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What changed in FIRST FINANCIAL BANKSHARES INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of FIRST FINANCIAL BANKSHARES INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+226 added−236 removedSource: 10-K (2026-02-25) vs 10-K (2025-02-21)

Top changes in FIRST FINANCIAL BANKSHARES INC's 2025 10-K

226 paragraphs added · 236 removed · 196 edited across 4 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

61 edited+10 added−11 removed172 unchanged
Biggest changeIn deciding whether to extend credit or enter into other transactions, we must rely on information furnished by or on behalf of customers and counterparties, including financial statements, credit reports and other financial information. We also rely on representations of those customers, counterparties or other third-parties, such as independent auditors, as to the accuracy and completeness of that information.
Biggest changeWe depend on the accuracy and completeness of information provided to us by our borrowers and counterparties and any misrepresented or fraudulent information could adversely affect our business, results of operations and financial condition In deciding whether to approve loans or to enter into other transactions with borrowers and counterparties, we rely on information furnished to us by, or on behalf of, borrowers and counterparties, including financial statements, credit reports and other financial information.
The recent changes in the political makeup of the Senate and House of Representatives in the U.S. Congress could result also in the reversal of some or all of the effects of the Tax Cuts and Jobs Act, which may have an adverse effect on our business, financial conditions and results of operations.
Changes in the political makeup of the Senate and House of Representatives in the U.S. Congress could result also in the reversal of some or all of the effects of the Tax Cuts and Jobs Act, which may have an adverse effect on our business, financial conditions and results of operations.
Inflationary pressures and rising prices may affect our results of operations and financial conditions. Inflation rose in 2022 at levels not seen for over 40 years, and such inflationary pressures continued into 2023 and 2024.
Inflationary pressures and rising prices may affect our results of operations and financial conditions. Inflation rose in 2023 and 2022 at levels not seen for over 40 years, and such inflationary pressures continued into 2024 and 2025.
Hurricanes, extended drought conditions, severe weather and natural disasters could significantly impact the Company's business. Hurricanes, extended drought conditions, severe weather and natural disasters and other adverse external events could have a significant impact on the Company's ability to conduct business.
Hurricanes, tornadoes, extended drought conditions, severe weather and natural disasters could significantly impact the Company's business. Hurricanes, tornadoes, extended drought conditions, severe weather and natural disasters and other adverse external events could have a significant impact on the Company's ability to conduct business.
We also receive funds from loan repayments, investment maturities and income on other interest-earning assets. While we emphasize the generation of low-cost core deposits as a source of funding, there is strong competition for 17 Table of Contents such deposits in our market area. Additionally, deposit balances can decrease if customers perceive alternative investments as providing a better risk/return tradeoff.
We also receive funds from loan repayments, investment maturities and income on other interest-earning assets. While we emphasize the generation of low-cost core deposits as a source of funding, there is strong competition for such deposits in our market area. Additionally, deposit balances can decrease if customers perceive alternative investments as providing a better risk/return tradeoff.
A debit card issuer that adopts certain fraud prevention procedures may charge an additional $0.01 per transaction. In July 2022, the Company became subject to the Durbin Amendment which reduced our interchange income per transaction in 2022 and going forward. 26 Table of Contents Federal income tax reform could have unforeseen effects on our financial condition and results of operations.
A debit card issuer that adopts certain fraud prevention procedures may charge an additional $0.01 per transaction. In July 2022, the Company became subject to the Durbin Amendment which reduced our interchange income per transaction in 2022 and going forward. Federal income tax reform could have unforeseen effects on our financial condition and results of operations.
Regulations adopted by these agencies, which are generally intended to provide protection for depositors and customers rather than for the benefit of shareholders, govern a comprehensive range of matters relating to ownership and control of our shares, our acquisition of other companies and businesses, permissible activities for us to engage in, maintenance of adequate capital levels and other aspects of our operations.
Regulations adopted by these agencies, which are generally intended to provide protection for depositors and customers rather than for the benefit of shareholders, govern a 26 Table of Contents comprehensive range of matters relating to ownership and control of our shares, our acquisition of other companies and businesses, permissible activities for us to engage in, maintenance of adequate capital levels and other aspects of our operations.
Our ownership base has shifted over the past several years resulting in institutional investors and indexed funds holding approximately 59% of our shares as compared to shareholders located in our footprint and other retail individual investors.
Our ownership base has shifted over the past several years resulting in institutional investors and indexed funds holding approximately 62% of our shares as compared to shareholders located in our footprint and other retail individual investors.
A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of the 27 Table of Contents Company’s common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which the Company has no control.
A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of the Company’s common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which the Company has no control.
We maintain an allowance for credit losses, which is an allowance established through a provision for credit losses charged to expense that represents management’s best estimate of probable losses inherent in our loan portfolio. Additional credit losses will occur in the future and may occur at a rate greater than we have experienced to date.
We maintain an allowance for credit losses, which is an allowance established through a provision for credit losses charged to expense that represents management’s best estimate of expected losses in our loan portfolio. Additional credit losses will occur in the future and may occur at a rate greater than we have experienced to date.
Factors that could reduce its access to liquidity sources include a downturn in the Texas market, difficult credit markets, depreciation in investment security values, or adverse regulatory actions against the Company. The Company’s access to deposits may also be affected by the liquidity needs of its depositors.
Factors that could reduce its access to liquidity sources include a downturn in the Texas market, difficult credit 17 Table of Contents markets, depreciation in investment security values, or adverse regulatory actions against the Company. The Company’s access to deposits may also be affected by the liquidity needs of its depositors.
The trust wealth management fees we receive may decrease as a result of poor investment performance, in either relative or absolute terms, which could decrease our revenues and net earnings. 21 Table of Contents Our trust company subsidiary derives its revenues primarily from investment management fees based on assets under management.
The trust wealth management fees we receive may decrease as a result of poor investment performance, in either relative or absolute terms, which could decrease our revenues and net earnings. Our trust company subsidiary derives its revenues primarily from investment management fees based on assets under management.
Accordingly, we are subject to mark-to-market risk and the application of fair value accounting may cause our earnings and AOCI to be more volatile than would be suggested by our underlying performance. We may need to raise additional capital and such funds may not be available when needed .
Accordingly, we are subject to mark-to-market risk and the application of fair value accounting may cause our earnings and AOCI to be more volatile than would be suggested by our underlying performance. 24 Table of Contents We may need to raise additional capital and such funds may not be available when needed .
Such events may also cause reductions in 24 Table of Contents regional and local economic activity that may have an adverse effect on our customers, which could limit our ability to raise and invest capital in these areas and communities, each of which could have a material effect on our financial conditions and results of operations.
Such events may also cause reductions in regional and local economic activity that may have an adverse effect on our customers, which could limit our ability to raise and invest capital in these areas and communities, each of which could have a material effect on our financial conditions and results of operations.
In particular, we may be charged by federal and state regulators with regulatory and compliance failures at an acquired business prior to the date of the acquisition, and these failures by the acquired company may have negative consequences for us, including the imposition of formal or informal enforcement actions.
In particular, we may be charged by federal and state regulators 27 Table of Contents with regulatory and compliance failures at an acquired business prior to the date of the acquisition, and these failures by the acquired company may have negative consequences for us, including the imposition of formal or informal enforcement actions.
In 18 Table of Contents developing and marketing new lines of business and/or products and services, the Company may invest significant time and resources. External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service.
In developing and marketing new lines of business and/or products and services, the Company may invest significant time and resources. External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service.
Any financial liability or reputation damage could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition and results of operations. Our operations rely on certain external vendors. We rely on certain external vendors to provide products and services necessary to maintain our day-to-day operations.
Any financial liability or reputation damage could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition and results of operations. 21 Table of Contents Our operations rely on certain external vendors. We rely on certain external vendors to provide products and services necessary to maintain our day-to-day operations.
Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for conveniences, as well as to create 23 Table of Contents additional efficiencies in our operations.
Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for conveniences, as well as to create additional efficiencies in our operations.
Additionally, the Company's trust revenues may be impacted by oil and gas prices which represented approximately 16% and 15% of total trust revenues in 2024 and 2023, respectively. Our Company lends primarily to small to medium-sized businesses that may have fewer resources to weather a downturn in the economy, which could adversely impact the Company’s operating results.
Additionally, the Company's trust revenues may be impacted by oil and gas prices which represented approximately 14% and 16% of total trust revenues in 2025 and 2024, respectively. Our Company lends primarily to small to medium-sized businesses that may have fewer resources to weather a downturn in the economy, which could adversely impact the Company’s operating results.
While we consider our exposure to credits related to the oil and gas industry to not be significant, at approximately 2.89%, of total loans HFI as of December 31, 2024, should the price of oil and gas decline and/or remain at low prices for an extended period, the general economic conditions in our Texas markets could be negatively affected, which could have a material adverse effect on our business, financial condition and results of operations.
While we consider our exposure to credits related to the oil and gas industry to not be significant, at approximately 3.86%, of total loans HFI as of December 31, 2025, should the price of oil and gas decline and/or remain at low prices for an extended period, the general economic conditions in our Texas markets could be negatively affected, which could have a material adverse effect on our business, financial condition and results of operations.
As of December 31, 2024, we met all of these new requirements, including the full capital conservation buffer.
As of December 31, 2025, we met all of these new requirements, including the full capital conservation buffer.
We do not have employment agreements with these key employees other than executive agreements in the event of a change of control and a confidential information, non-solicitation and non-competition agreement related to our stock options and restricted stock award, restricted stock unit and performance stock unit grants.
Outside of the transition and retirement agreement with the chairman of the board, we do not have employment agreements with these other key employees other than executive agreements in the event of a change of control and a confidential information, non-solicitation and non-competition agreement related to our stock options and restricted stock award, restricted stock unit and performance stock unit grants.
Any damage or failure that causes an interruption in our operations could have 19 Table of Contents an adverse effect on our financial condition and results of operations.
Any damage or failure that causes an interruption in our operations could have an adverse effect on our financial condition and results of operations.
Such claims may increase 20 Table of Contents in the future as the financial services sector becomes more reliant on information technology vendors. The plaintiffs in these actions frequently seek injunctions and substantial damages.
Such claims may increase in the future as the financial services sector becomes more reliant on information technology vendors. The plaintiffs in these actions frequently seek injunctions and substantial damages.
Increases in interest rates can have negative impacts on our business, including reducing our customers’ desire to borrow money from us or adversely affecting their ability to repay their outstanding loans by increasing their debt obligations through the periodic reset of adjustable interest rate loans.
Today, there continues to be uncertainty regarding future interest rates. Increases in interest rates can have negative impacts on our business, including reducing our customers’ desire to borrow money from us or adversely affecting their ability to repay their outstanding loans by increasing their debt obligations through the periodic reset of adjustable interest rate loans.
These banks had elevated levels of uninsured deposits, which may be less likely to remain at the bank over time and less stable as a source of funding than insured deposits. These failures led to volatility and declines in the market for bank stocks and questions about depositor confidence in depository institutions.
In 2023, certain banks with elevated levels of uninsured deposits, which may be less likely to remain at the bank over time and less stable as a source of funding than insured deposits, failed, which led to volatility and declines in the market for bank stocks and questions about depositor confidence in depository institutions.
The bank regulatory agencies possess broad authority to prevent or remedy unsafe or unsound practices or violations of law. We are subject to heightened regulatory requirements as our total assets exceed $10 billion. Our total assets were approximately $13.98 billion as of December 31, 2024.
The bank regulatory agencies possess broad authority to prevent or remedy unsafe or unsound practices or violations of law. We are subject to heightened regulatory requirements as our total assets exceed $10 billion. Our total assets were approximately $15.45 billion as of December 31, 2025.
In addition, as approximately 16% of trust fees came from management of oil and gas properties in 2024, a decline in the prices of oil and gas could lead to a loss of material amounts of our trust income. Our reputation and business could be damaged by negative publicity.
In addition, as approximately 14% of trust fees came from management of oil and gas properties in 2025, a decline in the prices of oil and gas could lead to a loss of our trust income. Our reputation and business could be damaged by negative publicity.
If legal matters related to intellectual property claims were resolved against us or settled, we could be required to make payments in amounts that could have a material adverse effect on our business, financial condition and results of operations. We depend on the accuracy and completeness of information about customers and counterparties.
If legal matters related to intellectual property claims were resolved against us or settled, we could be required to make payments in amounts that could have a material adverse effect on our business, financial condition and results of operations.
The Company’s stock price can fluctuate significantly in response to a variety of factors including, among other things: • actual or anticipated variations in quarterly results of operations; • recommendations by securities analysts; • operating and stock price performance of other companies that investors deem comparable to the Company; • new reports relating to trends, concerns and other issues in the financial services industry or Texas economy, including oil and gas and cattle prices; • perceptions in the marketplace regarding the Company and/or its competitors; • new technology used, or services offered, by competitors; • governmental investigations of the Company or administrative actions imposed by bank regulatory agencies; • significant acquisitions or business combinations involving the Company or its competitors; and • changes in government regulations, including tax laws.
The Company’s stock price can fluctuate significantly in response to a variety of factors including, among other things: • actual or anticipated variations in quarterly results of operations; • recommendations by securities analysts; • operating and stock price performance of other companies that investors deem comparable to the Company; • new reports relating to trends, concerns and other issues in the financial services industry or Texas economy, including oil and gas and cattle prices; • perceptions in the marketplace regarding the Company and/or its competitors; 28 Table of Contents • new technology used, or services offered, by competitors; • governmental investigations of the Company or administrative actions imposed by bank regulatory agencies; • significant acquisitions or business combinations involving the Company or its competitors; and • changes in economic, competitive, regulatory conditions and technical factors, or other developments affecting our industry, and publicity regarding our business or any of our significant customers or competitors.
These increased premiums would have an adverse effect on our net income and results of operations. In the fourth quarter of 2023, the FDIC imposed a $1.75 million special assessment on the Bank in response to the FDIC-insured financial institutions that failed in March 2023.
These increased premiums would have an adverse effect on our net income and results of operations. In the fourth quarter of 2023, and the first quarter of 2024, the FDIC imposed a special assessment to a total of $2.06 million in response to the FDIC-insured financial institutions that failed in March 2023.
Such failure in our analytical or forecasting models could have a material adverse effect on our business, financial condition and results of operations. The value of our goodwill and other intangible assets may decline in the future. As of December 31, 2024, we had $314.00 million of goodwill and other intangible assets.
Such failure in our analytical or forecasting models could have a material adverse effect on our business, financial condition and results of operations. The value of our goodwill and other intangible assets may decline in the future. 18 Table of Contents As of December 31, 2025, we had $313.65 million of goodwill and other intangible assets.
In addition, banking regulators periodically review our allowance for credit losses and may require us to increase our provision for credit losses or recognize further charge-offs, based on judgments different than those of our management.
Material additions to the allowance could materially decrease our net income. In addition, banking regulators periodically review our allowance for credit losses and may require us to increase our provision for credit losses or recognize further charge-offs, based on judgments different than those of our management.
Any substantial deterioration in any of the foregoing conditions could have a material adverse effect on our financial condition, results of operations and liquidity, which would likely have an adverse affect on the market price of our common stock.
Any substantial deterioration in any of the foregoing conditions could have a material adverse effect on our financial condition, results of operations and liquidity, which would likely have an adverse affect on the market price of our common stock. Our business is concentrated in Texas and a downturn in the economy of Texas may adversely affect our business.
We may not be able to complete future acquisitions, may not be successful in realizing the benefits of any acquisitions that are completed, or may choose not to pursue acquisition opportunities we might find beneficial.
Additionally, our completed acquisitions, or any future acquisitions, may not produce the revenue, earnings or synergies that we anticipated. We may not be able to complete future acquisitions, may not be successful in realizing the benefits of any acquisitions that are completed, or may choose not to pursue acquisition opportunities we might find beneficial.
We may incur compliance, operating, maintenance and remediation costs. Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks.
We may incur compliance, operating, maintenance and remediation costs. Increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our sustainability practices may impose additional costs on us or expose us to new or additional risks. Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their sustainability practices and disclosure.
As of December 31, 2024, we had a net unrealized loss of $424.29 million on our available for-sale investment securities portfolio as a result of the rising interest rate environment. Our investment securities totaled $4.62 billion, or 33.03% of total assets, at December 31, 2024. The details of this portfolio are included in Note 2 to the consolidated financial statements.
As of December 31, 2025, we had a net unrealized loss of $342.03 million on our available for-sale investment securities portfolio as a result of the elevated interest rate environment. Our investment securities totaled $5.51 billion, or 35.70% of total assets, at December 31, 2025. The details of this portfolio are included in Note 2 to the consolidated financial statements.
We are subject to possible claims and litigation pertaining to fiduciary responsibility. From time to time, customers could make claims and take legal actions pertaining to our performance of our fiduciary responsibilities.
From time to time, customers could make claims and take legal actions pertaining to our performance of our fiduciary responsibilities.
Additionally, we sell a large portion of our residential real estate loans to third-party investors, and rising interest rates could negatively affect our ability to generate suitable profits on the sale of such loans. If interest rates increase after we originate the loans, our ability to market those loans is impaired as the profitability on the loans decreases.
Additionally, we sell a large portion of our residential real estate loans to third-party investors, and rising interest rates could negatively affect our ability to generate suitable profits on the sale of such loans.
World events such as the Russia-Ukraine conflict, the Israel-Palestine conflict and other world events, including health related events, may adversely impact our business and our financial results, and the ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted.
World events such as the Russia-Ukraine conflict, the Israel-Palestine conflict and other world events, including health related events, may adversely impact our business and our financial results, and the ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted. 19 Table of Contents The Russia-Ukraine conflict, the Israel-Palestine conflict and other world events, including health-related events, are creating disruptions in the global economy and to the lives of individuals throughout the world.
For example, climate change advocates might not be able to force a regulatory ban on lending to certain industries, but the regulators could increase risk weighting on oil and gas loans. 25 Table of Contents Legislative and regulatory actions taken now or in the future that impact the financial industry may materially adversely affect us by increasing our costs, adding complexity in doing business, impeding the efficiency of our internal business processes, negatively impacting the recoverability of certain of our recorded assets, requiring us to increase our regulatory capital, limiting our ability to pursue business opportunities, and otherwise resulting in a material adverse impact on our financial condition, results of operation, liquidity, or stock price.
Legislative and regulatory actions taken now or in the future that impact the financial industry may materially adversely affect us by increasing our costs, adding complexity in doing business, impeding the efficiency of our internal business processes, negatively impacting the recoverability of certain of our recorded assets, requiring us to increase our regulatory capital, limiting our ability to pursue business opportunities, and otherwise resulting in a material adverse impact on our financial condition, results of operation, liquidity, or stock price.
The Federal Reserve Board adopted a final rule that implemented the Basel III Rule changes to the international regulatory capital framework and revised the U.S. risk-based and leverage capital requirements for U.S. banking organizations to strengthen identified areas of weakness in capital rules and to address relevant provisions of the Dodd-Frank Act.
The Federal Reserve Board adopted a final rule that implemented the Basel III Rule changes to the international regulatory capital framework and revised the U.S. risk-based and leverage capital requirements for U.S. banking organizations to strengthen identified areas of weakness in capital rules and to address relevant provisions of the Dodd-Frank Act. 25 Table of Contents The final rule established a stricter regulatory capital framework that requires banking organizations to hold more and higher-quality capital to act as a financial cushion to absorb losses and help banking organizations better withstand periods of financial stress.
General Risk Factors If we are unable to continue our historical levels of growth, we may not be able to maintain our historical earnings trends. 28 Table of Contents To achieve our past levels of growth, we have focused on both internal growth and acquisitions.
As a result, if you acquire our common stock, you may lose some or all of your investment. General Risk Factors If we are unable to continue our historical levels of growth, we may not be able to maintain our historical earnings trends. To achieve our past levels of growth, we have focused on both internal growth and acquisitions.
The Company may not be able to replace maturing deposits and advances as necessary in the future, especially if a large number of its depositors sought to withdraw their accounts, regardless of the reason. On March 9, 2023, Silvergate Bank, La Jolla, California, announced its decision to voluntarily liquidate its assets and wind down operations.
The Company may not be able to replace maturing deposits and advances as necessary in the future, especially if a large number of its depositors sought to withdraw their accounts, regardless of the reason.
In addition, because our systems contain information about individuals and businesses, our failure to appropriately maintain the security of the data we hold, whether as a result of our own error or the malfeasance of others could lead to unauthorized release of confidential or otherwise protected information or corruption of data.
We also face cybersecurity risks due to our reliance on internet technology and hybrid work arrangements, which could strain our technology resources or create additional opportunities for cybercriminals to exploit vulnerabilities. 20 Table of Contents In addition, because our systems contain information about individuals and businesses, our failure to appropriately maintain the security of the data we hold, whether as a result of our own error or the malfeasance of others could lead to unauthorized release of confidential or otherwise protected information or corruption of data.
If our assumptions prove to be incorrect, our current allowance may not be sufficient and adjustments may be necessary to allow for different economic conditions or adverse developments in our loan portfolio. Material additions to the allowance could materially decrease our net income.
In determining the amount of the allowance, we rely on an analysis of our loan portfolio, our experience and our evaluation of general economic conditions. If our assumptions prove to be incorrect, our current allowance may not be sufficient and adjustments may be necessary to allow for different economic conditions or adverse developments in our loan portfolio.
We do business through the purchase and sale of federal funds, check clearing and through the purchase and sale of loan participations with other financial institutions. Because these financial institutions have many risks, as do we, we could be adversely affected should one of these financial institutions experience significant financial difficulties or fail to comply with our agreements with them.
Because these financial institutions have many risks, as do we, we could be adversely affected should one of these financial institutions experience significant financial difficulties or fail to comply with our agreements with them. We are subject to possible claims and litigation pertaining to fiduciary responsibility.
These fluctuations can have an adverse effect on the revenue we generate from residential real estate loans and in certain instances, could result in a loss on the sale of the loans. We originate the majority of our secondary market loans by issuing interest rate lock commitments ("IRLCs") to the customer based on prevailing rates in the market.
If interest rates increase after we originate the loans, our 23 Table of Contents ability to market those loans is impaired as the profitability on the loans decreases. These fluctuations can have an adverse effect on the revenue we generate from residential real estate loans and in certain instances, could result in a loss on the sale of the loans.
We are exposed to changes in interest rates between the date of the IRLC and the closing of the loans. We hedge the price risk of the IRLCs based on various models and other factors using financial instruments which typically, but not always, correlate to the change in value to offset the risk.
We hedge the price risk of the IRLCs based on various models and other factors using financial instruments which typically, but not always, correlate to the change in value to offset the risk. These hedges may not be equally correlated or effective and expose the Company to risk and loss of earnings.
We intend to continue our current growth strategy, including opening new branches and acquiring other banks. The market for acquisitions remains highly competitive, and we may be unable to find satisfactory acquisition candidates in the future that fit our acquisition and growth strategy.
The market for acquisitions remains highly competitive, and we may be unable to find satisfactory acquisition candidates in the future that fit our acquisition and growth strategy. To the extent that we are unable to find suitable acquisition candidates, we may be unable to execute on an important component of our growth strategy.
If our borrowers’ ability to pay their loans is impaired by increasing interest payment obligations, our level of non-performing assets would increase, producing an adverse effect on operating results. Asset values, especially commercial real estate as collateral, securities or other fixed rate earning assets, can decline significantly with relatively minor changes in interest rates.
If our borrowers’ ability to pay their loans is impaired by increasing interest payment obligations, our level of non-performing assets would increase, producing an adverse effect on operating results.
External and Market Related Risks Our business faces unpredictable economic conditions, which could have an adverse effect on us. General economic conditions impact the banking industry. The credit quality of our loan portfolio necessarily reflects, among other things, the general economic conditions in the areas in which we conduct our business.
The credit quality of our loan portfolio necessarily reflects, among other things, the general economic conditions in the areas in which we conduct our business.
After an extended period at a target rate of 0-0.25%, the Federal Reserve Board began aggressively increasing interest rates in March 2022 and continuing into 2023 with increases of 25 basis points in February, March, May, and July 2023.
After an extended period at a target rate of 0-0.25%, the Federal Reserve Board began aggressively increasing interest rates in March 2022 and continuing into 2023 reaching a target range of 5.25% to 5.50%. Beginning in September 2024, the Federal Reserve Board began lowering interest rates resulting in a target rate range of 3.50% to 3.75% at December 31, 2025.
Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social and governance ("ESG") practices and disclosure. Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environmental, health and safety, diversity, labor conditions and human risks.
Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environmental, health and safety, diversity, labor conditions and human risks. Increased sustainability related compliance costs could result in increases to our overall operational costs.
Increased ESG related compliance costs could result in increases to our overall operational costs. Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, and our stock price.
Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, and our stock price. New government regulations could also result in new or more stringent forms of sustainability oversight and expanding mandatory and voluntary reporting, diligence, and disclosure.
Negative public opinion could also result from adverse news or publicity that impairs the reputation of the financial services industry. In addition, adverse publicity or negative information posted on social media, whether or not factually correct, may adversely impact our business prospects or financial results.
Negative public opinion could also result from adverse news or publicity that impairs the reputation of the financial services industry.
These economies include dynamic centers of higher education, agriculture, energy and natural resources, retail, military, healthcare, tourism, retirement living, manufacturing and distribution. Because we generally do not derive revenue or customers from other parts of the state or nation, our business and operations are dependent on economic conditions in our Texas markets.
Our network of bank regions is concentrated in Texas, primarily in the Central, North Central, Southeast and Western regions of the state. Most of our customers and revenue are derived from these areas. These economies include dynamic centers of higher education, agriculture, energy and natural resources, retail, military, healthcare, tourism, retirement living, manufacturing and distribution.
New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure. We compete with many larger financial institutions which have substantially greater financial resources than we have . Competition among financial institutions in Texas is intense.
We compete with many larger financial institutions which have substantially greater financial resources than we have . Competition among financial institutions in Texas is intense.
Any significant decline in one or more segments of the local economies could adversely affect our business, revenue, operations and properties. The volatility in oil and gas prices results in uncertainty about the Texas economy.
Because we generally do not derive revenue or customers from other parts of the state or nation, our business and operations are dependent on economic conditions in our Texas markets. Any significant decline in one or more segments of the local economies could adversely affect our business, revenue, operations and properties.
Reliance on inaccurate or misleading financial statements, credit reports or other financial information could have a material adverse impact on our business, financial condition and results of operations. We do business with other financial institutions that could experience financial difficulty.
Any such misrepresented or fraudulent information could adversely affect our business, financial condition and results of operations We do business with other financial institutions that could experience financial difficulty. We do business through the purchase and sale of federal funds, check clearing and through the purchase and sale of loan participations with other financial institutions.
In the first quarter of 2024, the FDIC updated the special assessment to a total of $2.06 million. The special assessment will be paid over ten quarters beginning in the second quarter of 2024. Risks Related to Acquisition Activities To continue our growth, we are affected by our ability to identify and acquire other financial institutions.
Risks Related to Acquisition Activities To continue our growth, we are affected by our ability to identify and acquire other financial institutions. We intend to continue our current growth strategy, including opening new branches and acquiring other banks.
Removed
Most recently, the Federal Reserve Board decreased interest rates 50 basis points in September and 25 basis points in November and December 2024, respectively, resulting in a target rate range of 4.25% to 4.50% at December 31, 2024. Today, there continues to be uncertainty regarding future interest rates.
Added
Asset values, especially commercial real estate as collateral, 16 Table of Contents securities or other fixed rate earning assets, can decline significantly with relatively minor changes in interest rates reducing the demand for collateral securing the loan.
Removed
In determining the amount of the allowance, we rely on an analysis of our loan portfolio, 16 Table of Contents our experience and our evaluation of general economic conditions.
Added
We also rely on representations of borrowers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors.
Removed
On March 10, 2023, Silicon Valley Bank, Santa Clara, California, was closed by the California Department of Financial Protection and Innovation (the “DFPI”), on March 12, 2023, Signature Bank, New York, New York, was closed by the New York State Department of Financial Services and on May 1, 2023, First Republic Bank, San Francisco, California, was closed by the DFPI, and in each case the FDIC was appointed receiver for the failed institution.
Added
If any of this information is intentionally or negligently misrepresented or fraudulent and such misrepresentation or fraud is not detected prior to loan funding, the value of the loan may be significantly lower than expected and we may be subject to regulatory action.
Removed
The Russia-Ukraine conflict, the Israel-Palestine conflict and other world events, including health-related events, are creating extensive disruptions in the global economy and to the lives of individuals throughout the world.
Added
Whether a misrepresentation is made by the loan applicant, another third party, or one of our employees, we generally bear the risk of loss associated with the misrepresentation or fraud. Our controls and processes may not have detected, or may not detect all, misrepresented or fraudulent information in our loan originations or from our business clients.
Removed
While the effects of COVID have reduced, the pandemic and related efforts to contain it have disrupted global economic activity, adversely affected the functioning of financial markets, impacted interest rates, increased economic and market uncertainty, employment and labor markets and disrupted trade and supply chains.
Added
In addition, adverse publicity or negative information posted on social media, whether or not factually correct, may adversely impact our business prospects or financial results. 22 Table of Contents External and Market Related Risks Our business faces unpredictable economic conditions, which could have an adverse effect on us. General economic conditions impact the banking industry.
Removed
We also face cybersecurity risks due to our reliance on internet technology and hybrid work arrangements, which could strain our technology resources or create additional opportunities for cybercriminals to exploit vulnerabilities.
Added
The volatility in oil and gas prices results in uncertainty about the Texas economy.
Removed
Our business is concentrated in Texas and a downturn in the economy of Texas may adversely affect our business. 22 Table of Contents Our network of bank regions is concentrated in Texas, primarily in the Central, North Central, Southeast and Western regions of the state. Most of our customers and revenue are derived from these areas.
Added
We originate the majority of our secondary market loans by issuing interest rate lock commitments ("IRLCs") to the customer based on prevailing rates in the market. We are exposed to changes in interest rates between the date of the IRLC and the closing of the loans.
Removed
These hedges may not be equally correlated or effective and expose the Company to risk and loss of earnings.
Added
For example, climate change advocates might not be able to force a regulatory ban on lending to certain industries, but the regulators could increase risk weighting on oil and gas loans.
Removed
The final rule established a stricter regulatory capital framework that requires banking organizations to hold more and higher-quality capital to act as a financial cushion to absorb losses and help banking organizations better withstand periods of financial stress.
Added
The special assessment was accrued and expensed when imposed and is being paid over ten quarters beginning in the second quarter of 2024. In December 2025, the FDIC approved an interim final rule to amend the collection period to eight quarters.
Removed
To the extent that we are unable to find suitable acquisition candidates, an important component of our growth strategy may be lost. Additionally, our completed acquisitions, or any future acquisitions, may not produce the revenue, earnings or synergies that we anticipated.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+1 added−1 removed15 unchanged
Biggest changeThe CISO also provides periodic cybersecurity updates to the Audit Committee and the Audit Committee Chairman is member of the Risk Committee. The management-level Technology Risk Committee and Security Advisory Committee oversee management of the Program and related assessments.
Biggest changeThe CISO also provides periodic cybersecurity updates to the Audit Committee and the Audit Committee Chairman is member of the Risk Committee. The management-level Technology Risk Committee and Security Advisory Committee oversee management of the Program and related assessments. Operational committees that manage risks associated with cybersecurity are Change Control Committee and Patch Management Committee.
The Company’s Risk Committee and technology company’s Board of Directors oversees areas of operational risk such as information technology activities; risks associated with development, infrastructure, and cybersecurity; oversight of information security risk assessments, strategies, policies, and programs; and disaster recovery, business continuity, and incident response process.
The Company’s Risk Committee and technology company’s Board of Directors oversees areas of operational risk such as information technology activities; risks associated with development, infrastructure, and cybersecurity; oversight of information security risk 30 Table of Contents assessments, strategies, policies, and programs; and disaster recovery, business continuity, and incident response process.
Although such risks have not materially affected us, including our business strategy, results of operations or financial condition, to date, we have, from time to time, experienced threats to and breaches of our data and systems, including malware and computer virus attacks.
We face a number of cybersecurity risks in connection with our business. Although such risks have not materially affected us, including our business strategy, results of operations or financial condition, to date, we have, from time to time, experienced threats to and breaches of our data and systems, including malware and computer virus attacks.
Removed
Operational committees that manage risks associated with cybersecurity are Change Control Committee and Patch Management Committee. 30 Table of Contents We face a number of cybersecurity risks in connection with our business.
Added
We periodically test elements of our incident response capability through tabletop exercises and other assessments. We use these exercises to identify opportunities to enhance our processes, including incident escalation, communications, and recovery procedures, and we integrate lessons learned into our information security program.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed0 unchanged
Biggest changeWe are in the process of constructing a new branch location in our existing market in Franklin, Texas.
Biggest changeWe are in the process of constructing a new branch location in our existing markets in Franklin and Beaumont, Texas. We are also constructing a new motor bank that will replace an existing stand alone motor bank in Abilene, Texas.
As of December 31, 2024, our subsidiaries collectively own 79 banking, trust and mortgage facilities, some of which are detached drive-ins, and also lease 11 banking facilities and 11 ATM locations. Our management considers all our existing locations to be well-suited for conducting the business of banking.
As of December 31, 2025, our subsidiaries collectively own 79 banking, trust and mortgage facilities, some of which are detached drive-ins, and also lease 11 banking facilities and 10 ATM locations. Our management considers all our existing locations to be well-suited for conducting the business of banking.
ITEM 2. PROPERTIES Our principal office is located in the First Financial Bank Building at 400 Pine Street in downtown Abilene, Texas. We lease two spaces in buildings owned by First Financial Bank totaling approximately 10,155 square feet.
ITEM 2. PROPERTIES Our principal office is located in the First Financial Bank Building at 400 Pine Street in downtown Abilene, Texas. Our corporate offices lease two spaces in buildings owned by First Financial Bank totaling approximately 17,600 square feet.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

129 edited+19 added−28 removed75 unchanged
Biggest changeThe banking agencies could require additions to our allowance for credit losses based on their judgment of information available to them at the time of their examinations of our bank subsidiary. 46 Table of Contents Loan Loss Experience and Allowance for Credit Losses (in thousands, except percentages): 2024 2023 2022 2021 2020 Balance at January 1, $ 88,734 $ 75,834 $ 63,465 $ 66,534 $ 52,499 Impact of adopting ASC 326 — — — — (619 ) Initial allowance on acquired TB&T PCD loans — — — — 1,678 Charge-offs: Commercial: C&I (1,392 ) (1,816 ) (589 ) (1,600 ) (2,516 ) Municipal — — — — — Total Commercial (1,392 ) (1,816 ) (589 ) (1,600 ) (2,516 ) Agricultural (67 ) (9 ) (9 ) (2,683 ) (372 ) Real estate: Construction & Development (205 ) — (100 ) — — Farm — — — — — Non-Owner Occupied CRE (763 ) — — (6 ) (563 ) Owner Occupied CRE — (10 ) (537 ) (231 ) (567 ) Residential real estate (13 ) (258 ) (186 ) (93 ) (373 ) Total real estate (981 ) (268 ) (823 ) (330 ) (1,503 ) Consumer: Auto (1,680 ) (1,006 ) (596 ) (610 ) (548 ) Non-Auto (895 ) (600 ) (435 ) (285 ) (375 ) Total Consumer (2,575 ) (1,606 ) (1,031 ) (895 ) (923 ) Total charge-offs (5,015 ) (3,699 ) (2,452 ) (5,508 ) (5,314 ) Recoveries: Commercial: C&I 576 267 953 2,150 1,315 Municipal — — — — — Total Commercial 576 267 953 2,150 1,315 Agricultural 111 286 155 36 31 Real estate: Construction & Development 4 106 — 1 — Farm — — — 110 157 Non-Owner Occupied CRE 37 71 852 702 131 Owner Occupied CRE 122 227 699 821 17 Residential real estate 98 24 114 96 151 Total Real Estate 261 428 1,665 1,730 456 Consumer: Auto 448 398 293 401 269 Non-Auto 161 170 215 211 171 Total Consumer 609 568 508 612 440 Total recoveries 1,557 1,549 3,281 4,528 2,242 Net recoveries (charge-offs) (3,458 ) (2,150 ) 829 (980 ) (3,072 ) Provision for credit losses (excluding provision for unfunded commitment) 13,049 15,050 11,540 (2,089 ) 16,048 Balance at December 31, $ 98,325 $ 88,734 $ 75,834 $ 63,465 $ 66,534 2024 2023 2022 2021 2020 Loans, held-for-investment at year-end $ 7,913,098 $ 7,148,791 $ 6,441,868 $ 5,388,972 $ 5,171,033 Average loans 7,516,352 6,784,352 5,923,594 5,341,332 5,152,531 Net (recoveries) charge-offs/average loans 0.05 % 0.03 % (0.01 )% 0.02 % 0.06 % Allowance for credit losses/year-end loans held-for-investment 1.24 % 1.24 % 1.18 % 1.18 % 1.29 % Allowance for credit losses/nonaccrual, past due 90 days still accruing and restructured loans 158.02 256.36 311.75 200.33 155.61 47 Table of Contents Allocation of Allowance for Credit Losses (in thousands): At December 31, 2024 2023 2022 2021 2020 Allocation Amount Allocation Amount Allocation Amount Allocation Amount Allocation Amount Commercial: C&I $ 15,436 $ 15,698 $ 16,129 $ 12,280 $ 13,609 Municipal 200 195 1,026 348 1,552 Total Commercial 15,636 15,893 17,155 12,628 15,161 Agricultural 1,653 1,281 1,041 1,597 1,255 Real estate: Construction & Development 19,861 28,553 26,443 17,627 13,512 Farm 2,871 2,914 1,957 663 1,876 Non-Owner Occupied CRE 14,664 13,425 9,075 10,722 8,391 Owner Occupied CRE 21,413 13,813 9,928 10,828 12,347 Residential real estate 20,488 11,654 9,075 8,133 12,601 Total Real Estate 79,297 70,359 56,478 47,973 48,727 Consumer: Auto 1,186 810 845 896 1,020 Non-Auto 553 391 315 371 371 Total Consumer 1,739 1,201 1,160 1,267 1,391 Total $ 98,325 $ 88,734 $ 75,834 $ 63,465 $ 66,534 Percent of Loans in Each Category of Total Loans: At December 31, 2024 2023 2022 2021 2020 Commercial: C&I 14.87 % 16.29 % 14.24 % 15.53 % 21.88 % Municipal 4.67 3.01 3.43 3.30 3.51 Total Commercial 19.54 19.30 17.67 18.83 25.39 Agricultural 1.21 1.19 1.19 1.83 1.83 Real estate: Construction & Development 13.33 13.47 14.89 13.91 10.71 Farm 4.29 4.83 4.76 4.03 2.94 Non-Owner Occupied CRE 10.18 11.58 11.36 11.57 11.95 Owner Occupied CRE 13.69 14.51 14.82 15.25 14.45 Residential real estate 27.76 25.66 24.46 24.76 24.14 Total Real Estate 69.25 70.05 70.29 69.52 64.19 Consumer: Auto 8.07 7.30 8.55 7.52 6.84 Non-Auto 1.93 2.16 2.30 2.30 1.75 Total Consumer 10.00 9.46 10.85 9.82 8.59 Total 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % Interest-Bearing Demand Deposits in Banks.
Biggest changeThe banking agencies could require additions to our allowance for credit losses based on their judgment of information available to them at the time of their examinations of our bank subsidiary. 46 Table of Contents Loan Loss Experience and Allowance for Credit Losses (in thousands, except percentages): 2025 2024 2023 2022 2021 Balance at January 1, $ 98,325 $ 88,734 $ 75,834 $ 63,465 $ 66,534 Charge-offs: Commercial: C&I (20,677 ) (1,392 ) (1,816 ) (589 ) (1,600 ) Municipal — — — — — Total Commercial (20,677 ) (1,392 ) (1,816 ) (589 ) (1,600 ) Agricultural — (67 ) (9 ) (9 ) (2,683 ) Real estate: Construction & Development (40 ) (205 ) — (100 ) — Farm — — — — — Non-Owner Occupied CRE (250 ) (763 ) — — (6 ) Owner Occupied CRE (4,405 ) — (10 ) (537 ) (231 ) Residential real estate (701 ) (13 ) (258 ) (186 ) (93 ) Total real estate (5,396 ) (981 ) (268 ) (823 ) (330 ) Consumer: Auto (1,518 ) (1,680 ) (1,006 ) (596 ) (610 ) Non-Auto (543 ) (895 ) (600 ) (435 ) (285 ) Total Consumer (2,061 ) (2,575 ) (1,606 ) (1,031 ) (895 ) Total charge-offs (28,134 ) (5,015 ) (3,699 ) (2,452 ) (5,508 ) Recoveries: Commercial: C&I 3,042 576 267 953 2,150 Municipal — — — — — Total Commercial 3,042 576 267 953 2,150 Agricultural 74 111 286 155 36 Real estate: Construction & Development 6 4 106 — 1 Farm 1 — — — 110 Non-Owner Occupied CRE 36 37 71 852 702 Owner Occupied CRE 317 122 227 699 821 Residential real estate 76 98 24 114 96 Total Real Estate 436 261 428 1,665 1,730 Consumer: Auto 596 448 398 293 401 Non-Auto 298 161 170 215 211 Total Consumer 894 609 568 508 612 Total recoveries 4,446 1,557 1,549 3,281 4,528 Net recoveries (charge-offs) (23,688 ) (3,458 ) (2,150 ) 829 (980 ) Provision (reversal) for loan losses 30,899 13,049 15,050 11,540 (2,089 ) Balance at December 31, $ 105,536 $ 98,325 $ 88,734 $ 75,834 $ 63,465 2025 2024 2023 2022 2021 Loans, held-for-investment at year-end $ 8,158,276 $ 7,913,098 $ 7,148,791 $ 6,441,868 $ 5,388,972 Average loans 8,123,368 7,516,352 6,784,352 5,923,594 5,341,332 Net (recoveries) charge-offs/average loans 0.29 % 0.05 % 0.03 % (0.01 )% 0.02 % Allowance for credit losses/year-end loans held-for-investment 1.29 % 1.24 % 1.24 % 1.18 % 1.18 % Allowance for credit losses/nonaccrual, past due 90 days still accruing and restructured loans 188.41 158.02 256.36 311.75 200.33 47 Table of Contents Allocation of Allowance for Credit Losses (in thousands): At December 31, 2025 2024 2023 2022 2021 Allocation Amount Allocation Amount Allocation Amount Allocation Amount Allocation Amount Commercial: C&I $ 17,696 $ 15,436 $ 15,698 $ 16,129 $ 12,280 Municipal 135 200 195 1,026 348 Total Commercial 17,831 15,636 15,893 17,155 12,628 Agricultural 325 1,653 1,281 1,041 1,597 Real estate: Construction & Development 17,000 19,861 28,553 26,443 17,627 Farm 2,577 2,871 2,914 1,957 663 Non-Owner Occupied CRE 14,561 14,664 13,425 9,075 10,722 Owner Occupied CRE 25,368 21,413 13,813 9,928 10,828 Residential real estate 25,614 20,488 11,654 9,075 8,133 Total Real Estate 85,120 79,297 70,359 56,478 47,973 Consumer: Auto 1,598 1,186 810 845 896 Non-Auto 662 553 391 315 371 Total Consumer 2,260 1,739 1,201 1,160 1,267 Total $ 105,536 $ 98,325 $ 88,734 $ 75,834 $ 63,465 Percent of Loans in Each Category of Total Loans: At December 31, 2025 2024 2023 2022 2021 Commercial: C&I 13.69 % 14.87 % 16.29 % 14.24 % 15.53 % Municipal 4.20 4.67 3.01 3.43 3.30 Total Commercial 17.88 19.54 19.30 17.67 18.83 Agricultural 1.17 1.21 1.19 1.19 1.83 Real estate: Construction & Development 14.19 13.33 13.47 14.89 13.91 Farm 4.02 4.29 4.83 4.76 4.03 Non-Owner Occupied CRE 10.21 10.18 11.58 11.36 11.57 Owner Occupied CRE 13.74 13.69 14.51 14.82 15.25 Residential real estate 28.02 27.76 25.66 24.46 24.76 Total Real Estate 70.17 69.25 70.05 70.29 69.52 Consumer: Auto 8.98 8.07 7.30 8.55 7.52 Non-Auto 1.80 1.93 2.16 2.30 2.30 Total Consumer 10.77 10.00 9.46 10.85 9.82 Total 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % Interest-Bearing Demand Deposits in Banks.
Net earnings for 2024 were $223.51 million compared to net earnings of $198.98 million for 2023, reflecting an increase of $24.53 million, or 12.33%. The increase in earnings for 2024 over 2023 was primarily attributable to the overall growth in net interest income from the growth in earning assets.
Net earnings for 2024 were $223.51 million compared to $198.98 million for 2023, reflecting an increase of $24.53 million, or 12.33%. The increase in earnings for 2024 over 2023 was primarily attributable to the overall growth in net interest income from the growth in earning assets.
Management reviews and approves these policies and procedures on an annual basis and makes changes as appropriate with input from our Board of Directors. Management receives and reviews monthly reports related to loan originations, quality, concentrations, delinquencies, nonperforming and potential problem loans.
Management reviews and approves these policies and procedures on an annual basis and makes changes as appropriate with input from our Board of Directors. Management and the board receives and reviews monthly reports related to loan originations, quality, concentrations, delinquencies, nonperforming and potential problem loans.
A downturn in the economy or lower employment could result in increased levels of nonaccrual, past due 90 days or more and still accruing, foreclosed assets, charge-offs, increased provision for credit losses and reductions in income. Additionally, as an integral part of their examination process, bank regulatory agencies periodically review the adequacy of our allowance for credit losses.
A downturn in the economy or lower employment could result in increased levels of nonaccrual, past due 90 days or more and still accruing, foreclosed assets, charge-offs, increased provision for credit losses and reductions in income. Additionally, as an integral part of their examination process, bank regulatory agencies regularly review the adequacy of our allowance for credit losses.
Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Our principal executive officer and principal financial officer have concluded, based on our evaluation of our disclosure controls and procedures, that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2024.
Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Our principal executive officer and principal financial officer have concluded, based on our evaluation of our disclosure controls and procedures, that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2025.
We deem our most critical accounting policies to be (1) our allowance for credit losses and our provision for credit losses and (2) our valuation of financial instruments.
We deem our most critical accounting policies to be (1) our allowance for credit losses (“ACL”) and our provision for credit losses and (2) our valuation of financial instruments.
CONTROLS AND PROCEDURES As of December 31, 2024, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934).
CONTROLS AND PROCEDURES As of December 31, 2025, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934).
The following discussion and analysis of the major elements of our consolidated balance sheets as of December 31, 2024 and 2023, and consolidated statements of earnings for the years 2022 through 2024 should be read in conjunction with our consolidated financial statements, accompanying notes, and selected financial data presented elsewhere in this Form 10-K.
The following discussion and analysis of the major elements of our consolidated balance sheets as of December 31, 2025 and 2024, and consolidated statements of earnings for the years 2023 through 2025 should be read in conjunction with our consolidated financial statements, accompanying notes, and selected financial data presented elsewhere in this Form 10-K.
PCAOB Auditor Firm I.D.: 42 ), the independent registered public accounting firm that audited our consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2024.
PCAOB Auditor Firm I.D.: 42 ), the independent registered public accounting firm that audited our consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2025.
Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. First Financial Bankshares, Inc. and subsidiaries’ management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024.
Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. First Financial Bankshares, Inc. and subsidiaries’ management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025.
Under the loan agreement, as renewed and amended, we are permitted to draw up to $25.00 million on a revolving line of credit. See Note 8 - Line of Credit in the accompanying notes to consolidated financial statements regarding further information on this line of credit.
Under the loan agreement, as renewed and amended, we are permitted to draw up to $50.00 million on a revolving line of credit. See Note 8 - Line of Credit in the accompanying notes to consolidated financial statements regarding further information on this line of credit.
Opinion on Internal Control over Financial Reporting We have audited First Financial Bankshares, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).
Opinion on Internal Control over Financial Reporting We have audited First Financial Bankshares, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).
The performance graph assumes $100 invested in our common stock at its closing price on December 31, 2019, and in each of the Russell 3000 Index and the S&P U.S. BMI Banks Index on the same date. The performance graph also assumes the reinvestment of all dividends.
The performance graph assumes $100 invested in our common stock at its closing price on December 31, 2020, and in each of the Russell 3000 Index and the S&P U.S. BMI Banks Index on the same date. The performance graph also assumes the reinvestment of all dividends.
Refer to the accompanying notes to consolidated financial statements for the expected timing of such payments as of December 31, 2024. These payments related to time deposits with stated maturity dates (Note 7 - Deposits and Borrowings) and operating leases (Note 11 - Commitments and Contingencies).
Refer to the accompanying notes to consolidated financial statements for the expected timing of such payments as of December 31, 2025. These payments related to time deposits with stated maturity dates (Note 7 - Deposits and Borrowings) and operating leases (Note 11 - Commitments and Contingencies).
The properties securing the Company’s real estate portfolio are generally diverse in terms of type and geographic location within Texas. This diversity helps reduce the exposure to adverse economic events that affect any single market or industry. Consumer loan underwriting utilizes methodical credit standards and analysis to supplement the Company’s underwriting policies and procedures.
The properties securing the Company’s real estate portfolio are generally diverse in terms of type and geographic location within Texas. This diversity helps reduce the exposure to adverse economic events that affect any single market or industry. 43 Table of Contents Consumer loan underwriting utilizes methodical credit standards and analysis to supplement the Company’s underwriting policies and procedures.
The unrealized gains or losses, net of taxes, on the portfolio are excluded from the calculation of all regulatory capital ratios. The changes in the fair value were driven by changes in interest rates based on expected actions by the Federal Reserve Board and other market conditions. The overall valuation of the portfolio is most correlated to the 5-year U.S.
The unrealized gains or losses, net of taxes, on the portfolio are excluded from the calculation of all regulatory capital ratios. The improvement in the fair value was driven by changes in interest rates based on expected actions by the Federal Reserve Board and other market conditions. The overall valuation of the portfolio is most correlated to the 5-year U.S.
The Federal Reserve Board, the Texas Department of Banking, the OCC and the FDIC expect that bank holding companies and insured banks should generally only pay dividends out of current operating earnings. IT EM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Management considers interest rate risk to be a significant market risk for the Company.
The Federal Reserve Board, the Texas Department of Banking, the OCC and the FDIC expect that bank holding companies and insured banks should generally only pay dividends out of current operating earnings. 53 Table of Contents IT EM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Management considers interest rate risk to be a significant market risk for the Company.
Maturities and Yields of Available-for-Sale Held at December 31, 2024 (in thousands, except percentages): Maturing One Year or Less After One Year Through Five Years After Five Years Through Ten Years After Ten Years Total Available-for-Sale: Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield U.S.
Maturities and Yields of Available-for-Sale Held at December 31, 2025 (in thousands, except percentages): Maturing One Year or Less After One Year Through Five Years After Five Years Through Ten Years After Ten Years Total Available-for-Sale: Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield U.S.
Quarterly Results of Operations (in thousands, except per share and common stock data): The following tables set forth certain unaudited historical quarterly financial data for each of the eight consecutive quarters in the fiscal years of 2024 and 2023.
Quarterly Results of Operations (in thousands, except per share and common stock data): The following tables set forth certain unaudited historical quarterly financial data for each of the eight consecutive quarters in the fiscal years of 2025 and 2024.
In our opinion, First Financial Bankshares, Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.
In our opinion, First Financial Bankshares, Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.
See “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Interest Rate Risk” for disclosure regarding this market risk. 53 Table of Contents IT EM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Our consolidated financial statements and the report of our independent registered public accounting firm begin on page F-1.
See “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Interest Rate Risk” for disclosure regarding this market risk. IT EM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Our consolidated financial statements and the report of our independent registered public accounting firm begin on page F-1.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of earnings, comprehensive earnings (loss), shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2024 and the related notes and our report dated February 20, 2025 expressed an unqualified opinion thereon.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of earnings, comprehensive earnings (loss), shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2025 and the related notes and our report dated February 25, 2026 expressed an unqualified opinion thereon.
See the below table and Note 2 to the Consolidated Financial Statements for additional disclosures relating to the maturities and fair values of the investment portfolio at December 31, 2024 and 2023.
See the below table and Note 2 to the Consolidated Financial Statements for additional disclosures relating to the maturities and fair values of the investment portfolio at December 31, 2025 and 2024.
These simulations incorporate assumptions regarding balance sheet growth and mix, pricing and the re-pricing and maturity characteristics of the existing and projected balance sheet. The following analysis depicts the estimated impact on net interest income of immediate changes in interest rates at the specified levels for the periods presented.
These simulations incorporate assumptions regarding balance sheet growth and mix, pricing and the re-pricing and maturity characteristics of the existing and projected balance sheet. 50 Table of Contents The following analysis depicts the estimated impact on net interest income of immediate changes in interest rates at the specified levels for the periods presented.
The effective tax rates differ from the statutory federal tax rate of 21.0% largely due to tax exempt interest income earned on certain investment securities and loans, the deductibility of dividends paid to our employee stock ownership plan, excess tax benefits for distribution under our deferred compensation plan and vesting of equity awards, and New Market Tax Credit ("NMTC") benefits.
The effective tax rates differ from the statutory federal tax rate of 21.0% largely due to tax exempt interest income earned on certain investment securities and loans, the deductibility of dividends paid to our employee stock ownership plan, excess tax benefits for distribution under our deferred compensation plan and vesting of equity awards, New Market Tax Credit ("NMTC") benefits, and Low Income Housing Tax Credits ("LIHTC").
Dividends . Our long-term dividend policy is to pay cash dividends to our shareholders of approximately 35% to 40% of annual net earnings while maintaining adequate capital to support growth.
Dividends . Our long-term dividend policy is to pay cash dividends to our shareholders of approximately 40% to 50% of annual net earnings while maintaining adequate capital to support growth.
The Company’s loan policy addresses types of consumer loans that may be originated and the collateral, if secured, which must be 43 Table of Contents perfected. The relatively smaller individual dollar amounts of consumer loans that are spread over numerous individual borrowers also minimize the Company’s risk.
The Company’s loan policy addresses types of consumer loans that may be originated and the collateral, if secured, which must be perfected. The relatively smaller individual dollar amounts of consumer loans that are spread over numerous individual borrowers also minimize the Company’s risk.
Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of our common stock during the three months ended December 31, 2024.
Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of our common stock during the three months ended December 31, 2025.
Maturity Distribution and Interest Sensitivity of Loans at December 31, 2024 (in thousands): The following tables summarize maturity information of our loan portfolio as of December 31, 2024.
Maturity Distribution and Interest Sensitivity of Loans at December 31, 2025 (in thousands): The following tables summarize maturity information of our loan portfolio as of December 31, 2025.
Equity Compensation Plans See “Item 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters”. Purchases of Equity Securities by the Issuer and Affiliated Purchasers On July 23, 2024, the Company’s Board of Directors extended the authorization to repurchase up to 5,000,000 common shares through July 31, 2025.
Equity Compensation Plans See “Item 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters”. Purchases of Equity Securities by the Issuer and Affiliated Purchasers On July 22, 2025, the Company’s Board of Directors extended the authorization to repurchase up to 5,000,000 common shares through July 31, 2026.
Additionally, trust fee income increased $6.99 million when compared to 2023 and there were no losses on sales of AFS securities in 2024 when compared to $7.12 million losses in 2023. The proceeds from sales of securities during 2023 were used to fund higher-yielding organic loan growth during 2024.
Additionally, trust fee income increased $6.99 million when compared to 2023 and there was no loss on sales of AFS securities in 2024 when compared to a $7.12 million loss in 2023. The proceeds from sales of securities during 2023 were used to fund higher-yielding organic loan growth during 2024.
The report, which expresses an opinion on the effectiveness of our internal control over financial reporting as of December 31, 2024, is included below. 55 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of First Financial Bankshares, Inc.
The report, which expresses an opinion on the effectiveness of our internal control over financial reporting as of December 31, 2025, is included below. 56 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of First Financial Bankshares, Inc.
Period (a) Total number of shares purchased (b) Average price paid per share (c) Total number of shares purchased as part of publicly announced plans or programs (d) Maximum number of shares that may yet be purchased under the plans or programs October 1, 2024 through October 31, 2024 - $ - - 4,898,663 November 1, 2024 through November 30, 2024 - $ - - 4,898,663 December 1, 2024 through December 31, 2024 - $ - - 4,898,663 Total - $ - - 4,898,663 32 Table of Contents PERFORMANCE GRAPH The following performance graph compares cumulative total shareholder returns for our common stock, the Russell 3000 Index, and the S&P U.S.
Period (a) Total number of shares purchased (b) Average price paid per share (c) Total number of shares purchased as part of publicly announced plans or programs (d) Maximum number of shares that may yet be purchased under the plans or programs October 1, 2025 through October 31, 2025 - $ - - 5,000,000 November 1, 2025 through November 30, 2025 - $ - - 5,000,000 December 1, 2025 through December 31, 2025 - $ - - 5,000,000 Total - $ - - 5,000,000 32 Table of Contents PERFORMANCE GRAPH The following performance graph compares cumulative total shareholder returns for our common stock, the Russell 3000 Index, and the S&P U.S.
Average municipal and related deposits totaled $1.46 billion for both years ended December 31, 2024 and 2023, respectively, with an average rate paid of 3.94% and 3.13%, for the respective years then ended. 39 Table of Contents The net interest margin, which measures tax-equivalent net interest income as a percentage of average earning assets, is illustrated in the table below for the years 2022 through 2024.
Average municipal and related deposits totaled $1.58 billion and $1.46 billion for the years ended December 31, 2025 and 2024, respectively, with an average rate paid of 3.42% and 3.94%, for the respective years then ended. 39 Table of Contents The net interest margin, which measures tax-equivalent net interest income as a percentage of average earning assets, is illustrated in the table below for the years 2023 through 2025.
Based on our assessment we believe that, as of December 31, 2024, the Company’s internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Securities Exchange Act of 1934, is effective based on those criteria. Ernst & Young LLP, Fort Worth, Texas, (U.S.
Based on our assessment we believe that, as of December 31, 2025, the Company’s internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Securities Exchange Act of 1934, is effective based on those criteria. Ernst & Young LLP, Dallas, Texas, (U.S.
These potential problem loans totaled $11.25 million as of December 31, 2024. See Note 3 to the Consolidated Financial Statements for more information on these assets. Allowance for Credit Losses . The allowance for credit losses is the amount we determine as of a specific date to be appropriate to absorb current expected credit losses on existing loans.
These potential problem loans totaled $3.67 million as of December 31, 2025. See Note 3 to the Consolidated Financial Statements for more information on these assets. Allowance for Credit Losses . The allowance for credit losses is the amount we determine as of a specific date to be appropriate to absorb current expected credit losses on existing loans.
The capital conservation buffer is designed to absorb losses during periods of economic stress and requires increased capital levels for the purpose of capital distributions and other payments.
The capital conservation buffer is designed to absorb losses during periods of economic stress and requires increased capital levels for the purpose of capital distributions and 51 Table of Contents other payments.
We are also restricted by a loan covenant within our line of credit agreement with Frost Bank to dividend no greater than 55% of net income, as defined in such loan agreement. The cash dividend payout ratios have amounted to 46.06%, 50.96% and 40.18% of net earnings, respectively, in 2024, 2023 and 2022.
We are also restricted by a loan covenant within our line of credit agreement with Frost Bank to dividend no greater than 55% of net income, as defined in such loan agreement. The cash dividend payout ratios have amounted to 42.38%, 46.06% and 50.96% of net earnings, respectively, in 2025, 2024 and 2023.
Our subsidiary bank also has federal funds purchased lines of credit with two non-affiliated banks totaling $130.00 million. At December 31, 2024, there were no amounts drawn on these lines of credit.
Our subsidiary bank also has federal funds purchased lines of credit with two non-affiliated banks totaling $175.00 million. At December 31, 2025, there were no amounts drawn on these lines of credit.
(2) Average balances include unrealized gains and losses on AFS securities. (3) Includes tax-equivalent yield adjustment of approximately $10.45 million, $11.55 million and $15.42 million for the years ended December 31, 2024, 2023 and 2022, respectively, using an effective tax rate of 21%. (4) Includes nonaccrual loans. Noninterest Income .
(2) Average balances include unrealized gains and losses on AFS securities. (3) Includes tax-equivalent yield adjustment of approximately $12.74 million, $10.45 million and $11.55 million for the years ended December 31, 2025, 2024 and 2023, respectively, using an effective tax rate of 21%. (4) Includes nonaccrual loans. Noninterest Income .
At December 31, 2024 and 2023, $442 thousand and $3.18 million are valued at the lower of cost or fair value, and the remaining amount is valued under the fair value option. The Company has certain lending policies and procedures in place that are designed to maximize loan growth with an acceptable level of risk.
At December 31, 2025 and 2024, $4.56 million and $442 thousand are valued at the lower of cost or fair value, and the remaining amount is valued under the fair value option. The Company has certain lending policies and procedures in place that are designed to maximize loan growth with an acceptable level of risk.
BMI Banks Index, which is a banking index prepared by S&P Global Market Intelligence and is comprised of all U.S. domiciled banks, for a five-year period (December 31, 2019 to December 31, 2024).
BMI Banks Index, which is a banking index prepared by S&P Global Market Intelligence and is comprised of all U.S. domiciled banks, for a five-year period (December 31, 2020 to December 31, 2025).
The highest amount of federal funds purchased, securities sold under repurchase agreements and advances from the FHLB at any month-end during 2024, 2023 and 2022 was $563.28 million, $822.98 million and $1.04 billion, respectively. Interest Rate Risk Interest rate risk results when the maturity or repricing intervals of interest-earning assets and interest-bearing liabilities are different.
The highest amount of federal funds purchased, securities sold under repurchase agreements and advances from the FHLB at any month-end during 2025, 2024 and 2023 was $197.51 million, $563.28 million and $822.98 million, respectively. Interest Rate Risk Interest rate risk results when the maturity or repricing intervals of interest-earning assets and interest-bearing liabilities are different.
Other sources of funds include our ability to borrow from short-term sources, such as purchasing federal funds from correspondent banks, sales of securities under agreements to repurchase and other borrowings, which amounted to $197.02 at December 31, 2024, and an unfunded $25.00 million revolving line of credit established with Frost Bank, a nonaffiliated bank, which matures on June 30, 2025 (see next paragraph).
Other sources of funds include our ability to borrow from short-term sources, such as purchasing federal funds from correspondent banks, sales of securities under agreements to repurchase and other borrowings, which amounted to $84.64 million at December 31, 2025, and an unfunded $50.00 million revolving line of credit established with Frost Bank, a nonaffiliated bank, which matures on June 30, 2027 (see next paragraph).
The average rates paid on securities sold under repurchase agreements were 3.16%, 2.84% and 0.31% for the years ended December 31, 2024, 2023 and 2022, respectively. The weighted average interest rate on federal funds purchased, securities sold under repurchase agreements and advances from the FHLB was 2.01%, 3.27% and 1.96% at December 31, 2024, 2023 and 2022, respectively.
The average rates paid on securities sold under repurchase agreements were 1.60%, 3.16% and 2.84% for the years ended December 31, 2025, 2024 and 2023, respectively. The weighted average interest rate on federal funds purchased, securities sold under repurchase agreements and advances from the FHLB was 1.46%, 2.01% and 3.27% at December 31, 2025, 2024 and 2023, respectively.
There are $1.09 billion of municipal and related deposits which are indexed to short-term treasury rates which have continued to increase with the changes in the applicable rate index.
There are $1.52 billion of municipal and related deposits which are indexed to short-term treasury rates which have continued to fluctuate with the changes in the applicable rate index.
Any repurchase of stock will be made through the open market, block trades, or in privately negotiated transactions in accordance with applicable laws and regulations. Under the repurchase plan, there is no minimum number of shares that the Company is required to repurchase.
Any repurchase of stock will be made through the open market, block trades, or in privately negotiated transactions in accordance with applicable laws and regulations. Under the repurchase plan, there is no minimum number of shares that the Company is required to repurchase. There have been no repurchases during 2024 or 2025.
Securities AFS included an unrealized loss fair value adjustment of $537.55 million, $510.92 million and $677.99 million at December 31, 2024, 2023, and 2022, respectively. Our mortgage related securities are backed by GNMA, FNMA or FHLMC or are collateralized by securities backed by these agencies.
Securities AFS included an unrealized loss fair value adjustment of $342.03 million, $537.55 million and $510.92 million at December 31, 2025, 2024, and 2023, respectively. Our mortgage related securities are backed by GNMA, FNMA or FHLMC or are collateralized by securities backed by these agencies.
Of this amount, approximately $1.90 billion will reprice immediately upon changes in the underlying index rate (primarily U.S. prime rate) with the remaining $173.43 million being subject to floors above or ceilings below the current index. Asset Quality .
Of this amount, approximately $1.81 billion will reprice immediately upon changes in the underlying index rate (primarily U.S. prime rate) with the remaining $354.40 million being subject to floors above or ceilings below the current index. Asset Quality .
ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” ASU 2023-09 requires entities to disclose more detailed information in their reconciliation of their statutory tax rate to their effective tax rate. Public business entities (PBEs) are required to provide this incremental detail in a numerical, tabular format.
Other Recently Issued and Effective Authoritative Accounting Guidance ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” ASU 2023-09 requires entities to disclose more detailed information in their reconciliation of their statutory tax rate to their effective tax rate. Public business entities (PBEs) are required to provide this incremental detail in a numerical, tabular format.
The yield on earning assets increased 90 basis points in 2023 when compared to 2022 while the rate paid on interest-bearing liabilities increased 143 basis points. The table below allocates the change in tax-equivalent net interest income between the amount of change attributable to volume and to rate.
The yield on earning assets increased 62 basis points in 2024 when compared to 2023 while the rate paid on interest-bearing liabilities increased 57 basis points. The table below allocates the change in tax-equivalent net interest income between the amount of change attributable to volume and to rate.
In addition, we have construction contracts with remaining future minimum contractual obligations of approximately $358 thousand in 2025. Off-Balance Sheet/Reserve for Unfunded Commitments. We are a party to financial instruments with off-balance sheet (“OBS”) risk in the normal course of business to meet the financing needs of our customers.
In addition, we have construction contracts with remaining future minimum contractual obligations of approximately $4.89 million in 2026. Off-Balance Sheet/Reserve for Unfunded Commitments. We are a party to financial instruments with off-balance sheet (“OBS”) risk in the normal course of business to meet the financing needs of our customers.
Deposits held by our subsidiary bank represent our primary source of funding. Total deposits were $12.10 billion as of December 31, 2024, as compared to $11.14 billion as of December 31, 2023 and $11.01 billion as of December 31, 2022.
Deposits held by our subsidiary bank represent our primary source of funding. Total deposits were $13.35 billion as of December 31, 2025, as compared to $12.10 billion as of December 31, 2024 and $11.14 billion as of December 31, 2023.
Treasury rates based on the composition and duration of the portfolio. At December 31, 2024, the 5-year U.S. Treasury rate was 4.39% compared to 3.84% at December 31, 2023, representing a 55 basis point increase during the year. As of December 31, 2024, an increase of 100 basis points in the 5-year U.S.
Treasury rates based on the composition and duration of the portfolio. At December 31, 2025, the 5-year U.S. Treasury rate was 3.72% compared to 4.39% at December 31, 2024, representing a 66 basis point decrease during the year. As of December 31, 2025, an increase of 100 basis points in the 5-year U.S.
If interest on these loans had been recognized on a full accrual basis during the year ended December 31, 2024, such income would have approximated $5.35 million. Included in our loan portfolio are certain other loans not included in the table above that are deemed to be potential problem loans.
If interest on all nonaccrual loans at December 31, 2025 had been recognized on a full accrual basis during the year ended December 31, 2025, such income would have approximated $5.69 million. Included in our loan portfolio are certain other loans not included in the table above that are deemed to be potential problem loans.
In response to the current interest rate environment and increases in benchmark rates, the Company has enhanced stress testing and loan review activities to mitigate interest rate reset risk with a specific emphasis on borrowers' abilities to absorb the impact of higher interest rates on loans.
In response to the current interest rate environment and increases in benchmark rates, the Company has enhanced stress testing and loan review activities to mitigate interest rate reset risk with a specific emphasis on borrowers' abilities to absorb the impact of higher interest rates as loans that were made in a much lower rate environment renew.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Fort Worth, Texas February 21, 2025 56 Table of Contents IT EM 9B. OTHER INFORMATION None .
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Dallas, Texas February 25, 2026 57 Table of Contents IT EM 9B. OTHER INFORMATION None .
Nonaccrual, past due 90 days or more and still accruing, and restructured loans plus foreclosed assets were $63.10 million at December 31, 2024, as compared to $35.10 million at December 31, 2023 and $24.33 million at December 31, 2022.
Nonaccrual, past due 90 days or more and still accruing, and restructured loans plus foreclosed assets were $56.49 million at December 31, 2025, as compared to $63.10 million at December 31, 2024 and $35.10 million at December 31, 2023.
We anticipate that our recurring cash sources will continue to include dividends and management fees from our subsidiaries. At December 31, 2024, $428.66 million was available for the payment of intercompany dividends by our subsidiaries without the prior approval of regulatory agencies. Our subsidiaries paid aggregate dividends to us of $55.50 million in 2024 and $133.50 million in 2023.
We anticipate that our recurring cash sources will continue to include dividends and management fees from our subsidiaries. At December 31, 2025, $366.54 million was available for the payment of intercompany dividends by our subsidiaries without the prior approval of regulatory agencies. Our subsidiaries paid aggregate dividends to us of $149.40 million in 2025 and $55.50 million in 2024.
Balance Sheet Review Loans . Our portfolio is comprised of loans made to businesses, professionals, individuals, and farm and ranch operations located in the primary trade areas served by our subsidiary bank. As of December 31, 2024, total loans HFI were $7.91 billion, an increase of $764.31 million as compared to December 31, 2023.
Balance Sheet Review Loans . Our portfolio is comprised of loans made to businesses, professionals, individuals, and farm and ranch operations located in the primary trade areas served by our subsidiary bank. As of December 31, 2025, total loans HFI were $8.16 billion, an increase of $245.18 million as compared to December 31, 2024.
At December 31, 2024, the Company’s reserve for unfunded commitments totaled $8.68 million which is recorded in other liabilities. Our exposure to credit loss in the event of nonperformance by the counterparty to the financial instrument for unfunded lines of credit, commitments to extend credit and standby letters of credit is represented by the contractual notional amount of these instruments.
At December 31, 2025, the Company’s reserve for unfunded commitments totaled $6.39 million which is recorded in other liabilities. 52 Table of Contents Our exposure to credit loss in the event of nonperformance by the counterparty to the financial instrument for unfunded lines of credit, commitments to extend credit and standby letters of credit is represented by the contractual notional amount of these instruments.
Unrealized gains and losses on investment securities AFS are excluded from and do not impact regulatory capital. During 2024, total shareholders’ equity averaged $1.54 billion, or 11.56% of average assets, as compared to $1.33 billion, or 10.32% of average assets during 2023.
Unrealized gains and losses on investment securities AFS are excluded from and do not impact regulatory capital. During 2025, total shareholders’ equity averaged $1.74 billion, or 12.08% of average assets, as compared to $1.54 billion, or 11.56% of average assets during 2024.
Such needs can develop from loan demand, deposit withdrawals or acquisition opportunities. Potential obligations resulting from the issuance of standby letters of credit and commitments to fund future borrowings to our loan customers are other factors affecting our liquidity needs.
Liquidity is our ability to meet cash demands as they arise. Such needs can develop from loan demand, deposit withdrawals or acquisition opportunities. Potential obligations resulting from the issuance of standby letters of credit and commitments to fund future borrowings to our loan customers are other factors affecting our liquidity needs.
Collateral for CRE loans is located throughout the Company's markets in central west Texas, the Dallas-Forth Worth metroplex and southeast Texas with less than 1% of properties located outside of the state. The largest concentrations in the CRE portfolio as to type are industrial/warehouse at approximately 13.91% and multifamily at approximately 7.64% as of December 31, 2024.
Collateral for CRE loans is located throughout the Company's markets in central west Texas, the Dallas-Forth Worth metroplex and southeast Texas with less than 1% of properties located outside of the state. The largest concentrations in the CRE portfolio as to type are industrial/manufacturing at approximately 18.60% and multifamily at approximately 7.75% as of December 31, 2025.
All additional property type categories are 7% or less of the CRE portfolio. Credit underwriting standards are periodically reviewed and adjusted based upon observations from our ongoing monitoring of economic conditions in our lending areas.
All additional CRE portfolio property type categories are below the identified concentration levels. Credit underwriting standards are periodically reviewed and adjusted based upon observations from our ongoing monitoring of economic conditions in our lending areas.
Borrowings. Included in borrowings were federal funds purchased, advances from the FHLB and other borrowings of $135.60 million, $22.15 million and $23.68 million at December 31, 2024, 2023 and 2022, respectively. The average balance of federal funds purchased, advances from the FHLB and other borrowings were $54.94 million, $81.26 million and $127.87 million during 2024, 2023 and 2022, respectively.
Borrowings. Included in borrowings were federal funds purchased, advances from the FHLB and other borrowings of $21.68 million, $135.60 million and $22.15 million at December 31, 2025, 2024 and 2023, respectively. The average balance of federal funds purchased, advances from the FHLB and other borrowings were $44.75 million, $54.94 million and $81.26 million during 2025, 2024 and 2023, respectively.
Year Ended December 31, 2024 2023 2022 2021 2020 (dollars in thousands, except per share data) Summary Income Statement Information: Interest income $ 628,918 $ 528,070 $ 432,854 $ 376,405 $ 364,128 Interest expense 202,177 144,261 31,440 6,042 14,243 Net interest income 426,741 383,809 401,414 370,363 349,885 Provision for credit losses 13,821 10,631 17,427 (1,139 ) 19,517 Noninterest income 123,989 108,003 131,665 142,176 139,935 Noninterest expense 265,063 237,882 234,778 241,708 227,938 Earnings before income taxes 271,846 243,299 280,874 271,970 242,365 Income tax expense 48,335 44,322 46,399 44,408 40,331 Net earnings $ 223,511 $ 198,977 $ 234,475 $ 227,562 $ 202,034 Per Share Data: Earnings per share, basic $ 1.56 $ 1.39 $ 1.64 $ 1.60 $ 1.42 Earnings per share, diluted 1.56 1.39 1.64 1.59 1.42 Cash dividends declared 0.72 0.71 0.66 0.58 0.51 Book value at period-end 11.24 10.50 8.87 12.34 11.80 Earnings performance ratios: Return on average assets 1.68 % 1.55 % 1.76 % 1.89 % 1.98 % Return on average equity 14.51 14.99 16.72 13.31 12.93 Dividend payout ratio 46.06 50.96 40.18 36.30 35.88 Summary Balance Sheet Data (Period-end): Securities $ 4,617,759 $ 4,732,762 $ 5,474,359 $ 6,573,179 $ 4,393,029 Loans, held-for-investment 7,913,098 7,148,791 6,441,868 5,388,972 5,171,033 Total assets 13,979,418 13,105,594 12,974,066 13,102,461 10,904,500 Deposits 12,099,174 11,138,300 11,005,507 10,566,488 8,675,817 Total liabilities 12,372,858 11,606,694 11,708,329 11,343,237 9,226,310 Total shareholders’ equity 1,606,560 1,498,900 1,265,737 1,759,224 1,678,190 Asset quality ratios: Allowance for credit losses/period-end loans held-for-investment 1.24 % 1.24 % 1.18 % 1.18 % 1.29 % Nonperforming assets/period-end loans held- for-investment plus foreclosed assets 0.80 0.49 0.38 0.63 0.83 Net charge offs (recoveries)/average loans 0.05 0.03 (0.01 ) 0.02 0.06 Capital ratios: Average shareholders’ equity/average assets 11.56 % 10.32 % 10.55 % 14.20 % 15.32 % Leverage ratio (1) 12.49 12.06 10.96 11.13 11.86 Tier 1 risk-based capital (2) 18.83 18.50 18.22 19.35 20.79 Common equity tier 1 capital (3) 18.83 18.50 18.22 19.35 20.79 Total risk-based capital (4) 20.00 19.62 19.29 20.34 22.03 (1) Calculated by dividing at period-end, shareholders’ equity (before accumulated other comprehensive earnings/loss) less intangible assets by fourth quarter average assets less intangible assets.
Year Ended December 31, 2025 2024 2023 2022 2021 (dollars in thousands, except per share data) Summary Income Statement Information: Interest income $ 702,480 $ 628,918 $ 528,070 $ 432,854 $ 376,405 Interest expense 201,593 202,177 144,261 31,440 6,042 Net interest income 500,887 426,741 383,809 401,414 370,363 Provision for credit losses 28,609 13,821 10,631 17,427 (1,139 ) Noninterest income 130,716 123,989 108,003 131,665 142,176 Noninterest expense 293,391 265,063 237,882 234,778 241,708 Earnings before income taxes 309,603 271,846 243,299 280,874 271,970 Income tax expense 56,024 48,335 44,322 46,399 44,408 Net earnings $ 253,579 $ 223,511 $ 198,977 $ 234,475 $ 227,562 Per Share Data: Earnings per share, basic $ 1.77 $ 1.56 $ 1.39 $ 1.64 $ 1.60 Earnings per share, diluted 1.77 1.56 1.39 1.64 1.59 Cash dividends declared 0.75 0.72 0.71 0.66 0.58 Book value at period-end 13.39 11.24 10.50 8.87 12.34 Earnings performance ratios: Return on average assets 1.76 % 1.68 % 1.55 % 1.76 % 1.89 % Return on average equity 14.59 14.51 14.99 16.72 13.31 Dividend payout ratio 42.38 46.06 50.96 40.18 36.30 Summary Balance Sheet Data (Period-end): Securities $ 5,514,113 $ 4,617,759 $ 4,732,762 $ 5,474,359 $ 6,573,179 Loans, held-for-investment 8,158,276 7,913,098 7,148,791 6,441,868 5,388,972 Total assets 15,446,476 13,979,418 13,105,594 12,974,066 13,102,461 Deposits 13,345,529 12,099,174 11,138,300 11,005,507 10,566,488 Total liabilities 13,529,159 12,372,858 11,606,694 11,708,329 11,343,237 Total shareholders’ equity 1,917,317 1,606,560 1,498,900 1,265,737 1,759,224 Asset quality ratios: Allowance for credit losses/period-end loans held-for-investment 1.29 % 1.24 % 1.24 % 1.18 % 1.18 % Nonperforming assets/period-end loans held- for-investment plus foreclosed assets 0.69 0.80 0.49 0.38 0.63 Net charge offs (recoveries)/average loans 0.29 0.05 0.03 (0.01 ) 0.02 Capital ratios: Average shareholders’ equity/average assets 12.08 % 11.56 % 10.32 % 10.55 % 14.20 % Leverage ratio (1) 12.55 12.49 12.06 10.96 11.13 Tier 1 risk-based capital (2) 19.99 18.83 18.50 18.22 19.35 Common equity tier 1 capital (3) 19.99 18.83 18.50 18.22 19.35 Total risk-based capital (4) 21.17 20.00 19.62 19.29 20.34 (1) Calculated by dividing at period-end, shareholders’ equity (before accumulated other comprehensive earnings/loss) less intangible assets by fourth quarter average assets less intangible assets.
As a percent of loans HFI and foreclosed assets, these assets were 0.80% at December 31, 2024, as compared to 0.49% at December 31, 2023 and 0.38% at December 31, 2022. As a percent of total assets, these assets were 0.45% at December 31, 2024, as compared to 0.27% at December 31, 2023 and 0.19% at December 31, 2022.
As a percent of loans HFI and foreclosed assets, these assets were 0.69% at December 31, 2025, as compared to 0.80% at December 31, 2024 and 0.49% at December 31, 2023. As a percent of total assets, these assets were 0.37% at December 31, 2025, as compared to 0.45% at December 31, 2024 and 0.27% at December 31, 2023.
During the year ended December 31, 2024, the corresponding unrealized loss before taxes on the portfolio of $510.92 million at December 31, 2023, changed to an unrealized loss before taxes of $537.55 million at December 31, 2024, which is recorded net of taxes in accumulated other comprehensive earnings (loss) in shareholders' equity.
During the year ended December 31, 2025, the corresponding unrealized loss before taxes on the portfolio of $537.55 million at December 31, 2024, declined to an unrealized loss before taxes of $342.03 million at December 31, 2025, which is recorded net of taxes in accumulated other comprehensive earnings (loss) in shareholders' equity.
(2) Nonaccrual loans are included in loans. 38 Table of Contents The net interest margin for 2024 was 3.50% which was a increase of 21 basis points from 2023. The net interest margin in 2023 was 3.29%, a decrease of five basis points from 2022.
(2) Nonaccrual loans are included in loans. 38 Table of Contents The net interest margin for 2025 was 3.79% which was an increase of 29 basis points from 2024. The net interest margin in 2024 was 3.50%, an increase of 21 basis points from 2023.
Commercial real estate loans (owner and non-owner occupied CRE) represent 23.87% of the Company's total loan portfolio as of December 31, 2024. Non-owner occupied CRE represents $805.57 million, or 10.18%, of the Company's total loan portfolio as of December 31, 2024. The properties securing this portfolio are diverse as to geographic location in Texas as well as industry type.
Commercial real estate loans (owner and non-owner occupied CRE) represent 23.94% of the Company's total loan portfolio as of December 31, 2025. Non-owner occupied CRE represents $832.82 million, or 10.21%, of the Company's total loan portfolio as of December 31, 2025. The properties securing this portfolio are diverse as to geographic location in Texas as well as industry type.
Although we believe we use the best information available to make credit loss allowance determinations, future adjustments could be necessary if circumstances or economic conditions differ substantially from the assumptions used in making our initial determinations.
Included in the following tables are further analysis of our allowance for credit losses. Although we believe we use the best information available to make credit loss allowance determinations, future adjustments could be necessary if circumstances or economic conditions differ substantially from the assumptions used in making our initial determinations.
See further disclosure of the unfunded lines of credit, unfunded commitments to extend credit and standby letters of credit (Note 12 - Financial Instruments with Off-Balance-Sheet Risk). Future notional amounts committed are $1.04 billion in less than one year, $601.28 million in more than one year but less than three years and $525.41 million thereafter.
See further disclosure of the unfunded lines of credit, unfunded commitments to extend credit and standby letters of credit (Note 12 - Financial Instruments with Off-Balance-Sheet Risk). Future notional amounts committed are $904.09 million in less than one year, $445.74 million in more than one year but less than three years and $442.28 million thereafter.
The average balance of interest-bearing deposits in banks was $253.39 million, $115.79 million and $217.53 million in 2024, 2023 and 2022, respectively. The average yield on interest-bearing deposits in banks was 5.23%, 5.09% and 1.67% in 2024, 2023 and 2022, respectively. 48 Table of Contents Available-for-Sale Securities .
The average balance of interest-bearing deposits in banks was $329.39 million, $253.39 million and $115.79 million in 2025, 2024 and 2023, respectively. The average yield on interest-bearing deposits in banks was 4.26%, 5.23% and 5.09% in 2025, 2024 and 2023, respectively. 48 Table of Contents Available-for-Sale Securities .
As of December 31, 2024, the investment portfolio had an overall tax equivalent yield of 2.55%, a weighted average life of 7.03 years and modified duration of 5.82 years. At December 31, 2023, the investment portfolio had an overall tax equivalent yield of 2.23%, a weighted average life of 6.07 years and modified duration of 5.30 years. Deposits .
As of December 31, 2025, the investment portfolio had an overall tax equivalent yield of 3.10%, a weighted average life of 6.54 years and modified duration of 5.43 years. At December 31, 2024, the investment portfolio had an overall tax equivalent yield of 2.55%, a weighted average life of 7.03 years and modified duration of 5.82 years. Deposits .
Total shareholders’ equity was $1.61 billion, or 11.49% of total assets at December 31, 2024, as compared to $1.50 billion, or 11.44% of total assets at December 31, 2023. Included in shareholders’ equity were $424.29 million and $403.30 million at December 31, 2024 and 2023, respectively, in unrealized losses on investment securities AFS, net of related income taxes.
Total shareholders’ equity was $1.92 billion, or 12.41% of total assets at December 31, 2025, as compared to $1.61 billion, or 11.49% of total assets at December 31, 2024. Included in shareholders’ equity were $269.94 million and $424.29 million at December 31, 2025 and 2024, respectively, in unrealized losses on investment securities AFS, net of related income taxes.
Our subsidiary bank also has (i) an available line of credit with the FHLB totaling $1.86 billion at December 31, 2024, secured by portions of our loan portfolio and certain investment securities; and (ii) access to the Federal Reserve Bank of Dallas lending program, including the Bank Term Funding Program, secured by portions of certain investment securities.
Our subsidiary bank also has (i) an available line of credit with the FHLB totaling $2.31 billion at December 31, 2025, secured by portions of our loan portfolio and certain investment securities; and (ii) access to approximately $1.85 billion at the Federal Reserve Bank of Dallas discount window lending program secured by portions of certain investment securities and portions of our loan portfolio.
As of December 31, 2024 and 2023, we had a total risk-based capital ratio of 20.00% and 19.62%, a Tier 1 capital to risk-weighted assets ratio of 18.83% and 18.50%, a common equity Tier 1 capital to risk-weighted ratio of 18.83% and 18.50% and a Tier 1 leverage ratio of 12.49% and 12.06%, respectively.
As of December 31, 2025 and 2024, we had a total risk-based capital ratio of 21.17% and 20.00%, a Tier 1 capital to risk-weighted assets ratio of 19.99% and 18.83%, a common equity Tier 1 capital to risk-weighted ratio of 19.99% and 18.83% and a Tier 1 leverage ratio of 12.55% and 12.49%, respectively.
Income tax expense was $48.34 million for 2024, as compared to $44.32 million for 2023 and $46.40 million for 2022. Our effective tax rates on pretax income were 17.78%, 18.22% and 16.52%, respectively, for the years 2024, 2023 and 2022.
Income tax expense was $56.02 million for 2025, as compared to $48.34 million for 2024 and $44.32 million for 2023. Our effective tax rates on pretax income were 18.10%, 17.78% and 18.22%, respectively, for the years 2025, 2024 and 2023.
Available cash and cash equivalents at the Company, which totaled $94.59 million at December 31, 2024, investment securities which totaled $2.12 million at December 31, 2024 with maturities over 5 to 6 years, available dividends from our subsidiaries which totaled $428.66 million at December 31, 2024, utilization of available lines of credit, and future debt or equity offerings are expected to be the source of funding for these potential acquisitions or expansions.
Available cash and cash equivalents at our parent company, which totaled $138.86 million at December 31, 2025, investment securities which totaled $1.12 million at December 31, 2025 with maturities over 4 to 5 years, available dividends from our subsidiaries which totaled $366.54 million at December 31, 2025, utilization of available lines of credit, and future debt or equity offerings are expected to be the source of funding for these potential acquisitions or expansions.

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