Investar Holding Corp

Previous wording

With respect to the pending WFB transaction, forward-looking statements include, but are not limited to, statements about the potential benefits of the transaction, including future financial and operating results; statements about the Company’s plans, objectives, expectations and intentions; statements about the expected timing of completion of the proposed merger; and other statements that are not historical facts. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include risks and uncertainties relating to: (i) the ability to obtain the requisite shareholder approvals; (ii) the risk that the Company may be unable to obtain governmental and regulatory approvals required to consummate the proposed merger, or required governmental and regulatory approvals may delay the merger or result in the imposition of conditions that could cause the parties to abandon the merger; (iii) the risk that a condition to closing may not be satisfied; (iv) the timing to consummate the proposed merger; (v) the risk that the businesses will not be integrated successfully; (vi) the risk that the cost savings and any other synergies from the proposed merger may not be fully realized or may take longer to realize than expected; (vii) disruption from the proposed merger making it more difficult to maintain relationships with customers, employees or vendors; and (viii) the diversion of management time on merger-related issues.

Current wording

With respect to the pending WFB transaction, forward-looking statements include, but are not limited to, statements about the potential benefits of the transaction, including future financial and operating results; statements about the Company’s plans, objectives, expectations and intentions; statements about the expected timing of completion of the proposed merger; and other statements that are not historical facts. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include risks and uncertainties relating to: (i) the risk that a condition to closing may not be satisfied; (ii) the timing to consummate the proposed merger; (iii) the risk that the businesses will not be integrated successfully; (iv) the risk that the cost savings and any other synergies from the proposed merger may not be fully realized or may take longer to realize than expected; (v) disruption from the proposed merger making it more difficult to maintain relationships with customers, employees or vendors; (vi) the diversion of management time on merger-related issues; and (vii) the impact of litigation or any other legal proceedings.

Previous wording

These factors should not be construed as exhaustive. Additional information on these and other risk factors can be found in Part I. Item 1A. “Risk Factors” and Part II. Item 7. “MD&A – Cautionary Note Regarding Forward-Looking Statements” in the Company’s Annual Report and in Part II. Item 1A. “Risk Factors” of this report.

Current wording

These factors should not be construed as exhaustive. Additional information on these and other risk factors can be found in Part I. Item 1A. “Risk Factors” and Part II. Item 7. “MD&A – Cautionary Note Regarding Forward-Looking Statements” in the Company’s Annual Report and in Part II. Item 1A. “Risk Factors” of this report. Additional information and risk factors related to the WFB transaction can be found in the definitive proxy statement/prospectus filed with the SEC on September 23, 2025, as amended.

Previous wording

Our strategy focuses on consistent, quality earnings through the optimization of our balance sheet. Our strategy includes originating and renewing high quality, primarily variable-rate, loans and allowing higher risk credit relationships to run off. We have kept duration short on our liabilities to provide flexibility to secure lower cost funding that was accretive to our net interest margin. Our strategy also includes growth through acquisitions, including whole-bank acquisitions, strategic branch acquisitions and asset acquisitions. We have completed seven whole-bank acquisitions since 2011 and regularly review acquisition opportunities. Our most recent whole bank acquisition was completed in April 2021. On July 1, 2025, we announced that we had entered into a definitive agreement to acquire WFB. For additional information, see Note 12. Subsequent Eventsand “Pending Acquisition of WFB” below.

Current wording

Our strategy focuses on consistent, quality earnings through the optimization of our balance sheet. Our strategy includes originating and renewing high quality, primarily variable-rate, loans and allowing higher risk credit relationships to run off. We have kept duration short on our liabilities to provide flexibility to secure lower cost funding that was accretive to our net interest margin. Our strategy also includes growth through acquisitions, including whole-bank acquisitions, strategic branch acquisitions and asset acquisitions. We have completed seven whole-bank acquisitions since 2011 and regularly review acquisition opportunities. Our most recent whole bank acquisition was completed in April 2021. On July 1, 2025, we announced that we had entered into an Agreement and Plan of Merger (the “Merger Agreement”). For additional information, see “Pending Acquisition of WFB” below.

Previous wording

On July 1, 2025, we announced that we had entered into a definitive agreement to acquire WFB, headquartered in Wichita Falls, Texas and its wholly-owned subsidiary, First National Bank. First National Bank operates seven branches and two mortgage offices in north Texas and had approximately $1.4 billion in assets at June 30, 2025. The closing of the transaction is subject to the satisfaction of all closing conditions, including the receipt of all required regulatory and shareholder approvals. For additional information, see Note 12. Subsequent Events.

Current wording

On July 1, 2025, we announced that we had entered into the Merger Agreement to acquire WFB, headquartered in Wichita Falls, Texas and its wholly-owned subsidiary, First National Bank. The Merger Agreement provides for the merger of WFB with and into the Company, with the Company as the surviving corporation. Immediately following the merger, First National Bank will be immediately merged with and into the Bank, with the Bank as the surviving bank. First National Bank operates seven branches and one mortgage office in north Texas, and, at June 30, 2025, had$1.4 billion in total assets, $1.1 billion in net loans and $1.1 billion in total deposits. Under the terms of the Merger Agreement, all of the issued and outstanding shares of WFB common stock will be converted into and represent the right to receive in the aggregate $7.2 million in cash from the Company and 3,955,334 shares of Company common stock, subject to certain adjustments. Based on the Company’s closing stock price of $19.32 as of June 30, 2025, the transaction is valued at approximately $83.6 million in the aggregate.

Previous wording

Changing Inflation andInterest*** Rates***. Inflation increased rapidly during 2021 through June 2022. After June 2022, the rate of inflation generally declined although it has remained above the Federal Reserve’s target inflation rate of 2%. In response, the Federal Reserve raised the federal funds target rate multiple times from March 2022 through July 2023. During 2023, the Federal Reserve raised the federal funds target rate four times, from 4.25% to 4.50%, to 5.25% to 5.50%. During 2024, beginning in September 2024, the Federal Reserve reduced the federal funds target rate three times by 100 basis points on a cumulative basis to 4.25% to 4.50%. Accordingly, the prevailing federal funds target rate for the six months ended June 30, 2025 was 100 basis points lower than for the six months ended June 30, 2024.

Current wording

Changing Inflation andInterest*** Rates***. Inflation increased rapidly during 2021 through June 2022. After June 2022, the rate of inflation generally declined although it has remained above the Federal Reserve’s target inflation rate of 2%. In response, the Federal Reserve raised the federal funds target rate multiple times from March 2022 through July 2023. During 2023, the Federal Reserve raised the federal funds target rate four times, from 4.25% to 4.50%, to 5.25% to 5.50%. During 2024, beginning in September 2024, the Federal Reserve reduced the federal funds target rate three times by 100 basis points on a cumulative basis to 4.25% to 4.50%. In September 2025, the Federal Reserve reduced the federal funds target rate by 25 basis points to 4.00% to 4.25%. Accordingly, the prevailing federal funds target rate for the nine months ended September 30, 2025 was lower than for the nine months ended September 30, 2024.

Previous wording

In response to the disruptions and related publicity, we formed an internal task force that included members of our ALCO. The task force met frequently to review our liquidity position and liquidity sources, and oversaw the Bank’s process to qualify for the BTFP. In addition, we took steps to inform our customers about our financial position, liquidity and insured deposit products. During the second quarter of 2023, we utilized the BTFP and reduced FHLB advances. The Bank utilized this source of funding due to its lower rate, the ability to prepay the obligations without penalty, and as a means to lock in funding. During the fourth quarter of 2023 and again in the first quarter of 2024, the Bank refinanced its BTFP borrowings with new borrowings under the program due to more favorable rates. The Federal Reserve ceased making new loans under the BTFP on March 11, 2024. During the third quarter of 2024, we began paying down borrowings under the BTFPand repaid all of the remaining borrowings under the BTFP in the fourth quarter of 2024. As of June 30, 2025, estimated uninsured deposits represented approximately 34% of our total deposits. For additional information, see “Discussion and Analysis of Financial Condition – “Deposits,” “Borrowings,” “Liquidity and Capital Resources” and our Annual Report, Part II. Item 1A. Risk Factors.

Current wording

In response to the disruptions and related publicity, we formed an internal task force that included members of our ALCO. The task force met frequently to review our liquidity position and liquidity sources, and oversaw the Bank’s process to qualify for the BTFP. In addition, we took steps to inform our customers about our financial position, liquidity and insured deposit products. During the second quarter of 2023, we utilized the BTFP and reduced FHLB advances. The Bank utilized this source of funding due to its lower rate, the ability to prepay the obligations without penalty, and as a means to lock in funding. During the fourth quarter of 2023 and again in the first quarter of 2024, the Bank refinanced its BTFP borrowings with new borrowings under the program due to more favorable rates. The Federal Reserve ceased making new loans under the BTFP on March 11, 2024. During the third quarter of 2024, we began paying down borrowings under the BTFPand repaid all of the remaining borrowings under the BTFP in the fourth quarter of 2024. As of September 30, 2025, estimated uninsured deposits represented approximately 35% of our total deposits. For additional information, see “Discussion and Analysis of Financial Condition – “Deposits,” “Borrowings,” “Liquidity and Capital Resources” and our Annual Report, Part II. Item 1A. Risk Factors.

Previous wording

In connection with the WFB transaction, on July 1, 2025 we completed a private placement of 32,500 shares of our newly designated Series A Preferred Stock at a price of $1,000 per share, for aggregate gross proceeds of $32.5 million. For additional information, see Note 12. Subsequent Events.

Current wording

Private Placement of Series A Preferred Stock. During the third quarter of 2025, we completed a private placement of 32,500 shares of our newly designated Series A Preferred Stock with selected institutional and other accredited investors at a price of $1,000 per share, for aggregate gross proceeds of $32.5 million. The net proceeds were $30.4 million, after deducting placement agent fees and other offering-related expenses.

Previous wording

At June 30, 2025, the Company and Bank each were in compliance with all regulatory capital requirements, and the Bank was considered “well-capitalized” under the FDIC’s prompt corrective action regulations. Key components of our performance for the six months ended June 30, 2025 are summarized below.

Current wording

At September 30, 2025, the Company and Bank each were in compliance with all regulatory capital requirements, and the Bank was considered “well-capitalized” under the FDIC’s prompt corrective action regulations. Key components of our performance for the three and nine months ended September 30, 2025 are summarized below.

Previous wording

General. Loans constitute our most significant asset, comprising 77% and 78% of our total assets at June 30, 2025 and December 31, 2024, respectively. Total loans decreased $18.7 million, or 0.9%, to$2.11 billion at June 30, 2025, compared to$2.13 billion at December 31, 2024. Thedecrease in loans was primarily the result of loan amortization. Given the high interest rate environment, we are emphasizing origination of high margin loans that promote long-term profitability and proactively exiting credit relationships that do not fit this strategy. Our variable-rate loans as a percentage of total loans increased to 34% at June 30, 2025 compared to 32% at December 31, 2024.

Current wording

General. Loans constitute our most significant asset, comprising 77% and 78% of our total assets at September 30, 2025 and December 31, 2024, respectively. Total loans increased $25.4 million, or 1.2%, to$2.15 billion at September 30, 2025, compared to$2.13 billion at December 31, 2024. Theincrease in loans was primarily the result of organic growth. Given the high interest rate environment, we are emphasizing origination of high margin loans that promote long-term profitability and proactively exiting credit relationships that do not fit this strategy. Our variable-rate loans as a percentage of total loans increased to 36% at September 30, 2025 compared to 32% at December 31, 2024.

Previous wording

At June 30, 2025, the Company’s business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was$993.6 million, an increase of$17.5 million, or 1.8%, compared to$976.2 million at December 31, 2024. Theincrease in the business lending portfoliois primarily driven by organic growth and higher utilization of credit lines, particularly on commercial and industrial relationships.

Current wording

At September 30, 2025, the Company’s business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $1.02 billion, an increase of$47.4 million, or 4.9%, compared to$976.2 million at December 31, 2024. Theincrease in the business lending portfoliowas primarily driven by organic growth and higher utilization of credit lines, particularly on commercial and industrial relationships.

Previous wording

Nonowner-occupied loans totaled $466.0 million at June 30, 2025, a decrease of $29.3 million, or 5.9%, compared to $495.3 million at December 31, 2024. The decrease in nonowner-occupied loans is primarily due to loan amortization and payoffs that aligned with our continued strategy to optimize and de-risk the mix of the portfolio.

Current wording

Nonowner-occupied loans totaled $459.7 million at September 30, 2025, a decrease of $35.6 million, or 7.2%, compared to $495.3 million at December 31, 2024. The decrease in nonowner-occupied loans was primarily due to loan amortization and payoffs that aligned with our continued strategy to optimize and de-risk the mix of the portfolio.

Previous wording

Construction and development loans totaled $141.7 million at June 30, 2025, a decrease of $12.9 million, or 8.3%, compared to $154.6 million at December 31, 2024. The decrease in construction and development loans is primarily due to conversions to permanent loans upon completion of construction.

Current wording

Construction and development loans totaled $140.6 million at September 30, 2025, a decrease of $14.0 million, or 9.1%, compared to $154.6 million at December 31, 2024. The decrease in construction and development loans was primarily due to conversions to permanent loans upon completion of construction.

Previous wording

During the third quarter of 2023 we exited the consumer mortgage loan origination business to transition into shorter duration, higher risk-adjusted return asset classes, in an effort to focus more on our core business and optimize profitability. The consumer mortgage portfolio was approximately $233.1 million and $242.5 million at June 30, 2025 and December 31, 2024, respectively, substantially all of which is included in the 1-4 family category. The remaining loans in the 1-4 family category consisted primarily of second mortgages, home equity loans, home equity lines of credit, and business purpose loans secured by 1-4 family residential real estate.

Current wording

During the third quarter of 2023 we exited the consumer mortgage loan origination business to transition into shorter duration, higher risk-adjusted return asset classes, in an effort to focus more on our core business and optimize profitability. The consumer mortgage portfolio was approximately$229.1 million and $242.5 million at September 30, 2025 and December 31, 2024, respectively, substantially all of which is included in the 1-4 family category. The remaining loans in the 1-4 family category consisted primarily of second mortgages, home equity loans, home equity lines of credit, and business purpose loans secured by 1-4 family residential real estate.

Previous wording

The following table sets forth loans outstanding at June 30, 2025, which, based on remaining scheduled repayments of principal, are due in the periods indicated. Loans with balloon payments and longer amortizations are often repriced and extended beyond the initial maturity when credit conditions remain satisfactory. Demand loans, loans having no stated schedule of repayments and no stated maturity and overdrafts are reported below as due in one year or less (dollars in thousands).

Current wording

The following table sets forth loans outstanding at September 30, 2025, which, based on remaining scheduled repayments of principal, are due in the periods indicated, as well as the amount of loans with fixed and variable rates in each maturity category. Loans with balloon payments and longer amortizations are often repriced and extended beyond the initial maturity when credit conditions remain satisfactory. Demand loans, loans having no stated schedule of repayments and no stated maturity and overdrafts are reported below as due in one year or less (dollars in thousands).

Previous wording

We purchase investment securities primarily to provide a source for meeting liquidity needs, with return on investment a secondary consideration. We also use investment securities as collateral for certain deposits and other types of borrowings. Investment securities represented 14% of our total assets and totaled$397.2 million at June 30, 2025, an increase of$23.4 million, or 6.3%, from$373.8 million at December 31, 2024. Theincrease in investment securities at June 30, 2025 compared to December 31, 2024 was driven primarily by a $24.4 million increase in residential mortgage-backed securities. Net unrealized losses in our AFS investment securities portfolio decreased to $52.9 million at June 30, 2025 compared to $61.4 million at December 31, 2024 primarily due to lower prevailing market interest rates. For additional information, see Note 3. Investment Securities.

Current wording

We purchase investment securities primarily to provide a source for meeting liquidity needs, with return on investment a secondary consideration. We also use investment securities as collateral for certain deposits and other types of borrowings. Investment securities represented 15% of our total assets and totaled$418.1 million at September 30, 2025, an increase of$44.3 million, or 11.8%, from$373.8 million at December 31, 2024. Theincrease in investment securities at September 30, 2025 compared to December 31, 2024 was driven primarily by a $36.5 million increase in residential mortgage-backed securities. Net unrealized losses in our AFS investment securities portfolio decreased to $47.5 million at September 30, 2025 compared to $61.4 million at December 31, 2024 primarily due to lower prevailing market interest rates. For additional information, see Note 3. Investment Securities.

Previous wording

The investment portfolio consists of AFS and HTM securities. We do not hold any investments classified as trading. We classify debt securities as HTM if management has the positive intent and ability to hold the securities to maturity. HTM debt securities are stated at amortized cost. Securities not classified as HTM are classified as AFSand are stated at fair value. As of June 30, 2025, AFS securities comprised 90% of our total investment securities.

Current wording

The investment portfolio consists of AFS and HTM securities. We do not hold any investments classified as trading. We classify debt securities as HTM if management has the positive intent and ability to hold the securities to maturity. HTM debt securities are stated at amortized cost. Securities not classified as HTM are classified as AFSand are stated at fair value. As of September 30, 2025, AFS securities comprised 89% of our total investment securities.

Previous wording

Total deposits were$2.34 billion at June 30, 2025, a decrease of$7.8 million, or 0.3%, compared to$2.35 billion at December 31, 2024. There were no brokered demand deposits at June 30, 2025, compared to $47.3 million at December 31, 2024. Total deposits, excluding $47.3 million of brokered demand deposits at December 31, 2024, increased $39.6 million, or 1.7%, to$2.34 billion at June 30, 2025, compared to $2.30 billion at December 31, 2024. We utilize brokered demand deposits when pricing is more favorable than other short-term borrowings.

Current wording

Total deposits were$2.37 billion at September 30, 2025, an increase of$26.7 million, or 1.1%, compared to$2.35 billion at December 31, 2024. There were no brokered demand deposits at September 30, 2025, compared to $47.3 million at December 31, 2024. Total deposits, excluding $47.3 million of brokered demand deposits at December 31, 2024, increased $74.1 million, or 3.2%, to$2.37 billion at September 30, 2025, compared to $2.30 billion at December 31, 2024. We utilize brokered demand deposits when pricing is more favorable than other short-term borrowings.

Previous wording

The increase in noninterest-bearing demand deposits, interest-bearing demand deposits, and money market deposits at June 30, 2025 compared to December 31, 2024 is primarily the result of organic growth. We increased rates on our interest-bearing demand deposits during the second quarter of 2025 compared to the second quarter of 2024 to attract and retain lower cost deposits relative to higher-cost short-term borrowings. The decrease in time deposits at June 30, 2025 compared to December 31, 2024 is primarily due to maturities of higher cost time deposits as a result of our strategy to keep duration short and lower rates. Brokered time deposits increased to $256.1 million at June 30, 2025 from $245.5 million at December 31, 2024. We utilize brokered time deposits with laddered maturities, entirely in denominations of less than $250,000, to secure fixed cost funding and reduce short-term borrowings. At June 30, 2025, the balance of brokered time deposits remained below 10% of total assets, and the remaining weighted average duration was approximately four months with a weighted average rate of 4.68%.

Current wording

The increase in noninterest-bearing demand deposits, interest-bearing demand deposits, and money market deposits at September 30, 2025 compared to December 31, 2024 was primarily the result of organic growth. We increased rates on our interest-bearing demand deposits during 2025 compared to 2024 to attract and retain lower cost deposits relative to higher-cost short-term borrowings. The decrease in time deposits at September 30, 2025 compared to December 31, 2024 was primarily due to maturities of higher cost time deposits as a result of our strategy to keep duration short and lower rates. Brokered time deposits decreased to $210.8 million at September 30, 2025 from $245.5 million at December 31, 2024. We utilize brokered time deposits with laddered maturities, entirely in denominations of less than $250,000, to secure fixed cost funding and reduce short-term borrowings. At September 30, 2025, the balance of brokered time deposits remained below 10% of total assets, and the remaining weighted average duration was approximately three months with a weighted average rate of 4.51%.

Previous wording

At June 30, 2025, our estimated uninsured deposits were$785.7 million, or approximately 34% of total deposits, compared to $737.6 million, or approximately 31% of our total deposits at December 31, 2024. The estimates are based on the same methodologies and assumptions used for our regulatory reporting requirements. The insured deposit data does not reflect an evaluation of all of the account ownership category distinctions that would determine the availability of deposit insurance to individual accounts based on FDIC regulations.

Current wording

At September 30, 2025, our estimated uninsured deposits were$825.3 million, or approximately 35% of total deposits, compared to $737.6 million, or approximately 31% of our total deposits at December 31, 2024. The estimates are based on the same methodologies and assumptions used for our regulatory reporting requirements. The insured deposit data does not reflect an evaluation of all of the account ownership category distinctions that would determine the availability of deposit insurance to individual accounts based on FDIC regulations.

Previous wording

We had$11.0 million of securities sold under agreements to repurchase at June 30, 2025 and $8.4 million at December 31, 2024. Our advances from the FHLB were$70.0 million at June 30, 2025, an increase of $2.8 million, compared to FHLB advances of $67.2 million at December 31, 2024. Based on original maturities, at June 30, 2025, $10.0 million of our FHLB advances were short-term and $60.0 million were long-term, compared to $7.2 million short-term and $60.0 million long-term FHLB advances at December 31, 2024. FHLB advances are used to fund new loan and investment activity that is not funded by deposits or other borrowings.

Current wording

We had$15.1 million of securities sold under agreements to repurchase at September 30, 2025 and $8.4 million at December 31, 2024. Our advances from the FHLB were$60.0 million at September 30, 2025, a decrease of $7.2 million, compared to FHLB advances of $67.2 million at December 31, 2024. Based on original maturities, at September 30, 2025, all of our FHLB advances were long-term, compared to $7.2 million short-term and $60.0 million long-term FHLB advances at December 31, 2024. FHLB advances are used to fund new loan and investment activity that is not funded by deposits or other borrowings.

Previous wording

On March 12, 2023, the Federal Reserve established the BTFP. The BTFP was a one-year program which provided additional liquidity through borrowings for a term of up to one year secured by the pledging of certain qualifying securities and other assets valued at par. Beginning in the second quarter of 2023, we utilized the BTFP to secure fixed rate funding for a one-year term and reduce short-term FHLB advances, which are priced daily. We utilized this source of funding due to its lower rate and the ability to prepay the obligations without penalty. The rates on the borrowings under the BTFP were fixed for one year from the day each borrowing was made. During the fourth quarter of 2023 and again in the first quarter of 2024, we refinanced all of our borrowings under the BTFP with new loans under the BTFP with a one-year term due to more favorable rates. The BTFP ceased making new loans as scheduled on March 11, 2024. During the third quarter of 2024, we began paying down borrowings under the BTFP and repaid all of the remaining borrowings under the BTFP in the fourth quarter of 2024. At June 30, 2025 and December 31, 2024, we had no outstanding borrowings under the BTFP.

Current wording

On March 12, 2023, the Federal Reserve established the BTFP. The BTFP was a one-year program that provided additional liquidity through borrowings for a term of up to one year secured by the pledging of certain qualifying securities and other assets valued at par. Beginning in the second quarter of 2023, we utilized the BTFP to secure fixed rate funding for a one-year term and reduce short-term FHLB advances, which are priced daily. We utilized this source of funding due to its lower rate and the ability to prepay the obligations without penalty. The rates on the borrowings under the BTFP were fixed for one year from the day each borrowing was made. During the fourth quarter of 2023 and again in the first quarter of 2024, we refinanced all of our borrowings under the BTFP with new loans under the BTFP with a one-year term due to more favorable rates. The BTFP ceased making new loans as scheduled on March 11, 2024. During the third quarter of 2024, we began paying down borrowings under the BTFP and repaid all of the remaining borrowings under the BTFP in the fourth quarter of 2024. At September 30, 2025 and December 31, 2024, we had no outstanding borrowings under the BTFP.

Previous wording

Typically, the main source of our short-term borrowings are advances from the FHLB; however, during the six months ended June 30, 2024, our primary source of short-term borrowings were borrowings under the BTFP due to more favorable rates. The rate charged for advances from the FHLB is directly tied to the Federal Reserve’s federal funds target rate. As previously discussed, the Federal Reserve target rate was 5.25% to 5.50% during first half of 2024 compared to 4.25% to 4.50% during first half of 2025.

Current wording

Typically, the main source of our short-term borrowings are advances from the FHLB; however, during the three and nine months ended September 30, 2024, our primary source of short-term borrowings were borrowings under the BTFP due to more favorable rates. The rate charged for advances from the FHLB is directly tied to the Federal Reserve’s federal funds target rate. As previously discussed, the Federal Reserve target rate was 4.00% to 4.25% at September 30, 2025 compared to 4.75% to 5.00% at September 30, 2024.

Previous wording

The average balances and cost of short-term borrowings for thesix months ended June 30, 2025 and 2024 are summarized in the table below (dollars in thousands).

Current wording

The average balances and cost of short-term borrowings for the three andnine months ended September 30, 2025 and 2024 are summarized in the table below (dollars in thousands).

Previous wording

Stockholders’ equity was$255.9 million at June 30, 2025, an increase of$14.6 million compared to December 31, 2024. The increase is primarily attributable to $10.8 million of net income for thesix months ended June 30, 2025 and a$6.7 million decrease in accumulated other comprehensive loss due to an increase in the fair value of the Bank’s AFS securities portfolio, partially offset by $2.1 million in dividends declared and $1.3 million for share repurchases.

Current wording

Stockholders’ equity was$295.3 million at September 30, 2025, an increase of$54.0 million compared to December 31, 2024. The increase was primarily attributable tothe issuance of the Series A Preferred Stock, discussed above, $17.0 million of net income for thenine months ended September 30, 2025 and an$11.0 million decrease in accumulated other comprehensive loss due to an increase in the fair value of the Bank’s AFS securities portfolio, partially offset by $3.2 million in dividends declared on common stock, $1.6 million for share repurchases, and $0.5 million in dividends declared on the Series A Preferred Stock.

Previous wording

The primary factors affecting net interest margin are changes in interest rates, competition, and the shape of the interest rate yield curve. The Federal Reserve Board sets various benchmark rates, including the federal funds rate, and thereby influences the general market rates of interest, including the deposit and loan rates offered by financial institutions. The Federal Reserve increased the federal funds target rate four times during 2023, from 4.25% to 4.50%, to 5.25% to 5.50%. During 2024, beginning in September, the Federal Reserve reduced the federal funds target rate three times by 100 basis points on a cumulative basis to 4.25% to 4.50%. Accordingly, the prevailing federal funds target rate during three and six months ended June 30, 2025 was 100 basis points lower than during thethree and six months ended June 30, 2024. For additional discussion, see Certain Events That Affect Period-over-Period Comparability –Changing Inflation and Interest Rates.

Current wording

The primary factors affecting net interest margin are changes in interest rates, competition, and the shape of the interest rate yield curve. The Federal Reserve Board sets various benchmark rates, including the federal funds target rate, and thereby influences the general market rates of interest, including the deposit and loan rates offered by financial institutions. The Federal Reserve increased the federal funds target rate four times during 2023, from 4.25% to 4.50%, to 5.25% to 5.50%. During 2024, beginning in September, the Federal Reserve reduced the federal funds target rate three times by 100 basis points on a cumulative basis to 4.25% to 4.50% where it remained until September 2025. In September 2025, the Federal Reserve reduced the federal funds target rate by 25 basis points to 4.00% to 4.25%. Accordingly, the prevailing federal funds target rate during three and nine months ended September 30, 2025 was lower than during thethree and nine months ended September 30, 2024. For additional discussion, see Certain Events That Affect Period-over-Period Comparability –Changing Inflation and Interest Rates.

Previous wording

Three months ended**June 30, 2025 vs. three months ended June 30, 2024. Net interest income increased 14.2% to$19.6 million for the three months ended June 30, 2025 compared to$17.2 million for the same period in 2024. Theincrease is primarily due to a lower average balance of short-term borrowings and a decrease in the rates paid on time deposits, partially offset by a lower average balance of loans and an increase in the average balance of and rates paid on interest-bearing demand deposits. Average short-term borrowings decreased by$215.6 million for the three months ended June 30, 2025, as we paid all remaining borrowings under the BTFP in the fourth quarter of 2024. The lower average balance of, and a decrease in rates paid on, short-term borrowings resulted in a $2.6 million decrease in interest expense compared to the same period in 2024. A lower average balance of, and a decrease in rates paid on, time deposits resulted in a $1.6 million decrease in interest expense compared to the same period in 2024. Average loans decreased by$64.5 million for the three months ended June 30, 2025 in accordance with our strategy to optimize the balance sheet, which, in addition to lower loan yields, resulted in a$1.0 million decrease in interest income on loans compared to the same period in 2024. Average interest-bearing demand deposits increased by $136.0 million, which, combined with an increase in rates, resulted in a $1.3 million increase in interest expense in the second quarter of 2025 compared to the same period in 2024. Average noninterest-bearing deposits increased by $22.9 million. Rates paid on interest-bearing liabilities decreased primarily as a result of the overall decrease in prevailing interest rates. Our yield on interest-earning assets was flat as the decrease in the yield on loans was offset by an increase in the yield on the investment securities portfolio.

Current wording

Three months ended**September 30, 2025 vs. three months ended September 30, 2024. Net interest income increased 18.5% to$21.2 million for the three months ended September 30, 2025 compared to$17.9 million for the same period in 2024. Theincrease was primarily due to a lower average balance of short-term borrowings and a decrease in the average balance of and rates paid on time deposits, partially offset by an increase in the average balance of and rates paid on interest-bearing demand deposits and a lower average balance of loans. Average short-term borrowings decreased by$179.1 million for the three months ended September 30, 2025, as we paid all remaining borrowings under the BTFP in the fourth quarter of 2024. The lower average balance of, and a decrease in rates paid on, short-term borrowings resulted in a $2.2 million decrease in interest expense compared to the same period in 2024. A lower average balance of, and a decrease in rates paid on, time deposits resulted in a $1.9 million decrease in interest expense compared to the same period in 2024. Average loans decreased by$18.1 million for the three months ended September 30, 2025 in accordance with our strategy to optimize the balance sheet, which, in addition to lower loan yields, resulted in a$0.2 million decrease in interest income on loans compared to the same period in 2024. Average interest-bearing demand deposits increased by $159.2 million, which, combined with an increase in rates, resulted in a $1.4 million increase in interest expense in the third quarter of 2025 compared to the same period in 2024. Average noninterest-bearing deposits increased by $17.9 million. Rates paid on interest-bearing liabilities decreased primarily as a result of the overall decrease in prevailing interest rates. Our yield on interest-earning assets increased primarily due to an increase in the yield on the investment securities portfolio, partially offset by the decrease in the average balance of loans.

Previous wording

Interest income was$35.4 million for the three months ended June 30, 2025, compared to$35.8 million for the same period in 2024. Loan interest income made up substantially all of our interest income for the three months ended June 30, 2025 and 2024, although interest on investment securities contributed 10.3% of interest income during thesecond quarter of 2025 compared to 8.3% during thesecond quarter of 2024. Of the $0.4 million decrease in interest income, a decrease in interest income of $0.7 million can be attributed primarily to the decrease in the volume of loans, partially offset byan increase of$0.3 million, which can be attributed primarily toan increase in the yield earned on investment securities. The overall yield on interest-earning assets was 5.45% for each the three months ended June 30, 2025 and 2024. The loan portfolio yielded 5.94% and 5.96% for the three months ended June 30, 2025 and June 30, 2024, respectively, while the yield on the investment portfolio was 3.22% for the three months ended June 30, 2025 compared to 2.81% for the three months ended June 30, 2024. The overall yield on interest-earning assets was flat for the quarter ended June 30, 2025 compared to the quarter ended June 30, 2024 and was primarily driven by a 41 basis point increase in the yield on the investment securities portfolio, offset by atwo basis point decrease in the yield on the loan portfolio.

Current wording

Interest income was$37.1 million for the three months ended September 30, 2025, compared to$36.8 million for the same period in 2024. Loan interest income made up substantially all of our interest income for the three months ended September 30, 2025 and 2024, although interest on investment securities contributed 10.2% of interest income during thethird quarter of 2025 compared to 8.1% during thethird quarter of 2024. Of the $0.2 million increase in interest income, an increase of$0.8 million can be attributed toa higher average balance of, and an increase in the yield earned on investment securities, partially offset by a decrease in interest income of $0.4 million, which can be attributed to decreases in the volume and yield earned on interest-earning balances with banks and a decrease in interest income of$0.2 million can be attributed primarily to the decrease in the volume of loans. The overall yield on interest-earning assets was 5.53% and 5.51%for the three months ended September 30, 2025 and 2024, respectively. The loan portfolio yielded 6.03% and 6.04% for the three months ended September 30, 2025 and September 30, 2024, respectively, while the yield on the investment portfolio was 3.28% for the three months ended September 30, 2025 compared to 2.82% for the three months ended September 30, 2024. The overall yield on interest-earning assets increased two basis points for the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024 and was primarily driven by a 46 basis point increase in the yield on the investment securities portfolio, partially offset by aone basis point decrease in the yield on the loan portfolio.

Previous wording

Interest expense was$15.7 million for the three months ended June 30, 2025, a decrease of$2.9 million compared to interest expense of$18.6 million for the three months ended June 30, 2024. A decrease in interest expense of$1.9 million resulted from a decrease in the volume of interest-bearing liabilities, primarily short-term borrowings. A decrease of$1.0 million resulted from thedecreasein the cost of interest-bearing liabilities, primarily time deposits. Average interest-bearing liabilities decreased by$75.7 million for the three months ended June 30, 2025 compared to the same period in 2024, as average short-term borrowings decreased by$215.6 million while average interest-bearing deposits increased by$125.5 million, primarily due to increases in average interest-bearing demand deposits. We increased rates on our interest-bearing demand deposits during the second quarter of 2025 compared to the second quarter of 2024 to attract and retain lower cost deposits relative to higher cost short-term borrowings. Average time deposits decreased, as we reduced rates on our time deposits during the second quarter of 2025 compared to the second quarter of 2024 due to lower prevailing market interest rates. The cost of deposits decreased 32 basis points to 3.06% for the three months ended June 30, 2025 compared to 3.38% for the three months ended June 30, 2024 primarily as a result of a decrease in the cost of time deposits, partially offset by a higher average balance of, and an increase in the cost of, interest-bearing demand deposits. The cost of interest-bearing liabilities decreased 45 basis points to 3.13% for the three months ended June 30, 2025 compared to 3.58% for the same period in 2024, primarily due to a lower average balance of short-term borrowings and a decrease in the cost of time deposits, partially offset by a higher cost and average balance of interest-bearing demand deposits.

Current wording

Interest expense was$15.9 million for the three months ended September 30, 2025, a decrease of$3.1 million compared to interest expense of$19.0 million for the three months ended September 30, 2024. A decrease in interest expense of$1.8 million resulted from a decrease in the volume of interest-bearing liabilities, primarily short-term borrowings. A decrease of$1.2 million resulted from thedecreasein the cost of interest-bearing liabilities, primarily time deposits. Average interest-bearing liabilities decreased by$59.9 million for the three months ended September 30, 2025 compared to the same period in 2024, as average short-term borrowings decreased by$179.1 million while average interest-bearing deposits increased by$105.6 million, primarily due to an increase in average interest-bearing demand deposits. We increased rates on our interest-bearing demand deposits during the third quarter of 2025 compared to the third quarter of 2024 to attract and retain lower cost deposits relative to higher cost short-term borrowings. Average time deposits decreased, as we reduced rates on our time deposits during the third quarter of 2025 compared to the third quarter of 2024 due to lower prevailing market interest rates. The cost of deposits decreased 41 basis points to 3.04% for the three months ended September 30, 2025 compared to 3.45% for the three months ended September 30, 2024 primarily as a result of a lower average balance of, and a decrease in the cost of time deposits, partially offset by a higher average balance of, and an increase in the cost of, interest-bearing demand deposits. The cost of interest-bearing liabilities decreased 50 basis points to 3.11% for the three months ended September 30, 2025 compared to 3.61% for the same period in 2024, primarily due to a lower average balance of short-term borrowings and a decrease in the cost of time deposits, partially offset by a higher cost and average balance of interest-bearing demand deposits.

Previous wording

Net interest margin was 3.03% for the three months ended June 30, 2025, an increase of 41 basis points from 2.62% for the three months ended June 30, 2024. Theincrease in net interest margin was primarily driven by a 45 basis point decrease in the cost of interest-bearing liabilities.

Current wording

Net interest margin was 3.16% for the three months ended September 30, 2025, an increase of 49 basis points from 2.67% for the three months ended September 30, 2024. Theincrease in net interest margin was primarily driven by a 50 basis point decrease in the cost of interest-bearing liabilities.

Previous wording

Six months ended**June 30, 2025 vs. six months ended June 30, 2024. Net interest income increased 10.4% to $38.0 million for the six months ended June 30, 2025 compared to $34.4 million for the same period in 2024. Theincrease is primarily due to a lower average balance of short-term borrowings and a decrease in the rates paid on time deposits, partially offset by a lower average balance of loans and an increase in the average balance of and rates paid on interest-bearing demand deposits. Average short-term borrowings decreased by $200.9 million for the six months ended June 30, 2025, as we paid all remaining borrowings under the BTFP in the fourth quarter of 2024. The lower average balance of, and a decrease in rates paid on, short-term borrowings resulted in a $4.9 million decrease in interest expense compared to the same period in 2024. A lower average balance of, and a decrease in rates paid on, time deposits resulted in a $2.6 million decrease in interest expense compared to the same period in 2024. Average loans decreased by $75.6 million for the six months ended June 30, 2025 in accordance with our strategy to optimize the balance sheet, which, in addition to lower loan yields, resulted in a $2.6 million decrease in interest income on loans compared to the same period in 2024. Average interest-bearing demand deposits increased by $113.6 million, which, combined with an increase in rates, resulted in a $2.2 million increase in interest expense in the first half of 2025 compared to the same period in 2024. Average noninterest-bearing deposits increased by $12.5 million. Rates paid on interest-bearing liabilities decreased primarily as a result of the overall decrease in prevailing interest rates. Our yield on interest-earning assets increased primarily due to an increase in yield on the investment securities portfolio.

Current wording

Nine months ended**September 30, 2025 vs. nine months ended September 30, 2024. Net interest income increased 13.1% to $59.1 million for the nine months ended September 30, 2025 compared to $52.3 million for the same period in 2024. Theincrease was primarily due to a lower average balance of short-term borrowings and a lower average balance of, and a decrease in the rates paid on time deposits, partially offset by a lower average balance of loans and an increase in the average balance of, and rates paid on interest-bearing demand deposits. Average short-term borrowings decreased by $193.6 million for the nine months ended September 30, 2025, as we paid all remaining borrowings under the BTFP in the fourth quarter of 2024. The lower average balance of, and a decrease in rates paid on, short-term borrowings resulted in a $7.1 million decrease in interest expense compared to the same period in 2024. A lower average balance of, and a decrease in rates paid on, time deposits resulted in a $4.4 million decrease in interest expense compared to the same period in 2024. Average loans decreased by $56.2 million for the nine months ended September 30, 2025 in accordance with our strategy to optimize the balance sheet, which, in addition to lower loan yields, resulted in a $2.8 million decrease in interest income on loans compared to the same period in 2024. Average interest-bearing demand deposits increased by $129.0 million, which, combined with an increase in rates, resulted in a $3.6 million increase in interest expensefor the nine months ended September 30, 2025 compared to the same period in 2024. Average noninterest-bearing deposits increased by $14.3 million. Rates paid on interest-bearing liabilities decreased primarily as a result of the overall decrease in prevailing interest rates. Our yield on interest-earning assets increased primarily due to an increase in yield on the investment securities portfolio.

Previous wording

Interest income was $69.8 million for the six months ended June 30, 2025, compared to $71.5 million for the same period in 2024. Loan interest income made up substantially all of our interest income for the six months ended June 30, 2025 and 2024, although interest on investment securities contributed 10.0% of interest income during thesecond quarter of 2025 compared to 8.4% during thesecond quarter of 2024. Of the $1.7 million decrease in interest income, a decrease in interest income of $1.8 million can be attributed to the decrease in the volume of interest-earnings assets, primarily loans. The overall yield on interest-earning assets was 5.42% and 5.41% for the six months ended June 30, 2025 and 2024, respectively. The loan portfolio yielded 5.91% and 5.93% for the six months ended June 30, 2025 and June 30, 2024, respectively, while the yield on the investment portfolio was 3.16% for the six months ended June 30, 2025 compared to 2.81% for the six months ended June 30, 2024. The increase in the overall yield on interest-earning assets compared to the quarter ended June 30, 2024 was primarily driven by a 35 basis point increase in the yield on the investment securities portfolio, partially offset by a two basis point decrease in the yield on the loan portfolio.

Current wording

Interest income was $106.9 million for the nine months ended September 30, 2025, compared to $108.4 million for the same period in 2024. Loan interest income made up substantially all of our interest income for the nine months ended September 30, 2025 and 2024, although interest on investment securities contributed 10.1% of interest income during thethird quarter of 2025 compared to 8.3% during thethird quarter of 2024. Of the $1.5 million decrease in interest income, a decrease in interest income of $2.1 million can be attributed to the decrease in the volume of interest-earnings assets, primarily loans. The overall yield on interest-earning assets was 5.46% and 5.45% for the nine months ended September 30, 2025 and 2024, respectively. The loan portfolio yielded 5.95% and 5.96% for the nine months ended September 30, 2025 and September 30, 2024, respectively, while the yield on the investment portfolio was 3.20% for the nine months ended September 30, 2025 compared to 2.81% for the nine months ended September 30, 2024. The increase in the overall yield on interest-earning assets compared to the quarter ended September 30, 2024 was primarily driven by a 39 basis point increase in the yield on the investment securities portfolio, partially offset by a one basis point decrease in the yield on the loan portfolio.

Previous wording

Interest expense was $31.8 million for the six months ended June 30, 2025, a decrease of $5.3 million compared to interest expense of $37.1 million for the six months ended June 30, 2024. A decrease in interest expense of $3.6 million resulted from a decrease in volume of interest-bearing liabilities, primarily short-term borrowings, partially offset by an increase in volume of interest-bearing demand deposits. A decrease in interest expense of $1.7 million resulted from thedecreasein the cost of interest-bearing liabilities, primarily time deposits, partially offset by an increase in the cost of interest-bearing demand deposits. Average interest-bearing liabilities decreased by $85.4 million for the six months ended June 30, 2025 compared to the same period in 2024, as average short-term borrowings decreased by $200.9 million while average interest-bearing deposits increased by $103.8 million. We reduced rates on our time deposits during thesix months ended June 30, 2025 compared to the to the same period in 2024 due to lower prevailing market interest rates. We increased rates on our interest-bearing demand deposits during thesix months ended June 30, 2025 compared to the to the same period in 2024 to attract and retain lower cost deposits relative to higher cost short-term borrowings. The cost of deposits decreased 24 basis points to 3.10% for the six months ended June 30, 2025 compared to 3.34% for the six months ended June 30, 2024 primarily as a result of a lower average balance of time deposits, partially offset by a higher average balance of, and an increase in the cost of, interest-bearing demand deposits. The cost of interest-bearing liabilities decreased 36 basis points to 3.18% for the six months ended June 30, 2025 compared to 3.54% for the same period in 2024, primarily due to a lower average balance of short-term borrowings and a decrease in the cost of time deposits, partially offset by a higher cost and average balance of interest-bearing demand deposits.

Current wording

Interest expense was $47.7 million for the nine months ended September 30, 2025, a decrease of $8.3 million compared to interest expense of $56.1 million for the nine months ended September 30, 2024. A decrease in interest expense of $5.4 million resulted from a decrease in volume of interest-bearing liabilities, primarily short-term borrowings and time deposits, partially offset by an increase in volume of interest-bearing demand deposits and long-term debt. A decrease in interest expense of $3.0 million resulted from thedecreasein the cost of interest-bearing liabilities, primarily time deposits and brokered time deposits, partially offset by an increase in the cost of interest-bearing demand deposits. Average interest-bearing liabilities decreased by $76.8 million for the nine months ended September 30, 2025 compared to the same period in 2024, as average short-term borrowings decreased by $193.6 million while average interest-bearing deposits increased by $104.5 million. We reduced rates on our time deposits during thenine months ended September 30, 2025 compared to the to the same period in 2024 due to lower prevailing market interest rates. We increased rates on our interest-bearing demand deposits during thenine months ended September 30, 2025 compared to the to the same period in 2024 to attract and retain lower cost deposits relative to higher cost short-term borrowings. The cost of deposits decreased 30 basis points to 3.08% for the nine months ended September 30, 2025 compared to 3.38% for the nine months ended September 30, 2024 primarily as a result of a lower average balance of, and a decrease in the cost of, time deposits, partially offset by a higher average balance of, and an increase in the cost of, interest-bearing demand deposits. The cost of interest-bearing liabilities decreased 42 basis points to 3.15% for the nine months ended September 30, 2025 compared to 3.57% for the same period in 2024, primarily due to a lower average balance of short-term borrowings and a lower average balance of, and a decrease in the cost of, time deposits, partially offset by a higher cost and average balance of interest-bearing demand deposits.

Previous wording

Net interest margin was 2.95% for the six months ended June 30, 2025, an increase of 34 basis points from 2.61% for the six months ended June 30, 2024. The increase in net interest margin was primarily driven by a 36 basis point decrease in the cost of interest-bearing liabilities and a one basis point increasein the yield on interest-earning assets.

Current wording

Net interest margin was 3.02% for the nine months ended September 30, 2025, an increase of 39 basis points from 2.63% for the nine months ended September 30, 2024. The increase in net interest margin was primarily driven by a 42 basis point decrease in the cost of interest-bearing liabilities and a one basis point increasein the yield on interest-earning assets.

Previous wording

Average Balances and Yields. The following table sets forth average balance sheet data, including all major categories of interest-earning assets and interest-bearing liabilities, together with the interest earned or paid and the average yield or rate paid on each such category for the six months ended June 30, 2025 and 2024. Averages presented in the table below are daily averages (dollars in thousands).

Current wording

Average Balances and Yields. The following table sets forth average balance sheet data, including all major categories of interest-earning assets and interest-bearing liabilities, together with the interest earned or paid and the average yield or rate paid on each such category for the nine months ended September 30, 2025 and 2024. Averages presented in the table below are daily averages (dollars in thousands).

Previous wording

Three months ended June 30, 2025 vs. three months ended June 30, 2024. Total noninterest income decreased $0.1 million, or 4.5%, to$2.6 million for the three months ended June 30, 2025 compared to$2.8 million for the three months ended June 30, 2024. Thedecrease in noninterest income was primarily attributable to a $0.7 million decrease in gain on sale of other real estate owned, which was realized in second quarter 2024 on the sale of certain property related to one loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida, partially offset by a $0.4 million decrease in loss on call or sale of investment securities, and a $0.1 million increase in other operating income. The increase in other operating income is primarily attributable to $0.3 million of insurance proceeds received in second quarter 2025 for damages to a property recorded in other real estate owned, also related to the loan relationship described above, and a $0.1 million increase in distributions from other investments, partially offset by a $0.1 million decrease in derivative fee income and a $0.1 million decrease in the change in net asset value of other investments.

Current wording

Nine months ended**September 30, 2025 vs. nine months ended September 30, 2024. Total noninterest income decreased $1.4 million, or 15.7%, to $7.6 million for thenine months ended September 30, 2025 compared to $9.0 million for thenine months ended September 30, 2024. Thedecrease in noninterest income was primarily attributable to $1.1 million in income from a legal settlement recorded in the third quarter of 2024, discussed above, a $0.6 million decrease in gain on sale of other real estate owned and a $0.4 million decrease in gain on sale or disposition of fixed assets, partially offset by a $0.4 million decrease in loss on call or sale of investment securities and a $0.4 million increase in other operating income. During the second quarter of 2024, we realized a $0.7 million gain on other real estate owned on the sale of certain property related to one loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida. During the first quarter of 2024, we recorded a $0.4 million gain on sale or disposition of fixed assets as a result of the closure of one branch in the Alabama market. The increase in other operating income was primarily attributable to a $0.5 million increase in distributions from other investments and $0.3 million of insurance proceeds received in second quarter 2025 for damages to a property recorded in other real estate owned, partially offset by a $0.2 million decrease in the change in net asset value of other investments and a $0.2 million decrease in derivative fee income.

Previous wording

Six months ended**June 30, 2025 vs. six months ended June 30, 2024. Total noninterest expense was $32.9 million for the six months ended June 30, 2025, an increase of $2.2 million, or 7.0%, compared to the same period in 2024. The increasewas primarily driven by a $1.0 million increase in salaries and employee benefits, a $0.5 million decrease in gain on early extinguishment of subordinated debt, a $0.3 million increase in acquisition expense, a $0.2 million increase in professional fees and a $0.2 million increase in other operating expense, partially offset by a $0.2 million decrease in depreciation and amortization. The increase in salaries and employee benefits is primarily due to investment in people with an emphasis on our Texas markets to remix and strengthen our balance sheet and an increase in health insurance claims. During the first half of 2024, we repurchased $5.0 million in principal amount of our 2029 Notes and $3.0 million in principal amount of our 2032 Notes and recognized a gain on early extinguishment of subordinated debt of $0.5 million. The increase in acquisition expense is related to the WFB transaction, discussed above. The increase in other operating expense resulted from a $0.2 million increase in branch services expense and a $0.2 million increase in collection and repossession expenses. During the first quarter of 2025, we recorded a $3.3 million recovery of loans previously charged off as a result of a property insurance settlement related to a loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida. The increase in collection and repossession expenses was primarily due to this property insurance settlement. The decrease in depreciation and amortization is primarily due to the closure of one branch location in the first quarter of 2024.

Current wording

Three months ended September 30, 2025 vs. three months ended September 30, 2024. Total noninterest expense was$16.5 million for the three months ended September 30, 2025, an increase of$0.3 million, or 2.1%, compared to the same period in 2024. Theincrease was primarily driven by a $0.3 million increase in salaries and employee benefits and a $0.2 million increase in acquisition expense, partially offset by a $0.1 million decrease in other operating expenses and a $0.1 million decrease in depreciation and amortization. The increase in salaries and employee benefits was primarily due to investment in people with an emphasis on our Texas markets to remix and strengthen our balance sheet and an increase in health insurance claims. The increase in acquisition expense was related to the WFB transaction announced on July 1, 2025. The decrease in other operating expenses resulted from $0.3 million in collection and repossession expenses recorded in the third quarter of 2024 related to the income from the legal settlement, discussed above, and a $0.1 million decrease in FDIC assessments, partially offset by a $0.1 million increase in write down of other real estate owned and a $0.1 million increase in branch services expense.

Previous wording

Three months ended June 30, 2025 vs. three months ended June 30, 2024. Total noninterest expense was$16.7 million for the three months ended June 30, 2025, an increase of$1.2 million, or 7.9%, compared to the same period in 2024. Theincrease was primarily driven by a $0.7 million increase in salaries and employee benefits, a $0.3 million decrease in gain on early extinguishment of subordinated debt, and a $0.2 million increase in acquisition expense. The increase in salaries and employee benefits is primarily due to investment in people with an emphasis on our Texas markets to remix and strengthen our balance sheet and an increase in health insurance claims. During the second quarter of 2024, we repurchased $5.0 million in principal amount of our 2029 Notes and $2.0 million in principal amount of our 2032 Notes and recognized a gain on early extinguishment of subordinated debt of $0.3 million. The increase in acquisition expense is related to the WFB transaction, discussed above. A $0.1 million increase in other operating expenses resulted primarily from a $0.3 million write down in the second quarter 2025 of other real estate owned related to the loan relationship discussed above and a former branch location.

Current wording

Nine months ended**September 30, 2025 vs. nine months ended September 30, 2024. Total noninterest expense was $49.5 million for the nine months ended September 30, 2025, an increase of $2.5 million, or 5.3%, compared to the same period in 2024. The increasewas primarily driven by a $1.3 million increase in salaries and employee benefits, a $0.6 million increase in acquisition expense, a $0.5 million decrease in gain on early extinguishment of subordinated debt, and a $0.2 million increase in professional fees, partially offset by a $0.2 million decrease in depreciation and amortization. The increase in salaries and employee benefits was primarily due to investment in people with an emphasis on our Texas markets to remix and strengthen our balance sheet and an increase in health insurance claims. During the first half of 2024, we repurchased $5.0 million in principal amount of our 2029 Notes and $3.0 million in principal amount of our 2032 Notes and recognized a gain on early extinguishment of subordinated debt of $0.5 million. The increase in acquisition expense was related to the WFB transaction, discussed above. The decrease in depreciation and amortization was primarily due to the closure of one branch location in the first quarter of 2024.

Previous wording

Income tax expense for the three months ended June 30, 2025 and 2024 was $0.9 million and $0.8 million, respectively. The effective tax rate for the three months ended June 30, 2025 and 2024 was 17.2% and 17.0%, respectively. Income tax expense for thesix months ended June 30, 2025 and 2024 was$2.4 million and $2.2 million, respectively. The effective tax rate for thesix months ended June 30, 2025 and 2024 was 17.9% and 20.1%, respectively. During the first quarter of 2024, we surrendered approximately $8.4 million of BOLI contracts and reinvested the proceeds in higher yielding policies, which resulted in $0.3 million of income tax expense. The restructuring had an expected earn-back period of just over one year.

Current wording

Income tax expense for the three months ended September 30, 2025 and 2024 was $1.3 million and $0.8 million, respectively. The effective tax rate for the three months ended September 30, 2025 and 2024 was 17.3% and 12.7%, respectively. Income tax expense for thenine months ended September 30, 2025 and 2024 was$3.6 million and $3.0 million, respectively. The effective tax rate for thenine months ended September 30, 2025 and 2024 was 17.7% and 17.5%, respectively. During the third quarter of 2024, we revised our estimated 2024 annual effective tax rate to account for our projected increase in nontaxable income from BOLI in the fourth quarter of approximately $3.1 million upon receipt of death benefit proceeds. During the first quarter of 2024, we surrendered approximately $8.4 million of BOLI contracts and reinvested the proceeds in higher yielding policies, which resulted in $0.3 million of income tax expense. The restructuring had an expected earn-back period of just over one year.

Previous wording

For the three andsix months ended June 30, 2025, and the three months ended June 30, 2024 the effective tax rate differed from the statutory tax rate of 21% primarily due totax-exempt interest income earned on certain loans and investment securities and income from BOLI. For thesix months ended June 30, 2024, the effective tax rate differed from the statutory tax rate of 21% primarily due to tax-exempt interest income earned on certain loans and investment securities and income from BOLI, partially offset by the surrender of BOLI contracts.

Current wording

For the three andnine months ended September 30, 2025, and the effective tax rate differed from the statutory tax rate of 21% primarily due totax-exempt interest income earned on certain loans and investment securities and income from BOLI. For thethree months ended September 30, 2024, the effective tax rate differed from the statutory tax rate of 21% primarily due to the revision of our estimated 2024 annual effective tax rate, discussed above, tax-exempt interest income earned on certain loans and investment securities and income from BOLI. For thenine months ended September 30, 2024, the effective tax rate differed from the statutory tax rate of 21% primarily due to the revision of our estimated 2024 annual effective tax rate, discussed above, tax-exempt interest income earned on certain loans and investment securities and income from BOLI, partially offset by the surrender of BOLI contracts.

Previous wording

On July 4, 2025, the OBBBA, which contains a broad range of tax reform provisions affecting businesses, was signed into law. Since the bill was signed after the close of the quarter, no financial statement impact was reflected in the second quarter of 2025. We are currently evaluating the impact of the OBBBA on the consolidated financial statements and do not believe it will have a material impact. While the details are still under review, we do not expect a significant impact on 2025 income tax expense.

Current wording

On July 4, 2025, the OBBBA, which contains a broad range of tax reform provisions affecting businesses, was signed into law. The OBBBA did not have a material impact on the consolidated financial statements in the third quarter of 2025, andwe do not expect a significant impact on 2025 income tax expense.