RED RIVER BANCSHARES INC

Previous wording

The purpose of this discussion and analysis is to focus on significant changes in the financial condition of Red River Bancshares, Inc. on a consolidated basis from December 31, 2024 through March 31, 2025, and on our results of operations for the quarters ended March 31, 2025 and December 31, 2024, and for the three months ended March 31, 2025 and March 31, 2024.

Current wording

The purpose of this discussion and analysis is to focus on significant changes in the financial condition of Red River Bancshares, Inc. on a consolidated basis from December 31, 2024 through June 30, 2025, and on our results of operations for the quarters ended June 30, 2025 and March 31, 2025, and for the six months ended June 30, 2025 and June 30, 2024.

Previous wording

FIRST QUARTER 2025 FINANCIAL AND OPERATIONAL HIGHLIGHTS

Current wording

SECOND QUARTER 2025 FINANCIAL AND OPERATIONAL HIGHLIGHTS

Previous wording

•Net income for the first quarter of 2025 was $10.4 million, or $1.52 diluted EPS, an increase of $1.0 million, or 11.2%, compared to $9.3 million, or $1.37 diluted EPS, for the fourth quarter of 2024. Net income for the first quarter increased due to having higher net interest income, along with approximately $620,000 of periodic items that reduced operating expenses. These operating expense reductions benefited EPS by approximately $0.07.

Current wording

•Net income for the second quarter of 2025 was $10.2 million, or $1.51 diluted EPS, a decrease of $156,000, or 1.5%, compared to $10.4 million, or $1.52 diluted EPS, for the first quarter of 2025. Net income for the second quarter was impacted by a $1.2 million increase in net interest income, which was offset by a $554,000 decrease in noninterest income, along with an expected $779,000 increase in operating expenses. Net income for the first quarter benefited from approximately $620,000 of periodic items that reduced operating expenses.

Previous wording

•For the first quarter of 2025, the return on assets was 1.32%, and the return on equity was 12.85%.

Current wording

•For the second quarter of 2025, the return on assets was 1.30%, and the return on equity was 12.27%.

Previous wording

•Net interest income and net interest margin FTE increased for the first quarter of 2025 compared to the prior quarter. Net interest income for the first quarter of 2025 was $24.6 million, which was $923,000, or 3.9%, higher than $23.7 million for the prior quarter. Net interest margin FTE increased 13 bps to 3.22% for the first quarter of 2025, compared to 3.09% for the prior quarter. These improvements resulted from higher securities yields and lower deposit rates.

Current wording

•Net interest income and net interest margin FTE increased for the second quarter of 2025 compared to the prior quarter. Net interest income for the second quarter of 2025 was $25.8 million, which was $1.2 million, or 4.9%, higher than $24.6 million for the prior quarter. Net interest margin FTE increased 14 bps to 3.36% for the second quarter of 2025, compared to 3.22% for the prior quarter. These improvements were the result of higher securities and loan yields and a lower cost of deposits, along with an improved asset mix.

Previous wording

•As of March 31, 2025, loans HFI were $2.11 billion, which was $39.7 million, or 1.9%, higher than $2.08 billion as of December 31, 2024. In the first quarter of 2025, we had steady new loan closing activity, combined with funding of loan construction commitments.

Current wording

•As of June 30, 2025, loans HFI were $2.14 billion, which was $23.8 million, or 1.1%, higher than $2.11 billion as of March 31, 2025. In the second quarter of 2025, we had steady new loan closing activity, combined with funding of loan construction commitments.

Previous wording

•As of March 31, 2025, liquid assets, which are cash and cash equivalents, were $252.2 million, and the liquid assets to assets ratio was 7.91%. We do not have any borrowings, brokered deposits, or internet-sourced deposits.

Current wording

•As of June 30, 2025, liquid assets, which are cash and cash equivalents, were $210.4 million, and the liquid assets to assets ratio was 6.64%. We do not have any borrowings, brokered deposits, or internet-sourced deposits.

Previous wording

•As of March 31, 2025, NPAs were $5.2 million, or 0.16% of assets, and the ACL was $21.8 million, or 1.03% of loans HFI.

Current wording

•As of June 30, 2025, NPAs were $1.3 million, or 0.04% of assets, and the ACL was $22.2 million, or 1.04% of loans HFI.

Previous wording

•The 2025 stock repurchase program authorizes us to purchase up to $5.0 million of our outstanding shares of common stock from January 1, 2025 through December 31, 2025. As of March 31, 2025, the 2025 stock repurchase program had $5.0 million of available capacity.

Current wording

•The 2025 stock repurchase program authorizes us to purchase up to $5.0 million of our outstanding shares of common stock from January 1, 2025 through December 31, 2025. No shares were repurchased in the first quarter of 2025. In the second quarter of 2025, we repurchased 11,748 shares on the open market at an aggregate cost of $656,000, excluding excise tax. As of June 30, 2025, the 2025 stock repurchase program had $4.3 million of available capacity.

Previous wording

Net income for the first quarter of 2025 was $10.4 million, or $1.52 diluted EPS, an increase of $1.0 million, or 11.2%, compared to $9.3 million, or $1.37 diluted EPS, for the fourth quarter of 2024. The increase in net income was due to a $923,000 increase in net interest income, a $277,000 increase in noninterest income, and a $252,000 decrease in operating expenses, partially offset by a $256,000 increase in income tax expense and a $150,000 increase in the provision for credit losses. The return on assets for the first quarter of 2025 was 1.32%, compared to 1.18% for the fourth quarter of 2024. The return on equity was 12.85% for the first quarter of 2025, compared to 11.46% for the fourth quarter of 2024. Our efficiency ratio for the first quarter of 2025 was 55.51%, compared to 58.71% for the fourth quarter of 2024.

Current wording

Net income for the second quarter of 2025 was $10.2 million, or $1.51 diluted EPS, a decrease of $156,000, or 1.5%, compared to $10.4 million, or $1.52 diluted EPS, for the first quarter of 2025. The decrease in net income was due to a $779,000 increase in operating expenses, a $554,000 decrease in noninterest income, and a $32,000 increase in income tax expense, partially offset by a $1.2 million increase in net interest income. The return on assets for the second quarter of 2025 was 1.30%, compared to 1.32% for the first quarter of 2025. The return on equity was 12.27% for the second quarter of 2025, compared to 12.85% for the first quarter of 2025. Our efficiency ratio for the second quarter of 2025 was 56.87%, compared to 55.51% for the first quarter of 2025.

Previous wording

Net income for the three months ended March 31, 2025, was $10.4 million, or $1.52 diluted EPS, an increase of $2.2 million, or 26.4%, compared to $8.2 million, or $1.16 diluted EPS, for the three months ended March 31, 2024. The increase in net income was due to a $3.2 million increase in net interest income and a $344,000 increase in noninterest income, partially offset by a $715,000 increase in operating expenses, a $562,000 increase in income tax expense, and a $150,000 increase in the provision for credit losses. The return on assets for the three months ended March 31, 2025, was 1.32%, compared to 1.07% for the three months ended March 31, 2024. The return on equity was 12.85% for the three months ended March 31, 2025, compared to 10.77% for the three months ended March 31, 2024. Our efficiency ratio for the three months ended March 31, 2025, was 55.51%, compared to 60.37% for the three months ended March 31, 2024.

Current wording

Net income for the six months ended June 30, 2025, was $20.5 million, or $3.03 diluted EPS, an increase of $4.4 million, or 27.0%, compared to $16.2 million, or $2.31 diluted EPS, for the six months ended June 30, 2024. The increase in net income was due to a $7.3 million increase in net interest income, partially offset by a $1.4 million increase in operating expenses, a $1.2 million increase in income tax expense, a $300,000 increase in the provision for credit losses, and a $36,000 decrease in noninterest income. The return on assets for the six months ended June 30, 2025, was 1.31%, compared to 1.06% for the six months ended June 30, 2024. The return on equity was 12.55% for the six months ended June 30, 2025, compared to 10.73% for the six months ended June 30, 2024. Our efficiency ratio for the six months ended June 30, 2025, was 56.20%, compared to 61.23% for the six months ended June 30, 2024.

Previous wording

In the first half of 2024, the target range for the federal funds rate was consistent at 5.25%-5.50%. In September of 2024, the FOMC decreased the federal funds rate by 50 bps and then by an additional 50 bps during the fourth quarter of 2024, reducing the target federal funds range to 4.25%-4.50%. The target range for the federal funds rate was unchanged in the first quarter of 2025. The average effective federal funds rate was 4.33% for the first quarter of 2025, compared to 4.65% for the fourth quarter of 2024, and 5.33% for the first quarter of 2024. Net interest income and net interest margin FTE increased in the first quarter of 2025 compared to both the prior quarter as well as the first quarter of 2024.

Current wording

In the first half of 2024, the target range for the federal funds rate was consistent at 5.25%-5.50%. In September of 2024, the FOMC decreased the federal funds rate by 50 bps and then by an additional 50 bps during the fourth quarter of 2024, reducing the target federal funds range to 4.25%-4.50%. The target range for the federal funds rate was unchanged in the first half of 2025. The average effective federal funds rate was 4.33% for the first and second quarters of 2025, compared to 5.33% for the first six months of 2024. Net interest income and net interest margin FTE increased in the second quarter of 2025, compared to the prior quarter. Also, net interest income and net interest margin FTE increased for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

Previous wording

Net interest income for the first quarter of 2025 was $24.6 million, which was $923,000, or 3.9%, higher than the fourth quarter of 2024, due to a $178,000 increase in interest and dividend income, combined with a $745,000 decrease in interest expense. The increase in interest and dividend income was mainly due to higher interest income on securities. Securities income increased $233,000 primarily due to reinvesting lower yielding securities cash flows into higher yielding securities. The decrease in interest expense was primarily due to lower rates on time deposits.

Current wording

Net interest income for the second quarter of 2025 was $25.8 million, which was $1.2 million, or 4.9%, higher than the first quarter of 2025, due to a $922,000 increase in interest and dividend income, combined with a $287,000 decrease in interest expense. The increase in interest and dividend income was mainly due to higher interest income on loans, partially offset by lower interest income on short-term liquid assets. Loan income increased $1.2 million due to higher yields on loans, combined with higher average loan balances. The income on short-term liquid assets decreased $598,000 due to a $57.5 million decrease in the average balance of these funds. The decrease in interest expense was due to lower rates on time deposits, along with a lower average balance on interest-bearing transaction deposits.

Previous wording

The net interest margin FTE increased 13 bps to 3.22% for the first quarter of 2025, compared to 3.09% for the prior quarter. This increase was due to improved yields on securities and loans, combined with lower deposit costs. The yield on securities increased 11 bps, primarily due to reinvesting lower yielding securities cash flows into higher yielding securities. The yield on loans increased 7 bps due to higher rates on new and renewed loans compared to the existing portfolio yield. The average rate on new and renewed loans was 7.02% for the first quarter of 2025 and 7.25% for the prior quarter. The cost of deposits decreased 10 bps to 1.61% for the first quarter of 2025, compared to 1.71% for the previous quarter, mainly due to lowering selected time deposit rates. As a result of this change, there was a 37 bp decrease in the rate on time deposits during the first quarter.

Current wording

The net interest margin FTE increased 14 bps to 3.36% for the second quarter of 2025, compared to 3.22% for the prior quarter. This increase was due to improved yields on securities and loans, combined with lower deposit costs. The yield on securities increased 12 bps, primarily due to reinvesting lower yielding securities cash flows into higher yielding securities. The yield on loans increased 9 bps due to higher rates on new and renewed loans compared to the prior quarter. The average rate on new and renewed loans was 7.14% for the second quarter of 2025 and 7.02% for the prior quarter. The cost of deposits decreased 5 bps to 1.56% for the second quarter of 2025, compared to 1.61% for the previous quarter, primarily due to maturing time deposits repricing at lower rates.

Previous wording

The FOMC kept the federal funds rate consistent in the first quarter of 2025, with the target federal funds range remaining at 4.25%-4.50%. The market’s expectation is that the FOMC may lower the target range of the federal funds rate several times in 2025. During the remainder of 2025, we anticipate receiving approximately $80.0 million in securities cash flows with an average yield of 3.28%, and we project approximately $162.2 million of fixed rate loans will mature with an average yield of 6.15%. We expect to redeploy these balances into slightly higher yielding assets. Additionally, during the second quarter of 2025, we expect $253.6 million of time deposits to mature with an average rate of 4.06%, which we anticipate repricing into slightly lower cost deposits. As of March 31, 2025, floating rate loans were 17.6% of loans HFI, and floating rate transaction deposits were 8.7% of interest-bearing transaction deposits. Depending on balance sheet activity, the movement in interest rates, and the economic outlook, we expect the net interest income and net interest margin FTE to remain fairly consistent for the remainder of 2025.

Current wording

The FOMC kept the federal funds rate consistent in the first half of 2025, with the target federal funds range remaining at 4.25%-4.50%. The market’s expectation is that the FOMC may lower the target range of the federal funds rate in the second half of 2025. During the remainder of 2025, we anticipate receiving approximately $50.0 million in securities cash flows with an average yield of 3.47%, and we project approximately $112.7 million of fixed rate loans will mature with an average yield of 6.14%. We expect to redeploy these balances into slightly higher yielding assets. Additionally, during the second half of 2025, we expect $439.0 million of time deposits to mature with an average rate of 3.71%. Weanticipate maintaining a fairly consistent cost of deposits in the second half of 2025. As of June 30, 2025, floating rate loans were 18.0% of loans HFI, and floating rate transaction deposits were 8.9% of interest-bearing transaction deposits. Depending on balance sheet activity, the movement in interest rates, and the economic outlook, we expect the net interest income and net interest margin FTE to increase slightly in the third and fourth quarters of 2025.

Previous wording

(1)Includes average outstanding balances of loans HFS of$2.6 million and$3.2 million for the three months ended March 31, 2025 and December 31, 2024, respectively.

Current wording

(1)Includes average outstanding balances of loans HFS of$2.5 million and$2.6 million for the three months ended June 30, 2025 and March 31, 2025, respectively.

Previous wording

Net interest income for the three months ended March 31, 2025 was $24.6 million, which was $3.2 million, or 15.2%, higher than $21.4 million for the three months ended March 31, 2024. Net interest income increased due to a $2.8 million increase in interest and dividend income, combined with a $457,000 decrease in interest expense.

Current wording

Net interest income for the six months ended June 30, 2025 was $50.4 million, which was $7.3 million, or 16.9%, higher than $43.2 million for the six months ended June 30, 2024. Net interest income increased due to a $5.8 million increase in interest and dividend income, combined with a $1.4 million decrease in interest expense.

Previous wording

The increase in interest and dividend income for the three months ended March 31, 2025, when compared to the three months ended March 31, 2024, was due to higher interest income on loans and securities, partially offset by a decrease in interest income on short-term liquid assets. Loan income increased $2.4 million due to higher rates on new and renewed loans compared to the existing portfolio yield, combined with higher balances in loans HFI. Securities income increased $792,000 primarily due to reinvesting lower yielding securities cash flows into higher yielding securities. The interest income on short-term liquid assets decreased $378,000 due to the FOMC lowering the federal funds rate during the second half of 2024. The decrease in interest expense for the three months ended March 31, 2025, when compared to the three months ended March 31, 2024, was primarily due to lower rates on time deposits.

Current wording

The increase in interest and dividend income for the six months ended June 30, 2025, when compared to the six months ended June 30, 2024, was due to higher interest income on loans and securities, partially offset by a decrease in interest income on short-term liquid assets. Loan income increased $5.0 million due to higher rates on new and renewed loans compared to the existing portfolio yield, combined with higher average loan balances. Securities income increased $1.9 million primarily due to reinvesting lower yielding securities cash flows into higher yielding securities. Interest income on short-term liquid assets decreased $1.0 million due to the FOMC lowering the federal funds rate during the second half of 2024. The decrease in interest expense for the six months ended June 30, 2025, when compared to the six months ended June 30, 2024, was due to lower rates on total interest-bearing deposits, partially offset by a higher average balance in these deposits.

Previous wording

Net interest margin FTE increased 39 bps to 3.22% for the three months ended March 31, 2025, from 2.83% for the three months ended March 31, 2024, primarily due to higher yields on securities and loans, combined with lower deposit costs. The yield on securities increased 47 bps mainly due to reinvesting lower yielding securities cash flows into higher yielding securities. The yield on loans increased 32 bps due to higher rates on new and renewed loans compared to the existing portfolio yield. The cost of deposits decreased 9 bps to 1.61% for the three months ended March 31, 2025, from 1.70% for the three months ended March 31, 2024, due to a 19 bp decrease in the rate on interest-bearing deposits. Within total interest-bearing deposits, the rate on time deposits and interest-bearing transaction deposits decreased 32 and 11 bps, respectively. These decreases occurred as we adjusted rates on selected transaction and time deposits during the second half of 2024 in response to the federal funds rate decreases by the FOMC. We also lowered selected time deposit rates in the first quarter of 2025.

Current wording

The yield on securities increased 49 bps mainly due to reinvesting lower yielding securities cash flows into higher yielding securities. The yield on loans increased 31 bps due to higher rates on new and renewed loans compared to the existing portfolio yield. The cost of deposits decreased 13 bps to 1.59% for the six months ended June 30, 2025, from 1.72% for the six months ended June 30, 2024, due to a 24 bp decrease in the rate on interest-bearing deposits. Within total interest-bearing deposits, the rate on time deposits and interest-bearing transaction deposits decreased 42 and 13 bps, respectively. These decreases occurred as we adjusted rates on selected transaction and time deposits during the second half of 2024 in response to the federal funds rate decreases by the FOMC. We also lowered selected time deposit rates in the first quarter of 2025.

Previous wording

The following table presents average balance sheet information, interest income, interest expense, and the corresponding average yields earned and rates paid for the three months ended March 31, 2025 and 2024:

Current wording

The following table presents average balance sheet information, interest income, interest expense, and the corresponding average yields earned and rates paid for the six months ended June 30, 2025 and 2024:

Previous wording

(1)Includes average outstanding balances of loans HFS of $2.6 million and $2.0 million for the three months ended March 31, 2025 and 2024, respectively.

Current wording

(1)Includes average outstanding balances of loans HFS of $2.6 million and $2.6 million for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

The provision for credit losses for the first quarter of 2025 was $450,000 for loans, which was $150,000 higher than the provision for credit losses of $300,000 for the prior quarter. The increase in the first quarter of 2025 was related to loan growth in the quarter, combined with uncertainty regarding tariffs and trade. The provision in the fourth quarter of 2024, which included $200,000 for loans and $100,000 for unfunded loan commitments, was due to potential economic challenges resulting from the recent inflationary environment, changing monetary policy, and loan growth. We will continue to evaluate future provision needs in relation to current economic situations, loan growth, trends in asset quality, forecasted information, and other conditions influencing loss expectations

Current wording

The provision for credit losses for the second quarter of 2025 was $450,000 for loans, which was consistent with the prior quarter. The provision in the first and second quarters of 2025 was due to loan growth, combined with uncertainty regarding tariffs and trade. We will continue to evaluate future provision needs in relation to current economic situations, loan growth, trends in asset quality, forecasted information, and other conditions influencing loss expectations.

Previous wording

Noninterest income increased $277,000 to $5.3 million for the first quarter of 2025 compared to $5.0 million for the fourth quarter of 2024. The increase in noninterest income was mainly due to higher brokerage income and a gain on equity securities, partially offset by lower mortgage loan income and SBIC income.

Current wording

Noninterest income decreased $554,000 to $4.7 million for the second quarter of 2025 compared to $5.3 million for the first quarter of 2025. The decrease in noninterest income was mainly due to lower brokerage income and SBIC income.

Previous wording

Brokerage income increased $401,000 to $1.3 million for the first quarter of 2025, compared to the prior quarter. The higher income in the first quarter of 2025 was due to increased investing activity by clients. Assets under management were $1.14 billion as of March 31, 2025, which was consistent with December 31, 2024.

Current wording

Brokerage income decreased $336,000 to $989,000 for the second quarter of 2025, compared to the prior quarter. The lower income in the second quarter of 2025 was due to decreased investing activity by clients. Assets under management were $1.19 billion as of June 30, 2025, and $1.14 billion as of March 31, 2025.

Previous wording

SBIC income decreased $66,000 to $280,000 for the first quarter of 2025, compared to the prior quarter. This decrease was primarily due to lower normal income received from these partnerships. We expect SBIC income to be lower in future quarters due to fund value fluctuations.

Current wording

SBIC income decreased $233,000 to $47,000 for the second quarter of 2025, compared to the prior quarter. This decrease was mainly due to fund value adjustments as an SBIC fund enters its wind-down phase. We expect SBIC income to fluctuate in future quarters.

Previous wording

Brokerage income increased $338,000 to $1.3 million for the three months ended March 31, 2025, compared to the same period prior year, due to increased investing activity by clients. Assets under management were $1.14 billion and $1.07 billion as of March 31, 2025 and 2024, respectively.

Current wording

Brokerage income increased $434,000 to $2.3 million for the six months ended June 30, 2025, compared to the same period prior year, due to increased investing activity by clients in the first half of 2025. Assets under management were $1.19 billion and $1.09 billion as of June 30, 2025 and 2024, respectively.

Previous wording

Debit card income, net, decreased $30,000 to $992,000 for the three months ended March 31, 2025, compared to the same period prior year. For the three months ended March 31, 2024, debit card income benefited from $145,000 of nonrecurring income due to the termination of our prior debit card provider contract. This decrease was partially offset by lower debit card expenses for the three months ended March 31, 2025, due to the new debit card provider contract.

Current wording

Debit card income, net, increased $103,000 to $2.1 million for the six months ended June 30, 2025, compared to the same period prior year. For the six months ended June 30, 2025, debit card expenses were lower due to the new debit card provider contract. The first half of 2024 benefited from $145,000 of nonrecurring income due to the termination of our prior debit card provider contract.

Previous wording

Operating expense decreased $252,000 to $16.6 million for the first quarter of 2025, compared to $16.8 million for the fourth quarter of 2024. Thedecrease in operating expenses was mainly due to lower data processing expense and loan and deposit expenses, partially offset by higher personnel expenses.

Current wording

Operating expenses increased $779,000 to $17.4 million for the second quarter of 2025, compared to $16.6 million for the first quarter of 2025. Theincrease in operating expenses was mainly due to higher data processing expense, loan and deposit expenses, and personnel expenses.

Previous wording

Loan and deposit expenses decreased $272,000 to $62,000 for the first quarter of 2025, compared to the prior quarter. This decrease was primarily attributable to receipt of a $173,000 negotiated, variable rebate from a vendor in the first quarter of 2025.

Current wording

Loan and deposit expenses increased $336,000 to $398,000 for the second quarter of 2025, compared to the prior quarter. The first quarter of 2025 benefited from the receipt of a $173,000 negotiated, variable rebate from a vendor. Also, in the second quarter of 2025, there was an increase in loan-related expenses due to the timing of mortgage expenses and higher collections expense.

Previous wording

Personnel expenses increased $254,000 to $10.0 million for the first quarter of 2025, compared to the prior quarter. This increase was primarily due to an increase in head count, restarting of payroll tax expense, and increased revenue-based commission compensation. As of March 31, 2025 and December 31, 2024, we had 375 and 369 total employees, respectively.

Current wording

Personnel expenses increased $193,000 to $10.2 million for the second quarter of 2025, compared to the prior quarter. This increase was primarily due to annual raises effective April 2025. As of June 30, 2025 and March 31, 2025, we had 374 and 375 total employees, respectively.

Previous wording

Operating expenses increased $715,000 to $16.6 million for the three months ended March 31, 2025, compared to $15.9 million for the three months ended March 31, 2024. Theincrease in operating expenses was mainly due to higher personnel expenses, occupancy and equipment expenses, technology expenses, and loan and deposit expenses, partially offset by lower other taxes and data processing expense.

Current wording

Operating expenses increased $1.4 million to $34.0 million for the six months ended June 30, 2025, compared to $32.6 million for the six months ended June 30, 2024. Theincrease in operating expenses was mainly due to higher personnel expenses, occupancy and equipment expenses, technology expenses, loan and deposit expenses, and data processing expense.

Previous wording

Personnel expenses increased $473,000 to$10.0 million for thethree months ended March 31, 2025, compared to the same period prior year. This increase was primarily due to an increase in headcount and increased revenue-based commission compensation. As of March 31, 2025 and 2024, we had 375 and 358 total employees, respectively.

Current wording

Personnel expenses increased $1.1 million to$20.2 million for thesix months ended June 30, 2025, compared to the same period prior year. This increase was primarily due to an increase in headcount and increased revenue-based commission compensation. As of June 30, 2025 and 2024, we had 374 and 361 total employees, respectively.

Previous wording

Occupancy and equipment expenses increased $178,000 to$1.8 million for thethree months ended March 31, 2025, compared to the same period prior year. This increase was primarily due to an increase in equipment maintenance contract expense, a full period of expenses related to our new banking center opened in the New Orleans market in 2024, and nonrecurring expenses related to the renovation of a banking center.

Current wording

Occupancy and equipment expenses increased $234,000 to$3.5 million for thesix months ended June 30, 2025, compared to the same period prior year. This increase was primarily due to an increase in maintenance expense, a full period of expenses related to our New Orleans market 2024 expansion, and nonrecurring expenses related to a banking center renovation. The same period prior year had $67,000 of non-recurring expenses related to our new location in the New Orleans market and other 2024 property renovations.

Previous wording

Technology expenses increased $126,000 to $835,000 for the three months ended March 31, 2025, compared to the same period prior year. This increase was primarily due to continued software technology enhancements and upgrades.

Current wording

Technology expenses increased $222,000 to $1.7 million for the six months ended June 30, 2025, compared to the same period prior year. This increase was primarily due to continued software technology enhancements and upgrades.

Previous wording

Loan and deposit expenses increased $104,000 to $62,000 for the three months ended March 31, 2025, compared to the same period prior year. For the three months ended March 31, 2025, we received a $173,000 negotiated, variable rebate from a vendor compared to a $262,000 similar rebate in the same period prior year.

Current wording

Loan and deposit expenses increased $193,000 to $460,000 for the six months ended June 30, 2025, compared to the same period prior year. In the first quarter of 2025, we received a $173,000 negotiated, variable rebate from a vendor compared to a $262,000 similar rebate in the same period prior year. Also, in the second quarter of 2025, there was an increase in loan-related expenses due to the timing of mortgage expenses and higher collections expense.

Previous wording

Data processing expense decreased $59,000 to $288,000 for the three months ended March 31, 2025, compared to the same period prior year. This decrease was due to receipt of a $447,000 periodic refund from our data processing center in the first quarter of 2025 compared to a $284,000 similar refund in the same period prior year. This decrease was partially offset by new expenses and $14,000 of nonrecurring implementation fees related toonline banking, mobile banking, and bill payment systems implemented in the first quarter of 2025.

Current wording

Data processing expense increased $11,000 to $1.0 million for the six months ended June 30, 2025, compared to the same period prior year. This increase was due to new expenses and $25,000 of nonrecurring implementation fees related to our first quarter 2025 online, mobile banking, and bill payment system upgrades. This increase was partially offset by the receipt of a $447,000 periodic refund from our data processing center in the first quarter of 2025, compared to a $284,000 similar refund in the same period prior year.

Previous wording

For the quarters ended March 31, 2025 and December 31, 2024, income tax expense totaled $2.5 million and $2.2 million, respectively. This increase in income tax expense was primarily due to the increase in pre-tax income. Our effective income tax rate for the quarters ended March 31, 2025 and December 31, 2024, was 19.4% for each quarter.

Current wording

For the quarters ended June 30, 2025 and March 31, 2025, income tax expense remained consistent at $2.5 million. The slight increase in income tax expense was due to the increase to our accrued tax rate during the second quarter of 2025. Our effective income tax rates for the quarters ended June 30, 2025 and March 31, 2025, were 19.8% and 19.4%, respectively.

Previous wording

For the three months ended March 31, 2025 and 2024, income tax expense totaled $2.5 million and $1.9 million, respectively. The increase in income tax expense was primarily due to the increase in pre-tax income. Our effective income tax rates for the three months ended March 31, 2025 and 2024, were 19.4% and 19.1%, respectively.

Current wording

For the six months ended June 30, 2025 and 2024, income tax expense totaled $5.0 million and $3.8 million, respectively. The increase in income tax expense was primarily due to the increase in pre-tax income. Our effective income tax rates for the six months ended June 30, 2025 and 2024, were 19.6% and 19.2%, respectively.

Previous wording

As of March 31, 2025, assets were $3.19 billion, which was $36.8 million, or 1.2%, higher than $3.15 billion as of December 31, 2024, primarily due to an increase in deposits. Total deposits increased $20.6 million, or 0.7%, to $2.83 billion as of March 31, 2025, from $2.81 billion as of December 31, 2024. Cash and cash equivalents decreased $16.8 million, or 6.3%, to $252.2 million and were 7.91% of assets as of March 31, 2025. Total securities increased $14.7 million, or 2.1%, to $699.5 million and were 21.95% of assets as of March 31, 2025. Loans HFI increased $39.7 million, or 1.9%, to $2.11 billion as of March 31, 2025. As of March 31, 2025, and December 31, 2024, we had no borrowings. Stockholders’ equity increased $13.6 million during the first three months of 2025 to $333.3 million as of March 31, 2025. As of March 31, 2025, the loans HFI to deposits ratio was 74.84%, compared to 73.97% as of December 31, 2024, and the noninterest-bearing deposits to total deposits ratio was 32.08%, compared to 30.89% as of December 31, 2024.

Current wording

As of June 30, 2025, assets were $3.17 billion, which was $18.5 million, or 0.6%, higher than $3.15 billion as of December 31, 2024. Total deposits were consistent at $2.81 billion as of June 30, 2025 and December 31, 2024. Cash and cash equivalents decreased $58.5 million, or 21.8%, to $210.4 million and were 6.64% of assets as of June 30, 2025. Total securities increased $12.4 million, or 1.8%, to $697.3 million and were 22.01% of assets as of June 30, 2025. Loans HFI increased $63.6 million, or 3.1%, to $2.14 billion as of June 30, 2025. As of June 30, 2025, and December 31, 2024, we had no borrowings. Stockholders’ equity increased $15.6 million during the first six months of 2025 to $335.4 million as of June 30, 2025. As of June 30, 2025, the loans HFI to deposits ratio was 76.09%, compared to 73.97% as of December 31, 2024, and the noninterest-bearing deposits to total deposits ratio was 31.95%, compared to 30.89% as of December 31, 2024.

Previous wording

Interest-bearing deposits in other banks were the third-largest component of earning assets as of March 31, 2025. Excess liquidity that is not being deployed into loans or securities is placed in these accounts. As of March 31, 2025, interest-bearing deposits in other banks were $215.7 million and were 6.8% of assets, a decrease of $22.7 million, or 9.5%, compared to $238.4 million and 7.6% of assets as of December 31, 2024. This decrease was primarily due to funding loan and securities growth, which exceeded deposit growth in the first quarter of 2025.

Current wording

Interest-bearing deposits in other banks were the third-largest component of earning assets as of June 30, 2025. Excess liquidity that is not being deployed into loans or securities is placed in these accounts. As of June 30, 2025, interest-bearing deposits in other banks were $168.0 million and 5.3% of assets, a decrease of $70.4 million, or 29.5%, compared to $238.4 million and 7.6% of assets as of December 31, 2024. This decrease was primarily due to funding loan and securities growth, which exceeded deposit growth in the first half of 2025.