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What changed in ServisFirst Bancshares, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of ServisFirst Bancshares, 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.

+312 added−400 removedSource: 10-K (2026-02-27) vs 10-K (2025-03-03)

Top changes in ServisFirst Bancshares, Inc.'s 2025 10-K

312 paragraphs added · 400 removed · 265 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

72 edited+17 added−48 removed184 unchanged
Biggest changeDespite prior approval, the Federal Reserve may order a bank holding company or its subsidiaries to terminate any of these activities or to terminate its ownership or control of any subsidiary when it has reasonable cause to believe that the bank holding company’s continued ownership, activity or control constitutes a serious risk to the financial safety, soundness, or stability of it or any of its bank subsidiaries.
Biggest changeDespite prior approval, the Federal Reserve may order a bank holding company or its subsidiaries to terminate any of these activities or to terminate its ownership or control of any subsidiary when it has reasonable cause to believe that the bank holding company’s continued ownership, activity or control constitutes a serious risk to the financial safety, soundness, or stability of it or any of its bank subsidiaries. 10 In addition to the permissible bank holding company activities listed above, a bank holding company may qualify and elect to become a financial holding company, permitting the bank holding company to engage in activities that are financial in nature or incidental or complementary to financial activity without posing a substantial risk to the safety and soundness of a depository institution or to the financial system generally.
Federal Laws Applicable to Consumer Credit and Deposit Transactions The Bank’s loan and deposit operations are subject to a number of federal consumer protection laws and regulations, including, among others: ● the Truth-In-Lending Act, as implemented by Regulation Z issued by the CFPB, governing, among other things, the disclosure of credit terms to consumers; ● the Real Estate Settlement Procedures Act, as implemented by Regulation X issued by the CFPB, prescribing, among other things, requirements in connection with residential mortgage loan applications, settlements, and servicing; ● the Home Mortgage Disclosure Act, as implemented by Regulation C issued by the CFPB, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; ● the Equal Credit Opportunity Act, as implemented by Regulation B issued by the CFPB, prohibiting discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or certain other prohibited factors in all aspects of credit transactions, imposing certain requirements regarding credit applications, and prescribing certain disclosure obligations; ● the Fair Credit Reporting Act, as implemented in part by Regulation V issued by the CFPB, governing the use and provision of information to credit reporting agencies by imposing, among other things, requirements for financial institutions to develop policies and procedures to identify potential identity theft, requirements for entities that furnish information to consumer reporting agencies (which would include the Bank) to implement procedures and policies regarding the accuracy and integrity of the furnished information and respond to disputes from consumers regarding credit reporting issues, requirements for mortgage lenders to disclose credit scores to consumers, and limitations on the ability of a business that receives consumer information from an affiliate to use that information for marketing purposes; ● the Fair Debt Collection Practices Act, as implemented in part by Regulation F issued by the CFPB, governing the manner in which consumer debts may be collected by debt collectors; ● the Servicemembers’ Civil Relief Act, governing the repayment terms of, and property rights underlying, secured obligations of persons in military service; ● the Right to Financial Privacy Act, imposing a duty to maintain the confidentiality of consumer financial records and prescribing procedures for complying with administrative subpoenas of financial records; ● the Electronic Funds Transfer Act, as implemented by Regulation E issued by the CFPB, governing automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; 15 ● the Truth in Savings Act, as implemented by Regulation DD issued by the CFPB, governing, among other things, the disclosure of deposit terms to consumers; and ● the Fair Housing Act, prohibiting discrimination in most housing-related activities, including financing, based on race, color, sex, national origin or religion.
Federal Laws Applicable to Consumer Credit and Deposit Transactions The Bank’s loan and deposit operations are subject to a number of federal consumer protection laws and regulations, including, among others: ● the Truth-In-Lending Act, as implemented by Regulation Z issued by the CFPB, governing, among other things, the disclosure of credit terms to consumers; ● the Real Estate Settlement Procedures Act, as implemented by Regulation X issued by the CFPB, prescribing, among other things, requirements in connection with residential mortgage loan applications, settlements, and servicing; ● the Home Mortgage Disclosure Act, as implemented by Regulation C issued by the CFPB, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; ● the Equal Credit Opportunity Act, as implemented by Regulation B issued by the CFPB, prohibiting discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or certain other prohibited factors in all aspects of credit transactions, imposing certain requirements regarding credit applications, and prescribing certain disclosure obligations; ● the Fair Credit Reporting Act, as implemented in part by Regulation V issued by the CFPB, governing the use and provision of information to credit reporting agencies by imposing, among other things, requirements for financial institutions to develop policies and procedures to identify potential identity theft, requirements for entities that furnish information to consumer reporting agencies (which would include the Bank) to implement procedures and policies regarding the accuracy and integrity of the furnished information and respond to disputes from consumers regarding credit reporting issues, requirements for mortgage lenders to disclose credit scores to consumers, and limitations on the ability of a business that receives consumer information from an affiliate to use that information for marketing purposes; ● the Fair Debt Collection Practices Act, as implemented in part by Regulation F issued by the CFPB, governing the manner in which consumer debts may be collected by debt collectors; ● the Servicemembers’ Civil Relief Act, governing the repayment terms of, and property rights underlying, secured obligations of persons in military service; ● the Right to Financial Privacy Act, imposing a duty to maintain the confidentiality of consumer financial records and prescribing procedures for complying with administrative subpoenas of financial records; ● the Electronic Funds Transfer Act, as implemented by Regulation E issued by the CFPB, governing automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; ● the Truth in Savings Act, as implemented by Regulation DD issued by the CFPB, governing, among other things, the disclosure of deposit terms to consumers; and ● the Fair Housing Act, prohibiting discrimination in most housing-related activities, including financing, based on race, color, sex, national origin or religion.
The Dodd-Frank Act (i) requires publicly traded companies to give stockholders a non-binding vote on executive compensation and golden parachute payments; (ii) enhances independence requirements for compensation committee members; (iii) requires companies listed on national securities exchanges to adopt incentive-based compensation clawback policies for executive officers; (iv) authorizes the SEC to promulgate rules that would allow stockholders to nominate their own candidates using a company’s proxy materials; and (v) directs the federal banking agencies to issue rules prohibiting incentive compensation that encourages inappropriate risks. ● Although insured depository institutions have long been subject to the FDIC’s resolution process, the Dodd-Frank Act creates a new mechanism for the FDIC to conduct the orderly liquidation of certain “covered financial companies,” including bank holding companies and systemically significant non-bank financial companies.
The Dodd-Frank Act (i) requires publicly traded companies to give stockholders a non-binding vote on executive compensation and golden parachute payments; (ii) enhances independence requirements for compensation committee members; (iii) requires companies listed on national securities exchanges to adopt incentive-based compensation clawback policies for executive officers; (iv) authorizes the SEC to promulgate rules that would allow stockholders to nominate their own candidates using a company’s proxy materials; and (v) directs the federal banking agencies to issue rules prohibiting incentive compensation that encourages inappropriate risks. 19 ● Although insured depository institutions have long been subject to the FDIC’s resolution process, the Dodd-Frank Act creates a new mechanism for the FDIC to conduct the orderly liquidation of certain “covered financial companies,” including bank holding companies and systemically significant non-bank financial companies.
In addition to the credit quality monitoring actions described above, our quarterly regional credit meetings and monthly/quarterly reports to the Board also include details on problem 1-4 family mortgage loans and broader portfolio trends. Construction and Development Loans . We make construction and development loans on both a pre-sold and speculative basis.
In addition to the credit quality monitoring actions described above, our quarterly regional credit meetings and monthly/quarterly reports to the Board also include details on problem 1-4 family mortgage loans and broader portfolio trends. 7 Construction and Development Loans . We make construction and development loans on both a pre-sold and speculative basis.
We analyze these statements, looking for weaknesses and trends, and will assign the loan a risk grade accordingly. Based on this risk grade, the loan may receive an increased degree of scrutiny by management. 8 Real Estate Loans We make commercial real estate loans, 1-4 family residential real estate loans, and construction and development loans. Commercial Real Estate .
We analyze these statements, looking for weaknesses and trends, and will assign the loan a risk grade accordingly. Based on this risk grade, the loan may receive an increased degree of scrutiny by management. Real Estate Loans We make commercial real estate loans, 1-4 family residential real estate loans, and construction and development loans. Commercial Real Estate .
In addition, we generally require personal guarantees from the principal owners of the property supported by a review by our management of the principal owners’ personal financial statements. Commercial real estate has received increased regulatory scrutiny in recent quarters due to valuation concerns associated with interest rates.
In addition, we generally require personal guarantees from the principal owners of the property supported by a review by our management of the principal owners’ personal financial statements. 6 Commercial real estate has received increased regulatory scrutiny in recent quarters due to valuation concerns associated with interest rates.
Relationships exceeding $3.0 million are subject to the same annual review requirement that applies to owner-occupied properties and construction loans. 9 1-4 Family Mortgage . Our 1-4 family mortgage residential loans consist primarily of residential second mortgage loans, residential construction loans, and traditional mortgage lending for one-to-four family residences.
Relationships exceeding $3.0 million are subject to the same annual review requirement that applies to owner-occupied properties and construction loans. 1-4 Family Mortgage . Our 1-4 family mortgage residential loans consist primarily of residential second mortgage loans, residential construction loans, and traditional mortgage lending for one-to-four family residences.
The CFPB’s supervisory focus primarily involves an institution’s compliance with federal consumer protection laws. 11 The results of examination activity by any of our federal or state bank regulators potentially can result in the imposition of significant limitations on our activities and growth.
The CFPB’s supervisory focus primarily involves an institution’s compliance with federal consumer protection laws. The results of examination activity by any of our federal or state bank regulators potentially can result in the imposition of significant limitations on our activities and growth.
The Federal Reserve has adopted an exception to this approval requirement for well-capitalized bank holding companies that meet certain conditions. 13 Bank Supervision and Regulation Generally The Bank is an Alabama state-chartered bank and, as such, is subject to examination and regulation by the Alabama Banking Department.
The Federal Reserve has adopted an exception to this approval requirement for well-capitalized bank holding companies that meet certain conditions. Bank Supervision and Regulation Generally The Bank is an Alabama state-chartered bank and, as such, is subject to examination and regulation by the Alabama Banking Department.
Applications to establish such branches must still be filed with the appropriate primary state and federal banking agencies. 22 On March 30, 2023, the CFPB issued a final rule implementing Section 1071 of the Dodd-Frank Act.
Applications to establish such branches must still be filed with the appropriate primary state and federal banking agencies. On March 30, 2023, the CFPB issued a final rule implementing Section 1071 of the Dodd-Frank Act.
The following discussion describes the material elements of the regulatory framework that applies to the Bank. FDIC Insurance Assessments The Bank’s deposits are insured by the FDIC to the full extent provided in the Federal Deposit Insurance Act, and the Bank pays assessments to the FDIC for that coverage.
The following discussion describes the material elements of the regulatory framework that applies to the Bank. 11 FDIC Insurance Assessments The Bank’s deposits are insured by the FDIC to the full extent provided in the Federal Deposit Insurance Act, and the Bank pays assessments to the FDIC for that coverage.
All securities held are traded in liquid markets, and we have no auction-rate securities. We had no investments in any one security, restricted or liquid, in excess of 10% of our stockholders’ equity at December 31, 2024.
All securities held are traded in liquid markets, and we have no auction-rate securities. We had no investments in any one security, restricted or liquid, in excess of 10% of our stockholders’ equity at December 31, 2025.
Stockholders may request hard copies of our filings, free of charge, by contacting our Senior Vice President of Investor Relations, Davis Mange, at 2500 Woodcrest Place, Birmingham, AL 35209, telephone (205) 949-3420.
Stockholders may request hard copies of our filings, free of charge, by contacting our Senior Vice President of Corporate Treasury and Investor Relations, Davis Mange, at 2500 Woodcrest Place, Birmingham, AL 35209, telephone (205) 949-3420.
These institutions, as well as other competitors of ours, may have greater resources, serve broader geographic markets, have higher lending limits, offer various services that we do not offer and may better afford, and make broader use of, media advertising, support services, and electronic technology than us.
(formerly Synovus Financial Corp.). These institutions, as well as other competitors of ours, may have greater resources, serve broader geographic markets, have higher lending limits, offer various services that we do not offer and may better afford, and make broader use of, media advertising, support services, and electronic technology than us.
Loans are conservatively underwritten, with interest rates, vacancy levels, and rental rates stressed to gauge performance through various economic conditions. These loans typically carry personal guarantees from the owners. At year-end 2024, non-owner-occupied commercial real estate amounted to approximately $4.18 billion, representing 33.2% of our total loan portfolio.
Loans are conservatively underwritten, with interest rates, vacancy levels, and rental rates stressed to gauge performance through various economic conditions. These loans typically carry personal guarantees from the owners. At year-end 2025, non-owner-occupied commercial real estate amounted to approximately $4.60 billion, representing 33.6% of our total loan portfolio.
At December 31, 2024, the Bank was well-capitalized under the regulatory framework for prompt corrective action.
At December 31, 2025, the Bank was well-capitalized under the regulatory framework for prompt corrective action.
The Basel III Capital Rules became effective as applied to us and the Bank on January 1, 2015, with a phase in period that generally extended from January 1, 2015 through January 1, 2019.
The Basel III Capital Rules became effective as applied to us and the Bank on January 1, 2015, with a phase in period that generally extended from January 1, 2015 through January 1, 2019. We and the Bank are currently in compliance with Basel III Capital Rules.
Congress is expected to lead to potentially significant changes to the existence, priorities, scope, practices and/or staffing levels of various regulatory agencies. For example, in February 2025, the Trump administration directed the CFPB to, among other things, suspend rule implementations and cease supervision activities.
Congress has led to significant changes to the existence, priorities, scope, practices and/or staffing levels of various regulatory agencies. For example, in February 2025, the Trump administration directed the CFPB to, among other things, suspend rule implementations and cease supervision activities.
We and the Bank are currently in compliance with Basel III Capital Rules. 16 Since the initial implementation of the Basel III Capital Rules, the U.S. federal banking agencies and other interested parties have proposed and, in certain cases, made changes to the rules based on a number of factors, including prevailing economic conditions and policy initiatives.
Since the initial implementation of the Basel III Capital Rules, the U.S. federal banking agencies and other interested parties have proposed and, in certain cases, made changes to the rules based on a number of factors, including prevailing economic conditions and policy initiatives.
Certain of our subsidiaries hold and manage participations in residential mortgages and commercial real estate loans originated by our bank in Alabama, Florida, Georgia and Tennessee, respectively, and have elected to be treated as a real estate investment trust, or REIT, for U.S. income tax purposes. Each of these entities is consolidated into the Company.
Certain of our subsidiaries hold and manage participations in residential mortgages and commercial real estate loans originated by our bank in Alabama, Florida, Georgia and Tennessee, respectively, and have elected to be treated as a real estate investment trust, or REIT, for U.S. income tax purposes.
However, in September 2014, the federal banking agencies adopted final rules implementing a Liquidity Coverage Ratio requirement in the United States for larger banking organizations. In February 2021, the federal banking agencies adopted final rules implementing a Net Stable Funding Ratio requirement, also for larger U.S. banking organizations. Neither we nor the Bank is subject to either set of rules.
In February 2021, the federal banking agencies adopted final rules implementing a Net Stable Funding Ratio requirement, also for larger U.S. banking organizations. Neither we nor the Bank is subject to either set of rules.
The final rule requires financial institutions to collect and report data to the CFPB on small business loan applicants, including demographic data, lending decisions and the price and terms of credit. The purpose of the rulemaking is to increase transparency and combat discrimination in small business lending. As noted above, the implementation of the Dodd-Frank Act is ongoing.
The final rule requires financial institutions to collect and report data to the CFPB on small business loan applicants, including demographic data, lending decisions and the price and terms of credit. The purpose of the rulemaking is to increase transparency and combat discrimination in small business lending.
In October 2023, the Federal Reserve requested comment on a proposal to lower the maximum interchange fee that a large debit card issuer can receive for a debit card transaction. The proposal would also establish a regular process for updating the maximum amount every other year going forward.
In October 2023, the Federal Reserve requested comment on a proposal to lower the maximum interchange fee that a large debit card issuer can receive for a debit card transaction. The proposal would also establish a regular process for updating the maximum amount every other year going forward. The proposed rule is pending and has not been finalized.
In addition to competitive salaries, these programs include annual bonuses, a 401(k) Retirement Plan, full medical, dental and vision insurance, life insurance and paid time off. Our Compensation Committee has retained a consultant to advise on pay structure for our executive officers.
Compensation and Benefits We provide robust compensation and benefits programs to help meet the needs of our employees. In addition to competitive salaries, these programs include annual bonuses, a 401(k) Retirement Plan, full medical, dental and vision insurance, life insurance and paid time off. Our Compensation Committee has retained a consultant to advise on pay structure for our executive officers.
In addition, the final rule also exempts small and intermediate banks from new data requirements that apply to banks with assets of at least $2 billion and limits certain new data requirements to large banks with assets greater than $10 billion. Most of the rule's requirements will be applicable beginning January 1, 2026.
In addition, the final rule also exempts small and intermediate banks from new data requirements that apply to banks with assets of at least $2 billion and limits certain new data requirements to large banks with assets greater than $10 billion.
These revisions became effective on January 1, 2020, with a required compliance date of January 1, 2021. 21 To date, the prohibitions under the Volcker Rule and the final rule adopted thereunder have not had, and we do not currently expect them to have in the future, a material effect on our businesses or revenue, but they do limit the scope of permissible activities in which we might engage.
To date, the prohibitions under the Volcker Rule and the final rule adopted thereunder have not had, and we do not currently expect them to have in the future, a material effect on our businesses or revenue, but they do limit the scope of permissible activities in which we might engage.
As a bank holding company, we are subject to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). We are required to file reports with the Federal Reserve and are subject to regular examinations by that agency.
The financial results of each of these entities is consolidated into the Company’s financial results. As a bank holding company, we are subject to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). We are required to file reports with the Federal Reserve and are subject to regular examinations by that agency.
We are also subject to Section 23B of the Federal Reserve Act, which, among other things, prohibits a bank from engaging in these transactions with affiliates unless the transactions are on terms substantially the same, or at least as favorable to the bank or its subsidiaries, as those prevailing at the time for comparable transactions with nonaffiliated companies. 18 The bank is also subject to restrictions on extensions of credit to its executive officers, directors, principal shareholders and their related interests.
We are also subject to Section 23B of the Federal Reserve Act, which, among other things, prohibits a bank from engaging in these transactions with affiliates unless the transactions are on terms substantially the same, or at least as favorable to the bank or its subsidiaries, as those prevailing at the time for comparable transactions with nonaffiliated companies.
(certain presumptions of control may apply once an acquiror owns 5% or more of the common stock and certain other factors are present). 12 Permissible Activities Under the BHC Act Under the BHC Act, a bank holding company is generally permitted to engage in or acquire direct or indirect control of more than 5% of the voting shares of any company engaged in the following activities: ● banking or managing or controlling banks; and ● any activity that the Federal Reserve determines to be so closely related to banking as to be a proper incident to the business of banking.
Permissible Activities Under the BHC Act Under the BHC Act, a bank holding company is generally permitted to engage in or acquire direct or indirect control of more than 5% of the voting shares of any company engaged in the following activities: ● banking or managing or controlling banks; and ● any activity that the Federal Reserve determines to be so closely related to banking as to be a proper incident to the business of banking.
According to the CFPB, the rule is designed to foster competition and innovation in the financial services industry by making it easier for consumers to switch financial providers and for new companies to offer innovative products and services. The compliance deadline is phased-in based on the asset size of the financial institution.
According to the CFPB, the rule is designed to foster competition and innovation in the financial services industry by making it easier for consumers to switch financial providers and for new companies to offer innovative products and services.
At year-end 2024, owner-occupied commercial real estate totaled approximately $2.55 billion, representing 20.2% of our total loan portfolio. Substandard loans in this segment totaled $25.1 million, and we recorded approximately $237,000 in charge-offs during 2024.
At year-end 2025, owner-occupied commercial real estate totaled approximately $2.74 billion, representing 20.0% of our total loan portfolio. Substandard loans in this segment totaled $21.1 million, and we recorded approximately $4.0 million in net charge-offs during 2025.
The guidance, which applies to all employees that have the ability to materially affect an institution’s risk profile, either individually or as part of a group, is based upon three primary principles: (i) balanced risk taking incentives; (ii) compatibility with effective controls and risk management; and (iii) strong corporate governance.
The guidance, which applies to all employees that have the ability to materially affect an institution’s risk profile, either individually or as part of a group, is based upon three primary principles: (i) balanced risk taking incentives; (ii) compatibility with effective controls and risk management; and (iii) strong corporate governance. 18 The scope and content of the U.S. banking agencies’ policies on compensation may continue to evolve in the near future.
Substandard loans in this category totaled $15.4 million, with no charge-offs recorded in 2024. In order to manage the risk inherent in these credits, we prepare a quarterly report to the Board of Directors detailing the top 20 metropolitan areas in which our collateral is located.
Substandard loans in this category totaled $88.7 million, we recorded approximately $1.2 million in net charge-offs during 2025. In order to manage the risk inherent in these credits, we prepare a quarterly report to the Board of Directors detailing the top 20 metropolitan areas in which our collateral is located.
The second metric is the “Net Stable Funding Ratio,” and its objective is to require a financial institution to maintain a minimum amount of stable sources relative to the liquidity profiles of the institution’s assets, as well as the potential for contingent liquidity needs arising from off-balance sheet commitments, over a one-year horizon. 17 In the Basel III Capital Rules, the federal banking agencies did not address either the Liquidity Coverage Ratio or the Net Stable Funding Ratio.
The second metric is the “Net Stable Funding Ratio,” and its objective is to require a financial institution to maintain a minimum amount of stable sources relative to the liquidity profiles of the institution’s assets, as well as the potential for contingent liquidity needs arising from off-balance sheet commitments, over a one-year horizon.
The agencies noted their belief that financial institutions had eased CRE underwriting standards in recent years and went on to identify actions that financial institutions should take to protect themselves from CRE-related credit losses during difficult economic cycles. The guidance also indicated that the agencies would pay special attention in the future to potential risks associated with CRE lending.
The agencies noted their belief that financial institutions had eased CRE underwriting standards in recent years and went on to identify actions that financial institutions should take to protect themselves from CRE-related credit losses during difficult economic cycles.
Failure to meet capital guidelines could subject a bank or bank holding company to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on accepting brokered deposits, and certain other restrictions on its business.
The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance-sheet items. 13 Failure to meet capital guidelines could subject a bank or bank holding company to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on accepting brokered deposits, and certain other restrictions on its business.
A bank holding company must guarantee that a subsidiary depository institution meets its capital restoration plan, subject to various limitations. The controlling holding company’s obligation to fund a capital restoration plan is limited to the lesser of (i) 5% of an undercapitalized subsidiary’s assets at the time it became undercapitalized and (ii) the amount required to meet regulatory capital requirements.
The controlling holding company’s obligation to fund a capital restoration plan is limited to the lesser of (i) 5% of an undercapitalized subsidiary’s assets at the time it became undercapitalized and (ii) the amount required to meet regulatory capital requirements.
To be categorized as well-capitalized, the Bank had to maintain minimum total risk-based, tier 1 risk-based, CET1 risk-based, and tier 1 leverage ratios of 10%, 8%, 6.5% and 5%, respectively, and must not be subject to any order or written agreement or directive by a federal banking agency to meet and maintain a specific capital level for any capital measure.
To be categorized as well-capitalized, the Bank had to maintain minimum total risk-based, tier 1 risk-based, CET1 risk-based, and tier 1 leverage ratios of 10%, 8%, 6.5% and 5%, respectively, and must not be subject to any order or written agreement or directive by a federal banking agency to meet and maintain a specific capital level for any capital measure. 14 Federal banking agencies are required to take various mandatory supervisory actions and are authorized to take other discretionary actions with respect to institutions in the three undercapitalized categories.
In addition, any person or group of persons acting in concert must obtain the approval of the Federal Reserve before acquiring 25% or more of the outstanding common stock of a bank holding company or otherwise obtaining control or a “controlling influence” over the bank holding company.
In addition, any person or group of persons acting in concert must obtain the approval of the Federal Reserve before acquiring 25% or more of the outstanding common stock of a bank holding company or otherwise obtaining control or a “controlling influence” over the bank holding company (certain presumptions of control may apply once an acquiror owns 5% or more of the common stock and certain other factors are present).
Privacy and Data Security We are subject to a number of U.S. federal, state, local and foreign laws and regulations relating to consumer privacy and data protection. Under privacy protection provisions of the Gramm-Leach-Bliley Act of 1999 and its implementing regulations and guidance, we are limited in our ability to disclose certain non-public information about consumers to nonaffiliated third parties.
Under privacy protection provisions of the Gramm-Leach-Bliley Act of 1999 and its implementing regulations and guidance, we are limited in our ability to disclose certain non-public information about consumers to nonaffiliated third parties.
We also aim to assist our employees with position-related training and development when available. We recruit the best people for the job regardless of gender, race, ethnicity, age, disability, sexual orientation, gender identity, cultural background or religious belief. It is our policy to fully comply with all state and federal laws applicable to discrimination in the workplace.
We recruit the best people for the job regardless of gender, race, ethnicity, age, disability, sexual orientation, gender identity, cultural background or religious belief. It is our policy to fully comply with all state and federal laws applicable to discrimination in the workplace. Health and Safety The success of our business is fundamentally connected to the well-being of our employees.
Other Banking Services Given client demand for increased convenience and account access, we offer a range of products and services, including 24-hour telephone banking, direct deposit, Internet banking, mobile banking, traveler’s checks, safe deposit boxes, attorney trust accounts and automatic account transfers.
Our bank is a member of the FDIC, and thus our deposits (subject to applicable FDIC limits) are FDIC-insured. 8 Other Banking Services Given client demand for increased convenience and account access, we offer a range of products and services, including 24-hour telephone banking, direct deposit, Internet banking, mobile banking, traveler’s checks, safe deposit boxes, attorney trust accounts and automatic account transfers.
New proposals to change the laws and regulations governing the banking industry are frequently introduced in the United States Congress, in the state legislatures and before the various bank regulatory agencies.
New proposals to change the laws and regulations governing the banking industry are frequently introduced in the United States Congress, in the state legislatures and before the various bank regulatory agencies. Additionally, the future implementation and enforcement of regulations may be affected by current and future Presidential administrations.
At year-end 2024, our 1-4 family mortgage portfolio was approximately $1.44 billion, representing 11.5% of our total loan portfolio. Substandard loans totaled $3.8 million, and we recorded approximately $761,000 in charge-offs for 2024.
At year-end 2025, our 1-4 family mortgage portfolio was approximately $1.67 billion, representing 12.2% of our total loan portfolio. Substandard loans totaled $10.0 million, and we recorded approximately $303,000 in charge-offs for 2025.
The scope and content of the U.S. banking agencies’ policies on compensation may continue to evolve in the near future. It cannot be determined at this time whether compliance with such policies will adversely affect the company’s or the bank’s ability to hire, retain and motivate its key employees.
It cannot be determined at this time whether compliance with such policies will adversely affect the company’s or the bank’s ability to hire, retain and motivate its key employees.
Under the final rule, a banking organization must notify its primary federal regulator within 36 hours of incidents that have materially disrupted or degraded, or are reasonably likely to materially disrupt or degrade, the banking organization’s ability to deliver services to a material portion of its customer base, jeopardize the viability of key operations of the banking organization, or impact the stability of the financial sector. 19 From an operational standpoint, cyberattacks and similar attempts to gain access to confidential customer information maintained by banks and other financial institutions have prompted the federal banking agencies to issue extensive guidance on cybersecurity.
Under the final rule, a banking organization must notify its primary federal regulator within 36 hours of incidents that have materially disrupted or degraded, or are reasonably likely to materially disrupt or degrade, the banking organization’s ability to deliver services to a material portion of its customer base, jeopardize the viability of key operations of the banking organization, or impact the stability of the financial sector.
Our banking regulators evaluate the effectiveness of our policies and procedures when determining whether to approve certain proposed banking activities, including acquisitions and branch applications. We believe the policies and procedures implemented by our Board of Directors are sufficient to be compliant with these laws.
Our banking regulators evaluate the effectiveness of our policies and procedures when determining whether to approve certain proposed banking activities, including acquisitions and branch applications.
Accordingly, the following discussion must be read in light of the enactment of any new federal or state banking laws or regulations or any amendment or repeal of existing laws or regulations, or any change in the policies of the regulatory agencies with jurisdiction over our operations, after the date of this Form 10-K.
Accordingly, the following discussion must be read in light of the enactment of any new federal or state banking laws or regulations or any amendment or repeal of existing laws or regulations, or any change in the policies of the regulatory agencies with jurisdiction over our operations, after the date of this Form 10-K. 9 Bank Holding Company Supervision and Regulation Because we own all of the capital stock of the Bank, we are a bank holding company under the federal Bank Holding Company Act of 1956, as amended (the “BHC Act”).
We make deposit services accessible to customers by offering traditional banking services, including direct deposit, wire transfer, night depository, banking-by-mail and remote capture for non-cash items. Our bank is a member of the FDIC, and thus our deposits (subject to applicable FDIC limits) are FDIC-insured.
We make deposit services accessible to customers by offering traditional banking services, including direct deposit, wire transfer, night depository, banking-by-mail and remote capture for non-cash items.
As of December 31, 2024, we had 630 full-time equivalent employees. We have 215 employees located in our corporate office, including sales and operations, and 415 in our regional offices and branches. Our management believes that we have good relations with our employees.
As of December 31, 2025, we had 666 full-time equivalent employees. We have 216 employees located in our corporate office, including sales and operations, and 450 in our regional offices and branches.
Moreover, the federal agencies have issued policy statements that provide that bank holding companies and insured banks should generally only pay dividends out of current operating earnings.
We and the Bank are also restricted from paying dividends if we fail to maintain capital above the Basel III capital conservation buffer. Moreover, the federal agencies have issued policy statements that provide that bank holding companies and insured banks should generally only pay dividends out of current operating earnings.
Effect of Governmental Monetary Policies Our bank’s earnings are affected by domestic economic conditions and the monetary and fiscal policies of the United States government and its agencies.
We believe the policies and procedures implemented by our Board of Directors are sufficient to be compliant with these laws. 17 Effect of Governmental Monetary Policies Our bank’s earnings are affected by domestic economic conditions and the monetary and fiscal policies of the United States government and its agencies.
The rule prohibits financial institutions from charging fees for paying overdrafts on ATM and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions. 20 There has been an enhanced focus by federal bank regulatory agencies with respect to industry practices relating to overdraft fees, credit card fees and non-sufficient funds fees.
The rule prohibits financial institutions from charging fees for paying overdrafts on ATM and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions.
As of December 31, 2024, we had total assets of approximately $17.35 billion, total loans of approximately $12.61 billion, total deposits of approximately $13.54 billion, and total stockholders’ equity of approximately $1.62 billion.
As of December 31, 2025, we had total assets of approximately $17.73 billion, total loans of approximately $13.70 billion, total deposits of approximately $14.22 billion, and total stockholders’ equity of approximately $1.85 billion.
Commitments and Contingencies As of December 31, 2024, we had commitments to extend credit beyond current amounts funded of $3.55 billion, had issued standby letters of credit in the amount of $125.1 million, and had commitments for credit card arrangements of $366.8 million. 10 Investments In addition to loans, we purchase investments in securities, primarily in treasuries and mortgage-backed securities.
Commitments and Contingencies As of December 31, 2025, we had commitments to extend credit beyond current amounts funded of $3.78 billion, had issued standby letters of credit in the amount of $117.4 million, and had commitments for credit card arrangements of $395.8 million.
Generally, subject to a narrow exception, the banking regulator must appoint a receiver or conservator for an institution that is critically undercapitalized. An institution that is categorized as undercapitalized, significantly undercapitalized, or critically undercapitalized is required to submit an acceptable capital restoration plan to its appropriate federal banking agency.
An institution that is categorized as undercapitalized, significantly undercapitalized, or critically undercapitalized is required to submit an acceptable capital restoration plan to its appropriate federal banking agency. A bank holding company must guarantee that a subsidiary depository institution meets its capital restoration plan, subject to various limitations.
As part of our compensation philosophy, we believe that we must offer and maintain market competitive total rewards programs for our employees in order to attract and retain superior talent. Information about our Executive Officers A brief description of the background of each of our executive officers as of December 31, 2024, is set forth below. Thomas A.
As part of our compensation philosophy, we believe that we must offer and maintain market competitive total rewards programs for our employees in order to attract and retain superior talent. Available Information Our corporate website is www.servisfirstbank.com.
Health and Safety The success of our business is fundamentally connected to the well-being of our employees. At the Bank, the health and safety of our employees are our top priority. We are committed to providing a safe and supportive work environment where every team member can thrive.
At the Bank, the health and safety of our employees are our top priority. We are committed to providing a safe and supportive work environment where every team member can thrive. We continuously assess and improve our safety practices, ensuring compliance with all relevant regulations, and promote a culture of open communication.
These factors are also considered in evaluating mergers, acquisitions, and applications to open an office or facility. Failure to adequately meet these criteria could impose additional requirements and limitations on the Bank.
These factors are also considered in evaluating mergers, acquisitions, and applications to open an office or facility. Failure to adequately meet these criteria could impose additional requirements and limitations on the Bank. Additionally, we must publicly disclose the terms of various CRA-related agreements. On October 24, 2023, the federal banking agencies adopted a final rule to modernize the CRA regulations.
Total construction loans decreased $30.3 million, or 2.0%, at December 31, 2024, compared to December 31, 2023. There were $(8,000) in net charge-offs (recoveries) on construction loans during 2024 and $105,000 in net charge-offs (recoveries) on construction loans during 2023.
There were $16,000 in net charge-offs on construction loans during 2025 and $(8,000) in net charge-offs (recoveries) on construction loans during 2024. There were $36.8 million in construction loans rated as substandard at December 31, 2025 and $3.5 million construction loans rated as substandard at December 31, 2024.
No investment in any of those instruments will exceed any applicable limitation imposed by law or regulation. Our Board of Directors reviews the investment portfolio on an ongoing basis in order to ensure that the investments conform to the policy as set by the Board of Directors.
Our Board of Directors reviews the investment portfolio on an ongoing basis in order to ensure that the investments conform to the policy as set by the Board of Directors. Our investment policy provides that no more than 30% of our total investment portfolio may be composed of municipal securities.
Under the Federal Deposit Insurance Corporation Improvement Act of 1991, a depository institution may not pay any dividends if payment would cause it to become undercapitalized or if it already is undercapitalized. We and the Bank are also restricted from paying dividends if we fail to maintain capital above the Basel III capital conservation buffer.
The federal banking agencies have indicated that paying dividends that deplete a depository institution’s capital base to an inadequate level would be an unsafe and unsound banking practice. Under the Federal Deposit Insurance Corporation Improvement Act of 1991, a depository institution may not pay any dividends if payment would cause it to become undercapitalized or if it already is undercapitalized.
We also have a referral bonus program for current employees, which we believe helps us to diversify our workforce at the same time. We are also committed to the continued development of our employees. Compliance, information technology and other banking industry-related training is completed by employees throughout the year.
We are also committed to the continued development of our employees. Compliance, information technology and other banking industry-related training is completed by employees throughout the year. We also aim to assist our employees with position-related training and development when available.
Interest rates, both on loans and deposits, and prices of services are significant competitive factors among financial institutions generally. Providing convenient locations, desired financial products and services, convenient office hours, quality customer service, quick local decision making, a strong community reputation and long-term personal relationships are all important competitive factors that we emphasize.
Providing convenient locations, desired financial products and services, convenient office hours, quality customer service, quick local decision making, a strong community reputation and long-term personal relationships are all important competitive factors that we emphasize. 5 In our markets, our five largest competitors are Regions Financial Corporation, Wells Fargo & Company, PNC Financial Services Group, Inc., Truist Financial Corporation, and Pinnacle Financial Partners, Inc.
Abbott was employed at BB&T (now Truist) from 2004 to 2013 in various senior lending and credit administration roles. Available Information Our corporate website is www.servisfirstbank.com. We have direct links on this website to our Code of Ethics and the charters for our Audit, Compensation and Corporate Governance and Nominations Committees, accessible on the “Investor Relations” section of our website.
We have direct links on this website to our Code of Ethics and the charters for our Audit, Compensation and Corporate Governance and Nominations Committees, accessible on the “Investor Relations” section of our website.
Based on this, our bank would be limited to paying $548.7 million in dividends as of December 31, 2024, subject to maintaining certain required capital levels. In addition, no dividends, withdrawals or transfers may be made from the bank’s surplus without the prior written approval of the Superintendent.
Based on this, our bank would be limited to paying $500.3 million in dividends as of December 31, 2025, subject to maintaining certain required capital levels.
Relationships in excess of $3.0 million are also subject to annual review by the responsible Lender, with final approval required from Credit Administration, ensuring any potential concerns in this portfolio are identified and addressed proactively. To mitigate the risk of construction loan defaults in our portfolio, management tracks and monitors these loans closely, with oversight from the Board of Directors.
These reviews include monitoring interest reserve sufficiency and assessing occupancy or absorption levels at six months post-completion for newly completed projects. Relationships in excess of $3.0 million are also subject to annual review by the responsible Lender, with final approval required from Credit Administration, ensuring any potential concerns in this portfolio are identified and addressed proactively.
Hiring, Promotion and Talent Development We are always looking to build our workforce from within and promote from our current talent pool whenever possible. When this is not the case, we look to career fairs and local colleges to network on an ongoing basis, as well as utilizing professional networking platforms, such as LinkedIn.
When this is not the case, we look to career fairs and local colleges to network on an ongoing basis, as well as utilizing professional networking platforms, such as LinkedIn. We also have a referral bonus program for current employees, which we believe helps us to diversify our workforce at the same time.
They are generally more risky than traditional residential real estate loans but less risky than commercial loans. Risk of default is usually determined by the well-being of the local economies. During times of economic stress, there is usually some level of job loss both nationally and locally, which directly affects the ability of the consumer to repay debt.
Consumer Loans We offer a variety of loans to retail customers in the communities we serve. Consumer loans in general carry a moderate degree of risk compared to other loans. They are generally more risky than traditional residential real estate loans but less risky than commercial loans. Risk of default is usually determined by the well-being of the local economies.
Risk on consumer-type loans is generally managed through policy limitations on debt levels consumer borrowers may carry and limitations on loan terms and amounts depending upon collateral type. Our consumer loans include home equity loans (open and closed-end), vehicle financing, loans secured by deposits, and secured and unsecured personal loans.
Our consumer loans include home equity loans (open and closed-end), vehicle financing, loans secured by deposits, and secured and unsecured personal loans. These types of consumer loans all carry varying degrees of risk.
Our and the Bank’s payment of dividends may also be affected or limited by other factors, such as the requirement to maintain adequate capital above regulatory guidelines. The federal banking agencies have indicated that paying dividends that deplete a depository institution’s capital base to an inadequate level would be an unsafe and unsound banking practice.
In addition, no dividends, withdrawals or transfers may be made from the bank’s surplus without the prior written approval of the Superintendent. 15 Our and the Bank’s payment of dividends may also be affected or limited by other factors, such as the requirement to maintain adequate capital above regulatory guidelines.
In addition to organic expansion, we may seek to expand through targeted acquisitions. Markets and Competition Our primary markets are broadly defined in the tables below. We draw most of our deposits from, and conduct most of our lending transactions in, these markets.
We draw most of our deposits from, and conduct most of our lending transactions in, these markets. Our retail and commercial divisions operate in highly competitive markets.
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Business Strategy We are a full service commercial bank focused on providing competitive products, state of the art technology and quality service. Our business philosophy is to operate as a metropolitan community bank emphasizing prompt, personalized customer service to the individuals and businesses located in our primary markets.
Added
Markets and Competition We operate primarily from locations in Alabama, Florida, Georgia, North and South Carolina, Tennessee and Virginia. We also operate a loan production office in Florida. As of December 31, 2025, we operated through 33 banking offices and one loan production office.
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We aggressively market to our target customers, which include privately held businesses generally with $2 million to $250 million in annual sales, professionals and affluent consumers whom we believe are underserved by the larger regional banks operating in our markets.
Added
Interest rates, both on loans and deposits, and prices of services are significant competitive factors among financial institutions generally.
Removed
We also seek to capitalize on the extensive relationships that our management, directors, advisory directors and stockholders have with the businesses and professionals in our markets. Focus on Core Banking Business. We deliver a broad array of core banking products to our customers.
Added
To mitigate the risk of construction loan defaults in our portfolio, management tracks and monitors these loans closely, with oversight from the Board of Directors. Total construction loans decreased $31.7 million, or 2.1%, at December 31, 2025, compared to December 31, 2024.
Removed
While many large regional competitors and national banks have chosen to develop non-traditional business lines to supplement their net interest income, we believe our focus on traditional commercial banking products driven by a high margin delivery system is a superior method to deliver returns to our stockholders.
Added
During times of economic stress, there is usually some level of job loss both nationally and locally, which directly affects the ability of the consumer to repay debt. Risk on consumer-type loans is generally managed through policy limitations on debt levels consumer borrowers may carry and limitations on loan terms and amounts depending upon collateral type.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe concentration risk associated with having a small number of relatively large loan relationships is that, if one or more of these relationships were to become delinquent or suffer default, we could be at risk of material losses.
Biggest changeIf one or more of these relationships were to become delinquent or suffer default, we could be at risk of material losses. The allowance for credit losses may not be adequate to cover losses associated with any of these relationships, and we may be required to increase the allowance or suffer a loss in connection therewith.
There are many factors that may impact the market price and trading volume of our common stock, including, without limitation: ● actual or anticipated fluctuations in our operating results, financial condition or asset quality; ● changes in our dividends; ● changes in economic or business conditions; ● the effects of, and changes in, trade, monetary and fiscal policies, including the interest rate policies of the Federal Reserve; ● publication of research reports about us, our competitors, or the financial services industry generally, or changes in, or failure to meet, securities analysts’ estimates of our financial and operating performance, or lack of research reports by industry analysts or ceasing of coverage; ● operating and stock price performance of companies that investors deemed comparable to us; ● future issuances of our common stock or other securities; ● additions to or departures of key personnel; ● proposed or adopted changes in laws, regulations or policies affecting us; ● perceptions in the marketplace regarding our competitors and/or us; ● significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving our competitors or us; ● other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services; and ● other news, announcements or disclosures (whether by us or others) related to us, our competitors, our core market or the financial services industry.
There are many factors that may impact the market price and trading volume of our common stock, including, without limitation: ● actual or anticipated fluctuations in our operating results, financial condition or asset quality; ● changes in our dividends; ● changes in economic or business conditions; ● the effects of, and changes in, trade, monetary and fiscal policies, including the interest rate policies of the Federal Reserve; 28 ● publication of research reports about us, our competitors, or the financial services industry generally, or changes in, or failure to meet, securities analysts’ estimates of our financial and operating performance, or lack of research reports by industry analysts or ceasing of coverage; ● operating and stock price performance of companies that investors deemed comparable to us; ● future issuances of our common stock or other securities; ● additions to or departures of key personnel; ● proposed or adopted changes in laws, regulations or policies affecting us; ● perceptions in the marketplace regarding our competitors and/or us; ● significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving our competitors or us; ● other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services; and ● other news, announcements or disclosures (whether by us or others) related to us, our competitors, our core market or the financial services industry.
These provisions may discourage potential acquisition proposals and could delay or prevent a change in control, including under circumstances in which our stockholders might otherwise receive a premium over the market price of our shares. 35 General Risk Factors Financial disruption or a prolonged economic downturn could materially and adversely affect our business.
These provisions may discourage potential acquisition proposals and could delay or prevent a change in control, including under circumstances in which our stockholders might otherwise receive a premium over the market price of our shares. General Risk Factors Financial disruption or a prolonged economic downturn could materially and adversely affect our business.
For example, changes in tariffs imposed or threatened to be imposed by the new Presidential administration may cause inflation, which can adversely affect our business. ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
For example, changes in tariffs imposed or threatened to be imposed by the new Presidential administration may cause inflation, which can adversely affect our business. 30 ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
We seek to position our asset portfolio to perform adequately in both a higher or lower interest rate environment, but this may not remain true in the future. Our interest sensitivity profile was somewhat liability sensitive as of December 31, 2024, generally meaning that our net interest income would decrease more from rising interest rates than from falling interest rates.
We seek to position our asset portfolio to perform adequately in both a higher or lower interest rate environment, but this may not remain true in the future. Our interest sensitivity profile was somewhat liability sensitive as of December 31, 2025, generally meaning that our net interest income would decrease more from rising interest rates than from falling interest rates.
As cyber threats continue to evolve, we continue to spend significant capital and other resources to protect against these threats or to alleviate or investigate problems caused by such threats.
As these threats continue to evolve, we continue to spend significant capital and other resources to protect against these threats or to alleviate or investigate problems caused by such threats.
This has resulted in losses to the Bank, and we expect this trend to continue. 28 We are dependent upon outside third parties for the processing and handling of our records and data. We rely on software developed by third-party vendors to process various transactions.
This has resulted in losses to the Bank, and we expect this trend to continue. We are dependent upon outside third parties for the processing and handling of our records and data. We rely on software developed and operated by third-party vendors to process various transactions.
Any shares of preferred stock that we may issue in the future may be senior to our common stock in respect to dividends, voting rights or other matters. 34 We and our bank are subject to capital and other requirements which restrict our ability to pay dividends.
Any shares of preferred stock that we may issue in the future may be senior to our common stock in respect to dividends, voting rights or other matters. We and our bank are subject to capital and other requirements that restrict our ability to pay dividends.
The real estate collateral in each case provides an alternate source of repayment in the event of default by the borrower, but could deteriorate in value after the time the credit is initially extended.
The real estate collateral provides an alternate source of repayment in the event of default by the borrower, but could deteriorate in value after the time the credit is initially extended.
Approximately 70% of the Bank’s liabilities as of December 31, 2024 were checking accounts and other liquid deposits, which are payable on demand or upon several days’ notice, while by comparison, 73% of the assets of the Bank were loans, which cannot be called or sold in the same time frame.
Approximately 73% of the Bank’s liabilities as of December 31, 2025 were checking accounts and other liquid deposits, which are payable on demand or upon several days’ notice, while by comparison, 77% of the assets of the Bank were loans, which cannot be called or sold in the same time frame.
As a result, defaults by, or even rumors or questions about, one or more financial services companies, or the financial services industry generally, have led to market-wide liquidity problems and could lead to losses or defaults by us or by other institutions.
Defaults by, or even rumors or questions about, one or more financial services companies, or the financial services industry generally, have led to market-wide liquidity problems and could lead to losses or defaults by us or by other institutions.
Our credit risk and credit losses could increase if our loans are concentrated to borrowers engaged in the same or similar activities or to borrowers who as a group may be uniquely or disproportionately affected by economic or market conditions.
Our credit risk and credit losses could increase if our loans are concentrated to borrowers engaged in the same or similar activities or to borrowers who as a group may be uniquely or disproportionately affected by unique geographic, industry or market conditions.
As of December 31, 2024, the fair value of our investment securities portfolio was approximately $1.88 billion. Factors beyond our control can significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of these securities.
As of December 31, 2025, the fair value of our investment securities portfolio was approximately $1.69 billion. Factors beyond our control can significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of these securities.
ITEM 1A. RISK FACTORS. The following list identifies and briefly summarizes the material risk factors known to us as of the date of this Form 10-K.
ITEM 1A. RISK FACTORS. The following list identifies the material risk factors known to us as of the date of this Form 10-K.
Our business, financial condition and results of operations could be harmed by any of the following risks or by other risks identified in this Form 10-K, as well as by other risks we may not have anticipated or viewed as material as of the date of this Form 10-K.
Our business, financial condition, results of operations and prospectus and ability to pay dividends could be materially harmed by any of the following risks or by other risks identified in this Form 10-K, as well as by other risks we may not have anticipated or viewed as material as of the date of this Form 10-K.
In addition, the Bank must maintain certain capital levels, which may restrict the ability of the bank to pay dividends to us and our ability to pay dividends to our stockholders. As of December 31, 2024, our Bank could pay approximately $548.7 million of dividends to us without prior approval of the Superintendent.
In addition, the Bank must maintain certain capital levels, which may restrict the ability of the bank to pay dividends to us and our ability to pay dividends to our stockholders. As of December 31, 2025, our Bank could pay approximately $500.3 million of dividends to us without prior approval of the Superintendent.
These provisions, and the corporate and banking laws and regulations applicable to us: ● provide that special meetings of stockholders may be called at any time only by the Chairman of our Board of Directors, by the President or by order of the Board of Directors; ● enable our Board of Directors to issue preferred stock up to the authorized amount, with such preferences, limitations and relative rights, including voting rights, as may be determined from time to time by the Board of Directors; ● enable our Board of Directors to increase the number of persons serving as directors and to fill the vacancies created as a result of the increase by a majority vote of the directors present at the meeting; ● enable our Board of Directors to amend our bylaws without stockholder approval; ● do not provide for cumulative voting rights (therefore allowing the holders of a majority of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose); and ● require approval of federal and state regulatory agencies.
Thus, your ability to realize the potential benefits of any sale by us may be limited, even if such sale would represent a greater value for stockholders than our continued independent operation. 29 These provisions, and the corporate and banking laws and regulations applicable to us: ● provide that special meetings of stockholders may be called at any time only by the Chairman of our Board of Directors, by the President or by order of the Board of Directors; ● enable our Board of Directors to issue preferred stock up to the authorized amount, with such preferences, limitations and relative rights, including voting rights, as may be determined from time to time by the Board of Directors; ● enable our Board of Directors to increase the number of persons serving as directors and to fill the vacancies created as a result of the increase by a majority vote of the directors present at the meeting; ● enable our Board of Directors to amend our bylaws without stockholder approval; ● do not provide for cumulative voting rights (therefore allowing the holders of a majority of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose); and ● require approval of federal and state regulatory agencies.
Our agreements with outside third parties include indemnification obligations in the event of any such security breaches; however, there is no assurance that such third-parties will have sufficient resources to provide full indemnification of all of their customers in the event such a security breach occurs.
Our agreements with outside third parties include indemnification obligations in the event of any such security breaches; however, there is no assurance that such third-parties will have sufficient resources to provide full indemnification of all of their customers in the event such a security breach occurs. Our recent results may not be indicative of our future results.
We are subject to interest rate risk, which could adversely affect our profitability. Our profitability, like that of most financial institutions, depends to a large extent on our net interest income, which is the difference between our interest income on interest-earning assets, such as loans and investment securities, and our interest expense on interest-bearing liabilities, such as deposits and borrowings.
Our profitability, like that of most financial institutions, depends to a large extent on our net interest income, which is the difference between our interest income on interest-earning assets, such as loans and investment securities, and our interest expense on interest-bearing liabilities, such as deposits and borrowings.
Additionally, like all regulated financial institutions, we are affected by monetary policies implemented by the Federal Reserve and other federal instrumentalities. A primary instrument of monetary policy employed by the Federal Reserve is the restriction or expansion of the money supply through open market operations.
Additionally, like all regulated financial institutions, we are affected by monetary policies implemented by the Federal Reserve and other federal instrumentalities. A primary instrument of monetary policy employed by the Federal Reserve is the restriction or expansion of the money supply through open market operations. This instrument of monetary policy frequently causes volatile fluctuations in interest rates.
If the U.S. economy weakens, our growth and profitability could be constrained. Uncertainty about the federal fiscal policymaking process and the medium and long-term fiscal outlook of the federal government is a concern for businesses, consumers and investors in the United States.
Our businesses and operations are sensitive to general business and economic conditions in the United States. If the U.S. economy weakens, our growth and profitability could be constrained. Uncertainty about the federal fiscal policymaking process and the medium and long-term fiscal outlook of the federal government is a concern for businesses, consumers and investors in the United States.
Any substantial, unexpected or prolonged change in the level or cost of liquidity could have a material adverse effect on our ability to meet deposit withdrawals and other customer needs, which could have a material adverse effect on our business, financial condition, results of operations and prospects. 30 The fair value of our investment securities can fluctuate due to factors outside of our control.
Any substantial, unexpected or prolonged change in the level or cost of liquidity could have a material adverse effect on our ability to meet deposit withdrawals and other customer needs. 25 The fair value of our investment securities can fluctuate due to factors outside of our control.
Liquidity is essential to our business. Liquidity risk is the potential that we will be unable to meet our obligations as they come due because of an inability to liquidate assets or obtain adequate funding.
Liquidity risk could impair our ability to fund operations and meet our obligations as they become due. Liquidity is essential to our business. Liquidity risk is the potential that we will be unable to meet our obligations as they come due because of an inability to liquidate assets or obtain adequate funding.
Changes in accounting standards could materially impact, potentially even retroactively, how we report our financial condition and results of our operations. Failure to comply with statutes, regulations, or policies could result in sanctions by regulatory agencies, civil monetary penalties, or reputational damage, each of which could have a material adverse effect on our business, financial condition, and results of operations.
Changes in accounting standards could materially impact, potentially even retroactively, how we report our financial condition and results of our operations. Failure to comply with statutes, regulations, or policies could result in sanctions by regulatory agencies, civil monetary penalties, or reputational damage.
Many of our competitors have greater resources to invest in technological improvements, and we may not be able to implement new technology-driven products and services, which could reduce our ability to effectively compete or increase our overall expenses and have a material adverse effect on our net income. Our information systems may experience a failure or interruption.
Many of our competitors have greater resources to invest in technological improvements, and we may not be able to implement new technology-driven products and services, which could reduce our ability to effectively compete or increase our overall expenses. 23 Our information systems may experience a failure or interruption. We rely heavily on communications and information systems to conduct our business.
Nonetheless, we may incur a temporary disruption in our ability to conduct business or process transactions, or incur damage to our reputation, if the third-party vendor fails to adequately maintain internal controls or institute necessary changes to systems. Such a disruption or breach of security may have a material adverse effect on our business.
Nonetheless, we may incur a temporary disruption in our ability to conduct business or process transactions, or incur damage to our reputation, if the third-party vendor fails to adequately maintain internal controls or institute necessary changes to systems.
We may still incur legal costs for a matter even if we have not established a reserve. In addition, due to the inherent subjectivity of the assessments and unpredictability of the outcome of legal proceedings, the actual cost of resolving a legal claim may be, and has in the past been, substantially higher than any amounts reserved for that matter.
In addition, due to the inherent subjectivity of the assessments and unpredictability of the outcome of legal proceedings, the actual cost of resolving a legal claim may be, and has in the past been, substantially higher than any amounts reserved for that matter.
The Bank Secrecy Act, the USA Patriot Act, and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports as appropriate.
We face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations. The Bank Secrecy Act, the USA Patriot Act, and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports as appropriate.
Adverse economic conditions and government policy responses to such conditions could have a material adverse effect on our business, financial condition, results of operations and prospects. Changes in U.S. trade policies may also adversely impact our business and operations.
Changes in any of these policies are influenced by macroeconomic conditions and other factors that are beyond our control. Adverse economic conditions and government policy responses to such conditions could have a material adverse effect on our business, financial condition, results of operations and prospects. Changes in U.S. trade policies may also adversely impact our business and operations.
We may be unable to continue our growth, whether organic or through acquisitions, due to a number of factors, such as changes in economic conditions, changes in banking laws, limited availability of suitable markets or targets, or our perceptions of acceptable risk.
Our current strategy is to grow organically and, if appropriate, supplement that growth with select acquisitions. We may be unable to continue our growth, whether organic or through acquisitions, due to a number of factors, such as changes in economic conditions, changes in banking laws, limited availability of suitable markets or targets, or our perceptions of acceptable risk.
We maintain an allowance for credit losses that we consider adequate to absorb losses inherent in the loan portfolio based on our assessment of the information available.
Our decisions regarding credit risk could be inaccurate and our allowance for credit losses may be inadequate. We maintain an allowance for credit losses that we consider adequate to absorb losses inherent in the loan portfolio based on our assessment of the information available.
The market price of our common stock may be highly volatile, which may make it difficult for you to resell your shares at the volume, prices and times desired.
Risks Related to Our Common Stock The market price of our common stock may be subject to substantial fluctuations, which may make it difficult for you to sell your shares at the volume, prices and times desired.
In addition, our customers may use personal smartphones, tablet PCs, or other mobile devices that are beyond our control systems in order to access our products and services.
Our customer’s use of personal smartphones, tablet PCs, or other mobile devices, and our use of third-party systems that are beyond our control systems in order to access our products and services may increase these risks.
If our assumptions and judgments are inaccurate, particularly with respect to creditworthiness of borrowers and value of collateral, we may incur loan losses in excess of our current allowance for credit losses and be required to make material additions to our allowance for credit losses, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
If our assumptions and judgments are inaccurate, particularly with respect to creditworthiness of borrowers and value of collateral, we may incur loan losses in excess of our current allowance for credit losses and be required to make material additions to our allowance for credit losses.
We must maintain certain risk-based and leverage capital ratios as required by the Federal Reserve, which can change depending on certain economic conditions and our risk profile and growth plans.
As a bank holding company, we are subject to supervision and regulation by the Federal Reserve, including risk-based and leverage capital requirements. We must maintain certain risk-based and leverage capital ratios as required by the Federal Reserve, which can change depending on certain economic conditions and our risk profile and growth plans.
We rely heavily on communications and information systems to conduct our business. Any failure or interruption in the operation of these systems could impair or prevent the effective operation of our customer relationship management, general ledger, deposit, lending, or other functions.
Any failure or interruption in the operation of these systems could impair or prevent the effective operation of our customer relationship management, general ledger, deposit, lending, or other functions.
Future declarations of quarterly dividends are subject to the approval of our Board of Directors and subject to limits imposed on us by our regulators. In order to pay any dividends, we will need to receive dividends from our bank or have other sources of funds. We and the Bank are subject to restrictions on the payment of dividends.
In order to pay any dividends, we will need to receive dividends from our bank or have other sources of funds. We and the Bank are subject to restrictions on the payment of dividends.
If either the Bank or insured institutions as a whole present a greater risk to the Deposit Insurance Fund in the future than they do today, if the Deposit Insurance Fund becomes depleted in any material respect, or if other circumstances arise that lead the FDIC to determine that the Deposit Insurance Fund should be strengthened, the Bank could be required to pay significantly higher deposit insurance premiums and/or additional special assessments (such as the one imposed by the FDIC in 2023) to the FDIC.
If either the Bank or insured institutions as a whole present a greater risk to the Deposit Insurance Fund in the future than they do today, if the Deposit Insurance Fund becomes depleted in any material respect, or if other circumstances arise that lead the FDIC to determine that the Deposit Insurance Fund should be strengthened, the Bank could be required to pay significantly higher deposit insurance premiums and/or additional special assessments (such as the one imposed by the FDIC in 2023) to the FDIC. 27 We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.
Any of these factors, among others, could cause other-than-temporary impairments and realized and/or unrealized losses in future periods and declines in other comprehensive income, which could materially and adversely affect our business, results of operations, financial condition and prospects.
Any of these factors, among others, could cause other-than-temporary impairments and realized and/or unrealized losses in future periods and declines in other comprehensive income.
There can be no assurance that dividends will in fact be paid on our common stock in future periods or that, if paid, such dividends will not be reduced or eliminated.
There can be no assurance that dividends will in fact be paid on our common stock in future periods or that, if paid, such dividends will not be reduced or eliminated. An investment in our common stock is not an insured deposit and is subject to risk of loss.
As can be seen from events in 2023 regarding the operations and failures of other banks in the U.S., an inability to raise funds through deposits, borrowings, correspondent banks, the sale of loans and other sources could have a substantial negative effect on our liquidity.
An inability to raise funds through deposits, borrowings, correspondent banks, the sale of loans and other sources could have a substantial negative effect on our liquidity.
These include risks related to our investments portfolio, the competitive environment and regulatory developments. As a business operating in the financial services industry, our business and operations may be adversely affected in numerous and complex ways by weak economic conditions. Our businesses and operations are sensitive to general business and economic conditions in the United States.
Many of the other risk factors discussed herein identify risks that result from, or are exacerbated by, financial economic downturn. These include risks related to our investments portfolio, the competitive environment and regulatory developments. As a business operating in the financial services industry, our business and operations may be adversely affected in numerous and complex ways by weak economic conditions.
The occurrence of any failures or interruptions impacting our information systems could damage our reputation, result in a loss of customer business, and expose us to additional regulatory scrutiny, civil litigation, and possible financial liability, any of which could have a material adverse effect on our financial condition and results of operations.
The occurrence of any failures or interruptions impacting our information systems could damage our reputation, result in a loss of customer business, and expose us to additional regulatory scrutiny, civil litigation, and possible financial liability. We use information technology in our operations and offer online banking services to our customers, which exposes us to the risk of unauthorized access.
Further, in addition to cyber-attacks, there has been a significant increase in check fraud in which checks are stolen in the mail and fraudulently deposited into the criminal’s account.
Our insurance may be inadequate to compensate us for losses due to any such loss or event. Further, in addition to cyber-attacks, there has been a significant increase in check fraud in which checks are stolen in the mail and fraudulently deposited into the criminal’s account.
The payment of dividends is also further subject to declaration by our Board of Directors, which takes into account our financial condition, earnings, general economic conditions and other factors, including statutory and regulatory restrictions.
Future declarations of quarterly dividends are subject to the approval of our Board of Directors, which takes into account our financial condition, earnings, general economic conditions and other factors, including statutory and regulatory restrictions, and subject to limits imposed on us by our regulators.
The banking business is highly competitive, and we experience competition in our markets from many other financial institutions. We compete with these other financial institutions both in attracting deposits and in making loans. Our profitability depends upon our continued ability to successfully compete with an array of financial institutions in our service areas and attract new customers.
We face competition from financial institutions and other financial service providers. The banking business is highly competitive, and we experience competition in our markets from many other financial institutions. We compete with these other financial institutions both in attracting deposits and in making loans.
Any regulatory action against us could have a material adverse effect on our business, results of operations, financial condition and prospects. FDIC deposit insurance assessments may materially increase in the future, which would have an adverse effect on earnings. As an FDIC-insured institution, the Bank is assessed a quarterly deposit insurance premium.
FDIC deposit insurance assessments may materially increase in the future, which would have an adverse effect on earnings. As an FDIC-insured institution, the Bank is assessed a quarterly deposit insurance premium.
Because a significant portion of our loan portfolio is dependent on commercial real estate, a change in the regulatory capital requirements applicable to us as a result of these policies could limit our ability to leverage our capital, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
Because a significant portion of our loan portfolio is dependent on commercial real estate, a change in the regulatory capital requirements applicable to us as a result of these policies could limit our ability to leverage our capital. We are subject to interest rate risk, which could adversely affect our profitability.
Federal and state regulation of the banking industry, along with tax and accounting laws, regulations, rules, and standards, may limit our operations significantly and control the methods by which we conduct business, as they limit those of other banking organizations.
Federal and state regulation of the banking industry, along with tax and accounting laws, regulations, rules, and standards, may limit our operations significantly and control the methods by which we conduct business. Banking regulations are primarily intended to protect depositors, deposit insurance funds, and the banking system as a whole, and not stockholders or other creditors.
In many cases, stockholders receive a premium for their shares when one company purchases another. For example, Alabama and Delaware law make it difficult for anyone to purchase the bank or us without approval of our Board of Directors.
For example, Alabama and Delaware law make it difficult for anyone to purchase the bank or us without approval of our Board of Directors.
The banking and financial services industries are undergoing rapid technological changes, with frequent introductions of new technology-driven products and services, including those of artificial intelligence.
We encounter technological change continually and have fewer resources than many of our competitors to invest in technological improvements. The banking and financial services industries are undergoing rapid technological changes, with frequent introductions of new technology-driven products and services, including those of artificial intelligence.
Our transactions with other financial institutions expose us to credit risk in the event of a default of a counterparty. The soundness of many financial services companies may be closely interrelated as a result of credit, trading, clearing and other relationships between such financial services companies.
We may be adversely affected by the soundness of other financial institutions. Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. The soundness of many financial services companies may be closely interrelated as a result of credit, trading, clearing and other relationships between such financial services companies.
In addition, an increase in interest rates could also have a negative impact on our results of operations by reducing the ability of borrowers to repay their current loan obligations.
In addition, an increase in interest rates could also have a negative impact on our results of operations by reducing the ability of borrowers to repay their current loan obligations. These circumstances could not only result in increased loan defaults, foreclosures and charge-offs, but also necessitate further increases to the allowance for credit losses.
Worldwide financial markets have recently experienced periods of extraordinary disruption and volatility, resulting in heightened credit risk, reduced valuation of investments, supply chain issues and labor constraints, high rates of inflation and decreased economic activity. Moreover, many companies have experienced reduced liquidity and uncertainty as to their ability to raise capital during such periods of market disruption and volatility.
Worldwide financial markets have recently experienced periods of extraordinary disruption and volatility, resulting in heightened credit risk, and reduced valuation of investments, due to, among other things, supply chain issues and labor constraints, high rates of inflation, decreased economic activity concerns of AI overspending and AI spending interrelatedness.
Further, even if we enter into new markets, we may not be able to successfully manage our growth or compete in new markets due to limitations in human resources, training and operational, financial and technological resources. 26 While we believe that we presently have sufficient capital to meet our needs for our immediate growth plans, our growth plans require capital, and our growth plans could be further limited by federal and state regulatory requirements to maintain adequate levels of capital to support our operations.
While we believe that we presently have sufficient capital to meet our needs for our immediate growth plans, our growth plans require capital, and our growth plans could be further limited by federal and state regulatory requirements to maintain adequate levels of capital to support our operations.
See also “ Cautionary Note Regarding Forward-Looking Statements. ” 24 Risks Related to Our Business We are dependent on the services of our management team and Board of Directors, and the unexpected loss of key officers or directors may adversely affect our business and operations.
See also “ Cautionary Note Regarding Forward-Looking Statements. ” Risks Related to Our Business We are dependent on the services of our management team, key employees and Board of Directors Our success depends in large part on the performance of our key personnel, including our management team, and Board of Directors and directors of the Bank.
Our largest loan relationships currently make up a significant percentage of our total loan portfolio. As of December 31, 2024, our 10 largest borrowing relationships totaled $816.3 million in commitments (including unfunded commitments), or approximately 6.5% of our total loan portfolio.
The costs associated with environmental investigation or remediation activities could be substantial. Our largest loan relationships currently make up a significant percentage of our total loan portfolio. As of December 31, 2025, our 10 largest borrowing relationships totaled $823.9 million in commitments (including unfunded commitments), or approximately 6.0% of our total loan portfolio.
Legal and regulatory proceedings and related matters with respect to the financial services industry, including those directly involving the Company or the Bank, have, and may continue to, adversely affect us or the financial services industry in general. We have been, and may in the future be, subject to various legal and regulatory proceedings.
Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation. Legal and regulatory proceedings and related matters with respect to the financial services industry, including those directly involving the Company or the Bank, have, and may continue to, adversely affect us or the financial services industry in general.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us. Any of these results could have a material adverse effect on our business, financial condition, results of operations and prospects.
We do not have any control over monetary policies implemented by the Federal Reserve or otherwise and any changes in these policies could have a material adverse effect on our business, financial condition, results of operations and prospects. 32 Federal and state regulators periodically examine our business and we may be required to remediate adverse examination findings.
Borrowings by the United States government to finance government debt may also cause fluctuations in interest rates. We do not have any control over monetary policies, or changes in those policies, implemented by the Federal Reserve or otherwise. Federal and state regulators periodically examine our business and we may be required to remediate adverse examination findings.
The long-term outlook for the fiscal position of the U.S. federal government is uncertain. From time to time, the U.S. government approaches its statutory debt limit. The failure by Congress to raise the federal debt ceiling could have severe repercussions within the U.S. and to global credit and financial markets.
The failure by Congress to raise the federal debt ceiling could have severe repercussions within the U.S. and to global credit and financial markets.
Additionally, the value of investment-held securities could rise, as existing higher-yield securities become more attractive in a lower interest-rate environment. All of these factors can individually or in the aggregate be detrimental to our business, and the interplay between these factors can be complex and unpredictable.
Additionally, the value of investment-held securities could rise, as existing higher-yield securities become more attractive in a lower interest-rate environment.
In some cases, we have contracted with third parties to run their proprietary software on our behalf. These systems include, but are not limited to, general ledger, payroll, employee benefits, loan and deposit processing, and securities portfolio accounting.
These systems include, but are not limited to, general ledger, payroll, employee benefits, loan and deposit processing, and securities portfolio accounting.
Regulatory requirements affecting our loans secured by commercial real estate could limit our ability to leverage our capital and adversely affect our growth and profitability.
Our use of historical and objective information in determining and managing credit exposure may not be accurate in assessing our risk. 24 Regulatory requirements affecting our loans secured by commercial real estate could limit our ability to leverage our capital and adversely affect our growth and profitability.
We have been, and may in the future be, negatively impacted by general business and economic conditions in the U.S., including inflation, recession, tariffs, trade wars, pandemics, political issues, regulatory issues and changes in the U.S. economy as a whole.
We have been, and may in the future be, negatively impacted by general business and economic conditions in our markets, including due to interest rates, housing conditions, real estate values, inflation, labor market issues, recession, tariffs, trade wars, pandemics, political issues, regulatory issues and changes local economies, that differ from the broader U.S. or global economies.
We are under continuous threat of loss due to hacking, cyber-attacks and fraud, including fraud committed by external parties against us or our customers, fraud committed internally by or associates and fraud committed by customers.
We are under continuous threat of loss due to the evolving nature and complexity, and increasing frequency of, hacking, cyber-attacks and fraud, including fraud committed by external parties against us or our customers, fraud committed internally by or associates and fraud committed by customers, unauthorized access, security breaches, computer viruses and other malware, phishing schemes, human error or other security failures related to information systems.
Various factors, such as economic conditions, regulatory and legislative considerations and competition, may impede or prohibit our ability to expand our market presence.
We may not be able to sustain our historical rate of growth or further expand our business. Various factors, such as economic conditions, regulatory and legislative considerations and competition, may impede or prohibit our ability to grow and expand. We may be subject to concentration risk.
Financial services companies are interrelated as a result of trading, clearing, counterparty, and other relationships. We have exposure to different industries and counterparties, and through transactions with counterparties in the financial services industry, including correspondent banks, brokers and dealers, commercial banks, investment banks, and other institutional clients.
Also as a result, we have credit risk exposure to different industries and counterparties, including correspondent banks, brokers and dealers, commercial banks, investment banks, and other institutional clients.
For example, federal and state consumer protection laws and regulations limit the manner in which we may offer and extend credit. In addition, the laws governing bankruptcy generally favor debtors, making it more expensive and more difficult to collect from customers who become subject to bankruptcy proceedings.
In addition, the laws governing bankruptcy generally favor debtors, making it more expensive and more difficult to collect from customers who become subject to bankruptcy proceedings. As a bank holding company, we are subject to certain capital requirements that may limit our operations.
Our technologies, systems and networks, and our customers’ devices, have been and will continue to be the target of cyber-attacks, electronic fraud, or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss, or destruction of our or our customers’ confidential, proprietary, and other information, or otherwise disrupt our or our customers’ or other third parties’ business operations.
These threats may result in the unauthorized release, gathering, monitoring, misuse, loss, inability to compile or use, or destruction of our or our customers’ confidential, proprietary data and other information, or otherwise disrupt our or our customers’ or other third parties’ business operations.
We lend primarily to small to medium-sized businesses within our communities, which may expose us to greater lending risks than those faced by other banks that lend to larger, better-capitalized and more diversified businesses with longer operating histories.
This may expose us to greater lending risks than those faced by other banks that lend to different markets, industries, or to larger, better-capitalized and more diversified businesses with longer operating histories. We manage our credit exposure through careful monitoring of loan applicants and loan concentrations in particular industries, and through our loan approval and review procedures.
Financial Statements and Supplementary Data elsewhere in this report. The internal controls that we have implemented in order to mitigate risks inherent to the business of banking might fail or be circumvented, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
For more information, see Note 1 – “ Summary of Significant Accounting Policies ” in the Notes to Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data elsewhere in this report The internal controls that we have implemented in order to mitigate risks inherent to the business of banking might fail or be circumvented.
Our business also is significantly affected by monetary and related policies of the U.S. federal government and its agencies. Changes in any of these policies are influenced by macroeconomic conditions and other factors that are beyond our control.
All of these factors can individually or in the aggregate be detrimental to our business, and the interplay between these factors can be complex and unpredictable. Our business also is significantly affected by monetary and related policies of the U.S. federal government and its agencies.
Our failure to compete effectively in our markets could restrain our growth or cause us to lose market share, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
Our failure to compete effectively in our markets could restrain our growth or cause us to lose market share. Our operations and financial performance could be adversely affected by natural disasters and weather.
Natural disasters, such as hurricanes, tornados, earthquakes and similar unpredictable weather events, could affect us directly (by interrupting our systems, damaging our offices or otherwise preventing us from operating our business in the ordinary course) or indirectly (by damaging or destroying the businesses or properties of our customers or otherwise impairing our customers’ ability to make loan payments on a timely basis or destroying property pledged as collateral for loans).
Those events may also impact indirectly by damaging or destroying the businesses or properties of our customers, impairing our customers’ ability to make loan payments on a timely basis, destroying property pledged as collateral for loans or increasing costs in response to changes.
It is inherently difficult to assess the outcome of these matters, and there can be no assurance that we will prevail in any proceeding or litigation. Any such matter could result in substantial cost and diversion of our management’s efforts, which could have a material adverse effect on our financial condition and operating results.
We have been, and may in the future be, subject to various legal and regulatory proceedings. It is inherently difficult to assess the outcome of these matters, and there can be no assurance that we will prevail in any proceeding or litigation and we may face an adverse determination.
In the event that these conditions recur or result in a prolonged economic downturn, our results of operations, financial position and/or liquidity could be materially and adversely affected. Many of the other risk factors discussed herein identify risks that result from, or are exacerbated by, financial economic downturn.
Moreover, many companies have experienced reduced liquidity and uncertainty as to their ability to raise capital during such periods of market disruption and volatility. In the event that these conditions recur or result in a prolonged economic downturn, our results of operations, financial position and/or liquidity could be materially and adversely affected.
A prolonged downturn in the real estate market, especially in our primary markets, could result in losses and adversely affect our profitability. As of December 31, 2024, 64.8% of our loan portfolio was composed of commercial and consumer real estate loans, of which 31.7% was owner-occupied commercial or 1-4 family mortgage loans.
We are subject to numerous risks related to real estate. As of December 31, 2025, 65.8% of our loan portfolio was composed of commercial and consumer real estate loans, of which 32.2% was owner-occupied commercial or 1-4 family mortgage loans.
Our success depends in large part on the performance of our key personnel, as well as on our ability to attract, motivate and retain highly qualified senior and middle management. Competition for employees is intense, and the process of locating key personnel with the combination of skills and attributes required to execute our business plan may be lengthy.
If any of our or the Bank’s executive officers, other key personnel, or directors leaves us or the Bank, we may be adversely affected. Competition for employees is intense, and the process of locating key personnel with the combination of skills and attributes required to execute our business plan may be lengthy.
A decline in real estate values, either in the regions we serve or across the country, could impair the value of our collateral and our ability to sell the collateral upon foreclosure, which would likely require us to increase our provision for credit losses.
A decline in real estate values, could require us to re-value the collateral and increase our provision for credit losses. 21 Additionally, in the event of a default with respect to any of these loans, we may foreclose on the real estate, which subjects us to additional risk of ownership and operation of real estate.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Information Security Officer informs the Information Technology Steering Committee by reporting on key issues, including significant cybersecurity and/or privacy incidents, discussed at committee meetings and the actions taken in response. The Information Technology Steering Committee meets on a monthly basis (or more frequently as may be required by the Incident Response Plan).
Biggest changeMore frequent meetings occur from time to time in accordance with the Incident Response Plan in order to facilitate timely informing and monitoring efforts. The Information Security Officer informs the Information Technology Steering Committee by reporting on key issues, including significant cybersecurity and/or privacy incidents, discussed at committee meetings and the actions taken in response.
The Information Security Program is periodically reviewed by such personnel with the goal of addressing changing threats and conditions and maturing our Information Security Program. 36 We employ an in-depth, layered, defensive strategy that embraces a “trust by design” philosophy when designing new products, services, and technology.
The Information Security Program is periodically reviewed by such personnel with the goal of addressing changing threats and conditions and maturing our Information Security Program. We employ an in-depth, layered, defensive strategy that embraces a “trust by design” philosophy when designing new products, services, and technology.
The experience of Chief Information and Operations Officer; Information Security Officer; and Chief Risk Officer are as follows: 35 years of experience in bank operations, systems development, payments, and information technology in Financial Services sector; 20 years of information security experience in the Banking, Government, Military, Energy, and Insurance sectors; and 29 years of experience in audit and risk management in the Financial Services Sector (banking) as an FDIC Examiner; Internal Audit Director; and Chief Risk Officer, respectively. 37
The experience of Chief Information and Operations Officer; Information Security Officer; and Chief Risk Officer are as follows: 37 years of experience in bank operations, systems development, payments, and information technology in Financial Services sector; 20 years of information security experience in the Banking, Government, Military, Energy, and Insurance sectors; and 29 years of experience in audit and risk management in the Financial Services Sector (banking) as an FDIC Examiner; Internal Audit Director; and Chief Risk Officer, respectively.
Key members of management are embedded into the Incident Response Plan by its design. The Incident Response Plan facilitates coordination across multiple parts of our organization and is evaluated at least annually. Notwithstanding our defensive measures and processes, the threat posed by cyber-attacks is severe.
Key members of management are embedded into the Incident Response Plan by its design. The Incident Response Plan facilitates coordination across multiple parts of our organization and is evaluated at least annually.
In particular, our Information Security Officer has over 20 years of information security experience in the Banking, Government, Military, Energy, and Insurance sectors and has the following cybersecurity certifications: Certified Information Systems Security Professional (CISSP), BS in Information Systems with a focus in Cyber Security, CompTIA Security+, CCNA (Security), CCNA (Route/Switch), CCNA (Collaboration), CompTIA Net+, Microsoft Certified System Engineer MCSE (win2000).
In particular, our Information Security Officer has over 20 years of information security experience in the Banking, Government, Military, Energy, and Insurance sectors and has the following cybersecurity certifications: Certified Information Systems Security Professional (CISSP), BS in Information Systems with a focus in Cyber Security, CompTIA Security+, CCNA (Security), CCNA (Route/Switch), CCNA (Collaboration), CompTIA Net+, Microsoft Certified System Engineer MCSE (win2000). 31 Our Board of Directors has approved management committees including the Information Technology Steering Committee, which focuses on technology impact, and the Risk Management Committee, which focuses on business impact.
The Information Technology Steering Committee is responsible for overseeing our information security and technology programs, including management’s actions to identify, assess, mitigate, and remediate or prevent material cybersecurity issues and risks.
The Information Technology Steering Committee meets on a monthly basis (or more frequently as may be required by the Incident Response Plan). The Information Technology Steering Committee is responsible for overseeing our information security and technology programs, including management’s actions to identify, assess, mitigate, and remediate or prevent material cybersecurity issues and risks.
Our Information Security Officer and our Chief Information and Operations Officer, along with key members of his team, regularly collaborate with peer banks, industry groups, and policymakers to discuss cybersecurity trends and issues and identify best practices.
In addition, we leverage certain industry and government associations, third-party benchmarking, audits, and threat intelligence feeds to facilitate and promote program effectiveness. Our Information Security Officer and our Chief Information and Operations Officer, along with key members of his team, regularly collaborate with peer banks, industry groups, and policymakers to discuss cybersecurity trends and issues and identify best practices.
Our objective for managing cybersecurity risk is to avoid or minimize the impacts of external threat events or other efforts to penetrate, disrupt or misuse our systems or information.
Our objective for managing cybersecurity risk is to avoid or minimize the impacts of external threat events or other efforts to penetrate, disrupt or misuse our systems or information. The structure of our information security program is designed around the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework, regulatory guidance, and other industry standards.
These committees generally meet monthly and quarterly, respectively, to provide oversight of our risk management strategy, standards, policies, practices, controls, and mitigation and prevention efforts employed to manage security risks. More frequent meetings occur from time to time in accordance with the Incident Response Plan in order to facilitate timely informing and monitoring efforts.
These committees provide oversight and governance of the technology program and the information security program. These committees generally meet monthly and quarterly, respectively, to provide oversight of our risk management strategy, standards, policies, practices, controls, and mitigation and prevention efforts employed to manage security risks.
Removed
The structure of our information security program is designed around the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework, Federal Financial Institution Examination Council (“FFIEC”) Cybersecurity Assessment Tool, regulatory guidance, and other industry standards. In addition, we leverage certain industry and government associations, third-party benchmarking, audits, and threat intelligence feeds to facilitate and promote program effectiveness.
Added
The plan also defines escalation pathways to senior management, including the Chief Risk Officer, General Counsel, and Chief Financial Officer, to support determinations regarding materiality and any related public disclosures or regulatory notifications. Notwithstanding our defensive measures and processes, the threat posed by cyber-attacks is severe.
Removed
Our Board of Directors has approved management committees including the Information Technology Steering Committee, which focuses on technology impact, and the Risk Management Committee, which focuses on business impact. These committees provide oversight and governance of the technology program and the information security program.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES. As of December 31, 2024, we operated through 33 banking offices and one loan production office. Our Woodcrest Place office also includes our corporate headquarters. Due to our focus on service-oriented banking with limited branch locations, each of these locations serves as a hub in our banking markets.
Biggest changeITEM 2. PROPERTIES. As of December 31, 2025, we operated through 33 banking offices and one loan production office. Our Woodcrest Place office also includes our corporate headquarters. We own our corporate headquarters, and lease a majority of our other locations.
Removed
We believe that our banking offices are in good condition, are suitable to our needs and, for the most part, are relatively new or refurbished. The following table gives pertinent details about our banking offices: State, Office Address City Zip Code Owned or Leased Date Opened Alabama: 2500 Woodcrest Place Birmingham 35209 Owned 3/2/2005 324 Richard Arrington Jr.
Added
Due to our focus on service-oriented banking with limited branch locations, each of these locations serves as a hub in our banking markets. We believe that our banking offices, whether owned or leased, are in good condition, are suitable to our needs and, for the most part, are relatively new or refurbished.
Removed
Boulevard North Birmingham 35203 Leased 12/19/2005 5403 Highway 280, Suite 401 Birmingham 35242 Leased 8/15/2006 401 Meridian Street, Suite 100 Huntsville 35801 Leased 11/21/2006 1267 Enterprise Way, Suite A Huntsville 35806 Leased 8/21/2006 1 Commerce Street, Suite 200 Montgomery 36104 Leased 6/4/2007 7256 Halcyon Park Drive Montgomery 36117 Leased 9/26/2007 4801 West Main Street Dothan 36305 Leased 10/17/2008 1640 Ross Clark Circle, Suite 307 Dothan 36301 Leased 2/1/2011 2 North Royal Street Mobile 36602 Leased 7/9/2012 4400 Old Shell Road Mobile 36608 Leased 9/3/2014 561 Fairhope Ave.
Removed
Suite 101 Fairhope 36532 Leased 9/29/2017 2272 Moores Mill Rd Auburn 36830 Leased 11/4/2024 Total Offices in Alabama 13 Offices Florida: 219 East Garden Street Suite 100 Pensacola 32502 Leased 4/1/2011 4980 North 12th Avenue Pensacola 32504 Owned 8/27/2012 316 Racetrack RD NE Ft.
Removed
Walton Bch. 32547 Owned 8/3/2020 1022 W 23rd Street, Suite 600 Panama City 32405 Leased 10/10/2022 1701 Hermitage Boulevard Suite 104 Tallahassee 32308 Leased 9/27/2022 4221 West Boy Scout Blvd.
Removed
Tampa 33607 Leased 1/4/2016 485 North Keller Road Orlando 32751 Leased 7/1/2021 247 Tamiami Trail South Venice 34285 Leased 1/3/2021 1718 Main Street, Suite 100 Sarasota 34236 Leased 7/1/2022 3375 Capital Circle NE, Bldg B 1 (1) Tallahassee 32308 Leased 3/29/2023 Total Offices in Florida 10 Offices Georgia: 300 Galleria Parkway SE, Suite 100 Atlanta 30339 Leased 7/1/2015 2801 Chapel Hill Road Douglasville 30135 Owned 1/28/2008 700 Brookstone Centre Parkway, Suite 400 Columbus 31904 Leased 2/1/2023 Total Offices in Georgia 3 Offices North Carolina: 14891 Ballantyne Village Way Suite 1000 Charlotte 28277 Leased 12/19/2022 1200 Ridgefield Boulevard Suite 254 Asheville 28806 Leased 9/19/2022 9624 Bailey Road, Suite I Cornelius 28031 Leased 7/1/2023 Total Offices in North Carolina 3 Offices South Carolina: 701 East Bay Street Suite 503 Charleston 29403 Leased 4/20/2015 100 S Main Street Suite I Summerville 29483 Leased 7/1/2016 Total Offices in South Carolina 2 Offices Tennessee: 1600 West End Avenue, Suite 200 Nashville 37203 Leased 5/1/2021 5384 Poplar Ave Memphis 38119 Leased 12/2/2024 Total Offices in Tennessee 2 Offices Virginia: 4505 Columbus Street, Suite 100 Virginia Beach 23462 Leased 9/1/2022 Total Offices in Virginia 1 Offices Total Offices 34 Offices (1) Property serves as a loan production office. 38

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe principal source of our cash flow, including cash flow to pay dividends, comes from dividends that the Bank pays to us as its sole shareholder. Statutory and regulatory limitations apply to the Bank’s payment of dividends to us, as well as our payment of dividends to our stockholders.
Biggest changeSubject to the Board of Directors’ approval and applicable regulatory requirements, we expect to continue paying cash dividends on a quarterly basis. The principal source of our cash flow, including cash flow to pay dividends, comes from dividends that the Bank pays to us as its sole shareholder.
Purchases of Equity Securities by the Registrant and Affiliated Purchasers We made no repurchases of our equity securities, and no “affiliated purchasers” (as defined in Rule 10b-18(a)(3) under the Exchange Act) purchased any shares of our equity securities during the fourth quarter of the fiscal year ended December 31, 2024.
Purchases of Equity Securities by the Registrant and Affiliated Purchasers We made no repurchases of our equity securities, and no “affiliated purchasers” (as defined in Rule 10b-18(a)(3) under the Exchange Act) purchased any shares of our equity securities during the fourth quarter of the fiscal year ended December 31, 2025.
Performance Graph The following graph shows a comparison of the five-year cumulative total stockholder return for the Company, the KBW Nasdaq Regional Banking Index (“KRX”), and the Standard and Poor's 600 (“S&P 600”).
Performance Graph The following graph shows a comparison of the five-year cumulative total stockholder return for the Company, the KBW Nasdaq Regional Banking Index (“KRX”), the Standard and Poor's 600 (“S&P 600”), and the Standard and Poor’s 600 Financials (“S&P 600 Financials”).
For a more complete discussion on the restrictions on dividends, see “Bank Supervision and Regulation - Payment of Dividends” in Item 1. Recent Sales of Unregistered Securities We had no sales of unregistered securities in 2024 other than those previously reported in our reports filed with the SEC.
Recent Sales of Unregistered Securities We had no sales of unregistered securities in 2025 other than those previously reported in our reports filed with the SEC.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Our common stock is listed on the New York Stock Exchange under the symbol “SFBS.” As of February 26, 2025, there were 453 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
The following performance graph does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates the performance graph by reference therein. 39 Date Index: 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 ServisFirst Bancshares, Inc. 100.00 108.50 223.96 185.63 182.25 230.99 S&P 600 100.00 109.57 137.26 113.35 129.09 137.90 KRX 100.00 87.90 117.08 106.01 101.77 111.52 ITEM 6. [Reserved].
The following performance graph does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates the performance graph by reference therein. 33 ITEM 6. [Reserved].
Removed
Dividends On December 16, 2024, our Board of Directors increased our quarterly cash dividend from $0.30 per share to $0.335 per share. Subject to the Board of Directors’ approval and applicable regulatory requirements, we expect to continue paying cash dividends on a quarterly basis.
Added
Our common stock is listed on the New York Stock Exchange under the symbol “SFBS.” As of February 20, 2026, there were 435 holders of record of our common stock. 32 Dividends On December 15, 2025, our Board of Directors increased our quarterly cash dividend from $0.335 per share to $0.38 per share.
Added
Statutory and regulatory limitations apply to the Bank’s payment of dividends to us, as well as our payment of dividends to our stockholders. For a more complete discussion on the restrictions on dividends, see “Bank Supervision and Regulation - Payment of Dividends” in Item 1.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

2 edited+0 added−0 removed0 unchanged
Biggest changeITEM 6. [RESERVED] 40 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF OPERATIONS 40 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 58 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 60 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 101 ITEM 9A. CONTROLS AND PROCEDURES 101 ITEM 9B.
Biggest changeITEM 6. [RESERVED] 34 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 34 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 52 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 54 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 95 ITEM 9A. CONTROLS AND PROCEDURES 95 ITEM 9B.
OTHER INFORMATION 101 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 101 PART III. 101
OTHER INFORMATION 96 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 96 PART III. 96

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

87 edited+10 added−17 removed67 unchanged
Biggest changeThe following table details our loans at December 31, 2024, 2023 and 2022: 2024 2023 2022 (Dollars in Thousands) Commercial, financial and agricultural $ 2,869,894 $ 2,823,986 $ 3,145,317 Real estate - construction 1,489,306 1,519,619 1,532,388 Real estate - mortgage: Owner-occupied commercial 2,547,143 2,257,163 2,199,280 1-4 family mortgage 1,444,623 1,249,938 1,146,831 Non-owner occupied commercial 4,181,243 3,744,346 3,597,750 Total real estate - mortgage 8,173,009 7,251,447 6,943,861 Consumer 73,627 63,777 66,402 Total Loans 12,605,836 11,658,829 11,687,968 Less: Allowance for credit losses (164,458 ) (153,317 ) (146,297 ) Net Loans $ 12,441,378 $ 11,505,512 $ 11,541,671 The following table details the percentage composition of our loan portfolio by type at December 31, 2024, 2023 and 2022: 2024 2023 2022 Commercial, financial and agricultural 22.77 % 24.22 % 26.91 % Real estate - construction 11.81 13.03 13.11 Real estate - mortgage Owner-occupied commercial 20.21 19.36 18.82 1-4 family mortgage 11.46 10.72 9.81 Non-owner occupied commercial 33.17 32.12 30.78 Subtotal: Real estate mortgage 64.84 62.20 59.41 Consumer 0.58 0.55 0.57 Total Loans 100.00 % 100.00 % 100.00 % The table below summarizes the Company’s commercial real estate portfolio at December 31, 2024 as segregated by industry concentrations based on North American Industry Classification System: 2024 Balance Percent of Total (Dollars in Thousands) Owner Occupied Real Estate Retail Trade $ 531,254 7.9 % Other Services (except Public Administration) 328,668 4.9 Health Care and Social Assistance 280,964 4.2 Accommodation and Food Services 191,716 2.8 Manufacturing 184,241 2.7 Professional, Scientific, and Technical Services 176,158 2.6 Real Estate and Rental and Leasing 149,602 2.2 Wholesale Trade 144,781 2.2 All Other Owner Occupied Real Estate 559,759 8.3 Total Owner Occupied Real Estate $ 2,547,143 37.9 % Non-Owner Occupied Real Estate Multifamily Permanent $ 1,248,694 18.6 % Shopping or Retail Center 596,066 8.9 Hotel or Motel 590,851 8.8 Office Building 433,726 6.4 Nursing Home or Assisted Living Facility 308,530 4.6 Office Warehouse 208,999 3.1 Warehouse 98,431 1.5 Self-Storage Facility 138,782 2.1 Gas Station or Convenience Store 97,995 1.5 Restaurant 55,612 0.8 All Other Income Property 403,557 6.0 Total Non-Owner Occupied Real Estate $ 4,181,243 62.1 % Total Commercial Real Estate $ 6,728,386 100.0 % 48 The table below summarizes the Company’s commercial real estate portfolio at December 31, 2024 as segregated by geographic region in which the property is located: 2024 Balance Percent of Total (Dollars in Thousands) State: Alabama $ 2,117,680 31.5 % Florida 1,789,717 26.6 Georgia 760,813 11.3 North Carolina 194,575 2.9 South Carolina 325,975 4.8 Tennessee 645,200 9.6 Virginia 74,336 1.1 Other 820,090 12.2 Total commercial real estate loans $ 6,728,386 100.0 % The following table details maturities and sensitivity to interest rate changes for our loan portfolio at December 31, 2024: Due in One After One Year After Five Years After Year or Less to Five Years to 15 Years 15 Years Total (in Thousands) Commercial, financial and agricultural $ 153,383 $ 2,109,940 $ 606,571 $ - $ 2,869,894 Real estate - construction 47,885 1,196,074 194,889 50,458 1,489,306 Real estate - mortgage: Owner-occupied commercial 38,805 1,294,176 1,169,400 44,762 2,547,143 1-4 family mortgage 38,928 369,379 347,227 689,089 1,444,623 Other mortgage 161,029 2,954,773 1,036,622 28,819 4,181,243 Total real estate - mortgage 238,762 4,618,328 2,553,249 762,670 8,173,009 Consumer 26,041 41,640 5,946 - 73,627 Total Loans $ 466,071 $ 7,965,982 $ 3,360,655 $ 813,128 $ 12,605,836 Less: Allowance for loan losses (164,458 ) Net Loans $ 12,441,378 Amount due after one year at fixed interest rates: Commercial, financial and agricultural $ 837,833 Real estate - construction 261,377 Real estate - mortgage: Owner-occupied commercial 1,605,383 1-4 family mortgage 940,743 Other mortgage 2,259,100 Total real estate - mortgage 4,805,226 Consumer 13,030 Total loans $ 5,917,466 Amount due after one year at variable interest rates: Commercial, financial and agricultural $ 1,878,678 Real estate - construction 1,180,044 Real estate - mortgage: Owner-occupied commercial 902,955 1-4 family mortgage 464,952 Other mortgage 1,761,114 Total real estate - mortgage 3,129,021 Consumer 34,556 Total loans $ 6,222,299 49 Asset Quality The following table presents a summary of the allowance for credit losses, net charge-offs and certain credit ratios for the years ended December 31, 2024, 2023 and 2022: As of and for the Years Ended December 31, 2024 2023 2022 (Dollars in Thousands) Allowance for credit losses to total loans outstanding 1.30 % 1.32 % 1.25 % Allowance for credit losses $ 164,458 $ 153,317 $ 146,297 Total loans outstanding $ 12,605,836 $ 11,658,829 $ 11,687,968 Nonaccrual loans to total loans outstanding 0.31 % 0.17 % 0.11 % Nonaccrual loans $ 39,501 $ 19,349 $ 12,450 Total loans outstanding $ 12,605,836 $ 11,658,829 $ 11,687,968 Allowance for credit losses to nonaccrual loans 416.34 % 792.38 % 1,175.08 % Allowance for credit losses $ 164,458 $ 153,317 $ 146,297 Nonaccrual loans $ 39,501 $ 19,349 $ 12,450 Net charge-offs during the period to average loans outstanding: Commercial, financial and agricultural 0.32 % 0.35 % 0.25 % Net charge-offs during the period $ 9,094 $ 10,429 $ 7,244 Average amount outstanding $ 2,825,914 $ 2,937,913 $ 2,957,627 Real estate - construction - % 0.01 % - % Net charge-offs (recoveries) during the period $ (8 ) $ 105 $ - Average amount outstanding $ 1,479,583 $ 1,470,330 $ 1,339,871 Real estate - mortgage: Owner-occupied commercial 0.01 % 0.01 % 0.01 % Net charge-offs during the period $ 208 $ 117 $ 170 Average amount outstanding $ 2,414,327 $ 2,273,834 $ 2,014,817 1-4 family mortgage 0.06 % - % - % Net charge-offs during the period $ 759 $ 54 $ 51 Average amount outstanding $ 1,357,272 $ 1,178,347 $ 1,015,498 Non-owner occupied commercial - % - % - % Net charge-offs during the period $ - $ - $ - Average amount outstanding $ 4,009,407 $ 3,673,667 $ 3,175,047 Total real estate - mortgage 0.01 % - % - % Net charge-offs during the period $ 967 $ 171 $ 221 Average amount outstanding $ 7,781,006 $ 7,125,848 $ 6,205,362 Consumer 0.56 % 1.44 % 0.68 % Net charge-offs during the period $ 359 $ 990 $ 505 Average amount outstanding $ 64,323 $ 68,721 $ 63,360 Total loans 0.09 % 0.10 % 0.08 % Net charge-offs during the period $ 10,412 $ 11,695 $ 7,970 Average amount outstanding $ 12,150,825 $ 11,602,812 $ 10,566,219 50 The allowance for credit losses (“ACL”) for December 31, 2024 and 2023 was calculated under the CECL methodology and totaled $164.5 million and $153.3 million, or 1.30% and 1.32% of loans, net of unearned income, respectively.
Biggest changeThe following table details our loans at December 31, 2025, 2024 and 2023: 2025 2024 2023 (Dollars in Thousands) Commercial, financial and agricultural $ 3,146,736 $ 2,869,894 $ 2,823,986 Real estate - construction 1,457,628 1,489,306 1,519,619 Real estate - mortgage: Owner-occupied commercial 2,739,823 2,547,143 2,257,163 1-4 family mortgage 1,671,713 1,444,623 1,249,938 Non-owner occupied commercial 4,603,389 4,181,243 3,744,346 Total real estate - mortgage 9,014,925 8,173,009 7,251,447 Consumer 77,623 73,627 63,777 Total Loans 13,696,912 12,605,836 11,658,829 Less: Allowance for credit losses (171,683 ) (164,458 ) (153,317 ) Net Loans $ 13,525,229 $ 12,441,378 $ 11,505,512 The following table details the percentage composition of our loan portfolio by type at December 31, 2025, 2024 and 2023: 2025 2024 2023 Commercial, financial and agricultural 22.97 % 22.77 % 24.22 % Real estate - construction 10.64 11.81 13.03 Real estate - mortgage Owner-occupied commercial 20.00 20.21 19.36 1-4 family mortgage 12.21 11.46 10.72 Non-owner occupied commercial 33.61 33.17 32.12 Subtotal: Real estate mortgage 65.82 64.84 62.20 Consumer 0.57 0.58 0.55 Total Loans 100.00 % 100.00 % 100.00 % The table below summarizes the Company’s commercial real estate portfolio at December 31, 2025 as segregated by industry concentrations based on North American Industry Classification System: 2025 Balance Percent of Total (Dollars in Thousands) Owner Occupied Real Estate Retail Trade $ 569,658 7.8 % Other Services (except Public Administration) 315,795 4.3 Health Care and Social Assistance 301,651 4.1 Accommodation and Food Services 270,733 3.7 Manufacturing 200,048 2.7 Professional, Scientific, and Technical Services 189,979 2.6 Real Estate and Rental and Leasing 154,081 2.1 Wholesale Trade 163,286 2.2 All Other Owner Occupied Real Estate 574,592 7.8 Total Owner Occupied Real Estate $ 2,739,823 37.3 % Non-Owner Occupied Real Estate Multifamily Permanent $ 1,347,177 18.3 % Shopping or Retail Center 678,426 9.2 Hotel or Motel 601,871 8.2 Office Building 471,312 6.4 Nursing Home or Assisted Living Facility 378,999 5.2 Office Warehouse 228,238 3.1 Warehouse 152,871 2.1 Self-Storage Facility 195,744 2.7 Gas Station or Convenience Store 107,975 1.5 Restaurant 74,420 1.0 All Other Income Property 366,356 5.0 Total Non-Owner Occupied Real Estate $ 4,603,389 62.7 % Total Commercial Real Estate $ 7,343,212 100.0 % 42 The table below summarizes the Company’s commercial real estate portfolio at December 31, 2025 as segregated by geographic region in which the property is located: 2025 Balance Percent of Total (Dollars in Thousands) State: Alabama $ 2,255,037 30.8 % Florida 1,956,500 26.7 Georgia 910,679 12.4 North Carolina 275,225 3.7 South Carolina 311,050 4.2 Tennessee 654,940 8.9 Virginia 147,667 2.0 Other 832,114 11.3 Total commercial real estate loans $ 7,343,212 100.0 % The following table details maturities and sensitivity to interest rate changes for our loan portfolio at December 31, 2025: Due in One After One Year After Five Years After Year or Less to Five Years to 15 Years 15 Years Total (in Thousands) Commercial, financial and agricultural $ 1,383,001 $ 1,516,476 $ 247,259 $ - $ 3,146,736 Real estate - construction 493,510 793,507 105,149 65,462 1,457,628 Real estate - mortgage: Owner-occupied commercial 376,925 1,727,970 631,270 3,658 2,739,823 1-4 family mortgage 211,947 351,928 321,972 785,866 1,671,713 Other mortgage 1,129,537 2,965,538 480,678 27,636 4,603,389 Total real estate - mortgage 1,718,409 5,045,436 1,433,920 817,160 9,014,925 Consumer 47,013 24,708 5,902 - 77,623 Total Loans $ 3,641,933 $ 7,380,127 $ 1,792,230 $ 882,622 $ 13,696,912 Less: Allowance for loan losses (171,683 ) Net Loans $ 13,525,229 Amount due after one year at fixed interest rates: Commercial, financial and agricultural $ 757,799 Real estate - construction 194,231 Real estate - mortgage: Owner-occupied commercial 1,344,440 1-4 family mortgage 998,988 Other mortgage 1,805,917 Total real estate - mortgage 4,149,345 Consumer 6,816 Total loans $ 5,108,191 Amount due after one year at variable interest rates: Commercial, financial and agricultural $ 1,005,936 Real estate - construction 769,887 Real estate - mortgage: Owner-occupied commercial 1,018,458 1-4 family mortgage 460,778 Other mortgage 1,667,935 Total real estate - mortgage 3,147,171 Consumer 23,794 Total loans $ 4,946,788 43 Asset Quality The following table presents a summary of the allowance for credit losses, net charge-offs and certain credit ratios for the years ended December 31, 2025, 2024 and 2023: As of and for the Years Ended December 31, 2025 2024 2023 (Dollars in Thousands) Allowance for credit losses to total loans outstanding 1.25 % 1.30 % 1.32 % Allowance for credit losses $ 171,683 $ 164,458 $ 153,317 Total loans outstanding $ 13,696,912 $ 12,605,836 $ 11,658,829 Nonaccrual loans to total loans outstanding 1.23 % 0.31 % 0.17 % Nonaccrual loans $ 168,351 $ 39,501 $ 19,349 Total loans outstanding $ 13,696,912 $ 12,605,836 $ 11,658,829 Allowance for credit losses to nonaccrual loans 101.98 % 416.34 % 792.38 % Allowance for credit losses $ 171,683 $ 164,458 $ 153,317 Nonaccrual loans $ 168,351 $ 39,501 $ 19,349 Net charge-offs during the period to average loans outstanding: Commercial, financial and agricultural 0.74 % 0.32 % 0.35 % Net charge-offs during the period $ 22,004 $ 9,094 $ 10,429 Average amount outstanding $ 2,956,886 $ 2,825,914 $ 2,937,913 Real estate - construction - % - % 0.01 % Net charge-offs (recoveries) during the period $ 16 $ (8 ) $ 105 Average amount outstanding $ 1,560,632 $ 1,479,583 $ 1,470,330 Real estate - mortgage: Owner-occupied commercial 0.16 % 0.01 % 0.01 % Net charge-offs during the period $ 4,037 $ 208 $ 117 Average amount outstanding $ 2,596,175 $ 2,414,327 $ 2,273,834 1-4 family mortgage 0.02 % 0.06 % - % Net charge-offs during the period $ 303 $ 759 $ 54 Average amount outstanding $ 1,567,733 $ 1,357,272 $ 1,178,347 Non-owner occupied commercial 0.03 % - % - % Net charge-offs during the period $ 1,168 $ - $ - Average amount outstanding $ 4,355,257 $ 4,009,407 $ 3,673,667 Total real estate - mortgage 0.06 % 0.01 % - % Net charge-offs during the period $ 5,508 $ 967 $ 171 Average amount outstanding $ 8,519,165 $ 7,781,006 $ 7,125,848 Consumer 0.81 % 0.56 % 1.44 % Net charge-offs during the period $ 592 $ 359 $ 990 Average amount outstanding $ 73,006 $ 64,323 $ 68,721 Total loans 0.22 % 0.09 % 0.10 % Net charge-offs during the period $ 28,120 $ 10,412 $ 11,695 Average amount outstanding $ 13,109,689 $ 12,150,825 $ 11,602,812 44 The allowance for credit losses (“ACL”) for December 31, 2025 and 2024 was calculated under the CECL methodology and totaled $171.7 million and $164.5 million, or 1.25% and 1.30% of loans, net of unearned income, respectively.
Overview The Company We are a bank holding company within the meaning of the BHC Act headquartered in Birmingham, Alabama. Through our wholly-owned subsidiary bank, we operate full service banking offices located in Alabama, Florida, Georgia, North Carolina, South Carolina, Tennessee, and Virginia. We also operate a loan production office in Florida.
Overview We are a bank holding company within the meaning of the BHC Act headquartered in Birmingham, Alabama. Through our wholly-owned subsidiary bank, we operate full service banking offices located in Alabama, Florida, Georgia, North Carolina, South Carolina, Tennessee and Virginia. We also operate a loan production office in Florida.
The accounting estimate related the Company’s ACL is considered to be a critical accounting estimate because considerable judgment and estimation is applied by management. Allowance for Credit Losses The Company assesses the adequacy of its allowance for credit losses at the end of each calendar quarter.
The accounting estimate related to the Company’s ACL is considered to be a critical accounting estimate because considerable judgment and estimation is applied by management. Allowance for Credit Losses The Company assesses the adequacy of its allowance for credit losses at the end of each calendar quarter.
Losses are predicted over a period of time determined to be reasonable and supportable, and at the end of the reasonable and supportable period losses are reverted to long term historical averages. The reasonable and supportable period and reversion period are re-evaluated each quarter by the Company and are dependent on the current economic environment among other factors.
Losses are predicted over a period of time determined to be reasonable and supportable, and at the end of the reasonable and supportable period losses are reverted to long term historical averages. The reasonable and supportable period and reversion period are re-evaluated each quarter by the Company and are dependent on the current economic environment among other factors.
Our regulators may disagree with our assumptions and could require us to materially increase our allowance for credit losses. 57 Loans with similar risk characteristics are evaluated in pools and, depending on the nature of each identified pool, the Company utilizes a DCF, PD/LGD, or remaining life method.
Our regulators may disagree with our assumptions and could require us to materially increase our allowance for credit losses. Loans with similar risk characteristics are evaluated in pools and, depending on the nature of each identified pool, the Company utilizes a DCF, PD/LGD, or remaining life method.
We are subject to general FDIC guidelines which require a minimum level of liquidity. Management believes our liquidity ratios meet or exceed these guidelines. Our management is not currently aware of any trends or demands that are reasonably likely to result in liquidity increasing or decreasing in any material manner.
We are subject to general FDIC guidelines that require a minimum level of liquidity. Management believes our liquidity ratios meet or exceed these guidelines. Our management is not currently aware of any trends or demands that are reasonably likely to result in liquidity increasing or decreasing in any material manner.
The following table presents the amortized cost and weighted average yield of our securities as of December 31, 2024 by their stated maturities (this maturity schedule excludes security prepayment and call features): Maturity of Debt Securities - Weighted Average Yield One Year or Less After One Year through Five Years After Five Years through Ten Years More Than Ten Years Total At December 31, 2024: (In Thousands) Securities Available for Sale: U.S.
The following table presents the amortized cost and weighted average yield of our securities as of December 31, 2025 by their stated maturities (this maturity schedule excludes security prepayment and call features): Maturity of Debt Securities - Weighted Average Yield One Year or Less After One Year through Five Years After Five Years through Ten Years More Than Ten Years Total At December 31, 2025: (In Thousands) Securities Available for Sale: U.S.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “ Management's Discussion and Analysis of Financial Condition and Results of Operations ” in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in “ Management's Discussion and Analysis of Financial Condition and Results of Operations ” in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
At the current time, our long-term liquidity needs primarily relate to funds required to support loan originations and commitments and deposit withdrawals. Capital Adequacy As of December 31, 2024, our most recent notification from the FDIC categorized us as well-capitalized under the regulatory framework for prompt corrective action.
At the current time, our long-term liquidity needs primarily relate to funds required to support loan originations and commitments and deposit withdrawals. Capital Adequacy As of December 31, 2025, our most recent notification from the FDIC categorized us as well-capitalized under the regulatory framework for prompt corrective action.
The following table shows, for the years ended December 31, 2024, 2023 and 2022, the average balances of each principal category of our assets, liabilities and stockholders’ equity, and an analysis of net interest income, and the change in interest income and interest expense segregated into amounts attributable to changes in volume and changes in rates.
The following table shows, for the years ended December 31, 2025, 2024 and 2023, the average balances of each principal category of our assets, liabilities and stockholders’ equity, and an analysis of net interest income, and the change in interest income and interest expense segregated into amounts attributable to changes in volume and changes in rates.
The investment policy allows portfolio holdings to include short-term securities purchased to provide us with needed liquidity and longer-term securities purchased to generate level income for us over periods of interest rate fluctuations. 47 Loan Portfolio The following is a condensed overview of changes in our loan portfolio.
The investment policy allows portfolio holdings to include short-term securities purchased to provide us with needed liquidity and longer-term securities purchased to generate level income for us over periods of interest rate fluctuations. 41 Loan Portfolio The following is a condensed overview of changes in our loan portfolio.
To remain categorized as well-capitalized, we must maintain minimum Common Equity Tier 1 risk-based, Tier 1 risk-based, total risk-based, and Tier 1 leverage ratios as disclosed in the table below. Our management believes that we are well-capitalized under the prompt corrective action provisions as of December 31, 2024.
To remain categorized as well-capitalized, we must maintain minimum Common Equity Tier 1 risk-based, Tier 1 risk-based, total risk-based, and Tier 1 leverage ratios as disclosed in the table below. Our management believes that we are well-capitalized under the prompt corrective action provisions as of December 31, 2025.
Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K filed with the SEC on March 1, 2024 for a discussion and analysis of the more significant factors that affected periods prior to 2023.
Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K filed with the SEC on March 1, 2025 for a discussion and analysis of the more significant factors that affected periods prior to 2024.
(2) Weighted average yield is calculated by taking the sum of each category of securities multiplied by the respective tax-equivalent yield for a given maturity, and dividing by the sum of the securities for the same maturity. As of December 31, 2024, we had $1.0 million in federal funds sold, compared with $100.6 million at December 31, 2023.
(2) Weighted average yield is calculated by taking the sum of each category of securities multiplied by the respective tax-equivalent yield for a given maturity, and dividing by the sum of the securities for the same maturity. As of December 31, 2025, we had $6.1 million in federal funds sold, compared with $1.0 million at December 31, 2024.
ITEM 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. This section of the Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
ITEM 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. This section of the Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.
At year-end 2024, there were no holdings of securities of any issuer, other than the U.S. government and its agencies, in an amount greater than 10% of stockholders’ equity.
At year-end 2025, there were no holdings of securities of any issuer, other than the U.S. government and its agencies, in an amount greater than 10% of stockholders’ equity.
Our primary permanent differences are related to tax exempt income on debt securities, state income tax benefit on real estate investment trust dividends, various qualifying tax credits and change in cash surrender value of bank-owned life insurance. We have invested $299.8 million in bank-owned life insurance for certain officers of the Bank.
Our primary permanent differences are related to tax exempt income on debt securities, state income tax benefit on real estate investment trust dividends, various qualifying tax credits and change in cash surrender value of bank-owned life insurance. We have invested $435.3 million in bank-owned life insurance for certain officers of the Bank.
All of our investments in mortgage-backed securities are pass-through mortgage-backed securities. We generally do not hold, and did not have at December 31, 2024, any structured investment vehicles or any private-label mortgage-backed securities. The amortized cost of securities in our portfolio totaled $1.92 billion at December 31, 2024, compared to $1.95 billion at December 31, 2023.
All of our investments in mortgage-backed securities are pass-through mortgage-backed securities. We generally do not hold, and did not have at December 31, 2025, any structured investment vehicles or any private-label mortgage-backed securities. The amortized cost of securities in our portfolio totaled $1.73 billion at December 31, 2025, compared to $1.92 billion at December 31, 2024.
Our management’s ability to respond to changes in interest rates by effective asset-liability management techniques is critical to maintaining the stability of the net interest margin and the momentum of our primary source of earnings. Net interest income increased 8.7% for the year ended December 31, 2024 from the year ended December 31, 2023.
Our management’s ability to respond to changes in interest rates by effective asset-liability management techniques is critical to maintaining the stability of the net interest margin and the momentum of our primary source of earnings. Net interest income increased 19.8% for the year ended December 31, 2025 from the year ended December 31, 2024.
Average assets totaled $16.33 billion in 2024, compared to $15.07 billion in 2023, and to $14.70 billion in 2022: For the Year Ended 2024 2023 2022 Sources of Funds: Deposits: Non-interest-bearing 15.9 % 18.9 % 32.1 % Interest-bearing 64.7 62.2 48.7 Federal funds purchased 8.8 8.5 10.4 Long term debt and other borrowings 0.4 0.6 0.4 Other liabilities 0.6 0.4 0.3 Equity capital 9.5 9.4 8.1 Total sources 100.0 % 100.0 % 100.0 % Uses of Funds: Loans 74.5 % 77.1 % 67.0 % Securities 12.0 12.5 11.2 Interest-bearing balances with banks 10.4 7.1 18.1 Federal funds sold 0.1 0.4 0.2 Other assets 3.0 3.0 3.5 Total uses 100.0 % 100.0 % 100.0 % Liquidity Liquidity is defined as our ability to generate sufficient cash to fund current loan demand, deposit withdrawals, or other cash demands and disbursement needs, and otherwise to operate on an ongoing basis.
Average assets totaled $17.75 billion in 2025, compared to $16.33 billion in 2024, and to $15.07 billion in 2023: 49 For the Year Ended 2025 2024 2023 Sources of Funds: Deposits: Non-interest-bearing 14.9 % 15.9 % 18.9 % Interest-bearing 64.0 64.8 62.2 Federal funds purchased 10.1 8.8 8.5 Long term debt and other borrowings 0.4 0.4 0.6 Other liabilities 0.8 0.6 0.4 Equity capital 9.8 9.5 9.4 Total sources 100.0 % 100.0 % 100.0 % Uses of Funds: Loans 74.0 % 74.5 % 77.0 % Securities 10.8 12.0 12.5 Interest-bearing balances with banks 10.5 10.4 7.1 Federal funds sold 1.4 0.1 0.4 Other assets 3.3 3.0 3.0 Total uses 100.0 % 100.0 % 100.0 % Liquidity Liquidity is defined as our ability to generate sufficient cash to fund current loan demand, deposit withdrawals, or other cash demands and disbursement needs, and otherwise to operate on an ongoing basis.
See the section captioned “Allowance for Credit Losses” located elsewhere in this item for additional discussion related to provision for credit losses. The provision expense for credit losses for the year ended December 31, 2024 increased compared to the year-ended December 31, 2023. The increase in provision expense is primarily the result of loan growth during 2024 compared to 2023.
See the section captioned “Allowance for Credit Losses” located elsewhere in this item for additional discussion related to provision for credit losses. The provision expense for credit losses for the year ended December 31, 2025 increased compared to the year-ended December 31, 2024. The increase in provision expense was primarily the result of loan growth during 2025 compared to 2024.
However, our ultimate source of liquidity consists of dividends from the Bank, which are limited by applicable law and regulations. In 2024 and 2023, the Bank paid dividends of $71.9 million and $62.5 million, respectively, to us. For a detailed discussion on the regulatory limitation on Bank dividends, see “Supervision and Regulation - Payment of Dividends” in Item 1.
However, our ultimate source of liquidity consists of dividends from the Bank, which are limited by applicable law and regulations. In 2025 and 2024, the Bank paid dividends of $78.9 million and $71.9 million, respectively, to us. For a detailed discussion on the regulatory limitation on Bank dividends, see “Supervision and Regulation - Payment of Dividends” in Item 1.
Please see Note 3 - “ Loans ” in the Notes to Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data elsewhere in this report for a more detailed analysis of our loan portfolio by type of loan. We had total loans of approximately $12.61 billion at December 31, 2024.
Please see Note 3 - “ Loans ” in the Notes to Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data elsewhere in this report for a more detailed analysis of our loan portfolio by type of loan. We had total loans of approximately $13.70 billion at December 31, 2025.
We are responsible for the payment of dividends to our stockholders and interest and principal on our outstanding indebtedness. As a source of internal liquidity, we have access to the capital markets. We also may continue periodic offerings of debt and equity securities.
As a separate entity from the bank, we also have separate liquidity obligations. We are responsible for the payment of dividends to our stockholders and interest and principal on our outstanding indebtedness. As a source of internal liquidity, we have access to the capital markets. We also may continue periodic offerings of debt and equity securities.
Previously the amortization of the investment was included in other non-interest expenses. Changes in other operating expenses from 2023 to 2024 are detailed in Note 15 - “ Other Operating Income and Expenses, ” to the Consolidated Financial Statements.
Previously the amortization of the investment was included in other non-interest expenses. Changes in other operating expenses from 2024 to 2025 are detailed in Note 14 - “ Other Operating Income and Expenses, ” to the Consolidated Financial Statements.
At December 31, 2024, we forecasted a slightly lower national unemployment rate and moderately higher national GDP compared to December 31, 2023. At December 31, 2023, we forecasted a slightly lower national unemployment rate and moderately higher national GDP compared to December 31, 2022.
At December 31, 2025, we forecasted a moderately higher national GDP and national unemployment rate unchanged compared to December 31, 2024. At December 31, 2024, we forecasted a slightly lower national unemployment rate and moderately higher national GDP compared to December 31, 2023.
Loan fees of $15,381, $13,752 and $19,605 are included in interest income in 2024, 2023, and 2022, respectively. (2) Amortization of acquired loan premiums of $186, $197 and $161 is included in interest income in 2024, 2023 and 2022, respectively. (3) Interest income and yields are presented on a fully taxable equivalent basis using a tax rate of 21%.
Loan fees of $19,761, $15,381 and $13,752 are included in interest income in 2025, 2024, and 2023, respectively. (2) Amortization of acquired loan premiums of $200, $186 and $197 is included in interest income in 2025, 2024 and 2023, respectively. (3) Interest income and yields are presented on a fully taxable equivalent basis using a tax rate of 21%.
The ACL on unfunded loan commitments is classified as a liability account on the balance sheet within other liabilities, while the corresponding provision for these credit losses is recorded as a component of other expense. The allowance for credit losses on unfunded commitments was $608,000 as of December 31, 2024 and $575,000 as of December 31, 2023.
The ACL on unfunded loan commitments is classified as a liability account on the balance sheet within other liabilities, while the corresponding provision for these credit losses is recorded as a component of provision of credit loss. The allowance for credit losses on unfunded commitments was $572,000 as of December 31, 2025 and $608,000 as of December 31, 2024.
Net credit charge-offs to average loans were 0.09% for the year ended December 31, 2024, compared to 0.10% and 0.08% for the years ended December 31, 2023 and 2022, respectively.
Net credit charge-offs to average loans were 0.21% for the year ended December 31, 2025, compared to 0.09% and 0.10% for the years ended December 31, 2024 and 2023, respectively.
These lines are subject to certain restrictions. Federal funds purchased from correspondent banks averaged $1.44 billion, $1.29 billion, and $1.53 billion for 2024, 2023 and 2022, respectively. We paid average interest rates on these funds of 5.27%, 5.18%, and 1.72% for the same three years, respectively.
These lines are subject to certain restrictions. Federal funds purchased from correspondent banks averaged $1.80 billion, $1.44 billion, and $1.29 billion for 2025, 2024 and 2023, respectively. We paid average interest rates on these funds of 4.37%, 5.27%, and 5.18% for the same three years, respectively.
As of December 31, 2024, our liquid assets, represented by cash and due from banks, federal funds sold and unpledged available-for-sale securities, totaled $2.73 billion. The Bank had loans pledged to both the FHLB and the Federal Reserve Bank of Atlanta, which provided approximately $3.07 billion and $2.11 billion, respectively, in available funding.
As of December 31, 2025, our liquid assets, represented by cash and due from banks, federal funds sold and unpledged available-for-sale securities, totaled $2.12 billion. The Bank had loans pledged to both the FHLB and the Federal Reserve Bank of Atlanta, which provided approximately $3.20 billion and $2.30 billion, respectively, in available funding.
Net Income Available to Common Stockholders Net income available to common stockholders was $227.2 million for the year ended December 31, 2024, compared to $206.8 million for the year ended December 31, 2023. The increase in net income was primarily attributable to an increase in net interest income.
Net Income Available to Common Stockholders Net income available to common stockholders was $276.5 million for the year ended December 31, 2025, compared to $227.2 million for the year ended December 31, 2024. The increase in net income was primarily attributable to an increase in net interest income.
We had 630 full-time equivalent employees as of December 31, 2024 compared to 591 as of December 31, 2023 Equipment and occupancy expense increased $224,000, or 1.6%, to $14.5 million for the year ended December 31, 2024 compared to $14.3 million for the same period in 2023.
We had 666 full-time equivalent employees as of December 31, 2025 compared to 630 as of December 31, 2024. Equipment and occupancy expense increased $78,000, or .5%, to $14.6 million for the year ended December 31, 2025 compared to $14.5 million for the same period in 2024.
When a workout is not achievable, we move to collection/foreclosure proceedings to obtain control of the underlying collateral as rapidly as possible to minimize the deterioration of collateral and/or the loss of its value. ● We require updated financial information, global inventory aging and interest carry analysis for existing customers to help identify potential future loan payment problems. ● We generally limit loans for new construction to established builders and developers that have an established record of turning their inventories, and we restrict our funding of undeveloped lots and land. 52 Nonperforming Assets The table below summarizes our nonperforming assets at December 31, 2024, 2023 and 2022: 2024 2023 2022 Number Number Number Balance of Loans Balance of Loans Balance of Loans (Dollars in Thousands) Nonaccrual loans: Commercial, financial and agricultural $ 25,692 54 $ 7,217 35 $ 7,108 18 Real estate - construction - - 111 1 - - Real estate - mortgage: Owner-occupied commercial 8,744 14 7,089 14 3,312 3 1-4 family mortgage 3,051 24 4,426 41 1,524 16 Non-owner occupied commercial 1,259 2 506 2 506 2 Total real estate - mortgage 13,054 40 12,021 57 5,342 21 Consumer 755 1 - - - - Total nonaccrual loans $ 39,501 95 $ 19,349 93 $ 12,450 39 90+ days past due and accruing: Commercial, financial and agricultural $ 38 4 $ 170 8 $ 195 26 Real estate - construction 661 2 - - - - Real estate - mortgage: Owner-occupied commercial - - - - - - 1-4 family mortgage 2,240 7 1,909 9 594 5 Non-owner occupied commercial - - - - 4,512 1 Total real estate - mortgage 2,240 7 1,909 9 5,106 6 Consumer 26 21 105 16 90 44 Total 90+ days past due and accruing $ 2,965 34 $ 2,184 33 $ 5,391 76 Total nonperforming loans $ 42,466 129 $ 21,533 126 $ 17,841 115 Plus: Other real estate owned and repossessions 2,531 8 995 7 248 2 Total nonperforming assets $ 44,997 137 $ 22,528 133 $ 18,089 117 Restructured accruing loans: Commercial, financial and agricultural $ - - $ - - $ 2,480 5 Real estate - construction - - - - - - Real estate - mortgage: Owner-occupied commercial - - - - - - 1-4 family mortgage - - - - - - Non-owner occupied commercial - - - - - - Total real estate - mortgage - - - - - - Consumer - - - - - - Total restructured accruing loans $ - - $ - - $ 2,480 5 Total nonperforming assets and restructured accruing loans $ 44,997 137 $ 22,528 133 $ 20,569 122 Ratios: Nonperforming loans to total loans 0.34 % 0.18 % 0.15 % Nonperforming assets to total loans plus other real estate owned and repossessions 0.36 % 0.19 % 0.15 % Nonperforming assets and restructured accruing loans to total loans plus other real estate owned and repossessions 0.36 % 0.19 % 0.18 % The accrual of interest on loans is discontinued when there is a significant deterioration in the financial condition of the borrower and full repayment of principal and interest is not expected or the principal or interest is more than 90 days past due, unless the loan is both well-collateralized and in the process of collection.
When a workout is not achievable, we move to collection/foreclosure proceedings to obtain control of the underlying collateral as rapidly as possible to minimize the deterioration of collateral and/or the loss of its value. ● We require updated financial information, global inventory aging and interest carry analysis for existing customers to help identify potential future loan payment problems. ● We generally limit loans for new construction to established builders and developers that have an established record of turning their inventories, and we restrict our funding of undeveloped lots and land. 46 Nonperforming Assets The table below summarizes our nonperforming assets at December 31, 2025, 2024 and 2023: 2025 2024 2023 Number Number Number Balance of Loans Balance of Loans Balance of Loans (Dollars in Thousands) Nonaccrual loans: Commercial, financial and agricultural $ 26,756 55 $ 25,692 54 $ 7,217 35 Real estate - construction 35,885 8 - - 111 1 Real estate - mortgage: Owner-occupied commercial 13,578 17 8,744 14 7,089 14 1-4 family mortgage 9,440 34 3,051 24 4,426 41 Non-owner occupied commercial 81,977 13 1,259 2 506 2 Total real estate - mortgage 104,995 64 13,054 40 12,021 57 Consumer 715 2 755 1 - - Total nonaccrual loans $ 168,351 129 $ 39,501 95 $ 19,349 93 90+ days past due and accruing: Commercial, financial and agricultural $ 101 10 $ 38 4 $ 170 8 Real estate - construction - - 661 2 - - Real estate - mortgage: Owner-occupied commercial - - - - - - 1-4 family mortgage 323 2 2,240 7 1,909 9 Non-owner occupied commercial - - - - - - Total real estate - mortgage 323 2 2,240 7 1,909 9 Consumer 54 28 26 21 105 16 Total 90+ days past due and accruing $ 478 40 $ 2,965 34 $ 2,184 33 Total nonperforming loans $ 168,829 169 $ 42,466 129 $ 21,533 126 Plus: Other real estate owned and repossessions 2,583 9 2,531 8 995 7 Total nonperforming assets $ 171,412 178 $ 44,997 137 $ 22,528 133 Ratios: Nonperforming loans to total loans 1.23 % 0.34 % 0.18 % Nonperforming assets to total loans plus other real estate owned and repossessions 1.25 % 0.36 % 0.19 % Nonperforming assets and restructured accruing loans to total loans plus other real estate owned and repossessions 1.25 % 0.36 % 0.19 % The accrual of interest on loans is discontinued when there is a significant deterioration in the financial condition of the borrower and full repayment of principal and interest is not expected or the principal or interest is more than 90 days past due, unless the loan is both well-collateralized and in the process of collection.
Earning assets as of December 31, 2023 were $15.85 billion, or 98.25% of total assets of $16.13 billion. We believe this ratio is expected to generally continue at these levels, although it may be affected by economic factors beyond our control. 46 Investment Portfolio We view the investment portfolio as a source of income and liquidity.
Earning assets as of December 31, 2024 were $17.05 billion, or 98.27% of total assets of $17.35 billion. We believe this ratio is expected to generally continue at these levels, although it may be affected by economic factors beyond our control. 40 Investment Portfolio We view the investment portfolio as a source of income and liquidity.
Average assets for the year ended December 31, 2024 were $16.33 billion, an increase of $1.27 billion, or 8.40%, over average assets of $15.07 billion for the year ended December 31, 2023. Growth in loans and interest-bearing balances with banks were the primary reasons for the increase in ending and average total assets.
Average assets for the year ended December 31, 2025 were $17.75 billion, an increase of $1.41 billion, or 8.65%, over average assets of $16.33 billion for the year ended December 31, 2024. Growth in loans and interest-bearing balances with banks were the primary reasons for the increase in ending and average total assets.
(4) Unrealized losses of $(60,030), $(74,519) and $(30,770) are excluded from the yield calculation in 2024, 2023, and 2022, respectively.
(4) Unrealized losses of $(26,700), $(60,030) and $(74,519) are excluded from the yield calculation in 2025, 2024, and 2023, respectively.
Our average interest-bearing liabilities increased $1.32 billion, or 12.3%, to $12.10 billion for the year ended December 31, 2024 from $10.78 billion for the year ended December 31, 2023.
Our average interest-bearing liabilities increased $1.12 billion, or 9.3%, to $13.22 billion for the year ended December 31, 2025 from $12.10 billion for the year ended December 31, 2024.
The following table presents the allocation of the allowance for credit losses for each respective loan category with the corresponding percent of loans in each category to total loans: For the Years Ended December 31, 2024 2023 2022 Percentage Percentage Percentage of Loans in of Loans in of Loans in Each Each Each Category to Category to Category to Amount Total Loans Amount Total Loans Amount Total Loans (Dollars in Thousands) Commercial, financial and agricultural $ 55,330 22.77 % $ 52,121 24.22 % $ 42,830 26.91 % Real estate - construction 38,597 11.81 44,658 13.03 42,889 13.11 Owner-occupied commercial 22,302 20.21 17,702 19.36 16,843 18.82 1-4 family mortgage 14,096 11.46 12,029 10.72 12,219 9.81 Non-owner occupied commercial 31,328 33.17 25,395 32.12 29,590 30.78 Consumer 2,805 0.58 1,412 0.55 1,926 0.57 Total $ 164,458 100.00 % $ 153,317 100.00 % $ 146,297 100.00 % 51 The Company assesses the adequacy of its ACL at the end of each calendar quarter.
The following table presents the allocation of the allowance for credit losses for each respective loan category with the corresponding percent of loans in each category to total loans: For the Years Ended December 31, 2025 2024 2023 Percentage Percentage Percentage of Loans in of Loans in of Loans in Each Each Each Category to Category to Category to Amount Total Loans Amount Total Loans Amount Total Loans (Dollars in Thousands) Commercial, financial and agricultural $ 63,620 22.97 % $ 55,330 22.77 % $ 52,121 24.22 % Real estate - construction 22,432 10.64 38,597 11.81 44,658 13.03 Owner-occupied commercial 18,833 20.00 22,302 20.21 17,702 19.36 1-4 family mortgage 24,739 12.21 14,096 11.46 12,029 10.72 Non-owner occupied commercial 38,971 33.61 31,328 33.17 25,395 32.12 Consumer 3,088 0.57 2,805 0.58 1,412 0.55 Total $ 171,683 100.00 % $ 164,458 100.00 % $ 153,317 100.00 % 45 The Company assesses the adequacy of its ACL at the end of each calendar quarter.
The following tables present a summary of our statements of income, including the percent change in each category, for the years ended December 31, 2024 compared to 2023, and for the years ended December 31, 2023 compared to 2022, respectively: Year Ended December 31, 2024 2023 Change from the Prior Year (Dollars in Thousands) Interest income $ 946,121 $ 813,246 16.3 % Interest expense 499,462 402,309 24.1 % Net interest income 446,659 410,937 8.7 % Provision for credit losses 21,587 18,715 15.3 % Net interest income after provision for credit losses 425,072 392,222 8.4 % Noninterest income 35,056 30,417 15.3 % Noninterest expense 181,146 178,051 1.7 % Income before income taxes 278,982 244,588 14.1 % Income taxes 51,740 37,735 37.1 % Net income 227,242 206,853 9.9 % Dividends on preferred stock 62 62 - % Net income available to common stockholders $ 227,180 $ 206,791 9.9 % Year Ended December 31, 2023 2022 Change from the Prior Year (Dollars in Thousands) Interest income $ 813,246 $ 559,315 45.4 % Interest expense 402,309 88,423 355.0 % Net interest income 410,937 470,892 (12.7 )% Provision for credit losses 18,715 37,607 (50.2 )% Net interest income after provision for credit losses 392,222 433,285 (9.5 )% Noninterest income 30,417 33,359 (8.8 )% Noninterest expense 178,051 157,816 12.8 % Income before income taxes 244,588 308,828 (20.8 )% Income taxes 37,735 57,324 (34.2 )% Net income 206,853 251,504 (17.8 )% Dividends on preferred stock 62 62 - % Net income available to common stockholders $ 206,791 $ 251,442 (17.8 )% 41 Performance Ratios The following table presents selected ratios of our results of operations for the years ended December 31, 2024, 2023 and 2022: For the Years Ended December 31, 2024 2023 2022 Return on average assets 1.39 % 1.37 % 1.71 % Return on average stockholders' equity 14.98 % 15.13 % 20.73 % Dividend payout ratio 29.82 % 30.06 % 19.17 % Net interest margin (1) 2.82 % 2.81 % 3.32 % Efficiency ratio (2) 37.60 % 40.34 % 31.30 % Average stockholders' equity to average total assets 9.29 % 9.07 % 7.33 % (1) Net interest margin is the net yield on interest earning assets and is the difference between the interest yield earned on interest-earning assets and interest rate paid on interest-bearing liabilities, divided by average earning assets.
The following tables present a summary of our statements of income, including the percent change in each category, for the years ended December 31, 2025 compared to 2024, and for the years ended December 31, 2024 compared to 2023, respectively: Year Ended December 31, 2025 2024 Change from the Prior Year (Dollars in Thousands) Interest income $ 990,427 $ 946,121 4.7 % Interest expense 455,218 499,462 (8.9 )% Net interest income 535,209 446,659 19.8 % Provision for credit losses 35,311 21,587 63.6 % Net interest income after provision for credit losses 499,898 425,072 17.6 % Noninterest income 27,222 35,056 (22.3 )% Noninterest expense 184,990 181,146 2.1 % Income before income taxes 342,130 278,982 22.6 % Income taxes 65,527 51,740 26.6 % Net income 276,603 227,242 21.7 % Dividends on preferred stock 62 62 - % Net income available to common stockholders $ 276,541 $ 227,180 21.7 % Year Ended December 31, 2024 2023 Change from the Prior Year (Dollars in Thousands) Interest income $ 946,121 $ 813,246 16.3 % Interest expense 499,462 402,309 24.1 % Net interest income 446,659 410,937 8.7 % Provision for credit losses 21,587 18,715 15.3 % Net interest income after provision for credit losses 425,072 392,222 8.4 % Noninterest income 35,056 30,417 15.3 % Noninterest expense 181,146 178,051 1.7 % Income before income taxes 278,982 244,588 14.1 % Income taxes 51,740 37,735 37.1 % Net income 227,242 206,853 9.9 % Dividends on preferred stock 62 62 - % Net income available to common stockholders $ 227,180 $ 206,791 9.9 % 35 Performance Ratios The following table presents selected ratios of our results of operations for the years ended December 31, 2025, 2024 and 2023: For the Years Ended December 31, 2025 2024 2023 Return on average assets 1.56 % 1.39 % 1.37 % Return on average stockholders' equity 16.05 % 14.98 % 15.13 % Dividend payout ratio 26.88 % 29.82 % 30.06 % Net interest margin (1) 3.12 % 2.82 % 2.81 % Efficiency ratio (2) 32.89 % 37.60 % 40.34 % Average stockholders' equity to average total assets 9.71 % 9.29 % 9.07 % (1) Net interest margin is the net yield on interest earning assets and is the difference between the interest yield earned on interest-earning assets and interest rate paid on interest-bearing liabilities, divided by average earning assets.
The ratio of net charged-off loans to average loans was 0.09% for 2024 compared to 0.10% for 2023. The ACL for December 31, 2024 totaled $164.5 million, or 1.30% of loans, net of unearned income. The ACL totaled $153.3 million, or 1.32% of loans, net of unearned income, at December 31, 2023.
The ratio of net charged-off loans to average loans was 0.21% for 2025 compared to 0.09% for 2024. The ACL for December 31, 2025 totaled $171.7 million, or 1.25% of loans, net of unearned income. The ACL totaled $164.5 million, or 1.30% of loans, net of unearned income, at December 31, 2024.
We maintain a higher level of earning assets in our business model than do our peers because we allocate fewer of our resources to facilities, ATMs, and cash and due-from-bank accounts used for transaction processing. Earning assets as of December 31, 2024 were $17.05 billion, or 98.27% of total assets of $17.35 billion.
We maintain a higher level of earning assets in our business model than our peers because we allocate fewer of our resources to brick and mortar facilities, ATMs, and cash and due-from-bank accounts used for transaction processing. Earning assets as of December 31, 2025 were $16.91 billion, or 95.37% of total assets of $17.73 billion.
Nonaccrual loans increased to $39.5 million, or 0.31% of total loans, at December 31, 2024 from $19.3 million, or 0.17% of total loans, at December 31, 2023, and were $12.5 million, or 0.11% of total loans, at December 31, 2022.
Nonaccrual loans increased to $168.4 million, or 1.23% of total loans, at December 31, 2025 from $39.5 million, or 0.31% of total loans, at December 31, 2024, and were $19.3 million, or 0.17% of total loans, at December 31, 2023.
The following table sets forth (i) the capital ratios of the Bank required by the FDIC to maintain “well-capitalized” status and (ii) our actual ratios of capital to total regulatory or risk-weighted assets, as of December 31, 2024: Well-Capitalized Actual at December 31, 2024 CET 1 Capital Ratio 6.50 % 11.83 % Tier 1 Capital Ratio 8.00 % 11.84 % Total Capital Ratio 10.00 % 12.99 % Leverage ratio 5.00 % 9.94 % For a description of capital ratios see Note 14 - “ Regulatory Matters ” to the Consolidated Financial Statements.
In addition, the Alabama Banking Department has required that the Bank maintain a leverage ratio of at least 8.00%. 50 The following table sets forth (i) the capital ratios of the Bank required by the FDIC to maintain “well-capitalized” status and (ii) our actual ratios of capital to total regulatory or risk-weighted assets, as of December 31, 2025: Well-Capitalized Actual at December 31, 2025 CET 1 Capital Ratio 6.50 % 11.65 % Tier 1 Capital Ratio 8.00 % 11.66 % Total Capital Ratio 10.00 % 12.93 % Leverage ratio 5.00 % 10.26 % For a description of capital ratios see Note 13 - “ Regulatory Matters ” to the Consolidated Financial Statements.
Our investment strategy is to accept a lower immediate yield in the investment portfolio by targeting shorter term investments. At December 31, 2024, mortgage-backed securities represented 34.5% of the investment portfolio, corporate debt represented 17.5% of the investment portfolio, state and municipal securities represented 0.9% of the investment portfolio, and U.S. Treasury securities represented 47.0% of the investment portfolio.
Our investment strategy is to accept a lower immediate yield in the investment portfolio by targeting shorter term investments. At December 31, 2025, mortgage-backed securities represented 29.8% of the investment portfolio, corporate debt represented 23.9% of the investment portfolio, state and municipal securities represented 1.1% of the investment portfolio, and U.S. Treasury securities represented 45.3% of the investment portfolio.
Year-end 2024 total loans were $12.61 billion, an increase of $947.0 million, or 8.1%, over year-end 2023 total loans of $11.66 billion. Earning assets include loans, securities, short-term investments and bank-owned life insurance contracts.
Year-end 2025 total loans were $13.70 billion, an increase of $1.09 billion, or 8.7%, over year-end 2024 total loans of $12.61 billion. Earning assets include loans, securities, short-term investments and bank-owned life insurance contracts.
The maximum amount outstanding at a month-end during 2024 and 2023 was $1.99 billion and $1.48 billion, respectively. Stockholders ’ Equity Stockholders’ equity increased $176.4 million during 2024, to $1.62 billion as of December 31, 2024 from $1.44 billion as of December 31, 2023.
The maximum amount outstanding at a month-end during 2025 and 2024 was $2.36 billion and $1.99 billion, respectively. Stockholders ’ Equity Stockholders’ equity increased $233.6 million during 2025, to $1.85 billion as of December 31, 2025 from $1.62 billion as of December 31, 2024.
The increase in stockholders’ equity resulted primarily from net income of $227.2 million during the year ended December 31, 2024, less dividends paid or declared on our common stock of $67.4 million during the year ended December 31, 2024.
The increase in stockholders’ equity resulted primarily from net income of $276.5 million during the year ended December 31, 2025, less dividends paid or declared on our common stock of $75.6 million during the year ended December 31, 2025.
The uninsured deposit data for 2024 and 2023 reflects the deposit insurance impact of “combined ownership segregation” of escrow and other accounts at an aggregate level but does not reflect an evaluation of all of the account styling distinctions that would determine the availability of deposit insurance to individual accounts based on FDIC regulations.
The uninsured deposit data for 2025 and 2024 reflects the deposit insurance impact of “combined ownership segregation” of escrow and other accounts at an aggregate level but does not reflect an evaluation of all of the account styling distinctions that would determine the availability of deposit insurance to individual accounts based on FDIC regulations. 47 The following table presents the portion of our time deposits in excess of insurance limit as of December 31, 2025.
See “—Quantitative and Qualitative Analysis of Market Risk” below in Item 7A for additional information. 55 Liquidity and Capital Adequacy Sources and Uses of Funds The following table illustrates, during the years presented, the mix of our funding sources and the assets in which those funds are invested as a percentage of our average total assets for the period indicated.
Liquidity and Capital Adequacy Sources and Uses of Funds The following table illustrates, during the years presented, the mix of our funding sources and the assets in which those funds are invested as a percentage of our average total assets for the period indicated.
The following table presents the average balance and average rate paid on each of the following deposit categories at the bank level for years ended December 31, 2024, 2023 and 2022: 53 For Year Ended December 31, 2024 2023 2022 Average Balance Yields/Rates Average Balance Yields/Rates Average Balance Yields/Rates Types of Deposits: (Dollars in Thousands) Non-interest-bearing demand deposits $ 2,609,137 - % $ 2,857,831 - % $ 4,415,972 - % Interest-bearing demand deposits 2,282,599 2.81 % 1,928,133 2.24 % 1,695,738 0.36 % Money market accounts 7,005,057 4.30 % 6,347,456 3.95 % 4,770,568 0.91 % Savings accounts 104,581 1.69 % 119,049 1.39 % 138,917 0.30 % Time deposits 1,201,756 4.45 % 1,010,683 3.58 % 757,327 1.17 % Brokered time deposits - - % - - % 50,000 1.68 % Total deposits $ 13,203,130 $ 12,263,152 $ 11,828,522 At December 31, 2024, 2023, and 2022 we estimate that we had approximately $9.03 billion, $8.76 billion and $7.66 billion, respectively, in total uninsured deposits.
The following table presents the average balance and average rate paid on each of the following deposit categories at the bank level for years ended December 31, 2025, 2024 and 2023: For Year Ended December 31, 2025 2024 2023 Average Balance Yields/Rates Average Balance Yields/Rates Average Balance Yields/Rates Types of Deposits: (Dollars in Thousands) Non-interest-bearing demand deposits $ 2,654,480 - % $ 2,609,137 - % $ 2,857,831 - % Interest-bearing demand deposits 2,219,996 2.03 % 2,282,599 2.81 % 1,928,133 2.24 % Money market accounts 7,682,961 3.55 % 7,005,057 4.30 % 6,347,456 3.95 % Savings accounts 103,444 1.60 % 104,581 1.69 % 119,049 1.39 % Time deposits 1,355,048 4.03 % 1,201,756 4.45 % 1,010,683 3.58 % Total deposits $ 14,015,929 $ 13,203,130 $ 12,263,152 At December 31, 2025, 2024, and 2023 we estimate that we had approximately $9.69 billion, $9.03 billion and $8.76 billion, respectively, in total uninsured deposits.
The increase in net interest spread and net interest margin was primarily attributable to increases in the average balance and the interest earned from loans, which increased $548.0 million and $88.8 million, respectively, in 2024.
The increase in net interest spread and net interest margin was primarily attributable to increases in the average balance and the interest earned from loans, which increased $958.9 million and $40.7 million, respectively, in 2025.
Specific allocations of the allowance for credit losses are estimated on one of several methods, including the estimated fair value of the underlying collateral, observable market value of similar debt or the present value of expected cash flows.
Individual evaluations are performed for nonaccrual loans, loans rated substandard, and modified loans classified as troubled debt restructurings. Specific allocations of the allowance for credit losses are estimated on one of several methods, including the estimated fair value of the underlying collateral, observable market value of similar debt or the present value of expected cash flows.
Average earning assets increased 8.4% in 2024 from 2023, which was primarily driven by an increase of 4.7% in average loans. A majority of our regional markets grew loans during 2024. Average interest-bearing liabilities increased 12.3% in 2024 from 2023. The increase in interest-bearing deposits was mostly attributable to the organic growth of our deposit base.
A majority of our regional markets grew loans during 2025. Average interest-bearing liabilities increased 9.3% in 2025 from 2024. The increase in interest-bearing deposits was mostly attributable to the organic growth of our deposit base.
We also recognized excess tax benefits as an income tax credit to our income tax expense from the exercise and vesting of stock options and restricted stock during 2024 of $1.3 million, compared to $1.5 million during 2023.
We recognized $44.5 million in credits during 2025 and $15.4 million during 2024, related to new investments in Federal New Market Tax Credits. We also recognized excess tax benefits as an income tax credit to our income tax expense from the exercise and vesting of stock options and restricted stock during 2025 of $798,000, compared to $1.3 million during 2024.
FDIC assessments decreased $4.9 million, or 31.6%, to $10.7 million for the year ended December 31, 2024 compared to $15.6 million for the same period in 2023. The FDIC implemented a special assessment to recapitalize the Deposit Insurance Fund resulting in an expense of $1.8 million during 2024, and $7.2 million during 2023.
FDIC assessments increased $303,000, or 2.8%, to $11.0 million for the year ended December 31, 2025 compared to $10.7 million for the same period in 2024. The FDIC implemented a special assessment to recapitalize the Deposit Insurance Fund resulting in an additional $1.8 million during 2024.
Treasury Securities - % 1.38 % - % - % 1.38 % Mortgage-backed securities - - 2.52 2.72 2.72 State and municipal securities 3.21 1.96 1.77 - 1.99 Total weighted average yield (2) 3.21 % 1.39 % 2.49 % 2.72 % 2.24 % (1) Yields on tax-exempt securities are computed on a fully tax-equivalent basis using a tax rate of 21% and are net of the effects of certain disallowed interest deductions.
Treasury Securities 1.15 % 1.44 % - % - % 1.38 % Mortgage-backed securities - 2.31 2.19 2.78 2.75 State and municipal securities 2.07 1.99 - - 2.03 Total weighted average yield (2) 1.21 % 1.46 % 2.19 % 2.78 % 2.22 % (1) Yields on tax-exempt securities are computed on a fully tax-equivalent basis using a tax rate of 21% and are net of the effects of certain disallowed interest deductions.
Third party processing and other services increased $3.3 million, or 11.9%, to $31.2 million for the year ended December 31, 2024 compared to $27.9 million for the same period in 2023. Professional services expense increased $985,000, or 16.6%, to $6.9 million for the year ended December 31, 2024 compared to $5.9 million for the same period in 2023.
Third party processing and other services increased $436,000, or 1.4%, to $31.6 million for the year ended December 31, 2025 compared to $31.2 million for the same period in 2024. Professional services expense increased $274,000, or 4.0%, to $7.2 million for the year ended December 31, 2025 compared to $6.9 million for the same period in 2024.
We use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments. 54 The following table sets forth our credit arrangements and financial instruments whose contract amounts represent credit risk as of December 31, 2024, 2023 and 2022: 2024 2023 2022 (In Thousands) Commitments to extend credit $ 3,552,958 $ 3,410,283 $ 4,230,485 Credit card arrangements 366,843 381,524 368,749 Standby letters of credit and financial guarantees 125,147 86,065 67,285 Total $ 4,044,948 $ 3,877,872 $ 4,666,519 Commitments to extend credit beyond current fundings are agreements to lend to a customer as long as there is no violation of any condition established in the contract.
The following table sets forth our credit arrangements and financial instruments whose contract amounts represent credit risk as of December 31, 2025, 2024 and 2023: 2025 2024 2023 (In Thousands) Commitments to extend credit $ 3,779,178 $ 3,552,958 $ 3,410,283 Credit card arrangements 395,780 366,843 381,524 Standby letters of credit and financial guarantees 117,371 125,147 86,065 Total $ 4,292,329 $ 4,044,948 $ 3,877,872 48 Commitments to extend credit beyond current fundings are agreements to lend to a customer if there is no violation of any condition established in the contract.
Portion of Time Deposits in Excess of Insurance Limit December 31, 2024 Time Deposits Otherwise Uninsured With a Maturity of: (In Thousands) 3 months or less $ 133,277 Over 3 months through 6 months 89,273 Over 6 months through 12 months 103,565 Over 12 months 25,790 Total $ 351,905 Borrowed Funds We had $457.0 million in unused and available federal funds lines of credit with regional banks as of December 31, 2024, compared to $880.0 million as of December 31, 2023.
Portion of Time Deposits in Excess of Insurance Limit December 31, 2025 Time Deposits Otherwise Uninsured With a Maturity of: (In Thousands) 3 months or less $ 222,214 Over 3 months through 6 months 55,734 Over 6 months through 12 months 68,702 Over 12 months 97,958 Total $ 444,608 Borrowed Funds We had $372.0 million in unused and available federal funds lines of credit with regional banks as of December 31, 2025, compared to $457.0 million as of December 31, 2024.
This table is presented on a taxable equivalent basis, if applicable. 42 Average Balance Sheets and Net Interest Analysis On a Fully Taxable-Equivalent Basis For the Year Ended December 31, (In thousands, except Average Yields and Rates) 2024 2023 2022 Average Balance Interest Earned / Paid Average Yield / Rate Average Balance Interest Earned / Paid Average Yield / Rate Average Balance Interest Earned / Paid Average Yield / Rate Assets: Interest-earning assets: Loans, net of unearned income (1)(2): Taxable $ 12,134,929 $ 787,361 6.49 % $ 11,584,541 $ 698,177 6.03 % $ 10,544,193 $ 498,810 4.73 % Tax-exempt (3) 15,896 434 2.73 18,271 834 4.56 22,026 1,055 4.79 Total loans, net of unearned income 12,150,825 787,795 6.48 11,602,812 699,011 6.02 10,566,219 499,865 4.73 Mortgage loans held for sale 7,974 401 5.03 4,293 259 6.03 1,460 43 2.95 Debt securities: Taxable 1,959,488 66,443 3.39 1,881,074 53,456 2.84 1,712,715 40,767 2.38 Tax-exempt (3) 980 39 3.98 2,716 79 2.91 6,658 172 2.58 Total debt securities (4) 1,960,468 66,482 3.39 1,883,790 53,535 2.84 1,719,373 40,939 2.38 Federal funds sold 19,770 1,128 5.71 53,376 2,844 5.33 58,307 1,556 2.67 Restricted equity securities 11,073 800 7.22 9,359 673 7.19 7,637 353 4.62 Interest-bearing balances with banks 1,698,962 89,522 5.27 1,066,159 57,064 5.35 1,832,215 16,811 0.92 Total interest-earning assets $ 15,849,072 $ 946,128 5.97 % $ 14,619,789 $ 813,386 5.56 % $ 14,185,211 $ 559,567 3.94 % Non-interest-earning assets: Cash and due from banks 100,639 105,140 162,855 Net premises and equipment 60,276 60,335 60,586 Allowance for loan losses, accrued interest and other assets 323,396 281,946 294,823 Total assets $ 16,333,383 $ 15,067,210 $ 14,703,475 Interest-bearing liabilities: Interest-bearing deposits: Interest-bearing demand deposits $ 2,282,599 $ 64,151 2.81 % $ 1,928,133 $ 43,265 2.24 % $ 1,695,738 $ 6,157 0.36 % Savings 104,581 1,763 1.69 119,049 1,656 1.39 138,917 421 0.30 Money market 7,005,057 301,212 4.30 6,347,456 250,674 3.95 4,770,568 43,335 0.91 Time deposits (5) 1,201,756 53,525 4.45 1,010,683 36,144 3.58 807,327 9,483 1.17 Total interest-bearing deposits 10,593,993 420,651 3.97 9,405,321 331,739 3.53 7,412,550 59,396 0.80 Federal funds purchased 1,444,463 76,064 5.27 1,288,877 66,730 5.18 1,528,866 26,267 1.72 Other borrowings 64,737 2,655 4.10 86,102 3,839 4.46 64,716 2,760 4.26 Total interest-bearing liabilities $ 12,103,193 $ 499,370 4.13 % $ 10,780,300 $ 402,308 3.73 % $ 9,006,132 $ 88,423 0.98 % Non-interest-bearing liabilities: Non-interest-bearing checking 2,609,137 2,857,831 4,415,972 Other liabilities 104,198 62,369 68,393 Stockholders' equity 1,559,213 1,418,189 1,232,460 Unrealized gains on securities (42,358 ) (51,479 ) (19,482 ) Total liabilities and stockholders' equity $ 16,333,383 $ 15,067,210 $ 14,703,475 Net interest income $ 446,758 $ 411,078 $ 471,144 Net interest spread 1.84 % 1.83 % 2.96 % Net interest margin (5) 2.82 % 2.81 % 3.32 % (1) Non-accrual loans are included in average loan balances in all periods.
This table is presented on a taxable equivalent basis, if applicable. 36 Average Balance Sheets and Net Interest Analysis On a Fully Taxable-Equivalent Basis For the Year Ended December 31, (In thousands, except Average Yields and Rates) 2025 2024 2023 Average Balance Interest Earned / Paid Average Yield / Rate Average Balance Interest Earned / Paid Average Yield / Rate Average Balance Interest Earned / Paid Average Yield / Rate Assets: Interest-earning assets: Loans, net of unearned income (1)(2): Taxable $ 13,080,536 $ 826,976 6.32 % $ 12,134,929 $ 787,361 6.49 % $ 11,584,541 $ 698,177 6.03 % Tax-exempt (3) 29,153 1,567 5.38 15,896 434 2.73 18,271 834 4.56 Total loans, net of unearned income 13,109,689 828,543 6.32 12,150,825 787,795 6.48 11,602,812 699,011 6.02 Mortgage loans held for sale 9,940 482 4.85 7,974 401 5.03 4,293 259 6.03 Debt securities: Taxable 1,912,880 67,122 3.51 1,959,488 66,535 3.40 1,881,074 53,499 2.84 Tax-exempt (3) 492 26 5.28 980 39 3.98 2,716 81 2.98 Total debt securities (4) 1,913,372 67,148 3.51 1,960,468 66,574 3.40 1,883,790 53,580 2.84 Federal funds sold and securities purchased with agreement to resell 241,838 12,007 4.96 19,770 1,128 5.71 53,376 2,844 5.33 Restricted equity securities 11,994 808 6.74 11,073 800 7.22 9,359 673 7.19 Interest-bearing balances with banks 1,866,211 81,773 4.38 1,698,962 89,522 5.27 1,066,159 57,063 5.35 Total interest-earning assets $ 17,153,044 $ 990,761 5.78 % $ 15,849,072 $ 946,220 5.97 % $ 14,619,789 $ 813,430 5.56 % Non-interest-earning assets: Cash and due from banks 105,871 100,639 105,140 Net premises and equipment 60,304 60,276 60,335 Allowance for loan losses, accrued interest and other assets 426,849 323,396 281,946 Total assets $ 17,746,068 $ 16,333,383 $ 15,067,210 Interest-bearing liabilities: Interest-bearing deposits: Interest-bearing demand deposits $ 2,219,996 $ 45,043 2.03 % $ 2,282,599 $ 64,151 2.81 % $ 1,928,133 $ 43,265 2.24 % Savings 103,444 1,657 1.60 104,581 1,763 1.69 119,049 1,656 1.39 Money market 7,682,961 272,644 3.55 7,005,057 301,211 4.30 6,347,456 250,675 3.95 Time deposits (5) 1,355,048 54,544 4.03 1,201,756 53,525 4.45 1,010,683 36,144 3.58 Total interest-bearing deposits 11,361,449 373,888 3.29 10,593,993 420,650 3.97 9,405,321 331,740 3.53 Federal funds purchased and securities purchased with agreement to resell 1,799,637 78,640 4.37 1,444,463 76,064 5.27 1,288,877 66,730 5.18 Other borrowings 63,356 2,690 4.25 64,737 2,748 4.24 86,102 3,839 4.46 Total interest-bearing liabilities $ 13,224,442 $ 455,218 3.44 % $ 12,103,193 $ 499,462 4.13 % $ 10,780,300 $ 402,309 3.73 % Non-interest-bearing liabilities: Non-interest-bearing checking 2,654,480 2,609,137 2,857,831 Other liabilities 144,217 104,198 62,369 Stockholders' equity 1,741,120 1,559,213 1,418,189 Unrealized gains on securities (18,191 ) (42,358 ) (51,479 ) Total liabilities and stockholders' equity $ 17,746,068 $ 16,333,383 $ 15,067,210 Net interest income $ 535,543 $ 446,758 $ 411,121 Net interest spread 2.34 % 1.84 % 1.83 % Net interest margin (5) 3.12 % 2.82 % 2.81 % (1) Non-accrual loans are included in average loan balances in all periods.
At December 31, 2024, the nonaccrual increase was driven by a commercial, financial and agricultural relationship and a owner-occupied commercial relationship. We maintain an ACL on unfunded commercial lending commitments and letters of credit to provide for the risk of loss inherent in these arrangements.
The year-over-year nonaccrual increase from the year ended December 31, 2024 to the year ended December 31, 2025 was attributable to a large, real-estate secured relationship. We maintain an ACL on unfunded commercial lending commitments and letters of credit to provide for the risk of loss inherent in these arrangements.
Service charges on deposit accounts increased $1.0 million, or 12.0%, to $9.4 million for the year ended December 31, 2024 compared to $8.4 million for the same period in 2023. Credit card income decreased $351,000, or 4.1%, to $8.3 million for the year ended December 31, 2024 compared to $8.6 million for the same period in 2023.
Service charges on deposit accounts increased $2.5 million, or 26.0%, to $11.9 million for the year ended December 31, 2025 compared to $9.4 million for the same period in 2024. Credit card income remained flat at $8.3 million during 2025 compared to 2024.
Income Tax Expense Income tax expense was $51.7 million for the year ended December 31, 2024 compared to $37.7 million in 2023. Our effective tax rates for 2024 and 2023 were 18.5% and 15.4%, respectively.
Income Tax Expense Income tax expense was $65.5 million for the year ended December 31, 2025 compared to $51.7 million in 2024. Our effective tax rates for 2025 and 2024 were 19.15% and 18.61%, respectively. The increase in our effective tax rates reflect the proportional amortization of accounting for investment tax credits.
The Company considers factors that are relevant within the qualitative framework which include the following: lending policy, changes in nature and volume of loans, staff experience, changes in volume and trends of problem loans, concentration risk, trends in underlying collateral values, external factors, quality of loan review system and other economic conditions.
The Company considers factors that are relevant within the qualitative framework which include the following: lending policy, changes in nature and volume of loans, staff experience, changes in volume and trends of problem loans, concentration risk, trends in underlying collateral values, external factors, quality of loan review system and other economic conditions. 51 Expected credit losses for loans that no longer share similar risk characteristics with the collectively evaluated pools are excluded from the collective evaluation and estimated on an individual basis.
Results of Operations The following discussion and analysis presents the more significant factors that affected our financial condition as of December 31, 2024 and 2023 and results of operations for each of the years then ended.
For additional information regarding our segment reporting, refer to (Note 22) - “ Segment Reporting ” Notes to the Consolidated Financial Statements. 34 Results of Operations The following discussion and analysis presents the more significant factors that affected our financial condition as of December 31, 2025 and 2024 and results of operations for each of the years then ended.
Other operating income decreased $150,000, or 4.9%, to $2.9 million for the year ended December 31, 2024 compared to $3.0 million for the same period in 2023. Merchant service revenue increased $63,000, or 2.9%, to $2.3 million for the year ended December 31, 2024 compared to $2.2 million for the same period in 2023.
Merchant service revenue increased $59,000, or 2.6%, to $2.3 million for the year ended December 31, 2025 compared to $2.3 million for the same period in 2024.
The interest rate lock commitments to customers related to loans that are originated for later sale are classified as derivatives. The fair values of our agreements with investors and rate lock commitments to customers as of December 31, 2024 and 2023 were not material.
The fair values of our agreements with investors and rate lock commitments to customers as of December 31, 2025 and 2024 were not material.
The ratio of our average interest-earning assets to average interest-bearing liabilities decreased from 135.6% for the year ended December 31, 2023 to 130.9% for the year ended December 31, 2024, as average noninterest-bearing deposits and stockholders’ equity decreased by a combined $107.8 million, or 2.52%, from 2023 to 2024. 44 Our average interest-earning assets produced a taxable equivalent yield of 5.97% for the year ended December 31, 2024, compared to 5.56% for the year ended December 31, 2023.
The ratio of our average interest-earning assets to average interest-bearing liabilities decreased from 130.9% for the year ended December 31, 2024 to 129.7% for the year ended December 31, 2025, as average noninterest-bearing deposits and stockholders’ equity increased by a combined $227.3 million, or 5.45%, from 2024 to 2025.
Provision for Credit Losses The provision for credit losses represents the amount determined by management to be necessary to maintain the allowance for credit losses (“ACL”) at a level capable of absorbing expected credit losses over the contractual life of loans in the loan portfolio.
The average rate paid on interest-bearing liabilities was 3.44% for the year ended December 31, 2025, compared to 4.13% for the year ended December 31, 2024. 38 Provision for Credit Losses The provision for credit losses represents the amount determined by management to be necessary to maintain the allowance for credit losses (“ACL”) at a level capable of absorbing expected credit losses over the contractual life of loans in the loan portfolio.
Financial Condition Assets Total assets as of December 31, 2024, were $17.35 billion, an increase of $1.22 billion, or 7.6%, from total assets of $16.13 billion as of December 31, 2023.
Financial Condition Assets Total assets as of December 31, 2025, were $17.73 billion, an increase of $375.5 million, or 2.2%, from total assets of $17.35 billion as of December 31, 2024.
When a rate is committed to a borrower, it is based on the best price that day and locked with our investor for that loan for a 30-day period. In the event the loan is not delivered to the investor, the Bank has no risk or exposure with the investor.
Derivatives The Bank has entered into agreements with secondary market investors to deliver loans on a “best efforts delivery” basis. When a rate is committed to a borrower, it is based on the best price that day and locked with our investor for that loan for a 30-day period.
Nonperforming loans increased to $42.5 million, or 0.34% of total loans, at December 31, 2024 from $21.5 million, or 0.18% of total loans, at December 31, 2023. During 2024, we had net charged-off loans totaling $10.4 million, compared to net charged-off loans of $11.7 million for 2023.
Nonperforming loans increased to $168.8 million, or 1.23% of total loans, at December 31, 2025 from $42.5 million, or 0.34% of total loans, at December 31, 2024. The year-over-year increase was attributable to a large, real-estate secured relationship. During 2025, we had net charged-off loans totaling $28.1 million, compared to net charged-off loans of $10.4 million for 2024.
Noninterest Income Noninterest income for the years ended December 31, 2024 and 2023 was as follows: 2024 2023 Change Percentage Change Service charges on deposit accounts $ 9,434 $ 8,420 $ 1,014 12.0 % Mortgage banking 4,922 2,755 2,167 78.7 % Credit card income 8,280 8,631 (351 ) (4.1 )% Bank-owned life insurance income 9,533 7,574 1,959 25.9 % Other operating income 2,887 3,037 (150 ) (4.9 )% Total noninterest income $ 35,056 $ 30,417 $ 4,639 15.3 % Noninterest income increased $4.6 million, or 15.3%, to $35.1 million for the year ended December 31, 2024 compared to $30.4 million for the same period in 2023.
Noninterest Income Noninterest income for the years ended December 31, 2025 and 2024 was as follows: 2025 2024 Change Percentage Change Service charges on deposit accounts $ 11,884 $ 9,434 $ 2,450 26.0 % Mortgage banking 5,464 4,922 542 11.0 % Credit card income 8,327 8,280 47 0.6 % Securities losses (16,375 ) - (16,375 ) N/M Bank-owned life insurance income 14,817 9,533 5,284 55.4 % Other operating income 3,105 2,887 218 7.6 % Total noninterest income $ 27,222 $ 35,056 $ (7,834 ) (22.3 )% Noninterest income decreased $7.8 million, or 22.3%, to $27.2 million for the year ended December 31, 2025 compared to $35.1 million for the same period in 2024.
Bank-owned life insurance income increased $2.0 million, or 25.9%, to $9.5 million for the year ended December 31, 2024 compared to $7.6 million for the same period in 2023. The cash surrender value increased $1.6 million during 2024 compared to 2023.
The cash surrender value increased $1.0 million and we recognized $4.3 million of income attributed to a BOLI policy during 2025 compared to 2024. Other operating income increased $218,000, or 7.6%, to $3.1 million for the year ended December 31, 2025 compared to $2.9 million for the same period in 2024.
Noninterest Expense Noninterest expense for the years ended December 31, 2024 and 2023 was as follows: 2024 2023 Change Percentage Change Salaries and employee benefits $ 96,318 $ 80,965 $ 15,353 19.0 % Equipment and occupancy expense 14,519 14,295 224 1.6 % Third party processing and other services 31,181 27,872 3,309 11.9 % Professional services 6,901 5,916 985 16.6 % FDIC and other regulatory assessments 10,687 15,614 (4,927 ) (31.6 )% Other real estate owned expense 199 47 152 323.4 % Other operating expenses 21,341 33,342 (12,001 ) (36.0 )% Total noninterest expenses $ 181,146 $ 178,051 $ 3,095 1.7 % 45 Noninterest expenses increased $3.1 million, or 1.7%, to $181.1 million for the year ended December 31, 2024 compared to $178.1 million for the same period in 2023.
Noninterest Expense Noninterest expense for the years ended December 31, 2025 and 2024 was as follows: 2025 2024 Change Percentage Change Salaries and employee benefits $ 94,815 $ 96,318 $ (1,503 ) (1.6 )% Equipment and occupancy expense 14,597 14,519 78 0.5 % Third party processing and other services 31,617 31,181 436 1.4 % Professional services 7,175 6,901 274 4.0 % FDIC and other regulatory assessments 10,990 10,687 303 2.8 % Other real estate owned expense 155 199 (44 ) (22.1 )% Other operating expenses 25,641 21,341 4,300 20.1 % Total noninterest expenses $ 184,990 $ 181,146 $ 3,844 2.1 % 39 Noninterest expenses increased $3.8 million, or 2.1%, to $185.0 million for the year ended December 31, 2025 compared to $181.1 million for the same period in 2024.
Treasury Securities 4.50 % 4.25 % - % - % 4.34 % Mortgage-backed securities 4.16 2.40 2.59 2.20 2.25 State and municipal securities 2.11 1.85 2.11 - 1.90 Corporate debt 4.56 6.89 4.30 4.50 4.84 Total weighted average yield (2) 4.50 % 4.52 % 4.16 % 2.24 % 4.03 % Securities Held to Maturity: U.S.
Treasury securities 4.20 % 4.27 % - % - % 4.21 % Mortgage-backed securities 2.64 2.56 2.52 4.70 4.35 State and municipal securities 1.70 1.89 2.19 - 1.90 Corporate debt - 6.45 5.42 6.49 5.62 Total weighted average yield (2) 4.19 % 4.83 % 5.34 % 4.96 % 4.75 % Securities Held to Maturity: U.S.
Additionally, we had available to us approximately $537 million in unused federal funds lines of credit with regional banks, subject to certain restrictions and collateral requirements, to meet short term funding needs. 56 As a separate entity from the bank, we also have separate liquidity obligations.
The Bank’s policy limits on brokered deposits would allow for up to $4.43 billion in available funding for brokered deposits. Additionally, we had available to us approximately $472 million in federal funds lines of credit with regional banks, subject to certain restrictions and collateral requirements, to meet short term funding needs.
Our net interest spread and net interest margin were 1.84% and 2.82%, respectively, for the year ended December 31, 2024, compared to 1.83% and 2.81%, respectively, for the year ended December 31, 2023.
The two primary factors that make up the spread are the interest rates received on loans and the interest rates paid on deposits. Our net interest spread and net interest margin were 2.34% and 3.12%, respectively, for the year ended December 31, 2025, compared to 1.84% and 2.82%, respectively, for the year ended December 31, 2024.
Basic and diluted net income per common share was $4.17 and $4.16, respectively, for the year ended December 31, 2024, compared to $3.80 and $3.79, respectively, for the year ended December 31, 2023.
Basic and diluted net income per common share were both $5.06 for the year ended December 31, 2025, compared to $4.17 and $4.16, respectively, for the year ended December 31, 2024. Return on average assets was 1.56% in 2025, compared to 1.39% in 2024, and return on average common stockholders’ equity was 16.05% in 2025, compared to 14.98% in 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+1 added−1 removed15 unchanged
Biggest changeEconomic Value of Equity Under Rate Shock At December 31, 2024 0 bps -400 bps -300 bps -200 bps -100 bps +100 bps +200 bps +300 bps +400 bps (Dollars in Thousands) Economic value of equity $ 1,616,772 $ 1,472,879.27 $ 1,534,316.60 $ 1,584,436.53 $ 1,616,448.62 $ 1,616,448.62 $ 1,597,370.71 $ 1,587,670.08 $ 1,574,735.90 Actual dollar change $ (143,893 ) $ (82,455 ) $ (32,335 ) $ (323 ) $ (323 ) $ (19,401 ) $ (29,102 ) $ (42,036 ) Percent change -8.9 % -5.1 % -2.0 % -0.02 % -0.02 % -1.2 % -1.8 % -2.6 % The one-year gap ratio of negative (10.08)% indicates that we would show an decrease in net interest income in a rising rate environment, and the EVE rate shock shows that the EVE would increase in a rising rate environment.
Biggest changeEconomic Value of Equity Under Rate Shock At December 31, 2025 0 bps -400 bps -300 bps -200 bps -100 bps +100 bps +200 bps +300 bps +400 bps (Dollars in Thousands) Economic value of equity $ 1,849,847 $ 1,539,073.00 $ 1,761,054.00 $ 1,811,000.00 $ 1,840,598.00 $ 1,851,697.00 $ 1,836,898.00 $ 1,823,949.00 $ 1,807,301.00 Actual dollar change $ (310,774 ) $ (88,793 ) $ (38,847 ) $ (9,249 ) $ 1,850 $ (12,949 ) $ (25,898 ) $ (42,546 ) Percent change -16.8 % -4.8 % -2.1 % -0.50 % 0.1 % -0.7 % -1.4 % -2.3 % The one-year gap ratio of negative (9.62)% indicates that we would show a decrease in net interest income in a rising rate environment, and the EVE rate shock shows that the EVE would increase in a rising rate environment.
Our asset liability committee develops its view of future rate trends by monitoring economic indicators, examining the views of economists and other experts, and understanding the current status of our balance sheet and conducts a quarterly analysis of the rate sensitivity position. The results of the analysis are reported to our Board of Directors on a quarterly basis. 59
Our asset liability committee develops its view of future rate trends by monitoring economic indicators, examining the views of economists and other experts, and understanding the current status of our balance sheet and conducts a quarterly analysis of the rate sensitivity position. The results of the analysis are reported to our Board of Directors on a quarterly basis. 53
As of December 31, 2024, our gap was within such ranges. The interest rate risk model measures scheduled maturities in periods of three months, four to twelve months, one to five years and over five years. The chart below illustrates our rate-sensitive position at December 31, 2024.
As of December 31, 2025, our gap was within such ranges. The interest rate risk model measures scheduled maturities in periods of three months, four to twelve months, one to five years and over five years. The chart below illustrates our rate-sensitive position at December 31, 2025. Management uses the one-year gap as the appropriate time period for setting strategy.
After starting the year 2023 at a rate of 0.15%, the Federal Reserve increased its targeted federal funds rate by 525 basis points and ended the year 2024 at 5.40%. As of December 31, 2024, the model shows decreases in our EVE for all rate shock scenarios.
After starting the year 2024 at a rate of 4.40%, the Federal Reserve decreased its targeted federal funds rate by 75 basis points and ended the year 2025 at 3.65%. As of December 31, 2025, the model shows decreases in our EVE for most rate shock scenarios.
Removed
Management uses the one-year gap as the appropriate time period for setting strategy. 58 Rate Sensitive Gap Analysis 1-3 Months 4-12 Months 1-5 Years Over 5 Years Total (Dollars in Thousands) Interest-earning assets: Loans, including mortgages held for sale $ 6,733,862 $ 1,478,639 $ 3,834,818 $ 567,728 $ 12,615,047 Securities 143,779 377,009 1,095,748 269,534 1,886,070 Federal funds sold 1,045 - - - 1,045 Interest bearing balances with banks 2,374,580 - - - 2,374,580 Total interest-earning assets $ 9,253,266 $ 1,855,648 $ 4,930,566 $ 837,262 $ 16,876,742 Interest-bearing liabilities: Deposits: Interest-bearing checking $ 2,570,673 $ - $ - $ - $ 2,570,673 Money market and savings 7,042,577 - - - 7,042,577 Time deposits 509,534 692,762 108,222 4 1,310,522 Federal funds purchased - - 30,000 34,743 64,743 Other borrowings 1,993,728 - - - 1,993,728 Total interest-bearing liabilities 12,116,512 692,762 138,222 34,747 Interest sensitivity gap $ (2,863,245 ) $ 1,162,886 $ 4,792,343 $ 802,515 $ 3,894,499 Cumulative sensitivity gap $ (2,863,245 ) $ (1,700,359 ) $ 3,091,984 $ 3,894,499 $ - Percent of cumulative sensitivity Gap to total interest-earning assets (16.97 )% (10.08 )% 18.32 % 23.08 % The interest rate risk model that defines the gap position also performs a “rate shock” test of the balance sheet.
Added
Rate Sensitive Gap Analysis 1-3 Months 4-12 Months 1-5 Years Over 5 Years Total (Dollars in Thousands) Interest-earning assets: Loans, including mortgages held for sale $ 7,345,868 $ 1,469,656 $ 4,083,202 $ 809,930 $ 13,708,656 Securities 125,127 730,041 662,914 221,367 1,739,449 Federal funds sold and Repos 504,962 - - - 504,962 Interest bearing balances with banks 1,121,734 - - - 1,121,734 Total interest-earning assets $ 9,097,691 $ 2,199,697 $ 4,746,116 $ 1,031,297 $ 17,074,801 Interest-bearing liabilities: Deposits: Interest-bearing checking $ 2,256,168 $ - $ - $ - $ 2,256,168 Money market and savings 7,888,843 - - - 7,888,843 Time deposits 752,654 571,542 65,552 3 1,389,751 Federal funds purchased - - - 34,743 34,743 Other borrowings 1,471,628 - - - 1,471,628 Total interest-bearing liabilities 12,369,293 571,542 65,552 34,746 13,041,133 Interest sensitivity gap $ (3,271,602 ) $ 1,628,155 $ 4,680,564 $ 996,551 $ 4,033,668 Cumulative sensitivity gap $ (3,271,602 ) $ (1,643,447 ) $ 3,037,117 $ 4,033,668 $ - Percent of cumulative sensitivity Gap to total interest-earning assets (19.16 )% (9.62 )% 17.79 % 23.62 % 52 The interest rate risk model that defines the gap position also performs a “rate shock” test of the balance sheet.

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