Financial Analysis

Merger On May 18, 2025, TXNM, Parent, and Merger Sub, entered into the Merger Agreement, pursuant to which Merger Sub will merge with and into TXNM, with TXNM surviving the Merger as a direct wholly-owned subsidiary of Parent. Parent and Merger Sub are affiliates of Blackstone Infrastructure. Pursuant to the Merger Agreement, each issued and outstanding share of the common stock of TXNM (other than (i) the issued shares of TXNM common stock that are owned by TXNM, Parent, Merger Sub, or any other wholly-owned subsidiaries of Parent or TXNM, in each case, not held on behalf of third parties, which will be automatically cancelled at the Effective Time and (ii) shares of TXNM common stock outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of, or consented in writing to, the Merger who is entitled to, and who has demanded, payment for fair value of such shares in accordance with applicable New Mexico law) will, at the Effective Time, be converted into the right to receive $61.25 in cash, without interest. The proposed Merger has been unanimously approved by the Board, and it was approved by a majority of the holders of outstanding shares of TXNM common stock, as of the applicable record date, at the special meeting held on August 28, 2025. On January 13, 2026, the waiting period under the HSR Act in connection with the Merger expired and on January 23, 2026, the FCC consented to the two transfers of control applications submitted b …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

Commitments and Contingencies Merger-Related Litigation Counsel for TXNM has received a number of demand letters from certain law firms on behalf of individuals who are purported TXNM shareholders, accompanied by draft complaints naming TXNM and its directors as defendants and alleging that TXNMs preliminary proxy statement with respect to the Merger omitted or misrepresented certain material information. Such draft complaints include a request for injunctive relief with respect to the TXNM shareholder vote to approve, and the closing of, the Merger, as well as other remedies, including counsel fees. In August 2025, reported shareholders filed complaints in New York state court alleging disclosure violations and seeking injunctive relief. TXNM believes that the allegations set forth in the demand letters, draft complaints, and complaints are without merit and will defend against such actions vigorously. Overview There are various claims and lawsuits pending against the Company. In addition, the Company is subject to federal, state, and local environmental laws and regulations and periodically participates in the investigation and remediation of various sites. In addition, the Company periodically enters into financial commitments in connection with its business operations. Also, the Company is involved in various legal and regulatory proceedings in the normal course of its business. See Note 17. It is not possible at this time for the Company to determine fully the effect of …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"Financing The Companys financing strategy includes both short-term and long-term borrowings. The Company utilizes short-term revolving credit facilities, as well as cash flows from operations, to provide funds for both construction and operating expenditures. Depending on market and other conditions, the Company will periodically sell long-term debt or enter into term loan arrangements and use the proceeds to reduce borrowings under the revolving credit facilities or refinance other debt. Each of the Companys revolving credit facilities, term loans, and other debt agreements contain a single financial covenant that requires the maintenance of a debt-to-capitalization ratio. For the TXNM agreements this ratio must be maintained at less than or equal to 70%, and for the PNM and TNMP agreements this ratio must be maintained at less than or equal to 65%. The Companys revolving credit facilities, term loans, and other debt agreements generally also contain customary covenants, events of default, cross-default provisions, and change-of-control provisions. PNM must obtain NMPRC approval for any financing transaction having a maturity of more than 18 months. In addition, PNM files its annual informational financing filing and short-term financing plan with the NMPRC. Financing Activities TXNM At December 31, 2022, TXNM had $1.0 billion outstanding under the TXNM 2021 Delayed-Draw Term Loan, among TXNM, the lenders party thereto, and Wells Fargo Bank, N.A., as administrative agent. A …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

A disaggregation of revenues from contracts with customers by the type of customer is presented in the table below. The table also reflects ARP revenues and other revenues. PNM TNMP TXNM Consolidated Year Ended December 31, 2025 (In thousands) Electric Operating Revenues: Contracts with customers: Retail electric revenue Residential $ 555,611 $ 235,356 $ 790,967 Commercial 465,639 187,965 653,604 Industrial 146,051 58,394 204,445 Public authority 24,113 8,410 32,523 Economy energy service 27,704 27,704 Transmission 149,669 170,061 319,730 Wholesale energy sales 97,755 97,755 Miscellaneous 6,336 3,860 10,196 Total revenues from contracts with customers 1,472,878 664,046 2,136,924 Alternative revenue programs 4,255 17,270 21,525 Other electric operating revenues 7,157 7,157 Total Electric Operating Revenues $ 1,484,290 $ 681,316 $ 2,165,606 PNM TNMP TXNM Consolidated Year Ended December 31, 2024 (In thousands) Electric Operating Revenues: Contracts with customers: Retail electric revenue Residential $ 541,581 $ 203,227 $ 744,808 Commercial 460,311 166,858 627,169 Industrial 123,754 35,300 159,054 Public authority 23,161 7,329 30,490 Economy energy service 25,481 25,481 Transmission 141,058 157,049 298,107 Wholesale energy sales 64,903 64,903 Miscellaneous 5,776 3,813 9,589 Total revenues from contracts with customers 1,386,025 573,576 1,959,601 Alternative revenue programs (9,720) 18,535 8,815 Other electric operating revenues 2,783 2,783 Total Electric Operating Revenues $ 1,3 …

DisaggregationOfRevenueTableTextBlock · excerpt; the full note is in the filing

Stock-Based Compensation TXNM has various stock-based compensation programs, which provide restricted stock awards, that are performance based and time based, under the Performance Equity Plan (PEP). Although certain PNM and TNMP employees are eligible to participate in the TXNM plans, PNM and TNMP do not have separate employee stock-based compensation plans. Performance stock awards awarded under the PEP are awarded for a three-year, overlapping performance period. Performance stock awards with performance periods ending from 2024 through 2025 did not include market targets. Performance stock awards with performance periods ending after 2025 are subject to achieving both performance and market targets. Other awards of restricted stock are only subject to time-based vesting requirements. Performance Equity Plan The PEP provides for the granting of non-qualified stock options, restricted stock rights, performance shares, performance units, and stock appreciation rights to officers, key employees, and non-employee members of the Board. Restricted stock under the PEP refers to awards of stock subject to vesting, performance, or market conditions rather than to shares with contractual post-vesting restrictions. Generally, the awards vest ratably over three years from the grant date of the award. However, awards with performance or market conditions vest upon satisfaction of those conditions. In addition, plan provisions provide that upon retirement, participants become 100% veste …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

Goodwill The excess purchase price over the fair value of the assets acquired and the liabilities assumed by TXNM for its 2005 acquisition of TNP was recorded as goodwill and was pushed down to the businesses acquired. In 2007, the TNMP assets that were included in its New Mexico operations, including goodwill, were transferred to PNM. TXNMs reporting units that currently have goodwill are PNM and TNMP. The Company evaluates its goodwill for impairment annually at the reporting unit level or more frequently if circumstances indicate that the goodwill may be impaired. Application of the impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, and determination of the fair value of each reporting unit. In certain circumstances an entity may perform a qualitative analysis to conclude that the goodwill of a reporting unit is not impaired. Under a qualitative assessment an entity considers macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, other relevant entity-specific events affecting a reporting unit, as well as whether a sustained decrease (both absolute and relative to its peers) in share price has occurred. An entity considers the extent to which each of the adverse events and circumstances identified could affect the comparison of a reporting units fair value with its carrying amount. An entity places more weight on the events and circu …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

Income Taxes Federal Income Tax Reform In 2017, comprehensive changes in U.S. federal income taxes were enacted through legislation commonly known as the Tax Cuts and Jobs Act (the Tax Act). The Tax Act made many significant modifications to the tax laws, including reducing the federal corporate income tax rate from 35% to 21% effective January 1, 2018. The Tax Act also eliminated federal bonus depreciation for utilities, limited interest deductibility for non-utility businesses and limited the deductibility of officer compensation. During 2020, the IRS issued final regulations related to certain officer compensation and, in January 2021, issued final regulations on interest deductibility that provide a 10% de minimis exception that allows entities with predominantly regulated activities to fully deduct interest expenses. As a result of the change in the federal income tax rate, the Company re-measured and adjusted its deferred tax assets and liabilities as of December 31, 2017. The portion of that adjustment not related to PNMs and TNMPs regulated activities was recorded as a reduction in net deferred tax assets and an increase in income tax expense. The portion related to PNMs and TNMPs regulated activities was recorded as a reduction in net deferred tax liabilities and an increase in regulatory liabilities. Beginning February 2018, PNMs NM 2016 Rate Case reflected the reduction in the federal and state corporate income tax rates, including amortization of excess deferred f …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Lease Commitments The Company enters into various lease agreements to meet its business needs and to satisfy the needs of its customers. The Company accounts for contracts that convey the use and control of identified assets for a period of time as leases. The Company classifies leases as operating or financing by evaluating the terms of the lease agreement. Agreements under which the Company is likely to utilize substantially all of the economic value or life of the asset or that the Company is likely to own at the end of the lease term, either through purchase or transfer of ownership, are classified as financing leases. Leases not meeting these criteria are accounted for as operating leases. Agreements under which the Company is a lessor are insignificant. TXNM, PNM, and TNMP determine present value for their leases using their incremental borrowing rates at the commencement date of the lease or, when readily available, the rate implicit in the agreement. The Company leases office buildings, vehicles, energy storage facilities, and other equipment. In addition, PNM had lease interests in PVNGS and certain rights-of-way agreements that are classified as leases. All of the Companys leases with fixed-payment terms in excess of one year are recorded on the Consolidated Balance Sheets by recording a present value lease liability and a corresponding right-of-use asset. Operating lease expense is recognized within operating expenses according to the use of the asset on a straight …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

New Accounting Pronouncements Information concerning recently issued accounting pronouncements that have not yet been adopted by the Company is presented below. The Company does not expect difficulty in adopting these standards by their required effective dates. Accounting Standards Update 2024-03 - Income Statement (Subtopic 220-40): Reporting Comprehensive Income - Expense Disaggregation Disclosures In November 2024, the FASB issued ASU 2024-03 that will require disclosure, in the notes to the financial statements, of specified information about certain costs and expenses at each interim and annual period. Disclosures should include amounts for purchases of inventory, employee compensation, depreciation and, intangible asset amortization; certain amounts that are already required to be disclosed under GAAP in the same disclosure as other disaggregation requirements; qualitative descriptions of the amounts remaining in relevant expense categories that are not disaggregated; and the total amount of selling expenses including the entitys definition of selling expenses. In January 2025, ASU 2025-01 was issued to clarify that the amendments of ASU 2024-03 are effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company expects to adopt the disclosure requirements of ASU 2024-03 with its Annual Report on Form 10-K for the year ended December 31, 2027. Accounting …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Pension and Other Postretirement Benefits TXNM and its subsidiaries maintain qualified defined benefit pension plans, postretirement benefit plans providing medical and dental benefits, and executive retirement programs (collectively, the PNM Plans and TNMP Plans). TXNM maintains the legal obligation for the benefits owed to participants under these plans. The periodic costs or income of the PNM Plans and TNMP Plans are included in regulated rates to the extent attributable to regulated operations. PNM and TNMP receive a regulated return on the amounts funded for pension and OPEB plans in excess of the periodic cost or income to the extent included in retail rates (a prepaid pension asset). Participants in the PNM Plans include eligible employees and retirees of TXNM and PNM. Participants in the TNMP Plans include eligible employees and retirees of TNMP. The PNM pension plan was frozen at the end of 1997 with regard to new participants, salary levels, and benefits. Through December 31, 2007, additional credited service could be accrued under the PNM pension plan up to a limit determined by age and service. The TNMP pension plan was frozen at December 31, 2005, with regard to new participants, salary levels, and benefits. A plan sponsor is required to (a) recognize in its statement of financial position an asset for a plans overfunded status or a liability for a plans underfunded status; (b) measure a plans assets and its obligations that determine its funded status as of the …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

Related Party Transactions TXNM, PNM, TNMP, and NMRD are considered related parties, as is PNMR Services Company, a wholly-owned subsidiary of TXNM that provides corporate services to TXNM and its subsidiaries in accordance with shared services agreements. These services are billed at cost on a monthly basis to the business units. In addition, prior to the sale of NMRD, PNM purchased renewable energy from certain NMRD-owned facilities at a fixed price per MWh of energy produced. On February 27, 2024, PNMR Development and AEP OnSite Partners sold their respective interests in NMRD, and the table below reflects transactions with NMRD prior to the sale. TXNM files a consolidated federal income tax return with its affiliated companies. A tax allocation agreement exists between TXNM and each of its affiliated companies. These agreements provide that the subsidiary company will compute its taxable income on a stand-alone basis. If the result is a net tax liability, such amount shall be paid to TXNM. If there are net operating losses and/or tax credits, the subsidiary shall receive payment for the tax savings from TXNM to the extent that TXNM is able to utilize those benefits. See Note 7 for information on intercompany borrowing arrangements. The table below summarizes the nature and amount of related party transactions of TXNM, PNM and TNMP: Year Ended December 31, 2025 2024 2023 (In thousands) Services billings: TXNM to PNM $ 133,409 $ 132,209 $ 124,321 TXNM to TNMP 53,852 53,166 …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

Electric Operating Revenues Accounts Receivable and Allowance for Credit Losses Accounts receivable consists primarily of trade receivables from customers. In the normal course of business, credit is extended to customers on a short-term basis. The Company estimates the allowance for credit losses on trade receivables based on historical experience and estimated default rates. Accounts receivable balances are reviewed monthly, adjustments to the allowance for credit losses are made as necessary and amounts that are deemed uncollectible are written off. In addition to the allowance for credit losses on trade receivables, the Company has evaluated other receivables for potential credit related losses. These balances include potential exposures for other non-retail utility services. In the years ended December 31, 2025, and 2024, there were no estimated credit losses related to these transactions. Revenue Recognition Retail electric operating revenues are recorded in the period of energy delivery, which includes estimated amounts for service rendered but unbilled at the end of each accounting period. The determination of the energy sales billed to individual retail customers is based on the reading of their meters, which occurs on a systematic basis throughout the month. At the end of each month, amounts of energy delivered to customers since the date of the last meter reading and the corresponding unbilled revenue are estimated. Unbilled electric revenue is estimated based on d …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

Segment Information TXNM has three reportable segments including PNM, TNMP, and Corporate and other. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The measure of profitability used by the CODM is Segment earnings (loss) attributable to TXNM, as presented below. The CODM uses this measure of profitability to allocate resources for each segment predominantly in the annual budget and forecasting process. The CODM considers budget to actual variances on a regular basis when making decisions about allocating capital and operational expense funding to the segments. TXNMs CODM is its President and CEO who is also the CEO of the PNM and TNMP segments. PNM PNM includes the retail electric utility operations of PNM that are subject to traditional rate regulation by the NMPRC. PNM provides integrated electricity services that include the generation, transmission, and distribution of electricity for retail electric customers in New Mexico. PNM also includes the generation and sale of electricity into the wholesale market, which includes the asset optimization of PNMs jurisdictional capacity as well as providing transmission services to third parties. FERC has jurisdiction over wholesale power and transmission rates. PNM includes the results of ETBC I upon its formation in 2023. TNMP TNMP is an electric utility providing services in Texas under the TECA. TNMPs operations are subject to traditional rate regulation …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

Stockholders Equity Common Stock and Equity Contributions In each of the years ended December 31, 2025, 2024, and 2023, TXNM executed agreements pursuant to which it issued shares of TXNM common stock. Details of these transactions and the physical settlement of shares of TXNM common stock may be found in Note 7. Neither PNM nor TNMP issued any common stock in 2025, 2024, and 2023. On August 2, 2024, TXNM increased the number of authorized shares of the TXNM common stock from 120,000,000 to 200,000,000. TXNM funded cash equity contributions to PNM of $123.3 million, $55.0 million, and zero in 2025, 2024, and 2023. TXNM funded $250.0 million, $24.0 million, and $40.9 million of cash equity contributions to TNMP in 2025, 2024, and 2023. Dividends on Common Stock The declaration of common dividends by TXNM is dependent upon a number of factors, including the ability of TXNMs subsidiaries to pay dividends. TXNMs primary sources of dividends are its operating subsidiaries. PNM declared and paid cash dividends to TXNM of $51.0 million in 2024 but did not declare or pay any cash dividends in 2025 or 2023. TNMP did not declare or pay any cash dividends to TXNM in 2025, 2024, or 2023. The NMPRC has placed certain restrictions on the ability of PNM to pay dividends to TXNM, including the restriction that PNM cannot pay dividends that cause its debt rating to fall below investment grade. The NMPRC provisions allow PNM to pay dividends, with at least 15 days prior notice, from current ea …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing

Merger On May 18, 2025, TXNM, Parent, and Merger Sub, entered into the Merger Agreement, pursuant to which Merger Sub will merge with and into TXNM, with TXNM surviving the Merger as a direct wholly-owned subsidiary of Parent. Parent and Merger Sub are affiliates of Blackstone Infrastructure. Pursuant to the Merger Agreement, each issued and outstanding share of the common stock of TXNM (other than (i) the issued shares of TXNM common stock that are owned by TXNM, Parent, Merger Sub, or any other wholly-owned subsidiaries of Parent or TXNM, in each case, not held on behalf of third parties, which will be automatically cancelled at the Effective Time and (ii) shares of TXNM common stock outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of, or consented in writing to, the Merger who is entitled to, and who has demanded, payment for fair value of such shares in accordance with applicable New Mexico law) will, at the Effective Time, be converted into the right to receive $61.25 in cash, without interest. The proposed Merger has been unanimously approved by the Board, and it was approved by a majority of the holders of outstanding shares of TXNM common stock, as of the applicable record date, at the special meeting held on August 28, 2025. On January 13, 2026, the waiting period under the HSR Act in connection with the Merger expired and on January 23, 2026, the FCC consented to the two transfers of control applications submitted b …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

Commitments and Contingencies Merger-Related Litigation Counsel for TXNM has received a number of demand letters from certain law firms on behalf of individuals who are purported TXNM shareholders, accompanied by draft complaints naming TXNM and its directors as defendants and alleging that TXNMs preliminary proxy statement with respect to the Merger omitted or misrepresented certain material information. Such draft complaints include a request for injunctive relief with respect to the TXNM shareholder vote to approve, and the closing of, the Merger, as well as other remedies, including counsel fees. In August 2025, reported shareholders filed complaints in New York state court alleging disclosure violations and seeking injunctive relief. TXNM believes that the allegations set forth in the demand letters, draft complaints, and complaints are without merit and will defend against such actions vigorously. Overview There are various claims and lawsuits pending against the Company. In addition, the Company is subject to federal, state, and local environmental laws and regulations and periodically participates in the investigation and remediation of various sites. In addition, the Company periodically enters into financial commitments in connection with its business operations. Also, the Company is involved in various legal and regulatory proceedings in the normal course of its business. See Note 12. It is not possible at this time for the Company to determine fully the effect of …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Financing The Companys financing strategy includes both short-term and long-term borrowings and the issuance of equity securities. The Company utilizes short-term revolving credit facilities, as well as cash flows from operations, to provide funds for both construction and operating expenditures. Depending on market and other conditions, the Company will periodically sell long-term debt, enter into term loan arrangements, or enter into equity arrangements and use the proceeds to reduce borrowings under the revolving credit facilities and commercial paper or refinance other debt. Each of the Companys revolving credit facilities, term loans, and other debt agreements contain a single financial covenant that requires the maintenance of a debt-to-capitalization ratio. For the TXNM agreements, this ratio must be maintained at less than or equal to 70%, and for the PNM and TNMP agreements, this ratio must be maintained at less than or equal to 65%. The Companys revolving credit facilities, term loans, and other debt agreements generally also contain customary covenants, events of default, cross-default provisions, and change-of-control provisions. PNM must obtain NMPRC approval for any financing transaction having a maturity of more than 18 months. In addition, PNM files its annual informational financing filing and short-term financing plan with the NMPRC. Additional information concerning financing activities is contained in Note 7 of the Notes to Consolidated Financial Statement …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

A disaggregation of revenues from contracts with customers by the type of customer is presented in the table below. PNM TNMP TXNM Three Months Ended June 30, 2026 (In thousands) Electric Operating Revenues: Contracts with customers: Retail electric revenue Residential $ 130,305 $ 62,908 $ 193,213 Commercial 110,831 46,368 157,199 Industrial 43,201 14,834 58,035 Public authority 5,291 2,294 7,585 Economy energy service 3,279 3,279 Transmission 40,742 44,216 84,958 Wholesale energy sales 11,171 11,171 Miscellaneous 2,007 1,064 3,071 Total revenues from contracts with customers 346,827 171,684 518,511 Alternative revenue programs 8,063 15,754 23,817 Other electric operating revenues 6,226 6,226 Total Electric Operating Revenues $ 361,116 $ 187,438 $ 548,554 Six Months Ended June 30, 2026 Electric Operating Revenues: Contracts with customers: Retail electric revenue Residential $ 250,457 $ 115,995 $ 366,452 Commercial 206,205 92,090 298,295 Industrial 82,071 31,136 113,207 Public authority 9,663 4,481 14,144 Economy energy service 6,521 6,521 Transmission 80,114 89,881 169,995 Wholesale energy sales 31,384 31,384 Miscellaneous 3,996 2,303 6,299 Total revenues from contracts with customers 670,411 335,886 1,006,297 Alternative revenue programs 12,183 26,523 38,706 Other electric operating revenues 8,533 8,533 Total Electric Operating Revenues $ 691,127 $ 362,409 $ 1,053,536 PNM TNMP TXNM Three Months Ended June 30, 2025 Electric Operating Revenues: Contracts with customers: Retail …

DisaggregationOfRevenueTableTextBlock · excerpt; the full note is in the filing

Stock-Based Compensation TXNM has various stock-based compensation programs, which provide restricted stock awards, that are performance-based and time-based, under the PEP. Although certain PNM and TNMP employees are eligible to participate in the TXNM plans, PNM and TNMP do not have separate employee stock-based compensation plans. Performance stock awards granted under the PEP are awarded for a three-year, overlapping performance period. Performance stock awards with performance periods ended or ending in 2028 do not include market targets. Performance stock awards with performance periods ending in 2026 and 2027 are subject to achieving both performance and market targets. Other awards of restricted stock are only subject to time-based vesting requirements. Additional information concerning stock-based compensation under the PEP is contained in Note 12 of the Notes to Consolidated Financial Statements in the 2025 Annual Reports on Form 10-K. Restricted stock under the PEP refers to awards of stock subject to vesting, performance, or market conditions rather than to shares with contractual post-vesting restrictions. Generally, the awards vest ratably over three years from the grant date of the award. However, awards with performance or market conditions vest upon satisfaction of those conditions. In addition, plan provisions provide that upon retirement, participants become 100% vested in certain stock awards. The vesting period for awards of restricted stock to non-employ …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

Income Taxes The Company makes an estimate of its anticipated effective tax rate for the year as of the end of each quarterly period within its fiscal year. In interim periods, income tax expense is calculated by applying the anticipated annual effective tax rate to year-to-date earnings before income taxes. Certain unusual or infrequently occurring items are excluded from the estimated annual rate calculation. Such items include regulatory disallowances, Merger-related costs, and excess tax benefits or deficiencies related to stock awards. At June 30, 2026, TXNM, PNM, and TNMP estimated their effective income tax rates for the year ended December 31, 2026, would be 15.11%, 12.44%, and 20.24%. The primary difference between the statutory income tax rates and the effective tax rates is the effect of the reduction in income tax expense resulting from the amortization of excess deferred federal income taxes. During the six months ended June 30, 2026, income tax expense calculated by applying the expected annual effective income tax rate to earnings before income taxes was further decreased by excess tax benefits related to stock awards of $0.4 million for TXNM, of which $0.3 million was allocated to PNM and $0.1 million was allocated to TNMP and by tax benefits on Merger-related costs of $1.4 million for TXNM, of which $0.5 million was allocated to PNM and an immaterial amount was allocated to TNMP. Beginning February 2018, PNMs NM 2016 Rate Case reflected the reduction in the f …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Lease Commitments The Company leases office buildings, vehicles, energy storage facilities, and other equipment. In addition, certain rights-of-way agreements are classified as leases. All of the Companys leases with terms in excess of one year are recorded on the balance sheet by recording a present value lease liability and a corresponding right-of-use asset. Operating lease expense is recognized within operating expenses according to the use of the asset on a straight-line basis. Financing lease costs, which are comprised primarily of fleet and office equipment leases commencing after January 1, 2019, are recognized by amortizing the right-of-use asset on a straight-line basis and by recording interest expense on the lease liability. Financing lease right-of-use assets amortization is reflected in depreciation and amortization and interest on financing lease liabilities is reflected as interest charges on the Companys Condensed Consolidated Statements of Earnings. See additional discussion of the Companys leasing activities in Note 8 of the Notes to Consolidated Financial Statements in the 2025 Annual Reports on Form 10-K. Land Easements and Rights-of-Way Many of PNMs electric transmission and distribution facilities are located on lands that require the grant of rights-of-way from governmental entities, Native American tribes, or private parties. PNM has completed several renewals of rights-of-way, the largest of which is a renewal with the Navajo Nation. PNM is obligated …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

New Accounting Pronouncements Information concerning recently issued accounting pronouncements that have not yet been adopted by the Company is presented below. The Company does not expect difficulty in adopting these standards by their required effective dates. Accounting Standards Update 2024-03 - Income Statement (Subtopic 220-40): Reporting Comprehensive Income - Expense Disaggregation Disclosures In November 2024, the FASB issued ASU 2024-03 that will require disclosure, in the notes to the financial statements, of specified information about certain costs and expenses at each interim and annual period. Disclosures should include amounts for purchases of inventory, employee compensation, depreciation, and intangible asset amortization; certain amounts that are already required to be disclosed under GAAP in the same disclosure as other disaggregation requirements; qualitative descriptions of the amounts remaining in relevant expense categories that are not disaggregated; and the total amount of selling expenses including the entitys definition of selling expenses. In January 2025, ASU 2025-01 was issued to clarify that the amendments of ASU 2024-03 are effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company expects to adopt the disclosure requirements of ASU 2024-03 with its Annual Report on Form 10-K for the year ended December 31, 2027. Accounting …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Pension and Other Postretirement Benefit Plans TXNM and its subsidiaries maintain qualified defined benefit pension plans, postretirement benefit plans providing medical and dental benefits, and executive retirement programs (collectively, the PNM Plans and TNMP Plans). TXNM maintains the legal obligation for the benefits owed to participants under these plans. The periodic costs or income of the PNM Plans and TNMP Plans are included in regulated rates to the extent attributable to regulated operations. The Company presents the service cost component of its net periodic benefit costs in administrative and general expenses and the non-service costs components in other income (deductions), net of amounts capitalized or deferred to regulatory assets and liabilities, on the Condensed Consolidated Statements of Earnings. PNM and TNMP receive a regulated return on the amounts funded for pension and OPEB plans in excess of accumulated periodic cost or income to the extent included in retail rates (a prepaid pension asset). Additional information concerning pension and OPEB plans is contained in Note 11 of the Notes to Consolidated Financial Statements in the 2025 Annual Reports on Form 10-K. Annual net periodic benefit cost for the plans is actuarially determined using the methods and assumptions set forth in that note and is recognized ratably throughout the year. Differences between TNMPs annual net periodic costs (income) and amounts included in its regulated rates are deferred t …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

Related Party Transactions TXNM, PNM, and TNMP are considered related parties, as is PNMR Services Company, a wholly-owned subsidiary of TXNM that provides corporate services to TXNM and its subsidiaries in accordance with shared services agreements. These services are billed at cost on a monthly basis to the business units. The table below summarizes the nature and amount of related party transactions of TXNM, PNM, and TNMP: Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 (In thousands) Services billings: TXNM to PNM $ 32,050 $ 35,317 $ 65,728 $ 67,404 TXNM to TNMP 13,712 14,109 28,236 27,485 PNM to TNMP 72 86 134 165 TNMP to TXNM 21 28 42 56 TNMP to PNM Interest billings: TXNM to PNM 24 76 63 84 PNM to TXNM 110 132 225 265 TXNM to TNMP 8 41 23 186 …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

Electric Operating Revenues TXNM is an investor-owned holding company with two regulated utilities providing electricity and electric services in New Mexico and Texas. TXNMs electric utilities are PNM and TNMP. Additional information concerning electric operating revenue is contained in Note 4 of the Notes to Consolidated Financial Statements in the 2025 Annual Reports on Form 10-K. Accounts Receivable and Allowance for Credit Losses Accounts receivable consists primarily of trade receivables from customers. In the normal course of business, credit is extended to customers on a short-term basis. The Company estimates the allowance for credit losses on trade receivables based on historical experience and estimated default rates. Accounts receivable balances are reviewed monthly, adjustments to the allowance for credit losses are made as necessary and amounts that are deemed uncollectible are written off. In addition to the allowance for credit losses on trade receivables, the Company has evaluated other receivables for potential credit related losses. These balances include potential exposures for other non-retail utility services. In both the three and six months ended June 30, 2026 and 2025, there were no estimated credit losses related to these transactions. Contract Balances Performance obligations related to contracts with customers are typically satisfied when the energy is delivered, and the customer or end-user utilizes the energy. Accounts receivable from customers re …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

Segment Information TXNM has three reportable segments, namely PNM, TNMP, and Corporate and Other. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The measure of profitability used by the CODM is Segment earnings (loss) attributable to TXNM, as presented below. The CODM uses this measure of profitability to allocate resources for each segment predominantly in the annual budget and forecasting process. The CODM considers budget to actual variances on a regular basis when making decisions about allocating capital and operational expense funding to the segments. TXNMs CODM is its current President and Chief Executive Officer (CEO) who is also the CEO of the PNM and TNMP segments. PNM PNMs electric utility operations are subject to traditional rate regulation by the NMPRC. PNM provides integrated electricity services that include the generation, transmission, and distribution of electricity for retail electric customers in New Mexico; the generation and sale of electricity into the wholesale market, which includes the asset optimization of PNMs jurisdictional capacity, as well as providing transmission services to third parties. FERC has jurisdiction over wholesale power and transmission rates. PNMs operations also include the results of ETBC I since its formation in 2023. TNMP TNMP is an electric utility providing services in Texas under the TECA. TNMPs operations are subject to traditional rate regulatio …

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Significant Accounting Policies and Responsibility for Financial Statements Financial Statement Preparation In the opinion of management, the accompanying unaudited interim Condensed Consolidated Financial Statements reflect all normal and recurring accruals and adjustments that are necessary to present fairly the consolidated financial position at June 30, 2026, and December 31, 2025, and the consolidated results of operations, comprehensive income, and cash flows for the six months ended June 30, 2026 and 2025. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could ultimately differ from those estimated. Weather causes the Companys results of operations to be seasonal in nature and the results of operations presented in the accompanying Condensed Consolidated Financial Statements are not necessarily representative of operations for an entire year. The Notes to Condensed Consolidated Financial Statements include disclosures for TXNM, PNM, and TNMP. This report uses the term Company when discussing matters of common applicability to TXNM, PNM, and TNMP. Discussions regarding only TXNM, PNM, or TNMP are so indicated. On May 18, 2025, TXNM, Parent, and Merger Sub, entered …

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Accumulated Other Comprehensive Income (Loss) Information regarding accumulated other comprehensive income (loss) for the six months ended June 30, 2026, and 2025 is as follows: Accumulated Other Comprehensive Income (Loss) PNM Corporate and Other TXNM Unrealized Gains on Available-for-Sale Debt Securities Pension Liability Adjustment Fair Value Adjustment for Cash Flow Hedges Total Total (In thousands) Balance at December 31, 2025 $ 218 $ (25,921) $ (25,703) $ (1,113) $ (26,816) Amounts reclassified from AOCI (pre-tax) (256) 1,445 1,189 94 1,283 Income tax impact of amounts reclassified 65 (367) (302) (24) (326) Other OCI changes (pre-tax) 67 67 67 Income tax impact of other OCI changes (17) (17) (17) Net after-tax change (141) 1,078 937 70 1,007 Balance at June 30, 2026 $ 77 $ (24,843) $ (24,766) $ (1,043) $ (25,809) Balance at December 31, 2024 $ 214 $ (75,922) $ (75,708) $ $ (75,708) Amounts reclassified from AOCI (pre-tax) (338) 2,749 2,411 2,411 Income tax impact of amounts reclassified 86 (698) (612) (612) Other OCI changes (pre-tax) 504 504 (2,493) (1,989) Income tax impact of other OCI changes (128) (128) 633 505 Net after-tax change 124 2,051 2,175 (1,860) 315 Balance at June 30, 2025 $ 338 $ (73,871) $ (73,533) $ (1,860) $ (75,393) The Condensed Consolidated Statements of Earnings include pre-tax amounts reclassified from AOCI related to Unrealized Gains on Available-for-Sale Debt Securities in (losses) on investment securities and Fair Value Adjustment for Cash Fl …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing