Exhibit 99.2

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

CONTENTS

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Consolidated Statements of Financial Condition

(Unaudited)

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Consolidated Statements of Financial Condition (Continued)

(Unaudited)

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

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

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

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(Unaudited)

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

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Consolidated Statements of Shareholders' Equity

(Unaudited)

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

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

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

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2015 

(Unaudited)

NOTE 1: Summary of Significant Accounting Policies

Nature of Operations

        Patriot and its subsidiaries, Patriot Intermediate Holdings, Patriot Bank, Patriot Mortgage, PB Commercial, PB Advantage LLC, Golf Beverages LLC and Promenade Place LLC, provide a variety of financial services to individuals and businesses primarily in the Texas cities of Houston, Dallas, Honey Grove and their respective surrounding areas. The accounting and reporting policies of Patriot conform with GAAP and to general regulatory practices of the United States banking industry. Policies and practices of Patriot which materially affect the determination of financial position, results of operations and cash flows are summarized as follows:

Principles of Consolidation

        The consolidated financial statements include the accounts of Patriot and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

        In preparing consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the valuation of foreclosed assets, deferred tax assets and the fair value of financial instruments.

Significant Group Concentrations of Credit Risk

        Most of Patriot's activities are with customers located within the Texas cities of Houston, Dallas, Honey Grove, and their respective surrounding areas. Note 3 to Patriot's unaudited consolidated financial statements discusses the types of securities that Patriot invests in. Note 4 to Patriot's unaudited consolidated financial statements discusses the types of lending that Patriot engages in. Patriot does not have any significant concentrations to any one industry or customer.

        Patriot carries certain assets with other financial institutions which are subject to credit risk by the amount such assets exceed federal deposit insurance limits. Management monitors the financial stability of correspondent banks and considers amounts advanced in excess of the FDIC limits to present no significant additional risk to Patriot.

Cash and Cash Equivalents

        For the purpose of presentation in the consolidated statements of cash flows, cash and cash equivalents include cash, noninterest-bearing balances due from banks and federal funds sold.

        Patriot is required to maintain average balances on hand or with the Dallas Federal Reserve. Patriot properly maintained amounts in excess of required reserves of $11,591,050 and $10,085,886 as of September 30, 2015 and December 31, 2014, respectively.

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2015 

(Unaudited)

NOTE 1: Summary of Significant Accounting Policies (Continued)

Interest Bearing Deposits in Banks

        Interest bearing deposits in banks mature within one year and are carried at cost.

Securities

        Debt securities that management has the positive intent and ability to hold to maturity, if any, are classified as "held to maturity" and are recorded at amortized cost.

        Securities not classified as held to maturity are classified as "available for sale" and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income.

        Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. 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. In determining whether other-than-temporary impairment exists, management considers many factors, including (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 Patriot to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

        Investments in equity securities are carried at cost. Any changes to the cost basis of these investments are recorded in the statement of income. These investments are reviewed annually to determine if an impairment charge is necessary. For the three months ended September 30, 2015 and 2014, no impairment charges were recorded. For the nine months ended September 30, 2015 and 2014, no impairment charges were recorded.

Loans Held for Sale

        Loans originated and intended for sale in the secondary market are carried at estimated fair value in the aggregate. Net unrealized losses, if any, are recognized through charges to income.

Loans

        Patriot grants mortgage, commercial and consumer loans to customers. A substantial portion of the loan portfolio is represented by commercial loans throughout the Texas cities of Houston and Dallas and their respective surrounding areas. The ability of Patriot's debtors to honor their contracts is dependent in part upon the general economic conditions in these areas.

        Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off which are measured at historical cost are generally reported at their outstanding unpaid principal balances net of any unearned income, charge-offs, and unamortized deferred fees and costs on originated loans. Loan origination fees and certain direct origination costs are deferred and recognized as adjustments to interest income over the lives of the related loans. Unearned income is amortized to interest income using a level yield methodology.

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2015 

(Unaudited)

NOTE 1: Summary of Significant Accounting Policies (Continued)

        The accounting guidance defines a portfolio segment as the level at which an entity develops and documents a systematic methodology to determine the allowance for credit losses, and a class of financing receivables as the level of disaggregation of portfolio segments based on the initial measurement attribute, risk characteristics and methods for assessing risk. Patriot's portfolio segments are Commercial and Industrial, Real Estate, and Consumer and Other. The classes of financing receivables within the real estate segment are Construction and Land Development, 1-4 Family Residential Mortgage, Multifamily Residential, and Commercial Mortgage. The remaining portfolio segments contain a single class of financing receivables. The allowance for credit losses is presented by portfolio segment.

        Loan Origination/Risk Management.    Patriot selectively extends credit for the purpose of establishing long-term relationships with its customers. Patriot mitigates the risks inherent in lending by focusing on businesses and individuals with demonstrated payment history, historically favorable profitability trends and stable cash flows. In addition to these primary sources of repayment, Patriot looks to tangible collateral and personal guarantees as secondary sources of repayment. Lending officers are provided with detailed underwriting policies covering all lending activities in which Patriot is engaged and that require all lenders to obtain appropriate approvals for the extension of credit. Patriot also maintains documentation requirements and extensive credit quality assurance practices in order to identify credit portfolio weaknesses as early as possible so any exposures that are discovered may be reduced.

        Patriot has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Patriot's management and the Patriot board review and approve these policies and procedures on a regular basis. A reporting system supplements the review process by providing management and the Patriot board with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.

        Patriot maintains an independent loan review department that reviews and validates the credit risk program on a periodic basis. Results of these reviews are presented to management and the Board of Directors. The loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit personnel, as well as Patriot's policies and procedures.

        Commercial and Industrial Loans.    A major lending focus of Patriot is on loans to small and medium-sized businesses in a wide variety of industries. Patriot's commercial lending emphasis includes loans to wholesalers, manufacturers and business service companies. A broad array of short and medium-term commercial lending products are made available to businesses for working capital (including inventory and accounts receivable), purchases of equipment and machinery and business expansion (including acquisitions of real estate and improvements). Generally, Patriot's commercial loans are underwritten on the basis of the borrower's ability to service such debt as reflected by cash flow projections. Commercial loans are generally collateralized by business assets, which may include real estate, accounts receivable and inventory, certificates of deposit, securities, guarantees or other collateral. Patriot also generally obtains personal guarantees from the principals of the business. Working capital loans are primarily collateralized by short-term assets, whereas term loans are primarily collateralized by long-term assets. As a result, commercial loans involve additional complexities, variables and risks and require more thorough underwriting and servicing than other types of loans.

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2015 

(Unaudited)

NOTE 1: Summary of Significant Accounting Policies (Continued)

        Construction and Land Development Loans.    Patriot makes loans to finance the construction of residential and non-residential properties. The majority of Patriot's residential construction loans in Texas are for single-family dwellings that are pre-sold or are under earnest money contracts. Patriot also originates loans to finance the construction of commercial properties such as multi-family, office, industrial, warehouse and retail centers. Construction loans involve additional risks attributable to the fact that loan funds are advanced upon the security of a project under construction, and the project is of uncertain value prior to its completion. Because of uncertainties inherent in estimating construction costs, the market value of the completed project and the effects of governmental regulation on real property, it can be difficult to accurately evaluate the total funds required to complete a project and the related loan to value ratio. As a result of these uncertainties, construction lending often involves the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project rather than the ability of a borrower or guarantor to repay the loan. If Patriot is forced to foreclose on a project prior to completion, there is no assurance that Patriot will be able to recover the entire unpaid portion of the loan. In addition, Patriot may be required to fund additional amounts to complete a project and may have to hold the property for an indeterminable period of time. While Patriot has underwriting procedures designed to identify what it believes to be acceptable levels of risks in construction lending, no assurance can be given that these procedures will prevent losses from the risks described above.

        1-4 Family Residential Mortgages.    Patriot originates 1-4 family residential mortgage loans collateralized by owner-occupied and non-owner-occupied real estate to finance the purchase of real estate. Repayment of these loans may be subject to adverse conditions in the real estate market or the economy to a greater extent than other types of loans. Loans collateralized by 1-4 family residential real estate generally have been originated in amounts of no more than 90% of appraised value. The underwriting analysis includes credit verification, appraisals and a review of the financial condition of the borrower.

        Commercial Mortgages.    Patriot makes commercial mortgage loans collateralized by owner-occupied and non-owner-occupied real estate to finance the purchase of real estate. Payments on loans secured by such properties are often dependent on the successful operation or management of the properties. Accordingly, repayment of these loans may be subject to adverse conditions in the real estate market or the economy to a greater extent than other types of loans.

        When underwriting these loans, Patriot seeks to minimize these risks in a variety of ways, including giving careful consideration to the property's operating history, future operating projections, current and projected occupancy, location and physical condition. The underwriting analysis also includes credit verification, analysis of global cash flow, appraisals and a review of the financial condition of the borrower.

        Consumer and Other Loans.    Consumer and other loans made by Patriot include automobile loans, recreational vehicle loans, boat loans, home improvement loans, home equity loans, and other personal loans. Consumer and other loans represent less than 1% of total loans. Risk is minimized due to relatively small loan amounts that are spread across many individual borrowers.

        Concentrations of Credit.    Most of Patriot's lending activity occurs within the state of Texas, including the two largest metropolitan areas of Houston and Dallas and their respective surrounding areas, as well as other markets. The majority of Patriot's loan portfolio consists of commercial and industrial and commercial real estate loans.

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2015 

(Unaudited)

NOTE 1: Summary of Significant Accounting Policies (Continued)

        Nonaccrual and Past Due Loans.    Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management's opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. In determining whether or not a borrower may be unable to meet payment obligations for each class of loans, Patriot considers the borrower's debt service capacity through the analysis of current financial information, if available, and/or current information with regards to Patriot's collateral position. Regulatory provisions would typically require the placement of a loan on nonaccrual status if (i) principal or interest has been in default for a period of 90 days or more unless the loan is both well secured and in the process of collection or (ii) full payment of principal and interest is not expected. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income on nonaccrual loans is recognized only after all principal has been collected in full. A loan may be returned to accrual status when all the principal and interest amounts contractually due are brought current and future principal and interest amounts contractually due are reasonably assured, which is typically evidenced by a sustained period (at least six months) of repayment performance by the borrower.

Allowance for Loan Losses

        The allowance for loan losses represents management's estimate of probable losses inherent in Patriot's lending portfolio. Credit exposures deemed to be uncollectible are charged against these accounts. Cash recovered on previously charged-off amounts is recorded as a recovery to these accounts. The allowance for loan losses does not include amounts related to accrued interest receivable as accrued interest receivable is reversed when a loan is placed on nonaccrual or is charged-off.

        Patriot employs a systematic methodology for determining the allowance for credit losses that consists of three components: (i) specific valuation allowances determined in accordance with FASB ASC Topic 310 based on probable losses on specific loans; (ii) historical valuation allowances determined in accordance with ASC Topic 450 based on historical average loss experience for similar loans with similar characteristics and trends adjusted, as necessary, to reflect the impact of current conditions; and (iii) general valuation allowances determined in accordance with ASC Topic 450 based on general economic conditions and other risk factors both internal and external to Patriot.

        A loan, with the exception of groups of smaller-balance homogenous loans, is considered impaired and subject to ASC Topic 310 when, based on current information, it is probable that the borrower will be unable to pay contractual interest or principal payments as scheduled in the loan agreement. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.

        The specific allowance related to an impaired loan is established when the carrying value of the loan is more than the present value of expected cash flows discounted at the loan's effective interest rate or, as a practical expedient, the loan's observable market price or the fair value of the collateral if the loan is collateral dependent.

        The allowance on the remaining portfolio segments is calculated using historical loss rates in accordance with ASC Topic 450. Criticized and classified loans, not deemed impaired, are subject to an allowance based on the historical loss migration analysis by grade. Pass loans are subject to an allowance based on historical losses by product type.

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2015 

(Unaudited)

NOTE 1: Summary of Significant Accounting Policies (Continued)

        The general component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and historical losses in the portfolio. The general valuation factor is based upon a more qualitative analysis of risk. Various risks are considered in the determination of the environmental adjustment factor such as asset quality, lending management and staff, loan policies and procedures, loan review, credit concentrations, loan volumes, collateral values, and economic trends.

Financial Instruments

        In the ordinary course of business, Patriot has entered into commitments to extend credit, including standby letters of credit. Such financial instruments are recorded when they are funded.

Derivative Instruments and Hedging Activities

        Derivative financial instruments are recognized as assets and liabilities on the consolidated statement of financial condition and measured at fair value.

Interest Rate Swap Agreements 

        For asset management purposes, Patriot uses interest rate swap agreements to hedge various exposures or to modify interest rate characteristics of various balance sheet accounts. Interest rate swaps are contracts in which a series of interest rate flows are exchanged over a prescribed period.

        The notional amount on which the interest payments are based is not exchanged. These swap agreements are derivative instruments and generally convert a portion of Patriot's variable rate loans to a fixed rate (cash flow hedge).

        The effective portion of the gain or loss on a derivative designated and qualifying as a cash flow hedging instrument is initially reported as a component of other comprehensive income and subsequently reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument, if any, is recognized currently in earnings.

        For cash flow hedges, the net settlement (upon close-out or termination) that offsets changes in the value of the hedged loan is deferred and amortized into net interest income over the life of the hedged loan. The portion, if any, of the net settlement amount that did not offset changes in the fair value of the hedged asset or liability is recognized immediately in earnings and classified as a component of noninterest income.

        Interest rate derivative financial instruments receive hedge accounting treatment only if they are designated as a hedge and are expected to be, and are, effective in substantially reducing interest rate risk arising from the assets and liabilities identified as exposing Patriot to risk. Those derivative financial instruments that do not meet specified hedging criteria would be recorded at fair value with changes in fair value recorded in earnings. If periodic assessments indicate derivatives no longer provide an effective hedge, the derivative contracts would be closed out and settled, or classified as a trading activity. Cash flows resulting from the derivative financial instruments that are accounted for as hedges of assets and liabilities are classified in the cash flow statement in the same category as the cash flows of the items being hedged.

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2015 

(Unaudited)

NOTE 1: Summary of Significant Accounting Policies (Continued)

Forward Loan Sales Commitments 

        Patriot carefully evaluates all loan sales agreements to determine whether they meet the definition of a derivative under authoritative accounting guidance as facts and circumstances may differ significantly.

        Patriot utilizes both "mandatory delivery" and "best efforts" forward loan sale commitments to mitigate the risk of potential decreases in the values of loans. See Note 18 to Patriot's unaudited consolidated financial statements On-Balance Sheet Derivative Instruments and Hedging Activities for further discussion.

Foreclosed Assets

        Assets acquired through, or in lieu of, loan foreclosure are initially recorded at fair value less estimated selling cost at the date of foreclosure. All write-downs based on the asset's fair value at the date of acquisition are charged to the allowance for loan losses. After foreclosure, property held for sale is carried at the lower of the new cost basis or fair value less cost to sell and depreciation is not recorded.

        Impairment losses on property to be held and used are measured as the amount by which the carrying amount of a property exceeds its fair value. The fair value of the property is depreciated based on its remaining useful life. Costs of significant property improvements are capitalized, whereas costs relating to holding property are expensed.

        Valuations are periodically performed by management, and any subsequent write-downs are recorded as a charge to operations, if necessary, to reduce the carrying value of a property to the lower of its cost or fair value less cost to sell.

Loans Acquired in Acquisitions

        Authoritative accounting guidance requires acquired loans to be recorded at fair value and prohibits carrying over valuation allowances in the initial accounting for acquired impaired loans. Loans carried at fair value, mortgage loans held for sale, and loans to borrowers in good standing under revolving credit agreements are excluded from the scope of the guidance. The guidance limits the yield that may be accreted to the excess of the undiscounted expected cash flows over the investor's initial investment in the loan. The excess of the contractual cash flows over expected cash flows may not be recognized as an adjustment of the yield. Subsequent increases in cash flows expected to be collected are recognized prospectively through an adjustment of the loan's yield over its remaining life. Decreases in expected cash flows are recognized as impairments.

Premises and Equipment

        Land is carried at cost. Buildings, leasehold improvements, furniture and equipment are carried at cost, less accumulated depreciation and amortization computed on the straight-line method over the estimated useful life of the asset or the expected terms of the underlying lease, if shorter.

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2015 

(Unaudited)

NOTE 1: Summary of Significant Accounting Policies (Continued)

Income Taxes

        Patriot's income tax expense consists of the following components: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. Patriot determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rate and laws are recognized in the period in which they occur.

        Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. 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 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management's judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not some portion or all of a deferred tax asset will not be realized.

        Patriot recognizes interest accrued on and penalties related to unrecognized tax benefits in tax expense. During the three months ended September 30, 2015 and 2014 Patriot recognized no interest and penalties.  During the nine months ended September 30, 2015 and 2014 Patriot recognized no interest and penalties. Patriot has no unrecognized tax benefits at September 30, 2015 and December 31, 2014.

        In May of 2006, the State of Texas implemented a new tax on taxable margin, effective for years ended after December 31, 2006. For Patriot, taxable margin is revenue less interest expense. The margin tax was insignificant for the three months ended September 30, 2015 and 2014.  The margin tax was insignificant for the nine months ended September 30, 2015 and 2014. The deferred tax component of this tax is insignificant.

        Based on management's analysis, Patriot did not have any uncertain tax positions as of September 30, 2015 and December 31, 2014. Patriot files income tax returns in the U.S. federal jurisdiction and the state of Texas. There are currently no income tax examinations underway for these jurisdictions. Patriot's income tax returns are subject to examination by the relevant taxing authorities as follows: U.S. federal income tax returns for tax years 2011 and forward; Texas income and margin tax returns for tax years 2010 and forward. 

Cash Surrender Value of Life Insurance

        Life insurance policies are initially recorded at cost at the date of purchase. Subsequent to purchase, the policies are periodically adjusted to contract value. The adjustment to contract value increases or decreases the carrying value of the policies and is recorded as income or expense on the consolidated statement of income.

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2015 

(Unaudited)

NOTE 1: Summary of Significant Accounting Policies (Continued)

Advertising

        Generally, advertising costs are expensed as incurred. Advertising expenses for the three months ended September 30, 2015 and 2014 were $119,669 and $238,676, respectively. Advertising expenses for the nine months ended September 30, 2015 and 2014 were $499,490 and $687,509, respectively.

Troubled Debt Restructured Loans

        A troubled debt restructured loan is a loan which Patriot, for reasons related to a borrower's financial difficulties, grants a concession to the borrower that Patriot would not otherwise consider. The loan terms which have been modified or restructured due to a borrower's financial difficulty include, but are not limited to, a reduction in the stated interest rate; an extension of the maturity; a reduction in the face amount of the debt; a reduction in the accrued interest; or re-aging, extension, deferral, renewal or rewrite. A troubled debt restructured loan would generally be considered impaired.

Preferred Stock

        Patriot has the authority to issue up to 24,991,590 shares of preferred stock. The preferred stock is available for issuance from time to time for various purposes as determined by the Board of Directors, including making future acquisitions, raising additional equity capital and financing. The following classes of preferred stock have been designated and issued:

Series B Preferred Stock 

        On December 19, 2008, Patriot entered into a purchase agreement with the Treasury Department pursuant to which Patriot issued and sold to the Treasury Department (i) 26,038 shares of Patriot's Fixed Rate Cumulative Perpetual Preferred Stock, Series B, par value $1.00 per share, with a liquidation value of $1,000 per share, and (ii) a warrant to purchase up to 1,302 shares of Patriot's Perpetual Preferred Stock, Series C, par value $1.00 per share, at an exercise price of $0.50 per share (which we refer to in this joint proxy statement/prospectus as the "Warrant"), for an aggregate purchase price of $26,038,000 in cash.

        Cumulative dividends on the Series B Preferred Stock will accrue on the liquidation preference at a rate of 5% per annum for the first five years, and at a rate of 9% per annum thereafter. The dividend rate increased to 9% per annum on February 15, 2014. Dividends are payable quarterly in arrears on each February 15, May 15, August 15, and November 15, each a dividend payment date, starting with February 15, 2009. Dividends payable during any dividend period are computed on the basis of a 360-day year consisting of twelve 30-day months.

        The Series B Preferred Stock has no maturity date and ranks senior to the Common Stock with respect to the payment of dividends and distributions and amounts payable upon liquidation, dissolution and winding up of Patriot. The Series B Preferred Stock generally is non-voting.

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2015 

(Unaudited)

NOTE 1: Summary of Significant Accounting Policies (Continued)

The Series B Preferred Stock may not be redeemed prior to the first dividend payment date falling on or after the third anniversary, December 19, 2011, of the original issue date. On or after the first dividend payment date falling on or after the third anniversary of the original issue date, Patriot, at its option, subject to the approval of the appropriate federal banking agency, may redeem, in whole or in part, at any time and from time to time, out of funds legally available thereafter, the shares of designated preferred stock at the time outstanding, upon notice given at a redemption price equal to the sum of (i) the liquidation amount per share and (ii) any accrued and unpaid dividends to, but excluding, the date fixed for redemption.

        The Treasury Department sold the Series B Preferred Stock to private investors in April 2014.

Series C Preferred Stock 

        The Warrant on Patriot's Perpetual Preferred Stock, Series C, was immediately exercised and issued on December 19, 2008. Cumulative dividends on the Series C Preferred Stock will accrue on the liquidation preference at a rate of 9% per annum. Dividends are payable quarterly in arrears on each February 15, May 15, August 15, and November 15, each a dividend payment date, starting with February 15, 2009. Dividends payable during any dividend period are computed on the basis of a 360-day year consisting of twelve 30-day months.

        The Series C Preferred Stock has no maturity date and ranks senior to the Common Stock with respect to the payment of dividends and distributions and amounts payable upon liquidation, dissolution and winding up of Patriot. The Series C Preferred Stock generally is non-voting.

        The Series C Preferred Stock may not be redeemed prior to the later of (i) the first dividend payment date falling on or after the third anniversary, December 19, 2011, of the original issue date; or (ii) the date on which all outstanding shares of the Series B Preferred Stock have been redeemed, repurchased, or otherwise acquired by Patriot. On or after the first dividend payment date falling on or after the third anniversary of the original issue date, Patriot, at its option, subject to the approval of the appropriate federal banking agency, may redeem, in whole or in part, at any time and from time to time, out of funds legally available thereafter, the shares of designated preferred stock at the time outstanding, upon notice given at a redemption price equal to the sum of (i) the liquidation amount per share and (ii) any accrued and unpaid dividends to, but excluding, the date fixed for redemption.

        The Treasury Department sold the Series C Preferred Stock to private investors in April 2014.

Series D Preferred Stock 

        The Series D Preferred Stock has a subscription price of $1.50 per share and a par value of $0.50 per share. Dividends are calculated at an annual rate of 7% based upon the subscription price of $1.50 and paid monthly. Dividends are noncumulative. If the Board of Directors does not declare a dividend for a particular monthly period, Patriot will have no obligation to pay dividends for that month.

        The holders of the Series D Preferred Stock will have no voting rights, except in connection with (1) the creation of a class or series of stock ranking prior to the Series D in the payment of dividends or in the distribution of assets on its liquidation, dissolution, or winding up; (2) certain mergers and consolidations between Patriot and another entity; and (3) amendments to the Patriot certificate. Holders will also not have any preemptive or subscription rights to acquire additional shares of Patriot stock.

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2015 

(Unaudited)

NOTE 1: Summary of Significant Accounting Policies (Continued)

        The Series D Preferred Stock will have no maturity date and Patriot will not be obligated to redeem them. Patriot may, at its option, and subject to the prior approval of the Dallas Federal Reserve, redeem the Series D Preferred Stock in whole or in part at any time following three years from the date of issuance at a cash redemption price of $1.50 per share.

        If the Series D Preferred Stock is outstanding after three years from the date of issuance, Patriot may, at its option, convert the Series D Preferred shares to shares of Common Stock at an initial conversion ratio of one share of Common Stock for each Series D Preferred share, plus cash in lieu of fractional shares.

        As of September 30, 2015 and December 31, 2014, Patriot had issued 1,200,001 shares of Series D Preferred Stock.

Series E Preferred Stock 

        The Series E Preferred Stock has a subscription price of $1.20 per share and a par value of $0.50 per share. Dividends are calculated at an annual rate of 10% based upon the subscription price of $1.20 and paid quarterly. Dividends are noncumulative. If the Board of Directors does not declare a dividend for a particular quarterly period, Patriot will have no obligation to pay dividends for that quarter.

        The holders of the Series E Preferred Stock will have no voting rights, except in connection with (1) the creation of a class or series of stock ranking prior to the Series E in the payment of dividends or in the distribution of assets on its liquidation, dissolution, or winding up; (2) certain mergers and consolidations between Patriot and another entity; and (3) amendments to the Patriot certificate.

Holders will also not have any preemptive or subscription rights to acquire additional shares of Patriot stock.

        The Series E Preferred Stock will have no maturity date and Patriot will not be obligated to redeem them. Patriot may, at its option, and subject to the prior approval of the Dallas Federal Reserve, redeem the Series E Preferred Stock in whole or in part at any time following three years from the date of issuance at a cash redemption price of $1.20 per share.

        If the Series E Preferred Stock is outstanding after three years from the date of issuance, Patriot may, at its option, convert the Series E Preferred shares to shares of Common Stock at an initial conversion ratio of one share of Common Stock for each Series E Preferred share, plus cash in lieu of fractional shares. The Series E Preferred Stock converted to shares of Common Stock in the fourth quarter of 2014.

        There were 10,400,000 shares of Series E Preferred Stock authorized and no shares of Series E Preferred Stock issued and outstanding as of September 30, 2015 and December 31, 2014. 

Series F Preferred Stock 

        The Series F Preferred Stock has a subscription price of $0.80 per share and a par value of $0.50 per share. Dividends are calculated at an annual rate of 10% based upon the subscription price of $0.80 and paid quarterly. Dividends are noncumulative. If the Board of Directors does not declare a dividend for a particular quarterly period, Patriot will have no obligation to pay dividends for that quarter.

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2015 

(Unaudited)

NOTE 1: Summary of Significant Accounting Policies (Continued)

         The holders of the Series F Preferred Stock will have no voting rights, except with respect to certain fundamental changes in terms of the Series F Preferred Stock and as required by Texas law. The voting rights will be in connection with (1) the creation of a class or series of stock ranking prior to the Series F in the payment of dividends or in the distribution of assets on its liquidation, dissolution, or winding up; (2) certain mergers and consolidations between Patriot and another entity; and (3) amendments to the Patriot certificate. Holders will also not have any preemptive or subscription rights to acquire additional shares of Patriot stock.

        The Series F Preferred Stock will have no maturity date and Patriot will not be obligated to redeem them.

       If the Series F Preferred Stock is outstanding after three years from the date of issuance, Patriot may, at its option, convert the Series F Preferred shares to shares of Common Stock at an initial conversion ratio of one share of Common Stock for each Series F Preferred share, plus cash in lieu of fractional shares.

        As of September 30, 2015 and December 31, 2014, Patriot had issued 10,687,500 shares of Series F Preferred Stock. 

Series G Preferred Stock 

        The Series G Preferred Stock has a subscription price of $0.50 per share and a par value of $0.50 per share. Dividends are calculated at an annual rate of 10% based upon the subscription price of $0.50 and paid quarterly. Dividends are noncumulative. If the Board of Directors does not declare a dividend for a particular quarterly period, Patriot will have no obligation to pay dividends for that quarter.

        The holders of the Series G Preferred Stock will have no voting rights, except with respect to certain matters as specified in the Patriot certificate and as otherwise required by Texas law. The voting rights will be in connection with (1) the creation of a class or series of stock ranking prior to the Series G Preferred Stock in the payment of dividends or in the distribution of assets on its liquidation, dissolution, or winding up; (2) certain mergers and consolidations between Patriot and another entity; (3) certain amendments to the Patriot certificate that adversely affect the rights and preferences of the Series G Preferred Stock; (4) the election of up to two directors of Patriot under special circumstances; and (5) as otherwise required by Texas law. Holders will also not have any preemptive or subscription rights to acquire additional shares of Patriot stock.

        The Series G Preferred Stock will have no maturity date and Patriot will not be obligated to redeem them.

        Patriot may, at its option at any time, convert the Series G Preferred shares to shares of Common Stock at a conversion ratio of four shares of Common Stock for each Series G Preferred share, plus cash in lieu of fractional shares. In addition, the Series G shares will automatically convert to shares of Common Stock at a conversion rate of four shares of Common Stock for each Series G Preferred share immediately following the redemption of conversion to Common Stock of all outstanding shares of the Series B Preferred Stock and Series C Preferred Stock.

        As of December 31, 2014, Patriot had issued 2,513,250 shares of Series G Preferred Stock. The Series G Preferred Stock converted to shares of Common Stock in February 2015.

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2015 

(Unaudited)

NOTE 1: Summary of Significant Accounting Policies (Continued)

Stock Purchase Agreement Restrictions 

        Pursuant to the terms of the Stock Purchase Agreement with the Treasury Department (which we refer to in this joint proxy statement/prospectus as the "Patriot Stock Purchase Agreement"), Patriot adopted certain standards for executive compensation and corporate governance for the period during which the Treasury Department holds the equity issued pursuant to the Patriot Stock Purchase Agreement, including the common stock which may be issued pursuant to the Troubled Asset Relief Program (which we refer to in this joint proxy statement/prospectus as "TARP") warrant (which we refer to in this joint proxy statement/prospectus as the "TARP Warrant"). These standards generally apply to Patriot's Chief Executive Officer, Chief Operating Officer and the three next most highly compensated senior executive officers. The standards include (1) ensuring that incentive compensation for senior executives does not encourage unnecessary and excessive risks that threaten the value of the financial institution; (2) required clawback of any bonus or incentive compensation paid to a senior executive based on statements of operations, gains or other criteria that are later proven to be materially inaccurate; (3) prohibition on making golden parachute payments to senior executives; and (4) agreement not to deduct for tax purposes executive compensation in excess of $500,000 for each senior executive. In particular, the change to the deductibility limit on executive compensation will likely increase the overall cost of Patriot's compensation programs in future periods. Since the TARP Warrant has a ten year term, Patriot could potentially be subject to the executive compensation and corporate governance restrictions for a ten year time period.

        On February 17, 2009, the American Recovery and Reinvestment Act of 2009 (which we refer to in this joint proxy statement/prospectus as "ARRA") was signed into law by President Obama. The ARRA includes a wide variety of programs intended to stimulate the economy and provide for extensive infrastructure, energy, health, and education needs. In addition, the ARRA imposes certain new executive compensation and corporate expenditure limits on all current and future TARP recipients, including Patriot, until the institution has repaid the Treasury Department, which is now permitted under the ARRA without penalty and without the need to raise new capital, subject to the Treasury Department's consultation with the recipient's appropriate regulatory agency.

        The ARRA executive compensation standards are more stringent than those currently in effect under the TARP Capital Purchase Program or those previously proposed by the Treasury Department.

        The new standards include (but are not limited to) (i) prohibitions on bonuses, retention awards and other incentive compensation, other than restricted stock grants which do not fully vest during the TARP period up to one-third of an employee's total annual compensation, (ii) prohibitions on golden parachute payments for departure from a company, (iii) an expanded clawback of bonuses, retention awards, and incentive compensation if payment is based on materially inaccurate statements of earnings, revenues, gains or other criteria, (iv) prohibitions on compensation plans that encourage manipulation of reported earnings, (v) retroactive review of bonuses, retention awards and other compensation previously provided by TARP recipients if found by the Treasury Department to be inconsistent with the purposes of TARP or otherwise contrary to public interest, (vi) required establishment of a company-wide policy regarding "excessive or luxury expenditures," and (vii) inclusion in a participant's proxy statements for annual shareholder meetings of a nonbinding "Say on Pay" shareholder vote on the compensation of executives for participants with securities registered under federal securities laws.

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2015 

(Unaudited)

NOTE 1: Summary of Significant Accounting Policies (Continued)

Business Combinations, Goodwill and Other Intangible Assets

        Authoritative accounting guidance requires that all business combinations initiated after June 30, 2001 are accounted for under the acquisition method and addresses the initial recognition and measurement of goodwill and other intangible assets acquired in a business combination. The guidance addresses the initial recognition and measurement of intangible assets acquired in a business combination and the accounting for goodwill and other intangible assets subsequent to their acquisition. The guidance provides that intangible assets with finite useful lives be amortized and that goodwill and intangible assets with indefinite lives not be amortized, but rather be tested at least annually for impairment.

        Goodwill and other intangible assets recorded in the acquisitions of First State Bank of Honey Grove, Quadco Bancshares, Inc., Northeast Bancshares, Inc., Principal Mortgage Group and Northstreet Mortgage, Inc. are subject to the provisions of the guidance.

        The goodwill associated with the acquisitions of Principal Mortgage Group and Northstreet Mortgage, Inc. was deemed impaired in 2014, resulting in a goodwill impairment loss of $94,352. The goodwill recorded on the remaining acquisitions amounted to $6,681,784 and is not subject to amortization. Patriot conducted a goodwill impairment test for the year ended December 31, 2014. There were no further reductions of recorded goodwill resulting from the impairment test.

        Other identifiable intangible assets recorded by Patriot Bank represent future benefits associated with the acquisition of core deposits of First State Bank of Honey Grove, Quadco Bancshares, Inc. and Northeast Bancshares, Inc. and are being amortized over 10 years utilizing a method that approximates the expected attrition of the deposits.

Stock Compensation Plans

        Authoritative accounting guidance requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost is measured based on the grant date fair value of the equity or liability instruments issued. The guidance covers a wide range of share-based compensation arrangements including stock options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans.

        The stock compensation accounting guidance requires that compensation cost for all stock awards be calculated and recognized over the employees' service period, generally defined as the vesting period. The guidance permits entities to use any option-pricing model that meets the fair value objective. Patriot elected to adopt the guidance on January 1, 2006 under the modified prospective method. Patriot did not have any awards outstanding prior to January 1, 2006.

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2015 

(Unaudited)

NOTE 1: Summary of Significant Accounting Policies (Continued)

Recently Issued Authoritative Accounting Guidance

Accounting Standards Updates

        FASB ASU No. 2014-04—"Receivables—Troubled Debt Restructuring by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans Upon Foreclosure" clarifies when an in substance foreclosure occurs, that is, when a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan. This is the point when the consumer mortgage loan should be derecognized and the real property recognized. ASU 2014-04 was effective for Patriot on January 1, 2015 and did not have a significant impact on Patriot's financial statements.

        FASB ASU No. 2014-09—"Revenue from Contract with Customers (Topic 606)" supersedes the revenue recognition requirements in Revenue Recognition (Topic 605), and most industry-specific guidance throughout the Industry Topics of the Codification. Additionally ASU 2014-09 supersedes some cost guidance included in Revenue Recognition—Construction-Type and Production-Type Contracts (Subtopic 605-35). In addition, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer are amended to be consistent with the guidance on recognition and measurement. The core principal of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The adoption of this ASU becomes effective for Patriot beginning after January 1, 2017, with retrospective application to each prior reporting period presented, and is not expected to have a significant impact on Patriot's financial statements.

        FASB ASU No. 2014-11—"Transfers and Servicing (Topic 860)—Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosure" changes the accounting for repurchase-to-maturity transactions to secured borrowing accounting. It also requires separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured borrowing accounting and disclosure for the repurchase agreement. The adoption of this ASU becomes effective for Patriot beginning after January 1, 2016 and is not expected to have a significant impact on Patriot's financial statements.

        FASB ASU No. 2014-12—"Compensation-Stock Compensation (Topic 718)—Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period" requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of the compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. The adoption of this ASU becomes effective for Patriot beginning after January 1, 2016 and is not expected to have a significant impact on Patriot's financial statements.

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2015 

(Unaudited)

NOTE 1: Summary of Significant Accounting Policies (Continued)

       FASB ASU No. 2014-14—"Classification of Certain Government-Guaranteed Mortgage Loans Upon Foreclosure" requires creditors to reclassify mortgage loans as another receivable that is separate from loans and to measure the receivable at the fixed or determinable amount expected to be received under the government guarantee if upon foreclosure the mortgage loans meet certain conditions. ASU 2014-04 was effective for Patriot on January 1, 2015 and did not have a significant impact on Patriot's financial statements.

        FASB ASU No. 2015-01—"Income Statement—Extraordinary and Unusual Items (Subtopic 225-20)—Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items." ASU 2015-01 eliminates from U.S. GAAP the concept of extraordinary items, which, among other things, required an entity to segregate extraordinary items considered to be unusual and infrequent from the results of ordinary operations and show the item separately in the income statement, net of tax, after income from continuing operations. ASU 2015-01 is effective for Patriot beginning January 1, 2016, though early adoption is permitted. ASU 2015-01 is not expected to have a significant impact on Patriot's financial statements.

FASB ASU No. 2015-02 — “Consolidation (Topic 810) – Amendments to the Consolidation Analysis.” ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: 1) Modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities, 2) Eliminate the presumption that a general partner should consolidate a limited partnership, 3) Affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships, 4) Provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2A-7 of the Investment Company Act of 1940 for registered money market funds. ASU 2015-02 is effective for Patriot beginning January 1, 2016. ASU 2015-02 is not expected to have a significant impact on Patriot’s financial statements.

FASB ASU No. 2015-03 — “Interest – Imputation of Interest (Subtopic 835-30) – Simplifying the Presentation of Debt Issuance Costs.” ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective for Patriot beginning January 1, 2017. ASU 2015-03 is not expected to have a significant impact on Patriot’s financial statements.

FASB ASU No. 2015-05 — “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) – Customer's Accounting for Fees Paid in a Cloud Computing Arrangement.” ASU 2015-05 provides a basis for evaluating whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, then the arrangement should be accounted for as a service contract. ASU 2015-05 is effective for Patriot beginning January 1, 2016. ASU 2015-05 is not expected to have a significant impact on Patriot’s financial statements.

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2015 

(Unaudited)

NOTE 1: Summary of Significant Accounting Policies (Continued)

FASB ASU No. 2015-14 — “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date.” In August 2015, the FASB issued ASU 2015-14, which defers the effective date of the previously issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) until the interim and annual reporting periods beginning after December 15, 2017. Earlier application is permitted for interim and annual reporting periods beginning after December 15, 2016. In May 2014, the FASB issued ASU 2014-09 that supersedes the revenue recognition requirements in Revenue Recognition (Topic 605), and most industry-specific guidance throughout the Industry Topics of the Codification.  Additionally ASU 2014-09 supersedes some cost guidance included in Revenue Recognition—Construction-Type and Production-Type Contracts (Subtopic 605-35).  In addition, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer are amended to be consistent with the guidance on recognition and measurement.  The core principal of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  The adoption of ASU 2014-09 becomes effective for Patriot beginning after January 1, 2018, with retrospective application to each prior reporting period presented, and is not expected to have a significant impact on Patriot’s financial statements.

FASB ASU No. 2015-15 – “Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting.”  In August 2015, the FASB issued ASU 2015-15 that adds SEC paragraphs pursuant to the SEC Staff Announcement at the June 18, 2015, Emerging Issues Task Force meeting about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. In April 2015, the FASB issued ASU No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires the presentation of debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. ASU 2015-15 is not expected to have a material impact on Patriot’s financial statements.

FASB ASU No. 2015-16 – “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments.” In September 2015, the FASB issued ASU 2015-16 that requires the acquirer in a business combination to recognize in the reporting period in which adjustment amounts are determined, any adjustments to provisional amounts that are identified during the measurement period, calculated as if the accounting had been completed at the acquisition date. Prior to the issuance of ASU 2015-16, an acquirer was required to restate prior period financial statements as of the acquisition date for adjustments to provisional amounts. The amendments in ASU 2015-16 are to be applied prospectively upon adoption. The adoption of the provisions of ASU 2015-16 upon issuance did not have a material impact on Patriot’s financial statements.

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2015 

(Unaudited)

NOTE 2: Earnings per Common Share

        Basic earnings per common share is computed as net income available to common shareholders divided by the weighted average number of common shares outstanding during the period.

        Diluted earnings per common share is computed using the weighted average number of shares determined for the basic earnings per common share computation plus the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock using the treasury stock method. Outstanding stock options and convertible preferred stock issued by Patriot represent the only dilutive effect reflected in diluted weighted average shares.

        The following table illustrates the computation of basic and diluted earnings per share:

PATRIOT BANCSHARES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

September 30, 2015 

(Unaudited)

NOTE 3: Securities

        The amortized cost and fair value of Patriot's investment securities, with gross unrealized gains and loss, are presented below: