What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2026-03-16 compared with 2025-03-12 · 380 added, 496 removed, 679 unchanged (56% of the section changed)

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Dividend Policy

The Company has paid a quarterly dividend since 2011 and intends to continue to declare dividends on a quarterly basis.

The declaration of dividends is at the discretion of our Board and will depend on our financial performance, future prospects, regulatory requirements and other factors deemed relevant by the Board.

The Company has paid a quarterly dividend on its common stock since 2011 and intends to continue to declare dividends on its common on a quarterly basis;

however, we are not obligated to pay dividends on either our common or preferred stock.

Pursuant to the Company's Restated Articles of Incorporation, subject to certain exceptions, we are prohibited from paying dividends on our common stock unless full dividends for the Series A Preferred Stock’s most recently completed dividend period have been declared and paid on all outstanding shares of Series A Preferred Stock.

The declaration of dividends on our common and preferred stock is at the discretion of our Board and will depend on our financial performance, future prospects, regulatory requirements and other factors deemed relevant by the Board.

Since we are a holding company with no material business activities, our ability to pay dividends is substantially dependent upon the ability of the Bank to transfer funds to us in the form of dividends, loans and advances.

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The performance graph assumes that the value of the investment in our common stock, the Russell 3000 Index and the S&P United States SmallCap Banks Index was $100 at December 31, 2020 and that all dividends were reinvested.

Investar Holding Corporation

S&P US SmallCap Banks

Investar Holding Corporation

S&P US SmallCap Banks

Period ending December 31,

Investar Holding Corporation

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We will not make or endorse any predictions as to future stock performance.

The information provided under the heading “ Stock Performance Graph ” shall not be deemed to be “ soliciting material ” or to be “ filed ” with the SEC or subject to its proxy regulations or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended, other than as provided in Item 201 of Regulation S-K.

The information provided in this section shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

The information provided under the heading “ Stock Performance Graph ” shall not be deemed to be “ soliciting material ” or to be “ filed ” with the SEC or subject to its proxy regulations or to the liabilities of Section 18 of the Exchange Act other than as provided in Item 201 of Regulation S-K.

The information provided in this section shall not be deemed to be incorporated by reference into any filing under the Securities Act or Exchange Act.

Unregistered Sales of Equity Securities

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December 1, 2025 to December 31, 2025

Includes 287 shares surrendered to cover the payroll taxes due upon the vesting of restricted stock.

I ncludes 577 shares surrendered to cover the payroll taxes due upon the vesting of restricted stock.

The average price paid per share does not include the effect of excise tax expense incurred on net stock repurchases.

The Company has had a stock repurchase program since 2015.

At December 31, 2024, the Company had 495,645 shares of our common stock remaining authorized for repurchase under the program.

The Company has had a share repurchase program, which has no expiration date, since 2015.

On July 19, 2023 and September 21, 2022, the Board approved an additional 350,000 shares and 300,000 shares, respectively, of the Company’s common stock for repurchase under the share repurchase program.

Securities Authorized for Issuance under Equity Compensation Plans

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The following discussion and analysis should be read in conjunction with the Company’s consolidated financial statements and related notes and other supplemental information included herein.

Certain risks, uncertainties and other factors, including those set forth under Item 1A.

Risk Factors in Part I, and elsewhere in this Annual Report on Form 10-K, may cause actual results to differ materially from those projected results discussed in the forward-looking statement appearing in this discussion and analysis.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K, both in Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere, contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act.

These forward-looking statements include statements relating to our projected growth, anticipated future financial performance, changes in our ACL including due to the adoption of ASU 2016-13, anticipated future credit quality and our potential ability to achieve performance and strategic goals, as well as statements relating to the anticipated effects of these factors on our business, financial condition and results of operations.

These statements can typically be identified through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “think,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature.

Our forward-looking statements contained herein are based on assumptions and estimates that management believes to be reasonable in light of the information available at this time.

However, many of these statements are inherently uncertain and beyond our control and could be affected by many factors.

Factors that could have a material effect on our business, financial condition, results of operations, cash flows and future growth prospects can be found in Item 1A.

Risk Factors .

These factors include, but are not limited to, the following, any one or more of which could materially affect the outcome of future events:

the significant risks and uncertainties for our business, results of operations and financial condition, as well as our regulatory capital and liquidity ratios and other regulatory requirements caused by business and economic conditions generally and in the financial services industry in particular, whether nationally, regionally or in the markets in which we operate;

changes in inflation, interest rates, yield curves and interest rate spread relationships that affect our loan and deposit pricing;

our ability to successfully execute our near-term strategy to pivot from primarily a growth strategy to a strategy primarily focused on consistent, quality earnings through the optimization of our balance sheet, and our ability to successfully execute a long-term growth strategy;

our ability to achieve organic loan and deposit growth, and the composition of that growth;

a reduction in liquidity, including as a result of a reduction in the amount of deposits we hold or other sources of liquidity, which may be caused by, among other things, disruptions in the banking industry similar to those that occurred in early 2023 that caused bank depositors to move uninsured deposits to other banks or alternative investments outside the banking industry;

our ability to identify and enter into agreements to combine with attractive acquisition candidates, finance acquisitions, complete acquisitions after definitive agreements are entered into, and successfully integrate and grow acquired operations;

our adoption on January 1, 2023 of ASU 2016-13, and inaccuracy of the assumptions and estimates we make in establishing reserves for credit losses and other estimates;

changes in the quality or composition of our loan portfolio, including adverse developments in borrower industries or in the repayment ability of individual borrowers;

changes in the quality and composition of, and changes in unrealized losses in, our investment portfolio, including whether we may have to sell securities before their recovery of amortized cost basis and realize losses;

the extent of continuing client demand for the high level of personalized service that is a key element of our banking approach as well as our ability to execute our strategy generally;

our dependence on our management team, and our ability to attract and retain qualified personnel;

the concentration of our business within our geographic areas of operation in Louisiana, Texas and Alabama;

increasing costs of complying with new and potential future regulations;

new or increasing geopolitical tensions, including resulting from wars in Ukraine and Israel and surrounding areas;

the emergence or worsening of widespread public health challenges or pandemics including COVID-19;

concentration of credit exposure;

any deterioration in asset quality and higher loan charge-offs, and the time and effort necessary to resolve problem assets;

fluctuations in the price of oil and natural gas;

data processing system failures and errors;

risks associated with our digital transformation process, including increased risks of cyberattacks and other security breaches and challenges associated with addressing the increased prevalence of artificial intelligence;

risks of losses resulting from increased fraud attacks against us and others in the financial services industry;

potential impairment of our goodwill and other intangible assets;

our potential growth, including our entrance or expansion into new markets, and the need for sufficient capital to support that growth;

the impact of litigation and other legal proceedings to which we become subject;

competitive pressures in the commercial finance, retail banking, mortgage lending and consumer finance industries, as well as the financial resources of, and products offered by, competitors;

the impact of changes in laws and regulations applicable to us, including banking, securities and tax laws and regulations and accounting standards, as well as changes in the interpretation of such laws and regulations by our regulators;

changes in the scope and costs of FDIC insurance and other coverages;

governmental monetary and fiscal policies;

hurricanes, tropical storms, tropical depressions, floods, winter storms, droughts and other adverse weather events, all of which have affected our market areas from time to time;

other natural disasters;

oil spills and other man-made disasters;

acts of terrorism;

other international or domestic calamities;

and other matters beyond our control.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included herein.

If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate.

Accordingly, you should not place undue reliance on any such forward-looking statements.

Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

New factors emerge from time to time, and it is not possible for us to predict which will arise.

In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

We qualify all of our forward-looking statements by these cautionary statements.

Certain risks, uncertainties and other factors, including those set forth under Cautionary Note Regarding Forward-Looking Statements at the beginning of this document, Item 1A.

Discussion in this Annual Report on Form 10-K includes results of operations and financial condition for 2025 and 2024 and year-over-year comparisons between 2025 and 2024.

For discussion on results of operations and financial condition pertaining to 2024 and 2023 and year-over-year comparisons between 2024 and 2023, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 12, 2025.

The Bank commenced operations in 2006 and we completed our initial public offering in July 2014.

On July 1, 2019, the Bank changed from a Louisiana state bank charter to a national bank charter and its name changed to Investar Bank, National Association.

Through the Bank, we provide full banking services, excluding trust services, tailored primarily to meet the needs of individuals, professionals, and small to medium-sized businesses.

Our primary areas of operation are south Louisiana (approximat ely 77% of our tota l deposits as of December 31, 2025), including Baton Rouge, New Orleans, Lafayette, Lake Charles, and their surrounding areas;

southeast Texas, primarily Houston and its surrounding area;

Texas, including Houston and its surrounding area, and, as of January 1, 2026, north Dallas and Wichita Falls and their surrounding areas;

and Alabama, including York and Oxford and their surrounding areas.

As of March 12, 2025 , we operated 29 fu ll service bran ches comprised of 20 full service branches in Louisiana, three full service branches in Texas, and six full service branches in Alabama.

The Bank commenced operations in 2006 and we completed our initial public offering in July 2014.

On July 1, 2019, the Bank changed from a Louisiana state bank charter to a national bank charter and its name changed to Investar Bank, National Association.

During 2023, we pivoted our near-term strategy from primarily a growth strategy to primarily a focus on consistent, quality earnings through the optimization of our balance sheet.

Our strategy includes a focus on originating and renewing high quality, primarily variable-rate, loans and allowing higher risk credit relationships to run off.

Our near-term strategy includes continuing to consider acquisitions on an opportunistic basis.

Our long-term strategy includes organic growth through high quality loans and growth through acquisitions, including whole-bank acquisitions, strategic branch acquisitions and asset acquisitions.

We have completed seven whole-bank acquisitions since 2011 and regularly review acquisition opportunities.

Our most recent whole bank acquisition was completed in April 2021.

We opened a loan a nd deposit production office in our Texas market in the first quarter of 2024 and converted it to a full-service branch location in the fourth quarter of 2024.

Additionally, in the third quarter of 2023, we converted an existing loan and deposit production office in Tuscaloosa, Alabama to a cashless branch designed to provide a digital banking experience.

During the third and fourth quarters of 2023, we purchased commercial and industrial revolving lines of credit with an unpaid principal balance of $162.7 million in two tranches.

We have continued to evaluate opportunities to improve our branch network efficiency, leverage our digital initiatives, and further reduce costs.

We closed four branches during our last three fiscal years.

Two of the branches had been acquired, and the closures involved anticipated synergies that resulted in significant cost savings.

In 2022, we sold five former branch locations and three tracts of land that were being held for future branch locations.

On January 27, 2023, we completed the sale of certain assets, deposits and other liabilities associated with our Alice, Texas and Victoria, Texas branch locations to First Community Bank in order to focus more on our core markets.

Of the Bank’s entire branch network, these two locations were geographically the most distant from our Louisiana headquarters.

In an effort to focus more on our core business and optimize profitability, in the third quarter of 2023, we made the strategic decision to exit the consumer mortgage origination business.

Consumer mortgage loan products are typically long-term and fixed-rate and generally require a higher relative ACL than other loan products.

Consumer mortgage volumes have decreased to historical lows due to the combination of rising housing prices and interest rates and constriction of housing supply.

As a result of this decision, we further optimized our workforce and will continue to dedicate resources to our more profitable products and services.

Substantially all of the consumer mortgage portfolio is included in the 1-4 family loan category.

As of March 16, 2026 , we operated 36 fu ll-service bran ches comprised of 20 full-service branches in Louisiana, ten full-service branches in Texas, and six full-service branches in Alabama.

Our strategy focuses on consistent, quality earnings through the optimization of our balance sheet.

Our strategy includes originating and renewing high quality, primarily variable-rate, loans and allowing higher risk credit relationships to run off.

We have kept duration short on our liabilities to provide flexibility to secure lower cost funding that was accretive to our net interest margin.

Our strategy also includes growth through acquisitions, including whole-bank acquisitions, strategic branch acquisitions and asset acquisitions.

We have completed eight whole-bank acquisitions since 2011 and regularly review acquisition opportunities.

Our most recent whole bank acquisition was completed in January 2026.

For additional information, see Item 1.

Business – Acquisition Activity – Recent Acquisitions .

Our principal business is lending to and accepting deposits from individuals and small to medium-sized businesses in our areas of operation.

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Our principal expenses are interest expense on interest-bearing customer deposits and borrowings, salaries and employee benefits, occupancy costs, data processing and other operating expenses.

We measure our performance through our net interest margin, return on average assets, and return on average equity, among other metrics, while seeking to maintain appropriate regulatory leverage and risk-based capital ratios.

We measure our performance through our net interest margin, return on average assets, and return on average common equity, among other metrics, while seeking to maintain appropriate regulatory leverage and risk-based capital ratios.

Acquisition of WFB

On July 1, 2025, we announced that we had entered into the Agreement and Plan of Merger by and between Investar and WFB, headquartered in Wichita Falls, Texas, which provided for the merger of WFB with and into Investar, with Investar as the surviving corporation, followed by the merger of FNB, WFB’s wholly-owned subsidiary, with and into the Bank, with the Bank as the surviving bank.

The Company completed its acquisition of WFB and FNB on January 1, 2026.

All of the issued and outstanding shares of WFB common stock were converted into aggregate merger consideration consisting of $7.2 million in cash and 3,955,272 shares of Company common stock for an aggregate transaction value of $112.9 million.

This value is based on the Company’s closing stock price on December 31, 2025 of $26.72 per common share.

At December 31, 2025, WFB had $1.2 billion in total assets, $1.0 billion in net loans and $1.0 billion in total deposits.

Private Placement of Series A Preferred Stock

In connection with the WFB transaction, on July 1, 2025, we completed a private placement of 32,500 shares of our newly designated Series A Preferred Stock with selected institutional and other accredited investors at a price of $1,000 per share, for aggregate gross proceeds of $32.5 million.

The net proceeds were $30.4 million, after deducting placement agent fees and other offering-related expenses.

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

For additional information, see Note 13.

Stockholders ’ Equity.

For certain GAAP performance measures, see “ Certain Performance Indicators:

GAAP Financial Measures ” below.

We also monitor changes in our tangible equity, tangible assets, and tangible book value per share, shown in the section “ Certain Performance Indicators:

We also monitor changes in our tangible equity, tangible assets, and tangible book value per common share, shown in the section “ Certain Performance Indicators:

Non-GAAP Financial Measures ” below.

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As of and for the years ended December 31,

(In thousands, except share data)

(In thousands, except per share data)

Financial Information

Total stockholders' equity

Total common stockholders’ equity

Net interest income

Diluted earnings per share

Noninterest income

Noninterest expense

Net income available to common shareholders

Diluted earnings per common share

Performance Ratios

Return on average assets

Return on average equity

Return on average common equity

Net interest margin

Dividend payout ratio

Efficiency ratio (3)

Noninterest expense

Net interest income

Noninterest income

Efficiency ratio (4)

Dividend payout ratio

Capital Ratios

Total equity to total assets

Total common equity to total assets

During 2023 we purchased commercial and industrial lines of credit with an unpaid principal balance of $162.7 million.

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and its wholly-owned subsidiary Cheaha Bank, by merger with and into the Company and Bank, respectively.

On February 21, 2020, the Bank acquired two branches from PlainsCapital Bank.

Calculated as noninterest expense divided by the sum of net interest income (before provision for credit losses) and noninterest income.

Calculated as noninterest expense divided by the sum of net interest income (before provision for (reversal of) credit losses) and noninterest income.

Certain Performance Indicators:

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Our accounting and reporting policies conform to accounting principles generally accepted in the United States, or GAAP, and the prevailing practices in the banking industry.

However, we also evaluate our performance based on certain additional metrics.

Tangible book value per share and the ratio of tangible equity to tangible assets are not financial measures recognized under GAAP and, therefore, are considered non-GAAP financial measures.

Our management, banking regulators, financial analysts and investors use these non-GAAP financial measures to compare the capital adequacy of banking organizations with significant amounts of preferred equity and/or goodwill or other intangible assets, which typically stem from the use of the purchase accounting method of accounting for mergers and acquisitions.

Tangible equity, tangible assets, tangible book value per share or related measures should not be considered in isolation or as a substitute for total stockholders’ equity, total assets, book value per share or any other measure calculated in accordance with GAAP.

Moreover, the manner in which we calculate tangible equity, tangible assets, tangible book value per share and any other related measures may differ from that of other companies reporting measures with similar names.

The following table reconciles, as of the dates set forth below, stockholders’ equity (on a GAAP basis) to tangible equity and total assets (on a GAAP basis) to tangible assets and calculates our tangible book value per share (dollars in thousands).

However, we also evaluate our performance based on certain additional non-GAAP metrics, including tangible book value, tangible assets, tangible book value per common share, and tangible common equity to tangible assets.

These measures are not financial measures recognized under GAAP and, therefore, are considered non-GAAP financial measures.

Our management, banking regulators, financial analysts and investors use these non-GAAP financial measures to compare the capital adequacy of banking organizations with significant amounts of preferred stock and/or goodwill or other intangible assets, which typically stem from the use of the purchase accounting method of accounting for mergers and acquisitions.

Tangible equity, tangible assets, tangible book value per common share or related measures should not be considered in isolation or as a substitute for total stockholders’ equity, total assets, book value per common share or any other measure calculated in accordance with GAAP.

Moreover, the manner in which we calculate tangible equity, tangible assets, tangible book value per common share and any other related measures may differ from that of other companies reporting measures with similar names.

As of and for the years ended December 31,

Tangible common equity

Total stockholders’ equity - GAAP

preferred stock

Total common stockholders’ equity

Core deposit intangible

Trademark intangible

Tangible equity

Tangible common equity

Tangible assets

Total assets - GAAP

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Tangible assets

Total shares outstanding

Book value per share

Total common shares outstanding

Book value per common share

Effect of adjustments

Tangible book value per share

Total equity to total assets

Tangible book value per common share

Total common equity to total assets

Effect of adjustments

Tangible equity to tangible assets

Critical Accounting Estimates

The preparation of our consolidated financial statements in accordance with GAAP requires us to make estimates and judgments that affect our reported amounts of assets, liabilities, income and expenses and related disclosure of contingent assets and liabilities.

Although independent third parties are often engaged to assist us in the estimation process, management evaluates the results, challenges assumptions used and considers other factors which could impact these estimates.

Actual results may differ from these estimates under different assumptions or conditions.

For more detailed information about our accounting policies, please refer to Note 1.

Summary of Significant Accounting Policies.

The following discussion presents our critical accounting estimates, which are those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations.

We believe that the judgments, estimates and assumptions that we use in the preparation of our consolidated financial statements are appropriate.

Allowance for Credit Losses .

In June 2016, the FASB issued a new accounting standard (ASU 2016-13), referred to as the CECL standard, which became effective for us, as a smaller reporting company, on January 1, 2023.

The CECL methodology requires that lifetime expected credit losses be recorded at the time the financial asset is originated or acquired, and be adjusted each period for changes in expected lifetime credit losses.

The CECL methodology replaces multiple prior impairment models under GAAP that generally required that a loss be “incurred” before it was recognized, and represents a significant change from prior GAAP.

Results for reporting periods beginning on and after January 1, 2023 are presented in accordance with ASU 2016-13 while prior period amounts continue to be reported in accordance with previously applicable GAAP.

For reporting periods beginning on and after January 1, 2023, reflecting the adoption of ASU 2016-13:

On January 1, 2023, we adopted ASC Topic 326, “ Financial Instruments—Credit Losses ,” commonly referred to as the CECL standard, on a modified retrospective basis.

The provisions of this guidance required a material change to the manner in which the Company estimates and reports losses on financial instruments, including loans and unfunded lending commitments, select investment securities, and other assets carried at amortized cost.

The allowance is sensitive to external factors including the general health of the economy, as evidenced by changes in interest rates, gross domestic product, unemployment rates, and changes in real estate demand and values.

Management considers these variables and all other available information when establishing the final level of the allowance.

These variables and others have the ability to result in actual loan losses that differ from the originally estimated amounts.

Changes in the factors used by management to determine the appropriateness of the allowance or the availability of new information could cause the allowance to be increased or decreased in future periods.

The Company’s management considers available forecasts, current events not captured and our specific portfolio characteristics and applies weights to the scenario output based on a best estimate of likely outcomes.

Changing economic conditions have introduced enhanced estimation uncertainty in the forecasts used to estimate expected credit loss.

Our credit loss models were built using historical data that may not correlate to existing economic conditions.

Such forecasted information is inherently uncertain, therefore, actual results may differ significantly from management’s estimates.

The quantitative loss rate analysis is supplemented by a review of qualitative factors that considers whether conditions differ from those existing during the historical periods used in the development of the credit loss models.

Such factors include, but are not limited to, changes in current and expected future economic conditions, changes in the nature and volume of the portfolio, changes in levels of concentrations, changes in the volume and severity of past due loans, changes in lending policies and personnel and changes in the competitive and regulatory environment of the banking industry.

While quantitative data for these factors is used where available, there is significant judgment applied in these processes.

For credits that are individually evaluated, a specific allowance is calculated as the shortfall between the credit’s value and the Bank’s exposure.

The loan’s value is measured by either the fair value of the collateral of the loan based on third-party appraisals if it is collateral dependent, or based on a discounted cash flow methodology.

Collatera l on impaired loans may include, but is not limited to, commercial and residential real estate and accounts receivable.

Values for impaired credits are highly subjective and based on information available at the time of valuation and the current resolution strategy.

These values are difficult to assess and have heightened uncertainty resulting from current market conditions.

Actual results could differ from these estimates.

Management considers the appropriateness of these critical assumptions as part of its allowance review and believes the ACL level is appropriate based on information available through the financial statement date.

Please refer to Note 3.

Loans and Allowance for Credit Losses, and Note 1.

Summary of Significant Accounting Policies – Allowance for Credit Losses for additional discussion.

For reporting periods prior to January 1, 2023, prior to the adoption of ASU 2016-13:

The allowance for loan losses was established as losses were estimated through a provision for loan losses charged to earnings.

Through December 31, 2022, the allowance for loan losses was based on the amount that management believed would be adequate to absorb probable losses inherent in the loan portfolio based on, among other things, evaluations of the collectability of loans and prior loan loss experience.

The evaluations took into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, and current economic conditions that may affect borrowers’ abilities to pay.

Another component of the allowance was losses on loans assessed as impaired under FASB ASC Topic 310,“ Receivables ” (“ASC 310”).

The balance of the loans determined to be impaired under ASC 310 and the related allowance was included in management’s estimation and analysis of the allowance for loan losses.

Allowances for impaired loans were generally determined based on collateral values or the present value of estimated cash flows.

The determination of the appropriate level of the allowance was inherently subjective as it requires estimates that are susceptible to significant revision as more information became available.

We had an established methodology to determine the adequacy of the allowance for loan losses that assessed the risks and losses inherent in our portfolio and portfolio segments.

We have an internally developed model that required significant judgment to determine the estimation method that fit the credit risk characteristics of the loans in our portfolio and portfolio segments.

Qualitative and environmental factors that may not be directly reflected in quantitative estimates include:

asset quality trends, changes in loan concentrations, new products and process changes, changes and pressures from competition, changes in lending policies and underwriting practices, trends in the nature and volume of the loan portfolio, and national and regional economic trends.

Changes in these factors were considered in determining changes in the allowance for loan losses.

The impact of these factors on our qualitative assessment of the allowance for loan losses could change from period to period based on management’s assessment of the extent to which these factors were already reflected in historic loss rates.

The uncertainty inherent in the estimation process was also considered in evaluating the allowance for loan losses.

Acquisition Accounting .

We account for our acquisitions under ASC Topic 805, “ Business Combinations ” (“ASC 805”), which requires the use of the purchase method of accounting.

All identifiable assets acquired, including loans, are recorded at fair value (which is discussed below).

The excess purchase price over the fair value of net assets acquired is recorded as goodwill.

If the fair value of the net assets acquired exceeds the purchase price, a bargain purchase gain is recognized.

For reporting periods beginning on and after January 1, 2023, reflecting the adoption of ASU 2016-13:

ASU 2016-13 amended the accounting model for purchased financial assets and replaced the guidance for PCI financial assets with the concept of PCD assets.

For PCD assets, the CECL estimate is recognized through the ACL with an offset to the amortized cost basis of the PCD asset at the date of acquisition.

Subsequent changes in the ACL for PCD assets are recognized through a provision for credit losses on loans.

We used the prospective transition approach for PCD loans that were previously classified as PCI and accounted for under ASC 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality” (“ASC 310-30”).

As permitted under ASU 2016-13, the Company did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption.

Please refer to Note 1.

Summary of Significant Accounting Policies – Acquisition Accounting , for additional discussion.

For reporting periods prior to January 1, 2023, prior to the adoption of ASU 2016-13:

Because the fair value measurements incorporated assumptions regarding credit risk, no allowance for loan losses related to acquired loans was recorded on the acquisition date.

The fair value measurements of acquired loans were based on estimates related to expected prepayments and the amount and timing of undiscounted expected principal, interest and other cash flows.

The fair value adjustment was amortized over the life of the loan using the effective interest method.

Through December 31, 2022, we accounted for acquired impaired loans under ASC Topic 310-30 .

An acquired loan was considered impaired when there was evidence of credit deterioration since origination and it was probable at the date of acquisition that we would be unable to collect all contractually required payments.

ASC 310-30 prohibited the carryover of an allowance for loan losses for acquired impaired loans.

Over the life of the acquired loans, we continually estimated the cash flows expected to be collected on individual loans or on pools of loans sharing common risk characteristics.

As of the end of each fiscal quarter, we evaluated the present value of the acquired loans using the effective interest rates.

For any increases in cash flows expected to be collected, we adjusted the amount of accretable yield recognized on a prospective basis over the loan’s or pool’s remaining life, while we recognized a provision for loan loss in the consolidated statement of income if the cash flows expected to be collected had decreased.

Overview of Financial Condition and Results of Operations

Net income for the year ended December 31, 2024 totaled $20.3 million, or $2.04 per diluted common share, compared to $16.7 million, or $1.69 per diluted common share, for the year ended December 31, 2023.

This represents a $3.6 million, or a 21.4%, increase in net income.

Net income increased primarily due to a $7.7 million increase in noninterest income, partially offset by a $4.8 million decrease in net interest income and a $0.4 million increase in noninterest expense.

There was also a $3.5 million negative provision for credit losses in 2024 compared to a negative provision for credit losses of $2.0 million in 2023.

The increase in noninterest income is mainly attributable to a $3.5 million increase in income from BOLI primarily due to the receipt of death benefit proceeds in the fourth quarter of 2024 and a gain on sale or disposition of fixed assets of $0.4 million recorded during the year ended December 31, 2024, primarily resulting from the closure of one branch in the Alabama market, compared to a loss on sale or disposition of fixed assets of $1.3 million recorded during the year ended December 31, 2023, primarily resulting from the sale of the Alice and Victoria, Texas branches, the disposition of ATMs and a reclassification of bank premises and equipment to other real estate owned.

In addition, we recorded noninterest income from a legal settlement of $1.1 million during the year ended December 31, 2024 related to one loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida.

We also recorded a gain on sale of other real estate owned of $0.7 million during the year ended December 31, 2024, primarily related to that loan relationship, compared to a loss on sale of other real estate owned of $0.1 million recorded during the year ended December 31, 2023.

The decrease in net interest income was a result of a $15.4 million increase in interest expense partially offset by a $10.7 million increase in interest income, as we experienced margin compression due to rising market interest rates.

The increase in noninterest expense primarily resulted from a $1.5 million increase in salaries and employee benefits, partially offset by a $0.7 million decrease in depreciation and amortization and a $0.4 million decrease in occupancy expense.

At December 31, 2024, the Company and the Bank each were in compliance with all regulatory capital requirements, and the Bank was considered “well-capitalized” under prompt corrective action regulations.

Additional key components of the Company’s performance during the year ended December 31, 2024 are summarized below.

Return on average assets increased to 0.73% for the year ended December 31, 2024, compared to 0.60% for the year ended December 31, 2023.

Return on average equity increased to 8.60% for the year ended December 31, 2024 compared to 7.63% for the year ended December 31, 2023.

Book value per common share increased to $24.55 at December 31, 2024, or 5.5%, compared to $23.26 at December 31, 2023.

Consistent with our strategy of optimizing the balance sheet, total loans decreased $85.5 million, or 3.9% to $2.13 billion at December 31, 2024, compared to $2.21 billion at December 31, 2023.

Variable-rate loans as a percentage of total loans was 32% at December 31, 2024 compared to 27% at December 31, 2023.

For the year ended December 31, 2024 , we recorded a $3.5 million negative provision for credit losses.

Nonperforming loans were 0.42% of total loans at December 31, 2024 compared to 0.26% at December 31, 2023.

Total deposits were $2.35 billion at December 31, 2024, an increase of $90.2 million, or 4.0%, compared to deposits of $2.26 billion at December 31, 2023.

Noninterest-bearing deposits decreased $16.6 million, or 3.7%, to $432.1 million compared to $448.8 million at December 31, 2023.

At December 31, 2024, estimated uninsured deposits represented approximately 31% of our total deposits.

During the year ended December 31, 2024, we redeemed $20.0 million in principal amount and repurchased $8.0 million in principal amount of our subordinated debt and recorded a $0.3 million gain on extinguishment of subordinated debt.

N et interest income for the year ended December 31, 2024 was $69.8 million, a decrease of $4.8 million, or 6.4% , compared to $74.5 million for the year ended December 31, 2023 , driven primarily by an increase in the rates paid on interest-bearing liabilities, partially offset by increase s in the volume and yield earned on interest-earning assets.

For the year ended December 31, 2024 , our net interest margin was 2.63% , compared to 2.83% for the year ended December 31, 2023

At December 31, 2024, we had no outstanding borrowings under the BTFP compared to $212.5 million at December 31, 2023 with a weighted average rate of 4.83%.

We repurchased 18,621 shares of our common stock at an average price of $16.13 per share during 2024 and repurchased 222,448 shares of our common stock at an average price of $13.47 per share during 2023.

We increased dividends by 4% to $0.41 per share for 2024 from $0.395 per share for 2023.

Stockholders’ equity increased 6.4% to $241.3 million at December 31, 2024, compared to December 31, 2023, due to net income for 2024, partially offset by dividends and stock repurchases, and an increase in accumulated other comprehensive loss due to a decrease in the fair value of the Bank’s AFS securities portfolio.

Tangible common equity to tangible assets

Certain Events That Affect Year-over-Year Comparability

Changing Inflation and Interest Rates .

During the entirety of 2021, the federal funds target rate was 0% to 0.25%, and it remained at that rate until March 2022.

Inflation increased rapidly during 2021 through June 2022.

After June 2022, the rate of inflation generally declined;

however, it began increasing in the later part of 2024 and has remained above the Federal Reserve’s target inflation rate of 2%.

In response, the Federal Reserve raised the federal funds target rate multiple times from March 2022 through July 2023.

Through these incremental increases to the target rate, the Federal Reserve raised, on a cumulative basis, the target rate from 0% to 0.25% by 525 basis points to 5.25% to 5.50%.

During 2023, the Federal Reserve raised the federal funds target rate four times, from 4.25% to 4.50%, to 5.25% to 5.50% where it remained until September 2024.

The Federal Reserve reduced the federal funds target rate three times in 2024 by 100 basis points on a cumulative basis to 4.25% to 4.50%.

During 2024, beginning in September 2024, the Federal Reserve reduced the federal funds target rate three times by 100 basis points on a cumulative basis to 4.25% to 4.50%.

During 2025, beginning in September 2025, the Federal Reserve reduced the federal funds target rate three times by 75 basis points on a cumulative basis to 3.50% to 3.75%.

Accordingly, the prevailing federal funds target rate for the year ended

December 31, 2025 was lower than for the year ended

December 31, 2024.

Disruptions in the Banking Industry .

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The Federal Reserve ceased making new loans under the BTFP on March 11, 2024.

During the third quarter of 2024, we began paying down borrowings under the BTFP and repaid all of the remainingborrowings under the BTFP in the fourth quarter of 2024.

As of December 31, 2024, estimated uninsured deposits represented approximately 31% of our total deposits.

For additional information, see “Discussion and Analysis of Financial Condition – “Deposits,” “Borrowings,” and “Liquidity and Capital Resources” and Part I.

During the third quarter of 2024, we began paying down borrowings under the BTFP and repaid all of the remaining borrowings under the BTFP in the fourth quarter of 2024.

December 31, 2025, estimated uninsured deposits represented approximately 34% of our total deposits.

For additional information, see “

Discussion and Analysis of Financial Condition –

Deposits ,” “

Borrowings ,” and “

Liquidity and Capital Resources ” and

Risk Factors .

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As a result of Hurricane Ida’s impact on the Borrower’s business operations, some of the collateral securing the loan relationship, including real estate, inventory, and equipment, experienced a significant reduction in value.

Since the third quarter of 2021, as of December 31, 2024, we have recorded net recoveries related to this loan relationship of $2.5 million, substantially all of which were in 2023.

Additionally, d uring 2024, we recorded a gain on sale of other real estate owned of $0.7 million and noninterest income of $1.1 million from a legal settlement related to this loan relationship.

COVID-19 Pandemic.

The COVID-19 pandemic and related governmental control measures severely disrupted financial markets and overall economic conditions in 2020 and 2021.

While the impact of the pandemic and the associated uncertainties remained in 2022 and 2023, there was significant progress made with COVID-19 vaccination levels, which resulted in the easing of restrictive measures in the U.S.

At the same time, many industries experienced supply chain disruptions and labor shortages.

Inflation increased significantly during 2021 and 2022, and in response the Federal Reserve raised the federal funds target rate multiple times in 2022 and 2023, as discussed above.

On April 10, 2023, the COVID-19 national emergency was ended by Congress, and the national public health emergency ended on May 11, 2023.

Adoption of ASU 2016-13.

As discussed throughout this report, we adopted ASU 2016-13 on January 1, 2023, and recorded a one-time, cumulative effect adjustment that increased the ACL by $5.9 million and decreased retained earnings, net of tax, by $4.3 million.

Loan Purchase Agreement.

In August 2023, we entered into a loan purchase agreement to acquire commercial and industrial revolving lines of credit, and related accrued interest, with an unpaid principal balance of $162.7 million and total commitments of $237.8 million in two tranches.

The first and second tranches consist of unpaid principal balances of $35.8 million and $127.0 million, respectively, and total commitments of $61.1 million and $176.7 million, respectively.

The purchase of the first tranche was completed on September 15, 2023, and the purchase of the second tranche was completed on October 3, 2023.

The revolving lines of credit are variable-rate and shorter-term in nature with varying renewal terms.

The loans are to consumer finance lending companies that possess a history of high credit quality and that we believe provide us with opportunities to deepen the relationships through our services such as treasury management.

We also hired two individuals with significant experience in lending in this area.

Sale of Two Branches to First Community Bank.

On January 27, 2023, we completed the sale of certain assets, deposits and other liabilities associated with the Alice and Victoria, Texas locations to First Community Bank, a Texas state bank located in Corpus Christi, Texas.

We sold approximately $13.9 million in loans and $14.5 million in deposits.

Exit from Consumer Mortgage Origination Busines s .

In the third quarter of 2023, we made the strategic decision to exit the consumer mortgage origination business.

For additional discussion, see “Overview.”

As of December 31, 2025, we have recorded total recoveries on the relationship of approximately $7.9 million on a cumulative basis.

During 2025, we recorded a $3.3 million recovery of loans previously charged off as a result of a property insurance settlement related to a loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida, and we also recorded related noninterest expense of $0.2 million.

D uring 2024, we recorded a gain on sale of other real estate owned of $0.7 million and noninterest income of $1.1 million from a legal settlement related to this loan relationship.

Branch Activity.

We closed one branch location in Baton Rouge, Louisiana and one branch location in Westlake, Louisiana in May 2022.

We closed one branch location in Central, Louisiana in March 2023.

We sold the land and buildings relating to five locations during 2022.

During 2022, we also sold three tracts of land that were held for future branch locations.

In January 2024, we closed one branch in Alabama.

We continue to evaluate opportunities to reduce our physical branch footprint and further improve efficiency through digital initiatives.

Subordinated Debt Repurchases.

In October 2024, we converted an existing loan and deposit production office in our Texas market to a full-service branch location.

Subordinated Debt Repurchases and Redemptions.

During the first quarter of 2024, we repurchased $1.0 million in principal amount of our 2032 Notes.

During the second quarter of 2024, we repurchased $5.0 million in principal amount of our 2029 Notes and $2.0 million in principal amount of our 2032 Notes.

Subordinated Debt Issuance and Redemptions.

In April 2022, we completed a private placement of $20.0 million in aggregate principal amount of our 2032 Notes.

In June 2022, we used the majority of the proceeds to redeem $18.6 million of our 2027 Notes.

We utilized the remaining proceeds for share repurchases and for general corporate purposes.

During the fourth quarter of 2024, we redeemed all of the remaining $20.0 million in principal amount of the 2029 Notes.

As of December 31, 2024, our outstanding subordinated debt consisted of $17.0 million in principal amount of our 2032 Notes.

As of December 31, 2025 and December 31, 2024, our outstanding subordinated debt consisted of $17.0 million in principal amount of our 2032 Notes.

Legal Settlement.

During the third quarter of 2024, we recorded noninterest income of $1.1 million from a legal settlement related to a lending relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida.

BOLI Restructuring.

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During the fourth quarter of 2024, we received BOLI death benefit proceeds totaling $5.5 million, and recorded a related $3.1 million in nontaxable noninterest income from BOLI.

Acquisition of WFB.

During 2025, we recorded acquisition expense of $1.0 million related to the acquisition of WFB completed on January 1, 2026.

Private Placement of Series A Preferred Stock.

During the third quarter of 2025, we completed a private placement of 32,500 shares of our newly designated Series A Preferred Stock with selected institutional and other accredited investors at a price of $1,000 per share, for aggregate gross proceeds of $32.5 million.

The net proceeds were $30.4 million, after deducting placement agent fees and other offering-related expenses.

Overview of Financial Condition and Results of Operations

Total assets were $2.8 billion at December 31, 2025, an increase of $0.1 million, or 4.0%, compared to total assets of $2.7 billion at December 31, 2024.

Net income available to common shareholders for the year ended December 31, 2025 totaled $21.8 million, or $2.13 per diluted common share, compared to $20.3 million, or $2.04 per diluted common share, for the year ended December 31, 2024 .

This represents a $1.6 million, or a 7.9% , increase in net income available to common shareholders.

At December 31, 2025, the Company and the Bank each were in compliance with all regulatory capital requirements, and the Bank was considered “well-capitalized” under prompt corrective action regulations.

Key components of the Company’s performance during the year ended December 31, 2025 are summarized below.

N et interest income for the year ended December 31, 2025 was $80.8 million, an increase of $11.0 million, or 15.8% , compared to $69.8 million for the year ended December 31, 2024 .

W e experienced margin expansion as our cost of funds decreased and our yield on interest-earning assets increased.

For the year ended December 31, 2025 , our net interest margin was 3.07% compared to 2.63% for the year ended December 31, 2024 .

Return on average assets increased to 0.83% for the year ended December 31, 2025 compared to 0.73% for the year ended December 31, 2024.

Return on average common equity decreased to 8.45% for the year ended December 31, 2025 compared to 8.60% for the year ended December 31, 2024.

Book value per common share increased to $27.63 at December 31, 2025, or 12.5% compared to $24.55 at December 31, 2024.

Total loans increased $50.9 million, or 2.4%, to $2.18 billion at December 31, 2025 compared to $2.13 billion at December 31, 2024.

Variable-rate loans as a percentage of total loans was 38% at December 31, 2025 compared to 32% at December 31, 2024.

We recorded a $3.4 million reversal of credit losses for t he year ended December 31, 2025 compared to a reversal of credit losses of $3.5 million for the year ended December 31, 2024.

Nonperforming loans were 0.43% of total loans at December 31, 2025 compared to 0.42% at December 31, 2024.

Total deposits were $2.35 billion at December 31, 2025, an increase of $4.3 million, or 0.2%, compared to deposits of $2.35 billion at December 31, 2024.

Noninterest-bearing deposits increased $13.8 million, or 3.2%, to $446.0 million compared to $432.1 million at December 31, 2024.

We repurchased 114,249 shares of our common stock at an average price of $19.84 per share during 2025 and repurchased 18,621 shares of our common stock at an average price of $16.13 per share during 2024.

We increased dividends by 6.1% to $0.435 per common share for 2025 from $0.41 per common share for 2024.

Stockholders’ equity increased 24.8% to $301.1 million at December 31, 2025, compared to December 31, 2024.

Discussion and Analysis of Financial Condition

Total assets were $2.7 billion at December 31, 2024, a decrease of $92.3 million, or 3.3%, compared to total assets of $2.8 billion at December 31, 2023.

The decrease can mainly be attributed to an $85.5 million decrease in loans and a $30.8 million decrease in the AFS securities portfolio, partially offset by a $22.2 million increase in the HTM securities portfolio .

Loans, constitute our most significant asset, comprising 77% and 78% of our total assets at December 31, 2025 and 2024, respectively.

Loans decreased $85.5 million, or 3.9%, to $2.13 billion at December 31, 2024 from $2.21 billion at December 31, 2023.

The decrease in loans was primarily the result of lower demand and loan amortization.

Given the high interest rate environment, we have been emphasizing origination of high margin loans that promote long-term profitability and proactively exiting credit relationships that do not fit this strategy.

Loans increased $50.9 million, or 2.4%, to $2.18 billion at December 31, 2025 from $2.13 billion at December 31, 2024.

The increase in loans was primarily the result of organic growth.

We emphasize the origination of high margin loans that promote long-term profitability and proactively exiting credit relationships that do not fit this strategy.

Our variable-rate loans as a percentage of total loans increased to 38% at December 31, 2025 compared to 32% at December 31, 2024.

The table below sets forth the balance of loans outstanding by loan type as of the dates presented, and the percentage of each loan type to total loans (dollars in thousands).

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Commercial and industrial (1)

At December 31, 2024, the Company’s total business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $976.2 million, a decrease of $16.8 million, or 1.7%, compared to the business lending portfolio of $993.0 million at December 31, 2023.

The decrease in the business lending portfolio is primarily driven by loan amortization consistent with our strategy of optimizing the balance sheet, partially offset by conversions of construction and development loans to owner-occupied loans upon completion of construction.

Largely as a result of our strategy to optimize the balance sheet, our variable-rate loans as a percentage of total loans increased to 32% at December 31, 2024 compared to 27% at December 31, 2023.

We continue to focus on a relationship-driven banking strategy and have increased our emphasis on originating higher margin commercial and industrial and owner-occupied commercial real estate loans that promote long-term profitability.

Nonowner-occupied loans totaled $495.3 million at December 31, 2024, an increase of $7.2 million, or 1.5% compared to $488.1 million at December 31, 2023, primarily due to a reclassification of a $15.9 million multifamily loan to a nonowner-occupied loan and conversions of construction and development loans to nonowner-occupied loans upon completion of construction, partially offset by loan amortization.

As discussed above under “Overview,” during the third quarter of 2023 we exited the consumer mortgage loan origination business to transition into shorter duration, higher risk-adjusted return asset classes, in an effort to focus more on our core business and optimize profitability.

The Company’s business lending portfolio consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans.

At December 31, 2025, the Company’s total business lending portfolio, which consists of loans secured by owner-occupied commercial real estate properties and commercial and industrial loans, was $1.06 billion, an increase of $79.2 million, or 8.1%, compared to the business lending portfolio of $976.2 million at December 31, 2024.

The increase in the business lending portfolio was primarily driven by organic growth and higher utilization of credit lines, particularly on commercial and industrial relationships.

Nonowner-occupied commercial real estate loans totaled $452.1 million at December 31, 2025, a decrease of $43.1 million, or 8.7% compared to $495.3 million at December 31, 2024.

The decrease in nonowner-occupied loans was primarily due to loan amortization and payoffs that aligned with our continued strategy to optimize and de-risk the mix of the portfolio.

During the third quarter of 2023, we exited the consumer mortgage loan origination business to transition into shorter duration, higher risk-adjusted return asset classes, in an effort to focus more on our core business and optimize profitability.

The consumer mortgage portfolio was approximately $224.5 million at December 31, 2025 , a decrease of $18.0 million, or 7.4%, compared to $242.5 million at December 31, 2024, substantially all of which is included in the 1-4 family category.

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At December 31, 2025 and December 31, 2024, we had no concentrations of loans exceeding 10% of total loans other than loans in the categories listed in the table above.

The table below sets forth the balance of owner-occupied loans by industry based on NAICS code and nonowner-occupied loans by property type as of the dates presented (dollars in thousands).

The table below sets forth the balance of owner-occupied c ommercial real estate loans by industry based on NAICS code and nonowner-occupied loans by property type as of the dates presented (dollars in thousands).

Percentage of Total

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Healthcare and social assistance

Mining, quarrying, and oil and gas extraction

Other services (except public administration)

Accommodation and food services

Professional, scientific, and technical services

Manufacturing

Educational services

All other (1)

Total owner-occupied

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Total nonowner-occupied

Total commercial real estate

The following table sets forth loans outstanding at December 31, 2024, which, based on remaining scheduled repayments of principal, a re due in the periods indicated, as well as the amount of loans with fixed and variable rates in each maturity range.

Loans with balloon payments and longer amortizations are often repriced and extended beyond the initial maturity when credit conditions remain satisfactory.

Demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts are reported below as due in one year or less.

No individual category within “All other” represents more than 4% of total owner-occupied loans.

The following table reflects contractual loan maturities of loans in our loan portfolio and the amount of such loans with fixed and variable interest rates in each maturity range as of December 31, 2025.

(dollars in thousands)

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After One Year Through Five Years

After Five Years Through Ten Years

After Ten Years Through Fifteen Years

After Five Years Through Fifteen Years

After Fifteen Years

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We also use investment securities as collateral for certain deposits and other types of borrowings.

Investment securities represented 14% of our total assets and totaled $373.8 million at December 31, 2024, a decrease of $8.6 million, or 2.2%, from $382.4 million at December 31, 2023.

The decrease in investment securities was driven by a $23.5 million decrease in residential mortgage-backed securities, a $4.3 million decrease in obligations of the U.S.

Treasury and U.S.

government agencies and corporations, and a $3.5 million decrease in commercial mortgage-backed securities, partially offset by a $21.9 million increase in obligations of state and political subdivisions and a $0.9 million increase in corporate bonds.

Investment securities represented 15% of our total assets and totaled $418.8 million at December 31, 2025, an increase of $45.0 million, or 12.0%, from $373.8 million at December 31, 2024.

The increase in investment securities was driven primarily by a $38.4 million increase in residential mortgage-backed securities and a $5.9 million increase in obligations of state and political subdivisions.

Due in large part to higher interest rates and market volatility, net unrealized losses in our AFS investment securities portfolio totaled $45.4 million at December 31, 2025 and $61.4 million at December 31, 2024.

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At December 31, 2025, AFS securities comprised 88% of our total investment portfolio.

We adopted ASU 2016-13 effective January 1, 2023.

Due to the nature of the investments, current market prices, and the current interest rate environment, we determined that the declines in the fair values of the AFS and HTM securities portfolio were not attributable to credit losses.

Accordingly, there was no adjustment made to the amortized cost basis upon adoption.

Accordingly, no ACL was recorded related to our investment securities.

The carrying values of our AFS securities are adjusted for unrealized gains or losses not attributable to credit losses as valuation allowances, and any gains or losses are reported on an after-tax basis as a component of other comprehensive income (loss).

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During the year ended December 31, 2025, we purchased $75.0 million of AFS investment securities, compared to $27.6 million during the year ended December 31, 2024.

Proceeds from maturities, prepayments and calls of AFS securities were $35.6 million in 2024 compared to $140.7 million in 2023, and we sold $18.0 million of AFS investment securities in 2024 compared to $15.0 million in 2023.

Proceeds from maturities, prepayments and calls of AFS securities were $52.2 million in 2025 compared to $35.6 million in 2024, and we had no sales of AFS investment securities in 2025 compared to $18.0 million in 2024.

Proceeds from maturities, prepayments and calls of HTM securities were $2.8 million in 2025 compared to $4.8 million in 2024.

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government agencies and corporations securities represented 10% and 23% of the AFS securities we purchased in 2025 and 2024 , respectively.

We did not purchase any other investment type in 2023.

Of the remaining AFS securities purchased in 2024 , 13% were obligations of state and political subdivisions and 9% were corporate bonds.

Of the remaining AFS securities purchased in 2025 and 2024 , 1% and 13%, respectively, were obligations of state and political subdivisions and 9% for each period were corporate bonds.

We only purchase corporate bonds that are investment grade securities issued by seasoned corporations.

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The decrease was primarily attributable to depreciation.

The remaining decrease was primarily attributable to the closure of one branch in our Alabama market in January 2024, which decreased bank premises and equipment by $0.9 million.

Deferred Tax Asset

At December 31, 2025 , the net deferred tax asset was $14.1 million, compared to $17.1 million at December 31, 2024 .

The increase in the deferred tax asset was primarily driven by an increase in the net unrealized losses of the Bank’s AFS securities portfolio, partially offset by a decrease in our ACL.

The Bank acquired net operating loss carryforwards as a result of acquisitions.

tax law imposes annual limitations under Internal Revenue Code Section 382 on the amount of net operating loss carryforwards that may be used to offset federal taxable income.

Under these laws, we may apply up to approximately $0.6 million to offset our taxable income each year.

During the year ended December 31, 2024 , we utilized $0.3 million in net operating loss carryforwards to offset federal taxable income.

At December 31, 2024, we held no net operating loss carryforwards.

The decrease in the deferred tax asset was primarily driven by a decrease in the net unrealized losses of the Bank’s AFS securities portfolio.

The following table sets forth the composition of our deposits and the percentage of each deposit type to total deposits at December 31, 2025 and 2024 (dollars in thousands).

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Total deposits were $2.35 billion at December 31, 2025, an increase of $4.3 million, or 0.2%, from total deposits of $2.35 billion at December 31, 2024.

The increase in interest-bearing demand deposits, money market deposits, and time deposits is primarily due to organic growth.

The decrease in noninterest-bearing demand deposits and savings deposits is primarily due to customers drawing down on their existing deposit accounts and shifts into interest-bearing deposit products with higher rates.

Brokered time deposits decreased to $245.5 million at December 31, 2024 from $269.1 million December 31, 2023 We utilize brokered time deposits, entirely in denominations of less than $250,000, to secure fixed cost funding and reduce short-term borrowings.

We utilized shorter term brokered time deposits, which were laddered in duration to provide flexibility, to fund a portion of the purchase of commercial and industrial revolving lines of credit in 2023.

At December 31, 2024, the balance of brokered time deposits remained below 10% of total assets, and the remaining weighted average duration was approximately seven months with a weighted average rate of 4.99%.

The Company had $47.3 million of brokered demand deposits at December 31, 2024 compared to none at December 31, 2023.

The increase in noninterest-bearing demand deposits, interest-bearing demand deposits and money market deposits was primarily due to organic growth.

We increased rates on our interest-bearing demand deposits during 2025 compared to 2024 to attract and retain lower cost deposits relative to higher-cost short-term borrowings.

The decrease in time deposits was primarily due to maturities of higher cost time deposits as a result of our strategy to keep duration short and lower rates.

Brokered time deposits decreased to $204.1 million at December 31, 2025 from $245.5 million at December 31, 2024.

We utilize brokered time deposits, entirely in denominations of less than $250,000, to secure fixed cost funding and reduce short-term borrowings.

At December 31, 2025, the balance of brokered time deposits remained below 10% of total assets, and the remaining weighted average duration was approxim ately five months with a weighted average rate of 4.03%.

The Company had de minimis brokered demand deposits at December 31, 2025 compared to $47.3 million at December 31, 2024.

We utilize brokered demand deposits when pricing is more favorable than other short-term borrowings.

Estimated uninsured deposits were $737.6 million and $720.1 m illion at December 31, 2024 and 2023, respectively.

Estimated uninsured deposits were $793.2 million, or approximately 34% of total deposits, at December 31, 2025 , compared to $737.6 m illion , or approximately 31% of total deposits, at December 31, 2024.

T he estimates are based on the same methodologies and assumptions used for our regulatory reporting requirements.

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Over twelve months

At December 31, 2024 , total borrowings include securities sold under agreements to repurchase, advances from the FHLB, subordinated debt issued in 2022, and junior subordinated debentures assumed through acquisitions.

At December 31, 2025 , total borrowings included securities sold under agreements to repurchase, advances from the FHLB, subordinated debt issued in 2022, and junior subordinated debentures assumed through acquisitions.

We had $11.2 million of securities sold under agreements to repurchase at December 31, 2025 compared to $8.4 million at December 31, 2024 .

Our advances from the FHLB were $116.0 million at December 31, 2025 , an increase of $48.8 million from FHLB advances of $67.2 million at December 31, 2024 .

FHLB advances are used to fund loan and investment activity that is not funded by deposits or other borrowings.

Based on original maturities, at December 31, 2024, $7.2 million were short-term and $60.0 million of FHLB advances were long-term, compared to no short-term and $23.5 million long-term FHLB advances at December 31, 2023.

Based on original maturities, at December 31, 2025, $36.0 million were short-term and $80.0 million of FHLB advances were long-term, com pared to $7.2 million short-term and $60.0 million long-term FHLB advances at December 31, 2024.

We utilized federal funds purchased during the years ended December 31, 2025 and 2024, although none were outstanding at the year-ends.

We had $8.4 million of securities sold under agreements to repurchase at December 31, 2024 compared to $8.6 million at December 31, 2023 .

At December 31, 2024, we had $17.0 million in principal amount of our 2032 Notes outstanding.

At December 31, 2023, we had $20.0 million in principal amount of our 2032 Notes outstanding and $25.0 million in principal amount of our 2029 Notes outstanding.

The carrying value of this subordinated debt was $16.7 million and $44.3 million at December 31, 2024 and December 31, 2023, respectively.

FHLB advances are used to fund new loan and investment activity that is not funded by deposits or other borrowings.

At December 31, 2025 and December 31, 2024, we had $17.0 million in principal amount of our 2032 Notes outstanding.

The carrying value of this subordinated debt was $16.7 million at December 31, 2025 and December 31, 2024.

Junior subordinated debt of $8.8 million and $8.7 million at December 31, 2025 and 2024 , respect ively, represents the junior subordinated debentures that we assumed in connection with our acquisitions of Cheaha Financial Group Inc.

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On March 12, 2023, the Federal Reserve established the BTFP.

The BTFP is a one-year program which provides additional liquidity through borrowings for a term of up to one year secured by the pledging of certain qualifying securities and other assets valued at par.

The BTFP was a one-year program which provided additional liquidity through borrowings for a term of up to one year secured by the pledging of certain qualifying securities and other assets valued at par.

Beginning in the second quarter of 2023, we utilized the BTFP to secure fixed rate funding for a one-year term and reduce short-term FHLB advances, which are priced daily.

We utilized this source of funding due to its lower rate and the ability to prepay the obligations without penalty.

The rates on the borrowings under the BTFP are fixed for one year from the day each borrowing is made.

The rates on the borrowings under the BTFP were fixed for one year from the day each borrowing was made.

During the fourth quarter of 2023 and again in the first quarter of 2024, we refinanced all of our borrowings under the BTFP with new loans under the BTFP with a one-year term due to more favorable rates.

During the third quarter of 2024, we began paying down borrowings under the BTFP and repaid all of the remaining borrowings under the BTFP in the fourth quarter of 2024.

At December 31, 2024, we had no outstanding borrowings under the BTFP compared to $212.5 million at December 31, 2023 with a weighted average rate of 4.83%.

At December 31, 2025 and 2024, we had no outstanding borrowings under the BTFP.

The BTFP ceased making new loans as scheduled on March 11, 2024.

Typically, the main source of our short-term borrowings are advances from the FHLB;

however, during the years ended December 31, 2024 and 2023, our primary source of short-term borrowings were borrowings under the BTFP due to more favorable rates.

however, during the year ended December 31, 2024, our primary source of short-term borrowings were borrowings under the BTFP due to more favorable rates.

The rate charged for advances from the FHLB is directly tied to the Federal Reserve’s federal funds target rate.

As previously discussed, the Federal Reserve raised the federal funds target rate multiple times in 2022 and 2023 and reduced the federal funds target rate multiple times in the second half of 2024.

As of December 31, 2025, the federal funds target rate was 3.50% to 3.75%.

6 unchanged sentences

Total short-term borrowings

At December 31, 2024 and 2023, we had $17.0 million and $20.0 million in principal amount of our 2032 Notes outstanding, respectively.

The following table sets forth certain information regarding securities sold under agreements to repurchase for the years ended December 31, 2025, 2024 and 2023 (dollars in thousands).

Repurchase agreements:

Amount outstanding at period end

Average amount outstanding during the period

Maximum amount at any month end during the period

Weighted-average interest rate at period end

Weighted-average interest rate during period

At December 31, 2025 and 2024, we had $17.0 million in principal amount of our 2032 Notes outstanding.

On April 6, 2022, we entered into a Subordinated Note Purchase Agreement with certain institutional accredited investors and qualified institutional buyers (the “Purchasers”) under which we issued $20.0 million in aggregate principal amount of our 2032 Notes to the Purchasers at a price equal to 100% of the aggregate principal amount of the 2032 Notes.

1 unchanged sentence

The 2032 Notes have a stated maturity date of April 15, 2032 and bear interest at a fixed rate of 5.125% per year from and including April 6, 2022 to but excluding April 15, 2027 or earlier redemption date.

From April 15, 2027 to but excluding the stated maturity date or earlier redemption date, the 2032 Notes will bear interest a floating rate equal to the then current three-month term SOFR, plus 277 basis points.

From April 15, 2027 to but excluding the stated maturity date or earlier redemption date, the 2032 Notes will bear interest at a floating rate equal to the then current three-month term SOFR, plus 277 basis points.

As provided in the 2032 Notes, the interest rate on the 2032 Notes during the applicable floating rate period may be determined based on a rate other than three-month term SOFR.

4 unchanged sentences

The 2032 Notes are intended to qualify as Tier 2 capital for regulatory purposes.

We used the majority of the net proceeds to redeem our 2027 Notes in June 2022, and utilized the remaining proceeds for share repurchases and for general corporate purposes.

We used the majority of the net proceeds from the 2032 Notes to redeem our 2027 Notes in June 2022, and utilized the remaining proceeds for share repurchases and for general corporate purposes.

During the year ended December 31, 2024, we repurchased $3.0 million in principal amount of the 2032 Notes.

At December 31, 2024, none of our 2029 Notes were outstanding.

At December 31, 2023, we had $25.0 million in principal amount of our 2029 Notes outstanding.

At December 31, 2025 and 2024, none of our 2029 Notes were outstanding.

On November 12, 2019, the Company issued $25.0 million in aggregate principal amount of its 2029 Notes at 100% of their face amount in a private placement to certain institutional and other accredited investors.

10 unchanged sentences

On December 30, 2024, we redeemed the remaining $20.0 million in principal amount i n full accordance with their terms at a redemption price equal to 100% of the outstanding principal balance plus accrued and unpaid interest up to but excluding the December 30, 2024 redemption date.

At December 31, 2024 and 2023, none of our 2027 Notes were outstanding.

On March 24, 2017, the Company issued $18.6 million in aggregate principal amount of its 2027 Notes due March 20, 2027 at 100% of the aggregate principal amount.

From and including the date of issuance, but excluding March 30, 2022, the 2027 Notes bore interest at an initial fixed rate of 6.00% per annum, payable semi-annually.

From and including March 30, 2022 and thereafter, the 2027 Notes bore interest at a floating rate equal to the then-current three-month LIBOR (but not less than zero) as calculated on each applicable date of determination, plus 3.945%, payable quarterly.

The Company could, beginning with the interest payment date of March 30, 2022, and on any interest payment date thereafter, redeem the 2027 Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the 2027 Notes to be redeemed plus accrued and unpaid interest to but excluding the date of redemption.

The 2027 Notes were intended to qualify as Tier 2 capital for regulatory capital purposes.

In June 2022, we redeemed the 2027 Notes in full in accordance with their terms at a redemption price equal to 100% of the outstanding principal balance plus accrued and unpaid interest up to but excluding the June 30, 2022 redemption date.

The aggregate redemption price, excluding accrued interest, totaled $18.6 million.

Stockholders’ Equity

Stockholders’ equity was $301.1 million at December 31, 2025, an increase of $59.8 million, or 24.8%, compared to December 31, 2024.

The increase in stockholders’ equity is primarily attributable to net income for fiscal year 2024, partially offset by an increase in accumulated other comprehensive loss due to a decrease in the fair value of the Bank’s AFS securities portfolio, $4.0 million in dividends declared, and $0.3 million in share repurchases.

The increase in stockholders’ equity was primarily attributable to the issuance of the Series A Preferred Stock, discussed above, net income for fiscal year 2025, a decrease in accumulated other comprehensive loss due to an increase in the fair value of the Bank’s AFS securities portfolio, partially offset by $4.3 million in dividends declared on common stock, $2.3 million for share repurchases, and $1.1 million in dividends declared on the Series A Preferred Stock.

Results of Operations

Performance Summary

For the year ended December 31, 2024, net income was $20.3 million, or $2.06 per basic common share and $2.04 per diluted common share, compared to net income of $16.7 million, or $1.69 per basic and diluted common share, for the year ended December 31, 2023.

The primary driver of the increase in net income is a $7.7 million increase in noninterest income, partially offset by a $4.8 million decrease in net interest income and a $0.4 million increase in noninterest expense.

There was also a $3.5 million negative provision for credit losses in 2024 compared to a negative provision for credit losses of $2.0 million in 2023.

Return on average assets increased to 0.73% for the year ended December 31, 2024 from 0.60% for the year ended December 31, 2023.

Return on average equity was 8.60% for the year ended December 31, 2024 compared to 7.63% for the year ended December 31, 2023.

The increase in both return on average assets and return on average equity is mainly attributable to the $3.6 million increase in net income.

For the year ended December 31, 2023, net income was $16.7 million, or $1.69 per basic and diluted common share, compared to net income of $35.7 million, or $3.54 per basic common share and $3.50 per diluted common share, for the year ended December 31, 2022.

The primary drivers of the decrease in net income are a $15.3 million decrease in net interest income and an $11.8 million decrease in noninterest income, partially offset by a $2.0 million negative provision for credit losses in 2023 compared to a provision for credit losses of $2.9 million in 2022.

The decrease in net interest income was a result of a $43.9 million increase in interest expense partially offset by a $28.6 million increase in interest income, as the Bank experienced margin compression due to rising market interest rates.

The decrease in noninterest income is mainly attributable to $8.1 million of swap termination fees and $1.4 million of income from insurance proceeds recorded during the year ended December 31, 2022 and the loss on sale or disposition of fixed assets of $1.3 million during the year ended December 31, 2023, primarily resulting from the sale of the Alice and Victoria, Texas branches, compared to a loss on sale or disposition of fixed assets of $0.3 million for the year ended December 31, 2022.

The negative provision for credit losses of $2.0 million for the year ended December 31, 2023 was primarily due to net recoveries of $2.3 million in 2023 primarily attributable to recoveries on one loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida.

Return on average assets decreased to 0.60% for the year ended December 31, 2023 from 1.37% for the year ended December 31, 2022.

Return on average equity was 7.63% for the year ended December 31, 2023 compared to 15.63% for the year ended December 31, 2022.

The decrease in both return on average assets and return on average equity is mainly attributable to the $19.0 million decrease in net income.

As of and for the year ended December 31,

Net income available to common shareholders

Diluted earnings per common share

Performance Ratios

Return on average assets

Return on average common equity

Book value per common share

Net Interest Income and Net Interest Margin

3 unchanged sentences

The primary factors affecting net interest margin are changes in interest rates, competition, and the shape of the interest rate yield curve.

The Federal Reserve Board sets various benchmark rates, including the federal funds rate, and thereby influences the general market rates of interest, including the deposit and loan rates offered by financial institutions.

The federal funds target rate increased substantially during 2022 and 2023, before decreasing during the second half of 2024, as discussed in more detail in Certain Events That Affect Year-over-Year Comparability – Changing Inflation and Interest Rates.

Net interest income decreased 6.4% to $69.8 million for the year ended December 31, 2024 from $74.5 million for the same period in 2023.

Net interest margin was 2.63% for the year ended December 31, 2024, a decrease of 20 basis points from 2.83% for the year ended December 31, 2023.

The decrease in net interest income resulted primarily from an increase in the rates paid on time deposits and interest-bearing demand deposits and an increase in the volume of brokered time deposits, partially offset primarily by an increase in both the average balance of, and the yield earned on, loans and a decrease in both the average balance of, and rates paid on, short-term borrowings.

Average time deposits increased $45.4 million primarily due to organic growth and customer funds migrating from other deposit categories due to higher rates offered, which along with higher rates paid, resulted in an $8.8 million increase in interest expense compared to the year ended December 31, 2023.

Average interest-bearing demand deposits increased $3.6 million.

Higher rates paid on interest-bearing demand deposits led to a $5.1 million increase in interest expense compared to the year ended December 31, 2023.

Average brokered time deposits were $249.7 million during the year ended December 31, 2024 compared to $163.9 million during the year ended December 31, 2023, which along with higher rates paid added $4.7 million to interest expense.

Average loans increased $39.9 million primarily due to the purchase of commercial and industrial revolving lines of credit in the second half of 2023, which, in addition to higher loan yields, resulted in a $10.6 million increase in interest income compared to the year ended December 31, 2023.

The Federal Reserve Board sets various benchmark rates, including the federal funds target rate, and thereby influences the general market rates of interest, including the deposit and loan rates offered by financial institutions.

During 2024, beginning in September, the Federal Reserve reduced the federal funds target rate three times by 100 basis points on a cumulative basis to 4.25% to 4.50% where it remained until September 2025.

During 2025, beginning in September, the Federal Reserve reduced the federal funds target rate three times by 75 basis points on a cumulative basis to 3.50% to 3.75%, where it remained as of March 16, 2026.

Accordingly, the prevailing federal funds target rate during year ended December 31, 2025 was lower than during the year ended December 31, 2024.

For additional discussion, see Certain Events That Affect Year-over-Year Comparability – Changing Inflation and Interest Rates.

Net interest income increased 15.8% to $80.8 million for the year ended December 31, 2025 from $69.8 million for the same period in 2024.

Net interest margin was 3.07% for the year ended December 31, 2025, an increase of 44 basis points from 2.63% for the year ended December 31, 2024.

The increase in net interest income resulted primarily from a lower average balance of short-term borrowings and a lower average balance of, and a decrease in the rates paid on, time deposits, partially offset by a lower average balance of loans and an increase in the average balance of, and rates paid on, interest-bearing demand deposits.

Average short-term borrowings decreased $149.8 million, as we repaid our borrowings under the BTFP, which along with lower rates paid, resulted in a $7.4 million decrease in interest expense compared to the year ended December 31, 2024.

Average noninterest-bearing deposits decreased $58.7 million.

Our yield on interest-earning assets increased as did our rate paid on interest-bearing liabilities primarily as a result of the overall increase in prevailing interest rates.

We experienced margin pressure beginning late in 2022, which continued in 2023 and 2024.

We raised rates offered on interest-bearing deposits and experienced a decrease in noninterest-bearing deposits, compared to the year ended December 31, 2023.

We may experience additional pressure on our net interest margin during 2025 if the yield on our interest-earning assets decreases faster than our cost of funds.

Average time deposits decreased $34.4 million, which along with lower rates paid, resulted in a $6.0 million decrease in interest expense compared to the year ended December 31, 2024.

Average loans decreased $36.6 million in accordance with our strategy to optimize the balance sheet, which, partially offset by higher loan yields, resulted in a $1.8 million decrease in interest income compared to the year ended December 31, 2024.

Average interest-bearing demand deposits increased $126.8 million, which, combined with an increase in rates, resulted in a $4.2 million increase in interest expense compared to the year ended December 31, 2024.

Average brokered time deposits were $237.3 million during the year ended December 31, 2025 compared to $249.7 million during the year ended December 31, 2024, which along with lower rates paid resulted in a $1.9 million decrease in interest expense compared to the year ended December 31, 2024.

Average noninterest-bearing deposits increased $15.5 million during the year ended December 31, 2025 compared to the same period in 2024.

Rates paid on interest-bearing liabilities decreased primarily as a result of the overall decrease in prevailing interest rates and our strategy to optimize the balance sheet.

Our yield on interest-earning assets increased due to an increase in yield on loans and the investment securities portfolio.

Interest income was $144.0 million for the year ended December 31, 2025 compared to $143.9 million for the same period in 2024.

Loan interest income made up substantially all of our interest income for the years ended December 31, 2025 and 2024, although interest on investment securities contributed 10.2% of interest income for the year ended December 31, 2025 compared to 8.5% for the year ended December 31, 2024.

Interest on our commercial real estate loans, commercial and industrial loans, and 1-4 family residential real estate loans constituted the three largest components of our loan interest income for the years ended December 31, 2024 and 2023 at 85% and 84% of total interest income on loans, respectively.

The overall yield on interest-earning assets increased 37 basis points to 5.43% for the year ended December 31, 2024 compared to 5.06% for the same period in 2023.

Interest on our commercial real estate loans, commercial and industrial loans, and 1-4 family residential real estate loans constituted the three largest components of our loan interest income for the years ended December 31, 2025 and 2024 at 85% of total interest income on loans.

The overall yield on interest-earning assets increased four basis points to 5.47% for the year ended December 31, 2025 compared to 5.43% for the same period in 2024.

The loan portfolio yielded 5.96% for the year ended December 31, 2025 compared to 5.94% for the year ended December 31, 2024.

The increase in yield on our loan portfolio was driven primarily by higher yields on commercial real estate loans and commercial and industrial loans.

The increase in yield on our loan portfolio was driven primarily by higher yields on commercial real estate loans and multifamily loans.

In addition, the yield on the investment portfolio was 3.23% for the year ended December 31, 2025 compared to 2.86% for the year ended December 31, 2024.

Interest expense was $74.1 million for the year ended December 31, 2024, an increase of $15.4 million compared to interest expense of $58.7 million for the year ended December 31, 2023.

The increase in interest expense is primarily attributable to the increase in the rates paid on interest-bearing liabilities, primarily time deposits and interest-bearing demand deposits, and to a lesser extent the increase in the volume of interest-bearing liabilities, primarily brokered time deposits, for the year ended December 31, 2024 compared to December 31, 2023.

For the year ended December 31, 2024, the cost of interest-bearing deposits increased 89 basis points to 3.38% primarily due to increases in the federal funds target rate.

As previously discussed, the federal funds target rate increased during 2023 to 5.25% to 5.50% and decreased beginning in September 2024 to 4.25% to 4.50%, which affects the rate the Company pays for deposits, immediately available overnight funds, and long-term borrowings.

The cost of short-term borrowings decreased 35 basis points to 4.58% primarily due to our refinancing of our borrowings under the BTFP in the first quarter of 2024.

For the year ended December 31, 2024, the cost of interest-bearing liabilities increased 66 basis points to 3.55% compared to the same period in 2023.

For a detailed discussion of our net interest income and net interest margin performance for 2023 compared to 2022, see our Annual Report on Form 10-K for the year ended December 31, 2023, Item 7.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Performance Summary and – Net Interest Income and Net Interest Margin –2023 vs.

2022, and – Volume/Rate Analysis .

Interest expense was $63.2 million for the year ended December 31, 2025, a decrease of $10.9 million compared to interest expense of $74.1 million for the year ended December 31, 2024.

A decrease in interest expense of $6.0 million resulted from a decrease in the volume of interest-bearing liabilities, primarily short-term borrowings and time deposits partially offset by an increase in volume of interest-bearing demand deposits and long-term debt.

A decrease in interest expense of $4.9 million resulted from the decrease in the cost of interest-bearing liabilities, primarily time deposits and brokered time deposits, partially offset by an increase in the cost of interest-bearing demand deposits.

Average interest-bearing liabilities decreased by $56.0 million for the year ended December 31, 2025 compared to the year ended December 31, 2024, as average short-term borrowings decreased by $149.8 million while average interest-bearing deposits increased by $126.8 million.

For the year ended December 31, 2025, the cost of interest-bearing deposits decreased 34 basis points to 3.04% primarily due to lower prevailing market interest rates.

As previously discussed, the federal funds target rate decreased during 2025 to 3.50% to 3.75%, which affects the rate the Company pays for deposits, immediately available overnight funds, and long-term borrowings.

We increased rates on our interest-bearing demand deposits during the year ended December 31, 2025 compared to the to the year ended December 31, 2024 to attract and retain lower cost deposits relative to higher cost short-term borrowings.

The cost of short-term borrowings decreased 139 basis points to 3.19% primarily due to our payoff of our borrowings under the BTFP during the year ended December 31, 2024.

For the year ended December 31, 2025, the cost of interest-bearing liabilities decreased 44 basis points to 3.11% compared to the same period in 2024.

Average Balances and Yields .

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Noninterest Income

Noninterest income includes, among other things, service charges on deposit accounts, gains and losses on call or sale of investment securities, gains and losses on sales or dispositions of fixed assets and other real estate owned, swap termination fee income, gain on sale of loans, servicing fees and fee income on serviced loans, intercha nge fees, income from BOLI, changes in the fair value of equity securities, income from legal settlement, and income from insurance proceeds.

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

Total noninterest income increased $7.7 million, or 117.3%, to $14.2 million for the year ended December 31, 2024 compared to $6.5 million for the year ended December 31, 2023.

The increase is mainly attributable to a $3.5 million increase in income from BOLI primarily due to the receipt of death benefit proceeds in the fourth quarter of 2024 and a gain on sale or disposition of fixed assets of $0.4 million recorded during the year ended December 31, 2024, primarily resulting from the closure of one branch in the Alabama market, compared to a loss on sale or disposition of fixed assets of $1.3 million recorded during the year ended December 31, 2023, primarily resulting from the sale of the Alice and Victoria, Texas branches, the disposition of ATMs and a reclassification of bank premises and equipment to other real estate owned.

There was also $1.1 million of income from legal settlement recorded for the year ended December 31, 2024 related to a lending relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida, compared to none for the year ended December 31, 2023.

The following table illustrates the primary components of noninterest income for the year ended December 31, 2025 compared to the year ended December 31, 2024 (dollars in thousands).

For the Years Ended December 31,

Increase (Decrease)

Noninterest income:

Service charges on deposit accounts

Gain (loss) on call or sale of investment securities, net

(Loss) gain on sale or disposition of fixed assets, net

Gain on sale of other real estate owned, net

Interchange fees

Income from BOLI

Change in the fair value of equity securities

Income from legal settlement

Other operating income

Total noninterest income

Total noninterest income decreased $4.7 million, or 33.4%, to $9.5 million for the year ended December 31, 2025 compared to $14.2 million for the year ended December 31, 2024.

The decrease was mainly attributable to nonrecurring items occurring during the year ended December 31, 2024.

We recorded $3.1 million in income from BOLI for the receipt of death benefit proceeds during the year ended December 31, 2024.

During the first quarter of 2024, we recorded a $0.4 million gain on sale or disposition of fixed assets as a result of the closure of one branch in the Alabama market.

Service charges on deposit accounts include maintenance fees on accounts, account enhancement charges for additional deposit account features, per item charges, overdraft fees, and treasury management charges.

Service charges on deposit accounts increased 0.5% to $3.3 million for the year ended December 31, 2025 compared to $3.2 million for the same period in 2024.

There was a $0.8 million loss on call or sale of investment securities for the year ended December 31, 2024 compared to a $0.3 million loss for the year ended December 31, 2023.

We sold approximately $18.0 million of securities during the year ended December 31, 2024 compared to $15.0 million during the year ended December 31, 2023.

There was a $0.7 million gain on sale of other real estate owned for the year ended December 31, 2024 compared to a $0.1 million loss for the year ended December 31, 2023.

The gain on sale of other real estate owned for the year ended December 31, 2024 resulted primarily from the sale of a property during the second quarter of 2024 related to one loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida.

There was a de minimis gain on call or sale of investment securities for the year ended December 31, 2025 compared to a $0.8 million loss for the year ended December 31, 2024.

We sold no securities during the year ended December 31, 2025 compared to $18.0 million during the year ended December 31, 2024.

There was a de minimis gain on sale of other real estate owned for the year ended December 31, 2025 compared to a $0.7 million gain for the year ended December 31, 2024.

We sold approximately $3.1 million of other real estate owned during the year ended December 31, 2025 compared to $2.1 million of sales during the year ended December 31, 2024.

Interchange fees, which are fees earned on the usage of the Bank’s credit and debit cards, decreased $0.1 million, or 4.8%, to $1.6 million for year ended December 31, 2024 from $1.7 million for the year ended December 31, 2023.

Interchange fees, which are fees earned on the usage of the Bank’s credit and debit cards, decreased $41,000, or 2.5%, to $1.6 million for year ended December 31, 2025 from $1.6 million for the year ended December 31, 2024.

The decrease in interchange fees can primarily be attributed to the decrease in the volume of debit and credit card transactions.

Income from BOLI increased $3.5 million to $4.9 million for the year ended December 31, 2024 from $1.4 million for the year ended December 31, 2023.

During the first quarter of 2024, we surrendered approximately $8.4 million of BOLI and reinvested the proceeds in higher yielding policies, which resulted in increased interest earned on our BOLI policies.

During the fourth quarter of 2024 , we received BOLI death benefit proceeds totaling $5.5 million and recorded $3.1 million in nontaxable income from BOLI.

Income from BOLI decreased $2.9 million to $2.0 million for the year ended December 31, 2025 from $4.9 million for the year ended December 31, 2024.

During the year ended December 31, 2024 , we received BOLI death benefit proceeds totaling $5.5 million and recorded $3.1 million in nontaxable income from BOLI.

During the year ended December 31, 2025, we purchased $7.5 million in BOLI policies, which resulted in increased interest earning on our BOLI policies.

Other operating income includes, among other things, credit card, ATM and wire fees, derivative fee income, changes in the net asset value of other investments and lease income.

The $0.5 million increase in other operating income for the year ended December 31, 2024 is primarily attributable to a $0.3 million increase in derivative fee income and a $0.1 million increase in the change in net asset value of other investments compared to the year ended December 31, 2023.

For a detailed discussion of our noninterest income for 2023 compared to 2022, see Item 7.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Noninterest Income – 2023 vs.

2022 in our Annual Report on Form 10-K for the year ended December 31, 2023 .

The $0.2 million decrease in other operating income for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily attributable to a $0.6 million decrease in the change in net asset value of other investments and a $0.2 million decrease in derivative fee income, partially offset by a $0.3 million increase in distributions from other investments and $0.3 million of insurance proceeds received in the second quarter of 2025 for damages to a property recorded in other real estate owned.

Noninterest Expense

Noninterest expense includes salaries and employee benefits and other cos ts associated with the conduct of our operations.

Our goal is to manage our costs within the framework of our near-term operating strategy of generating consistent, quality earnings.

Our goal is to manage our costs within the framework of our operating strategy of generating consistent, quality earnings.

The following table illustrates the primary components of noninterest expense for the year ended December 31, 2025 compared to the year ended December 31, 2024 (dollars in thousands).

For the Years Ended December 31,

Increase (Decrease)

Noninterest expense:

Depreciation and amortization

Salaries and employee benefits

Data processing

Professional fees

Gain on early extinguishment of subordinated debt

Acquisition expense

Other operating expenses

Total noninterest expense

Total noninterest expense was $65.7 million for the year ended December 31, 2025, an increase of $2.7 million, or 4.3%, from $63.0 million for the year ended December 31, 2024.

This increase was primarily driven by an increase in salaries and employee benefits, partially offset by decreases in depreciation and amortization and occupancy expense.

This increase was primarily driven by increases in salaries and employee benefits and acquisition expense, partially offset by decreases in depreciation and amortization and other operating expenses.

Salaries and employee benefits increased $1.6 million, or 4.2%, to $40.2 million for the year ended December 31, 2025, compared to $38.6 million for the year ended December 31, 2024.

The increase in salaries and employee benefits is primarily due to investment in people with an emphasis on our Texas markets to remix and strengthen our balance sheet and deferred compensation expense, partially offset by a decrease in health insurance claims and severance expense.

As of December 31, 2024, we had 327 full-time and eight part-time employees, compared to 320 full-time and 11 part-time employees as of December 31, 2023.

The increase in salaries and employee benefits was primarily due to investment in people with an emphasis on our Texas markets to remix and strengthen our balance sheet and an increase in health insurance claims, partially offset by a decrease in deferred compensation expense.

As of December 31, 2025, we had 319 full-time and eight part-time employees, compared to 327 full-time and eight part-time employees as of December 31, 2024.

Depreciation and amortization decreased $0.3 million, or 9.8%, to $2.8 million for the year ended December 31, 2025, compared to $3.1 million for the year ended December 31, 2024.

The decrease in depreciation and amortization is primarily driven by the closure of one branch during the first quarter of 2024 and the sale of the Alice and Victoria, Texas branches and the closure of one branch during the first quarter of 2023.

Data processing increased $0.1 million, or 3.7%, to $3.6 million for the year ended December 31, 2024 from $3.5 million for the same period in 2023.

The decrease in depreciation and amortization was primarily driven by the closure of one branch during the first quarter of 2024.

Data processing decreased $0.2 million, or 4.3%, to $3.5 million for the year ended December 31, 2025 from $3.6 million for the same period in 2024.

We did not complete any acquisitions, which typically drive higher data processing expenses, during the years ended December 31, 2025 and 2024.

We regularly review existing contracts with the goal of negotiating favorable terms to offset the increased variable cost components of our data processing costs, such as new accounts and increased transaction volume.

Occupancy expense decreased $0.4 million, or 14.0%, to $2.6 million for the year ended December 31, 2024 from $3.0 million for the year ended December 31, 2023.

This decrease is primarily attributable to $0.4 million in occupancy expense recorded during the year ended December 31, 2023 primarily to terminate remaining contractually obligated lease payments due under non-cancelable operating leases as a result of the sale of the Alice and Victoria, Texas branches.

Occupancy expense increased $0.1 million, or 3.5%, to $2.7 million for the year ended December 31, 2025 from $2.6 million for the year ended December 31, 2024.

This increase was primarily attributable to utilities and insurances expense.

Acquisition expense increased to $1.0 million for the year ended December 31, 2025 compared to none for the year ended December 31, 2024.

This increase was attributable to the acquisition of WFB completed on January 1, 2026.

Other operating expenses include security, business development, FDIC and OCC assessments, bank shares and property taxes, collection and repossession, charitable contributions, repair and maintenance costs, personnel training and development, filing fees, and other costs related to the operation of our business.

Other operating expenses increased $0.3 million, or 2.0%, to $13.3 million for the year ended December 31, 2024 from $13.0 million for the year ended December 31, 2023.

The increase in other operating expenses was primarily due to increases in collection and repossession expenses, FDIC assessments, and write-down of other real estate owned, partially offset by a decrease in bank shares taxes.

For a detailed discussion of our noninterest expense for 2023 compared to 2022, see Item 7.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – Noninterest Expense – 2023 vs.

2022 in our Annual Report on Form 10-K for the year ended December 31, 2023 .

Other operating expenses decreased $0.2 million, or 1.5%, to $13.1 million for the year ended December 31, 2025 from $13.3 million for the year ended December 31, 2024.

The decrease in other operating expenses was primarily due to decreases in collection and repossession expenses and FDIC assessments, partially offset by increases in write-down of other real estate owned and bank shares taxes.

Income Tax Expense

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During the fourth quarter of 2024 , we received BOLI death benefit proceeds totaling $5.5 million and recorded $3.1 million in nontaxable income from BOLI.

For the year ended December 31, 2024, the effective tax rate differs from the statutory rate of 21% primarily due to tax-exempt interest income earned on certain loans and investment securities and income from BOLI, partially offset by the surrender of BOLI contracts.

For the year ended December 31, 2025, the effective tax rate differs from the statutory rate of 21% primarily due to tax-exempt interest income earned on certain loans and investment securities and income from BOLI.

For the year ended December 31, 2022, the effective tax rate differs from the statutory rate of 21% primarily due to nontaxable income from insurance proceeds and tax-exempt interest income earned on certain loans and investment securities and income from BOLI.

On July 4, 2025, the OBBBA, which contains a broad range of tax reform provisions affecting businesses, was signed into law.

The OBBBA did not have a significant impact on 2025 income tax expense.

Risk Management

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Loans and Allowance for Credit Losses – Credit Quality Indicators .

At December 31, 2024 and December 31, 2023, there were no loans classified as Loss or Doubtful, $32.7 million and $12.0 million, respectively, of loans classified as Substandard, and $7.8 million and $10.8 million, respectively, of loans classified as Special Mention as of such dates.

At December 31, 2025 and December 31, 2024, there were no loans classified as Loss or Doubtful, $38.1 million and $32.7 million, respectively, of loans classified as Substandard, and $9.7 million and $7.8 million, respectively, of loans classified as Special Mention.

Of our aggregate $47.8 million and $40.5 million Substandard and Special Mention loans at December 31, 2025 and December 31, 2024, respectively, $1.7 million and $2.0 million, respectively, were acquired and marked to fair value at the time of their acquisition.

The increase in loans classified as Substandard is primarily due to one loan relationship in which $13.6 million of construction and development and commercial real estate loans were downgraded and are still accruing and one nonowner-occupied commercial real estate relationship totaling $2.4 million, which was placed on nonaccrual.

The increase in loans classified as Substandard was primarily due to two relationships in which $9.7 million of commercial real estate loans were downgraded and are still accruing.

An independent loan review is conducted annually, whether internally or externally, on at least 40% of commercial loans utilizing a risk-based approach designed to maximize the effectiveness of the review.

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Allowance for Credit Losses .

Effective January 1, 2023, we adopted ASU 2016-13, which uses the CECL accounting methodology for the ACL.

Upon adoption, we recorded a one-time, cumulative effect adjustment to increase the ACL by $5.9 million.

The ACL was $26.7 million at December 31, 2024, a decrease compared to $30.5 million at December 31, 2023 and an increase compared to $24.4 million at December 31, 2022.

We account for the ACL in accordance with FASB ASC Topic 326, “ Financial Instruments – Credit Losses ” (“ASC 326”), which uses the CECL accounting methodology.

The CECL methodology requires that lifetime expected credit losses be recorded at the time the financial asset is originated or acquired and be adjusted each period through a provision for credit losses for changes in the expected lifetime credit losses.

The ACL was $26.3 million at December 31, 2025, a decrease compared to $26.7 million at December 31, 2024.

We maintain a separate ACL on unfunded loan commitments, which is included in “Accrued taxes and other liabilities” in the accompanying consolidated balance sheets.

The ACL is generally increased by the provision for credit losses and decreased by charge-offs, net of recoveries.

For the years ended December 31, 2024 and 2023, the negative provision for credit losses on loans was $3.5 million and $2.0 million, respectively.

For the year ended December 31, 2022, the provision for credit losses was $2.9 million.

The negative provision for credit losses for the year ended December 31, 2024 was primarily driven by a decrease in total loans, aging of existing loans, an improvement in the economic forecast and, to a lesser extent, the completion of our annual CECL allowance model recalibration, which resulted in lower historical loss rates.

The provision for loan losses for the year ended December 31, 2023 was primarily driven by net recoveries of $2.3 million in the loan portfolio primarily attributable to recoveries on one loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida.

The provision for loan losses for the year ended December 31, 2022 reflects provisioning related to our organic loan growth.

During the first quarter of 2024, we completed our annual model recalibration process.

For the years ended December 31, 2025 and 2024, the reversal of credit losses was $3.4 million and $3.5 million, respectively.

The reversal of credit losses for the year ended December 31, 2025 was primarily due to a $3.3 million recovery during the first quarter of 2025 of loans previously charged off as a result of a property insurance settlement related to one loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida.

The reversal of credit losses for the year ended December 31, 2024 was primarily driven by a decrease in total loans, aging of existing loans, an improvement in the economic forecast and, to a lesser extent, the completion of our annual CECL allowance model recalibration, which resulted in lower historical loss rates.

We complete our annual model recalibration process in the first quarter of each year.

Our annual review includes peer group analysis, updates to our probability of default and loss-given default models, including prepayment and curtailment assumptions, and qualitative factor scorecard ranges, as needed.

The changes resulting from the model recalibration reduced the ACL by approximately $0.5 million.

The changes resulting from the model recalibration reduced the ACL by approximately $0.5 million during each of the years ended December 31, 2025 and 2024.

Refer to Note 1.

Summary of Significant Accounting Policies – Allowance for Credit Losses for further discussion of our ACL accounting policy.

Refer to “ Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates ” for further discussion.

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Commercial and industrial

As discussed above, the balance in the ACL is principally influenced by the provision for credit losses and by net loan loss experience.

As discussed above, the balance in the ACL is principally influenced by the provision for (reversal of) credit losses and by net loan loss experience.

Additions to the allowance are charged to the provision for credit losses.

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Allowance for credit losses at beginning of period

ASU 2016-13 adoption impact (1)

Provision for credit losses on loans (2)

ASC 326 adoption impact (1)

Reversal of credit losses on loans (2)

Net recoveries (charge-offs)

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Nonaccrual loans to total loans - period end

On January 1, 2023, the Company adopted ASU 2016-13, which introduced a new model known as CECL.

Refer to Note 1.

Summary of Significant Accounting Policies for more information on the adoption of ASU 2016-13.

Amounts for the years ended December 31, 2024 and December 31, 2023 reflect the impact of adopting the CECL accounting standard and the Company’s transition from a probable incurred loss methodology to the current expected credit loss methodology.

Amounts for the year ended December 31, 2022 represent the allowance for loan losses under the probable incurred loss methodology.

For the year ended December 31, 2024, the $3.5 million negative provision for credit losses on the consolidated statement of income includes a $3.2 million negative provision for loan losses and a $0.3 million negative provision for unfunded loan commitments.

For the year ended December 31, 2023, the $2.0 million negative provision for credit losses on the consolidated statement of income includes a $2.0 million negative provision for loan losses and a $36,000 negative provision for unfunded loan commitments.

The ACL to total loans decreased to 1.26% at December 31, 2024 compared to 1.38% at December 31, 2023 while the ACL to nonaccrual loans ratio decreased to 302.8% at December 31, 2024 from 529.3% at December 31, 2023.

The decrease in the ACL to total loans at December 31, 2024 compared to December 31, 2023 is primarily due to the one-time, cumulative effect adjustment to increase the ACL by $5.9 million recorded upon adoption of ASU 2016-13 on January 1, 2023.

The decrease in the ACL to nonaccrual loans and the increase in nonaccrual loans to total loans are primarily due to the increase in nonaccrual loans.

On January 1, 2023, the Company adopted ASC 326, which introduced a new model known as CECL.

For the year ended December 31, 2025, the $3.4 million reversal of credit losses on the consolidated statement of income includes a $3.8 million reversal of loan losses and a $0.4 million provision for unfunded loan commitments.

For the year ended December 31, 2024, the $3.5 million reversal of credit losses on the consolidated statement of income includes a $3.2 million reversal of loan losses and a $0.3 million reversal of credit losses on unfunded loan commitments.

For the year ended December 31, 2023, the $2.0 million reversal of credit losses on the consolidated statement of income includes a $2.0 million reversal of loan losses and a $36,000 reversal of credit losses on unfunded loan commitments.

The ACL to total loans decreased to 1.21% at December 31, 2025 compared to 1.26% at December 31, 2024, and the ACL to nonaccrual loans ratio decreased to 284.6% at December 31, 2025 from 302.8% at December 31, 2024.

The decrease in the ACL to total loans at December 31, 2025 compared to December 31, 2024 was primarily due to an increase in total loans, aging of existing loans and an improvement in the economic forecast.

The decrease in the ACL to nonaccrual loans and the increase in nonaccrual loans to total loans was primarily due to the increase in nonaccrual loans.

Nonaccrual loans were $9.3 million, or 0.43% of total loans, at December 31, 2025, an increase of $0.4 million compared to $8.8 million, or 0.42% of total loans, at December 31, 2024.

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Net charge-offs include recoveries of amounts previously charged off.

Net charge-offs for the year ended December 31, 2024 were $0.6 million, or 0.03% of the average loan balance.

Net recoveries for the years ended December 31, 2023 and 2022 were $2.3 million and $0.6 million, respectively, equal to 0.11% and 0.03%, of the average loan balance for the respective periods.

Net recoveries for the year ended December 31, 2025 were $3.4 million, or 0.16% of the average loan balance.

Net charge-offs for the years ended December 31, 2024 were $0.6 million, equal to 0.03% of the average loan balance for the period.

Net recoveries for the year ended December 31, 2025 were primarily the result of a property insurance settlement related to a loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida.

Net charge-offs for the year ended December 31, 2024 were primarily attributable to a charge-off on one $0.7 million commercial and industrial loan relationship.

Net recoveries for the year ended December 31, 2023 were primarily attributable to recoveries on one loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida.

Net recoveries for the year ended December 31, 2022 were primarily driven by one $0.9 million recovery on a commercial and industrial loan relationship.

Management believes the ACL at December 31, 2024 is sufficient to provide adequate protection against losses in our loan portfolio.

Management believes the ACL at December 31, 2025 is sufficient to provide adequate protection against losses in our portfolio.

However, there can be no assurance that this allowance will prove to be adequate over time to cover ultimate losses in connection with our loans.

This allowance may prove to be inadequate due to higher inflation and interest rates than anticipated, other unanticipated adverse changes in the economy, unanticipated effects of the current geopolitical and domestic political conflicts, a public health crisis, or discrete events adversely affecting specific customers or industries.

Our results of operations and financial condition could be materially adversely affected to the extent that the allowance is insufficient to cover such changes or events.

This ACL may prove to be inadequate due to many factors, including those set forth under Cautionary Note Regarding Forward-Looking Statements at the beginning of this document and in Item 1A.

Risk Factors .

These factors could cause deterioration in credit quality that could lead us to increase our ACL in future periods.

Our results of operations and financial condition could be materially adversely affected to the extent that the ACL is insufficient to cover such changes or events.

Nonperforming assets .

Nonperforming assets consist of nonperforming loans and other real estate owned.

Nonperforming loans are those on which the accrual of interest has stopped or loans which are contractually 90 days past due on which interest continues to accrue.

Nonperforming loans are those on which the accrual of interest has stopped or loans that are contractually 90 days past due and accruing.

Loans are ordinarily placed on nonaccrual when a loan is specifically determined to be impaired or when principal and interest is delinquent for 90 days or more.

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A loan may be returned to accrual status when all the principal and interest amounts contractually due are brought current and future principal and interest amounts contractually due are reasonably assured, which is typically evidenced by a sustained period of repayment performance by the borrower.

Restructured loans.

Effective January 1, 2023, we adopted ASU 2022-02, “ Financial Instruments - Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures, ” which eliminated the accounting guidance for TDRs.

Prior to our adoption of ASU 2022-02, we accounted for a modification to the contractual terms of a loan that resulted in granting a concession to a borrower experiencing financial difficulties as a TDR.

Occasionally, we modify loans to borrowers in financial distress by providing certain concessions, such as principal forgiveness, term extension, an other-than-insignificant payment delay, an interest rate reduction, or a combination of such concessions.

Nonperforming loans were $9.3 million, or 0.43% of total loans, at December 31, 2025, an increase of $0.5 million compared to $8.8 million, or 0.42% of total loans, at December 31, 2024.

Loan Modifications to Borrowers Experiencing Financial Difficulty.

Occasionally, we modify loans to borrowers in financial distress by providing certain concessions, such as principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension, excluding covenant waivers and modification of contingent acceleration clauses, or a combination of such concessions.

When principal forgiveness is provided, the amount of forgiveness is charged off against the ACL.

Upon our determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or portion of the loan) is written off.

Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or portion of the loan) is written off.

During the years months ended December 31, 2025 and 2024 , we did not provide any modifications under these circumstances to borrowers experiencing financial difficulty.

Other Real Estate Owned .

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Real property no longer used in the Bank’s business operations is recorded at the lower of its net book value or fair value at the date of transfer to other real estate owned.

For the year ended December 31, 2025, additions to other real estate owned were $1.7 million, which were driven by transfers of commercial real estate and 1-4 family loans to other real estate owned.

Also during the year ended December 31, 2025, we recorded a $0.4 million of write-downs of other real estate owned related to a property that was part of the loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida, a former branch location based on a third-party appraisal, and a 1-4 family property.

For the year ended December 31, 2024, additions to other real estate owned were $2.0 million, which were primarily driven by transfers of 1-4 family loans to other real estate owned.

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Also during the year ended December 31, 2024, we recorded a $0.2 million write-down of other real estate owned primarily related to a former branch location based on a third-party appraisal.

For the year ended December 31, 2023, additions to other real estate owned were $3.9 million, which were primarily driven by transfers of properties related to one loan relationship that became impaired in the third quarter of 2021 as a result of Hurricane Ida.

During the year ended December 31, 2023, we closed one branch and one stand-alone ATM and transferred the associated land and buildings from bank premises and equipment to other real estate owned, as we did not intend to use the properties for banking operations.

Other real estate owned with a cost basis of $2.1 million and $1.5 million was sold during the years ended December 31, 2024 and 2023, respectively, resulting in a net gain of $0.7 million and a net loss of $0.1 million for the respective periods, compared to a cost basis of $5.8 million and a net gain of $9,000 for the year ended December 31, 2022.

Other real estate owned with a cost basis of $3.1 million and $2.1 million was sold during the years ended December 31, 2025 and 2024, respectively, resulting in a de minimis net gain and a net gain of $0.7 million for the respective periods.

The following table provides details of our other real estate owned as of the dates indicated (dollars in thousands).

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Other Real Estate Owned, for additional information.

Swap Contracts.

The Bank historically has entered into interest rate swap contracts, some of which have been forward starting, to manage exposure against the variability in the expected future cash flows (future interest payments) attributable to changes in the 1-month SOFR associated with the forecasted issuances of 1-month fixed rate debt arising from a rollover strategy.

An interest rate swap is an agreement whereby one party agrees to pay a fixed rate of interest on a notional principal amount in exchange for receiving a floating rate of interest on the same notional amount for a predetermined period of time, from a second party.

At December 31, 2025 and December 31, 2024, the Company had no current or forward starting interest rate swap agreements.

For additional information, see Note 12.

Derivative Financial Instruments.

The Company also enters into interest rate swap contracts that allow commercial loan customers to effectively convert a variable-rate commercial loan agreement to a fixed-rate commercial loan agreement.

Under these agreements, the Company enters into a variable-rate loan agreement with a customer in addition to an interest rate swap agreement, which serves to effectively swap the customer’s variable-rate loan into a fixed-rate loan.

The Company then enters into a corresponding swap agreement with a third party in order to economically hedge its exposure through the customer agreemen t.

The interest rate swaps with both the customers and third parties are not designated as hedges and changes in fair value are recognized through earnings.

As the interest rate swaps are structured to offset each other, changes to the underlying benchmark interest rates considered in the valuation of these instruments do not result in an impact to earnings;

however, there may be fair value adjustments related to credit quality variations between counterparties, which may impact earnings.

The Company did not recognize any net impact in other income resulting from fair value adjustments during the years ended December 31, 2025 , 2024 and 2023 .

At December 31, 2025 and 2024 , we had notional amounts of $180.8 million and $186.9 million, respectively, in interest rate swap contracts with customers and $180.8 million and $186.9 million, respectively, in offsetting interest rate swap contracts with other financial institutions.

At December 31, 2025 and 2024 , the fair values of the swap contracts consisted of gross assets of $11.7 million and $17.2 million, respectively, and gross liabilities of $11.7 million and $17.2 million, respectively, recorded in “Other assets” and “Accrued taxes and other liabilities,” respectively, in the accompanying consolidated balance sheets.

Impact of Inflation.

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After June 2022, the rate of inflation generally declined;

however, it began increasing in the later part of 2024 and has remained higher than the Federal Reserve’s target inflation rate of two percent.

however, it has remained higher than the Federal Reserve’s target inflation rate of two percent.

In response to higher inflation, the Federal Reserve increased the federal funds target rate during 2022 and 2023 as discussed in Certain Events That Affect Year-over-Year Comparability – Changing Inflation and Interest Rates , which generally increased the amount we earn on our interest-earning assets but also increased the amount we pay on our interest-bearing liabilities as discussed throughout this report.

We believe that higher rates resulting from inflation and related factors led to constrained loan demand during 2023 and 2024.

We believe that higher rates resulting from inflation and related factors led to constrained loan demand during 2023 and 2024 and to a lesser extent in 2025.

When the rate of inflation accelerates, there is an erosion of consumer and customer purchasing power.

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Inflation has also increased and may continue to increase the costs of goods and services we purchase, including the costs of salaries and benefits.

As noted above, the rate of inflation generally declined after June 2022.

In response, from September 2024 to December 2024, the Federal Reserve reduced the federal funds target rate by 100 basis points to 4.25% to 4.50%, where it remained as of March 12, 2025.

As noted above, we are monitoring changes and potential changes to U.S.

tariff and trade policies that could have an adverse impact on inflation and economic growth, at least in the near term, and which make forecasting difficult.

As also noted above, the rate of inflation generally declined after June 2022.

In response, from September 2024 to December 2024, the Federal Reserve reduced the federal funds target rate by 100 basis points to 4.25% to 4.50%.

During 2025, beginning in September 2025, the Federal Reserve reduced the federal funds target rate three times by 75 basis points on a cumulative basis to 3.50% to 3.75%, where it remained as of March 16, 2026.

The inflationary outlook in the U.S.

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Hence, the income simulation is the key indicator for earnings-at-risk since it expressly measures what the gap report attempts to estimate.

Short term interest rate risk management tactics are decided by the ALCO where risk exposures exist out into the 1 to 2-year horizon.

Short term interest rate risk management tactics are decided by the ALCO where risk exposures exist out into the one to two-year horizon.

Tactics are formulated and presented to the ALCO for discussion, modification, and/or approval.

Such tactics may include asset and liability acquisitions of appropriate maturities in the cash market, loan and deposit product/pricing strategy modification, and derivatives hedging activities to the extent such activity is authorized by the board of directors.

Since the impact of rate changes due to mismatched balance sheet positions in the short-term can quickly and materially affect the current year’s income statement, they require constant monitoring and management.

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Net Interest Income (1)

The percentage change in this column represents the projected net interest income for 12 months on a flat balance sheet in a stable interest rate environment versus the projected net interest income in the various rate scenarios.

The percentage change in this column represents the projected net interest income for 12 months on a static balance sheet in a stable interest rate environment versus the projected net interest income in the various rate scenarios.

The computation of the prospective effects of hypothetical interest rate changes requires numerous assumptions regarding characteristics of new business and the behavior of existing positions.

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Key assumptions include asset prepayment speeds, competitive factors, the relative price sensitivity of certain assets and liabilities, and the expected life of non-maturity deposits.

However, there are a number of factors that influence the effect of interest rate fluctuations on us which are difficult to measure and predict.

For example, a rapid drop in interest rates might cause our loans to repay at a more rapid pace and certain mortgage-related investments to prepay more quickly than projected.

However, there are a number of factors that influence the effect of interest rate fluctuations on us that are difficult to measure and predict.

For example, a rapid drop in interest rates might cause our loans to be repaid at a more rapid pace and certain mortgage-related investments to prepay more quickly than projected.

This could mitigate some of the benefits of falling rates as are expected when we are in a negatively-gapped position.

Conversely, a rapid rise in rates could give us an opportunity to increase our margins and slow the rate of repayment on our mortgage-related loans which would increase our returns, bu t can also increase our costs of interest-bearing liabilities faster than we expect and faster than an increase in our yield on interest-earning assets which would decrease our returns.

Conversely, a rapid rise in rates could give us an opportunity to increase our margins and stifle the rate of repayment on our mortgage-related loans, which would increase our returns;

however, we may need to increase the rates we offer to maintain or increase deposits, which would adversely impact our margins.

As a result, because these assumptions are inherently uncertain, actual results will differ from simulated results.

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Liquidity is a measure of the ability to fund loan commitments and meet deposit maturities and withdrawals in a timely and cost-effective way.

Cash flow requirements can be met by generating net income, attracting new deposits, converting assets to cash or borrowing funds.

Our primary sources of funds are from deposits, amortization of loans, loan prepayments and the maturities of loans, payments and maturities of investment securities and other investments and other cash flows provided from operations.

Uses of funds include deposits, debt service, lease commitments, unfunded commitments, and dividends.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit outflows, loan prepayments, and borrowings are greatly influenced by general interest rates, economic conditions, and the competitive environment in which we operate.

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Excess short-term liquidity is usually invested in overnight federal funds sold.

Our core deposits, which are deposit s excluding brokered demand deposits, brokered time deposits, t ime deposits greater than $250,000 and deposits of municipalities and other political entities, are our most stable source of liquidity to meet our cash flow needs due to the nature of the long-term relationships generally established with our customers.

Our core deposits, which are deposit s excluding brokered demand deposits, brokered time deposits, and t ime deposits greater than $250,000 are our most stable source of liquidity to meet our cash flow needs due to the nature of the long-term relationships generally established with our customers.

Maintaining the ability to acquire these funds as needed in a variety of markets, and within ALCO compliance targets, is essential to ensuring our liquidity.

At December 31, 2024 and 2023, 68% a nd 64% of our total assets, respectively, were funded by core deposits.

At December 31, 2025 and 2024, 68% of our total assets, were funded by core deposits.

Our investment portfolio is another alternative for meeting our cash flow requirements.

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Some securities are pledged to secure certain deposit types or short-term borrowings, such as FHLB advances, which impacts their liquidity.

At December 31, 2024, securities with a carrying value of $68.1 million were pledged to secure certain deposits, borrowings, and other liabilities compared to $296.2 million in pledged securities at December 31, 2023 with the decrease due primarily to our repayment of borrowings under the BTFP.

At December 31, 2025 , securities with a carrying value of $75.6 million were pledged to secure certain deposits, borrowings, and other liabilities compared to $68.1 million in pledged securities at December 31, 2024 .

Other sources available for meeting liquidity needs include advances from the FHLB, repurchase agreements and other borrowings.

FHLB advances may be used to meet day to day liquidity needs, particularly if the prevailing interest rate on an FHLB advance compares favorably to the rates that we would be required to pay to attract deposits.

At December 31, 2024, the balance of our outstanding advances with the FHLB was $67.2 million, consisting of $7.2 million short-term and $60.0 million long-term advances based on original maturity, an increase from $23.5 million, all long-term advances based on original maturity, at December 31, 2023.

At December 31, 2025, the balance of our outstanding advances with the FHLB was $116.0 million, consisting of $36.0 million short-term and $80.0 million long-term advances based on original maturity, an increase from $67.2 million, consisting of $7.2 million short-term and $60.0 million long-term advances based on or iginal maturity, at December 31, 2024 .

The total amount of remaining credit available to us from the FHLB at December 31, 2025 was approximately $651.5 million.

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There w ere no outstandi ng balances on our unsecured lines of credit at December 31, 2025 or 2024.

At December 31, 2024, we held $27.9 million of cash and cash equivalents, maintained approximately $733.7 million of available funding from FHLB advances and maintained $60.0 million in unsecured lines of credit with correspondent banks, totaling $821.6 million, which represents 111% of uninsured deposits of $737.6 million at December 31, 2024.

In addition, at December 31, 2024 and 2023 we had $17.0 million and $45.0 million, respectively, in aggregate principal amount of subordinated debt outstanding.

At December 31, 2025, w e held $41.5 million of cash and cash equivalents, maintained approximately $651.5 million of available funding from FHLB advances and maintained $60.0 million in unsecured lines of credit with correspondent banks, totaling $753.0 million, which represents 95% of uninsured deposits of $793.2 million at December 31, 2025.

In addition, at December 31, 2025 and 2024 we had $17.0 million in aggregate principal amount of subordinated debt outstanding.

During the year ended December 31, 2024, we redeemed $20.0 million in principal amount and repurchased $8.0 million in principal amount of our subordinated debt.

In April 2022, we completed a private placement of $20.0 million in aggregate principal amount of our 2032 Notes, and used the majority of the proceeds to redeem $18.6 million of our 2027 Notes in June 2022.

For additional information, see Note 10.

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In recent periods, the proportion of our deposits represented by noninterest-bearing deposits has declined primarily due to rising market interest rates as customers have migrated to higher yielding alternatives.

At December 31, 2025, we held $204.1 million of brokered time deposits and de minimis brokered demand deposits, as defined for federal regulatory purposes.

At December 31, 2024, we held $245.5 million of brokered time deposits and $47.3 million of brokered demand deposits, as defined for federal regulatory purposes.

At December 31, 2023, we held $269.1 million of brokered time deposits and no brokered demand deposits, as defined for federal regulatory purposes.

We utilize brokered time deposits to secure fixed cost funding and reduce short-term borrowings.

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We also hold QwickRate® deposits, included in our time deposit balances, which we obtain through a qualified network, to address liquidity needs when rates on such deposits compare favorably with deposit rates in our markets.

At December 31, 2024, we held $12.9 million o f QwickRate® deposits, a decrease com pared to $17.0 million at December 31, 2023.

At December 31, 2025, we hel d $11.3 million of QwickRate® deposits, a decrease com pared to $12.9 million at December 31, 2024.

The following table presents, by type, our funding sources, which consist of total average deposits and borrowed funds, as a percentage of total funds and the total cost of each funding source for the years ended December 31, 2025 and 2024.

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We may issue capital stock and debt securities from time to time to fund acquisitions and support our organic growth.

As noted elsewhere in this report, on July 1, 2025 we completed a private placement of Series A Preferred Stock.

We used the net proceeds from the offering to support the acquisition of WFB and for general corporate purposes, including organic growth and other potential acquisitions.

The Series A Preferred Stock is intended to qualify as additional Tier 1 capital.

For additional information see Discussion and Analysis of Financial Condition – Borrowings .

During 2024, we paid $4.0 million in dividends, compared to $3.8 million in 2023 and $3.6 million in 2022.

During 2025, we paid $4.2 million in dividends on our common stock, compared to $4.0 million in 2024 and $3.8 million in 2023.

During 2025, we paid $0.5 million in dividends on our Series A Preferred Stock, compared to none in 2024 and 2023.

Our Board has authorized a share repurchase program and during 2025 we paid $2.3 million to repurchase our shares, compared to $0.3 million in 2024 and $3.0 million in 2023 .

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In order to be well-capitalized, the Bank cannot be subject to any written agreement or order requiring it to maintain a specific level of capital for any capital measure.

The Company and the Bank each were in compliance with all regulatory capital requirements as of December 31, 2024, 2023 and 2022.

The Company and the Bank were each in compliance with all regulatory capital requirements as of December 31, 2025, 2024 and 2023.

The Bank also was considered “well-capitalized” under the OCC’s prompt corrective action regulations as of these dates.

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Total capital to risk-weighted assets

Off-Balance Sheet Transactions and Lease Obligations

Swap Contracts.

At December 31, 2024 and December 31, 2023, the Company had no current or forward starting interest rate swap agreements.

For additional information, see Note 12.

Derivative Financial Instruments.

During the year ended December 31, 2022, we voluntarily terminated our remaining interest rate swap agreements with a total notional amount of $115.0 million in response to market conditions.

For the year ended December 31, 2022, an unrealized gain of $6.4 million, net of tax expense of $1.7 million, was reclassified from “Accumulated other comprehensive loss” and recorded as “Swap termination fee income” in noninterest income in the accompanying consolidated statement of income.

For the year ended December 31, 2022, a gain of $4.3 million, net of a $1.2 million tax expense, was recognized in “Other comprehensive loss” in the accompanying consolidated statement of comprehensive income (loss) for the change in fair value of the interest rate swap contracts.

The Company then enters into a corresponding swap agreement with a third party in order to economically hedge its exposure through the customer agreemen t.

The interest rate swaps with both the customers and third parties are not designated as hedges under FASB ASC Topic 815, “ Derivatives and Hedging, ” and are marked to market through earnings.

however, there may be fair value adjustments related to credit quality variations between counterparties, which may impact earnings as required by FASB ASC Topic 820, “ Fair Value Measurement.

” The Company did not recognize any gains or losses in other income resulting from fair value adjustments during the years ended December 31, 2024 , 2023 , and 2022 .

At December 31, 2024 and 2023 , we had notional amounts of $186.9 million and $174.9 million, respectively, in interest rate swap contracts with customers and $186.9 million and $174.9 million, respectively, in offsetting interest rate swap contracts with other financial institutions.

At December 31, 2024 and 2023 , the fair values of the swap contracts consisted of gross assets of $17.2 million and $17.3 million, respectively, and gross liabilities of $17.2 million and $17.3 million, respectively, recorded in “Other assets” and “Accrued taxes and other liabilities,” respectively, in the accompanying consolidated balance sheets.

Off-Balance Sheet Transactions

Unfunded Commitments.

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The credit risk associated with these commitments is evaluated in a manner similar to the ACL.

The reserve for unfunded loan commitments is included in “Accrued taxes and other liabilities” in the accompanying consolidated balance sheets.

At December 31, 2024 and 2023, the reserve for unfunded loan commitments was $42,000 and $0.3 million, respectively.

The ACL on unfunded loan commitments is included in “Accrued taxes and other liabilities” in the accompanying consolidated balance sheets.

At December 31, 2025 and 2024, the ACL on unfunded loan commitments was $0.4 million and $42,000, respectively.

Loan commitments and standby letters of credit do not necessarily represent future cash requirements, in that while the customer typically has the ability to draw upon these commitments at any time, these commitments often expire without being drawn upon in full or at all.

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Additionally, at December 31, 2025, the Company had unfunded commitments of $1.5 million for its investment in SBIC qualified funds.

For each of the years ended December 31, 2024 and 2023, we engaged in no off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations, or cash flows currently or in the future.

For each of the years ended December 31, 2025 and 2024, we did not engage in any off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations, or cash flows currently or in the future.

Lease Obligations

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Over five years

On January 27, 2023, we completed the previously announced sale of certain assets, deposits and other liabilities associated with the Alice and Victoria, Texas branch locations.

Upon the completion of the sale, we recorded $0.3 million of occupancy expense to terminate the remaining contractually obligated lease payments due under non-cancelable operating leases.

Critical Accounting Estimates

Actual results may differ from these estimates under different assumptions or conditions.

For more detailed information about our accounting policies, please refer to

Summary of Significant Accounting Policies.

We believe that the judgments, estimates and assumptions that we use in the preparation of our consolidated financial statements are appropriate.

Allowance for Credit Losses

The ACL is sensitive to external factors including the general health of the economy, as evidenced by changes in interest rates, gross domestic product, unemployment rates, and changes in real estate demand and values.

Management considers these variables and all other available information when establishing the final level of the allowance.

These variables and others have the ability to result in actual loan losses that differ from the originally estimated amounts.

Changing economic conditions have introduced enhanced estimation uncertainty in the forecasts used to estimate expected credit loss.

Our credit loss models were built using historical data that may not correlate to existing economic conditions.

Such forecasted information is inherently uncertain and, therefore, actual results may differ significantly from management’s estimates.

Such factors include, but are not limited to, changes in current and expected future economic conditions, changes in the nature and volume of the portfolio, changes in levels of concentrations, changes in the volume and severity of past due loans, changes in lending policies and personnel, changes in the competitive and regulatory environment of the banking industry and changes in other external factors.

While quantitative data for these factors is used where available, there is

significant judgment applied in these processes.

For credits that are individually evaluated, a specific allowance is calculated as the shortfall between the credit’s value and the Bank’s exposure.

The loan’s value is measured by either the

fair value of the collateral of the loan based on third-party appraisals if it is collateral dependent, or based on a discounted cash flow methodology.

Collatera l on impaired loans may include, but is not limited to,

commercial and residential real estate and accounts receivable.

Values for impaired credits are highly subjective and based on information available at the time of valuation and the current resolution strategy.

These values are difficult to assess and have heightened uncertainty resulting from current market conditions.

Actual results could differ from these estimates.

Please refer to

Loans and Allowance for Credit Losses, and

Summary of Significant Accounting Policies – Allowance for Credit Losses for additional discussion.

Loan Acquisition Accounting .

Financial assets acquired in business combinations are initially recorded at fair value, which includes an estimate of credit losses expected to be realized over the remaining lives of the loans.

The fa ir value of acquired loans is determined using a discounted cash flow model based on assumptions regarding the amount and timing of principal and interest prepayments, estimated payments, estimated default rates, estimated loss severity in the event of defaults, and current market rates.

Purchased financial assets are accounted for based upon a determination of whether they were purchased as PCD loans, loans with more-than insignificant amount of credit deterioration, or non-PCD loans, loans with an insignificant amount of credit deterioration.

For PCD loans, the CECL estimate is recognized through the ACL with an offset to the amortized cost basis of the PCD loan at the date of acquisition.

Subsequent changes in the ACL for PCD assets are recognized through a provision for credit losses on loans.

Please refer to Note 1.

Summary of Significant Accounting Policies – Acquisition Accounting

for additional discussion.

Quantitative and Qualitative Disclosures about Market Risk

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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