilities 167,024 119,829 Stockholders' equity 1,944,735 1,716,232 Accumulated other comprehensive loss (2,164 ) (25,377 ) Total liabilities and stockholders' equity $ 18,012,036 $ 17,626,503 Net interest income $ 156,143 $ 131,777 Net interest spread 2.91 % 2.30 % Net interest margin 3.63 % 3.10 % (1) Non-accrual loans are included in average loan balances in all periods. Loan fees of $4,763 and $4,430 are included in interest income in the second quarter of 2026 and 2025, respectively. (2) Amortization of acquired loan premiums of $48 and $51 is included in interest income in 2026 and 2025, respectively. (3) Interest income and yields are presented on a fully taxable equivalent basis using a tax rate of 21%. (4) Unrealized losses of $(3,061) and $(34,084) are excluded from the yield calculation in the second quarter of 2026 and 2025, respectively. 40 For the Three Months Ended June 30, 2026 Compared to 2025 Increase (Decrease) in Interest Income and Expense Due to Changes in: Volume Rate Total (In Thousands) Interest-earning assets: Loans, net of unearned income Taxable $ 18,907 $ (6,295 ) $ 12,612 Tax-exempt (67 ) 2,058 1,991 Total loans, net of unearned income 18,840 (4,237 ) 14,603 Mortgages held for sale 21 2 23 Debt securities: Taxable (2,779 ) 2,038 (741 ) Tax-exempt (1 ) 1 - Total debt securities (2,780 ) 2,039 (741 ) Federal funds sold 2,790 (235 ) 2,555 Restricted equity securities 5 (7 ) (2 ) Interest-bearing balances with banks (9,636 ) (3,141 ) (12,777 ) Total interest-earning assets $ 9,240 $ (5,579 ) $ 3,661 Interest-bearing liabilities: Interest-bearing demand deposits $ (737 ) $ (481 ) $ (1,218 ) Savings 40 (59 ) (19 ) Money market accounts 3,003 (12,691 ) (9,688 ) Time deposits (464 ) (2,659 ) (3,123 ) Total interest-bearing deposits 1,842 (15,890 ) (14,048 ) Federal funds purchased (3,145 ) (3,173 ) (6,318 ) Other borrowed funds (302 ) (37 ) (339 ) Total interest-bearing liabilities (1,605 ) (19,100 ) (20,705 ) Increase in net interest income $ 10,845 $ 13,521 $ 24,366 Our growth in loans and interest-bearing balances with banks drove the favorable volume component change. The rate component was favorable as loan yields decreased 14 basis points and average rates paid on interest-bearing liabilities decreased 59 basis points for the three months ended June 30, 2026. 41 Average Balance Sheets and Net Interest Analysis On a Fully Taxable-Equivalent Basis For the Six Months Ended June 30, (In thousands, except Average Yields and Rates) 2026 2025 Interest Interest Average Earned / Average Average Earned / Average Balance Paid Yield / Rate Balance Paid Yield / Rate Assets: Interest-earning assets: Loans, net of unearned income (1)(2): Taxable $ 13,976,178 $ 428,228 6.18 % $ 12,832,237 $ 402,656 6.35 % Tax-exempt (3) 29,510 2,881 19.69 27,710 720 5.25 Total loans, net of unearned income 14,005,688 431,109 6.21 12,859,947 403,376 6.34 Mortgage loans held for sale 12,011 293 4.92 9,249 233 5.09 Debt securities: Taxable 1,678,879 31,915 3.83 1,949,999 32,583 3.38 Tax-exempt (3) 444 13 5.90 540 14 5.24 Total debt securities (4) 1,679,323 31,928 3.83 1,950,539 32,597 3.38 Federal funds sold and securities purchased with agreement to resell 436,655 9,708 4.48 63,325 1,614 5.15 Restricted equity securities 12,343 385 6.29 11,805 411 7.04 Interest-bearing balances with banks 1,002,706 18,545 3.73 2,237,845 49,655 4.47 Total interest-earning assets $ 17,148,726 $ 491,968 5.79 % $ 17,132,710 $ 487,886 5.76 % Noninterest-earning assets: Cash and due from banks 100,228 109,025 Net fixed assets and equipment 62,283 59,789 Allowance for credit losses, accrued interest and other assets 579,572 366,570 Total assets $ 17,890,809 $ 17,668,094 Liabilities and stockholders' equity: Interest-bearing liabilities: Interest-bearing demand deposits $ 2,200,877 $ 16,928 1.55 % $ 2,349,154 $ 24,322 2.09 % Savings deposits 111,464 781 1.41 101,750 817 1.62 Money market accounts 7,884,925 118,086 3.02 7,476,611 135,367 3.66 Time deposits 1,323,487 21,930 3.34 1,341,370 27,727 4.18 Total interest-bearing deposits 11,520,753 157,725 2.76 11,268,885 188,233 3.38 Federal funds purchased 1,571,246 29,155 3.74 1,924,929 42,885 4.50 Other borrowings 34,750 695 4.03 64,750 1,374 4.29 Total interest-bearing liabilities $ 13,126,749 $ 187,575 2.88 % $ 13,258,564 $ 232,492 3.55 % Noninterest-bearing liabilities: Noninterest-bearing demand deposits 2,797,418 2,603,209 Other liabilities 55,891 140,282 Stockholders' equity 1,912,085 1,693,443 Accumulated other comprehensive loss (1,334 ) (27,404 ) Total liabilities and stockholders' equity $ 17,890,809 $ 17,668,094 Net interest income $ 304,393 $ 255,394 Net interest spread 2.91 % 2.21 % Net interest margin 3.58 % 3.01 % (1) Non-accrual loans are included in average loan balances in all periods. Loan fees of $9,949 and $8,194 are included in interest income in the six months ended June 30, 2026 and 2025, respectively. (2) Amortization of acquired loan premiums of $96 and $103 is included in interest income in 2026 and 2025, respectively. (3) Interest income and yields are presented on a fully taxable equivalent basis using a tax rate of 21%. (4) Unrealized losses of $(1,953) and $(36,790) are excluded from the yield calculation in 2026 and 2025, respectively. 42 For the Six Months Ended June 30, 2026 Compared to 2025 Increase (Decrease) in Interest Income and Expense Due to Changes in: Volume Rate Total (In Thousands) Interest-earning assets: Loans, net of unearned income Taxable $ 35,227 $ (9,655 ) $ 25,572 Tax-exempt 50 2,111 2,161 Total loans, net of unearned income 35,277 (7,544 ) 27,733 Mortgages held for sale 67 (7 ) 60 Debt securities: Taxable (4,844 ) 4,176 (668 ) Tax-exempt (3 ) 1 (2 ) Total debt securities (4,847 ) 4,177 (670 ) Federal funds sold 8,326 (232 ) 8,094 Restricted equity securities (1 ) (25 ) (26 ) Interest-bearing balances with banks (23,901 ) (7,209 ) (31,110 ) Total interest-earning assets $ 14,921 $ (10,840 ) $ 4,081 Interest-bearing liabilities: Interest-bearing demand deposits $ (1,457 ) $ (5,937 ) $ (7,394 ) Savings 74 (110 ) (36 ) Money market accounts 7,086 (24,367 ) (17,281 ) Time deposits (365 ) (5,432 ) (5,797 ) Total interest-bearing deposits 5,338 (35,846 ) (30,508 ) Federal funds purchased (7,190 ) (6,540 ) (13,730 ) Other borrowed funds (604 ) (75 ) (679 ) Total interest-bearing liabilities (2,456 ) (42,461 ) (44,917 ) Increase in net interest income $ 17,377 $ 31,621 $ 48,998 Our growth in loans and interest-bearing balances with banks drove the favorable volume component change. While the overall rate component was favorable, loan yields decreased by 13 basis points, and the average rate paid on interest-bearing liabilities decreased by 67 basis points for the six months ended June 30, 2026. Tax Credit Investments We invest in certain affordable housing projects throughout our market area as a means of supporting local communities. We receive tax credits related to these investments, for which we typically act as a limited partner and therefore do not exert control over the operating or financial policies of the partnerships. We typically provide financing during the construction and development of the properties. Tax credits are subject to recapture by taxing authorities based on compliance features required to be met at the project level. Our maximum potential exposure to losses relative to investments in variable interest entities is generally limited to the sum of the outstanding balance, future funding commitments and any related loans to the entity, exclusive of any potential tax recapture associated with the investments. Loans to these entities are underwritten in substantially the same manner as the Company’s other loans and are generally secured. We invest as a limited partner in certain projects through the New Market Tax Credit program, which is a federal financial program aimed to stimulate business and real estate investment in underserved communities via a federal tax credit. We also invest in certain tax-advantaged projects promoting renewable energy sources designed to generate a return primarily through the realization of federal and state income tax credits, and other tax benefits, over specified time periods. We have investments in and future funding commitments related to private equity and certain other equity method investments. The risk exposure related to such commitments is generally limited to the amount of investments and future funding commitments made. The following table summarizes certain tax credit and certain equity investments. Balance Sheet Location June 30, 2026 December 31, 2025 (In Thousands) Investments in affordable housing, new market and renewable energy projects and other qualified tax credits: Carrying amount Other assets $ 130,260 $ 98,681 Amount of future funding commitments including in carrying amount Other liabilities 100,581 65,439 Lending exposures Loans 116,126 107,764 SBIC and certain other equity method investments: Carrying amount Other assets 17,004 13,399 Amount of future funding commitments not included in carrying amount N/A 38,946 18,551 43 The following table presents a summary of tax credits and amortization expense associated with those investments accounted for using the proportional amortization method for the period indicated. Three Months Ended June 30, Income Statement Location 2026 2025 (In Thousands) Income tax credits and other income tax benefits Income tax expense $ (24,028 ) $ (3,341 ) Amortization expense Income tax expense 24,752 2,564 Six Months Ended June 30, Income Statement Location 2026 2025 (In Thousands) Income tax credits and other income tax benefits Income tax expense $ (27,426 ) $ (6,682 ) Amortization expense Income tax expense 31,294 5,127 Provision for Credit Losses The provision for credit losses on loans was $11.7 million for the three months ended June 30, 2026, an increase of $286,000 from $11.4 million for the three months ended June 30, 2025, and was $22.3 million for the six months ended June 30, 2026, an increase of $4.4 million from $17.9 million for the six months ended June 30, 2025. The ACL as of June 30, 2026, March 31, 2026, and June 30, 2025, totaled $181.9 million, $173.9 million, and $170.0 million, or 1.26%, 1.25%, and 1.28% of loans, net of unearned income, respectively. Annualized net credit charge-offs to quarter-to-date average loans were 0.11% for the three months ended June 30, 2026, a 9 basis points decrease compared to 0.20% for the second quarter of 2025. Annualized net credit charge-offs to year-to-date average loans were 0.17% for the six months ended June 30, 2026, compared to 0.19% for the corresponding period in 2025. Nonperforming loans increased to $171.0 million, or 1.18% of total loans, at June 30, 2026 from $168.8 million, or 1.23% of total loans at December 31, 2025, and increased compared to $72.2 million, or 0.55% of total loans, at June 30, 2025. See the section captioned “Asset Quality” located elsewhere in this item for additional discussion related to provision for credit losses. Noninterest Income Three Months Ended June 30, Six Months Ended June 30, 2026 2025 $ change % change 2026 2025 $ change % change (In Thousands) (In Thousands) Noninterest income: Service charges on deposit accounts $ 3,338 $ 2,671 $ 667 25.0 % $ 6,634 $ 5,229 $ 1,405 26.9 % Mortgage banking 2,221 1,323 898 67.9 % 4,113 1,936 2,177 112.4 % Credit card income 2,492 2,119 373 17.6 % 4,694 4,087 607 14.9 % Securities losses - (8,563 ) 8,563 NM - (8,563 ) 8,563 NM Bank-owned life insurance income 4,133 2,126 2,007 94.4 % 6,955 4,263 2,692 63.1 % Other operating income 708 745 (37 ) (5.0 )% 1,336 1,746 (410 ) (23.5 )% Total noninterest income $ 12,892 $ 421 $ 12,471 NM $ 23,732 $ 8,698 $ 15,034 172.8 % Noninterest income totaled $12.9 million for the three months ended June 30, 2026, compared to $421,000 in the corresponding period in 2025, and totaled $23.7 million for the six months ended June 30, 2026, compared to $8.7 million in the corresponding period in 2025. 44 Details of noninterest income are as follows: ● Service charges on deposit accounts increased $667,000, or 25.0%, to $3.3 million for the three months ended June 30, 2026 compared to $2.7 million for the same period in 2025, and increased $1.4 million, or 26.9%, to $6.6 million for the six months ended June 30, 2026 compared to $5.2 million for the same period in 2025. We increased our service charge rates on many of our checking account products in July of 2025. ● Mortgage banking income increased $898,000, or 67.9%, to $2.2 million for the three months ended June 30, 2026 compared to $1.3 million for the same period in 2025, and increased $2.2 million, or 112.4%, to $4.1 million for the six months ended June 30, 2026 compared to $1.9 million for the same period in 2025. The increase on a year-over-year basis was primarily due to an increase in loans sold into the secondary market. We also increased our per-loan administrative fee in the first quarter of 2026. ● Credit card income increased $373,000, or 17.6%, to $2.5 million for the three months ended June 30, 2026 compared to $2.1 million for the same period in 2025, and increased $607,000, or 14.9%, to $4.7 million for the six months ended June 30, 2026 compared to $4.1 million for the same period in 2025. ● During the second quarter of 2025, the Company sold available-for-sale mortgage-backed securities with an amortized cost basis of $70.5 million and recorded a pre-tax loss of $8.6 million, as a result of a portfolio restructuring. ● Bank-owned life insurance (“BOLI”) income increased $2.0 million, or 94.4%, to $4.1 million for the three months ended June 30, 2026 compared to $2.1 million for the same period in 2025, and increased $2.7 million, or 63.1%, to $7.0 million for the six months ended June 30, 2026 compared to $4.3 million for the same period in 2025. The increases were primarily due to our purchases of $150.0 million of new contracts in the third quarter of 2025 and $25.0 million of new contracts in the second quarter of 2026. Additionally, we had a $1.0 million adjustment in the first quarter of 2026 related to a correction of BOLI income in the fourth quarter of 2025. ● Other operating income decreased $37,000, or 5.0%, to $708,000 for the three months ended June 30, 2026 compared to $745,000 for the same period in 2025, and decreased $410,000, or 23.5%, to $1.3 million for the six months ended June 30, 2026 compared to $1.7 million for the same period in 2025. Merchant service revenue increased $114,000, or 19.0%, to $714,000 for the three months ended June 30, 2026 compared to $600,000 for the same period in 2025, and increased $176,000, or 15.9%, to $1.3 million for the six months ended June 30, 2026 compared to $1.1 million for the same period in 2025. Noninterest Expense Three Months Ended June 30, Six Months Ended June 30, 2026 2025 $ change % change 2026 2025 $ change % change Noninterest expense: Salaries and employee benefits $ 26,274 $ 22,576 $ 3,698 16.4 % $ 53,127 $ 45,455 $ 7,672 16.9 % Equipment and occupancy expense 3,963 3,523 440 12.5 % 7,911 7,245 666 9.2 % Third party processing and other services 7,962 8,005 (43 ) (0.5 )% 15,487 15,743 (256 ) (1.6 )% Professional services 2,227 1,904 323 17.0 % 4,170 3,837 333 8.7 % FDIC and other regulatory assessments 2,753 2,753 - - % 4,260 5,607 (1,347 ) (24.0 )% OREO expense 75 27 48 177.8 % 95 60 35 58.3 % Other operating expense 6,707 5,416 1,291 23.8 % 12,295 12,364 (69 ) (0.6 )% Total noninterest expense $ 49,961 $ 44,204 $ 5,757 13.0 % $ 97,345 $ 90,311 $ 7,034 7.8 % Noninterest expense totaled $50.0 million for the three months ended June 30, 2026, an increase of $5.8 million, or 13.0%, compared to the corresponding period in 2025, and totaled $97.3 million for the six months ended June 30, 2026, an increase of $7.0 million, or 7.8%, from the corresponding period in 2025. Details of noninterest expense are as follows: ● Salary and benefit expense increased $3.7 million, or 16.4%, to $26.3 million for the three months ended June 30, 2026 compared to $22.6 million for the same period in 2025, and increased $7.7 million, or 16.9%, to $53.1 million for the six months ended June 30, 2026 compared to $45.5 million for the same period in 2025. The number of FTE employees increased by 25, or 3.8%, to 684 at June 30, 2026 compared to 659 at June 30, 2025. ● Third party processing and other services decreased $43,000, or 0.5%, to $8.0 million for the three months ended June 30, 2026 compared to $8.0 million for the same period in 2025, and decreased $256,000, or 1.6%, to $15.5 million for the six months ended June 30, 2026 compared to $15.7 million for the same period in 2025. ● Professional services expense increased $323,000, or 17.0%, to $2.2 million for the three months ended June 30, 2026 compared to $1.9 million for the same period in 2025, and increased $333,000, or 8.7%, to $4.2 million for the six months ended June 30, 2026 compared to $3.8 million for the same period in 2025. ● FDIC and other regulatory assessments remained unchanged at $2.8 million for both the three months ended June 30, 2026, and June 30, 2025, and decreased $1.3 million, or 24.0%, to $4.3 million for the six months ended June 30, 2026 compared to $5.6 million for the same period in 2025. ● Other operating expenses increased $1.3 million, or 23.8%, to $6.7 million for the three months ended June 30, 2026 compared to $5.4 million for the same period in 2025, and decreased $69,000, or 0.6%, to $12.3 million for the six months ended June 30, 2026 compared to $12.4 million for the same period in 2025. 45 Income Tax Expense Income tax expense was $21.4 million for the three months ended June 30, 2026 compared to $15.2 million for the same period in 2025, and was $39.4 million for the six months ended June 30, 2026, compared to $31.1 million for the same period in 2025. Our effective tax rate for the three and six months ended June 30, 2026 was 19.94% and 18.91%, respectively, compared to 19.82% and 19.94% for the corresponding periods in 2025, respectively. During the first quarter of 2026, we purchased Investment Tax Credits, which reduced our tax expense. We recognized excess tax benefits as an income tax credit to our income tax expense from the exercise of stock options and vesting of restricted stock during the three and six months ended June 30, 2026 of $36,000 and $265,000, respectively, compared to $234,000 and $704,000 for three and six months ended June 30, 2025, respectively. Our primary permanent differences are related to tax exempt income on securities, state income tax benefit on real estate investment trust dividends, various qualifying tax credits and change in cash surrender value of bank-owned life insurance. We own real estate investment trusts for the purpose of holding and managing participations in residential mortgages and commercial real estate loans originated by the Bank. The trusts are wholly-owned subsidiaries of a trust holding company, which in turn is an indirect wholly-owned subsidiary of the Bank. The trusts earn interest income on the loans they hold and incur operating expenses related to their activities. They pay their net earnings, in the form of dividends, to the Bank, which receives a deduction for state income taxes. Critical Accounting Estimates The accounting principles we follow and our methods for applying these principles conform to U.S. generally accepted accounting principles (“GAAP”) and to general practices within the banking industry. To prepare consolidated financial statements in conformity with GAAP, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and future results could differ. In management’s opinion, certain accounting policies have a more significant impact than others on the Company’s financial reporting. The allowance for credit losses and income taxes are particularly significant for the Company’s financial reporting. Information concerning our accounting policies and critical accounting estimates with respect to these items is available in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. There were no changes to the accounting policies for the allowance for credit losses or income taxes during the three and six months ended June 30, 2026.