What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-05 compared with 2025-05-02 · 266 added, 145 removed, 822 unchanged (33% of the section changed)

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We believe these factors include, but are not limited to, the following:

• risks relating to the proposed acquisition of Progressive Bancorp, Inc.

(“Progressive”) including, without limitation:

the timing of consummation of the proposed merger;

the risk that any condition to closing of the proposed merger may not be satisfied or waived;

the risk that the merger may not be completed at all;

the diversion of management time on issues related to the proposed merger;

unexpected transaction costs, including the costs of integrating operations;

the risks that the businesses will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected;

the potential failure to fully or timely realize expected revenues and revenue synergies, including as the result of revenues following the merger being lower than expected;

the risk of deposit and customer attrition;

any changes in deposit mix;

unexpected operating and other costs, which may differ or change from expectation;

the risk of customer and employee loss and business disruptions, including, without limitation, as the result of difficulties in maintaining relationships with employees;

increased competitive pressures on solicitations of customers by competitors;

as well as difficulties and risks inherent with entering new markets;

• risks related to the integration of any other acquired businesses, including exposure to potential asset quality and credit quality risks and unknown or contingent liabilities, risks related to entering a new geographic market, the time and costs associated with integrating systems, technology platforms, procedures and personnel, the ability to retain key employees and maintain relationships with significant customers, the need for additional capital to finance such transactions, and possible failures in realizing the anticipated benefits from acquisitions;

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FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF BUSINESS FIRST

The following discussion and analysis focuses on significant changes in the financial condition of Business First and its subsidiaries from December 31, 2024 to March 31, 2025, and its results of operations for the three months ended March 31, 2025.

The following discussion and analysis focuses on significant changes in the financial condition of Business First and its subsidiaries from December 31, 2024 to June 30, 2025, and its results of operations for the three and six months ended June 30, 2025.

This discussion and analysis is intended to highlight and supplement information presented elsewhere in this report and should be read in conjunction with (i) the accompanying unaudited consolidated financial statements and the notes thereto (the “Notes”) and (ii) our Annual Report on Form 10-K for the year ended December 31, 2024 , including the audited consolidated financial statements and notes thereto, management’s discussion and analysis, and the risk factor disclosures contained therein.

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We currently operate out of banking centers and loan production offices across Louisiana and Texas.

As of March 31, 2025, we had total assets of $7.8 billion, total loans of $6.0 billion, total deposits of $6.5 billion, and total shareholders’ equity of $826.3 million.

As of June 30, 2025, we had total assets of $7.9 billion, total loans of $6.0 billion, total deposits of $6.4 billion, and total shareholders’ equity of $848.4 million.

As a financial holding company operating through one reportable operating segment, community banking, we generate most of our revenues from interest income on loans, customer service and loan fees, and interest income from securities.

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Other Developments

Bank Term Funding Program ( “ BTFP ” )

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

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

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

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.

The 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 $1.3 billion and $907.7 billion as of March 31, 2025, and December 31, 2024, respectively, through the Federal Reserve discount window.

On April 11, 2023, the Bank opened two new lines of credit for additional contingent liquidity, totaling $1.1 billion and $907.7 million as of June 30, 2025, and December 31, 2024, 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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Acquisition of Oakwood Bancshares, Inc.

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.

Immediately following the consummation of the Oakwood acquisition, Oakwood Bank merged with and into b1BANK, with b1BANK 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.

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

Sale of Kaplan Banking Center

On April 4, 2025, we sold the Kaplan banking center, located in Kaplan, Louisiana, to Currency Bank headquartered in Baton Rouge, Louisiana, in accordance with the Branch Purchase and Assumption Agreement dated December 12, 2024.

On April 4, 2025, we sold the Kaplan banking center, located in Kaplan, Louisiana, to Currency Bank headquartered in Baton Rouge, Louisiana, in accordance with a Branch Purchase and Assumption Agreement, dated December 12, 2024.

The sale included $50.7 million in deposits, $2.3 million in loans, and $1.4 million in fixed assets, net of depreciation.

The deposit premium paid by Currency Bank as consideration was 8.00% of total deposits assumed at closing.

The loans and deposits associated with the Kaplan banking center were included in the consolidated balance sheet as of March 31, 2025.

The total deposit premium paid by Currency Bank as consideration was 8.00% of the total deposits assumed at closing resulting in a gain on the sale of $3.4 million.

Acquisition of Progressive Bancorp, Inc.

("Progressive")

On July 7, 2025, we entered into a definitive agreement with Progressive providing for us to acquire Progressive and its wholly-owned bank subsidiary, Progressive Bank.

Progressive had approximately $752.2 million of total assets, $673.0 million of deposits and $582.9 million of loans as of March 31, 2025.

Financial Highlights

The financial highlights as of and for the three months ended March 31, 2025, include:

• Total assets of $7.8 billion, a $72.4 million, or 0.9%, decrease from December 31, 2024.

• Total loans held for investment of $6.0 billion, a $480,000, or 0.0%, decrease from December 31, 2024.

The financial highlights as of and for the six months ended June 30, 2025, include:

• Total assets of $7.9 billion, a $91.2 million, or 1.2%, increase from December 31, 2024.

• Total loans held for investment of $6.0 billion, a $66.3 million, or 1.1%, increase from December 31, 2024.

• Total deposits of $6.4 billion, a $91.7 million, or 1.4%, decrease from December 31, 2024.

• Net income available to common shareholders of $19.2 million for the three months ended March 31, 2025, a $7.0 million, or 57.1%, increase from the three months ended March 31, 2024.

• Net income available to common shareholders of $39.9 million for the six months ended June 30, 2025, an $11.9 million, or 42.3%, increase from the six months ended June 30, 2024.

The increase was largely attributable to the acquisition of Oakwood during the quarter ended December 31, 2024.

• Net interest income of $66.0 million for the three months ended March 31, 2025, an increase of $14.5 million, or 28.0%, from the three months ended March 31, 2024.

• Net interest income of $133.0 million for the six months ended June 30, 2025, an increase of $27.5 million, or 26.0%, from the six months ended June 30, 2024.

The increase was largely attributable to the acquisition of Oakwood during the quarter ended December 31, 2024.

• Allowance for credit losses of 1.02% of total loans held for investment, compared to 0.98% as of December 31, 2024, and a ratio of nonperforming loans to total loans held for investment of 0.97%, compared to 0.42% as of December 31, 2024.

• Earnings per common share for the first three months of 2025 of $0.65 per basic and diluted common share, compared to $0.49 per basic common share and $0.48 per diluted common share for the first three months of 2024.

• Return on average assets of 1.00% over the first three months of 2025, compared to 0.74% for the first three months of 2024.

• Return on average common equity of 10.48% over the first three months of 2025, compared to 8.51% for the first three months of 2024.

• Earnings per common share for the first six months of 2025 of $1.36 per basic common share and $1.35 per diluted common share, compared to $1.11 per basic common share and $1.10 per diluted common share for the first six months of 2024.

• Return on average assets of 1.04% over the first six months of 2025, compared to 0.84% for the first six months of 2024.

• Return on average common equity of 10.68% over the first six months of 2025, compared to 9.73% for the first six months of 2024.

• Capital ratios for Tier 1 Leverage, Common Equity Tier 1, Tier 1 Risk-based and Total Risk-based Capital of 9.86%, 9.88%, 10.99% and 13.07%, respectively, compared to 9.53%, 9.44%, 10.56% and 12.75% at December 31, 2024.

• Book value per common share of $26.23, an increase of 6.5% from $24.62 at December 31, 2024.

Results of Operations for the Three Months Ended March 31, 2025, and 2024

Results of Operations for the Three and Six Months Ended June 30, 2025, and 2024

Performance Summary

For the three months ended March 31, 2025, net income available to common shareholders was $19.2 million, or $0.65 per basic and diluted common share, compared to net income of $12.2 million, or $0.49 per basic common share and $0.48 per diluted common share, for the three months ended March 31, 2024.

Return on average assets, on an annualized basis, increased to 1.00% for the three months ended March 31, 2025, from 0.74% for the three months ended March 31, 2024.

Return on average equity, on an annualized basis, increased to 10.48% for the three months ended March 31, 2025, as compared to 8.51% for the three months ended March 31, 2024.

For the three months ended June 30, 2025, net income available to common shareholders was $20.8 million, or $0.70 per basic and diluted common share, compared to net income of $15.9 million, or $0.63 per basic common share and $0.62 diluted common share, for the three months ended June 30, 2024.

Return on average assets, on an annualized basis, increased to 1.07% for the three months ended June 30, 2025, from 0.95% for the three months ended June 30, 2024.

Return on average equity, on an annualized basis, decreased to 10.87% for the three months ended June 30, 2025, as compared to 10.94% for the three months ended June 30, 2024.

For the six months ended June 30, 2025, net income available to common shareholders was $39.9 million, or $1.36 per basic common share and $1.35 per diluted common share, compared to net income of $28.1 million, or $1.11 per basic common share and $1.10 per diluted common share, for the six months ended June 30, 2024.

Return on average assets, on an annualized basis, increased to 1.04% for the six months ended June 30, 2025, from 0.84% for the six months ended June 30, 2024.

Return on average equity, on an annualized basis, increased to 10.68% for the six months ended June 30, 2025, as compared to 9.73% for the six months ended June 30, 2024.

Net Interest Income

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

For the three months ended March 31, 2025, net interest income totaled $66.0 million, and net interest margin and net interest spread were 3.68% and 2.91%, respectively, compared to $51.5 million, 3.32%, and 2.36%, respectively, for the three months ended March 31, 2024.

The average yield on the loan portfolio was 6.99% for the three months ended March 31, 2025, compared to 6.88% for the three months ended March 31, 2024, and the average yield on total interest-earning assets was 6.35% for the three months ended March 31, 2025, compared to 6.18% for the three months ended March 31, 2024.

For the three months ended March 31, 2025, overall cost of funds (which includes noninterest-bearing deposits) decreased 18 basis points compared to the three months ended March 31, 2024.

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.

For the three months ended June 30, 2025, net interest income totaled $67.0 million, and net interest margin and net interest spread were 3.68% and 2.88%, respectively, compared to $54.0 million, 3.45%, and 2.47%, respectively, for the

three months ended June 30, 2024.

The average yield on the loan portfolio was 6.96% for the three months ended June 30, 2025, compared to 7.07% for the three months ended June 30, 2024, and the average yield on total interest-earning assets was 6.31% for the three months ended June 30, 2025, compared to 6.38% for the three months ended June 30, 2024.

For the three months ended June 30, 2025, overall cost of funds (which includes noninterest-bearing deposits) decreased 29 basis points compared to the three months ended June 30, 2024.

For the six months ended June 30, 2025, net interest income totaled $133.0 million, and net interest margin and net interest spread were 3.68% and 2.90%, respectively, compared to $105.5 million, 3.39%, and 2.42%, respectively, for the six months ended June 30, 2024.

The average yield on the loan portfolio was 6.98% for the six months ended June 30, 2025, compared to 6.97% for the six months ended June 30, 2024, and the average yield on total interest-earning assets was 6.33% for the six months ended June 30, 2025, compared to 6.28% for the six months ended June 30, 2024.

For the six months ended June 30, 2025, overall cost of funds (which includes noninterest-bearing deposits) decreased 23 basis points compared to the six months ended June 30, 2024.

The following tables present, 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.

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

For the three months ended March 31, 2025, and 2024, interest income not recognized on nonaccrual loans was not material.

For the three and six months ended June 30, 2025, and 2024, interest income not recognized on nonaccrual loans was not material.

Any nonaccrual loans have been included in the table as loans carrying a zero yield.

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

Acquired loans were recorded at fair

value at acquisition and accrete/amortize discounts and premiums as an adjustment to yield.

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

For the Three Months Ended March 31,

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

Averages presented in the tables below, and throughout this report, are daily averages.

For the Three Months Ended June 30,

Balance Interest

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Subordinated debt - trust preferred securities 5,000 100 8.02 5,000 113 9.09

Advances from FHLB 447,271 4,793 4.30 324,691 3,372 4.18

Other borrowings 20,514 134 2.62 19,164 122 2.56

Total interest-bearing liabilities 5,595,448 47,808 3.43 4,716,975 45,861 3.91

Noninterest-bearing liabilities:

Noninterest-bearing deposits 1,292,262 1,297,085

Other liabilities 65,847 41,999

Total noninterest-bearing liabilities 1,358,109 1,339,084

Shareholders' equity:

Common shareholders' equity 765,884 583,184

Preferred equity 71,930 71,930

Total shareholders' equity 837,814 655,114

Total liabilities and shareholders' equity $ 7,791,371 $ 6,711,173

Net interest rate spread (1) 2.88 % 2.47 %

Net interest income $ 67,042 $ 54,009

Net interest margin (2) 3.68 % 3.45 %

Overall cost of funds 2.78 % 3.07 %

____________________________

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

(2) Net interest margin is equal to net interest income divided by average interest-earning assets.

For the Six Months Ended June 30,

Balance Interest

Earned/Interest

Paid Average Yield/Rate Average

Balance Interest

Earned/Interest

Paid Average Yield/Rate

(Dollars in thousands) (Unaudited)

Interest-earning assets:

Total loans $ 5,983,870 $ 207,020 6.98 % $ 5,090,289 $ 176,551 6.97 %

Securities 930,930 13,520 2.93 890,158 11,532 2.61

Securities purchased under agreements to resell 40,950 1,052 5.18 - - -

Interest-bearing deposits in other banks 326,000 6,951 4.30 288,426 7,798 5.44

Total interest-earning assets 7,281,750 228,543 6.33 6,268,873 195,881 6.28

Allowance for loan losses (55,829) (40,988)

Noninterest-earning assets 545,367 461,465

Total assets $ 7,771,288 $ 228,543 $ 6,689,350 $ 195,881

Liabilities and Shareholders' Equity

Interest-bearing liabilities:

Interest-bearing deposits $ 5,085,431 $ 83,985 3.33 % $ 4,170,406 $ 78,929 3.81 %

Subordinated debt 94,954 2,497 5.30 99,942 2,710 5.45

Subordinated debt - trust preferred securities 5,000 199 8.03 5,000 226 9.09

Bank Term Funding Program - - - 130,220 2,788 4.31

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(2) Net interest margin is equal to net interest income divided by average interest-earning assets.

The following table presents information regarding the dollar amount of changes in interest income and interest expense for the periods indicated for each major component of interest-earning assets and interest-bearing liabilities and distinguishes between the changes attributable to changes in volume and changes attributable to changes in interest rates.

For the purposes of this table, changes attributable to both rate and volume that cannot be segregated have been allocated to rate.

For the Three Months Ended March 31, 2025 compared to the

Three Months Ended March 31, 2024

The following tables present information regarding the dollar amount of changes in interest income and interest expense for the periods indicated for each major component of interest-earning assets and interest-bearing liabilities and distinguishes between the changes attributable to changes in volume and changes attributable to changes in interest rates.

For the purposes of these tables, changes attributable to both rate and volume that cannot be segregated have been allocated to rate.

For the Three Months Ended June 30, 2025 compared to the

Three Months Ended June 30, 2024

Increase (Decrease) due to change in

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Interest-bearing deposits in other banks 946 (764) 182

Total increase in interest income $ 16,254 $ 1,428 $ 17,682

Total increase (decrease) in interest income $ 16,555 $ (1,575) $ 14,980

Interest-bearing liabilities:

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Subordinated debt - trust preferred securities - (13) (13)

Advances from FHLB 1,323 98 1,421

Other borrowings 9 3 12

Total increase (decrease) in interest expense $ 7,643 $ (5,696) $ 1,947

Increase in net interest income $ 8,912 $ 4,121 $ 13,033

For the Six Months Ended June 30, 2025 compared to the

Six Months Ended June 30, 2024

Increase (Decrease) due to change in

Volume Rate Total

(Dollars in thousands) (Unaudited)

Interest-earning assets:

Total loans $ 30,426 $ 43 $ 30,469

Securities 560 1,428 1,988

Securities purchased under agreements to resell 1,052 - -

Interest-bearing deposits in other banks 779 (1,626) (847)

Total increase (decrease) in interest income $ 32,817 $ (155) $ 32,662

Interest-bearing liabilities:

Interest-bearing deposits $ 14,893 $ (9,837) $ 5,056

Subordinated debt (139) (74) (213)

Subordinated debt - trust preferred securities - (27) (27)

Bank Term Funding Program - (2,788) (2,788)

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Our provision for credit losses is a charge to income in order to bring our allowance for credit losses to a level deemed appropriate by management.

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 $2.8 million for the three months ended March 31, 2025, and $1.2 million for the same period in 2024.

The higher provision for the three months ended March 31, 2025, compared to the same period in 2024 relates primarily to reserves on two individual commercial lending relationships in the current quarter of $2.3 million.

This increase was partially offset by changes in the composition of the loan portfolio and related reserve rates, compared to the quarter ended March 31, 2024.

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 $2.2 million for the three months ended June 30, 2025, and $1.3 million for the same period in 2024.

For the six months ended June 30, 2025, and 2024, the provision for credit losses was $5.0 million and $2.5 million, respectively.

The higher provision for the three and six months ended June 30, 2025, compared to the same period in 2024 relates primarily to deterioration in the macroeconomic forecast in the current period compared to the prior period, as well as a return to a more normalized credit environment, reflected in an increased portion of nonaccrual and past due loans, compared to the three and six months ended June 30, 2024.

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, 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:

For the Three Months Ended March 31,

The following tables present, for the periods indicated, the major categories of noninterest income:

For the Three Months Ended June 30,

2025 2024 Increase (Decrease)

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Mortgage origination income 55 35 20

Correspondent bank income 83 196 (113)

Gain on sales of other real estate owned 56 2 54

Gain on sale of branch 3,360 - 3,360

Swap fee income 808 285 523

Pass-through income (loss) from other investments (246) 392 (638)

Other 2,319 2,013 306

Total noninterest income $ 14,415 $ 12,176 $ 2,239

For the Six Months Ended June 30,

2025 2024 Increase (Decrease)

(Dollars in thousands) (Unaudited)

Noninterest income:

Service charges on deposit accounts $ 5,493 $ 4,976 $ 517

Debit card and ATM fee income 3,816 3,726 90

Bank-owned life insurance income 1,566 1,206 360

Gain on sales of loans 2,037 2,599 (562)

Loss on sales of investment securities (48) (1) (47)

Fees and brokerage commissions 4,128 3,812 316

Mortgage origination income 165 104 61

Gain (loss) on sales of other real estate owned (212) 65 (277)

Gain (loss) on sales of other assets 155 (15) 170

Gain on sale of branch 3,360 - 3,360

Gain on extinguishment of debt 630 - 630

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Total noninterest income $ 27,641 $ 21,562 $ 6,079

Total noninterest income increased $3.8 million, or 40.9%, from the three months ended March 31, 2024 mainly attributable to an increase on the gain on sales of loans of $1.1 million, the gain on the extinguishment of debt related to our subordinated debt of $630,000, and the acquisition of Oakwood.

Total noninterest income increased $2.2 million, or 18.4%, from the three months ended June 30, 2024.

The increase is primarily due to the gain of $3.4 million from the sale of our Kaplan banking center, offset with lower gains of the sales of loans of $1.7 million compared to the three months ended June 30, 2024.

Total noninterest income increased $6.1 million, or 28.2%, from the six months ended June 30, 2024.

The increase is primarily due to the gain of $3.4 million from the sale of our Kaplan banking center, increases in our swap fee income of $1.0 million, or 201.0%, and the gain on the extinguishment of debt related to our subordinated debt of $630,000, and the acquisition of Oakwood.

Noninterest Expense ( “ Other Expense ” )

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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.

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

For the Three Months Ended March 31,

The following tables present, for the periods indicated, the major categories of noninterest expense:

For the Three Months Ended June 30,

2025 2024 Increase (Decrease)

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Total noninterest expense $ 51,206 $ 43,110 $ 8,096

Total noninterest expense increased $8.1 million, or 18.9%, from the three months ended March 31, 2024, primarily attributed to the increase in salaries and employee benefits of $4.1 million, or 16.1%, an increase in occupancy and bank premises of $887,000, or 35.3%, and an increase in data processing of $657,000, or 25.5%.

The increases were largely attributable to the acquisition of Oakwood.

For the Six Months Ended June 30,

2025 2024 Increase (Decrease)

(Dollars in thousands) (Unaudited)

Salaries and employee benefits $ 57,814 $ 50,939 $ 6,875

Non-staff expenses:

Occupancy of bank premises 6,520 5,148 1,372

Depreciation and amortization 4,228 3,418 810

Data processing 8,557 5,220 3,337

FDIC assessment fees 2,045 1,702 343

Legal and professional fees 2,106 1,908 198

Advertising and promotions 2,379 2,111 268

Utilities and communications 1,476 1,392 84

Ad valorem shares tax 2,250 1,800 450

Directors' fees 472 550 (78)

Other real estate owned expenses and write-downs 50 108 (58)

Merger and conversion related expenses 460 749 (289)

Other 13,427 10,587 2,840

Total noninterest expense $ 101,784 $ 85,632 $ 16,152

Total noninterest expense increased $8.1 million, or 18.8%, from the three months ended June 30, 2024, primarily attributed to the increase in salaries and employee benefits of $2.8 million, or 10.9%, and an increase in data processing of $2.7 million, or 101.5%.

The increases were largely attributable to the acquisition of Oakwood and our core conversion.

Total noninterest expense increased $16.2 million, or 18.9%, from the six months ended June 30, 2024, primarily attributed to the increase in salaries and employee benefits of $6.9 million, or 13.5%, an increase in occupancy of bank premises of $1.4 million, or 26.7%, and an increase in data processing of $3.3 million, or 63.9%.

The increases were largely attributable to the acquisition of Oakwood and our core conversion.

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 three months ended March 31, 2025, income tax expense totaled $5.3 million, a increase of $1.6 million, or 45.0%, compared to $3.6 million for the same period in 2024.

Our effective tax rates for the three months ended March 31, 2025, and 2024 were 20.4% and 21.1%, respectively.

For the three months ended June 30, 2025, income tax expense totaled $5.9 million, an increase of $1.4 million, or 29.9%, compared to $4.6 million for the same period in 2024.

Our effective tax rates for the three months ended June 30, 2025, and 2024 were 21.1% and 21.0%, respectively.

For the six months ended June 30, 2025, income tax expense totaled $11.2 million, an increase of $3.0 million, or 36.6%, compared to $8.2 million for the same period in 2024.

Our effective tax rates for the six months ended June 30, 2025, and 2024 were 20.8% and 21.0%, respectively.

Financial Condition

Our total assets decreased $72.4 million, or 0.9%, from December 31, 2024, to March 31, 2025, primarily due to the decrease in total deposits, which reduced the cash available for fed funds sold.

Our total assets increased $91.2 million, or 1.2%, from December 31, 2024, to June 30, 2025, primarily due to the increases in our mortgage-backed investment portfolio, unrealized gains in our investment portfolio, and increases in our loan portfolio.

Loan Portfolio

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Our loan portfolio represents the highest yielding component of our earning asset base.

As of March 31, 2025, total loans, excluding mortgage loans held for sale, were $6.0 billion, a decrease of $480,000, compared to $6.0 billion as of December 31, 2024.

Additionally, $717,000 in loans were classified as loans held for sale as of December 31, 2024, and we had none as of March 31, 2025.

Total loans held for investment as a percentage of total deposits were 92.6% and 91.9% as of March 31, 2025, and December 31, 2024, respectively.

Total loans held for investment as a percentage of total assets were 76.8% and 76.1% as of March 31, 2025, and December 31, 2024, respectively.

As of June 30, 2025, total loans, excluding mortgage loans held for sale, were $6.0 billion, an increase of $66.3 million, or 1.1%, compared to $6.0 billion as of December 31, 2024.

Additionally, $677,000, and $717,000 in loans were classified as loans held for sale as of June 30, 2025, and December 31, 2024, respectively.

Total loans held for investment as a percentage of total deposits were 94.2% and 91.9% as of June 30, 2025, and December 31, 2024, respectively.

Total loans held for investment as a percentage of total assets were 76.1% as of both June 30, 2025, and December 31, 2024, respectively.

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

As of March 31, 2025 (Unaudited) As of December 31, 2024

As of June 30, 2025 (Unaudited) As of December 31, 2024

Amount Percent Amount Percent

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Total loans held for investment $ 6,047,650 100.0 % $ 5,981,399 100.0 %

As of March 31, 2025 (Unaudited) As of December 31, 2024

As of June 30, 2025 (Unaudited) As of December 31, 2024

Amount Percent Amount Percent

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Bayou Region 84,392 3.3 81,995 3.3

Total commercial real estate 2,472,121 100.0 % 2,483,223 100.0 %

Total commercial real estate loans 2,533,761 100.0 % 2,483,223 100.0 %

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

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These loans are usually repaid through refinancing, cash flow from the borrower’s ongoing operations, development of the property, or sale of the property.

Commercial loans decreased $11.1 million or 0.4%, remaining at $2.5 billion as of March 31, 2025 and December 31, 2024.

Commercial loans increased $50.5 million or 2.0%, remaining at $2.5 billion as of June 30, 2025 and December 31, 2024.

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.

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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 $36.8 million, or 5.5%, to $633.7 million as of March 31, 2025, from $670.5 million as of December 31, 2024.

Construction loans decreased $70.2 million, or 10.5%, to $600.3 million as of June 30, 2025, from $670.5 million as of December 31, 2024.

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.

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Repayment of these loans primarily relies on successful rental and management of the property.

Residential loans increased $49.8 million, or 5.6%, to $934.4 million as of March 31, 2025, from $884.5 million as of December 31, 2024.

Residential loans decreased $4.6 million, or 0.5%, to $879.9 million as of June 30, 2025, from $884.5 million as of December 31, 2024.

Commercial loans include general commercial and industrial, or C&I, loans, including commercial lines of credit, working capital loans, term loans, equipment financing, asset acquisition, expansion, and development loans, borrowing base loans, letters of credit and other loan products, primarily in the Company’s target markets that are underwritten based on the borrower’s ability to service the debt from income.

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Any interruption or discontinuance of operating cash flows from the business, which may be influenced by events not under the control of the borrower such as economic events and changes in governmental regulations, could materially affect the ability of the borrower to repay the loan.

Commercial loans decreased $6.5 million, or 0.3%, remaining at $1.9 billion as of March 31, 2025 and December 31, 2024.

Commercial loans increased $92.3 million, or 4.9%, to $2.0 billion as of June 30, 2025, from $1.9 billion as of December 31, 2024.

Consumer and other loans include a variety of loans to individuals for personal, family and household purposes, including secured and unsecured installment and term loans.

The risk is based on changes in the borrower’s financial condition, which could be affected by numerous factors, including divorce, job loss, illness or other personal hardship, and fluctuations in the value of the real estate or personal property securing the consumer loan, if any.

Consumer and other loans increased $4.1 million, or 5.5%, to $78.6 million as of March 31, 2025, from $74.5 million as of December 31, 2024.

Consumer and other loans decreased $1.7 million, or 2.3%, to $72.7 million as of June 30, 2025, from $74.5 million as of December 31, 2024.

The contractual maturity ranges of loans in our loan portfolio and the amount of such loans with fixed and floating interest rates in each maturity range as of the date indicated are summarized in the following tables:

As of March 31, 2025

As of June 30, 2025

One Year or Less One Through Five

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We believe our conservative lending approach and focused management of nonperforming assets has resulted in sound asset quality and the timely resolution of problem assets.

We had $42.8 million and $30.5 million in nonperforming assets as of March 31, 2025, and December 31, 2024, respectively.

We had $41.6 million in nonperforming loans as of March 31, 2025, compared to $25.0 million as of December 31, 2024.

The increase in nonperforming assets from December 31, 2024, to March 31, 2025, is primarily due to three commercial lending relationships.

We had $60.3 million and $30.5 million in nonperforming assets as of June 30, 2025, and December 31, 2024, respectively.

We had $58.8 million in nonperforming loans as of June 30, 2025, compared to $25.0 million as of December 31, 2024.

The increase in nonperforming assets from December 31, 2024, to June 30, 2025, is primarily due to three commercial lending relationships, making up 80.1% of the total increase.

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

As of March 31,

As of June 30,

2025 (Unaudited) As of December 31,

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Ratio of nonaccrual loans to total loans held for investment 0.93 0.40

As of March 31, 2025 (Unaudited) As of December 31, 2024

As of June 30, 2025 (Unaudited) As of December 31, 2024

(Dollars in thousands)

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See Note 6 of the consolidated financial statements for the presentation of loans in their credit quality categories that is in compliance with the CECL standard.

As of March 31, 2025

As of June 30, 2025

Pass Special Mention Substandard Doubtful Total

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• for Commercial loans, the operating results of the commercial, industrial or professional enterprise, the borrower’s business, professional and financial ability and expertise, the specific risks and volatility of income and operating results typical for businesses in that category, and the value, nature and marketability of collateral;

As of March 31, 2025, the allowance for credit losses totaled $60.4 million, or 1.01%, of total loans held for investment.

As of June 30, 2025, the allowance for credit losses totaled $61.8 million, or 1.02%, of total loans held for investment.

As of December 31, 2024, the allowance for credit losses totaled $58.5 million, or 0.98%, of total loans held for investment.

The following tables present, as of and for the periods indicated, an analysis of the allowance for credit losses and other related data:

As of and For the Three Months Ended

March 31, 2025 (Unaudited) As of and For the Year Ended December

As of and For the Six Months Ended

June 30, 2025 (Unaudited) As of and For the Year Ended December

(Dollars in thousands)

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Ratio of allowance for credit losses to nonaccrual loans 109.56 242.38

As of and For the Three Months Ended

March 31, 2025 (Unaudited) As of and For the Year Ended

December 31, 2024 As of and For the Three Months Ended

March 31, 2024 (Unaudited)

As of and For the Six Months Ended

June 30, 2025 (Unaudited) As of and For the Year Ended

December 31, 2024 As of and For the Six Months Ended

June 30, 2024 (Unaudited)

Net Charge-offs

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The total allowance is available to absorb losses from any loan category.

As of March 31, 2025 (Unaudited) As of December 31, 2024 As of March 31, 2024 (Unaudited)

As of June 30, 2025 (Unaudited) As of December 31, 2024 As of June 30, 2024 (Unaudited)

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

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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 March 31, 2025, the carrying amount of investment securities totaled $920.6 million, an increase of $27.0 million, or 3.0%, compared to $893.5 million as of December 31, 2024.

The increase was primarily due to purchases and unrealized gains in the first three months of 2025.

Securities represented 11.8% and 11.4% of total assets as of March 31, 2025, and December 31, 2024, respectively.

As of June 30, 2025, the carrying amount of investment securities totaled $926.5 million, an increase of $32.9 million, or 3.7%, compared to $893.5 million as of December 31, 2024.

The increase was primarily due to purchases of mortgage-backed securities and net unrealized gains in the first six months of 2025.

Securities represented 11.7% and 11.4% of total assets as of June 30, 2025, and December 31, 2024, respectively.

Our investment portfolio consists entirely of securities classified as available for sale.

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The following tables summarize the amortized cost and estimated fair value of investment securities as of the dates shown:

As of March 31, 2025

As of June 30, 2025

Amortized Cost Gross Unrealized

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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 March 31, 2025.

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

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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 both March 31, 2025 and December 31, 2024, was negligible and therefore, no allowance for credit loss was recorded related to our investment securities.

Based on our assessments, expected credit losses on the investment securities portfolio as of both June 30, 2025 and December 31, 2024, 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.

The contractual maturity of a mortgage-backed security is the date at which the last underlying mortgage matures.

As of March 31, 2025

As of June 30, 2025

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

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If interest rates begin to fall, prepayments may increase, thereby shortening the estimated life of this security.

The weighted average life of our investment portfolio was 4.67 years with an estimated effective duration of 3.76 years as of March 31, 2025.

As of March 31, 2025, and December 31, 2024, we did not own securities of any one issuer for which aggregate adjusted cost exceeded 10% of our consolidated shareholders’ equity as of such respective dates.

As of March 31, 2025, and December 31, 2024, the Company held other equity securities of $40.9 million and $41.1 million, respectively, comprised mainly of FHLB stock, small business investment companies (“SBICs”) and financial technology (“Fintech”) fund investments.

The weighted average life of our investment portfolio was 4.54 years with an estimated effective duration of 3.64 years as of June 30, 2025.

As of June 30, 2025, and December 31, 2024, we did not own securities of any one issuer for which aggregate adjusted cost exceeded 10% of our consolidated shareholders’ equity as of such respective dates.

As of June 30, 2025, and December 31, 2024, the Company held other equity securities of $48.7 million and $41.1 million, respectively, comprised mainly of FHLB stock, small business investment companies (“SBICs”) and financial technology (“Fintech”) fund investments.

The increase is mainly attributed to an increase of $5.9 million, or 28.8%, in FHLB stock.

We offer a variety of deposit accounts having a wide range of interest rates and terms including demand, savings, money market and time accounts.

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

Total deposits as of March 31, 2025, were $6.5 billion, an decrease of $53.2 million, or 0.8%, compared to $6.5 billion as of December 31, 2024.

Total uninsured deposits were $2.7 billion, or 41.7%, of total deposits as of March 31, 2025 compared to $2.8 billion, or 43.4%, of total deposits as of December 31, 2024.

Total deposits as of June 30, 2025, were $6.4 billion, a decrease of $91.7 million, or 1.4%, compared to $6.5 billion as of December 31, 2024.

Total uninsured deposits were $2.7 billion, or 42.1%, of total deposits as of June 30, 2025 compared to $2.8 billion, or 43.4%, of total deposits as of December 31, 2024.

Since it is not reasonably practical 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 March 31, 2025, were $1.3 billion compared to $1.4 billion as of December 31, 2024, a decrease of $48.7 million, or 3.6%.

Average deposits for the three months ended March 31, 2025, were $6.4 billion, an increase of $673.6 million, or 11.8%, over the full year average for the year ended December 31, 2024, of $5.7 billion.

Noninterest-bearing deposits as of both June 30, 2025 and December 31, 2024, were $1.4 billion, an increase of $53.7 million, or 4.0%.

Average deposits for the six months ended June 30, 2025, were $6.4 billion, an increase of $641.4 million, or 11.2%, over the full year average for the year ended December 31, 2024, of $5.7 billion.

The increase was largely attributable to the impact of the acquisition of Oakwood on October 1, 2024.

The average rate paid on total interest-bearing deposits decreased over this period from 3.73% for the year ended December 31, 2024, to 3.35% for the three months ended March 31, 2025.

In addition, noninterest-bearing demand accounts served to reduce the cost of deposits to 2.70% for the three months ended March 31, 2025, compared to 2.89% for the year ended December 31, 2024.

The average rate paid on total interest-bearing deposits decreased over this period from 3.73% for the year ended December 31, 2024, to 3.33% for the six months ended June 30, 2025.

In addition, noninterest-bearing demand accounts served to reduce the cost of deposits to 2.67% for the six months ended June 30, 2025, compared to 2.89% for the year ended December 31, 2024.

The following table presents the daily average balances and weighted average rates paid on deposits for the periods indicated:

For the Three Months Ended

March 31, 2025 (Unaudited) For the Year Ended

For the Six Months Ended

June 30, 2025 (Unaudited) For the Year Ended

December 31, 2024

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Total deposits $ 6,354,090 2.67 % $ 5,712,678 2.89 %

The ratio of average noninterest-bearing deposits to average total deposits for the three months ended March 31, 2025, and the year ended December 31, 2024, was 19.5% and 22.5%, respectively.

The following table sets forth the contractual maturities of certain certificates of deposit at March 31, 2025:

The ratio of average noninterest-bearing deposits to average total deposits for the six months ended June 30, 2025, and the year ended December 31, 2024, was 20.0% and 22.5%, respectively.

The following table sets forth the contractual maturities of certain certificates of deposit at June 30, 2025:

Certificates of

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Federal Funds Purchased Lines of Credit Relationships

We maintain Federal Funds Purchased Lines of Credit Relationships with the following correspondent banks and limits as of March 31, 2025:

We maintain Federal Funds Purchased Lines of Credit Relationships with the following correspondent banks and limits as of June 30, 2025:

Fed Funds Purchase

6 unchanged sentences

Total $ 160,000

We had no outstanding balances on these lines at March 31, 2025 and December 31, 2024.

We had no outstanding balances on these lines at both June 30, 2025 and December 31, 2024.

Liquidity and Capital Resources

Liquidity involves our ability to utilize funds to support asset growth and acquisitions or reduce assets to meet deposit withdrawals and other payment obligations, to maintain reserve requirements and otherwise to operate on an ongoing basis and manage unexpected events.

For the three months ended March 31, 2025, and the year ended December 31, 2024, liquidity needs were primarily met by core deposits, security and loan maturities, and amortizing investment and loan portfolios.

For the six months ended June 30, 2025, and the year ended December 31, 2024, liquidity needs were primarily met by core deposits, security and loan maturities, and amortizing investment and loan portfolios.

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

As of March 31, 2025, and December 31, 2024, we maintained six federal funds purchased lines of credit with correspondent banks which provided for extensions of credit with an availability to borrow up to an aggregate of $160.0 million.

There were no funds drawn under these lines of credit at March 31, 2025, and December 31, 2024.

We had an additional $1.6 billion of availability through the FHLB at both March 31, 2025, and December 31, 2024.

As of March 31, 2025 and December 31, 2024, we had $1.3 billion and $907.7 million, respectively, of availability through the Federal Reserve Discount Window.

As of June 30, 2025, and December 31, 2024, we maintained six federal funds purchased lines of credit with correspondent banks which provided for extensions of credit with an availability to borrow up to an aggregate of $160.0 million.

There were no funds drawn under these lines of credit at June 30, 2025, and December 31, 2024.

We had an additional $1.5 billion and $1.3 billion of availability through the FHLB at June 30, 2025, and December 31, 2024, respectively.

As of June 30, 2025 and December 31, 2024, we had $1.1 billion and $907.7 million, respectively, of availability through the Federal Reserve Discount Window.

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 periods indicated.

Average total assets equaled $7.8 billion and $7.0 billion for the three months ended March 31, 2025, and the year ended December 31, 2024, respectively.

For the Three

Average total assets equaled $7.8 billion and $7.0 billion for the six months ended June 30, 2025, and the year ended December 31, 2024, respectively.

2025 (Unaudited) For the Year Ended

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We do not expect a change in the primary source or use of our funds in the foreseeable future.

Our average net loans increased 18.7% for the three months ended March 31, 2025, compared to the same period in 2024.

Our average net loans increased 17.6% for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to the acquisition of Oakwood.

We predominantly invest excess deposits in overnight deposits with the Federal Reserve, securities, interest-bearing deposits at other banks or other short-term liquid investments until needed to fund loan growth.

Our securities portfolio had a weighted average life of 4.67 years and an effective duration of 3.76 years as of March 31, 2025.

Our securities portfolio had a weighted average life of 4.54 years and an effective duration of 3.64 years as of June 30, 2025.

As of December 31, 2024, our securities portfolio had a weighted average life of 4.63 years and an effective duration of 3.79 years.

As of March 31, 2025, we had outstanding $1.3 billion in commitments to extend credit and $49.9 million in commitments associated with outstanding standby and commercial letters of credit.

As of June 30, 2025, we had outstanding $1.5 billion in commitments to extend credit and $51.0 million in commitments associated with outstanding standby and commercial letters of credit.

As of December 31, 2024, we had outstanding $1.4 billion in commitments to extend credit and $50.0 million in commitments associated with outstanding standby and commercial letters of credit.

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See “ Off Balance Sheet Items ” below for additional information.

As of March 31, 2025, and December 31, 2024 we had cash and cash equivalents, including federal funds sold and securities purchased under agreements to resell, of $480.9 million and $567.6 million, respectively.

As of June 30, 2025, and December 31, 2024 we had cash and cash equivalents, including federal funds sold and securities purchased under agreements to resell, of $560.5 million and $567.6 million, respectively.

We had no exposure to future cash requirements associated with known uncertainties or capital expenditures of a material nature for either period.

Capital Resources

Total shareholders’ equity increased to $826.3 million as of March 31, 2025, compared to $799.5 million as of December 31, 2024, an increase of $26.8 million, or 3.4%.

Total shareholders’ equity increased to $848.4 million as of June 30, 2025, compared to $799.5 million as of December 31, 2024, an increase of $49.0 million, or 6.1%.

This increase was primarily due to net income of $42.6 million and other comprehensive income of $15.2 million resulting from the after-tax effect of unrealized gains in our investment securities portfolio, offset with dividends paid on preferred stock and common stock of $11.0 million.

On April 24, 2025, our Board declared a quarterly dividend in the amount of $18.75 per preferred share to the preferred shareholders of record as of May 15, 2025.

The dividend is to be paid on May 31, 2025, or as soon as practicable thereafter.

On April 24, 2025, our Board declared a quarterly dividend based upon our financial performance for the three months ended March 31, 2025, in the amount of $0.14 per common share to the common shareholders of record as of May 15, 2025.

The dividend is to be paid on May 31, 2025, or as soon as practicable thereafter.

On July 24, 2025, our Board declared a quarterly dividend in the amount of $18.75 per preferred share to the preferred shareholders of record as of August 15, 2025.

The dividend is to be paid on August 31, 2025, or as soon as practicable thereafter.

On July 24, 2025, our Board declared a quarterly dividend based upon our financial performance for the three months ended June 30, 2025, in the amount of $0.14 per common share to the common shareholders of record as of August 15, 2025.

The dividend is to be paid on August 31, 2025, or as soon as practicable thereafter.

The declaration and payment of dividends to our shareholders, as well as the amounts thereof, are subject to the discretion of the Board and depend upon our results of operations, financial condition, capital levels, cash requirements, future prospects and other factors deemed relevant by the Board.

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We are subject to regulatory capital requirements at the holding company and bank levels.

As of March 31, 2025, and December 31, 2024, we and b1BANK were in compliance with all applicable regulatory capital requirements, and b1BANK was classified as “well-capitalized,” for purposes of prompt corrective action regulations.

As of June 30, 2025, and December 31, 2024, we and b1BANK were in compliance with all applicable regulatory capital requirements, and b1BANK was classified as “well-capitalized,” for purposes of prompt corrective action regulations.

As we employ our capital and continue to grow our operations, our regulatory capital levels may decrease depending on our level of earnings.

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The following table presents the actual capital amounts and regulatory capital ratios for us and b1BANK as of the dates indicated.

As of March 31, 2025 (Unaudited) As of December 31, 2024

As of June 30, 2025 (Unaudited) As of December 31, 2024

Amount Ratio Amount Ratio

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FHLB Advances

Advances from the FHLB totaled approximately $317.4 million and $355.9 million at March 31, 2025 and December 31, 2024, respectively.

As of March 31, 2025, and December 31, 2024, the FHLB advances were collateralized by a blanket floating lien on certain securities and loans, had a weighted average stated rate of 4.17% and 4.15%, respectively, and mature within ten years.

Bank Term Funding Program ( “ BTFP ” )

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 the banks’ U.S.

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

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.

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

Advances from the FHLB totaled approximately $492.9 million and $355.9 million at June 30, 2025 and December 31, 2024, respectively.

As of June 30, 2025, and December 31, 2024, the FHLB advances were collateralized by a blanket floating lien on certain securities and loans, had a weighted average stated rate of 4.27% and 4.15%, respectively, and mature within ten years.

Contractual Obligations

The following tables summarize contractual obligations and other commitments to make future payments as of March 31, 2025, and December 31, 2024 (other than non-maturity deposit obligations), which consist of future cash payments associated with our contractual obligations pursuant to our FHLB advances, subordinated debt, revolving line of credit, and non-cancelable future operating leases.

The following tables summarize contractual obligations and other commitments to make future payments as of June 30, 2025, and December 31, 2024 (other than non-maturity deposit obligations), which consist of future cash payments associated with our contractual obligations pursuant to our FHLB advances, subordinated debt, revolving line of credit, and non-cancelable future operating leases.

Payments related to leases are based on actual payments specified in underlying contracts.

Advances from the FHLB totaled approximately $317.4 million and $355.9 million at March 31, 2025 and December 31, 2024, respectively.

Advances from the FHLB totaled approximately $492.9 million and $355.9 million at June 30, 2025 and December 31, 2024, respectively.

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 paid this debt off in full at the time of maturity.

The subordinated debt totaled $92.7 million and $99.8 million at March 31, 2025 and December 31, 2024, respectively, including premium.

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

The subordinated debt totaled $92.6 million and $99.8 million at June 30, 2025 and December 31, 2024, respectively, including premium.

Of this subordinated debt, $25.0 million bears interest at a fixed rate of 6.75% through December 31, 2028 and a floating rate, based on a benchmark rate plus 369 basis points, thereafter through maturity in 2033, $52.5 million of this subordinated debt bears interest at a fixed rate of 4.25% through March 31, 2026 and a floating rate, based on a benchmark rate plus 354 basis points, thereafter through maturity in 2031.

During the three months ended March 31, 2025, $7.0 million of this debt was redeemed for a gain of $630,000.

We had $3.9 million of this subordinated debt bears interest at a fixed rate of 4.75% through April 1, 2026 and a floating rate, based on a benchmark rate plus 442 basis points, thereafter through maturity in 2031.

Also, $3.9 million of this subordinated debt bears interest at a fixed rate of 4.75% through April 1, 2026 and a floating rate, based on a benchmark rate plus 442 basis points, thereafter through maturity in 2031.

We acquired three separate notes as part of the TCBI acquisition totaling $26.4 million.

Of those notes, $10.0 million bears an adjustable interest rate plus 350 basis points, based on a benchmark rate, adjusting quarterly until maturity on April 11, 2028, and callable beginning April 11, 2023, $7.5 million bears an adjustable interest rate plus 350 basis points, based on a benchmark rate, adjusting quarterly, until maturity on December 13, 2028, and callable beginning December 13, 2023, and $8.9 million, which was called on May 1, 2023 and ceased bearing interest as of such date.

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 $775,000 and $833,000 remaining at March 31, 2025 and December 31, 2024, respectively.

As of March 31, 2025

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 $718,000 and $833,000 remaining at June 30, 2025 and December 31, 2024, respectively.

As of June 30, 2025

1 year or less More than 1 year

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The following table summarizes the simulated change in net interest income and fair value of equity over a 12-month horizon as of the dates indicated:

As of March 31, 2025 As of December 31, 2024

As of June 30, 2025 As of December 31, 2024

Change in Interest Rates (Basis Points) Percent Change in

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Core Net Income .

Core net income available to common shareholders, which excludes certain income and expenses, for the three months ended March 31, 2025, was $19.3 million, or $0.65 per diluted common share, compared to core net income available to common shareholders of $12.8 million, or $0.50 per diluted common share, for the three months ended March 31, 2024.

Notable noncore events impacting earnings for the three months ended March 31, 2025, included a $155,000 gain on sale of a former bank premises, $630,000 gain on the extinguishment of subordinated debt, offset by $679,000 in acquisition-related expenses and core conversion expenses of $216,000, compared to a $50,000 gain on sale of a former bank premises and $715,000 in acquisition-related expenses for the same period in 2024.

For the Three Months Ended March 31,

Core net income available to common shareholders, which excludes certain income and expenses, for the three months ended June 30, 2025, was $19.5 million, or $0.66 per diluted common share, compared to core net income available to common shareholders of $16.3 million, or $0.64 per diluted common share, for the three months ended June 30, 2024.

Notable noncore events impacting earnings for the three months ended June 30, 2025, included a $3.4 million gain on the sale of a branch, offset by $570,000 in acquisition-related expenses and core conversion expenses of $1.0 million, compared to $419,000 in acquisition-related expenses for the same period in 2024.

For the six months ended June 30, 2025, core net income available to common shareholders, was $38.8 million, or $1.31 per diluted common share, compared to core net income available to common shareholders of $29.1 million, or $1.14 per diluted common share, for the six months ended June 30, 2024.

Notable noncore events impacting earnings for the six months ended June 30, 2025, included a $155,000 gain on sale of a former bank premises, $3.4 million gain on the sale of a branch, $630,000 gain on the extinguishment of subordinated debt, offset by $1.2 million in acquisition-related expenses and core conversion expenses of $1.2 million, compared to a $50,000 gain on sale of a former bank premises and $1.1 million in acquisition-related expenses for the same period in 2024.

For the Three Months Ended June 30, For the Six Months Ended June 30,

2025 2024 2025 2024

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

12 unchanged sentences

Losses on sale of securities 47 - 48 1

Gain on sale of branch (3,360) - (3,360) -

Gain on extinguishment of debt - - (630) -

9 unchanged sentences

Losses on sale of securities 47 - 48 1

Gain on sale of branch (3,360) - (3,360) -

Gain on extinguishment of debt - - (630) -

6 unchanged sentences

Tax on losses on sale of securities 10 - 10 -

Tax on gain on sale of branch (833) - (833) -

Tax on gain on extinguishment of debt - - (133) -

9 unchanged sentences

Losses on sale of securities, net of tax 37 - 38 1

Gain on sale of branch, net of tax (2,527) - (2,527) -

Gain on extinguishment of debt, net of tax - - (497) -

6 unchanged sentences

Losses on sale of securities, net of tax - - - -

Gain on sale of branch, net of tax (0.09) - (0.09) -

Gain on extinguishment of debt, net of tax - - (0.02) -

24 unchanged sentences

____________________________

(1) Excludes the dilutive effect, if any, of 216,253 and 198,238 shares of common stock issuable upon exercise of outstanding stock options and restricted stock awards as of March 31, 2025 and December 31, 2024, respectively.

(1) Excludes the dilutive effect, if any, of 145,833 and 198,238 shares of common stock issuable upon exercise of outstanding stock options and restricted stock awards as of June 30, 2025 and December 31, 2024, respectively.

Tangible Common Equity to Tangible Assets .

20 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-Q

Item 2. Management’s Discussion and Analysis