This discussion and analysis discusses information contained in our financial statements and other relevant statistical data, and is intended to enhance your understanding of our financial condition and results of operations for the three and six months ended June 30, 2026 and 2025. You should read the information in this section in conjunction with the business and financial information regarding FB Bancorp, Inc. provided in this document, including the financial statements, which appear elsewhere in this document. Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of the results for the year ending December 31, 2026 or any future period.
Forward-Looking Statements
Certain statements contained in this Quarterly Report on Form 10-Q, including those under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, that are not historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements with respect to the Company’s beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, and intentions regarding future events, performance, financial condition, results of operations and business strategies, and involve known and unknown risks, uncertainties and other factors, which may be beyond the Company’s control, and which may cause the actual results, performance or achievements of the Company or its wholly-owned banking subsidiary, Fidelity Bank, to be materially different from those set forth in the forward-looking statements. These forward-looking statements, which are based on certain current assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of words or phrases such as “may,” “will,” “should,” “assume,” “support,” “indicate,” “contemplate,” “further,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “point to,” “believe,” “intend,” “outlook,” “anticipate,” “expect,” “strategy,” “forecasts,” “target” and similar words or expressions.
Forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict or are beyond our control. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those set forth in Item 1A of the Company’s Annual Report on Form 10-K, as supplemented by its Quarterly Reports on Form 10-Q, and may include, but are not limited to the following factors:
•general economic and business conditions nationally and in our market areas, including conditions affecting employment levels, borrower creditworthiness, interest rates, inflation, tariffs or trade policy changes, slowdowns in economic growth and the threat of recession, property values and customer confidence and spending, as well as the financial stress on borrowers and changes to customer and client behavior and credit risk as a result of the foregoing;
•changes in the interest rate environment and the impact on the level and composition of deposits, loan demand, liquidity, and the values of loan collateral and securities;
•inflation and unemployment;
•the effects of competition (including the inability to grow, or attrition of, deposits, customers and employees) from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, non-bank financial technology providers, securities brokerage firms, insurance companies, private credit funds, money market and other mutual funds and other financial institutions;
•real estate values and liquidity in our primary market areas, the financial health of our borrowers, and weakness in the real estate market;
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•fiscal and monetary policies of the U.S. Government, including the interest rate policies of the Federal Reserve;
•changes in accounting policies and practices that may be adopted by the regulatory agencies and the accounting standards setters;
•changes in government regulations affecting financial institutions, including regulatory fees, capital requirements, and changes in the scope and cost of FDIC insurance;
•potential goodwill impairment;
•inaccuracies or other failures from the use of models, including the failure of assumptions and estimates (including with respect to our financial statements), as well as differences in, and changes to, economic, market and credit conditions;
•acquisitions and the integration of acquired businesses;
•credit risk management, asset-liability management, and the sufficiency of our allowance for credit losses;
•the financial and securities markets, including significant turbulence or disruption in the capital or financial markets;
•changes in federal tax law or policy;
•our ability to successfully execute a business strategy to achieve profitable growth;
•the failure to identify, attract and retain key personnel and other employees and to engage in adequate succession planning;
•the availability of and costs associated with sources of liquidity, including our ability to comply with applicable capital and liquidity requirements;
•our ability to identify and address cybersecurity risks, fraud and systems errors, and disruptions, security breaches or other failures in our information technology systems;
•the effects of war or other conflicts, civil unrest, acts of terrorism, natural disasters, health emergencies, or climate-related events; and
•other factors and risks described under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein and in any of the Company’s subsequent reports filed with the SEC and available on its website at www.sec.gov.
The foregoing factors should not be construed as exhaustive. The Company cautions readers not to place undue reliance on any such forward-looking statements which represent our beliefs, assumptions and estimates only as of the date they are made. The Company advises readers that the factors listed above could affect the Company’s future results or financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.
Except as required by applicable law or regulation, we do not undertake, and we specifically disclaim any obligation, to update or revise any forward-looking statements to reflect new information, events or circumstances, changes in assumptions, to reflect the occurrence of anticipated or unanticipated events, or otherwise after the date of the statements.
All written or oral forward-looking statements attributable to the Company are expressly qualified in their entirety by this cautionary notice. Additional factors that could cause actual results to differ materially can be found in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, or in other periodic reports that we file with the SEC.
Overview
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FB Bancorp, Inc. conducts its operations primarily through Fidelity Bank. Fidelity Bank’s business consists primarily of taking deposits from the general public and investing those deposits, together with funds generated from operations, in one- to four-family residential real estate loans, commercial real estate loans, commercial loans, home equity loans and lines of credit, consumer loans and construction loans. We also invest in securities, which have historically consisted primarily of mortgage-backed securities and obligations issued by U.S. government sponsored enterprises. We offer a variety of deposit accounts including negotiable orders of withdrawal, which we refer to as “NOW” accounts throughout this document, savings accounts, money market accounts and certificate of deposit accounts. Fidelity Bank is subject to comprehensive regulation and examination by the Louisiana Office of Financial Institutions and the FDIC. FB Bancorp, Inc. is subject to comprehensive regulation and examination by the Federal Reserve Board.
Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets and the interest we pay on our interest-bearing liabilities. Our results of operations also are affected by our provisions for credit losses, non-interest income and non-interest expense. Non-interest income currently consists primarily of service charges on deposit accounts, gain on the resale of mortgage loans and mortgage servicing rights and other service charges and fees. Non-interest expense currently consists primarily of expenses related to salaries and employee benefits, occupancy and equipment, data processing, advertising and marketing, amortization of mortgage servicing rights, and other expenses.
Our results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.
Business Strategy
Our principal objective is to build long-term value for our stockholders by operating a profitable community-oriented financial institution dedicated to meeting the banking needs of our customers by emphasizing personalized and efficient customer service. Highlights of our current business strategy include:
• Continuing to seek to grow and diversify our loan portfolio prudently by increasing originations of commercial real estate and commercial loans in an effort to increase the overall loan portfolio yield. We intend to continue to prudently increase our originations of commercial real estate and commercial loans in order to diversify our loan portfolio and increase yield. At June 30, 2026, commercial real estate loans amounted to $273.1 million, or 36.57% of total loans and other commercial loans amounted to $96.3 million, or 12.90%, of total loans.
• Maintaining our strong asset quality through conservative loan underwriting. We intend to maintain strong asset quality through what we believe are our conservative underwriting standards and credit monitoring processes. At June 30, 2026, our non-performing loans totaled $13.8 million, or 1.85% of total loans.
• Continuing to attract and retain customers in our current market areas and growing our low-cost “core” deposit base while expanding our offices and banking activity in the Baton Rouge and Lafayette, Louisiana markets. We consider our core deposits to include NOW accounts, statement savings accounts, money market accounts, and other savings deposit accounts. We will continue our efforts to increase our core deposits to provide a stable source of funds to support loan growth at costs consistent with improving our interest rate spread and net interest margin. Core deposits totaled $455.6 million, or 56.18% of total deposits, at June 30, 2026. We have expanded our deposit and lending activities into the Baton Rouge and Lafayette, Louisiana markets over the last several years, including the hiring of Market Area Presidents and lending teams and the establishment of a branch office and we anticipate that these efforts will continue.
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• Continuing to implement and invest in both our online banking infrastructure and our fully digital bank (“Andi”) in order to meet current customer needs as well as expand our customer base in existing and new markets. We are expanding our online banking infrastructure for consumer and commercial customers to meet existing and prospective customer expectations with digital deposit products, lending products and financial wellness products. We have also established a fully digital-only bank as a division of Fidelity Bank.
• Remaining a community-oriented institution relying on high quality service to maintain and build a loyal local customer base. We have been operating continuously in southern Louisiana since 1908. Through the goodwill we have developed over years of providing timely, efficient banking services, we believe that we have been able to attract a loyal base of local retail customers on which we hope to continue to build our banking business.
• Continuing to grow through organic growth while also considering opportunistic acquisitions or branching. We intend to grow our assets organically on a managed basis, and the capital we raised in the stock offering enabled us to increase our lending and investment capacity. In addition to organic growth, we may also consider expansion opportunities in our market areas or in contiguous markets that we believe would enhance both our franchise value and stockholder returns. These opportunities may include acquiring other financial institutions and/or establishing loan production offices, establishing new, or de novo, branch offices and/or acquiring branch offices, funded with capital raised through the Company’s stock offering in the third quarter of 2024.
We expect these strategies to continue guiding the deployment of the net proceeds from the stock offering and our overall business operations. We intend to pursue these strategies on a go-forward basis, subject to changes in market conditions, regulatory requirements, and other factors that may affect our business and financial performance.
Critical Accounting Policies and Use of Critical Accounting Estimates
The discussion and analysis of the financial condition and results of operations are based on our financial statements, which are prepared in conformity with GAAP. The preparation of these financial statements requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. We consider the accounting policies discussed below to be critical accounting policies. The estimates and assumptions that we use are based on historical experience and various other factors and are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations. Facts and circumstances that could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy and changes in the financial condition of borrowers.
The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company,” we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We intend to take advantage of the benefits of this extended transition period. Accordingly, our financial statements may not be comparable to companies that comply with such new or revised accounting standards.
The following represent our critical accounting policies:
Provision for Credit Losses. On January 1, 2023, Fidelity Bank adopted ASU 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended, which replaced the incurred loss methodology with an expected loss methodology that is referred
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to as CECL throughout this document. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized costs, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842 on leases. In addition, ASC 326 made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write down on available-for-sale debt securities that management does not intend to sell or believe that it is not, more than likely, required to sell.
Upon adoption of this new credit loss measurement standard, Fidelity Bank did not recognize a material change to its financial position or results of operations. No retroactive cumulative effect of accounting changes was recognized in this adoption.
Deferred Tax Assets. Income taxes are accounted for under the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
Deferred tax assets are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50%. Deferred tax assets are reduced by a valuation allowance, if based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized.
Fair Value Measurements. Fair values of financial instruments are estimated using relevant market information and other assumptions. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates. The fair value estimates of existing on- and off-balance sheet financial instruments do not include the value of anticipated future business or the value of assets and liabilities not considered financial instruments.
The following tables set forth selected historical financial and other data of Fidelity Bank for the periods and at the dates indicated. The information at June 30, 2026, and for the three and six months ended June 30, 2026 and 2025, is not audited but, in the opinion of management, includes all adjustments necessary for a fair presentation. These adjustments are standard and recurring. The results of operations for the six months ended June 30, 2026 are not necessarily indicative of the results of operations that may be expected or realized for the entire year. The information at December 31, 2025 is derived in part from, and should be read together with, the audited financial statements and related notes beginning at page F-1 of the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 26, 2026.
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June 30, 2026 December 31, 2025
(In thousands)
Selected Financial Condition Data:
Total assets $ 1,225,644 $ 1,255,406
Total cash and cash equivalents 45,209 60,269
Securities available for sale, at fair value 338,035 326,346
Loans held for investment, net 738,709 737,667
Total deposits 810,975 841,403
Federal Home Loan Bank advances 111,186 78,257
Total equity 283,816 314,450
For the three months ended June 30, For the six months ended June 30,
2026 2025 2026 2025
(In thousands)
Selected Operating Data For Continuing Operations:
Total interest and dividend income $ 16,699 $ 16,451 $ 33,102 $ 32,415
Total interest expense 4,798 4,349 9,358 8,466
Net interest income 11,901 12,102 23,744 23,949
Provision for credit losses 475 453 965 838
Net interest income after provision for credit losses 11,426 11,649 22,779 23,111
Total non-interest income 2,238 954 3,349 2,009
Total non-interest expense 13,096 11,316 24,947 22,114
Net income before income taxes 568 1,287 1,181 3,006
Income tax expense (129 ) 258 (10 ) 607
Net income from continuing operations $ 697 $ 1,029 $ 1,191 $ 2,399
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For the three months ended June 30, For the six months ended June 30,
2026 2025 2026 2025
Performance Ratios:
Net income from continuing operations (in thousands) $ 697 $ 1,029 $ 1,191 $ 2,399
Net loss from discontinued operations (in thousands) $ (767 ) $ (150 ) $ (1,142 ) $ (815 )
Net income (loss) (in thousands) $ (70 ) $ 879 $ 49 $ 1,584
Return on average assets from continuing operations (1) 0.06 % 0.08 % 0.10 % 0.19 %
Return on average equity from continuing operations(2) 0.24 % 0.31 % 0.41 % 0.73 %
Earnings per share from continuing operations - basic and diluted $ 0.05 $ 0.06 $ 0.08 $ 0.13
Net interest margin (3) 4.20 % 4.65 % 4.34 % 4.63 %
Non-interest income to average assets from continuing operations 0.15 % 0.08 % 0.27 % 0.16 %
Non-interest expense to average assets from continuing operations 1.05 % 0.91 % 2.00 % 1.79 %
Efficiency ratio from continuing operations(4) 92.62 % 86.68 % 92.08 % 85.19 %
Average interest-earning assets to average interest-bearing liabilities 142.90 % 151.61 % 144.77 % 151.29 %
Capital Ratios:
Total risk-based capital 29.96 % 30.12 % 29.96 % 30.12 %
Tier 1 risk-based capital 29.16 % 29.40 % 29.16 % 29.40 %
Common equity Tier 1 risk-based capital 29.16 % 29.40 % 29.16 % 29.40 %
Tier 1 leverage capital 20.32 % 20.26 % 20.32 % 20.26 %
Average equity to average assets 22.93 % 26.65 % 23.53 % 26.67 %
Common stock book value per share $ 17.66 $ 16.74 $ 17.66 $ 16.74
Common stock book value per share (net of unearned ESOP shares) $ 19.39 $ 18.12 $ 19.39 $ 18.12
Asset Quality Ratios:
Allowance for credit losses to total loans (5) 0.91 % 0.80 % 0.91 % 0.80 %
Allowance for credit losses to non-performing loans 49.43 % 47.21 % 49.43 % 47.21 %
Net charge-offs to average outstanding loans 0.07 % 0.06 % 0.13 % 0.13 %
Non-performing loans to total loans 1.85 % 1.68 % 1.85 % 1.68 %
Non-performing loans to total assets 1.12 % 1.05 % 1.12 % 1.05 %
Total non-performing assets to total assets (6) 1.37 % 1.18 % 1.37 % 1.18 %
Other:
Number of offices 19 18 19 18
Number of full-time equivalent employees 210 324 210 324
(1) Represents net income (loss) from continuing operations divided by average total assets.
(2) Represents net income (loss) from continuing operations divided by average equity.
(3) Represents net interest income divided by average interest-earning assets. Includes loans held for sale.
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(4) Represents non-interest expense divided by the sum of net interest income and non-interest income.
(5) Total loans includes only loans held for investment.
(6) Non-performing assets includes other real estate owned.
Comparison of Financial Condition at June 30, 2026 and December 31, 2025
Total Assets. Total assets were $1.23 billion at June 30, 2026, compared to $1.26 billion at December 31, 2025. The largest fluctuation between these periods came from an increase in securities available for sale of $11.7 million, or 3.58%. This increase was due to favorable investment yields in the current period, predominantly in previously issued government backed mortgage securities. During the six months ended June 30, 2026, the Company purchased approximately $44.6 million in securities with favorable yields. The Company also sold $10.0 million in securities for a gain of $162 thousand.
Cash and Cash Equivalents. Cash levels decreased by $15.1 million, or 24.99%, to $45.2 million at June 30, 2026 from $60.3 million at December 31, 2025, as such assets were used in part to fund loans, purchase investment securities, and repurchase Company stock.
Available-for-Sale Investment Securities. Investment securities increased $11.7 million, or 3.58%, to $338.0 million at June 30, 2026, from $326.3 million at December 31, 2025. Aggregate securities purchased totaled $44.6 million and aggregate securities maturing, called, or sold totaled $29.5 million during the six months ended June 30, 2026. This increase was due to favorable investment yields in the current period.
Loans Held for Investment, Net. Loans held for investment, net, increased by $1.0 million, or 0.14%, to $738.7 million at June 30, 2026 from $737.7 million at December 31, 2025. During the six months ended June 30, 2026, net loan originations (net of payoffs) totaled $4.0 million. The increase in net loans held for investment, compared to December 31, 2025, came primarily from the following: commercial real estate loans increased $24.3 million, or 9.77%, other consumer loans increased $6.5 million, or 28.62%, primarily due to purchase of a seasoned pool of consumer loans, and other commercial loans increased $4.1 million, or 4.49%, offset by total residential mortgage loans decreasing $33.7 million, or 12.54%.
Increases in loan balances reflect our strategy to grow the commercial and commercial real estate loan portfolios. We have expanded our lending activities into the Baton Rouge and Lafayette, Louisiana markets, including adding lending teams in these markets. In June 2026, the Company purchased approximately $9.9 million in consumer loans that qualified for the gross-up method for acquired loans. The Company added $488 thousand to the allowance for credit losses related to these acquired consumer loans.
Deposits. Deposits decreased by $30.4 million, or 3.62%, to $811.0 million at June 30, 2026 from $841.4 million at December 31, 2025. Core deposits (defined as all deposits other than certificates of deposit) decreased $27.2 million, or 5.64%, to $455.6 million at June 30, 2026 from $482.9 million at December 31, 2025. Certificates of deposit decreased $3.2 million, or 0.89%, to $355.4 million at June 30, 2026 from $358.5 million at December 31, 2025. Our certificates of deposit included $85.8 million in wholesale and brokered certificates of deposit at June 30, 2026 and $89.6 million at December 31, 2025. Such deposits generally tend to be at higher yields than other types of deposits and generally do not represent direct customer relationships, but were utilized, in part, to fund loan and investment growth.
Borrowings. Borrowings increased $32.9 million, or 42.08%, from $78.3 million at December 31, 2025 to $111.2 million at June 30, 2026. Borrowings have increased over the last two quarters primarily to fund investment security purchases, offset the decrease in deposits, and fund $27.6 million in Company stock repurchases. Company borrowings consist of advances on a line of credit with the Federal Home Loan Bank of Dallas. At June 30, 2026, approximately $292 million was available on this borrowing line.
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Total Equity. Total equity decreased $30.6 million, or 9.74%, to $283.8 million at June 30, 2026 from $314.5 million at December 31, 2025. This decrease was primarily due to $27.6 million in Company common stock repurchases and a $4.5 million increase in accumulated other comprehensive loss, partially offset by net income.
Average Balances Sheets. The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. Average yields include the effect of net deferred fee income, discounts and premiums that are amortized or accreted to interest income or interest expense. Average balances are calculated using daily average balances.
For the six months ended June 30,
2026 2025
Average Outstanding Balance Interest Average Yield/Rate Average Outstanding Balance Interest Average Yield/Rate
(Dollars in thousands)
Interest-earning assets:
Cash and cash equivalents $ 54,535 $ 907 3.35 % $ 86,964 $ 1,804 4.18 %
Securities 336,876 6,852 4.10 % 254,274 4,688 3.72 %
Loans held for investment 740,409 25,827 7.03 % 768,339 27,168 7.13 %
Loans held for sale 13,466 393 5.88 % 22,909 796 7.00 %
Total earning assets (4) 1,145,286 33,979 5.98 % 1,132,486 34,456 6.14 %
Non-interest-earning assets:
Cash and cash equivalents 6,838 6,957
Fixed Assets 56,591 56,411
Allowance for credit losses (6,266 ) (6,213 )
Other 45,486 45,722
Total non-interest-earning assets 102,649 102,877
Total Assets $ 1,247,935 $ 1,235,363
Interest-bearing liabilities:
Interest-bearing demand deposits $ 113,765 $ 92 0.16 % $ 107,908 $ 100 0.19 %
Interest-bearing savings and money market deposits 221,417 1,390 1.27 % 237,038 1,305 1.11 %
Certificates of deposit 359,286 6,045 3.39 % 338,546 5,721 3.41 %
Total interest-bearing deposits 694,468 7,527 2.19 % 683,492 7,126 2.10 %
Interest-bearing borrowings 96,662 1,831 3.82 % 65,045 1,340 4.16 %
Total interest-bearing liabilities 791,130 9,358 2.39 % 748,537 8,466 2.28 %
Non-interest:
Demand deposits 148,816 144,865
Other liabilities 14,325 12,471
Total non-interest liabilities 163,141 157,336
Total Equity 293,664 329,490
Total liabilities and equity $ 1,247,935 $ 1,235,363
Net interest income $ 24,621 $ 25,990
Net interest-earning assets (1) $ 354,156 $ 383,949
Net interest rate spread (2) 3.59 % 3.86 %
Net yield on interest-earning assets (3) 4.34 % 4.63 %
Average of interest-earning assets to interest-bearing liabilities 144.77 % 151.29 %
Average equity to assets 23.53 % 26.67 %
(1) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(2) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
(3) Represents net interest income divided by average interest-earning assets.
(4) $877 thousand and $2.0 million of interest on earning assets represents origination fees, discount fees and interest income from discontinued operations for 2026 and 2025, respectively.
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For the three months ended June 30,
2026 2025
Average Outstanding Balance Interest Average Yield/Rate Average Outstanding Balance Interest Average Yield/Rate
(Dollars in thousands)
Interest-earning assets:
Cash and cash equivalents $ 51,117 $ 425 3.33 % $ 78,056 $ 807 4.15 %
Securities 343,712 3,551 4.14 % 259,257 2,391 3.70 %
Loans held for investment 744,290 12,762 6.88 % 775,647 13,945 7.21 %
Loans held for sale 2,741 15 2.18 % 24,337 395 6.51 %
Total earning assets (4) 1,141,860 16,753 5.88 % 1,137,297 17,538 6.19 %
Non-interest-earning assets:
Cash and cash equivalents 6,247 7,602
Fixed Assets 55,995 57,391
Allowance for credit losses (6,268 ) (6,171 )
Other 46,575 44,834
Total non-interest-earning assets 102,549 103,656
Total Assets $ 1,244,409 $ 1,240,953
Interest-bearing liabilities:
Interest-bearing demand deposits $ 111,086 $ 31 0.11 % $ 108,369 $ 57 0.21 %
Interest-bearing savings and money market deposits 217,112 645 1.19 % 230,455 616 1.07 %
Certificates of deposit 359,962 3,059 3.41 % 352,656 3,060 3.48 %
Total interest-bearing deposits 688,160 3,735 2.18 % 691,480 3,733 2.17 %
Interest-bearing borrowings 110,928 1,063 3.84 % 58,676 616 4.21 %
Total interest-bearing liabilities 799,088 4,798 2.41 % 750,156 4,349 2.33 %
Non-interest:
Demand deposits 146,408 145,277
Other liabilities 13,559 14,834
Total non-interest liabilities 159,967 160,111
Total Equity 285,354 330,686
Total liabilities and equity $ 1,244,409 $ 1,240,953
Net interest income $ 11,955 $ 13,189
Net interest-earning assets (1) $ 342,772 $ 387,141
Net interest rate spread (2) 3.48 % 3.86 %
Net yield on interest-earning assets (3) 4.20 % 4.65 %
Average of interest-earning assets to interest-bearing liabilities 142.90 % 151.61 %
Average equity to assets 22.93 % 26.65 %
(1) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(2) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
(3) Represents net interest income divided by average interest-earning assets.
(4) $54 thousand and $1.1 million of interest on earning assets represents origination fees, discount fees and interest income from discontinued operations for 2026 and 2025, respectively.
Rate/Volume Analysis
The following tables present the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. There were no out-of-period items or adjustments required to be excluded from the table below.
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Six months ended June 30, 2026 vs. Six months ended June 30, 2025
Increase (Decrease) Due to Total Increase (Decrease)
Volume Rate
(In thousands)
Interest-earning assets:
Cash and cash equivalents $ (673 ) $ (224 ) $ (897 )
Securities 1,523 641 2,164
Loans (986 ) (355 ) (1,341 )
Loans held for sale (328 ) (75 ) (403 )
Total interest-earning assets (464 ) (13 ) (477 )
Interest-bearing liabilities:
Interest-bearing demand deposits 6 (14 ) (8 )
Interest-bearing savings and money market deposits (86 ) 171 85
Certificates of deposit 350 (26 ) 324
Total interest-bearing deposits 270 131 401
Interest-bearing borrowings 651 (160 ) 491
Total interest-bearing liabilities 921 (29 ) 892
Net interest income $ (1,385 ) $ 16 $ (1,369 )
Three months ended June 30, 2026 vs. Three months ended June 30, 2025
Increase (Decrease) Due to Total Increase (Decrease)
Volume Rate
(In thousands)
Interest-earning assets:
Cash and cash equivalents $ (279 ) $ (103 ) $ (382 )
Securities 781 379 1,160
Loans (562 ) (621 ) (1,183 )
Loans held for sale (351 ) (29 ) (380 )
Total interest-earning assets (411 ) (374 ) (785 )
Interest-bearing liabilities:
Interest-bearing demand deposits 2 (28 ) (26 )
Interest-bearing savings and money market deposits (36 ) 65 29
Certificates of deposit 63 (64 ) (1 )
Total interest-bearing deposits 29 (27 ) 2
Interest-bearing borrowings 549 (102 ) 447
Total interest-bearing liabilities 578 (129 ) 449
Net interest income $ (989 ) $ (245 ) $ (1,234 )
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Comparison of Operating Results From Continuing Operations for the Six Months Ended June 30, 2026 and 2025
General. Net income for the six months ended June 30, 2026 from continuing operations was $1.2 million, compared to net income of $2.4 million for the six months ended June 30, 2025. The decrease in net income was primarily the result of a $2.8 million, or 12.81%, increase in total non-interest expenses partially offset by a $1.3 million, or 66.70%, increase in total non-interest income.
Interest Income. Interest income increased $687 thousand, or 2.12%, to $33.1 million for the six months ended June 30, 2026, compared to $32.4 million for the six months ended June 30, 2025. This increase was primarily attributable to a $2.2 million, or 46.16%, increase in interest and dividends on investment securities, partially offset by a decrease of $897 thousand, or 49.72%, from interest on deposits in other banks and $580 thousand, or 2.24%, decrease in interest and fees on loans.
Interest and fees on loans decreased $580 thousand, or 2.24%, for the six months ended June 30, 2026 compared to the same period in 2025. The average balance of loans held for investment during the six months ended June 30, 2026 decreased by $27.9 million, or 3.64%, while the average yield on these loans decreased to 7.03% for the six months ended June 30, 2026 from 7.13% for the six months ended June 30, 2025. The decrease in average yield on loans was due to the decreasing interest rate environment for variable interest rate loans tied to Prime. As a result of the Federal Reserve's monetary policy actions between June 30, 2025 and June 30, 2026, the prime rate declined, placing downward pressure on yields earned on the Company's variable-rate loan portfolio.
The average balance of investment securities increased by $82.6 million, or 32.49%, to $336.9 million for the six months ended June 30, 2026 from $254.3 million for the six months ended June 30, 2025, while the average yield on investment securities increased to 4.10% for the six months ended June 30, 2026 compared to 3.72% for the six months ended June 30, 2025. The Company primarily purchased government issued mortgage backed securities with expected yields above 5%.
Interest Expense. Total interest expense increased $892 thousand, or 10.54%, to $9.4 million for the six months ended June 30, 2026, from $8.5 million for the six months ended June 30, 2025. The increase was due to an increase of $491 thousand, or 36.64%, in interest on borrowed funds and $401 thousand, or 5.63%, in interest expense on deposits. The largest average balance fluctuation was of borrowed funds by $31.6 million, or 48.61%, over the periods presented. Borrowed funds increased due in part to fund investment purchases and Company stock repurchases.
Net Interest Income. Net interest income was $23.7 million and $23.9 million for the six months ended June 30, 2026 and June 30, 2025, respectively. Over this same period, interest and dividends on investments increased $2.2 million, or 46.16%, offset by a decrease in interest on deposits in other banks by $897 thousand, a decrease in interest and fees on loans by $580 thousand and an increase in total interest expense of $892 thousand, or 10.54%. Net interest margin was 4.34% for the six months ended June 30, 2026, compared to 4.63% for the six months ended June 30, 2025.
Provision for Credit Losses. Based on an analysis of the factors described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Use of Critical Accounting Estimates — Allowance for Credit Losses,” there was a $965 thousand provision for credit losses for the six months ended June 30, 2026 compared to a $838 thousand provision for the same period ended June 30, 2025.
Total non-performing loans were $13.8 million at June 30, 2026, compared to $16.9 million at December 31, 2025, and $13.0 million at June 30, 2025. The majority of non-performing loans, $12.2 million, relate to first lien residential mortgage loans. These non-performing residential loans have a weighted average loan to value below 80%. Residential real estate loans remain under elevated credit pressures in our gulf coast lending markets due to rising insurance costs. The annual net charge-off percentage of residential
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loans, based on period-end balances of residential loans, was 0.14% for the calendar year 2025, and 0.12% for the calendar year 2024. Classified loans totaled $16.5 million at June 30, 2026, compared to $19.5 million at June 30, 2025, and total loans past due greater than 30 days were $20.4 million and $19.0 million at those respective dates. Special mention loans were $2.3 million at June 30, 2026 compared to $907 thousand at June 30, 2025. As a percentage of non-performing loans, the allowance for credit losses was 49.43% at June 30, 2026 compared to 47.21% at June 30, 2025.
The allowance for credit losses reflects the estimate management believes to be appropriate to cover probable expected losses that were inherent in the loan portfolio at June 30, 2026. While management believes the estimates and assumptions used in the determination of the adequacy of the allowance are reasonable, such estimates and assumptions could be proven incorrect in the future, and the actual amount of future provisions may exceed the amount of past provisions. Any increase in future provisions that may be required may adversely impact the Company’s financial condition and results of operations. In addition, bank regulatory agencies periodically review the allowance for credit losses and may recommend an increase in the provision for possible credit losses or the recognition of loan charge-offs, based on judgments different than those of management.
Non-interest Income. Non-interest income totaled $3.3 million for the six months ended June 30, 2026, an increase of $1.3 million, or 66.70%, from $2.0 million for the six months ended June 30, 2025. The largest increase was due to a $1.2 million gain on life insurance proceeds realized in May 2026 related to Bank owned life insurance assets.
Non-interest Expense. Non-interest expense increased $2.8 million, or 12.81%, to $24.9 million for the six months ended June 30, 2026, compared to $22.1 million for the six months ended June 30, 2025. Increases in non-interest expenses were primarily due to a $2.0 million, or 16.43%, increase in salaries and employee benefits due to added staff for the Lafayette branch opened by the Bank in August 2025, severance related reorganization costs, normal pay and benefit increases, a $412 thousand, or 12.27%, increase in occupancy and equipment related to the new Lafayette branch and new ATM servicing contracts.
Provision (Benefit) for Income Tax Expense. The benefit for income taxes was $10 thousand for the six months ended June 30, 2026, compared to a provision of $607 thousand for the six months ended June 30, 2025. The change is a direct reflection of net income before income taxes for each period and there was no material change in the Bank’s effective tax rates. The gain on life insurance proceeds was not subject to income tax.
Comparison of Operating Results From Continuing Operations for the Three Months Ended June 30, 2026 and 2025
General. Net income from continuing operations of $697 thousand was recorded for the three months ended June 30, 2026, compared to net income of $1.0 million for the three months ended June 30, 2025. The decrease in net income was primarily the result of a $1.8 million, or 15.73%, increase in total non-interest expenses partially offset by a $1.3 million, or 134.59%, increase in total non-interest income.
Interest Income. Interest income increased $248 thousand, or 1.51%, to $16.7 million for the three months ended June 30, 2026, compared to $16.5 million for the three months ended June 30, 2025. This increase was primarily attributable to a $1.2 million, or 48.45%, increase in interest and dividends on investment securities, partially offset by a decrease of $382 thousand, or 47.34%, from interest on deposits in other banks and $529 thousand, or 3.99%, decrease in interest and fees on loans.
Interest and fees on loans decreased $529 thousand, or 3.99%, for the three months ended June 30, 2026 compared to the same period in 2025. The average balance of loans held for investment during the three months ended June 30, 2026 decreased by $31.4 million, or 4.04%, while the average yield on these loans decreased to 6.88% for the three months ended June 30, 2026 from 7.21% for the three months ended June 30, 2025. The decrease in average yield on loans was due to the decreasing interest rate environment for variable interest rate loans tied to Prime. As a result of the Federal Reserve's monetary
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policy actions between June 30, 2025 and June 30, 2026, the prime rate declined, placing downward pressure on yields earned on the Company's variable-rate loan portfolio.
The average balance of investment securities increased by $84.5 million, or 32.58%, to $343.7 million for the three months ended June 30, 2026 from $259.3 million for the three months ended June 30, 2025, while the average yield on investment securities increased to 4.14% for the three months ended June 30, 2026 compared to 3.70% for the three months ended June 30, 2025. The Company primarily purchased government issued mortgage backed securities with expected yields above 5%.
Interest Expense. Total interest expense increased $449 thousand, or 10.32%, to $4.8 million for the three months ended June 30, 2026, from $4.3 million for the three months ended June 30, 2025. The increase was primarily due to an increase of $447 thousand, or 72.56%, in interest on borrowed funds. The increase in interest on borrowed funds was primarily due to an increase in other borrowings by $52.3 million, or 89.05%, over the periods presented. Borrowed funds increased due in part to fund investment purchases and Company stock repurchases.
Net Interest Income. Net interest income was $11.9 million and $12.1 million for the three months ended June 30, 2026 and June 30, 2025, respectively. Over this same period, interest and dividends on investments increased $1.2 million, or 48.45%, offset by a decrease in interest on deposits in other banks by $382 thousand, a decrease in interest and fees on loans by $529 thousand and an increase in total interest expense of $449 thousand, or 10.32%. Net interest margin was 4.20% for the three months ended June 30, 2026, compared to 4.65% for the three months ended June 30, 2025.
Provision for Credit Losses. Based on an analysis of the factors described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Use of Critical Accounting Estimates — Allowance for Credit Losses,” there was a $475 thousand provision for credit losses for the three months ended June 30, 2026 compared to a $453 thousand provision for the same period ended June 30, 2025.
The allowance for credit losses reflects the estimate management believes to be appropriate to cover probable expected losses that were inherent in the loan portfolio at June 30, 2026. While management believes the estimates and assumptions used in the determination of the adequacy of the allowance are reasonable, such estimates and assumptions could be proven incorrect in the future, and the actual amount of future provisions may exceed the amount of past provisions. Any increase in future provisions that may be required may adversely impact the Company’s financial condition and results of operations. In addition, bank regulatory agencies periodically review the allowance for credit losses and may recommend an increase in the provision for possible credit losses or the recognition of loan charge-offs, based on judgments different than those of management.
Non-interest Income. Non-interest income totaled $2.2 million for the three months ended June 30, 2026, an increase of $1.3 million, or 134.59%, from $954 thousand for the three months ended June 30, 2025. The largest increase was due to a $1.2 million gain on life insurance proceeds realized in May 2026 related to Bank owned life insurance assets.
Non-interest Expense. Total non-interest expenses were $13.1 million for the three months ended June 30, 2026, compared to $11.3 million for the three months ended June 30, 2025. This represents a $1.8 million, or 15.73%, increase in total non-interest expenses. Increases in non-interest expenses were primarily due to a $1.4 million, or 23.01%, increase in salaries and employee benefits due to added staff for the Lafayette branch opened by the Bank in August 2025, the recently approved 2025 Equity Incentive Plan ("2025 EIP"), severance related reorganization costs, normal pay and benefit increases, and a $186 thousand, or 10.78%, increase in occupancy and equipment related to the new Lafayette branch and new ATM servicing contracts. Total expected compensation cost related to the 2025 EIP is expected to be $2.6 million at an annual rate before taxes.
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Gross severance payments of $817 thousand were paid by the Company in the three months ended June 30, 2026. A total of $585 thousand of these severance payments were recorded in salaries and employee benefits from continuing operations for the three months ended June 30, 2026. The Company expects approximately $749 thousand in annual savings going forward within continuing operations due to these reorganization changes.
Provision (Benefit) for Income Tax Expense. The benefit for income taxes was $129 thousand for the three months ended June 30, 2026, compared to a provision of $258 thousand for the three months ended June 30, 2025. The change is a direct reflection of net income before income taxes for each period and there was no material change in the Bank’s effective tax rates. The gain on life insurance proceeds was not subject to income tax.
Comparison of Results From Discontinued Operations for the Six Months Ended June 30, 2026 and 2025
The net loss from discontinued operations was $1.1 million for the six months ended June 30, 2026 compared to a net loss of $815 thousand for the six months ended June 30, 2025. The increase in loss is the result of unwinding the NOLA Lending Group. As of June 30, 2026, all customer loan pipelines have been finalized and one employee remains as part of this mortgage banking segment. The Company expects to absorb remaining assets and liabilities, at fair value, into the Bank's statements of financial condition in the third quarter of 2026. The Company expects remaining losses from discontinued operations to be significantly less over the final months of 2026. For more information on discontinued operations, see Note 2 of the unaudited financial statements contained within this filing.
Comparison of Results From Discontinued Operations for the Three Months Ended June 30, 2026 and 2025
The net loss from discontinued operations was $767 thousand for the three months ended June 30, 2026 compared to a net loss of $150 thousand for the three months ended June 30, 2025. The increase in loss is the result of unwinding the NOLA Lending Group. As of June 30, 2026, all customer loan pipelines have been finalized and one employee remains as part of this mortgage banking segment. The Company expects to absorb remaining assets and liabilities, at fair value, into the Bank's statements of financial condition in the third quarter of 2026. The Company expects remaining losses from discontinued operations to be significantly less over the final months of 2026. For more information on discontinued operations, see Note 2 of the unaudited financial statements contained within this filing.
Management of Market Risk
General. Our most significant form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of our financial condition and results of operations to changes in market interest rates. The Bank has Asset Liability Committees at both the management and the board levels, with one board member having observational status at the management-level committee to ensure continuity. The management-level committee is comprised of senior level officers. The Board’s Asset Liability Committee receives reports from management at each of its meetings and reviews the minutes of the management-level committee. The Board’s Asset Liability Committee establishes the policies and guidelines for managing the Bank’s interest rate risk. All directors participate in discussions during the regular board meetings evaluating the interest rate risk inherent in our assets and liabilities, and the level of risk that is appropriate. These discussions take into consideration our business strategy, operating environment, capital, liquidity and performance objectives consistent with the policy and guidelines approved by them.
Our asset/liability management strategy attempts to manage the impact of changes in interest rates on net interest income, our primary source of earnings. Among the techniques we are using to manage interest rate risk are:
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• maintaining capital levels that exceed the thresholds for well-capitalized status under federal regulations;
• maintaining a high level of liquidity;
• growing our volume of core deposit accounts;
• managing our investment securities portfolio so as to reduce the average maturity and effective life of the portfolio; and
• continuing to diversify our loan portfolio by adding more commercial-related loans, which typically have shorter maturities and/or balloon payments.
By following these strategies, we believe that we are better positioned to react to increases and decreases in market interest rates.
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Economic Value of Equity. We also compute amounts by which the net present value of our assets and liabilities (economic value of equity or “EVE”) would change in the event of a range of assumed changes in market interest rates. This model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value. The model estimates the economic value of each type of asset, liability and off-balance sheet contract under the assumptions that the United States Treasury yield curve increases instantaneously by 100, 200, 300 and 400 basis point increments or decreases instantaneously by 100 or 200 basis point increments, with changes in interest rates representing immediate and permanent, parallel shifts in the yield curve.
The following table sets forth, at June 30, 2026, the calculation of the estimated changes in our EVE that would result from the designated immediate changes in the United States Treasury yield curve.
June 30, 2026
EVE as a Percentage of Present Value Assets (3)
Estimated Increase (Decrease) in EVE Increase (Decrease) (basis points)
Change in Interest Rates (basis points) (1) Estimated EVE (2) Amount Percent EVE Ratio (4)
(Dollars in thousands)
400 $ 299,570 $ (57,905 ) (16.20 )% 24.08 % (465 )
300 315,145 (42,330 ) (11.84 )% 25.33 % (340 )
200 330,932 (26,543 ) (7.43 )% 26.60 % (213 )
100 345,183 (12,292 ) (3.44 )% 27.74 % (99 )
- 357,475 — — % 28.73 % —
(100) 367,494 10,019 2.80 % 29.53 % 80
(200) 373,856 16,381 4.58 % 30.05 % 132
(1) Assumes an immediate uniform change in interest rates at all maturities.
(2) EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.
(3) Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.
(4) EVE Ratio represents EVE divided by the present value of assets.
The table above indicates that at June 30, 2026, we would have experienced a 7.43% decrease in EVE in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 4.58% increase in EVE in the event of an instantaneous 200 basis point decrease in market interest rates. Each of the estimated increase (decreases) in the percentage of change in EVE in the table above are within the Board of Directors’ guidelines.
Change in Net Interest Income. The following table sets forth, at June 30, 2026, the calculation of the estimated changes in our net interest income, referred to as “NII” throughout this document, that would result from the designated immediate changes in the United States Treasury yield curve.
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June 30, 2026
Change in Interest Rates (basis points) (1) NII Year 1 Forecast Year 1 Change from Level
(Dollars in thousands)
+400 $ 46,819 (1.65 )%
+300 47,618 0.03 %
+200 48,218 1.29 %
+100 48,209 1.27 %
Level 47,604 — %
(100) 46,419 (2.49 )%
(200) 45,262 (4.92 )%
(1) Assumes an immediate uniform change in interest rates at all maturities.
The table above indicates that at June 30, 2026, we would have a 1.29% increase in NII in the event of an instantaneous parallel 200 basis point increase in market interest rates and a 4.92% decrease in NII in the event of an instantaneous 200 basis point decrease in market interest rates. Each of the estimated decreases in the percentage of change in the net interest income in the table above are within the Board of Directors’ guidelines.
Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurement. Modeling changes in EVE and NII require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the EVE and NII tables presented above assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the EVE and NII tables provide an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on EVE and NII and will differ from actual results.
EVE and NII calculations also may not reflect the fair values of financial instruments. For example, decreases in market interest rates can increase the fair values of our loans, deposits and borrowings.
Liquidity and Capital Resources
Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities, proceeds from maturities of securities and sales of mortgage loans. We have the ability to borrow from the Federal Home Loan Bank of Dallas, and at June 30, 2026, we had $111.2 million of outstanding borrowings from the Federal Home Loan Bank of Dallas. At June 30, 2026, we had the capacity to borrow an additional $292.0 million from the Federal Home Loan Bank of Dallas and an additional $131.3 million from the Federal Reserve Board discount window.
While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments and sales are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period.
Our cash flows are comprised of three primary classifications: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. For further information, see the statements of cash flows contained in the financial statements appearing elsewhere in this document.
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We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of our maturing time deposits will be retained.
At June 30, 2026, Fidelity Bank’s Tier 1 leverage capital was $256.1 million, or 20.32% of adjusted assets. Accordingly, it was categorized as well-capitalized at June 30, 2026. Management is not aware of any conditions or events since the most recent notification that would change our category. For further information, see Note 9 of the financial statements included elsewhere in this document.
Off-Balance Sheet Arrangements. At June 30, 2026, we had $277.1 million of outstanding commitments to originate loans, which included $239.1 million in revolving lines of credit, $16.2 million in residential construction loans and $21.8 million in commercial construction loans and lines of credit. At June 30, 2026, none of our revolving lines of credit related to commercial real estate loans. Certificates of deposit that are scheduled to mature in less than one year from June 30, 2026 totaled $286.7 million. Management expects that a substantial portion of the maturing certificates of deposit will be renewed. However, if a substantial portion of these deposits is not retained, we may utilize Federal Home Loan Bank of Dallas advances or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.
Recent Accounting Pronouncements
For a discussion of the impact of recent accounting pronouncements, see Note 1 of the notes to our financial statements included elsewhere in this document.
Impact of Inflation and Changing Prices
The financial statements and related data presented in this document have been prepared according to GAAP which require the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates, generally, have a more significant impact on a financial institution’s performance than does inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.