Investar Holding Corp

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. 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.

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 “Cautionary Note Regarding Forward-Looking Statements” in the Company’s Annual Report and in Part II. Item 1A. “Risk Factors” of this report.

Previous wording

The Bank commenced operations in 2006, and we completed our initial public offering in July 2014. On July 1, 2019, the Bank changed from a Louisiana state bank charter to a national bank charter, and its name changed to Investar Bank, National Association. Through the Bank, we provide full banking services, excluding trust services, tailored primarily to meet the needs of individuals, professionals, and small to medium-sized businesses. Our primary areas of operation are south Louisiana, including Baton Rouge, New Orleans, Lafayette, Lake Charles, and their surrounding areas; southeast Texas, primarily Houston and its surrounding area; and Alabama, including York and Oxford and their surrounding areas. At September 30, 2025, we operated 29 full service branches comprised of 20 full service branches in Louisiana, three full service branches in Texas, and six full service branches in Alabama. We opened a loan and deposit production office in our Texas market in the first quarter of 2024 and converted it to a full-service branch location in the fourth quarter of 2024. We have continued to evaluate opportunities to improve our branch network efficiency, leverage our digital initiatives, and further reduce costs. We closed one branch in our Alabama market during the first quarter of 2024.

Current wording

The Bank commenced operations in 2006, and we completed our initial public offering in July 2014. On July 1, 2019, the Bank changed from a Louisiana state bank charter to a national bank charter, and its name changed to Investar Bank, National Association. Through the Bank, we provide full banking services, excluding trust services, tailored primarily to meet the needs of individuals, professionals, and small to medium-sized businesses. Our primary areas of operation are south Louisiana, including Baton Rouge, New Orleans, Lafayette, Lake Charles, and their surrounding areas; Texas, including Houston and its surrounding area, and, as of January 1, 2026, north Dallas and Wichita Falls and their surrounding areas; and Alabama, including York and Oxford and their surrounding areas. At March 31, 2026, we operated 36 full service branches comprised of 20 full service branches in Louisiana, ten full service branches in Texas, and six full service branches in Alabama.

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 an Agreement and Plan of Merger (the “Merger Agreement”). For additional information, see “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 eight whole-bank acquisitions since 2011 and regularly review acquisition opportunities. Our most recent whole bank acquisition was completed in January 2026. For additional information, see “Acquisition of WFB” below.

Previous 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.

Current wording

On July 1, 2025, we announced that we had entered into the Agreement and Plan of Merger by and between the Company and WFB, headquartered in Wichita Falls, Texas, which provided for the merger of WFB with and into the Company, with the Company as the surviving corporation, followed by the merger of FNB, WFB’s wholly-owned subsidiary, with and into the Bank, with the Bank as the surviving bank. We completed the acquisition of WFB and FNB on January 1, 2026. All of the issued and outstanding shares of WFB common stock were converted into aggregate merger consideration consisting of $7.2 million in cash and 3,955,272 shares of our common stock for an aggregate transaction value of $112.9 million. This value is based on the Company’s closing stock price on December 31, 2025 of $26.72 per common share. On January 1, 2026, we acquired $1.15 billion in total assets, $950.2 million in net loans and $1.02 billion in total deposits. For additional information, see Note 2. Business Combinations.

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 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. Investar intends to use the net proceeds from the offering to support the acquisition of WFB and for general corporate purposes, including organic growth and other potential acquisitions. We filed a Registration Statement on Form S-3 with the SEC on September 2, 2025 registering the resale from time to time by the stockholders named therein of the shares of Company common stock issuable upon conversion of shares of Series A Preferred Stock. The Registration Statement was declared effective by the SEC on September 17, 2025. For additional information, see Note 5. Stockholders’ Equity.

Current 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 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. The Company utilized the net proceeds from the offering to support the acquisition of WFB and for general corporate purposes, including organic growth and other potential acquisitions.

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%. 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.

Current wording

Changing Inflation andInterest*** Rates***. During 2025, beginning in September 2025, the Federal Reserve reduced the federal funds target rate three times by 75 basis points on a cumulative basis to 3.50% to 3.75%. Accordingly, the prevailing federal funds target rate for the three months ended March 31, 2026 was lower than for the three months ended March 31, 2025.

Previous wording

Total assets increased $77.8 million, or 2.9%, to $2.80 billion at September 30, 2025, compared to $2.72 billion at December 31, 2024. For thethree months ended September 30, 2025, net income available to common shareholders was $5.7 million, or $0.54 per diluted common share, compared to net income available to common shareholders of $5.4 million, or $0.54, per diluted common share for thethree months ended September 30, 2024. For thenine months ended September 30, 2025, net income available to common shareholders was $16.4 million, or$1.62 per diluted common share, compared to net income available to common shareholders of$14.1 million, or $1.43, per diluted common share for thenine months ended September 30, 2024.

Current wording

Total assets increased $1.04 billion, or 36.8%, to $3.88 billion at March 31, 2026, compared to $2.83 billion at December 31, 2025. The acquisition of WFB increased total assets$1.15 billion on January 1, 2026. For thethree months ended March 31, 2026, net income available to common shareholders was $11.5 million, or $0.77 per diluted common share, compared to net income available to common shareholders of $6.3 million, or $0.63 per diluted common share, for thethree months ended March 31, 2025. At March 31, 2026, 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.

Previous 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.

Current wording

Key components of our performance for the three months ended March 31, 2026 are summarized below.

Previous 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.

Current wording

General. Loans constitute our most significant asset, comprising 79.2% and 76.8% of our total assets at March 31, 2026 and December 31, 2025, respectively. Total loans increased $891.8 million, or 41.0%, to$3.07 billion at March 31, 2026, compared to$2.18 billion at December 31, 2025. Theincrease in loans was primarily the result of the acquisition of WFB, which increased total loans $961.9 million on January 1, 2026. We are emphasizing the 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 49% at March 31, 2026 compared to 38% at December 31, 2025. Included in variable-rate loans as of March 31, 2026 are adjustable-rate mortgage loans we acquired in connection with our acquisition of WFB.

Previous 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.

Current wording

At March 31, 2026, the Company’s business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $1.17 billion, an increase of$112.3 million, or 10.6%, compared to $1.06 billion at December 31, 2025. Theincrease in the business lending portfoliowas primarily driven by the acquisition of WFB, partially offset by loan amortization.

Previous 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.

Current wording

Construction and development loans totaled $318.9 million at March 31, 2026, an increase of $170.9 million, or 115.5%, compared to $148.0 million at December 31, 2025. The increase in construction and development loans was primarily due to the acquisition of WFB.

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$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.

Current wording

The consumer mortgage portfolio was approximately$879.8 million and $224.5 million at March 31, 2026 and December 31, 2025, respectively. The increase was due to the acquisition of WFB. Our consumer mortgage portfolio is included in the 1-4 family and construction and development categories. At March 31, 2026, the remaining loans in the construction and development category consisted primarily of commercial properties, and 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

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.

Current wording

Nonowner-occupied loans totaled $504.8 million at March 31, 2026, an increase of $52.6 million, or 11.6%, compared to $452.1 million at December 31, 2025. The increase in nonowner-occupied loans was primarily due to the acquisition of WFB, partially offset by loan amortization and payoffs that aligned with our continued strategy to optimize and de-risk the mix of the portfolio.

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 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.

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 12% of our total assets and totaled $460.6 million at March 31, 2026, an increase of $41.8 million, or 10.0%, from$418.8 million at December 31, 2025. Theincrease in investment securities at March 31, 2026 compared to December 31, 2025 was driven primarily by a $17.7 million increase inobligations of the U.S. Treasury and U.S. government agencies and corporations, a $13.7 million increase in residential mortgage-backed securities and a $9.3 million increase incommercial mortgage-backed securities. Due in large part to higher interest rates and market volatility, net unrealized losses in our AFS investment securities portfolio totaled $47.2 million at March 31, 2026, compared to $45.4 million at December 31, 2025. For additional information, see Note 4. 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 September 30, 2025, AFS securities comprised 89% 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 March 31, 2026, AFS securities comprised 90% of our total investment securities.

Previous wording

Due to the nature of the investments, current market prices, and the current interest rate environment, we determined that the declines in the fair values of the AFS and HTM securities portfolio were not attributable to credit losses at September 30, 2025 and December 31, 2024. Accordingly, there was no adjustment made to the amortized cost basis. The carrying values of our AFS securities are adjusted for unrealized gains or losses not attributable to credit losses as valuation allowances, and any gains or losses are reported on an after-tax basis as a component of other comprehensive income (loss).

Current wording

Due to the nature of the investments, current market prices, and the current interest rate environment, we determined that the declines in the fair values of the AFS and HTM securities portfolio were not attributable to credit losses at March 31, 2026 and December 31, 2025. Accordingly, no ACL was recorded related to our investment securities. The carrying values of our AFS securities are adjusted for unrealized gains or losses not attributable to credit losses as valuation allowances, and any gains or losses are reported on an after-tax basis as a component of other comprehensive income (loss).

Previous 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%.

Current wording

The increase in noninterest-bearing demand deposits, interest-bearing demand deposits, and money market deposits at March 31, 2026 compared to December 31, 2025 was primarily the result of the acquisition of WFB and organic growth. The increase in time deposits at March 31, 2026 compared to December 31, 2025 was primarily the result of the acquisition of WFB, partially offset by the run-off of higher yielding time deposits. Brokered time deposits decreased to $101.2 million at March 31, 2026 from $204.1 million at December 31, 2025. We utilize brokered time deposits, entirely in denominations of less than $250,000, to secure fixed cost funding and reduce short-term borrowings. At March 31, 2026, the balance of brokered time deposits remained below 10% of total assets, and the remaining weighted average duration was approximately five months with a weighted average rate of 3.94%.

Previous 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.

Current wording

At March 31, 2026, our estimated uninsured deposits were$1.16 billion, or approximately 36% of total deposits, compared to $793.2 million, or approximately 34% of our total deposits at December 31, 2025. 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

At September 30, 2025, total borrowings include securities sold under agreements to repurchase, FHLB advances, subordinated debt issued in 2022, and junior subordinated debentures assumed through acquisitions.

Current wording

At March 31, 2026, total borrowings included securities sold under agreements to repurchase, FHLB advances, subordinated debt issued in 2022, and junior subordinated debentures assumed through acquisitions.

Previous 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.

Current wording

Our advances from the FHLB were$136.0 million at March 31, 2026, an increase of $20.0 million compared to FHLB advances of $116.0 million at December 31, 2025. Based on original maturities, at March 31, 2026, $36.0 million were short-term and $100.0 million were long-term FHLB advances, compared to $36.0 million short-term and $80.0 million long-term FHLB advances at December 31, 2025. FHLB advances are used to fund new loan and investment activity that is not funded by deposits or other borrowings.

Previous 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.

Current wording

The main source of our short-term borrowings are advances from the FHLB. The rate charged for advances from the FHLB is directly tied to the Federal Reserve’s federal funds target rate. As of March 31, 2026, the federal funds target rate was 3.50% to 3.75%.

Previous 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).

Current wording

The average balances and cost of short-term borrowings for thethree months ended March 31, 2026 and 2025 are summarized in the table below (dollars in thousands).

Previous wording

The carrying value of the subordinated debt, which consists entirely of our 2032 Notes, was$16.7 millionat September 30, 2025 and December 31, 2024. The$8.8 million and$8.7 million in junior subordinated debt at September 30, 2025 and December 31, 2024, respectively, represent the junior subordinated debentures that we assumed through acquisitions.

Current wording

The carrying value of the subordinated debt, which consists entirely of our 2032 Notes, was$16.7 millionat March 31, 2026 and December 31, 2025. The$23.0 million and$8.8 million in junior subordinated debt at March 31, 2026 and December 31, 2025, respectively, represented the junior subordinated debentures that we assumed through acquisitions. The increase in junior subordinated debt was due to the acquisition of WFB and consisted of $9.2 million of unsecured debt obligations due to trusts and a $5.0 million loan, which matures in October 2029, related to our Southlake corporate office. On January 1, 2026, we assumed WFB’s obligations on an unsecured basis with respect to a $10.0 million note to TIB, N.A. We repaid the note in full in January 2026.

Previous 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.

Current wording

Stockholders’ equity was $414.6 million at March 31, 2026, an increase of $113.6 million compared to December 31, 2025. The increase was primarily attributable to the acquisition of WFB, $12.0 million of net income for the three months ended March 31, 2026, partially offset by $1.5 million for share repurchases, a $1.4 million increase in accumulated other comprehensive loss due to a decrease in the fair value of the Bank’s AFS securities portfolio, $1.5 million in dividends declared on common stock, 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 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.

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. During 2025, beginning in September, the Federal Reserve reduced the federal funds target rate three times by 75 basis points on a cumulative basis to 3.50% to 3.75%, where it remained as of May 8, 2026. Accordingly, the prevailing federal funds target rate during the three months ended March 31, 2026 was lower than during the three months ended March 31, 2025. For additional discussion, see Certain Events That Affect Period-over-Period Comparability –Changing Inflation and Interest Rates.

Previous 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.

Current wording

Three months ended March 31, 2026 vs. three months ended March 31, 2025. Net interest income increased 78.0% to $32.7 million for the three months ended March 31, 2026 compared to $18.3 million for the same period in 2025. The increase was primarily due to a higher average balance of, and an increase in the yield on, the loan portfolio, partially offset by an increase in the average balance of interest-bearing demand deposits and time deposits. Average loans increased by $987.0 million for the three months ended March 31, 2026 primarily due to the acquisition of WFB, which, in addition to higher loan yields, resulted in a $17.4 million increase in interest income on loans compared to the same period in 2025. Average brokered time deposits were $152.3 million for the three months ended March 31, 2026 compared to $252.3 million during the three months ended March 31, 2025, which along with lower rates paid, resulted in a $1.5 million decrease in interest expense compared to the three months ended March 31, 2025. Average interest-bearing demand deposits increased by $517.9 million, which, combined with an increase in rates, resulted in a $3.6 million increase in interest expense in the first quarter of 2026 compared to the same period in 2025. A higher average balance of time deposits partially offset by a decrease in rates paid on time deposits resulted in a $2.1 million increase in interest expense compared to the same period in 2025. Average noninterest-bearing deposits increased by $203.6 million. Our yield on interest-earning assets increased primarily due to an increase in the average balance of, and the yield on, the loan portfolio. Rates paid on interest-bearing liabilities decreased primarily as a result of the overall decrease in prevailing interest rates.

Previous 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.

Current wording

Interest income was $53.2 million for the three months ended March 31, 2026, compared to $34.4 million for the same period in 2025. Loan interest income made up substantially all of our interest income for the three months ended March 31, 2026 and 2025, although interest on investment securities contributed 7.7% of interest income during the first quarter of 2026 compared to 9.7% during the first quarter of 2025. The overall yield on interest-earning assets was 5.86% and 5.39% for the three months ended March 31, 2026 and 2025, respectively. The loan portfolio yielded 6.28% and 5.88% for the three months ended March 31, 2026 and 2025, respectively, while the yield on the investment portfolio was 3.44% for the three months ended March 31, 2026 compared to 3.10% for the three months ended March 31, 2025. The overall yield on interest-earning assets increased 47 basis points for the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025 and was primarily driven by a 40 basis point increase in the yield on the loan portfolio and a 34 basis point increase in the yield on the investment securities portfolio.

Previous 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.

Current wording

Interest expense was $20.5 million for the three months ended March 31, 2026, an increase of $4.5 million compared to interest expense of $16.1 million for the three months ended March 31, 2025. An increase in interest expense of $5.3 million resulted from an increase in the volume of interest-bearing liabilities, primarily interest-bearing deposits and time deposits. A decrease of $0.8 million resulted from thedecreasein the cost of interest-bearing liabilities, primarily time deposits and brokered time deposits. Average interest-bearing liabilities increased by $812.8 million for the three months ended March 31, 2026 compared to the same period in 2025, while average interest-bearing deposits increased by $774.9 million, primarily due to an increase in average interest-bearing demand deposits and average time deposits. We increased rates on our interest-bearing demand deposits during the first quarter of 2026 compared to the first quarter of 2025 to attract and retain lower cost deposits relative to higher cost short-term borrowings and brokered time deposits, and the interest-bearing demand deposits acquired from WFB had a higher rate than legacy interest-bearing demand deposits. Average time deposits increased due to the acquisition of WFB; however, we reduced rates on our time deposits during the first quarter of 2026 compared to the first quarter of 2025 due to lower prevailing market interest rates. The cost of deposits decreased 30 basis points to 2.85% for the three months ended March 31, 2026 compared to 3.15% for the three months ended March 31, 2025 primarily as a result of a lower average balance of, and a decrease in rates paid on, brokered time deposits and a decrease in rates paid on time deposits, partially offset by a higher average balance of time deposits and a higher average balance of, and an increase in the rates paid on, interest-bearing demand deposits. The cost of interest-bearing liabilities decreased 28 basis points to 2.94% for the three months ended March 31, 2026 compared to 3.22% for the same period in 2025.

Previous 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.

Current wording

Net interest margin was 3.59% for the three months ended March 31, 2026, an increase of 72 basis points from 2.87% for the three months ended March 31, 2025. The increase in net interest margin was primarily driven by a 47 basis point increase in the yield on interest-earning assets and a 28 basis point decrease in the cost of interest-bearing liabilities.

Previous wording

Noninterest income includes, among other things, service charges on deposit accounts, gains and losses on sale or disposition of fixed assets, interchange fees, income from BOLI, and changes in the fair value of equity securities. We expect to continue to develop new products that generate noninterest income, and enhance our existing products, in order to diversify our revenue sources.

Current wording

We expect to continue to develop new products that generate noninterest income, and enhance our existing products, in order to diversify our revenue sources.

Previous wording

Three months ended September 30, 2025 vs. three months ended September 30, 2024. Total noninterest income decreased $0.6 million, or 15.8%, to$3.0 million for the three months ended September 30, 2025 compared to$3.5 million for the three 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 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 increase in other operating income and a $0.1 million increase in gain on sale of other real estate owned. The increase in other operating income was primarily attributable to a $0.4 million increase in distributions from other investments.

Current wording

Three months ended**March 31, 2026 vs. three months ended March 31, 2025. Total noninterest income increased $1.0 million, or 48.2%, to $3.0 million for thethree months ended March 31, 2026 compared to $2.0 million for thethree months ended March 31, 2025. Theincrease in noninterest incomewas primarily attributable to a $0.2 million increase in interchange fees, a $0.2 million increase in income from BOLI, a $0.2 million increase in service charges on deposit accounts, a $0.2 million increase in change in fair value of equity securities, and a $0.3 million increase in other operating income, partially offset by a $0.1 million increase in loss on sale of other real estate owned. The increase in other operating income was primarily attributable to a $0.1 million increase in distributions from other investments and a $0.1 million increase in wealth management income.

Previous 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.

Current wording

Three months ended March 31, 2026 vs. three months ended March 31, 2025. Total noninterest expense was $22.8 million for the three months ended March 31, 2026, an increase of $6.6 million, or 40.7%, compared to the same period in 2025. The increase was primarily driven by a $3.3 million increase in salaries and employee benefits, a $1.6 million increase in acquisition expense, a $0.6 million increase in depreciation and amortization, a $0.3 million increase in occupancy, a $0.3 million increase in data processing and a $0.2 million increase in other operating expense. The increases were primarily related to the acquisition of WFB on January 1, 2026. The increase in other operating expense was primarily attributable to a $0.2 million increase in FDIC assessments.

Previous 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.

Current wording

Income tax expense for the three months ended March 31, 2026 and 2025 was $2.9 million and $1.4 million, respectively. The effective tax rate for the three months ended March 31, 2026 and 2025 was 19.4% and 18.4%, respectively.

Previous 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.

Current wording

For the three months ended March 31, 2026 and 2025, 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.

Previous wording

The primary risks associated with our operations are credit, interest rate and liquidity risk. Changing inflation also presents risk. Credit, inflation and interest rate risk are discussed below, while liquidity risk is discussed in this section under the headingLiquidity and Capital Resources below.

Current wording

The primary risks associated with our operations are credit, interest rate and liquidity risk. Changing inflation also presents risk. Credit, inflation and interest rate risk are discussed immediately below, while liquidity risk is discussed in this section under the headingLiquidity and Capital Resources further below.

Previous wording

At September 30, 2025 and December 31, 2024, there were no loans classified as loss or doubtful, $30.9 million and$32.7 million, respectively, of loans classified as substandard, and$10.2 million and$7.8 million, respectively, of loans classified as special mention.

Current wording

At March 31, 2026 and December 31, 2025, there were no loans classified as Loss, while there were $24,000 and no loans, respectively, classified as Doubtful, $43.0 million and $38.1 million, respectively, of loans classified as Substandard, and $9.2 million and $9.7 million, respectively, of loans classified as Special Mention.

Previous wording

Allowance for Credit Losses. We account for the ACL in accordance with ASC 326, which uses the CECL accounting methodology. The CECL methodology requires that lifetime expected credit losses be recorded at the time the financial asset is originated or acquiredand be adjusted each period through a provision for credit losses for changes in the expected lifetime credit losses. The ACL was$26.5 million and$26.7 million at September 30, 2025 and December 31, 2024, respectively.

Current wording

Allowance for Credit Losses. We account for the ACL in accordance with ASC 326, which uses the CECL accounting methodology. The CECL methodology requires that lifetime expected credit losses be recorded at the time the financial asset is originated or acquiredand be adjusted each period through a provision for credit losses for changes in the expected lifetime credit losses. The ACL was$36.0 million and$26.3 million at March 31, 2026 and December 31, 2025, respectively. On January 1, 2026, we recorded an $11.7 million ACL due to the acquisition of WFB.

Previous wording

We maintain a separate ACLon unfunded loan commitments, which is included in “Accrued taxes and other liabilities” in the accompanying consolidated balance sheets. The ACLis generally increased by the provision for credit losses and decreased by charge-offs, net of recoveries. The provision for credit losses for the three months ended September 30, 2025 was primarilydue toloan growth partially offset by changes in the economic forecast and loan mix. The negative provision for credit losses for the nine months ended September 30, 2025 was primarilydue toa $3.3 million recovery during the first quarter of 2025 of loans previously charged off as a result of a property insurance settlement related to one loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida. The negative provision for credit losses for thethree months ended September 30, 2024 was primarily due to net recoveries of $0.4 million, a decrease in total loans, aging of existing loans and an improvement in the economic forecast. The negative provision for credit losses for thenine months ended September 30, 2024 was primarily due to net recoveries, a decrease in total loans, aging of existing loans, an improvement in the economic forecast and, to a lesser extent, the completion of our annual CECL allowance model recalibration, which resulted in lower historical loss rates.

Current wording

We maintain a separate ACLon unfunded loan commitments, which is included in “Accrued taxes and other liabilities” in the accompanying consolidated balance sheets. The ACLis generally increased by the provision for credit losses and decreased by charge-offs, net of recoveries.

Previous wording

We complete our annual model recalibration process in the first quarter of each year. Our annual review includes peer group analysis, updates to our probability of default and loss-given default models, including prepayment and curtailment assumptions, and qualitative factor scorecard ranges, as needed. The changes resulting from the model recalibration reduced the ACL by approximately $0.5 million during each of thenine months ended September 30, 2025 and 2024.

Current wording

Periodically, we complete a CECL allowance model recalibration. This process, which was completed in the first quarter of 2026, includes peer group analysis, updates to our probability of default and loss-given default models, including prepayment and curtailment assumptions, and qualitative factor scorecard ranges, as needed. The changes resulting from the model recalibration reduced the ACL by approximately $3.0 million and $0.5 million during thethree months ended March 31, 2026 and 2025, respectively.

Previous wording

As discussed above, the balance in the ACL is principally influenced by the provision for credit losses on loans and net loan loss experience. Additions to the ACL are charged to the provision for credit losses on loans. Losses are charged to the ACL as incurred and recoveries on losses previously charged to the allowance are credited to the allowance at the time the recovery is collected.

Current wording

As discussed above, the balance in the ACL is principally influenced by the provision for (reversal of) credit losses on loans and net loan loss experience. Additions to the ACL are charged to the provision for credit losses on loans. Losses are charged to the ACL as incurred and recoveries on losses previously charged to the allowance are credited to the allowance at the time the recovery is collected.