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Item 5. Market for Registrant’s Common Equity

2025-03-07 compared with 2024-03-01 · 299 added, 186 removed, 905 unchanged (35% of the section changed)

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In 2006, our board of directors adopted the 2006 Stock Option Plan pursuant to which we were permitted to issue stock options to purchase up to 450,000 shares of our common stock, all of which could be issued as either incentive stock options under Section 422A of the Internal Revenue Code of 1986, as amended, or non-qualified stock options.

Although our 2006 Stock Option Plan expired on December 22, 2016 and we are no longer permitted to issue additional stock options under this plan, as of December 31, 2023, we had 120,608 outstanding and unexercised stock options that have been issued to our executive officers and key personnel and remain subject to the terms and conditions of the 2006 Stock Option Plan until they are exercised or forfeited.

On June 29, 2017, our shareholders approved the 2017 Equity Incentive Plan, or the Plan, and the shareholders approved additional shares under the Plan during 2022.

The Plan provides for the grant of various types of equity grants and awards, including incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares and other stock-based awards to eligible participants, which includes our employees, directors and consultants.

The Plan has reserved 1,043,908 shares of common stock for grant, award or issuance to eligible participants, all of which may be subject to incentive stock option treatment.

As of December 31, 2023, there were 745,620 common shares issued under this Plan to our employees, directors or consultants.

In January 2007, our board of directors adopted an amendment to the 2006 Stock Option Plan which increased the number of available shares under the plan from 450,000 to 1,500,000.

Although our 2006 Stock Option Plan expired on December 22, 2016 and we are no longer permitted to issue additional stock options under this plan, as of December 31, 2024, we had outstanding and unexercised stock options to purchase up to 12,400 shares of our common stock outstanding that have been issued to our executive officers and key personnel and remain subject to the terms and conditions of the 2006 Stock Option Plan until they are exercised or forfeited.

On June 29, 2017, our shareholders approved the 2017 Equity Incentive Plan (the “2017 Plan”).

The 2017 Plan provided for the issuance of up to 500,000 shares of our common stock pursuant to various types of equity grants and awards, including incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares and other stock-based awards to eligible participants, which includes our employees, directors and consultants.

In June 2022, our shareholders approved an amendment to the 2017 Plan, which increased the number of shares of common stock issuable pursuant to equity grants and awards under the plan from 500,000 to 900,000.

Additionally, the number of shares issuable under the 2017 Plan was increased by 143,908 shares as a result of the assumption of options to purchase shares of TCBI common stock that were converted into options to purchase shares of our common stock in connection with the TCBI acquisition on March 1, 2022.

As of December 31, 2024, we had outstanding and unexercised stock options to purchase up to 15,485 shares of our common stock that have been issued under the 2017 Plan.

On May 23, 2024, our shareholders approved the 2024 Equity Incentive Plan (the “2024 Plan”) which reserved 645,000 shares of common stock, plus any shares available for issuance under the 2017 Plan and any underlying awards outstanding under the 2017 Plan as of the effective date of the 2024 Plan that are terminated or canceled without having been exercised or are forfeited, canceled or repurchased by the Company, for grant, award or issuance to eligible participants, all of which may be subject to incentive stock option treatment.

In addition, the number of shares issuable under the 2024 Plan was increased by 207,293 shares as a result of the conversion of Oakwood stock options to Company stock options in connection with the Oakwood acquisition on October 1, 2024.

In total, the 2024 Plan has reserved 852,293 shares of common stock for grant, award, or issuance to eligible participants, all of which may be subject to incentive stock option treatment.

As of December 31, 2024, there were 160,336 shares of common stock issued under the 2024 Plan to our employees, directors or consultants, of which 152,084 shares are subject to outstanding and unexercised stock options to

purchase shares of our common stock, and 484,664 shares of common stock remain available for grant.

As of May 23, 2024, there will be no future awards made under the 2017 Plan.

The following table summarizes information as of December 31, 2024 relating to the number of securities to be issued upon the exercise of the outstanding options and warrants and their weighted-average exercise price.

Number of Securities to Be Issued Upon Exercise of Outstanding Options

Weighted-Average

Number of Securities to Be Issued Upon Exercise

of Outstanding Options Weighted-Average

Exercise Price of

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Recent Sales of Unregistered Securities

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

On May 23, 2023, the Company’s board of directors approved a resolution authorizing management to repurchase shares of its common stock with an aggregate purchase price of up to $30.0 million from time to time, subject to certain limitations and conditions.

This 2023 stock repurchase program was effective until December 31, 2023.

The 2023 stock repurchase program did not obligate the Company to repurchase any shares of its common stock.

The Company did not repurchase any shares under this plan.

Stock Performance Graph

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The historical stock price performance for our common stock shown on the graph below is not necessarily indicative of future stock performance.

Selected Financial Data.

Date BFST S&P 500 KRX

12/31/2019 $ 100.00 $ 100.00 $ 100.00

3/31/2020 54.55 80.40 59.62

6/30/2020 62.43 96.92 68.30

9/30/2020 61.42 105.57 61.30

12/31/2020 83.77 118.40 91.29

3/31/2021 98.87 125.71 118.41

6/30/2021 95.32 136.46 116.73

9/30/2021 97.64 137.25 120.48

12/31/2021 118.68 152.39 124.74

3/31/2022 102.50 145.38 122.03

6/30/2022 90.28 121.97 107.40

9/30/2022 91.72 116.02 111.62

12/31/2022 94.83 124.79 116.10

3/31/2023 73.89 134.14 95.25

6/30/2023 65.52 145.87 89.78

9/30/2023 82.09 141.09 91.92

12/31/2023 108.47 157.59 115.63

3/31/2024 98.66 174.23 108.87

6/30/2024 96.97 181.69 105.92

9/30/2024 115.02 192.38 122.61

12/31/2024 115.79 197.02 130.90

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations.

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For additional information about these transactions, See “ Note 3 – Mergers and Acquisitions ” in our audited consolidated financial statements included in Item 8 of this Report.

Acquisition of Texas Citizens Bancorp, Inc.

On October 20, 2021, we entered into a definitive agreement to acquire Texas Citizens Bancshares, Inc.

(“TCBI”), the parent bank holding company for Texas Citizens Bank, National Association, headquartered in Pasadena, Texas.

The acquisition was consummated on March 1, 2022.

At February 28, 2022, TCBI reported $534.2 million in total assets, $349.5 million in loans and $477.2 million in total deposits.

Preferred Stock Issuance

On September 1, 2022, we entered into a securities purchase agreement with certain investors pursuant to which we offered and sold shares of our 7.50% fixed-to-floating rate non-cumulative perpetual preferred stock, with no par value, for an aggregate purchase price of $72.0 million.

The preferred stock was structured to qualify as additional Tier 1 capital under applicable regulatory capital guidelines.

Holders of the preferred stock will be entitled to receive, if, when, and as declared by our board of directors (the “Board”), non-cumulative cash dividends at a rate of 7.50% for the first five years following issuance and thereafter at a variable rate equal to the then current 3-month secured overnight financing rate (“SOFR”), reset quarterly, plus 470 basis points.

The preferred stock has a perpetual term and may not be redeemed, except under certain circumstances, under the first five years of issuance.

We intend to use the net proceeds from the preferred stock issuance to provide additional capital support to the Bank, to support growth, to better position us to take advantage of strategic opportunities that may arise from time to time, repayment of existing debt, and for general corporate purposes.

Public Offering

On October 12, 2022, we entered into an underwriting agreement with Stephens, Inc., a representative of several underwriters, to issue and sell 2,500,000 shares of our common stock, $1.00 par value per share, in an underwritten public offering and a public offering price of $20.00 per share.

After deducting underwriting discounts, commissions and offering expenses, the net proceeds of the offering was $47.2 million.

Bank Term Funding Program ( “ BTFP ” )

On March 12, 2023, the Federal Reserve developed the BTFP, which offers loans to banks with a term of up to one year.

The loans are secured by pledging participating banks’ U.S.

On March 12, 2023, the Federal Reserve developed the BTFP, which offered loans to banks with a term of up to one year.

These loans were secured by pledging participating banks’ U.S.

treasuries, agency securities, agency mortgage-backed securities, and other qualifying assets.

These pledged securities are valued at par for collateral purposes.

The Bank participated in the BTFP and pledged securities with a remaining par value of $333.3 million as of December 31, 2023.

The Bank had outstanding BTFP debt of $300.0 million at December 31, 2023.

These loans bear a fixed rate of 4.38% and mature on March 22, 2024.

These pledged securities were valued at par for collateral purposes.

The Bank participated in the BTFP and had outstanding debt of $300.0 million at December 31, 2023.

These loans bore a fixed rate of 4.38% and matured on March 22, 2024, at which time we repaid them in full.

Federal Reserve Bank ’ s Discount Window

On April 11, 2023, the Bank opened two new lines of credit for additional contingent liquidity, totaling $1.0 billion as of December 31, 2023, through the Federal Reserve discount window.

On April 11, 2023, the Bank opened two new lines of credit for additional contingent liquidity, totaling $907.7 million and $1.0 billion as of December 31, 2024 and 2023, respectively, through the Federal Reserve discount window.

The Bank has not yet drawn on either of the lines of credit as of the date of this report.

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The sale included total deposits of $16.3 million and a pre-tax gain of $945,000.

Loan Deferrals

Beginning on March 25, 2020, we took proactive measures to help customers impacted by COVID-19 by deferring principal and/or interest payments.

As of December 31, 2023, we had deferrals remaining on 930 loans with an aggregate outstanding balance of $341.4 million, although all loans were outside their deferral periods.

In accordance with FASB and interagency regulatory guidance issued in March 2020, loans that are modified under the terms of our COVID-19 Deferral Assistance Program will not be considered as troubled debt restructurings to the extent that they meet the terms of such guidance under Section 4013 of the CARES Act, as extended by the Consolidated Appropriations Act of 2021.

Acquisition of Waterstone

On January 31, 2024, we consummated the acquisition, through b1BANK, of Waterstone, headquartered in Katy, Texas.

Waterstone offers community banks and small businesses a range of SBA lending services including planning, pre-qualification, packaging, closing and disbursements, servicing, and liquidations.

Upon consummation of the acquisition, we paid $3.3 million in cash to the former owners of Waterstone.

Acquisition of Oakwood

On October 1, 2024, we consummated the merger of Oakwood, the parent bank holding company for Oakwood Bank, with and into us, with us continuing as the surviving corporation pursuant to the terms of the Reorganization Agreement.

Immediately following the consummation of the Oakwood acquisition, Oakwood Bank merged with and into us, with us surviving the merger.

Pursuant to the terms of the Reorganization Agreement, upon consummation of the Oakwood acquisition, we issued 3,973,134 shares of our common stock to the former shareholders of Oakwood.

As of September 30, 2024, Oakwood had $863.6 million in total assets, $700.2 million in loans and $741.3 million in total deposits.

Financial Highlights

The financial highlights as of and for the year ended December 31, 2024 include:

Total assets of $6.6 billion, a $594.1 million, or 9.9%, increase from December 31, 2022.

• Total assets of $7.9 billion, a $1.3 billion, or 19.3%, increase from December 31, 2023.

• Total loans held for investment of $6.0 billion, a $988.6 million, or 19.8%, increase from December 31, 2023.

Total deposits of $5.2 billion, a $428.4 million, or 8.9%, increase from December 31, 2022.

Net income available to common shareholders of $65.6 million, a $12.8 million, or 24.1%, increase from the year ended December 31, 2022.

• Total deposits of $6.5 billion, a $1.3 billion, or 24.1%, increase from December 31, 2023.

• Net income available to common shareholders of $59.7 million, a $5.9 million, or 9.0%, decrease from the year ended December 31, 2023.

• Net interest income of $227.4 million, a $12.3 million, or 5.7%, increase from the year ended December 31, 2023.

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For the year ended December 31, 2024, net income available to common shareholders was $59.7 million, or $2.27 per basic common share and $2.26 per diluted common share, compared to net income available to common shareholders of $65.6 million, or $2.62 per basic common share and $2.59 per diluted common share, for the year ended December 31, 2023.

Return to common shareholders on average assets increased to 1.04% for the year ended December 31, 2023 from 0.97% for the year ended December 31, 2022.

Return to common shareholders on average common equity increased to 12.36% for the year ended December 31, 2023, as compared to 11.59% for the year ended December 31, 2022.

Return to common shareholders on average assets decreased to 0.86% for the year ended December 31, 2024 from 1.04% for the year ended December 31, 2023.

Return to common shareholders on average common equity decreased to 9.54% for the year ended December 31, 2024, as compared to 12.36% for the year ended December 31, 2023.

Net Interest Income

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Because noninterest-bearing sources of funds, such as noninterest-bearing deposits and shareholders’ equity also fund interest-earning assets, net interest margin includes the benefit of these noninterest-bearing sources.

We calculate average assets, liabilities, and equity using a monthly average, and average yield/rate utilizing an actual 365 day count convention.

We calculate average assets, liabilities, and equity using a daily average, and average yield/rate utilizing an actual day count convention.

For the year ended December 31, 2024, net interest income totaled $227.4 million, and net interest margin and net interest spread were 3.48% and 2.55%, respectively.

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The average yield on the loan portfolio was 7.03%, for the year ended December 31, 2024, compared to 6.65% for the year ended December 31, 2023, and the average yield on total interest-earning assets was 6.35% for the year ended December 31, 2024, compared to 5.95% for the year ended December 31, 2023.

For the year ended December 31, 2023, overall cost of funds (which includes noninterest-bearing deposits) increased 169 basis points compared to the year ended December 31, 2022, primarily due to the federal reserve continuing to increase rates during the first part of 2023 and full impact of the 2022 increases.

For the year ended December 31, 2024, overall cost of funds (which includes noninterest-bearing deposits) increased 58 basis points compared to the year ended December 31, 2023.

The following table presents, for the periods indicated, an analysis of net interest income by each major category of interest-earning assets and interest-bearing liabilities, the average amounts outstanding and the interest earned or paid on such amounts.

The table also sets forth the average rate earned on interest-earning assets, the average rate paid on interest-bearing liabilities, and the net interest margin on average total interest-earning assets for the same periods.

Interest earned on loans that are classified as nonaccrual is not recognized in income;

Interest earned

on loans that are classified as nonaccrual is not recognized in income;

however, the balances are reflected in average outstanding balances for the period.

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The average total loans reflected below is net of deferred loan fees and discounts.

Acquired loans were recorded at fair value at acquisition and accrete interest income over the remaining lives of the respective loans or expected cash flows.

Averages presented in the table below, and throughout this report, are month-end averages.

Acquired loans were recorded at fair value at acquisition and accrete/amortize discounts and premiums as an adjustment to yield.

For the Years Ended December 31,

Average Outstanding Balance

Interest Earned/Interest Paid

Average Yield/Rate

Average Outstanding Balance

Interest Earned/Interest Paid

Average Yield/Rate

Average Outstanding Balance

Interest Earned/Interest Paid

Average Yield/Rate

2024 2023 2022

Average Outstanding

Balance Interest Earned/Interest

Paid Average Yield/Rate Average Outstanding

Balance Interest Earned/Interest

Paid Average Yield/Rate Average Outstanding

Balance Interest Earned/Interest

Paid Average Yield/Rate

(Dollars in thousands)

Interest-earning assets:

Total loans $ 5,327,466 $ 374,555 7.03 % $ 4,859,637 $ 323,327 6.65 % $ 4,020,436 $ 218,032 5.42 %

Securities 921,393 25,259 2.74 898,771 20,125 2.24 956,232 16,503 1.73

Interest-bearing deposits in other banks 287,474 14,950 5.20 180,997 9,875 5.46 115,016 1,579 1.37

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Noninterest-earning assets 481,333 444,140 413,917

Total assets $ 6,973,735 $ 414,764 $ 6,341,880 $ 353,327 $ 5,473,508 $ 236,114

Liabilities and Shareholders' Equity

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Overall cost of funds 3.01 % 2.43 % 0.74 %

_______________________________

(1) Net interest spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.

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Increase (Decrease) due to change in

Volume Rate Total

(Dollars in thousands)

Interest-earning assets:

Total loans $ 32,891 $ 18,337 $ 51,228

Securities 620 4,514 5,134

Interest-bearing deposits in other banks 5,537 (462) 5,075

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Advances from FHLB (509) (29) (538)

FNBB Line of Credit

Other borrowings (60) 32 (28)

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Increase (Decrease) due to change in

Volume Rate Total

(Dollars in thousands)

Interest-earning assets:

Total loans $ 55,835 $ 49,460 $ 105,295

Securities (1,287) 4,909 3,622

Interest-bearing deposits in other banks 3,600 4,696 8,296

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Subordinated debt - trust preferred securities - 183 183

Bank Term Funding Program 11,313 - 11,313

Advances from FHLB 2,439 4,784 7,223

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For a description of the factors taken into account by management in determining the allowance for credit losses see “— Financial Condition — Allowance for Credit Losses .” The provision for credit losses was $10.9 million and $4.5 million for the years ended December 31, 2024 and 2023, respectively.

The lower provision during the year ended December 31, 2023 compared to 2022 relates primarily to lower loan growth in 2023, as well as improvements in the macroeconomic environment and continued resolution of acquired PCD loans in our portfolio.

The higher provision during the year ended December 31, 2024 compared to 2023 relates primarily to the acquisition of Oakwood, and, to a lesser extent, increases from organic loan growth and non-performing loans.

Noninterest Income ( “ Other Income ” )

Our primary sources of noninterest income are service charges on deposit accounts, debit card and automated teller machine (“ATM”) fee income, income from bank-owned life insurance, fees and brokerage commissions, and pass-through income from other investments (small business investment company (“SBIC”) partnerships and fintech technology (“Fintech”) funds).

Our primary sources of noninterest income are service charges on deposit accounts, debit card and automated teller machine (“ATM”) fee income, income from bank-owned life insurance, fees and brokerage commissions, loan sales, swap fee income, and pass-through income from other investments (small business investment company (“SBIC”) partnerships and financial technology (“Fintech”) funds).

The following table presents, for the periods indicated, the major categories of noninterest income:

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Gain on sales of loans 2,973 1,972 1,001

Loss on sales of investment securities

Gain (loss) on sales of investment securities 7 (2,565) 2,572

Fees and brokerage commissions 7,844 7,247 597

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Pass-through income from other investments 1,208 1,946 (738)

Other 7,284 4,762 2,522

Total noninterest income $ 44,193 $ 36,642 $ 7,551

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We earn fees from our customers for deposit-related services, and these fees constitute a significant and predictable component of our noninterest income.

Service charges on deposit accounts were $9.7 million for the year ended December 31, 2023, compared to $8.3 million for the 2022, an increase of $1.4 million, or 17.3%.

Service charges on deposit accounts were $10.6 million for the year ended December 31, 2024, compared to $9.7 million for the 2023, an increase of $873,000, or 9.0%.

Gain on sales of loans.

We had gains on sales of loans of $2.0 million in 2023, compared to $574,000 in 2022, an increase of $1.4 million, or 243.6%, primarily due to increased SBA loan sale activity.

Loss on sales of investment securities.

We had losses on the sales of investment securities of $2.6 million in 2023, compared to $48,000 in 2022, an additional loss of $2.5 million.

We had gains on sales of loans of $3.0 million in 2024, compared to $2.0 million in 2023, an increase of $1.0 million, or 50.8%, primarily due to increased SBA loan sale activity.

Gain (loss) on sales of investment securities.

We had net gains on the sales of investment securities of $7,000 in 2024, compared to net losses on the sales of $2.6 million in 2023.

During the fourth quarter of 2023, we sold $71.5 million in securities at a loss, with a weighted average book yield of 1.98% and reinvested the funds into high yielding investments with an average book yield of 5.17%, locking in higher yields and keeping consistent, the duration and overall portfolio weighted average life.

As of December 31, 2023, we expect to recoup our losses within 1.1 years.

Gain on sales of other real estate owned.

We had net gains on the sales or other real estate owned of $646,000 in 2023, compared to $33,000 in 2022, an increase of $613,000.

We had net gains on the sales or other real estate owned of $89,000 in 2024, compared to $646,000 in 2023, a decrease of $557,000.

The majority of the gains on sale of other real estate in 2023 resulted from the sale of two properties at a total gain of $511,000.

Loss on sales / disposals of other assets.

We had a disposal of former bank premises during 2022 which resulted in a loss of $717,000.

Gain on sale of banking center.

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Swap fee income.

We had swap fee income from back-to-back interest rate swaps in the amount of $964,000 during 2023.

We had swap fee income from back-to-back interest rate swaps in the amount of $2.7 million in 2024, compared to $964,000 during 2023, an increase of $1.8 million, or 184.1%.

This category includes a variety of other income producing activities, including wire transfer fees, insurance commissions and credit card income.

Other income increased $860,000, or 22.0%, for the year ended December 31, 2023, compared to the same period in 2022.

Other income increased $2.5 million, or 53.0%, for the year ended December 31, 2024, compared to the same period in 2023.

Noninterest Expense ( “ Other Expense ” )

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The largest component of noninterest expense is salaries and employee benefits.

Noninterest expense also includes operational expenses, such as occupancy expenses, depreciation and amortization, professional and regulatory fees, including Federal Deposit Insurance Corporation (“FDIC”) assessments, data processing expenses, and advertising and promotion expenses, among others.

Noninterest expense also includes operational expenses, such as occupancy expenses, depreciation and amortization, professional and regulatory fees, including FDIC assessments, data processing expenses, and advertising and promotion expenses, among others.

The following table presents, for the periods indicated, the major categories of noninterest expense:

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Merger and conversion related expenses 1,236 236 1,000

Other 21,500 21,265 235

Total noninterest expense $ 177,652 $ 156,702 $ 20,950

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Salaries and employee benefits were $103.9 million for the year ended December 31, 2024, an increase of $13.3 million, or 14.7%, compared to the same period in 2023.

The increase was primarily due to additional hires for new positions and our merit increase cycle.

The increase was primarily due to the acquisitions of Waterstone and Oakwood, additional hires for new positions and our merit increase cycle.

As of December 31, 2024, we had 859 full-time equivalent employees, compared to 761 full-time equivalents as of December 31, 2023.

Salaries and employee benefits included stock-based compensation expense of $2.5 million and $4.4 million for the years ended December 31, 2024 and 2023, respectively.

Occupancy of bank premises .

Occupancy of bank premises expenses were $10.9 million and $9.5 million for the years ended December 31, 2024 and 2023, respectively, an increase of $1.4 million, or 15.0%, which is primarily due to the acquisition of Oakwood.

Data processing .

Data processing fees were $9.0 million and $8.4 million for the years ended December 31, 2023 and 2022, respectively, an increase of $676,000, or 8.1%.

FDIC assessment fees .

FDIC assessment fees were $3.6 million and $2.9 million for the years ended December 31, 2023 and 2022, respectively, an increase of $791,000, or 27.7%, mainly due to the increased regulatory rates by the FDIC.

Other real estate owned expenses and write-downs.

Other real estate owned expenses and write-downs increased to $687,000 compared to $193,000 for the years ended December 31, 2023 and 2022, respectively.

An increase of $494,000, or 256.0%, resulted mainly from the write-down of $432,000 on one property that we were holding for future expansion.

Data processing fees were $12.0 million and $9.0 million for the years ended December 31, 2024 and 2023, respectively, an increase of $2.9 million, or 32.4%.

Merger and conversion related expenses.

Merger and conversion related expenses for the years ended December 31, 2022 was primarily to the acquisition of TCBI in 2022.

Merger and conversion related expenses for the year ended December 31, 2024 was primarily to the acquisitions of Waterstone and Oakwood in 2024.

This category includes various operating and administrative expenses including business development expenses (i.e.

travel and entertainment, donations and club dues), insurance, supplies and printing, equipment rent, and software support and maintenance.

Other noninterest expense increased $3.3 million, or 18.1%, for the year ended December 31, 2023 compared to the same period in 2022.

Other noninterest expense increased $235,000, or 1.1%, for the year ended December 31, 2024 compared to the same period in 2023.

Income Tax Expense

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Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

For the year ended December 31, 2023, income tax expense totaled $19.5 million, an increase of $5.2 million, or 36.3%, compared to $14.3 million for the same period in 2022.

For the year ended December 31, 2024, income tax expense totaled $17.9 million, an decrease of $1.6 million, or 8.2%, compared to $19.5 million for the same period in 2023.

For the years ended December 31, 2024 and 2023, our effective tax rates were 21.6% and 21.6%, respectively.

Our income tax rate expense increased in 2023 largely due to the Section 291 of the Tax Equity an Fiscal Responsibility Act of 1982 (“TEFRA”) disallowance calculation.

Financial Condition

Our total assets increased $594.1 million, or 9.9%, from $6.0 billion as of December 31, 2022 to $6.6 billion as of December 31, 2023, due primarily from the increases in our loan portfolio, as well as our cash and cash equivalents due to our increase in deposits.

Our total assets increased $1.3 billion, or 19.3%, from $6.6 billion as of December 31, 2023 to $7.9 billion as of December 31, 2024, due primarily from the acquisition of Oakwood, increases in our loan portfolio, as well as our cash and cash equivalents due to our increase in deposits.

Loan Portfolio

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As of December 31, 2024, total loans, excluding mortgage loans held for sale, were $6.0 billion, an increase of $988.6 million or 19.8%, compared to $5.0 billion as of December 31, 2023.

The increase was primarily due to the growth in our Dallas/Fort Worth metroplex, North Louisiana and New Orleans regions, offset by a reduction in the Bayou region.

The increase was primarily due to the acquisition of Oakwood.

Additionally, $717,000 and $835,000 in mortgage loans were classified as loans held for sale as of December 31, 2024 and 2023, respectively.

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The following table summarizes our loan portfolio by type of loan as of the dates indicated:

As of December 31, 2023

As of December 31, 2022

As of December 31, 2024 As of December 31, 2023

Amount Percent Amount Percent

(Dollars in thousands)

Real Estate Loans:

Retail and Wholesale $ 580,974 9.7 % $ 573,725 11.5 %

Hospitality 310,576 5.2 249,027 5.0

Healthcare 218,152 3.6 201,098 4.0

Services 170,747 2.9 155,283 3.1

Energy 98,779 1.7 100,523 2.0

Other 1,103,995 18.5 938,272 18.8

Total Commercial 2,483,223 41.6 2,217,928 44.4

Construction 670,502 11.2 669,798 13.4

Residential 884,533 14.8 682,394 13.7

Total Real Estate Loans 4,038,258 67.6 3,570,120 71.5

Commercial 1,868,675 31.2 1,358,838 27.2

Consumer and Other 74,466 1.2 63,827 1.3

Total loans held for investment $ 5,981,399 100.0 % $ 4,992,785 100.0 %

As of December 31, 2024 As of December 31, 2023

Amount Percent Amount Percent

(Dollars in thousands)

Commercial real estate:

Dallas Region $ 778,174 31.3 % $ 618,608 27.9 %

New Orleans Region 466,661 18.8 439,087 19.8

North Louisiana Region 440,238 17.7 418,510 18.9

Capitol Region 246,321 9.9 213,492 9.6

Houston Region 234,959 9.5 243,097 11.0

Southwest Louisiana Region 234,875 9.5 201,538 9.1

Bayou Region 81,995 3.3 83,596 3.8

Total commerical real estate loans $ 2,483,223 100.0 % $ 2,217,928 100.0 %

Commercial loans are extensions of credit secured by owner-occupied and non-owner-occupied collateral.

4 unchanged sentences

Commercial loans increased $265.3 million, or 12.0%, to $2.5 billion as of December 31, 2024, from $2.2 billion as of December 31, 2023.

Construction loans include loans to small-to-midsized businesses to construct owner-occupied properties, loans to developers of commercial real estate investment properties and residential developments and, to a lesser extent, loans to individual clients for construction of single-family homes in our market areas.

extent, loans to individual clients for construction of single-family homes in our market areas.

Risks associated with these loans include fluctuations in the value of real estate, project completion risk and changes in market trends.

We are also exposed to risk based on the ability of the construction loan borrower to finance the loan or sell the property upon completion of the project, which may be affected by changes in secondary market terms and criteria for permanent financing since the time we funded the loan.

Construction loans decreased $52.3 million, or 7.2%, to $669.8 million as of December 31, 2023, from $722.1 million as of December 31, 2022.

Construction loans increased $704,000, or 0.1%, to $670.5 million as of December 31, 2024, from $669.8 million as of December 31, 2023.

Residential loans include first and second lien 1-4 family mortgage loans, as well as home equity lines of credit, in each case primarily on owner-occupied primary residences.

12 unchanged sentences

As of December 31, 2024

One Year or Less

One Through Five

Five Through Fifteen Years

After Fifteen Years

One Year or Less One Through Five

Years Five Through Fifteen Years After Fifteen Years Total

(Dollars in thousands)

Real Estate Loans:

Commercial $ 374,129 $ 1,513,009 $ 513,999 $ 82,086 $ 2,483,223

Construction 320,732 286,326 47,195 16,249 670,502

Residential 143,804 514,596 151,262 74,871 884,533

Total Real Estate Loans 838,665 2,313,931 712,456 173,206 4,038,258

Commercial 919,905 672,153 271,632 4,985 1,868,675

Consumer and Other 44,359 26,830 3,123 154 74,466

2 unchanged sentences

Real Estate Loans:

Commercial $ 134,809 $ 1,141,096 $ 349,949 $ 12,854 $ 1,638,708

Construction 66,241 132,702 13,892 7,454 220,289

Residential 72,174 422,430 96,826 21,189 612,619

Total Real Estate Loans 273,224 1,696,228 460,667 41,497 2,471,616

Commercial 179,506 351,913 152,841 - 684,260

Consumer and Other 35,067 21,062 2,585 154 58,868

2 unchanged sentences

Real Estate Loans:

Commercial $ 239,320 $ 371,913 $ 164,050 $ 69,232 $ 844,515

Construction 254,491 153,624 33,303 8,795 450,213

Residential 71,630 92,166 54,436 53,682 271,914

Total Real Estate Loans 565,441 617,703 251,789 131,709 1,566,642

Commercial 740,399 320,240 118,791 4,985 1,184,415

Consumer and Other 9,292 5,768 538 - 15,598

1 unchanged sentence

As of December 31, 2023

One Year or Less

One Through Five

Five Through Fifteen Years

After Fifteen Years

One Year or Less One Through Five

Years Five Through Fifteen Years After Fifteen Years Total

(Dollars in thousands)

Real Estate Loans:

Commercial $ 251,365 $ 1,256,655 $ 620,029 $ 89,879 $ 2,217,928

Construction 325,883 278,039 45,910 19,966 669,798

Residential 79,357 401,852 137,283 63,902 682,394

Total Real Estate Loans 656,605 1,936,546 803,222 173,747 3,570,120

Commercial 520,058 594,274 243,744 762 1,358,838

Consumer and Other 35,971 23,520 4,134 202 63,827

2 unchanged sentences

Real Estate Loans:

Commercial $ 156,227 $ 1,067,124 $ 450,884 $ 17,470 $ 1,691,705

Construction 96,020 187,970 16,388 13,866 314,244

Residential 49,434 344,549 85,731 14,952 494,666

Total Real Estate Loans 301,681 1,599,643 553,003 46,288 2,500,615

Commercial 134,242 331,029 147,388 - 612,659

Consumer and Other 26,867 17,373 3,260 159 47,659

2 unchanged sentences

Real Estate Loans:

Commercial $ 95,138 $ 189,531 $ 169,145 $ 72,409 $ 526,223

Construction 229,863 90,069 29,522 6,100 355,554

Residential 29,923 57,303 51,552 48,950 187,728

Total Real Estate Loans 354,924 336,903 250,219 127,459 1,069,505

Commercial 385,816 263,245 96,356 762 746,179

Consumer and Other 9,104 6,147 874 43 16,168

13 unchanged sentences

We had $25.0 million in nonperforming loans as of December 31, 2024 compared to $17.1 million as of December 31, 2023.

The increase in nonperforming assets from December 31, 2022 to December 31, 2023 is primarily due to the adoption of CECL and the elimination of ASC 310-30 which excluded purchased impaired loans accreting interest income from nonperforming loans.

The increase in nonperforming assets from December 31, 2023 to December 31, 2024 is primarily due to two lending relationships secured by residential real estate, one secured by commercial real estate, and one commercial loan that is unsecured.

The following tables present information regarding nonperforming loans at the dates indicated:

As of December 31,

2024 2023 2022

(Dollars in thousands)

12 unchanged sentences

As of December 31,

2024 2023 2022

(Dollars in thousands)

1 unchanged sentence

Real Estate Loans:

Commercial $ 3,621 $ 3,280 $ 2,644

Construction 5,251 3,543 992

Residential 7,078 7,352 4,080

Total Real Estate Loans 15,950 14,175 7,716

Commercial 8,039 2,395 3,150

Consumer and Other 158 373 188

As of December 31, 2023, our loan portfolio included 930 loans with an aggregate outstanding balance of $341.4 million that had previously been granted temporary payment deferrals of principal and/or interest due to the effect of the COVID-19 pandemic.

As of December 31, 2022, our loan portfolio included 1,164 loans with an aggregate outstanding balance of $425.2 million that had previously been granted temporary payment deferrals.

In accordance with FASB and interagency regulatory guidance issued in March 2020, loans that were modified under the terms of our COVID-19 Deferral Assistance Program are not to be considered as troubled debt restructurings to the extent that they meet the terms of such guidance under Section 4013 of the CARES Act.

Loans under these deferrals remain in their current risk rating and/or past due status through the deferral period.

None of these loans are currently in their deferral period at December 31, 2023 and 2022, respectively.

Total $ 24,147 $ 16,943 $ 11,054

Potential Problem Loans

16 unchanged sentences

As of December 31, 2024

Special Mention

Pass Special Mention Substandard Doubtful Total

(Dollars in thousands)

Real Estate Loans:

Commercial $ 2,383,439 $ 75,385 $ 23,548 $ 851 $ 2,483,223

Construction 658,364 3,436 8,702 - 670,502

Residential 871,634 3,163 9,485 251 884,533

Total Real Estate Loans 3,913,437 81,984 41,735 1,102 4,038,258

Commercial 1,828,485 25,979 13,911 300 1,868,675

Consumer and Other 74,097 - 369 - 74,466

Total $ 5,816,019 $ 107,963 $ 56,015 $ 1,402 $ 5,981,399

As of December 31, 2023

Special Mention

Pass Special Mention Substandard Doubtful Total

(Dollars in thousands)

Real Estate Loans:

Commercial $ 2,188,840 $ 18,658 $ 9,163 $ 1,267 $ 2,217,928

Construction 661,796 4,087 3,570 345 669,798

Residential 669,391 3,161 9,353 489 682,394

Total Real Estate Loans 3,520,027 25,906 22,086 2,101 3,570,120

Commercial 1,338,339 14,623 5,308 568 1,358,838

Consumer and Other 63,265 100 462 - 63,827

Total $ 4,921,631 $ 40,629 $ 27,856 $ 2,669 $ 4,992,785

Allowance for Credit Losses

17 unchanged sentences

For the Years Ended December 31,

2024 2023 2022

(Dollars in thousands)

3 unchanged sentences

Adoption of ASU 2016-13 - 5,857 -

Adjustment for Oakwood purchased credit deterioration loans 8,410 - -

Provision for credit losses 10,873 4,483 10,667

Commercial (263) 2,049 51

Construction 2,261 36 16

Residential 297 42 191

Total Real Estate 2,295 2,127 258

Commercial 986 2,813 2,139

Consumer and other 2,392 1,489 424

Total charge-offs 5,673 6,429 2,821

Commercial 86 26 50

Construction 515 1 25

Residential 14 18 20

Total Real Estate 615 45 95

Commercial 236 672 739

Consumer and other 329 327 167

6 unchanged sentences

For the Years Ended December 31,

Net Charge-offs (Recoveries)

Percent of Average Loans

Net Charge-offs (Recoveries)

Percent of Average Loans

Net Charge-offs (Recoveries)

Percent of Average Loans

2024 2023 2022

Net Charge-offs (Recoveries) Percent of Average Loans Net Charge-offs (Recoveries) Percent of Average Loans Net Charge-offs (Recoveries) Percent of Average Loans

(Dollars in thousands)

Commercial $ (349) 0.00 % $ 2,023 0.04 % $ 1 0.00 %

Construction 1,746 0.03 % 35 0.00 % (9) 0.00 %

Residential 283 0.00 % 24 0.00 % 171 0.00 %

Total Real Estate Loans 1,680 0.03 % 2,082 0.04 % 163 0.00 %

Commercial 750 0.01 % 2,141 0.05 % 1,400 0.04 %

Consumer and Other 2,063 0.04 % 1,162 0.02 % 257 0.01 %

6 unchanged sentences

For the Years Ended December 31,

Percent to Total

2024 2023 2022

Amount Percent to Total Amount Percent to Total Amount Percent to Total

(Dollars in thousands)

Commercial $ 23,688 40.5 % $ 17,882 40.9 % $ 14,922 38.5 %

Construction 8,473 14.5 8,142 18.6 5,905 15.2

Residential 8,394 14.3 5,662 12.9 5,367 13.8

Total real estate 40,555 69.3 31,686 72.4 26,194 67.5

Commercial 17,432 29.8 11,796 27.0 11,950 30.8

Consumer and Other 541 0.9 256 0.6 639 1.7

1 unchanged sentence

We use our securities portfolio to provide a source of liquidity, an appropriate return on funds invested, manage interest rate risk, meet collateral requirements, and meet regulatory capital requirements.

As of December 31, 2023, the carrying amount of investment securities totaled $879.6 million, a decrease of $11.2 million, or 1.3%, compared to $890.8 million as of December 31, 2022.

As of December 31, 2024, the carrying amount of investment securities totaled $893.5 million, an increase of $14.0 million, or 1.6%, compared to $879.6 million as of December 31, 2023.

Securities represented 11.4% and 13.4% of total assets as of December 31, 2024 and 2023, respectively.

3 unchanged sentences

As of December 31, 2024

Amortized Cost

Gross Unrealized

Amortized Cost Gross Unrealized

Gains Gross Unrealized

Losses Fair Value

(Dollars in thousands)

4 unchanged sentences

Municipal securities 313,452 23 29,092 284,383

Total $ 973,423 $ 913 $ 80,787 $ 893,549

As of December 31, 2023

Amortized Cost

Gross Unrealized

Amortized Cost Gross Unrealized

Gains Gross Unrealized

Losses Fair Value

(Dollars in thousands)

4 unchanged sentences

Municipal securities 331,273 298 27,798 303,773

Total $ 963,978 $ 1,274 $ 85,681 $ 879,571

All of our mortgage-backed securities are agency securities.

We do not hold any Fannie Mae or Freddie Mac preferred stock, corporate equity, collateralized debt obligations, collateralized loan obligations, private label collateralized mortgage obligations, subprime, Alt-A, or second lien elements in our investment portfolio as of December 31, 2024.

The allowance for credit losses encompasses potential expected credit losses related to the securities portfolio for credit losses.

The assessment includes reviewing historical loss data for both our portfolio and similar types of investment securities to develop an estimate for the current securities portfolio.

The allowance for credit losses encompasses potential expected credit losses related to the securities portfolio.

In order to develop an estimate of credit losses expected for the current securities portfolio, we perform an assessment that includes reviewing historical loss data for both our portfolio and similar types of investment securities.

Additionally, our review of the securities portfolio for expected credit losses includes an evaluation of factors including the security issuer bond ratings, delinquency status, insurance or other available credit support, as well as our expectations of the forecasted economic outlook relevant to these securities.

The results of the analysis are evaluated quarterly to confirm that credit loss estimates are appropriate for the securities portfolio.

Based on our assessments, expected credit losses on the investment securities portfolio as of December 31, 2023, was negligible and therefore, no allowance for credit loss was recorded related to our investment securities.

Prior to the adoption of ASU 2016-13, declines in the fair value of available-for-sale securities below their cost that were deemed to be other than temporary were reflected in earnings as realized losses.

In estimating other-than-temporary impairment losses prior to January 1, 2023, management considered, among other things, (i) the length of time and the extent to which the fair value had been less than cost, (ii) the financial condition and near-term prospects of the issuer and (iii) the intent and our ability to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

Based on our assessments, expected credit losses on the investment securities portfolio as of December 31, 2024 and 2023, was negligible and therefore, no allowance for credit loss was recorded related to our investment securities.

The following tables set forth the fair value, maturities and approximated weighted average yield based on estimated annual income divided by the average amortized cost of the securities portfolio as of the dates indicated.

1 unchanged sentence

As of December 31, 2024

Within One Year

After One Year but Within Five Years

After Five Years but Within Ten Years

After Ten Years

Within One Year After One Year but Within Five Years After Five Years but Within Ten Years After Ten Years Total

Amount Yield Amount Yield Amount Yield Amount Yield Total Yield

(Dollars in thousands)

4 unchanged sentences

Municipal securities 24,577 1.44 % 93,150 1.76 % 105,409 1.96 % 61,247 2.97 % 284,383 2.07 %

Total $ 28,658 1.61 % $ 173,167 1.82 % $ 328,897 2.89 % $ 362,827 3.13 % $ 893,549 2.74 %

As of December 31, 2023

Within One Year

After One Year but Within Five Years

After Five Years but Within Ten Years

After Ten Years

Within One Year After One Year but Within Five Years After Five Years but Within Ten Years After Ten Years Total

Amount Yield Amount Yield Amount Yield Amount Yield Total Yield

(Dollars in thousands)

4 unchanged sentences

Municipal securities 16,766 1.56 % 96,739 1.55 % 117,092 1.91 % 73,176 2.38 % 303,773 1.89 %

Total $ 17,126 1.54 % $ 171,117 1.63 % $ 349,660 2.65 % $ 341,668 2.66 % $ 879,571 2.43 %

The contractual maturity of mortgage-backed securities, collateralized mortgage obligations and asset-backed securities is not a reliable indicator of their expected life because borrowers have the right to prepay their obligations at any time.

9 unchanged sentences

We rely primarily on competitive pricing policies, convenient locations and personalized service to attract and retain these deposits.

Total deposits as of December 31, 2023 were $5.2 billion, an increase of $428.4 million, or 8.9%, compared to $4.8 billion as of December 31, 2022.

Total deposits as of December 31, 2024 were $6.5 billion, an increase of $1.3 billion, or 24.1%, compared to $5.2 billion as of December 31, 2023.

Total uninsured deposits were $2.8 billion, or 43.4% of deposits as of December 31, 2024 compared to $2.0 billion, or 38.9%, or total deposits as of December 31, 2023.

Since it is not reasonably practicable to provide a precise measure of uninsured deposits, the amounts are estimated and are based on the same methodologies and assumptions that are used for regulatory reporting requirements for the call report.

Noninterest-bearing deposits as of December 31, 2023 were $1.3 billion compared to $1.5 billion as of December 31, 2022, a decrease of $250.3 million, or 16.2%.

Since it is not reasonably practicable to

provide a precise measure of uninsured deposits, the amounts are estimated and are based on the same methodologies and assumptions that are used for regulatory reporting requirements for the call report.

Noninterest-bearing deposits as of December 31, 2024 were $1.4 billion compared to $1.3 billion as of December 31, 2023, an increase of $58.0 million, or 4.5%.

Average deposits for the year ended December 31, 2024 were $5.7 billion, an increase of $733.5 million, or 14.7%, compared to the year ended December 31, 2023 of $5.0 billion.

4 unchanged sentences

For the Years Ended December 31

Average Balance

Average Balance Average Rate Average Balance Average Rate

(Dollars in thousands)

18 unchanged sentences

12 months or more 274,512 81,042

Total $ 687,601 $ 496,911

We utilize short-term and long-term borrowings to supplement deposits to fund our lending and investment activities.

3 unchanged sentences

The FHLB allows us to borrow on a blanket floating lien status collateralized by certain securities and loans.

As of December 31, 2023 and 2022, total borrowing capacity of $1.8 billion, for both periods, was available under this arrangement and $211.2 million and $410.1 million, respectively, was outstanding with a weighted average stated interest rate of 3.65% as of December 31, 2023 and 3.88% as of December 31, 2022.

As of December 31, 2024 and 2023, total borrowing capacity of $2.0 billion and $1.8 billion, respectively, was available under this arrangement and $355.9 million and $211.2 million, respectively, was outstanding with a weighted average stated interest rate of 4.15% as of December 31, 2024 and 3.65% as of December 31, 2023.

Our current longest dated FHLB advance matures within ten years.

16 unchanged sentences

Bank Term Funding Program ( “ BTFP ” ) .

On March 12, 2023, the Federal Reserve launched the BTFP, which offers loans to banks with a term of up to one year.

The loans are secured by pledging participating banks’ U.S.

On March 12, 2023, the Federal Reserve launched the BTFP, which offered loans to banks with a term of up to one year.

The loans were secured by pledging participating banks’ U.S.

treasuries, agency securities, agency mortgage-backed securities, and any other qualifying assets.

These pledged securities will be valued at par for collateral purposes.

These pledged securities were valued at par for collateral purposes.

The Bank participated in the BTFP and had outstanding debt of $300.0 million at December 31, 2023.

These loans bear a fixed interest rate of 4.38% and mature on March 22, 2024.

These loans bore a fixed interest rate of 4.38% and matured on March 22, 2024, at which time we repaid them in full.

The following table presents our Bank Term Funding Program borrowings at the date indicated.

6 unchanged sentences

Weighted average interest rate during the year 4.31 %

December 31, 2023

Amount outstanding at year-end $ 300,000

Weighted average stated interest rate at year-end 4.38 %

Maximum month-end balance during the year $ 428,000

Average balance outstanding during the year $ 253,706

Weighted average interest rate during the year 4.46 %

Subordinated Note Purchase Agreement ( “ Subordinated Debt ” ) .

2 unchanged sentences

The balance outstanding at both December 31, 2024 and 2023 was $25.0 million.

These subordinated notes were issued for the purpose of paying off our long term advance and line of credit with FNBB, for general corporate purposes and to provide Tier 2 capital.

These subordinated notes were issued for the purpose of paying off our long term advance and line of credit with First National Bankers' Bank ("FNBB"), for general corporate purposes and to provide Tier 2 capital.

The subordinated notes are redeemable by the Company at its option beginning in 2028.

12 unchanged sentences

This $8.9 million note was fully extinguished during the year ended December 31, 2023.

As part of valuing these three subordinated notes from TCBI, we incurred a fair value adjustment premium of $3.4 million that will accrete over five-to-seven years, with $1.1 million and $2.9 million remaining at December 31, 2023 and December 31, 2022, respectively.

As part of valuing these three subordinated notes from TCBI, we incurred a fair value adjustment premium of $3.4 million that will accrete over five-to-seven years, with $833,000 and $1.1 million remaining at December 31, 2024 and December 31, 2023, respectively.

We recognized $1.5 million in gains on the extinguishment of this debt during the year ended December 31, 2023.

14 unchanged sentences

Weighted average interest rate during the year 5.05 %

FNBB revolving advances .

FNBB allowed us to borrow on a revolving basis up to $5.0 million.

This line of credit, established on September 12, 2016, was secured by a pledge of and security interest in the common stock of our wholly-owned subsidiary, b1BANK.

This line of credit carried a variable interest rate equal to the Wall Street Journal Prime rate.

This FNBB line was established for the purpose of repurchasing shares of our common stock from certain of our shareholders and for general corporate purposes.

This line of credit was paid in full in March 2021.

This line of credit was re-established on November 3, 2021.

This line of credit did not have a balance at December 31, 2021.

In May 2022, we utilized the full amount of this line of $5.0 million.

This line of credit carried a variable interest rate equal to the Wall Street Journal Prime rate not to be less than 3.50%.

This line of credit was paid in full, and not renewed, in November 2022.

Trust preferred securities .

11 unchanged sentences

TIB National Association $ 55,000

PNC Bank 38,000

First Horizon Bank 17,000

ServisFirst Bank 10,000

Texas Capital 5,000

Total $ 160,000

The following table represents combined Federal Funds Purchased Lines of Credit for all relationships at the dates indicated.

16 unchanged sentences

For the years ended December 31, 2024 and 2023, liquidity needs were primarily met by core deposits, security and loan maturities, and amortizing investment and loan portfolios.

In addition, we utilize, or have available, brokered deposits, purchased funds from correspondent banks, the Bank Term Funding Program (while available), the Federal Reserve discount window, and overnight advances from the FHLB.

As of December 31, 2023 and 2022, we maintained five and six lines of credit, respectively, with correspondent banks which provided for extensions of credit with an availability to borrow up to an aggregate of $145.0 million and $154.0 million as of December 31, 2023 and 2022, respectively.

At December 31, 2022, we had $14.1 million outstanding under these lines of credit.

There were no funds under these lines of credit outstanding as of December 31, 2023.

In addition, we utilize, or have available, brokered deposits, purchased funds from correspondent banks, the Federal Reserve discount window, and overnight advances from the FHLB.

As of December 31, 2024 and 2023, we maintained six and five lines of credit, respectively, with correspondent banks which provided for extensions of credit with an availability to borrow up to an aggregate of $160.0 million and $145.0 million as of December 31, 2024 and 2023, respectively.

There were no funds under these lines of credit outstanding as of December 31, 2024 and 2023, respectively.

The following table illustrates, during the periods presented, the mix of our funding sources and the average assets in which those funds are invested as a percentage of average total assets for the period indicated.

10 unchanged sentences

Shareholders' equity 10.0 9.5

Total 100.0 % 100.0 %

Uses of Funds:

3 unchanged sentences

Other noninterest-earning assets 6.9 7.0

Total 100.0 % 100.0 %

Average noninterest-bearing deposits to average deposits 22.5 % 28.4 %

10 unchanged sentences

As of December 31, 2024, we had no exposure to future cash requirements associated with known uncertainties or capital expenditures of a material nature.

We had cash and cash equivalents, including federal funds sold, of $377.2 million and $168.3 million as of December 31, 2023 and 2022, respectively.

We had cash and cash equivalents, federal funds sold and securities purchased under agreements to resell, of $567.6 million and $377.2 million as of December 31, 2024 and 2023, respectively.

Capital Resources

Total shareholders’ equity increased to $799.5 million as of December 31, 2024, compared to $644.3 million as of December 31, 2023, an increase of $155.2 million, or 24.1%.

This increase was primarily due to net income available to common shareholders of $65.6 million, other comprehensive income of $7.6 million resulting from the after tax effect of unrealized gains in our investment securities portfolio, and offset by dividends paid on common shares of $12.7 million.

This increase was primarily due to the acquisition of Oakwood, which resulted in stock issuance of $103.8 million, net income available to common shareholders of $59.7 million, other comprehensive income of $3.6 million resulting from the after tax effect of unrealized gains in our investment securities portfolio, and offset by dividends paid on common shares of $14.9 million.

On January 23, 2025, our board of directors declared a quarterly dividend in the amount of $18.75 per preferred share to the preferred shareholders of record as of February 15, 2025.

36 unchanged sentences

Bank Term Funding Program ( “ BTFP ” )

On March 12, 2023, the Federal Reserve launched the BTFP, which offers loans to banks with a term of up to one year.

The loans are secured by pledging participating banks’ U.S.

On March 12, 2023, the Federal Reserve launched the BTFP, which offered loans to banks with a term of up to one year.

The loans were secured by pledging participating banks’ U.S.

treasuries, agency securities, agency mortgage-backed securities, and any other qualifying assets.

These pledged securities will be valued at par for collateral purposes.

These pledged securities were valued at par for collateral purposes.

The Bank participated in the BTFP and had outstanding debt of $300.0 million at December 31, 2023.

These loans bear a fixed interest rate of 4.38% and mature on March 22, 2024.

These loans bore a fixed interest rate of 4.38% and mature on March 22, 2024, at which time we repaid them in full.

Contractual Obligations

4 unchanged sentences

We participated in the BTFP in March 2023 and as of December 31, 2023, had outstanding debt of $300.0 million, at a fixed rate of 4.38% and set to mature on March 22, 2024.

We expect to either refinance the debt or pay it off with additional funding sources of which we have sufficient borrowing capacity as of December 31, 2023.

We repaid this debt in full at the time of maturity.

The subordinated debt totaled $99.8 million and $100.0 million as of December 31, 2024 and 2023.

3 unchanged sentences

This $8.9 million note was fully extinguished during the year ended December 31, 2023.

We recognized $1.5 million in gains on the extinguishment of this debt during the year ended December 31, 2023.

As of December 31, 2024

1 year or less

More than 1 year

1 year or less More than 1 year

but less than 3

1 unchanged sentence

but less than 5

5 years or more

5 years or more Total

(Dollars in thousands)

7 unchanged sentences

Commitments to extend credit 762,661 373,705 144,823 96,685 1,377,874

Total $ 1,900,751 $ 899,132 $ 274,105 $ 264,972 $ 3,338,960

As of December 31, 2023

1 year or less

More than 1 year

1 year or less More than 1 year

but less than 3

1 unchanged sentence

but less than 5

5 years or more

5 years or more Total

(Dollars in thousands)

3 unchanged sentences

Advances from FHLB - 111,198 25,000 75,000 211,198

BTFP 300,000 - - - 300,000

Subordinated debt - trust preferred securities - - - 5,000 5,000

2 unchanged sentences

Commitments to extend credit 625,521 330,138 106,171 112,477 1,174,307

Total $ 2,019,905 $ 687,651 $ 191,133 $ 279,542 $ 3,178,231

Off-Balance Sheet Items

38 unchanged sentences

As of December 31,

Change in Interest Rates (Basis Points)

Percent Change in

Change in Interest Rates (Basis Points) Percent Change in

Percent Change in

3 unchanged sentences

Fair Value of

+300 8.10 % (0.70 %) (5.50 %) (5.59 %)

+200 5.60 % (0.30 %) (3.20 %) (3.47 %)

+100 2.90 % - % (1.10 %) (1.39 %)

Base - % - % - % - %

-100 (2.30 %) 0.30 % 0.30 % 1.40 %

-200 (5.20 %) (1.30 %) 0.50 % 2.67 %

The results of the simulations are primarily driven by the contractual characteristics of all balance sheet instruments and customer behavior.

16 unchanged sentences

Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core business.

These non-GAAP disclosures are not necessarily comparable to non-GAAP measures that may be presented by other companies.

These non-GAAP

disclosures are not necessarily comparable to non-GAAP measures that may be presented by other companies.

You should understand how such other banking organizations calculate their financial metrics or with names similar to the non-GAAP financial measures we have discussed in this statement when comparing such non-GAAP financial measures.

1 unchanged sentence

Core net income available to common shareholders for the year ended December 31, 2024 was $65.8 million, or $2.49 per diluted common share, compared to core net income available to common shareholders of $66.3 million, or $2.62 per diluted common share, for the year ended December 31, 2023.

Core net income available to common shareholders for the year ended December 31, 2023 included an adjustment for $2.5 million in losses on sales of securities, $945,000 in a gain on the sale of our Leesville, Louisiana banking center, $1.5 million in a gain on the extinguishment of debt associated with the TCBI acquisition in 2022, which was attributed to the $8.9 million subordinated debt redemption, $236,000 in acquisition-related expenses, and a $432,000 write-down on former bank premises, compared to $48,000 in losses on the sales of securities, $687,000 in insurance reimbursements from storm expenditures, the incurrence of $717,000 in losses attributed to former bank premises and equipment, $5.2 million in acquisition-related expenses and $501,000 million in hurricane repair expenses for the year ended December 31, 2022.

Core net income available to common shareholders for the year ended December 31, 2024 included a CECL impact on the Oakwood acquisition of $4.8 million, acquisition related expenses of $1.6 million and core conversion expenses of $974,000, compared to an adjustment for $2.6 million in losses on sales of securities, $945,000 in a gain on the sale of our Leesville, Louisiana banking center, $1.5 million in a gain on the extinguishment of debt associated with the TCBI acquisition in 2022, which was attributed to the $8.9 million subordinated debt redemption, $236,000 in acquisition-related expenses, and a $432,000 write-down on former bank premises for the year ended December 31, 2023.

For the Years Ended December 31,

2023 2022 2022

(Dollars in thousands, except per share data) (Unaudited)

7 unchanged sentences

Provision for credit losses 10,873 4,483 10,886

CECL Oakwood impact (3) (4,824) - -

Core provision expense 6,049 4,483 10,886

Other Income:

Losses on former bank premises and equipment

Other income 44,193 36,642 29,310

(Gains) losses on former bank premises and equipment (50) - 717

(Gains) losses on sale of securities (7) 2,565 48

8 unchanged sentences

Occupancy and bank premises - storm repair - - (501)

Core conversion expense (974) - -

Core other expense 175,057 156,034 143,730

1 unchanged sentence

Pre-tax income 83,051 90,586 68,592

Losses on former bank premises and equipment

CECL Oakwood impact (3) 4,824 - -

(Gains) losses on former bank premises and equipment (50) - 717

(Gains) losses on sale of securities (7) 2,565 48

5 unchanged sentences

Occupancy and bank premises - storm repair - - 501

Core conversion expense 974 - -

Core pre-tax income 90,413 91,416 74,349

1 unchanged sentence

Provision for income taxes 17,944 19,543 14,337

Tax on losses on former bank premises and equipment

Tax on CECL Oakwood impact (3) 1,019 - -

Tax on (gains) losses on former bank premises and equipment (11) - 151

Tax on (gains) losses on sale of securities (1) 542 10

5 unchanged sentences

Tax on occupancy and bank premises - storm repair - - 106

Tax on core conversion expense 205 - -

Core provision for income taxes 19,253 19,689 15,402

4 unchanged sentences

Net income available to common shareholders 59,706 65,642 52,905

Losses on former bank premises and equipment , net of tax

CECL Oakwood impact (3), net of tax 3,805 - -

(Gains) losses on former bank premises and equipment , net of tax (39) - 566

(Gains) losses on sale of securities, net of tax (6) 2,023 38

5 unchanged sentences

Occupancy and bank premises - storm repair, net of tax - - 395

Core conversion expense, net of tax 769 - -

Core net income available to common shareholders $ 65,759 $ 66,326 $ 57,597

1 unchanged sentence

Diluted earnings per common share $ 2.26 $ 2.59 $ 2.32

Losses on former bank premises and equipment , net of tax

CECL Oakwood impact (3), net of tax 0.14 - -

(Gains) losses on former bank premises and equipment , net of tax - - 0.02

(Gains) losses on sale of securities, net of tax - 0.08 -

5 unchanged sentences

Occupancy and bank premises - storm repair, net of tax - - 0.02

Core conversion expense, net of tax 0.03 - -

Core diluted earnings per common share $ 2.49 $ 2.62 $ 2.52

_______________________________

(1) Tax rates, exclusive of certain nondeductible acquisition-related expenses and goodwill, utilized were 21.129% for both 2024 and 2023 .

1 unchanged sentence

(2) Includes merger and conversion-related expenses and salary and employee benefits.

(3) CECL non-PCD provision/unfunded commitment expense attributable to Oakwood.

Tangible Book Value Per Common Share.

9 unchanged sentences

Total common shareholders' equity 727,536 572,329

Goodwill (121,572) (88,391)

Core deposit and customer intangibles (17,252) (11,895)

3 unchanged sentences

Tangible book value per common shares (1) 19.92 18.62

_______________________________

(1) Excludes the dilutive effect, if any, of 198,238 and 217,094 shares of common stock issuable upon exercise of outstanding stock options and restricted stock awards as of December 31, 2024 and 2023 , respectively.

10 unchanged sentences

Total common shareholders' equity 727,536 572,329

Goodwill (121,572) (88,391)

Core deposit and customer intangibles (17,252) (11,895)

1 unchanged sentence

Tangible Assets

Total Assets $ 7,857,090 $ 6,584,550

Goodwill (121,572) (88,391)

Core deposit and customer intangibles (17,252) (11,895)

15 unchanged sentences

Acquired loans are accounted for based upon a determination of whether they were purchased with more-than insignificant amount of credit deterioration (“PCD” loans) or an insignificant amount of credit deterioration (“non-PCD” loans), in either case as compared to origination.

In either case, the difference between the estimated fair value of the acquired loan related to non-credit deterioration is treated as an adjustment to the contractual yield and accreted into interest income over the remaining life of the loan.

The difference between the estimated fair value of the acquired loan related to non-credit deterioration is treated as an

adjustment to the contractual yield and accreted into interest income over the remaining life of the loan.

Acquired loans are generally valued using a discount cash flow model.

The assumptions in the model included prepayment rates, default/loss given default rates, collateral values, recovery rates, and discount rates.

Allowance for Credit Losses on Loans and Unfunded Commitments

15 unchanged sentences

Under this method, the Company records the assets acquired, including identified intangible assets, and liabilities assumed, at their respective fair values, which generally involves estimates based on third party valuations, such as appraisals, discounted cash flow analyses or other valuation techniques, as well as internal valuations for certain instruments.

Core deposit intangibles, deposit premiums, securities, properties, and borrowings are some of the more subjective instruments which are generally fair valued by the Company during acquisitions.

Core deposit intangibles, deposit premiums, securities, properties, and borrowings are some of the more subjective instruments which are generally fair valued during acquisitions.

Further, the determination of the useful lives as well as the appropriate amortization method of other intangible assets is also subjective.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity