Exhibit 99.1

RICHLAND STATE BANCORP, INC. AND SUBSIDIARY

Consolidated Financial Statements

and Other Financial Information

RAYVILLE, LOUISIANA

DECEMBER 31, 2017 AND 2016

RICHLAND STATE BANCORP, INC. AND SUBSIDIARY

RAYVILLE, LOUISIANA

TABLE OF CONTENTS

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

	Page
Independent Auditor’s Report	1-2
Consolidated Balance Sheets	3-4
Consolidated Statements of Income	5
Consolidated Statements of Comprehensive Income	6
Consolidated Statements of Changes in Stockholders’ Equity	7
Consolidated Statements of Cash Flows	8-9
Notes to Consolidated Financial Statements	10-30

OTHER FINANCIAL INFORMATION

Independent Auditor’s Report on Other Financial Information	32
Details of Consolidated Balance Sheet-December 31, 2017	33-34
Details of Consolidated Balance Sheet-December 31, 2016	35-36
Details of Consolidated Statement of Income-December 31, 2017	37
Details of Consolidated Statement of Income-December 31, 2016	38

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

February 28, 2018

The Audit Committee and Stockholders

Richland State Bancorp, Inc. and Subsidiary

Rayville, Louisiana

Independent Auditor’s Report

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of Richland State Bancorp, Inc. and Subsidiary, which comprise the consolidated balance sheets as of December 31, 2017 and 2016, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for the years then ended and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement, whether due to fraud or error.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

1

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Richland State Bancorp, Inc. and Subsidiary as of December 31, 2017 and 2016, and the consolidated results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Shreveport, Louisiana

2

RICHLAND STATE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2017 AND 2016

A S S E T S	2017		2016
Cash and cash equivalents:
Cash and noninterest-bearing accounts		12,564,687		6,493,261
Federal funds sold		-		-
Total cash and cash equivalents		12,564,687		6,493,261
Interest bearing deposits		13,655,023		4,161,148
Investment securities:
Securities available for sale		42,988,347		36,363,577
Securities held to maturity		29,230,354		31,541,148
Other investment securities		1,750,796		1,736,316
Total investment securities		73,969,497		69,641,041
Loans, less allowance for loan losses of $1,683,291 and $1,455,449 respectively		189,628,252		188,632,876
Accrued interest receivable		1,632,161		1,587,300
Premises and equipment, net		4,388,831		4,436,975
Cash value of life insurance		7,546,257		7,128,751
Other real estate		453,113		455,549
Other assets		339,215		353,199
Total assets		304,177,036		282,890,100

The accompanying notes are an integral part of these consolidated financial statements.

3

RICHLAND STATE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2017 AND 2016

LIABILITIES AND STOCKHOLDERS’ EQUITY	2017			2016
Liabilities:
Deposits:
Noninterest-bearing deposits		67,547,558			65,827,535
Interest-bearing deposits		76,329,550			65,973,631
Savings		53,132,286			47,717,517
Time		69,849,891			62,720,243
Total deposits		266,859,285			242,238,926
Accrued interest payable		44,414			22,928
Accrued expenses		2,934,006			2,780,505
Federal Home Loan Bank advances		-			5,500,000
Total liabilities		269,837,705			250,542,359
Stockholders’ equity:
Common stock, $5 par value; 600,000 shares authorized; 97,303 and 97,506 shares issued and outstanding at December 31, 2017 & 2016		486,515			487,530
Additional paid-in capital		126,121			162,683
Retained earnings		33,855,818			31,905,457
Accumulated other comprehensive income		(129,123	)		(207,929	)
Total stockholders’ equity		34,339,332			32,347,741
Total liabilities and stockholders’ equity		304,177,036			282,890,100

The accompanying notes are an integral part of these consolidated financial statements.

4

RICHLAND STATE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

	2017		2016
Interest income:
Interest on loans		10,332,821		9,780,167
Interest on federal funds sold		140		1,156
Interest on investment securities		1,387,867		1,620,435
Other		18,840		16,515
Total interest income		11,739,668		11,418,273
Interest expense:
Interest on deposits		867,152		611,535
Interest on other borrowings		62,381		95,882
Total interest expense		929,533		707,417
Net interest income		10,810,135		10,710,856
Provision for loan losses		360,000		994,000
Net interest income, net of provision for loan losses		10,450,135		9,716,856
Other income:
Service charges on deposit accounts		1,818,002		1,683,610
Commissions and fees		1,256,724		1,372,883
Increase in cash value of life insurance		157,647		152,346
Life insurance proceeds		-		127,972
Net investment security gains		-		54,486
Other income		445,349		526,356
Total other income		3,677,722		3,917,653
Other expenses:
Salaries		4,873,486		4,695,766
Employee benefits		1,174,298		972,137
Net occupancy expense		596,098		589,735
Furniture and equipment expense		349,221		369,636
Data processing fees		630,950		620,282
Other operating expenses		2,614,981		2,767,038
Total other expenses		10,239,034		10,014,594
Net income		3,888,823		3,619,915

The accompanying notes are an integral part of these consolidated financial statements.

5

RICHLAND STATE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

	2017		2016
Net income		3,888,823		3,619,915
Other comprehensive income (loss):
Unrealized holding gain (loss) arising during period		78,806		(550,256	)
Less-reclassification adjustment for gains realized in net income		-		(110,981	)
Total other comprehensive income (loss)		78,806		(661,237	)
Comprehensive income		3,967,629		2,958,678

The accompanying notes are an integral part of these consolidated financial statements.

6

RICHLAND STATE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

										Accumulated
				Additional						Other
	Common			Paid-In			Retained			Comprehensive
	Stock			Capital			Earnings			Income			Total
Balance-December 31, 2015		487,530			162,683			30,225,911			453,308			31,329,432
Comprehensive income:
Net income		-			-			3,619,915			-			3,619,915
Other comprehensive income		-			-			-			(661,237	)		(661,237	)
Shareholder distributions		-			-			(1,940,369	)		-			(1,940,369	)
Balance-December 31, 2016		487,530			162,683			31,905,457			(207,929	)		32,347,741
Comprehensive income:
Net income		-			-			3,888,823			-			3,888,823
Stock options vested		-			22,714			-			-			22,714
Purchase of 203 shares of Company stock		(1,015	)		(59,276	)		-			-			(60,291	)
Other comprehensive income		-			-			-			78,806			78,806
Shareholder distributions		-			-			(1,938,462	)		-			(1,938,462	)
Balance-December 31, 2017		486,515			126,121			33,855,818			(129,123	)		34,339,331

The accompanying notes are an integral part of these consolidated financial statements.

7

RICHLAND STATE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

	2017		2016
Cash flows from operating activities:
Net income	3,888,823		3,619,915
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	409,558		401,301
Provision for loan losses	360,000		994,000
(Gain) loss on sale of assets and other real estate	(139,010	)	(15,880	)
Amortization of investment security premiums	501,239		593,745
Accretion of investment security discounts	(3,808	)	(11,013	)
Realized (gain) on sale of investment securities	-		(54,486	)
Stock option expense	22,714		-
(Increase) decrease in:
Accrued interest receivable	(44,861	)	110,060
Other assets	13,984		45,213
Cash value of life insurance	(417,506	)	(148,091	)
Increase (decrease) in:
Accrued expenses	232,308		24,308
Interest payable	21,486		3,180
Total adjustments	956,104		1,942,337
Net cash provided by operating activities	4,844,927		5,562,252
Cash flows from investing activities:
(Increase) in time deposits at other banks	(9,493,875	)	(855,831	)
Maturities, pay-downs and calls of available for sale securities	7,584,113		14,548,992
Purchases of available for sale securities	(14,361,762	)	(5,204,276	)
Proceeds from sale of available for sale securities	-		1,153,729
Maturities, paydowns and calls of securities held to maturity	5,417,650		4,842,000
Purchases of securities held to maturity	(3,451,408	)	(2,705,030	)
Net (increase) in loans	(1,355,376	)	(11,598,113	)
Purchases of premises and equipment	(361,414	)	(693,110	)
Proceeds from premises and equipment	-		17,500
Purchase of other investment securities	(14,480	)	(97,972	)
Purchase of life insurance			(1,420,000	)
Proceeds of life insurance	141,446		127,972
Net cash (used) provided by investing activities	(15,895,106	)	1,884,139

The accompanying notes are an integral part of these consolidated financial statements.

8

RICHLAND STATE BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

	2017			2016
Cash flows from financing activities:
Net increase in noninterest-bearing deposits		1,720,022			1,175,565
Net increase (decrease) in interest-bearing deposits		10,355,919			(9,350,662	)
Net increase (decrease) in savings deposits		5,414,769			(3,674,429	)
Net increase in time deposits		7,129,648			1,767,777
Purchase and conversion of stock		(60,291	)		-
Advances from FHLB		(5,500,000	)		1,500,000
Shareholder distributions		(1,938,462	)		(1,940,369	)
Net cash provided (used) by financing activities		17,121,605			(10,522,118	)
Net increase (decrease) in cash and cash equivalents		6,071,426			(6,844,005	)
Cash and cash equivalents-beginning of year		6,493,261			13,337,266
Cash and cash equivalents-end of year		12,564,687			6,493,261
Supplementary cash flow information:
Interest paid on deposits and borrowed funds		908,047			704,309
Income taxes		-			-
Loans transferred to other real estate		215,000			-

The accompanying notes are an integral part of these consolidated financial statements.

9

RICHLAND STATE BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2017 AND 2016

1. Summary of Significant Accounting Policies

Consolidation – The accounting and reporting policies of Richland State Bancorp, Inc. and its wholly-owned subsidiary conform to accounting principles generally accepted in the United States of America and to general practices within the banking industry. The consolidated financial statements include the accounts of Richland State Bancorp, Inc. (the Company) and its wholly-owned subsidiary, Richland State Bank (the Bank). All significant intercompany accounts and transactions have been eliminated in the consolidation.

Business – The Bank generates commercial, real estate, mortgage and consumer loans and receives deposits from customers located primarily in the northeast and north central region of Louisiana. Services are provided at its main office in Rayville, Louisiana and other regional branch offices. The Company is subject to regulation of the Office of Financial Institutions of the State of Louisiana and the Federal Reserve Bank of Dallas. The Bank operates under a state bank charter and provides full banking services. As a state bank, the Bank is subject to examination by the Office of Financial Institutions of the State of Louisiana and by the Federal Deposit Insurance Corporation.

Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans, and fair values of financial instruments. In connection with the determination of the allowances for losses on loans and foreclosed real estate, management obtains independent appraisals for significant properties. While management uses available information to recognize losses on loans, future additions to the allowances may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowances for losses on loans and foreclosed real estate. Such agencies may require the Bank to recognize additions to the allowances based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the allowances for losses on loans and foreclosed real estate may change materially in the near future.

Cash and Cash Equivalents – Cash and cash equivalents include cash on hand, amounts due from banks with a maturity of three months or less and federal funds sold.

Investment Securities – The Bank classifies its debt and marketable equity securities in one or more of three categories: trading, available-for-sale, or held-to-maturity. Trading securities are bought and held principally for the purpose of selling them in the near term. Held-to-maturity securities are those securities in which the Bank has the ability and intent to hold the security until maturity. All other securities not included in trading or held-to-maturity are classified as available-for-sale.

10

1. Summary of Significant Accounting Policies    (Continued)

Trading and available-for-sale securities are recorded at fair value. Held-to-maturity securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums or discounts. Unrealized holding gains and losses on trading securities are included in earnings. Unrealized holding gains and losses on available-for-sale securities are reported as a separate component of stockholders’ equity (accumulated other comprehensive income) until realized. Transfers of securities between categories are recorded at fair value at the date of transfer.

Premiums and discounts are amortized or accreted over the life of the related security as an adjustment to yield. Dividend and interest income are recognized when earned. Realized gains and losses for securities classified as available-for-sale and held-to-maturity are included in earnings and are derived using the specific identification method for determining the cost of securities sold.

Unrealized holding gains and losses on securities available for sale which have been reported as direct increases or decreases in stockholders’ equity are accounted for as other comprehensive income. Cumulative changes in unrealized gains and losses on such securities are accounted for in accumulated other comprehensive income as part of stockholders’ equity.

The Bank reviews securities for impairment on at least an annual basis. Declines in the fair value of held-to-maturity and available for sale securities below their cost that are deemed to be other-than-temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of impairment related to other factors is recognized in other comprehensive income. In estimating other-than-temporary impairment losses, management considers, among other things, the length of time and the extent to which the fair value has been less than cost, the financial condition and the near-term prospects of the issuer, and the intent and ability of the Bank to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value. There were no impairment losses for the years ended December 31, 2017 and 2016.

Loans – Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan losses, and any deferred fees or costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan origination fees and certain direct origination costs are recognized in the year incurred as the loan portfolio mainly consists of short-term loans.

The accrual of interest on loans is discontinued at the time the loan is 90 days past due unless the credit is well secured and in the process of collection. Past due status is based on contractual terms of the loan. However, loans may be placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. Interest on impaired loans is discontinued when, in management’s opinion, the borrower may be unable to meet the schedule payments they become due.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is subsequently accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured, or when the loan becomes well secured and in the process of collection.

11

1. Summary of Significant Accounting Policies    (Continued)

Allowance for Loan Losses – The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the collectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance consists of specific, general, and unallocated components. The specific component relates to loans that are classified by management as either doubtful, substandard or special mention. For such loans that are also classified as impaired, an allowance is established when the collateral value or observable market price of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors. An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.

A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial, real estate and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment.

Bank Premises and Equipment – Land is carried at cost. Bank premises and equipment are carried at cost, less accumulated depreciation. Depreciation of premises and equipment is provided on the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are capitalized and depreciated using the straight-line method over the estimated useful lives of the improvements or the expected terms of the leases, if shorter. Accelerated depreciation methods are used for income tax purposes. Maintenance and repairs are charged to expense as incurred, and renewals and betterments are capitalized. When premises and equipment are retired or otherwise disposed of, the cost of the assets and related accumulated depreciation are removed from the accounts and the resulting gains or losses are recognized.

12

1. Summary of Significant Accounting Policies    (Continued)

Other Real Estate – Other real estate represents property acquired through foreclosure or deeded in lieu of foreclosure on loans on which the borrowers have defaulted as to payment of principal and interest. These properties are carried at the lower of cost of acquisition or the asset’s fair value less estimated selling costs. Reductions in the balance at the date of acquisition are charged to the allowance for loan losses. Any subsequent write-downs to reflect current fair value are charged to noninterest expense. After foreclosure, valuations are periodically performed by management and property held for sale is carried at the lower of the new cost basis or fair value. The Bank held $453,113 and $455,549 in other real estate, and there were no allowances for possible write-downs in the value of other real estate owned at December 31, 2017 or 2016, respectively.

Income Taxes – Effective January 1, 2008, the Company filed an election to be taxed under the provisions of Subchapter S of Section 1361 of the Internal Revenue Code. Under those provisions, the Company does not pay federal corporate income taxes on its taxable income. Instead, the shareholders are liable for individual federal income taxes on their proportionate share of the Company’s taxable income. As a result of the election, no income taxes will be recognized in the financial statements.

Advertising – The Bank charges the costs of advertising and promotion to expense as incurred. These costs were $128,781 and $167,574 in the years ended December 31, 2017 and 2016, respectively.

Bank-Owned Life Insurance – The Company has purchased life insurance contracts on the lives of certain key employees. The Bank is the beneficiary of these policies. These contracts are reported at the cash surrender value and changes in the cash surrender value are included in other non-interest income.

Stock-Based Compensation – GAAP requires all share-based payments to employees, including grants of employee stock options to be recognized as expense in the statement of operations based on their fair values. The amount of compensation is measured at the fair value of the options when granted and this cost is expensed over the requisite service period, which is normally the vesting period of the options.

Stockholders’ Equity – On January 1, 2015, the Louisiana Business Corporation Act (the Act) became effective. Under the provisions of the Act, there is no concept of “Treasury Shares.” Rather, shares purchased by the Company constitute authorized but unissued shares. Under Accounting Standards Codification (ASC) 505-30, Treasury Stock, accounting for treasury stock shall conform to state law. Accordingly, the Company’s Consolidated Statement of Financial Condition as of December 31, 2017 and 2016 reflects this change. The cost of shares purchased by the Company has been allocated to Common Stock and Retained Earnings balances.

Recent Accounting Pronouncements – In January 2016, the FASB issued ASU 2016-01, Financial Instruments. The amendments in this Update supersede the guidance to classify equity securities with readily determinable fair values into different categories and require equity securities to be measured at fair value with changes in the fair value recognized through net income.  The amendments allow equity investments that do not have readily determinable fair values to be re-measured at fair value either upon the occurrence of an observable price change or upon identification of an impairment.  The amendments in this Update also simplify the impairment assessment of equity investments without readily determinable fair values by requiring assessment for impairment qualitatively at each reporting period. In addition, the amendments supersede the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities.

13

1. Summary of Significant Accounting Policies    (Continued)

The provisions within this Update require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument- specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option. This amendment excludes from net income gains or losses that the entity may not realize because those financial liabilities are not usually transferred or settled at their fair values before maturity. The amendments in this Update require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or in the accompanying notes to the financial statements.

The amendments in ASU 2016-01 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company has elected to early adopt the provision that allows the Company not to disclose the fair value of financial instruments in accordance with guidance in ASC 825. The adoption of the remaining provisions is not expected to have a material impact on the Company’s consolidated financial statements.

2. Investment Securities

The carrying amounts of investment securities as shown in the consolidated balance sheets and their approximate market values at December 31, 2017 and 2016 were as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Securities available for sale:
December 31, 2017:
U.S. government agency		8,779,914		25,124		(90,814	)		8,714,224
Mortgage-backed		34,337,556		126,851		(190,284	)		34,274,123
		43,117,470		151,975		(281,098	)		42,988,347
Securities available for sale:
December 31, 2016:
U.S. government agency		7,530,468		48,590		(88,191	)		7,490,867
Mortgage-backed		29,041,039		174,913		(343,242	)		28,872,710
		36,571,507		223,503		(431,433	)		36,363,577

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Securities held to maturity:
December 31, 2017:
State and municipal		29,230,354		324,836		(107,925	)		29,447,265
Securities held to maturity:
December 31, 2016:
State and municipal		31,541,148		365,395		(199,818	)		31,706,725

14

2. Investment Securities    (Continued)

For the years ended December 31, 2017 and 2016, proceeds from sales of securities available for sale amounted to $-0- and $1,153,729, respectively. Gross realized gains for sales amounted to $-0- and $25,877, respectively, and gross realized losses amounted to ($-0-) and ($2,741), respectively. Gross realized gains related to call of securities amounted to $-0- and $31,350, respectively.

The following stocks are considered a restricted stock as only banks, which are members of these organizations, may acquire or redeem the stock. The stock is redeemable at its face value; therefore there are no gross unrealized gains or losses associated with these investments.

Restricted investment securities at December 31, 2017 and 2016 are as follows:

	2017		2016
Federal Home Loan Bank stock, at cost		1,243,600		1,229,900
Texas Independent Bank, at cost		101,840		101,840
Community Financial Insurance Center, LLC		405,356		404,576
		1,750,796		1,736,316

Information pertaining to securities with gross unrealized losses at December 31, 2017 and 2016, aggregated by investment category and length of time that individual securities have been in a continuous loss position is as follows:

	Less than 12 Months					12 Months or Greater					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
Securities available for sale:
December 31, 2017:
U.S. government/agency		991,250		(7,283	)		5,100,446		(83,531	)		6,091,696		(90,814	)
Mortgage backed		12,796,965		(82,015	)		6,418,946		(108,269	)		19,215,911		(190,284	)
		13,788,215		(89,298	)		11,519,392		(191,800	)		25,307,607		(281,098	)
Securities available for sale:
December 31, 2016:
U.S. government/agency		5,266,847		(88,181	)		-		-			5,266,847		(88,191	)
Mortgage backed		19,177,512		(282,607	)		1,489,971		(60,635	)		20,667,483		(343,242	)
		24,444,359		(370,798	)		1,489,971		(60,635	)		25,934,330		(431,433	)
Securities held to maturity:
December 31, 2017:
State and municipal securities		10,292,512		(82,633	)		1,168,304		(25,292	)		11,460,816		(107,925	)
		10,292,512		(82,633	)		1,168,304		(25,292	)		11,460,816		(107,925	)
Securities held to maturity:
December 31, 2016:
State and municipal securities		11,451,780		(199,818	)		-		-			11,451,780		(199,818	)
		11,451,780		(199,818	)		-		-			11,451,780		(199,818	)

15

2. Investment Securities    (Continued)

Management evaluates securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Bank to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. Management has determined that there was no other-than-temporary impairment associated with these securities at December 31, 2017 and 2016.

The amortized cost and estimated fair value of investment securities, whether held to maturity or available for sale at December 31, 2017 and 2016, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Securities				Securities
	Held-to-Maturity				Available-for-Sale
	Amortized		Approximate		Amortized		Approximate
	Cost		Market Value		Cost		Market Value
December 31, 2017:
Due in one year or less		2,960,033		2,980,846		1,500,227		1,490,846
Due from one-five years		13,794,682		13,959,602		7,925,465		7,867,319
Due from five-ten years		12,475,639		12,506,818		13,874,959		13,832,808
Due after ten years		-		-		19,817,819		19,797,374
		29,230,354		29,447,266		43,118,470		42,988,347
December 31, 2016:
Due in one year or less		4,562,248		4,592,601		22,626		22,940
Due from one-five years		14,338,819		14,548,728		6,669,701		6,622,128
Due from five-ten years		12,081,003		12,018,344		12,853,722		12,818,823
Due after ten years		559,078		549,702		17,025,458		16,899,686
		31,541,148		31,709,375		36,571,507		36,363,577

Maturities of mortgage-backed securities are reported at their estimated maturity date as furnished by the Bank’s investment broker. Maturities may differ due to the borrowers’ right to prepay obligations with or without penalty.

Investment securities with an amortized cost of $28,081,044 and approximate market value of $28,020,019 at December 31, 2017 and an amortized cost of $30,346,686 and approximate market value of $30,230,181 at December 31, 2016, were pledged to secure various repurchase transactions, public funds on deposit and for other purposes as required or permitted by law.

16

3. Loans and Reserve for Credit Losses

Major classifications of loans at December 31, 2017 and 2016 are as follows:

	2017			2016
Consumer/Installment		5,000,492			5,091,696
Real estate		135,188,673			123,169,596
Commercial		51,122,378			61,827,033
		191,311,543			190,088,325
Less-Allowance for loan losses		(1,683,291	)		(1,455,449	)
Loans, net		189,628,252			188,632,876

The following tables detail loans by type individually and collectively evaluated for impairment at December 31, 2017 and 2016:

	Loans Evaluated for Impairment
	Individually		Collectively		Total
December 31, 2017:
Installment		-		5,000,492		5,000,492
Real estate		7,273,816		127,914,857		135,188,673
Commercial		4,974,197		46,148,181		51,122,378
		12,248,013		179,063,530		191,311,543
December 31, 2016:
Installment		32,748		5,058,948		5,091,696
Real estate		12,389,785		110,779,811		123,169,596
Commercial		2,901,952		58,925,081		61,827,033
		15,324,485		174,763,840		190,088,325

Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when contractually due. Loans that experience insignificant payment delays or payment shortfalls are generally not classified as impaired. On a case-by-case basis, management determines the significance of payment delays and payment shortfalls, taking into consideration all of the circumstances related to the loan, including; the length of the payment delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. If determined to be impaired, the loan is evaluated using one of the valuation criteria permitted under FASB ASC Topic 310. If, after review, a specific valuation allowance is not assigned to the loan and the loan is not considered to be impaired, the loan remains with a pool of similar risk-rated loans and is evaluated collectively.

The following tables present loans individually evaluated for impairment as of December 31, 2017 and 2016:

	For the Year Ended December 31, 2017
			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no impairment allowance recorded:
Consumer		-		-		-		-		-
Real estate		7,102,799		7,102,799		-		7,174,368		441,549
Commercial		4,974,197		4,974,197		-		6,177,268		165,518
Subtotal		12,076,996		12,076,996		-		13,351,636		607,067

17

3. Loans and Reserve for Credit Losses    (Continued)

	For the Year Ended December 31, 2017
			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With an impairment allowance recorded:
Consumer		-		-		-		-		-
Real estate		171,017		171,017		24,559		170,805		2,450
Commercial		-		-		-		-		-
Subtotal		171,017		171,017		24,559		170,805		2,450
Total:
Consumer		-		-		-		-		-
Real estate		7,273,816		7,273,816		24,559		7,345,173		443,999
Commercial		4,974,197		4,974,197		-		6,177,268		165,518
Total		12,248,013		12,248,013		-		13,522,441		609,517

	For the Year Ended December 31, 2016
			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no impairment allowance recorded:
Consumer		32,748		32,748		-		34,897		6,322
Real estate		11,758,461		11,758,461		-		11,037,645		35,064
Commercial		2,901,952		2,901,952		-		3,528,926		580,618
Subtotal		14,693,161		14,693,161		-		14,601,468		622,004
With an impairment allowance recorded:
Consumer		-		-		-		-		-
Real estate		631,324		631,324		173,899		860,519		35,065
Commercial		-		-		-		-		5,088
Subtotal		631,324		631,324		173,899		860,519		40,153
Total:
Consumer		32,748		32,748		-		34,897		5,322
Real estate		12,389,785		12,389,785		173,899		11,898,164		70,129
Commercial		2,901,952		290,952		-		3,528,926		585,706
Total		15,324,485		12,713,485		173,899		15,461,987		661,157

Included in impaired loans are non-accrual loans of $197,142 and $234,370 at December 31, 2017 and 2016, respectively. No additional funds are committed to be advanced in connection with impaired loans.

Troubled debt restructuring (“TDRs”) are loans for which the contractual terms on the loan have been modified and both of the following conditions exist: (i) the borrower is experiencing financial difficulty and (ii) the restructuring constitutes a concession. The Bank assesses all loan modifications to determine whether they constitute a TDR. Restructurings resulting in an insignificant delay in payment are not considered to be TDRs. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length and the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

18

3. Loans and Reserve for Credit Losses    (Continued)

All TDRs are considered impaired loans. Impairment is measured on a loan by loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

The following tables summarize loans restructured with both term and rate changes in troubled debt restructurings:

December 31, 2017

Total TDRs

TDRs in Default

Pre-

Post-

Pre-

Post-

Number

Modification

Modification

Number

Modification

Modification

of

Recorded

Recorded

of

Recorded

Recorded

Contracts

Balance

Balance

Contracts

Balance

Balance

Installments loans

-

-

-

-

-

-

Real estate loans

-

-

-

Commercial loans

-

-

-

-

-

-

-

-

-

	December 31, 2016
	Total TDRs						TDRs in Default
			Pre-		Post-				Pre-		Post-
	Number		Modification		Modification		Number		Modification		Modification
	of		Recorded		Recorded		of		Recorded		Recorded
	Contracts		Balance		Balance		Contracts		Balance		Balance
Installments loans		-		-		-		-		-		-
Real estate loans		1		517,417		216,000		-		-		-
Commercial loans		-		-		-		-		-		-
		1		517,417		216,000		-		-		-

The Bank has established a loan grading system that consists of eight individual credit risk grades (risk ratings) that encompass a range from loans where the expectation of loss is negligible to loans where loss has been established. The model is based on the risk of default for an individual credit and establishes certain criteria to delineate the level of risk across the eight unique credit risk grades. Credit risk grade definitions are as follows:

Pass (Risk Rate (RR) 1 through 4) – Grades one through four represent groups of loans that exhibit characteristics that represent low to marginal risk measured by using a variety of credit risk criteria such as cash flow coverage, debt service coverage, liquidity, management experience, prevailing economic conditions and other factors that may be relevant to a specific loan. In general, these loans are supported by properly margined collateral and guarantees of principal parties.

Special Mention (RR 5) – a loan that exhibits a potential weakness that if left uncorrected will lead to a more severe rating. This rating is for credits that are currently protected but potentially weak because of an adverse feature or condition.

19

3. Loans and Reserve for Credit Losses    (Continued)

Substandard (RR 6) – a loan that has at least one identified weakness that is well defined. This rating is for credits that are inadequately protected by current worth or paying capacity of borrower or collateral. These loans are specifically evaluated for impairment and further deterioration could lead to a downgrade.

Doubtful (RR 7) – a loan with an identified weakness and collection or liquidation in full is highly questionable or improbable. Generally, these credits have an impaired primary source of repayment and secondary sources are not sufficient to prevent a loss in the credit.

Loss (RR 8) – a loan or a portion of a loan that is deemed to be uncollectible.

The tables below illustrate the carrying amount of loans by credit quality indicator at December 31, 2017 and 2016:

			Special
	Pass		Mention		Substandard		Doubtful		Loss		Total
December 31, 2017:
Loans by type:
Consumer		4,670,507		259,836		57,123		13,026		-		5,000,492
Real Estate		127,606,064		6,136,014		1,349,370		97,225		-		135,188,673
Commercial		46,188,568		4,761,199		172,611		-		-		51,122,378
		178,465,139		11,157,049		1,579,104		110,251		-		191,311,543
December 31, 2016:
Loans by type:
Consumer		4,774,816		222,300		81,160		13,420		-		5,091,696
Real Estate		110,679,637		9,614,163		2,779,821		95,975		-		123,169,596
Commercial		58,679,183		2,992,478		155,372		-		-		61,827,033
		174,133,636		12,828,941		3,016,353		109,395		-		190,088,325

The following tables provide an aging analysis of past due loans and non-accrual loans by class at December 31, 2017 and 2016:

	Past Due		Past Due Over 90 Days
	30-89		and		Non-		Total				Total
	Days		Accruing		Accruing		Past Due		Current		Loans
December 31, 2017:
Loans by type:
Consumer		153,571		-		-		153,571		4,846,921		5,000,492
Real estate		1,329,594		-		139,253		1,468,847		133,719,826		135,188,673
Commercial		108,797		11,909		18,167		138,873		50,983,505		51,122,378
		1,591,962		11,909		157,420		1,761,291		189,550,252		191,311,543
December 31, 2016:
Loans by type:
Consumer		74,920		8,082		-		83,002		5,008,694		5,091,696
Real estate		136,031		323,405		142,086		601,522		122,568,074		123,169,596
Commercial		178,929		139,415		85,629		403,973		61,423,060		61,827,033
		389,880		470,902		227,715		1,088,497		188,999,828		190,088,325

20

4. Allowance for Loan Losses

Changes in the allowance for loan losses were as follows:

	2017			2016
Balance-beginning of year		1,455,449			1,650,352
Provision for loan losses		360,000			994,000
Loans charged off		(451,016	)		(1,286,425	)
Recoveries		318,858			97,522
Balance-end of year		1,683,291			1,455,449

The following tables detail the balance in the allowance for loan losses by portfolio segment at December 31, 2017 and 2016:

	Balance		Provision			Loans					Balance
	January 1,		for Loan			Charged					December
	2017		Losses			Off			Recoveries		31, 2017
Loans by type:
Consumer		84,680		(8,553	)		(40,050	)		11,330		47,407
Real estate		828,292		420,974			(367,092	)		218,616		1,100,790
Commercial		542,477		(52,421	)		(43,874	)		88,912		535,094
		1,455,449		360,000			(451,016	)		318,858		1,683,291

	Balance		Provision		Loans					Balance
	January 1,		for Loan		Charged					December
	2016		Losses		Off			Recoveries		31, 2016
Loans by type:
Consumer		76,286		3,039		(33,344	)		38,699		84,680
Real estate		744,421		102,027		(53,700	)		35,544		828,292
Commercial		829,645		888,934		(1,199,381	)		23,279		542,477
		1,650,352		994,000		(1,286,425	)		97,522		1,455,449

	Allowance for Loan Losses
	Disaggregated by Impairment Method
	Individually		Collectively		Total
December 31, 2017:
Consumer		-		47,407		47,407
Real estate		24,559		1,076,231		1,100,790
Commercial		-		535,094		535,094
		24,559		1,658,732		1,683,291
December 31, 2016:
Consumer		32,748		51,932		84,680
Real estate		173,899		654,393		828,292
Commercial		-		542,477		542,477
		206,647		1,248,802		1,455,449

21

5. Bank Premises and Equipment

Major classifications of premises and equipment at December 31, 2017 and 2016 are summarized below:

	2017			2016
Land		1,407,559			1,407,559
Buildings		5,137,366			5,005,768
Furniture and equipment		3,166,029			3,035,774
Vehicles		256,980			258,251
Construction in process		83,755			2,500
		10,051,689			9,709,852
Less-accumulated depreciation		(5,662,858	)		(5,272,877	)
Premises and equipment, net		4,388,831			4,436,975

Depreciation and amortization expense for the years ending December 31, 2017 and 2016 was $409,558 and $401,301, respectively.

6. Time Deposits

Included in time deposits at December 31, 2017 and 2016, respectively, were approximately $15,145,637 and $8,347,560 of certificates of deposit and IRAs in denominations of $250,000 or more.

At December 31, 2017, the scheduled maturities of Certificates of Deposit and IRAs are as follows:

2017	45,843,066
2018	19,524,173
2019	1,341,196
2020	1,202,075
2021	1,939,381
	69,849,891

7. Accumulated Other Comprehensive Income (Loss)

The following table presents amounts reclassified out of accumulated other comprehensive income (loss) for the year ended December 31, 2017 and 2016:

	Amount Reclassified from	Affected Line Items in
	Accumulated Other Comprehensive	the Consolidated
	Income (Loss)	Statement of Income
Unrealized gains and (losses) on available-for-sale securities	-	Net investment security gains
Unrealized gains and (losses) on available-for-sale securities	110,981	Net investment security gains

22

8. Other Borrowed Funds

The Bank had outstanding advances from the Federal Home Loan Bank at December 31, 2017 and 2016, in the amount of $-0- and $5,500,000, respectively. Advances outstanding incur market interest rates based on the time the borrowing is initiated. The contract rate as of December 31, 2017 was 1.30%. Security for all indebtedness and outstanding commitments consists of a security interest in all of the first mortgage loans, farm/agriculture loans, small business loans, capital stock of Federal Home Loan Bank, and deposit accounts in the Federal Home Loan Bank owned by the Bank. The net available under the blanket floating lien as of December 31, 2017 and 2016 was $83,685,265 and $75,218,920, respectively.

The Bank also has the ability to borrow funds under multiple federal funds lines of credit with First National Bankers Bank. The unsecured federal funds lines of credit total $9,700,000. Borrowings under these lines, including the rates and maturities for such borrowings, are at the sole discretion of the issuing banks and depend upon the availability of funds. Outstanding borrowings under these federal funds lines were $-0- and $-0- at December 31, 2017 and 2016, respectively.

9. Employees’ Retirement Trust

The Bank has a contributory retirement plan for the benefit of substantially all of its employees. The Bank’s annual contribution is determined by the Board of Directors subject to the limitation of fifteen (15) percent of the participating employees’ compensation. The Bank’s contributions amounted to $231,500 in 2017 and $129,200 in 2016.

10. Financial Instruments with Off-Balance Sheet Risk

The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, unfunded commitments to extend credit, and commercial letters of credit. These instruments involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amount recognized in the consolidated statements of financial condition.

The Bank’s exposure to credit loss is represented by the contractual amount of these instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

The following table summarizes the Bank’s maximum exposure to credit losses represented by the contractual amount of the commitments to extend credit and letters of credit as of December 31:

	2017		2016
Commitments to extend credit		82,960,432		87,152,271
Unfunded commitments to extend credit		29,872,558		32,564,023
Commercial letters of credit		165,954		596,799

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount and type of collateral obtained, if deemed necessary by the Bank upon extension of credit, varies and is based on management’s credit evaluation of the counter-party. Approximately $50,084,425 and $28,190,981 of commitments to extend credit at December 31, 2017 and 2016, respectively, were at variable rates and the remainder was at fixed rates.

23

10. Financial Instruments with Off-Balance Sheet Risk    (Continued)

Unfunded commitments under commercial lines of credit, revolving credit lines, and overdraft protection agreement are commitments for possible future extensions of credit to existing customers. These lines of credit are uncollateralized and usually do not contain a specified maturity date and ultimately may not be drawn upon to the total extent to which the Bank is committed.

Commercial letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those letters of credit are primarily issued to support public and private borrowing arrangements. Essentially all letters of credit issued have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank generally holds collateral supporting those commitments. Guarantees that are not derivative contracts have been reported on the Bank’s statement of condition at their fair value at inception. The Bank considers commercial letters of credit to be guarantees, and considers the liability related to such guarantees at December 31, 2017 and 2016 to be immaterial and therefore not recorded on the consolidated financial statements.

11. Contingencies

The Company and Bank are involved in certain litigation incurred in the normal course of business. In the opinion of management and legal counsel, liabilities arising from such claims, if any, would not have a material effect upon the consolidated financial statements.

12. Related Party Transactions

Some of the directors and executive officers of the Company and the Bank are customers of the Bank, and some of the individuals are principals in entities which are customers of the Bank. As such customers, they have had transactions in the ordinary course of business with the Bank, including borrowings, all of which, in the opinion of management, were on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than a normal risk of collectability or present any other unfavorable features to the Bank. At December 31, 2017 and 2016, the aggregate indebtedness of those individuals and their interests as a group to the Bank was approximately $8,686,240 and $5,895,762, respectively. Total principal loan additions were approximately $10,028,032 and $3,353,713, and total principal payments were $7,237,554 and $3,202,353 for the years ended December 31, 2017, and 2016. Deposits from related parties held by the Bank at December 31, 2017 and 2016 amounted to $9,534,679 and $9,504,079, respectively.

Financial Institutions Service Center (FISC) provides various computer services and equipment to the Bank. For the years ended December 31, 2017 and 2016, the amounts paid for these services amounted to approximately $587,873 and $611,466, respectively. The Bank owns an equity interest in FISC.

13. Concentration of Credit Risk

The Bank grants loans primarily to customers throughout northeast and north central Louisiana. Although the bank has a diversified loan portfolio, a substantial portion of its loans, although not necessarily originated for the purposes of real estate acquisition, is secured by real estate and agricultural production and its ability to fully collect its loans could depend upon these markets in this region. The bank typically requires collateral with sufficient margin in value to cover the principal amount of the loan. Such collateral is evidenced by mortgages on property held and readily accessible to the bank.

24

13. Concentration of Credit Risk   (Continued)

Additionally, at times, the Bank maintains deposits and federal funds sold in federally insured financial institutions in excess of federally insured limits. Management monitors the soundness of these financial institutions and feels the Bank’s risk is negligible.

14. Operating Leases

The Bank leases branch bank office space in Monroe, West Monroe and Bastrop, Louisiana and several ATMs at its branches under non-cancelable operating leases. The leases can require the Bank to pay a pro-rated annual share for maintenance, insurance and property taxes. Lease expense amounted to $297,212 in 2017 and $319,115 in 2016.

Minimum future obligations on all leases in effect at December 31, 2017 are as follows:

For the years ended December 31,
2018	206,295
2019	142,354
2020	147,063
2021	147,063
2022	147,063
Thereafter	294,126
	1,083,964

15. Regulatory Matters

The Company and its subsidiary bank are subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and its subsidiary bank to maintain minimum amounts and ratios (set forth in the table below) of total capital (as defined in the regulations) to risk-weighted assets (as defined), and tangible and core capital (as defined) to tangible assets (as defined). Management believes that as of December 31, 2017, the Company and its subsidiary bank meets all capital adequacy requirements to which it is subject.

The Company’s and the Bank’s actual capital amounts and ratios as of December 31, 2017 and 2016 are presented below:

As of June 30, 2016, the date of the most recent notification from the Office of Financial Institutions, the Bank was categorized as well capitalized under the regulatory framework for prompt corrective action.

25

15. Regulatory Matters   (Continued)

								Minimum
						Minimum		To Be Well
						For Capital		Capitalized Under
						Adequacy		Prompt Corrective
	Actual					Purposes		Action Procedures
	Amount		Ratio			Amount	Ratio	Amount		Ratio
As of December 31, 2017:
Total Capital to Risk Weighted Assets:
Consolidated		36,151,000		16.43	%	≥$17,600,000	≥8.0%		N/A		N/A
The Bank		35,501,000		16.14	%	≥$17,600,000	≥8.0 %	≥$22,000,000		≥    %
Tier I Capital to Risk Weighted Assets:
Consolidated		34,468,000		15.67	%	≥$13,200,000	≥6.0%		N/A		N/A
The Bank		33,818,000		15.37	%	≥$13,200,000	≥6.0%	≥$17,600,000		≥    %
Common Equity/Tier 1 Capital to Risk weighted assets:
Consolidated		34,468,000		15.67	%	≥$9,900,000	≥4.5%		N/A		N/A
The Bank		33,818,000		15.37	%	≥$9,900,000	≥4.5%	≥$14,300,000		≥    %
Tier I Capital to Average Assets:
Consolidated		33,406,000		10.80	%	≥$12,133,000	≥4.0%		N/A		N/A
The Bank		32,106,000		10.59	%	≥$12,133,000	≥4.0 %	≥$15,166,000		≥    %
As of December 31, 2016:
Total Capital to Risk Weighted Assets:
Consolidated	$	33,979,000		15.74	%	≥$17,270,000	≥8.0%		N/A		N/A
The Bank	$	33,561,000		15.55	%	≥$17,270,000	≥8.0%	≥$21,587,000		≥10.0%
Tier I Capital to Risk Weighted Assets:
Consolidated	$	32,524,000		15.07	%	≥$12,952,000	≥6.0%		N/A		N/A
The Bank	$	32,106,000		14.87	%	≥$12,952,000	≥6.0%	≥$17,270,000		≥8.0%
Common Equity/Tier 1 Capital to Risk weighted assets:
Consolidated	$	32,524,000		15.07	%	≥$9,714,000	≥4.5%		N/A		N/A
The Bank	$	32,106,000		14.87	%	≥$9,714,000	≥4.5%	≥$14,032,000		≥6.5%
Tier I Capital to Average Assets:
Consolidated	$	32,524,000		11.09	%	≥$11,729,000	≥4.0%		N/A		N/A
The Bank	$	32,106,000		10.95	%	≥$11,729,000	≥4.0%	≥$14,662,000		≥5.0%

The Company’s ability to pay dividends to shareholders is substantially dependent on funds received from its subsidiary bank. The Bank may not, without prior approval from the Office of Financial Institutions, declare dividends in excess of current year earnings plus net earnings from the close of the prior year. Regulations allow both the Office of Financial Institutions and the FDIC to prohibit capital distributions in certain circumstances.

26

16. Employee Stock Option Plan

The Company has an employee stock option plan for certain employees. The Plan grants the employees the option to purchase stock in Richland State Bancorp, Inc. at an exercise price which has been determined by the Board of Directors to be the fair market value of the minority shares of common stock at the date of grant. These options vest over a six year period and must be exercised no later than 10 years after date of grant. The options are incentive stock options.

On December 31, 2015, the Board of Directors of Richland State Bancorp, Inc. approved and entered into a stock option agreement with three employees to issue 1,000 total stock options that represent the right to purchase one share of the Company at an exercise price of $278. These options vest 15% at the date of grant, 15% per year for the next five years from the date of grant and 10% on the sixth year from the date of grant. Compensation expense for these equity-classified awards is recognized over the requisite service or vesting period based upon the fair value at the date of grant.

The Company uses the Black-Scholes model in order to estimate the fair value of the stock options granted in 2015. This model relies on certain assumptions and estimations in order to assign value. More specifically the model relies on the estimation of the total equity and on specific assumptions concerning the expected equity volatility of the Company, the expected time period until vesting, the risk free rate of return that corresponds to the effective term and the expected dividend yield of the common stock. The fair value of the stock options granted in 2016 was $75.71 per share.

The following set of assumptions was used in the development of the Black Scholes pricing model in order to determine the fair value of the stock options:

Estimated equity volatility	30.32	%
Estimated term (years)	7
Risk-free rate of return	2.09	%
Dividend yield	2.00	%

For the year ended December 31, 2017, the Company recognized approximately $22,714 related to compensation expense for stock options that vested during the year.

The following summarizes the option activity in the Plan:

	Option Price Per Share
	$115.00		$188.00		$200.00		$278.00
	Per Share		Per Share		Per Share		Per share
December 31, 2017:
At beginning		-		1,500		1,250		1,000
Options granted		-		-		-		-
Options exercised		-		-		-		-
At ending		-		1,500		1,250		1,000
December 31, 2016:
At beginning		-		1,500		1,250		1,000
Options granted		-		-		-		-
Options exercised		-		-		-		-
At ending		-		1,500		1,250		1,000

27

16. Employee Stock Option Plan   (Continued)

Vesting Table

A summary of the status of the Company’s non-vested options as of December 31, 2017, and changes during the year ended December 31, 2017, is as follows:

	Number of			Weighted average
	shares			exercise price
Non-vested - January 1, 2017		600		$	277.50
Granted		-			-
Vested		(150	)		-
Forfeited		-			-
Non-vested - December 31, 2017		450		$	277.50

17. Deferred Compensation Arrangements

The Company instituted a “Non-Qualified Deferred Compensation Arrangement” with participating employees and members of the Board of Directors. An actuarially determined charge, which is included in other operating expense, is made each year based on the future benefits to be paid to the participant (or beneficiary) under the Plan. Total amounts paid or accrued under such arrangements, amounted to $193,044 in 2017 and $208,920 in 2016.

The Company has also implemented a “Long-Term Cash Incentive Plan” for its participating members of management, whereby the participants are paid a cash incentive based upon the Company’s performance (return on equity, targeted growth in equity, etc.). The payment is at the discretion of the Board of Directors, and is payable at the discretion of the participant as a lump-sum cash distribution, in accordance with the three (3) year vesting schedule, or upon the participant’s separation from service from the Company. The Plan may be amended or terminated by the Board of Directors at any time, provided the amendment or termination does not impair the rights of the participants under the plan provisions. Total compensation expense under the plan was $69,501 and $104,997 for the years ended December 31, 2017 and 2016, respectively.

18. Fair Value of Financial Instruments

Fair value measurements are used to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures, as well as the methodology and significant assumptions used in estimating fair values. In accordance with FASB ASC 820, “Fair Value Measurement and Disclosures,” the fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. All nonfinancial instruments, by definition, have been excluded from these disclosure requirements. Accordingly, the fair value estimates do not represent the underlying value of the Company and may not be realized in an immediate settlement of the instrument.

28

18. Fair Value of Financial Instruments   (Continued)

The fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions.

Fair Value Hierarchy. In accordance with this guidance, financial assets and financial liabilities, generally measured at fair value, are grouped in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 – Valuation is based on inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following methods and assumptions were used in estimating fair value disclosures for financial instruments:

Fair values of assets and liabilities measured at fair value on a recurring basis at December 31, 2016 and 2015 are as follows:

	Level 1		Level 2		Level 3		Fair Value
December 31, 2017:
Securities available-for-sale:
Debt securities:
U.S. government and agency		-		8,714,224		-		8,714,224
Mortgage-backed		-		34,274,123		-		34,274,123
Total securities available-for-sale		-		42,988,347		-		42,988,347

29

18. Fair Value of Financial Instruments   (Continued)

	Level 1		Level 2		Level 3		Fair Value
December 31, 2016:
Securities available-for-sale:
Debt securities:
U.S. government and agency		-		7,490,868		-		7,490,868
Mortgage-backed		-		28,872,709		-		28,872,709
Total securities available-for-sale		-		36,363,577		-		36,363,577

19. Income Taxes

The Company, as required by accounting standards, reviewed its various tax positions taken or expected to be taken in its tax return and has determined it does not have unrecognized tax benefits. The Company does not expect the position to change significantly over the next twelve months. The Company will recognize interest and penalties accrued on any unrecognized tax benefits as a component of other expenses. As of December 31, 2017, the Company has not accrued interest or penalties related to uncertain tax positions.

The Company files a consolidated federal tax return. The Company’s federal income tax returns for the tax years 2014 and subsequent remain subject to examination by the Internal Revenue Service.

20. Subsequent Events

In accordance with FASB ASC Topic 855, “Subsequent Events,” the Company evaluated events and transactions that occurred after the balance sheet date but before the financial statements were made available for potential recognition or disclosure in the financial statements. The Company evaluated such events through February 28, 2018, the date for which the financial statements were available for distribution, for potential recognition and disclosure, noting no subsequent events requiring potential recognition or disclosure in the financial statements.

30

OTHER FINANCIAL INFORMATION

31

February 28, 2018

The Audit Committee and Stockholders

Richland State Bancorp, Inc. and Subsidiary

Rayville, Louisiana

Independent Auditor’s Report on Other Financial Information

We have audited the consolidated financial statements of Richland State Bancorp, Inc. and Subsidiary as of and for the years ended December 31, 2017 and 2016, and our report thereon dated February 28, 2018, which expressed an unmodified opinion on those consolidated financial statements, appears on Pages 1-2. Our audits were conducted for the purpose of forming an opinion on the consolidated financial statements taken as a whole. The consolidating information on Pages 32 through 35 is presented for purposes of additional analysis and is not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The information has been subjected to the auditing procedures applied in the audits of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the consolidated financial statements as a whole.

Shreveport, Louisiana

32

RICHLAND STATE BANCORP, INC. AND SUBSIDIARY

DETAILS OF CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2017

	Richland State		Richland
A S S E T S	Bancorp, Inc.		State Bank		Eliminations			Consolidated
Cash and cash equivalents:
Cash and noninterest-bearing balances due from banks		650,411		12,564,687		(650,411	)		12,564,687
Total cash and cash equivalents		650,411		12,564,687		(650,411	)		12,564,687
Time deposits in banks		-		13,655,023		-			13,655,023
Investment securities:
Securities available for sale		-		42,988,347		-			42,988,347
Securities held to maturity		-		29,230,354		-			29,230,354
Other investment securities		-		1,750,796		-			1,750,796
Total investment securities		-		73,969,497		-			73,969,497
Investment in subsidiary		33,688,920		-		(33,688,920	)		-
Loans, less allowance for loan losses of $1,683,291		-		189,628,252		-			189,628,252
Accrued interest receivable		-		1,632,161		-			1,632,161
Bank premises, automobiles and equipment		-		4,388,831		-			4,388,831
Cash value life insurance		-		7,546,257		-			7,546,257
Real estate owned other than bank premises		-		453,113		-			453,113
Other assets		-		339,215		-			339,215
Total assets		34,339,331		304,177,036		(34,339,331	)		304,177,036

33

LIABILITIES AND	Richland State			Richland
STOCKHOLDERS’ EQUITY	Bancorp, Inc.			State Bank			Eliminations			Consolidated
Liabilities:
Deposits:
Demand		-			68,197,969			(650,411	)		67,547,558
Interest-bearing demand		-			76,329,550			-			76,329,550
Savings					53,132,286			-			53,132,286
Time		-			69,849,891			-			69,849,891
Total deposits		-			267,509,696			(650,411	)		266,859,285
Accrued interest payable		-			44,414			-			44,414
Accrued expenses		-			2,934,006			-			2,934,006
Federal Home Loan Bank advances		-			-			-			-
Total liabilities		-			270,488,116			(650,411	)		269,837,705
Stockholders’ equity:
Common stock $5 par value; 600,000 shares authorized; 97,303 shares issued and outstanding		486,515			512,500			(512,500	)		486,515
Additional paid-in capital		126,121			13,487,500			(13,487,500	)		126,121
Retained earnings		33,855,818			19,818,043			(19,818,043	)		33,855,818
Accumulated other comprehensive income		(129,123	)		(129,123	)		129,123			(129,123	)
Total stockholders’ equity		34,339,331			33,688,920			(33,688,920	)		34,339,331
Total liabilities and stockholders’ equity		34,339,331			304,177,036			(34,339,331	)		304,177,036

34

RICHLAND STATE BANCORP, INC. AND SUBSIDIARY

DETAILS OF CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2016

	Richland State		Richland
A S S E T S	Bancorp, Inc.		State Bank		Eliminations			Consolidated
Cash and cash equivalents:
Cash and noninterest-bearing balances due from banks		417,795		6,493,261		(417,795	)		6,493,261
Total cash and cash equivalents		417,795		6,493,261		(417,795	)		6,493,261
Time deposits in banks		-		4,161,148		-			4,161,148
Investment securities
Securities available for sale		-		36,363,577		-			36,363,577
Securities held to maturity		-		31,541,148		-			31,541,148
Other investment securities		-		1,736,316		-			1,736,316
Total investment securities		-		69,641,041		-			69,641,041
Investment in subsidiary		31,929,946		-		(31,929,946	)		-
Loans, less allowance for loan losses of $1,455,449		-		188,632,876		-			188,632,876
Bank premises, automobiles and equipment		-		4,436,975		-			4,436,975
Real estate owned other than bank premises		-		455,549		-			455,549
Accrued interest receivable		-		1,587,300		-			1,587,300
Cash value life insurance		-		7,128,751		-			7,128,751
Other assets		-		353,199		-			353,199
Total assets		32,347,741		282,890,100		(32,347,741	)		282,890,100

35

LIABILITIES AND	Richland State			Richland
STOCKHOLDERS’ EQUITY	Bancorp, Inc.			State Bank			Eliminations			Consolidated
Liabilities:
Deposits:
Demand		-			66,245,330			417,795			65,827,535
Interest-bearing demand		-			65,973,631			-			65,973,631
Savings		-			47,717,517			-			47,717,517
Time		-			62,720,243			-			62,720,243
Total deposits		-			242,656,721			417,795			242,238,926
Accrued interest payable		-			22,928			-			22,928
Other liabilities		-			2,780,505			-			2,780,505
Federal Home Loan Bank advances		-			5,500,000			-			5,500,000
Total liabilities		-			250,960,154			417,795			250,542,359
Stockholders’ equity:
Common stock, $5 par value; 600,000 shares authorized; 97,506 shares issued and outstanding		487,530			512,500			512,500			487,530
Additional paid-in capital		162,683			13,487,500			13,487,500			162,683
Retained earnings		31,905,457			18,137,875			18,137,875			31,905,457
Accumulated other comprehensive income		(207,929	)		(207,929	)		(207,929	)		(207,929	)
Total stockholders’ equity		32,347,741			31,929,946			32,347,741			32,347,741
Total liabilities and stockholders’ equity		32,347,741			282,890,100			32,347,741			282,890,100

36

RICHLAND STATE BANCORP, INC. AND SUBSIDIARY

DETAILS OF CONSOLIDATED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2017

	Richland State			Richland
	Bancorp, Inc.			State Bank		Eliminations		Consolidated
Interest income:
Interest and fees on loans		-			10,332,821		-		10,332,821
Interest on investment securities		-			1,387,867		-		1,387,867
Interest on federal funds sold		-			140		-		140
Other		-			18,840		-		18,840
Total interest income		-			11,739,668		-		11,739,668
Interest expense:
Interest on deposits		-			867,152		-		867,152
Interest on borrowings		-			62,381		-		62,381
Total interest expense		-			929,533		-		929,533
Net interest income		-			10,810,135		-		10,810,135
Provision for loan losses		-			360,000		-		360,000
Net interest income after provision for loan losses		-			10,450,135		-		10,450,135
Other income:
Service charges		-			1,818,002		-		1,818,002
Commissions and fees		-			1,256,724		-		1,256,724
Increase in cash value life insurance		-			157,647		-		157,647
Life insurance proceeds		-			-		-		-
Investment security gains		-			-		-		-
Other		-			445,349		-		445,349
Total other income		-			3,677,722		-		3,677,722
Other expenses:
Salaries		-			4,873,486		-		4,873,486
Employee benefits		-			1,174,298		-		1,174,298
Net occupancy expense		-			596,098		-		596,098
Equipment expense and depreciation		-			349,221		-		349,221
Other operating expenses		29,807			2,585,174		-		2,614,981
Data processing fees		-			630,950		-		630,950
Total other expenses		29,807			10,209,227		-		10,239,034
Income (loss) before equity in earnings of subsidiary		(29,807	)		3,918,630		-		3,888,823
Equity in earnings of subsidiary		3,918,630			-		3,918,630		-
Net income		3,888,823			3,918,630		3,918,630		3,888,823

37

RICHLAND STATE BANCORP, INC. AND SUBSIDIARY

DETAILS OF CONSOLIDATED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2016

	Richland State			Richland
	Bancorp, Inc.			State Bank		Eliminations		Consolidated
Interest income:
Interest and fees on loans		-			9,780,167		-		9,780,167
Interest on investment securities		-			1,620,435		-		1,620,435
Interest on federal funds sold		-			16,515		-		16,515
Other		-			1,156		-		1,156
Total interest income		-			11,418,273		-		11,418,273
Interest expense:
Interest on deposits		-			611,535		-		611,535
Interest on borrowings		-			95,882		-		95,882
Total interest expense		-			707,417		-		707,417
Net interest income		-			10,710,856		-		10,710,856
Provision for loan losses		-			994,000		-		994,000
Net interest income after provision for loan losses		-			9,716,856		-		9,716,856
Other income:
Service charges		-			1,683,610		-		1,683,610
Commissions and fees		-			1,372,883		-		1,372,883
Increase in cash value life insurance		-			152,346		-		152,346
Life insurance proceeds		-			127,972		-		127,972
Investment security gains		-			54,486		-		54,486
Other		-			526,356		-		526,356
Total other income		-			3,917,653		-		3,917,653
Other expenses:
Salaries					4,695,766		-		4,695,766
Employee benefits		-			972,137		-		972,137
Occupancy expense		-			589,735		-		589,735
Equipment expense and depreciation		-			369,636		-		369,636
Other operating expenses		2,119			2,764,919		-		2,767,038
Data processing fees		-			620,282		-		620,282
Total other expenses		2,119			10,012,475		-		10,014,594
Income (loss) before equity in earnings of subsidiary		(2,119	)		3,622,034		-		3,619,915
Equity in earnings of subsidiary		3,622,034			-		3,622,034		-
Net income		3,619,915			3,622,034		3,622,034		3,619,915

38