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What changed in RED RIVER BANCSHARES INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of RED RIVER BANCSHARES INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+405 added−423 removedSource: 10-K (2025-03-14) vs 10-K (2024-03-15)

Top changes in RED RIVER BANCSHARES INC's 2024 10-K

405 paragraphs added · 423 removed · 334 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

99 edited+20 added−20 removed131 unchanged
Biggest changeUnder the Basel III capital rules, Red River Bank is required to maintain four minimum capital standards: (1) a leverage ratio of at least 4.00%, (2) a common equity Tier I risk-based capital ratio of at least 7.00%, (3) a Tier I risk-based capital ratio of at least 8.50%, and (4) a total risk-based capital ratio of at least 10.50%.
Biggest changeA summary of the regulatory capital ratios and the CCB are presented below: Minimum Regulatory Capital Ratio CCB Minimum Regulatory Capital Ratio plus CCB Total Risk-Based Capital (Tier I capital plus Tier II capital to total risk-weighted assets) 8.00 % 2.50 % 10.50 % Tier I Risk-Based Capital (Tier I capital to total risk-weighted assets) 6.00 % 2.50 % 8.50 % Common Equity Tier I Capital (Common equity tier I capital to total risk-weighted assets) 4.50 % 2.50 % 7.00 % Tier I Leverage Capital (Tier I capital to adjusted total assets) 4.00 % — % 4.00 % These capital requirements are minimum requirements.
Bank Regulation Red River Bank is a commercial bank chartered under the laws of the State of Louisiana. As such, Red River Bank is subject to extensive regulation, supervision, and examination by the OFI and the FDIC. In addition, Red River Bank’s deposits are insured to the maximum extent permitted by law by the FDIC.
Bank Regulation Red River Bank is a commercial bank chartered under the laws of the State of Louisiana. As such, the Bank is subject to extensive regulation, supervision, and examination by the OFI and the FDIC. In addition, the Bank’s deposits are insured to the maximum extent permitted by law by the FDIC.
These policies have a significant influence on the overall growth of bank loans, investments, and deposits, and the interest rates charged on loans or paid on deposits. We cannot predict the nature of future fiscal and monetary policies or the effect of these policies on our operations and activities, financial condition, results of operations, growth plans, or future prospects.
These policies have a significant influence on the overall growth of bank loans, investments, and deposits, and the interest rates charged on loans or paid on deposits. We cannot predict the nature of future fiscal and monetary policies or the effect of these policies on our operations and activities, financial condition, results of operations, growth plans, or prospects.
Future legislation, regulation, and policies, and the effects of such legislation, regulation, and policies, may have a significant influence on our operations and activities, financial condition, results of operations, growth plans, or future prospects, and the overall growth and distribution of loans, investments, and deposits.
Future legislation, regulation, and policies, and the effects of such legislation, regulation, and policies, may have a significant influence on our operations and activities, financial condition, results of operations, growth plans, or prospects, and the overall growth and distribution of loans, investments, and deposits.
In evaluating applications with respect to these transactions, the Federal Reserve is required to consider, among other things, the effect of the acquisition on competition; the financial condition, managerial resources, and future prospects of the bank holding company and the bank(s) concerned; the convenience and needs of the communities to be served (including the record of performance under the CRA); the effectiveness of the applicant in combating money laundering activities; and the extent to which the proposed acquisition would result in greater or more concentrated risks to the stability of the U.S. banking or financial system.
In evaluating applications with respect to these transactions, the Federal Reserve is required to consider, among other things, the effect of the acquisition on competition; the financial condition, managerial resources, and prospects of the bank holding company and the bank(s) concerned; the convenience and needs of the communities to be served (including the record of performance under the CRA); the effectiveness of the applicant in combating money laundering activities; and the extent to which the proposed acquisition would result in greater or more concentrated risks to the stability of the U.S. banking or financial system.
A bank holding company may elect to be treated as a financial holding company if all of its depository institution subsidiaries are “well-capitalized” and “well-managed,” and have received a rating of not less than “Satisfactory” on its most recent examination under the CRA.
A bank holding company may elect to be treated as a financial holding company if all of its depository institution subsidiaries are “well-capitalized” and “well-managed,” and have received a rating of not less than “Satisfactory” on their most recent examination under the CRA.
In every proposed merger transaction, the reviewing agency must also consider the financial and managerial resources and future prospects of the existing and proposed institutions, the convenience and needs of the community to be served, the bank’s CRA performance, and the effectiveness of each insured depository institution involved in the proposed merger transaction in combating money-laundering activities.
In every proposed merger transaction, the reviewing agency must also consider the financial and managerial resources and prospects of the existing and proposed institutions, the convenience and needs of the community to be served, the bank’s CRA performance, and the effectiveness of each insured depository institution involved in the proposed merger transaction in combating money-laundering activities.
Although “control” is based on all of the facts and circumstances surrounding the investment, control is conclusively presumed to exist if a person or company (or group acting in concert) acquires 25.0% or more of any class of voting securities of the bank holding company.
Although “control” is based on the facts and circumstances surrounding the investment, control is conclusively presumed to exist if a person or company (or group acting in concert) acquires 25.0% or more of any class of voting securities of the bank holding company.
Such legislation, regulation, and policies have had a significant effect on the operations and activities, financial condition, results of operations, growth plans, and future prospects of commercial banks in the past and are expected to continue to do so. 20 Table of Contents
Such legislation, regulation, and policies have had a significant effect on the operations and activities, financial condition, results of operations, growth plans, and prospects of commercial banks in the past and are expected to continue to do so. 20 Table of Contents
Our ability to pay dividends and make other distributions depends in part upon the receipt of dividends from our subsidiary bank, which is subject to certain restrictions on dividends as discussed in more detail below.
Our ability to pay dividends and make other distributions depends in part upon the receipt of dividends from the Bank, which is subject to certain restrictions on dividends as discussed in more detail below.
Under the final rule, (1) the federal banking agencies will evaluate bank performance across the varied activities they conduct and communities in which they operate in order to encourage banks to expand access to credit, investment, and banking services in low- and moderate-income communities, (2) the CRA regulations are updated to evaluate lending outside traditional assessment areas generated by the growth of non-branch delivery systems, such as online and mobile banking, branchless banking, and hybrid models, (3) a new metrics-based approach was adopted to evaluate bank retail lending and community development financing, using benchmarks based on peer and demographic data, and (4) CRA evaluations and data collection are tailored according to bank size and type.
Under the final rule, (1) the federal banking agencies will evaluate bank performance across the varied activities they conduct and communities in which they operate in order to encourage banks to expand access to credit, investment, and banking services in low- and moderate-income communities, (2) the CRA regulations are updated to evaluate lending outside 17 Table of Contents traditional assessment areas generated by the growth of non-branch delivery systems, such as online and mobile banking, branchless banking, and hybrid models, (3) a new metrics-based approach was adopted to evaluate bank retail lending and community development financing, using benchmarks based on peer and demographic data, and (4) CRA evaluations and data collection are tailored according to bank size and type.
We believe that, as of December 31, 2023, the Bank is well-capitalized under the regulatory framework for prompt corrective action. Banks that are adequately capitalized, but not well-capitalized, may not accept, renew, or rollover brokered deposits without a waiver from the FDIC and are subject to restrictions on the interest rates that can be paid on deposits.
We believe that, as of December 31, 2024, the Bank is well-capitalized under the regulatory framework for prompt corrective action. Banks that are adequately capitalized, but not well-capitalized, may not accept, renew, or rollover brokered deposits without a waiver from the FDIC and are subject to restrictions on the interest rates that can be paid on deposits.
Any advances from a FHLB must be secured by specified types of collateral, and all long-term advances may be obtained only for the purpose of providing funds for the financing of residential housing. As a member of the FHLB of Dallas, Red River Bank is required to acquire and hold shares of capital stock in the FHLB of Dallas.
Any advances from a FHLB must be secured by specified types of collateral, and all long-term advances may be obtained only for the purpose of providing funds for the financing of residential housing. As a member of the FHLB of Dallas, the Bank is required to acquire and hold shares of capital stock in the FHLB of Dallas.
Failure to comply with the supervisory letter could result in a supervisory finding that the bank holding company is operating in an unsafe and unsound manner. In addition, our ability to pay dividends may also be limited as a result of the CCB under the Basel III regulatory capital framework.
Failure to comply with the supervisory letter could result in a supervisory finding that the bank holding company is operating in an unsafe and unsound manner. In addition, our ability to pay dividends may also be limited because of the CCB under the Basel III regulatory capital framework.
Under longstanding Federal Reserve policy, which has been codified by the Dodd-Frank Act, we are expected to act as a source of financial strength to, and to commit resources to support, Red River Bank. This support may be required at times when we may not be inclined to provide it.
Under longstanding Federal Reserve policy, which has been codified by the Dodd-Frank Act, we are expected to act as a source of financial strength to, and to commit resources to support, the Bank. This support may be required at times when we may not be inclined to provide it.
Capital Adequacy Requirements The FDIC and OFI monitor the capital adequacy of Red River Bank by using a combination of risk-based guidelines and leverage ratios. These agencies consider the Bank’s capital levels when taking action on various types of applications and when conducting supervisory activities related to the safety and soundness of the Bank and the banking system.
Capital Adequacy Requirements The FDIC and OFI monitor the capital adequacy of the Bank by using a combination of risk-based guidelines and leverage ratios. These agencies consider the Bank’s capital levels when taking action on various types of applications and when conducting supervisory activities related to the safety and soundness of the Bank and the banking system.
Consumers also have the option to direct banks and other financial institutions not to share information about transactions and experiences with affiliated companies for the purpose of marketing products or services. In addition to applicable federal privacy regulations, Red River Bank is subject to certain state privacy laws.
Consumers also have the option to direct banks and other financial institutions not to share information about transactions and experiences with affiliated companies for the purpose of marketing products or services. In addition to applicable federal privacy regulations, the Bank is subject to certain state privacy laws.
The bank regulatory agencies have the power to enforce compliance with applicable banking laws and regulations. These requirements and restrictions include requirements to maintain reserves against deposits, restrictions on the nature and amount of loans that may be made and the interest that may be charged thereon, and restrictions relating to investments and other activities of Red River Bank.
The bank regulatory agencies have the power to enforce compliance with applicable banking laws and regulations. These requirements and restrictions include requirements to maintain reserves against deposits, restrictions on the nature and amount of loans that may be made and the interest that may be charged thereon, and restrictions relating to investments and other activities of the Bank.
As of December 31, 2023, the Company and the Bank qualify for the CBLR framework. Management does not intend to utilize the CBLR framework. Corrective Measures for Capital Deficiencies The federal banking regulators are required by the FDIA to take “prompt corrective action” with respect to capital-deficient banks that are FDIC-insured.
As of December 31, 2024, the Company and the Bank qualify for the CBLR framework. Management does not intend to utilize the CBLR framework. Corrective Measures for Capital Deficiencies The federal banking regulators are required by the FDIA to take “prompt corrective action” with respect to capital-deficient banks that are FDIC-insured.
In addition to FDIC approval, the Bank must also obtain the prior approval of the OFI before acquiring or merging with another bank. The OFI will consider similar criteria when reviewing an application. Branching Under Louisiana law, Red River Bank is permitted to establish additional branch offices within Louisiana, subject to the approval of the OFI.
In addition to FDIC approval, the Bank must also obtain the prior approval of the OFI before acquiring or merging with another bank. The OFI will consider similar criteria when reviewing an application. Branching Under Louisiana law, the Bank is permitted to establish additional branch offices within Louisiana, subject to the approval of the OFI.
Generally, Sections 23A and 23B (1) limit the extent to which the bank or its subsidiaries may engage in “covered transactions” with any one affiliate to an amount equal to 10.0% of such bank’s capital stock and surplus, and limit the aggregate of all such transactions with all affiliates to an amount equal to 20.0% of such capital stock and surplus, and (2) require that all such transactions be on terms substantially the same, or at least as favorable, to the 15 Table of Contents bank or subsidiary as those that would be provided to a non-affiliate.
Generally, Sections 23A and 23B (1) limit the extent to which the bank or its subsidiaries may engage in “covered transactions” with any one affiliate to an amount equal to 10.0% of such bank’s capital stock and surplus, and limit the aggregate of all such transactions with all affiliates to an amount equal to 20.0% of such capital stock and surplus, and (2) require that all such transactions be on terms substantially the same, or at least as favorable, to the bank or subsidiary as those that would be provided to a non-affiliate.
An unsatisfactory CRA record could substantially delay approval or result in denial of an application. Red River Bank received a “Satisfactory” rating in its most recent CRA examination in 2022. On October 24, 2023, the federal banking agencies adopted a final rule to modernize the CRA regulations.
An unsatisfactory CRA record could substantially delay approval or result in denial of an application. The Bank received a “Satisfactory” rating in its most recent CRA examination in 2022. On October 24, 2023, the federal banking agencies adopted a final rule to modernize the CRA regulations.
As of December 31, 2023, our consumer loans were 1.4% of loans HFI. Loans Held for Sale Our mortgage lending group originates home mortgage loans that are sold to investors on the secondary market. Loan types include conventional, VA, FHA, and Rural Development.
As of December 31, 2024, our consumer loans were 1.4% of loans HFI. Loans Held for Sale Our mortgage lending group originates home mortgage loans that are sold to investors on the secondary market. Loan types include conventional, VA, FHA, and Rural Development.
In general, Louisiana law provides that Red River Bank may not pay any dividends to the Company unless the Bank has surplus at least equal to 50.0% of its capital stock and such surplus will not be reduced below 50.0% following payment of the dividend.
In general, Louisiana law provides that the Bank may not pay any dividends to the Company unless the Bank has surplus at least equal to 50.0% of its capital stock and such surplus will not be reduced below 50.0% following payment of the dividend.
For example, the CFPB issued a Request for Information in January 2022 seeking public input with respect to financial institution practices relating to, among other areas, credit card fees, overdraft fees and non-sufficient funds fees and stated its intent to reduce these types of fees through crafting rules, issuing 17 Table of Contents industry guidance, and focusing supervision and enforcement resources to achieve this goal.
For example, the CFPB issued a Request for Information in January 2022 seeking public input with respect to financial institution practices relating to, among other areas, credit card fees, overdraft fees and non-sufficient funds fees and stated its intent to reduce these types of fees through crafting rules, issuing industry guidance, and focusing supervision and enforcement resources to achieve this goal.
We recommend and utilize sound commercial and industrial loan structures that limit our risks as a lender, while also helping to drive the success of our clients’ businesses. Commercial and industrial loans comprised 15.8% of loans HFI as of December 31, 2023.
We recommend and utilize sound commercial and industrial loan structures that limit our risks as a lender, while also helping to drive the success of our clients’ businesses. Commercial and industrial loans comprised 15.8% of loans HFI as of December 31, 2024.
Holding Company Capital Requirements As previously referenced in “- Financial Services Industry Reform,” effective January 1, 2023, we became subject to, on a consolidated basis, the same minimum capital ratios under Basel III as Red River Bank.
Holding Company Capital Requirements As previously referenced in “- Financial Services Industry Reform,” effective January 1, 2023, we became subject to, on a consolidated basis, the same minimum capital ratios under Basel III as the Bank.
We believe that we maintain employment and benefit programs that are appropriate with respect to position responsibilities, competitive with the external market, and capable of attracting, retaining, and motivating competent employees. We recognize the importance of our employee’s financial health and well-being and strive to provide comprehensive compensation and benefits packages to help meet those needs.
We believe that we maintain employment and benefit programs that are appropriate with respect to position responsibilities, competitive with the external market, and capable of attracting, retaining, and motivating competent 10 Table of Contents employees. We recognize the importance of our employee’s financial health and well-being and strive to provide comprehensive compensation and benefits packages to help meet those needs.
As discussed above, in certain circumstances, we could also be required to guarantee the capital restoration plan of Red River Bank, if the Bank became undercapitalized for purposes of the FDIC’s prompt corrective action regulations.
As discussed above, in certain circumstances, we could also be required to guarantee the capital restoration plan of the Bank, if the Bank became undercapitalized for purposes of the FDIC’s prompt corrective action regulations.
Prior approval of the OFI is required for Red River Bank to pay any dividend that would exceed its net profits earned during the current year combined with its retained net profits of the immediately preceding year.
Prior approval of the OFI is required for the Bank to pay any dividend that would exceed its net profits earned during the current year combined with its retained net profits of the immediately preceding year.
All loans, advances, letters of credit, and other extensions of credit made by the FHLB of Dallas to Red River Bank are secured by a portion of Red River Bank’s loan portfolio, as well as capital stock of the FHLB of Dallas held by Red River Bank.
All loans, advances, letters of credit, and other extensions of credit made by the FHLB of Dallas to the Bank are secured by a portion of the Bank’s loan portfolio, as well as capital stock of the FHLB of Dallas held by the Bank.
Although our consumer real estate loan portfolio presents lower levels of risk than our commercial and industrial, commercial real estate, and construction and 8 Table of Contents development loan portfolios, we are exposed to risks based on fluctuations in the value of the real estate collateral securing the loan, as well as changes in the borrower’s financial condition, which could be affected by numerous factors, including divorce, job loss, illness, or other personal hardship.
Although our consumer real estate loan portfolio presents lower levels of risk than our commercial and industrial, CRE, and construction and development loan portfolios, we are exposed to risks based on fluctuations in the value of the real estate collateral securing the loan, as well as changes in the borrower’s financial condition, which could be affected by numerous factors, including divorce, job loss, illness, or other personal hardship.
If a bank holding company has elected to become a financial holding company, it may engage in activities that are (1) financial in nature or incidental to such financial activity, or (2) complementary to a financial activity and which do not 13 Table of Contents pose a substantial risk to the safety and soundness of a depository institution or to the financial system generally.
If a bank holding company has elected to become a financial holding company, it may engage in activities that are (1) financial in nature or incidental to such financial activity, or (2) complementary to a financial activity and which do not pose a substantial risk to the safety and soundness of a depository institution or to the financial system generally.
The guidance provides that a bank may have a concentration in commercial real estate lending if (1) total reported loans for construction, land development, and other land represent 100.0% or more of total risk-based capital, or (2) total non-owner occupied commercial real estate loans, excluding owner occupied properties, represent 300.0% or more of the bank’s total risk-based capital and the outstanding balance of the bank’s commercial real estate loan portfolio has increased 50.0% or more during the prior 36 months.
The guidance provides that a bank may have a concentration in CRE lending if (1) total reported loans for construction, land development, and other land represent 100.0% or more of total risk-based capital, or (2) total non-owner occupied CRE loans, excluding owner occupied properties, represent 300.0% or more of the bank’s total risk-based capital and the outstanding balance of the bank’s CRE loan portfolio has increased 50.0% or more during the prior 36 months.
In addition, under federal law, Red River Bank may not pay any dividend to the Company if it is undercapitalized or the payment of the dividend would cause it to become undercapitalized.
In addition, under federal law, the Bank may not pay any dividend to the Company if it is undercapitalized or the payment of the dividend would cause it to become undercapitalized.
Significantly undercapitalized banks may be subject to a number of requirements and restrictions, including orders to sell sufficient shares or obligations to become adequately capitalized, limitations on asset growth, and cessation of receipt of deposits from correspondent banks. Generally, subject to a narrow exception, the FDIC must appoint a receiver or conservator for an institution that is critically undercapitalized.
Significantly undercapitalized banks may be subject to requirements and restrictions, including orders to sell sufficient shares or obligations to become adequately capitalized, limitations on asset growth, and cessation of receipt 15 Table of Contents of deposits from correspondent banks. Generally, subject to a narrow exception, the FDIC must appoint a receiver or conservator for an institution that is critically undercapitalized.
The Dodd-Frank Act and the CFPB’s implementing regulations, including the TILA-RESPA integrated disclosure rules, also impose disclosure requirements with respect to the origination and sale of residential mortgages.
The Dodd-Frank Act and the 18 Table of Contents CFPB’s implementing regulations, including the TILA-RESPA integrated disclosure rules, also impose disclosure requirements with respect to the origination and sale of residential mortgages.
Points and fees are subject to a relatively stringent cap, and the terms include a wide array of payments that may be made in the course of closing a loan.
Points and fees are subject to a relatively stringent cap, and the terms include a wide array of payments that may be made while closing a loan.
As of December 31, 2023, our tax-exempt loans were 3.7% of loans HFI. Consumer Loans We also make a variety of loans to individuals for personal, family, and household purposes, including secured and unsecured installment and term loans.
As of December 31, 2024, our tax-exempt loans were 3.1% of loans HFI. Consumer Loans We also make a variety of loans to individuals for personal, family, and household purposes, including secured and unsecured installment and term loans.
Through our partnership with registered investment advisors, our investment group also provides investment advisory services, financial planning services, and a comprehensive suite of retirement plans. As of December 31, 2023, our investment group had $1.04 billion of assets under management.
Through our partnership with registered investment advisors, our investment group also provides investment advisory services, financial planning services, and a comprehensive suite of retirement plans. As of December 31, 2024, our investment group had $1.14 billion of assets under management.
As of December 31, 2023, our construction and development loans were 6.3% of loans HFI. Commercial and Industrial Loans We have expertise in meeting the financing needs of commercial operating companies. Our specialists in these areas understand the cash cycle, working capital, and the fixed asset acquisition needs of businesses, which allows us to deliver customizable and effective financing solutions.
As of December 31, 2024, our construction and development loans were 7.5% of loans HFI. Commercial and Industrial Loans We have expertise in meeting the financing needs of commercial operating companies. Our specialists in these areas understand the cash cycle, working capital, and the fixed asset acquisition needs of businesses, which allows us to deliver customizable and effective financing solutions.
In addition, any capital loans that we make to Red River Bank are subordinate in right of payment to deposits and to certain other indebtedness of Red River Bank.
In addition, any capital loans that we make to the Bank are subordinate in right of payment to deposits and to certain other indebtedness of the Bank.
Failure to comply with applicable laws, regulations, and supervisory agreements, breaches of fiduciary duty, or the maintenance of unsafe and unsound conditions or practices, could subject us or our subsidiaries, including Red River Bank, as well as their respective officers, directors, and other institution-affiliated parties, to administrative sanctions and potentially substantial civil money penalties.
Failure to comply with applicable laws, regulations, and 19 Table of Contents supervisory agreements, breaches of fiduciary duty, or the maintenance of unsafe and unsound conditions or practices, could subject us or our subsidiaries, including the Bank, as well as their respective officers, directors, and other institution-affiliated parties, to administrative sanctions, enforcement actions, and potentially substantial civil money penalties.
In our Northshore Louisiana market, which we define to include St. Tammany Parish, we operate one banking center. We operate one banking center in our Acadiana market, which we define to include Lafayette Parish. In our New Orleans market, which we define to include Orleans Parish, we operate one banking center and one combined LDPO.
In our Northshore Louisiana market, which we define to include St. Tammany Parish, we operate one banking center. We operate one banking center in our Acadiana market, which we define to include Lafayette Parish. In our New Orleans market, which we define to include Orleans and Jefferson Parishes, we operate two banking centers and one combined LDPO.
In the event of our bankruptcy, any commitment by us to a federal bank regulatory agency to maintain the capital of Red River Bank under a capital restoration plan would be assumed by the bankruptcy trustee and entitled to a priority of payment.
In the event of our bankruptcy, any commitment by us to a 13 Table of Contents federal bank regulatory agency to maintain the capital of the Bank under a capital restoration plan would be assumed by the bankruptcy trustee and entitled to a priority of payment.
OUR MARKETS As of December 31, 2023, we operated from a network of 27 banking centers throughout Louisiana and one combined LDPO in New Orleans, Louisiana.
OUR MARKETS As of December 31, 2024, we operated from a network of 28 banking centers throughout Louisiana and one combined LDPO in New Orleans, Louisiana.
If a concentration is present, the bank will be subject to further regulatory scrutiny with respect to its risk management practices for commercial real estate lending.
If a concentration is present, the bank will be subject to further regulatory scrutiny with respect to its risk management practices for CRE lending.
HUMAN CAPITAL As of December 31, 2023, we had 362 employees, including 353 full-time employees. None of our employees are represented by any collective bargaining unit or are parties to a collective bargaining agreement. We believe that our relations with our employees are very good.
HUMAN CAPITAL As of December 31, 2024, we had 369 employees, including 358 full-time employees. None of our employees are represented by any collective bargaining unit or are parties to a collective bargaining agreement. We believe that our relations with our employees are very good.
The Dodd-Frank Act (1) requires certain publicly traded companies to give shareholders a non-binding vote on executive 11 Table of Contents compensation and golden parachute payments; (2) enhances independence requirements for compensation committee members; (3) requires national securities exchanges to require listed companies to adopt incentive-based compensation clawback policies for executive officers; (4) requires certain publicly traded companies to disclose the relationship between the executive compensation actually paid by the company and the financial performance of the company; and (5) authorizes the SEC to promulgate rules that would allow shareholders to nominate their own director candidates using a company’s proxy materials.
In addition to those requirements, the Dodd-Frank Act addresses many investor protection, corporate governance, and executive compensation matters that affect most U.S. publicly traded companies. 11 Table of Contents The Dodd-Frank Act (1) requires certain publicly traded companies to give shareholders a non-binding vote on executive compensation and golden parachute payments; (2) enhances independence requirements for compensation committee members; (3) requires national securities exchanges to require listed companies to adopt incentive-based compensation clawback policies for executive officers; (4) requires certain publicly traded companies to disclose the relationship between the executive compensation actually paid by the company and the financial performance of the company; and (5) authorizes the SEC to promulgate rules that would allow shareholders to nominate their own director candidates using a company’s proxy materials.
These capital requirements are minimum requirements. The FDIC or OFI may also set higher capital requirements if warranted by the risk profile of Red River Bank, economic conditions impacting its markets, or other circumstances particular to the Bank.
The FDIC or OFI may also set higher capital requirements if warranted by the risk profile of the Bank, economic conditions impacting its markets, or other circumstances particular to the Bank.
Commitments to Extend Credit We had outstanding commitments to extend credit in the forms of lines of credit and standby letters of credit of approximately $387.4 million as of December 31, 2023. We use the same credit policies in making these commitments as we do for our other loans.
Commitments to Extend Credit We had outstanding commitments to extend credit in the forms of lines of credit and standby letters of credit of approximately $521.5 million as of December 31, 2024. We use the same credit policies in making these commitments as we do for our other loans.
Any new branch, whether located inside or outside of Louisiana, must also be approved by the FDIC, as the Bank’s primary federal regulator. Red River Bank may also establish offices in other states by merging with banks or by purchasing branches of banks in other states, subject to certain restrictions.
Any new branch, whether located inside or outside of Louisiana, must also be approved by the FDIC, as the Bank’s primary federal regulator. The Bank may also establish offices in other states by merging with banks or by purchasing branches of banks in other states, subject to certain restrictions (including obtaining the prior approval of the OFI and FDIC).
Concentrated Commercial Real Estate Lending Regulations The federal banking regulatory agencies have promulgated guidance governing financial institutions with concentrations in commercial real estate lending.
Concentrated CRE Lending Regulations The federal banking regulatory agencies have promulgated guidance governing financial institutions with concentrations in CRE lending.
Moreover, if, in the opinion of the FDIC and the OFI, Red River Bank is engaged in an unsound practice (which could include the payment of dividends), the FDIC may require, generally after notice and hearing, the Bank to cease such practice.
Moreover, if, in the opinion of the FDIC and the OFI, the Bank is engaged in an unsafe or unsound practice 16 Table of Contents (which could include the payment of dividends), the FDIC may require, generally after notice and hearing, the Bank to cease such practice.
Our mission is to be the premier statewide banking organization in Louisiana. We completed an initial public offering of our common stock in May 2019 as an emerging growth company under the JOBS Act.
Our mission is to be the premier statewide banking organization in Louisiana. We completed an initial public offering of our common stock in May 2019.
Our common stock is listed on the Nasdaq Global Select Market under the symbol “RRBI.” As of December 31, 2023, we were the sixth largest financial institution headquartered in Louisiana based on assets, with total assets of $3.13 billion, loans HFI of $1.99 billion, total deposits of $2.80 billion, and total stockholders’ equity of $303.9 million.
Our common stock is listed on the Nasdaq Global Select Market under the symbol “RRBI.” As of December 31, 2024, we were the sixth largest financial institution headquartered in Louisiana based on assets, with total assets of $3.15 billion, loans HFI of $2.08 billion, total deposits of $2.81 billion, and total stockholders’ equity of $319.7 million.
As of December 31, 2023, our non-owner occupied commercial real estate loans were 22.0% of loans HFI. One-to-Four Family Residential Loans. We offer primary and secondary liens on one-to-four family mortgage loans, as well as home equity lines of credit, in each case primarily on owner occupied primary residences.
As of December 31, 2024, our non-owner occupied CRE loans were 22.1% of loans HFI. 8 Table of Contents One-to-Four Family Residential Loans. We offer primary and secondary liens on one-to-four family mortgage loans, as well as home equity lines of credit, in each case primarily on owner occupied primary residences.
Brokerage Services We offer a broad range of products and services designed to meet the investment needs of all of our customers through our investment group and LPL Financial LLC, our registered broker-dealer.
From checking and savings products to sophisticated financing structures, we work to meet our clients’ changing needs. Brokerage Services We offer a broad range of products and services designed to meet the investment needs of all of our customers through our investment group and LPL Financial LLC, our registered broker-dealer.
In addition, consumers may also prevent disclosure of certain information among affiliated 18 Table of Contents companies that is assembled or used to determine eligibility for a product or service, such as that shown on consumer credit reports and asset and income information from applications.
These regulations affect how consumer information is transmitted through financial services companies and conveyed to outside vendors. In addition, consumers may also prevent disclosure of certain information among affiliated companies that is assembled or used to determine eligibility for a product or service, such as that shown on consumer credit reports and asset and income information from applications.
As a result, the Bank does not have a concentration in commercial real estate lending. Community Reinvestment Act The CRA and the related regulations are intended to encourage banks to help meet the credit needs of their entire assessment area, including low and moderate income neighborhoods, consistent with the safe and sound operations of such banks.
Community Reinvestment Act The CRA and the related regulations are intended to encourage banks to help meet the credit needs of their entire assessment area, including low and moderate income neighborhoods, consistent with the safe and sound operations of such banks.
The final rule requires financial institutions to collect and report data to the CFPB on small business loan applicants, including demographic data, lending decisions, and the price and terms of credit. The purpose of the rule is to increase transparency and combat discrimination in small business lending. Currently, the U.S.
The final rule requires financial institutions to collect and report data to the CFPB on small business loan applicants, including demographic data, lending decisions, and the price and terms of credit. The purpose of the rule is to increase transparency and combat discrimination in small business lending. For banks with moderate volume lending, the compliance deadline is January 16, 2026.
Our construction and development portfolio includes loans to small and medium-sized businesses to construct owner occupied facilities, loans to developers of commercial real estate investment properties and residential developments, and, to a lesser extent, loans to individual clients for construction of single-family homes.
As of December 31, 2024, our one-to-four family residential loans were 29.6% of loans HFI. Construction and Development Loans. Our construction and development portfolio includes loans to small and medium-sized businesses to construct owner occupied facilities, loans to developers of CRE investment properties and residential developments, and, to a lesser extent, loans to individual clients for construction of single-family homes.
For example, a bank holding company controlling such a bank can be required to obtain prior Federal Reserve approval of proposed dividends, or might be required to divest the bank or other affiliates. 12 Table of Contents Acquisitions by Bank Holding Companies We must obtain the prior approval of the Federal Reserve before (1) acquiring more than 5.0% of the voting stock of any bank or other bank holding company, (2) acquiring all or substantially all of the assets of any bank or bank holding company, or (3) merging or consolidating with any other bank holding company.
Acquisitions by Bank Holding Companies We must obtain the prior approval of the Federal Reserve before (1) acquiring more than 5.0% of the voting stock of any bank or other bank holding company, (2) acquiring all or substantially all of the assets of any bank or bank holding company, or (3) merging or consolidating with any other bank holding company.
Our underwriting criteria for non-owner occupied properties is even more conservative than our underwriting criteria for owner occupied properties due to the higher inherent risks generally associated with the former. Our target rate of return is also higher for non-owner occupied commercial real estate loans.
We target property types with a greater ability to withstand changes in market forces. Our underwriting criteria for non-owner occupied properties is even more conservative than our underwriting criteria for owner occupied properties due to the higher inherent risks generally associated with the former. Our target rate of return is also higher for non-owner occupied CRE loans.
CORPORATE INFORMATION Our principal executive offices are located at 1412 Centre Court Drive, Suite 301, Alexandria, Louisiana 71301, and our telephone number is (318) 561-4000. Our website is www.redriverbank.net.
Our equal employment opportunity commitment applies to all areas of employment including hiring, training, placement, promotion, compensation, and benefits. CORPORATE INFORMATION Our principal executive offices are located at 1412 Centre Court Drive, Suite 301, Alexandria, Louisiana 71301, and our telephone number is (318) 561-4000. Our website is www.redriverbank.net.
Failure to meet capital guidelines could subject Red River Bank to a variety of enforcement remedies, including issuance of a capital directive, restrictions on business activities, and other measures under the FDIC’s prompt corrective action regulations.
Failure to meet capital guidelines could subject the Bank to a variety of enforcement remedies, including issuance of a capital directive, restrictions on business activities, and other measures under the FDIC’s prompt corrective action regulations. As part of the directive under the Economic Growth Act, in September 2019, the FDIC and other federal bank regulatory agencies approved the CBLR framework.
Those providers, because they are not so highly regulated, may have a competitive advantage over us and may continue to draw customers away from traditional banking institutions, with a continuing adverse effect on the banking industry in general. 19 Table of Contents Future Legislation and Regulatory Reform In light of current economic conditions and the market outlook, regulators may increase their focus on the regulation of financial institutions.
Those providers, because they are not so highly regulated, may have a competitive advantage over us and may continue to draw customers away from traditional banking institutions, with a continuing adverse effect on the banking industry in general.
As of December 31, 2023, Red River Bank’s total reported loans for construction, land development, and other land represented less than 100.0% of the Bank’s total risk-based capital, and its total commercial real estate loans, excluding owner occupied properties, represented less than 300.0% of the Bank’s total risk-based capital.
As of December 31, 2024, the Bank’s total reported loans for construction, land development, and other land represented less than 100.0% of the Bank’s total risk-based capital, and its total CRE loans, excluding owner occupied properties, represented less than 300.0% of the Bank’s total risk-based capital. As a result, the Bank does not have a concentration in CRE lending.
As part of our new market expansion plan, we expanded operations to four new markets between 2017 and 2022. In 2017, we began operations in the Southwest Louisiana market, which includes the Lake Charles, Louisiana MSA. During 2018 and 2019, we entered the Northshore market, located on the north shore of Lake Pontchartrain, near New Orleans, Louisiana.
In 2017, we began operations in the Southwest Louisiana market, which includes the Lake Charles, Louisiana MSA. During 2019, we entered the Northshore market, located on the north shore of Lake Pontchartrain, near New Orleans, Louisiana. In 2020, we entered the Acadiana market, which includes the Lafayette, Louisiana MSA.
Compensation and benefits include 10 Table of Contents market-competitive pay, health insurance, dental insurance, vision insurance, employer paid and voluntary life insurance, health and dependent care flexible spending accounts, paid holidays, paid vacation and sick time, and other insurance and benefit options.
Compensation and benefits include market-competitive pay, health insurance, dental insurance, vision insurance, employer paid and voluntary life insurance, health and dependent care flexible spending accounts, paid holidays, paid vacation and sick time, and other insurance and benefit options. We also offer a 401(k) Plan, and we make matching contributions to that plan.
We also offer a 401(k) Plan, which includes our stock as an investment option, and we make matching contributions to that plan. In addition, we offer stock-based compensation to key employees as a way to attract and retain talent. For more information on our benefit plans and stock-based compensation, see “Item 8. Financial Statements and Supplementary Data - Note 9.
In addition, we offer stock-based compensation to key employees as a way to attract and retain talent. For more information on our benefit plans and stock-based compensation, see “Item 8. Financial Statements and Supplementary Data - Note 9. Employee Benefits” and “- Note 10. Stock-Based Compensation Plans,” respectively, in this Report.
At this time, it is difficult to anticipate the continued impact the above-described legislation may have on our business, our customers, and the financial industry generally.
For banks with $3.0 billion to $10.0 billion in total assets, the compliance deadline is April 1, 2028. At this time, it is difficult to anticipate the continued impact the above-described legislation may have on our business, our customers, and the financial industry generally.
In 2020, we entered the Acadiana market, which includes the Lafayette, Louisiana MSA, by opening a combined LDPO in Lafayette. We also entered the New Orleans market in 2021 by opening a combined LDPO in downtown New Orleans, Louisiana. In Lafayette, Louisiana, in the first quarter of 2022, we opened our first full-service banking center, which we purchased in 2020.
In 2021, we entered the New Orleans market by opening a combined LDPO in downtown New Orleans, Louisiana, which was followed by a full-service banking center in 2022. In the second quarter of 2024, we opened our third banking location in the New Orleans market with a full-service banking center in Metairie, Louisiana.
These minimum capital requirements are set forth below under the heading “- Bank Regulation - Capital Adequacy Requirements.” Imposition of Liability for Undercapitalized Subsidiaries Federal banking regulations require FDIC-insured banks that become undercapitalized to submit a capital restoration plan.
These minimum capital requirements are set forth below under the heading “- Bank Regulation - Capital Adequacy Requirements.” The Federal Reserve monitors the capital adequacy of the Company and considers its capital levels when taking action on various types of applications and when conducting supervisory activities related to the safety and soundness of the Company. 12 Table of Contents Imposition of Liability for Undercapitalized Subsidiaries Federal banking regulations require FDIC-insured banks that become undercapitalized to submit a capital restoration plan.
In general, banks with assets of $10.0 billion or less, such as Red River Bank, will continue to be examined for consumer compliance, and subject to enforcement actions, by their primary federal regulator.
The CFPB has authority to promulgate regulations; issue orders, guidance, interpretations, and policy statements; conduct examinations; and bring enforcement actions regarding consumer financial products and services. In general, banks with assets of $10.0 billion or less, such as the Bank, will continue to be examined for consumer compliance, and subject to enforcement actions, by their primary federal regulator.
At least semi-annually, the FDIC updates its loss and income projections for the Deposit Insurance Fund and, if needed, increases or decreases assessment rates, following notice-and-comment rulemaking, if required.
At least semi-annually, the FDIC updates its loss and income projections for the Deposit Insurance Fund and, if needed, increases or decreases assessment rates, following notice-and-comment rulemaking, if required. The FDIC issued a final rule in October 2022 increasing deposit insurance assessments on all financial institutions beginning in the first quarterly assessment period of 2023.
Mortgage Lending Rules The Dodd-Frank Act authorized the CFPB to establish certain minimum standards for the origination of residential mortgages, including a determination of the borrower’s ability to repay.
As previously referenced in “- Bank Holding Company Regulation - Financial Services Industry Reform,” the future of the CFPB is presently uncertain. Mortgage Lending Rules The Dodd-Frank Act authorized the CFPB to establish certain minimum standards for the origination of residential mortgages, including a determination of the borrower’s ability to repay.
Employee Benefits” and “- Note 10. Stock-Based Compensation Plans,” respectively, in this Report. We seek to engage personnel at all levels by offering opportunities for learning, growth, and the achievement of career objectives. We strive, to the extent possible, to promote from within to fill open positions.
We seek to engage personnel at all levels by offering opportunities for learning, growth, and the achievement of career objectives. We strive, to the extent possible, to promote from within to fill open positions. Additionally, we encourage our employees to volunteer in community service activities in the markets that we serve.
Treasury management services include ways to help our business customers manage accounts payable, accounts receivable, account fraud risk, and information reporting. Treasury management deposit products consist of remote deposit capture, automated clearing house origination, merchant services, positive pay and automated fraud detection tools, account reconciliation services, zero balance accounts, and sweep accounts, including loan and investment sweep accounts.
Treasury management deposit products consist of remote deposit capture, automated clearing house origination, merchant services, positive pay and automated fraud detection tools, account reconciliation services, zero balance accounts, and sweep accounts, including loan and investment sweep accounts. We have dedicated teams who partner with our commercial and private bankers to meet those needs.
No qualified applicant or employee is to be discriminated against because of race, color, national origin, sex, pregnancy, religion, disability, age, veteran status, citizenship, genetic characteristics, or other status protected by federal, state, local, or other law. Our equal employment opportunity commitment applies to all areas of employment including hiring, training, placement, promotion, compensation, and benefits.
We are an Equal Opportunity Employer committed to workplace diversity and inclusion. We employ people based upon merit, ability and qualifications. No qualified applicant or employee is to be discriminated against because of race, color, national origin, sex, pregnancy, religion, disability, age, veteran status, citizenship, genetic characteristics, or other status protected by federal, state, local, or other law.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese actions include the power to stop any practices such agency found to be unsafe or unsound; to require affirmative action to correct any conditions resulting from any violation or practice; to issue an administrative order that can be judicially enforced; to direct an increase in our capital; to restrict our ability to pay dividends; to restrict our growth; to assess civil money penalties against us, the Bank, or our respective officers and directors; to remove officers and directors; and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate the Bank’s deposit insurance and place it into receivership or conservatorship.
Biggest changeThese actions include the power to stop any practices such agency found to be unsafe or unsound; to require affirmative action to correct any conditions resulting from any violation or practice; to issue an administrative order that can be judicially enforced; to direct an increase in our capital; to restrict our ability to pay dividends; to restrict our growth; to assess civil money penalties against us, the Bank, or our respective officers and directors; to remove officers and directors; and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate the Bank’s deposit insurance and place it into receivership or conservatorship. 31 Table of Contents We are subject to capital requirements, which may result in lower returns on equity, require us to raise additional capital, prevent us from accessing FHLB advances, restrict our access to other borrowing lines, limit growth opportunities, result in regulatory restrictions, or require us to commit capital resources to support the Bank.
These factors include, but are not limited to, rating agency actions related to the securities, defaults by the issuer or with respect to the underlying collateral, and changes in market interest rates and instability in the capital markets.
These factors include, but are not limited to, changes in market interest rates, rating agency actions related to the securities, defaults by the issuer or with respect to the underlying collateral, and instability in the capital markets.
Certain federal, state, and local laws are intended to eliminate lending practices that are considered “predatory.” These laws prohibit practices such as steering borrowers away from more affordable products, selling unnecessary insurance to borrowers, repeatedly refinancing loans, and making loans without a reasonable expectation that the borrowers will be able to repay the loans irrespective of the value of the underlying property.
Certain federal and state laws are intended to eliminate lending practices that are considered “predatory.” These laws prohibit practices such as steering borrowers away from more affordable products, selling unnecessary insurance to borrowers, repeatedly refinancing loans, and making loans without a reasonable expectation that the borrowers will be able to repay the loans irrespective of the value of the underlying property.
In addition, we participate in loans originated by other institutions, and we participate in syndicated transactions (including shared national credits) in which other lenders serve as the lead bank. Further, high-profile bank failures have resulted in some degree of public awareness and caused widespread questions about potential concerns in the financial institutions industry.
In addition, we participate in loans originated by other institutions, and we participate in syndicated transactions (including shared national credits) in which other lenders serve as the lead bank. Further, high-profile bank failures in 2023 have resulted in some degree of public awareness and caused widespread questions about potential concerns in the financial institutions industry.
Our commercial real estate loan portfolio exposes us to risks that may be greater than the risks related to other types of loans. Our loan portfolio includes owner occupied and non-owner occupied commercial real estate loans for individuals and businesses for various purposes, which are secured by commercial properties, as well as real estate construction and development loans.
Our CRE loan portfolio exposes us to risks that may be greater than the risks related to other types of loans. Our loan portfolio includes owner occupied and non-owner occupied CRE loans for individuals and businesses for various purposes, which are secured by commercial properties, as well as real estate construction and development loans.
Adverse changes affecting real estate values and the liquidity of real estate in one or more of our markets could increase the credit risk associated with our loan portfolio, significantly impair the value of property pledged as collateral on loans, and affect our ability to sell the collateral upon foreclosure without a loss or additional losses. 21 Table of Contents Additionally, we may have to foreclose on the collateral property to protect our investment.
Adverse changes affecting real estate values and the liquidity of real estate in one or more of our markets could increase the credit risk associated with our loan portfolio, significantly impair the value of property pledged as collateral on loans, and affect our ability to sell the collateral upon foreclosure without a loss or additional losses. 21 Table of Contents Additionally, we may have to foreclose on the collateral property.
Our success depends in large part on the performance of our key personnel, as well as on our ability to attract, motivate, and retain highly qualified management and employees. Competition for employees is intense, and the process of locating key personnel with the combination of skills and attributes required to execute our business plan may be lengthy.
Our success depends in large part on the performance of our key personnel, as well as on our ability to attract, motivate, and retain highly qualified management and employees. Competition for employees is intense, and the process of locating key personnel with the combination of skills and attributes required to execute our business plan may be difficult.
Although we seek to limit this exposure through clear disclosure, ongoing oversight, and contractual provisions requiring indemnification, limitations of liability, insurance coverage, and other similar protections, those obligations may not always be enforceable, or our third-party service providers ultimately may not have sufficient financial strength to fully comply, all of which may increase our financial exposure and adversely affect our business.
Although we seek to limit this 28 Table of Contents exposure through clear disclosure, ongoing oversight, and contractual provisions requiring indemnification, limitations of liability, insurance coverage, and other similar protections, those obligations may not always be enforceable, or our third-party service providers ultimately may not have sufficient financial strength to fully comply, all of which may increase our financial exposure and adversely affect our business.
Additionally, our business could be adversely affected by the effects of war and international conflict, civil unrest, inflation, labor market and supply chain constraints, or a widespread outbreak of pandemics. Further, we are monitoring the ongoing military conflicts between Russia and Ukraine and Israel and Hamas, as well as the current tensions with China.
Additionally, our business could be adversely affected by the effects of war and international conflict, civil unrest, inflation, trade policy and tariffs, labor market and supply chain constraints, or a widespread outbreak of pandemics. Further, we are monitoring the ongoing military conflicts between Russia and Ukraine and Israel and Hamas, as well as the current tensions with China.
Specifically, acquisitions could result in higher than expected deposit attrition, loss of key employees, significant fair value adjustments, or other consequences that could adversely affect our business. Further, the carrying amount of any goodwill that we currently maintain or may acquire may be subject to impairment in future periods.
Specifically, acquisitions could result in higher than expected deposit attrition, loss of key employees, significant fair value adjustments, 25 Table of Contents or other consequences that could adversely affect our business. Further, the carrying amount of any goodwill that we currently maintain or may acquire may be subject to impairment in future periods.
In addition, we cannot provide assurance that we will be able to successfully integrate any business or assets we acquire with our existing business. The integration of acquired operations and assets may require 25 Table of Contents substantial management time, effort, and resources and may divert management’s focus from other strategic opportunities and operational matters.
In addition, we cannot provide assurance that we will be able to successfully integrate any business or assets we acquire with our existing business. The integration of acquired operations and assets may require substantial management time, effort, and resources and may divert management’s focus from other strategic opportunities and operational matters.
Under this “source of strength” doctrine, the Federal Reserve may require a bank holding company to make capital injections into a troubled subsidiary bank at times when the bank holding 32 Table of Contents company may not be inclined to do so and may charge the bank holding company with engaging in unsafe and unsound practices for failure to commit resources to such a subsidiary bank.
Under this “source of strength” doctrine, the Federal Reserve may require a bank holding company to make capital injections into a troubled subsidiary bank at times when the bank holding company may not be inclined to do so and may charge the bank holding company with engaging in unsafe and unsound practices for failure to commit resources to such a subsidiary bank.
Any of the following risks, as well as risks of which we are not now aware or currently deem immaterial, could materially and adversely affect our business, financial condition, and results of operations.
Any of the following risks, as well as risks that we are not now aware or currently deem immaterial, could materially and adversely affect our business, financial condition, and results of operations.
The repurchase programs authorize us to purchase up to a set amount of our outstanding shares of common stock between specific dates. Repurchases may be made from 30 Table of Contents time to time in the open market at prevailing prices and based on market conditions, or in privately negotiated transactions.
The repurchase programs authorize us to purchase up to a set amount of our outstanding shares of common stock between specific dates. Repurchases may be made from time to time in the open market at prevailing prices and based on market conditions, or in privately negotiated transactions.
The medium and long-term fiscal outlook of the federal government and U.S. economy are concerns for businesses, consumers, and investors in the U.S. In addition, economic conditions in foreign countries, including global political hostilities, could affect the stability of global financial markets, which could hinder domestic economic growth.
The medium and long-term fiscal outlook of the federal government and U.S. economy may be concerns for businesses, consumers, and investors in the U.S. In addition, economic conditions in foreign countries, including global political hostilities, could affect the stability of global financial markets, which could hinder domestic economic growth.
Additionally, repurchases under our stock repurchase programs will diminish our cash reserves, which could impact our ability to pursue possible future strategic opportunities and acquisitions, support our operations, invest in securities, and pay dividends, and could result in lower overall returns on our cash balances.
Additionally, stock repurchases will diminish our cash reserves, which could impact our ability to pursue possible future strategic opportunities and acquisitions, support our operations, invest in securities, and pay dividends, and could result in lower overall returns on our cash balances.
We may thereafter own and operate such property, in which case we would be exposed to the risks inherent in the ownership of real estate, including potential environmental liability due to contamination of a property either during ownership or after the divesting of it. As of December 31, 2023, we held OREO totaling $69,000.
We may thereafter own and operate such property, in which case we would be exposed to the risks inherent in the ownership of real estate, including potential environmental liability due to contamination of a property either during ownership or after the divesting of it. As of December 31, 2024, we held OREO totaling $38,000.
If the overall economic climate in the U.S., generally, or in Louisiana, specifically, experiences material disruption, our borrowers may experience difficulties in repaying their loans, the collateral we hold may decrease in value or become illiquid, and the level of nonperforming loans, charge-offs, and delinquencies could rise and require significant additional provisions for credit losses, which could adversely affect our net income.
If the overall economic climate in the U.S., generally, or in Louisiana, specifically, or in a particular industry our borrowers are concentrated, experiences material disruption, our borrowers may experience difficulties in repaying their loans, the collateral we hold may decrease in value or become illiquid, and the level of nonperforming loans, charge-offs, and delinquencies could rise and require significant additional provisions for credit losses, which could adversely affect our net income.
This may come at a time when we have limited other funding options and could jeopardize our ability to originate loans, invest in securities, or meet other obligations such as repaying any potential borrowings or meeting deposit withdrawal demands, which could adversely impact our business or profitability.
These actions could come at a time when we have limited other funding options and could jeopardize our ability to originate loans, invest in securities, or meet other obligations such as repaying any potential borrowings or meeting deposit withdrawal demands, which could adversely impact our business or profitability.
Repurchases may also be subject to a nondeductible excise tax under the Inflation Reduction Act of 2022 equal to 1.0% of the fair market value of the shares repurchased, subject to certain limitations. Our corporate governance documents, and certain corporate and banking laws applicable to us, could make a takeover more difficult.
Repurchases are subject to a nondeductible excise tax under the Inflation Reduction Act of 2022 equal to 1.0% of the fair market value of the shares repurchased, subject to certain limitations. Our corporate governance documents, and certain corporate and banking laws applicable to us, could make a takeover more difficult.
While we do not expect that these conflicts will be directly material to us, associated effects of the geopolitical instability, such as the imposition of sanctions against Russia and Russia’s response to such sanctions (including retaliatory acts like cyber-attacks and sanctions against other countries), could adversely affect the global economy or domestic markets, including ours.
While we do not expect that these conflicts will be directly material to us, associated effects of the geopolitical instability, such as the imposition of sanctions against any country and their response to such sanctions (including retaliatory acts like cyber-attacks and sanctions against other countries), could adversely affect the global economy or domestic markets, including ours.
A deterioration in local economic conditions or in the residential or commercial real estate markets could have an adverse effect on the quality of our loan portfolio, the demand for our products and services, the ability of borrowers to timely repay loans, and the value of the collateral securing loans.
A deterioration in local economic conditions or in the residential or CRE markets could have an adverse effect on the quality of our loan portfolio, the demand for our products and services, the ability of borrowers to timely repay loans, and the value of the collateral securing loans.
Further, any new laws, rules, and regulations could make compliance more difficult or expensive. For additional information regarding laws and regulation to which our business is subject, see “Item 1. Business - Supervision and Regulation. 31 Table of Contents Legislative and regulatory actions taken now or in the future, may increase our costs.
Further, any new laws, rules, and regulations could make compliance more difficult or expensive. For additional information regarding laws and regulation to which our business is subject, see “Item 1. Business - Supervision and Regulation.” Legislative and regulatory actions taken now or in the future, may increase our costs.
Real estate values in many Louisiana markets have experienced periods of fluctuation over the last several years. As of December 31, 2023, $1.58 billion, or 79.1%, of loans HFI were secured by real estate as the primary component of collateral. We also make loans secured by real estate as a supplemental source of collateral.
Real estate values in many Louisiana markets have experienced periods of fluctuation over the last several years. As of December 31, 2024, $1.65 billion, or 79.7%, of loans HFI were secured by real estate as the primary component of collateral. We also make loans secured by real estate as a supplemental source of collateral.
The interests of these insiders could conflict with the interests of our other shareholders. 29 Table of Contents The rights of our common shareholders may be subordinate to the holders of any debt securities or preferred stock that we may issue in the future. As of December 31, 2023, we did not have any outstanding long-term debt.
The interests of these insiders could conflict with the interests of our other shareholders. The rights of our common shareholders may be subordinate to the holders of any debt securities or preferred stock that we may issue in the future. As of December 31, 2024, we did not have any outstanding long-term debt.
As of December 31, 2023, 94.0% of loans HFI were made to borrowers who reside or conduct business in Louisiana, and substantially all of our real estate loans are secured by properties located in Louisiana.
As of December 31, 2024, 94.2% of loans HFI were made to borrowers who reside or conduct business in Louisiana, and substantially all of our real estate loans are secured by properties located in Louisiana.
As a lender, we are exposed to the risk that our borrowers will be unable to repay their loans according to their terms, and that the collateral securing repayment of their loans, if any, may not be sufficient to ensure repayment.
As a lender, we are exposed to the risk that our borrowers will be unable to repay their loans according to their terms, and that the collateral securing repayment of their loans, if any, may be insufficient.
Federal, state, and local consumer lending laws may restrict our ability to originate certain mortgage loans, increase our risk of liability with respect to such loans, increase the time and expense associated with the foreclosure process, or prevent us from foreclosing at all.
Business - Supervision and Regulation.” Federal and state consumer lending laws may restrict our ability to originate certain mortgage loans, increase our risk of liability with respect to such loans, increase the time and expense associated with the foreclosure process, or prevent us from foreclosing at all.
As of December 31, 2023, approximately $315.3 million, or 15.8%, of loans HFI were commercial and industrial loans collateralized, in general, by general business assets including, among other things, accounts receivable, inventory, equipment, and available real estate, and most are backed by a personal guaranty of the borrower or principal.
As of December 31, 2024, approximately $327.1 million, or 15.8%, of loans HFI were commercial and industrial loans collateralized, in general, by general business assets including, among other things, accounts receivable, inventory, equipment, and available real estate, and most are backed by a personal guaranty of the borrower or principal.
For more information on dividend regulations, see “Item 1. Business - Supervision and Regulation.” Our stock repurchase program may not enhance long-term stockholder value, and stock repurchases, if any, could increase the volatility of the price of our common stock and diminish our cash reserves. Since August 2020, we have maintained stock repurchase programs.
For more information on dividend regulations, see “Item 1. Business - Supervision and Regulation.” Our stock repurchase program may not enhance long-term stockholder value, and stock repurchases, if any, could increase the volatility of the price of our common stock and diminish our cash reserves. We maintain stock repurchase programs.
Changes in any of these policies are influenced by macroeconomic conditions and other factors that are beyond our control. Federal fiscal and monetary policymaking decisions could lead to changes in interest rates, inflation, or other economic impacts such as supply chain issues, labor market constraints, and recessions.
Changes in any of these policies are influenced by macroeconomic conditions and other factors that are beyond our control. Federal fiscal and monetary policymaking decisions could lead to changes in interest rates, inflation, or other economic impacts such as recessions.
Although we have not historically issued shares of preferred stock, our board of directors has the authority to issue up to 1,000,000 such shares, and to determine the terms of each issuance of preferred stock and any indebtedness, without shareholder approval, which may be senior to our common stock.
Although we do not currently have any outstanding preferred stock, our board of directors has the authority to issue up to 1,000,000 shares of preferred stock, and to determine the terms of each issuance of preferred stock and any indebtedness, without shareholder approval, which may be senior to our common stock.
Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The determination of the amount of allowance involves a high degree of judgement and subjectivity. As of December 31, 2023, our ACL totaled $21.3 million, which represents approximately 1.07% of loans HFI.
Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The determination of the amount of allowance involves a high degree of judgment and subjectivity. As of December 31, 2024, our ACL totaled $21.7 million, which represents approximately 1.05% of loans HFI.
Because of the credit profile of our customers, we typically have a substantial amount of total unfunded credit commitments, which is not reflected on our balance sheet. As of December 31, 2023, we had $387.4 million in unfunded credit commitments to our customers.
Because of the credit profile of our customers, we typically have a substantial amount of total unfunded credit commitments, which is not reflected on our balance sheet. As of December 31, 2024, we had $521.5 million in unfunded credit commitments to our customers.
Consequently, we could be required to increase our ACL, adversely affecting our profitability. Our business may be adversely affected by credit risk associated with residential property. As of December 31, 2023, $599.5 million, or 30.1%, of our total loan portfolio was secured by primary and secondary liens on one-to-four family residential loans.
Consequently, we could be required to increase our ACL, adversely affecting our profitability. Our business may be adversely affected by credit risk associated with residential property. As of December 31, 2024, $614.6 million, or 29.6%, of our total loan portfolio was secured by primary and secondary liens on one-to-four family residential loans.
As of December 31, 2023, we had NPAs of $2.6 million, or 0.08% of assets. NPAs adversely affect our net income in various ways. We do not record interest income on OREO or on nonperforming loans, which adversely affects our income.
As of December 31, 2024, we had NPAs of $3.3 million, or 0.10% of assets. NPAs adversely affect our net income in various ways. We do not record interest income on OREO or on nonperforming loans, which adversely affects our income.
In addition, there are risks inherent in making any loan, including risks with respect to the period of time the loan may be repaid; risks relating to proper loan underwriting; risks resulting from changes in economic and industry conditions such as labor and material shortages, supply chain difficulties, and inflationary pressures; and risks inherent in dealing with individual borrowers.
In addition, there are risks inherent in making any loan, including risks with respect to the period of time the loan may be repaid; risks relating to proper loan underwriting; risks resulting from changes in economic and industry conditions such as inflationary pressures; tariffs and trade wars; and risks inherent in dealing with individual borrowers.
Repurchases pursuant to our stock repurchase programs could affect our stock price and increase its volatility. The existence of a stock repurchase program could also cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our stock.
The existence of a stock repurchase program could also cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our stock.
Finally, NPAs can take significant time and resources to resolve, causing the related costs of maintaining those assets to increase. These effects may be particularly pronounced in a market of reduced real estate values and excess inventory.
Finally, NPAs can take significant time and resources to resolve, causing the related costs of maintaining those assets to increase. These effects may be particularly pronounced in a declining real estate market where valuations are falling and excess inventory is present.
It is also becoming more prevalent in regulatory compliance. While we are not currently subject to annual stress testing under the Dodd-Frank Act or the Federal Reserve’s Comprehensive Capital Analysis and Review submissions, we currently utilize asset/liability management modeling and stress testing for monitoring and managing interest rate risk and liquidity.
While we are not currently subject to annual stress testing under the Dodd-Frank Act or the Federal Reserve’s Comprehensive Capital Analysis and Review submissions, we currently utilize asset/liability management modeling and stress testing for monitoring and managing interest rate risk and liquidity. We also use an ACL model to evaluate the ACL.
As of December 31, 2023, our directors and executive officers beneficially owned approximately 16.5% of our issued and outstanding shares of common stock.
As of December 31, 2024, our directors and executive officers beneficially owned approximately 15.9% of our issued and outstanding shares of common stock.
The rules establish a regulatory capital standard based on common equity Tier I, require us and the Bank to satisfy a minimum capital adequacy requirement, and impose a CCB. Failure to meet the CCB will result in certain limitations on dividends, stock repurchases, and discretionary bonus payments to executive officers.
The rules establish a regulatory capital standard based on common equity Tier I, which require us and the Bank to satisfy a minimum capital adequacy requirement. Failure to meet capital guidelines could subject us to a variety of limitations on dividends, stock repurchases, and discretionary bonus payments to executive officers.
These laws and regulations, among other matters, prescribe minimum capital requirements, impose limitations on the business activities in which we can engage, limit the dividends or distributions that Red River Bank can pay to us and that we can pay to our shareholders, impose certain specific accounting requirements on us that may be more restrictive and may result in greater or earlier charges to earnings or reductions in our capital than GAAP would require, require us to have an effective anti-money laundering program, and prohibit discriminatory lending practices and unfair, deceptive, or abusive acts.
These laws and regulations, among other matters, prescribe minimum capital requirements, impose limitations on the business activities in which we can engage, limit the dividends or distributions that the Bank can pay to us and that we can pay to our shareholders, require us to have an effective anti-money laundering program, and prohibit discriminatory lending practices and unfair, deceptive, or abusive acts.
As of December 31, 2023, we had energy loans of $34.0 million, or 1.7% of loans HFI. We also may have indirect exposure to energy prices, as some of our non-energy customers’ businesses may be affected by volatility with the oil and gas industry and the impact of inflation on energy prices.
As of December 31, 2024, we had energy loans of $29.8 million, or 1.4% of loans HFI. We also may have indirect exposure to energy prices, as some of our non-energy customers’ businesses may be affected by volatility in the oil and gas industry and energy prices.
Small to medium-sized businesses: frequently have smaller market shares than their competition; may be more vulnerable to economic downturns, inflation, and labor market and supply chain constraints; may often need substantial additional capital to expand or compete; and may experience substantial volatility in operating results. Any of these factors may impair a borrower’s ability to repay a loan.
A significant portion of our business is focused on small to medium-sized businesses, which frequently have smaller market shares than their competition; may be more vulnerable to economic downturns, inflation, and labor market and supply chain constraints; may often need substantial additional capital to expand or compete; and may experience substantial volatility in operating results.
Additionally, depending on our capital levels, the FHLB of Dallas may reduce or eliminate entirely our total borrowing availability with it.
Additionally, depending on our capital levels, the FHLB of Dallas may reduce or eliminate entirely our total borrowing availability with it. Our other borrowing lines may also be restricted or include increased borrowing costs.
While we believe the quantitative techniques and approaches of these models improve our decision-making, they also create the possibility that faulty data, flawed quantitative approaches, or misunderstanding or misuse of their outputs could negatively impact our decision-making ability or, if we become subject to regulatory stress-testing in the future, cause adverse regulatory scrutiny. 28 Table of Contents We utilize third-party companies to support our investment group, and we may be adversely affected by the condition or performance of our third-party brokerage partners.
While we believe the quantitative techniques and approaches of these models improve our decision-making, they also create the possibility that faulty data, flawed quantitative approaches, or misunderstanding or misuse of their outputs could negatively impact our decision-making ability or, if we become subject to regulatory stress-testing in the future, cause adverse regulatory scrutiny.
Risks Related to the Regulation of Our Industry We operate in a highly regulated environment and the laws and regulations that govern our operations, corporate governance, executive compensation, and accounting principles, or changes in them, or our failure to comply with them, could subject us to regulatory action or penalties.
If we are covered by securities analysts and are the subject of an unfavorable report, the price of our common stock may decline. 30 Table of Contents Risks Related to the Regulation of Our Industry We operate in a highly regulated environment and the laws and regulations that govern our operations, corporate governance, executive compensation, and accounting principles, or changes in them, or our failure to comply with them, could subject us to regulatory action or penalties.
Commercial real estate loans expose us to greater credit risk than loans secured by residential real estate, because there are fewer potential purchasers for the commercial real estate collateral, which can make liquidation more difficult in the event of default of the underlying loan.
CRE loans expose us to greater credit risk than loans secured by residential real estate, because there are fewer potential purchasers for the CRE collateral, which can make liquidation more difficult in the event of default of the underlying loan. Additionally, non-owner occupied CRE loans generally involve relatively large balances to single borrowers or related groups of borrowers.
As of December 31, 2023, our owner occupied loans totaled $412.7 million, or 20.7% of loans HFI. Also, as of December 31, 2023, our construction and development loans, non-owner occupied commercial real estate loans, and non-real estate secured loans financing commercial real estate activities totaled $566.6 million, or 28.4% of loans HFI.
As of December 31, 2024, our owner occupied CRE loans totaled $425.7 million, or 20.5% of loans HFI. Also, as of December 31, 2024, our construction and development loans, non-owner occupied CRE loans, and non-real estate secured loans financing CRE activities totaled $615.4 million, or 29.7% of loans HFI.
Our dividend policy may change without notice, and our future ability to pay dividends is subject to restrictions. Holders of our common stock are entitled to receive only such cash dividends as our board of directors may declare out of funds legally available for the payment of dividends.
Holders of our common stock are entitled to receive only such cash dividends as our board of directors may declare out of funds legally available for the payment of dividends.
Our access to funding sources could also be affected by regulatory actions against us or by a decrease in the level of our business 26 Table of Contents activity due to a downturn in the Louisiana economy or in economic conditions generally.
These factors may include disruptions in the financial markets or negative expectations about the industry’s prospects. Our access to funding sources could also be affected by regulatory actions against us or by a decrease in the level of our business activity due to a downturn in the Louisiana economy or in economic conditions generally.
The small to medium-sized businesses that we lend to may have fewer resources to handle adverse business developments, which may impair their ability to repay loans. A significant portion of our business development and marketing strategy is focused on small to medium-sized businesses.
The small to medium-sized businesses that we lend to may have fewer resources to handle adverse business developments, which may impair their ability to repay loans.
We are not registered with the SEC as an investment advisor or broker-dealer. To provide a broader range of investment products and services to our customers through our investment group, we partner with third parties who are licensed and registered to serve in those capacities.
To provide a broader range of investment products and services to our customers through our investment group, we partner with third parties who are licensed and registered to serve in those capacities. The investment products and services provided to our customers through our investment group, by virtue of these third-party channels generally are not insured by the FDIC.
We could be subject to losses, regulatory action, or reputational harm due to fraudulent and negligent acts on the part of loan applicants, our employees, and other parties.
The death, disability, or resignation of one or more of these people could have an adverse impact on the business and its ability to repay loans. We could be subject to losses, regulatory action, or reputational harm due to fraudulent and negligent acts on the part of loan applicants, our employees, and other parties.
As a result, holders of our common stock bear the risk that our future issuances of debt or equity securities or our incurrence of other borrowings may negatively affect the market price of our common stock.
As a result, holders of our 29 Table of Contents common stock bear the risk that our future issuances of debt or equity securities or our incurrence of other borrowings may negatively affect the market price of our common stock. Our dividend policy may change without notice, and our future ability to pay dividends is subject to restrictions.
Even if the relevant, factual assumptions are accurate, our decisions may prove to be inadequate or inaccurate because of other flaws in the design or use of analytical tools used by management.
Even if the relevant, factual assumptions are accurate, our decisions may prove to be inadequate or inaccurate because of other flaws in the design or use of analytical tools used by management. We utilize data and modeling in our management’s decision-making, and faulty data or modeling approaches could negatively impact our decision-making ability or subject us to regulatory scrutiny.
In addition, the success of a small or medium-sized business often depends on the management skills, talents, and efforts of one individual or a small group of individuals. The death, disability, or resignation of one or more of these people could have an adverse impact on the business and its ability to repay loans.
Any of these factors may impair a borrower’s ability to repay a loan. In addition, the success of a small or medium-sized business often depends on the management skills, talents, and efforts of one individual or a small group of individuals.
Our access to funding sources in amounts adequate to finance or capitalize our activities or on terms that are acceptable to us, could be impaired by factors that affect us, the financial services industry, or the economy in general. These factors may include disruptions in the financial markets or negative expectations about the industry’s prospects.
Historically, we have not utilized brokered or internet deposits to meet liquidity needs. Our access to funding sources in amounts adequate to finance or capitalize our activities or on terms that are acceptable to us, could be impaired by factors that affect us, the financial services industry, or the economy in general.
Cyber incidents could include actual or attempted unauthorized access, tampering, malware insertion, ransomware attacks, or other system integrity events. Increasing sophistication of cyber-attacks makes it increasingly difficult to prevent a security breach. For example, in mid-2023, we received notice that certain of our customer data was involved in the global incident involving the MOVEit Transfer vulnerability.
Cyber incidents could include actual or attempted unauthorized access, tampering, malware insertion, ransomware attacks, or other system integrity events. Increasing sophistication of cyber-attacks makes it increasingly difficult to prevent a security breach.
Higher interest rates could adversely affect the ability of borrowers of floating rate loans to meet their higher payment obligations, which could result in an increase in delinquencies and charge-offs, and increase the cost of deposits.
Higher interest rates could adversely affect the ability of borrowers of floating rate loans to meet their higher payment obligations, which could result in an increase in delinquencies and charge-offs, and increase the cost of deposits. 23 Table of Contents The fair market value of our securities portfolio, the investment income, and the cash flows from these securities also fluctuate depending on general economic and market conditions.
A decrease in the general level of interest rates may reduce the yield on short-term interest-bearing assets and on new and renewing loans and securities, while decreasing deposit rate pressure and the cost of deposits. 23 Table of Contents The fair market value of our securities portfolio, the investment income, and the cash flows from these securities also fluctuate depending on general economic and market conditions.
A decrease in the general level of interest rates may reduce the yield on short-term interest-bearing assets and on new and renewing loans and securities, and may decrease deposit rate pressure and the cost of deposits.
Our other primary sources of liquidity consist of cash flows from operations, maturities and sales of investment securities, and proceeds from the issuance and sale of our equity to investors. As a secondary source of liquidity, we have the ability to borrow overnight funds from other financial institutions with whom we have a correspondent relationship.
Our other primary sources of liquidity consist of cash flows from operations, loan repayments, maturities and sales of investment securities, and proceeds from the issuance and sale of our equity to investors.
The investment products and services provided to our customers through our investment group, by virtue of these third-party channels generally are not insured by the FDIC. Therefore, we may have exposure for illegal, negligent, fraudulent, or other acts of these investment advisors and brokers.
We may have exposure for illegal, negligent, fraudulent, or other acts of these investment advisors and brokers.
This could adversely affect our liquidity, which could impair our ability to fund operations and meet obligations as they become due. Volatility in oil and natural gas prices along with cyclical downturns in the energy industry, particularly in Louisiana, could lead to increased credit losses in our loan portfolio.
This could adversely affect our liquidity, which could impair our ability to fund operations and meet obligations as they become due. Negative conditions in the health care sector could lead to increased credit losses in our loan portfolio. Health care loans, which were $167.3 million, or 8.1% of loans HFI as of December 31, 2024, are our largest industry concentration.
Additionally, non-owner occupied commercial real estate loans generally involve relatively large balances to single borrowers or related groups of borrowers. Accordingly, charge-offs on non-owner occupied commercial real estate loans may be larger on an individual loan basis than those incurred with our residential or consumer loan portfolios.
Accordingly, charge-offs on non-owner occupied CRE loans may be larger on an individual loan basis than those incurred with our residential or consumer loan portfolios. Unexpected deterioration in the credit quality of our CRE loan portfolio would require us to increase our provision for credit losses, which would reduce our profitability.
We are dependent on the use of data and modeling in our management’s decision-making, and faulty data or modeling approaches could negatively impact our decision-making ability or subject us to regulatory scrutiny. The use of statistical and quantitative models and other quantitative analysis is intrinsic to bank decision-making and is becoming increasingly widespread in our operations.
The use of statistical and quantitative models and other quantitative analysis is part of bank decision-making and is used in our operations. It is also prevalent in regulatory compliance.
Removed
Unexpected deterioration in the credit quality of our commercial real estate loan portfolio would require us to increase our provision for credit losses, which would reduce our profitability.
Added
These loan consist of loans to nursing and residential care facilities and physician and dental practices.
Removed
We also have the ability to borrow from the FHLB of Dallas and the Federal Reserve Bank’s Discount Window facility. Also, the Federal Reserve’s Bank Term Funding Program was available from March 12, 2023 through March 11, 2024. Historically, we have not utilized brokered or internet deposits to meet liquidity needs.
Added
To the extent that adverse economic conditions or other factors disproportionately and negatively impact the health care sector, it could lead to increased credit losses in our loan portfolio Volatility in oil and natural gas prices along with cyclical downturns in the energy industry, particularly in Louisiana, could lead to increased credit losses in our loan portfolio.
Removed
Our internal network systems were not impacted by the MOVEit Transfer vulnerability. However, several of our third-party financial institution vendors who utilized MOVEit Transfer in their service offerings to us notified us that their systems may have been compromised.
Added
As a secondary source of liquidity, we have the ability to borrow overnight funds from other financial institutions with whom we have a correspondent 26 Table of Contents relationship. We also have the ability to borrow from the FHLB of Dallas and the Federal Reserve Bank’s Discount Window facility.
Removed
Based on the investigation, we were notified that certain of our customers had personal information exfiltrated through the cyber-attack, and we notified our affected customers.
Added
We utilize third-party companies to support our investment group, and we may be adversely affected by the condition or performance of our third-party brokerage partners. We are not registered with the SEC as an investment advisor or broker-dealer.
Removed
In addition, since the commencement of the PPP, numerous other banks have been subject to litigation regarding the process and procedures that those banks used in processing applications for the PPP.
Added
We have also repurchased shares of our common stock outside of our stock repurchase programs in privately negotiated repurchases with approval from the board of directors. Repurchases could affect our stock price and increase its volatility.
Removed
We may be exposed to similar litigation from governmental agencies, customers, non‑customers, and agents that approached us regarding PPP loans and litigation regarding our procedures for processing applications, funding PPP loans, and coordinating the forgiveness of the loans.
Added
For additional information regarding regulatory capital standards to which our business is subject, see “Item 1.
Removed
If any such litigation is initiated against us, it may result in significant financial liability, significant litigation costs, or adversely affect our reputation. Further, governmental agencies could audit our PPP borrowers, and any deficiencies resulting from such audit could also expose us to liability and reputational risk.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFor further discussion of risks from cybersecurity threats, see “Item 1A. Risk Factors” in this Report. 34 Table of Contents Governance Our IT Director and ISO are primarily responsible for the cybersecurity component and are key members of the ERM program, reporting directly to the Chief Operating Officer and Chief Executive Officer, respectively.
Biggest changeFor further discussion of risks from cybersecurity threats, see “Item 1A. Risk Factors” in this Report. 33 Table of Contents Governance Our IT Director and ISO are primarily responsible for the cybersecurity component and are key members of the ERM program, reporting directly to the Chief Operating Officer and Chief Executive Officer, respectively.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeAs of December 31, 2023, Red River Bank owned its main office building, its operations center, and 21 of its banking centers. The remaining banking office facilities were subject to lease agreements. Our facilities are in good condition and are adequate to meet our operating needs for the foreseeable future.
Biggest changeAs of December 31, 2024, the Bank owned its main office building, its operations center, and 22 of its banking centers. The remaining banking office facilities were subject to lease agreements. Our facilities are in good condition and are adequate to meet our operating needs for the foreseeable future.
Item 2. Properties As of December 31, 2023, Red River Bank operated from a network of 27 banking centers throughout Louisiana and one combined LDPO in New Orleans, Louisiana. The Bank’s principal executive office is located at 1412 Centre Court Drive, Suite 301, Alexandria, Louisiana 71301.
Item 2. Properties As of December 31, 2024, Red River Bank operated from a network of 28 banking centers throughout Louisiana and one combined LDPO in New Orleans, Louisiana. The Bank’s principal executive office is located at 1412 Centre Court Drive, Suite 301, Alexandria, Louisiana 71301.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+2 added−0 removed7 unchanged
Biggest changeRepurchases may be made from time to time in the open market at prevailing prices and based on market conditions, or in privately negotiated transactions. 36 Table of Contents Stock Performance Graph The following graph shows a comparison of the cumulative total shareholder return for our common stock, the Nasdaq Composite Index, and the S&P US Small Cap Banks Index for the period beginning on May 3, 2019, which was the first day our common stock traded on the Nasdaq Global Select Market, through December 31, 2023.
Biggest changeThe excise tax includes the tax on the shares repurchased during 2023 and 2024 that reduced the availability under the 2024 stock repurchase program. 35 Table of Contents Stock Performance Graph The following graph shows a comparison of the cumulative total shareholder return for our common stock, the Nasdaq Composite Index, and the S&P US Small Cap Banks Index between December 31, 2019, and December 31, 2024.
The information provided in this section shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act. Item 6. [Reserved] 37 Table of Contents
The information provided in this section shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act. Item 6. [Reserved] 36 Table of Contents
The 2023 stock repurchase program authorized us to purchase up to $5.0 million of our outstanding shares of common stock from January 1, 2023 through December 31, 2023. Repurchases were made from time to time in the open market at prevailing prices and based on market conditions.
The 2024 stock repurchase program authorized us to purchase up to $5.0 million of our outstanding shares of common stock from January 1, 2024 through December 31, 2024. Repurchases were made from time to time in the open market at prevailing prices and based on market conditions, and in privately negotiated transactions.
Prior to that date, there was no public trading market for our common stock. Holders of Record As of February 29, 2024, there were approximately 247 holders of record of our common stock. 35 Table of Contents Dividends and Dividend Policy We anticipate paying quarterly dividends on our common stock, subject to approval by our board of directors.
Prior to that date, there was no public trading market for our common stock. Holders of Record As of February 28, 2025, there were approximately 232 holders of record of our common stock. 34 Table of Contents Dividends and Dividend Policy We anticipate paying quarterly dividends on our common stock, subject to approval by our board of directors.
The 2024 stock repurchase program has terms similar to the 2023 stock repurchase program and authorizes us to purchase up to $5.0 million of our outstanding shares of common stock from January 1, 2024 through December 31, 2024.
(4) On December 19, 2024, we announced that our board of directors approved the renewal of the 2024 stock repurchase program. The renewed stock repurchase program has similar terms to the 2024 stock repurchase program and authorizes us to purchase up to $5.0 million of our outstanding shares of common stock from January 1, 2025 through December 31, 2025.
The graph below represents $100 invested on May 3, 2019, in our common stock at our initial public offering price of $45.00 per share, and otherwise reflects our stock, the Nasdaq Composite Index, and the S&P US Small Cap Banks Index values as of the close of trading and assumes the reinvestment of dividends, if any.
The graph below represents $100 invested in each of our common stock, the Nasdaq Composite Index, and the S&P US Small Cap Banks Index on December 31, 2019, and reflects those values as of the close of trading and assumes the reinvestment of dividends, if any.
Business - Supervision and Regulation - Bank Holding Company Regulation - Regulatory Restrictions on Dividends; Source of Strength” and “- Bank Regulation - Regulatory Restrictions on Dividends.” Issuer Purchases of Equity Securities Our purchases of shares of common stock made during the quarter under our publicly announced stock repurchase program are summarized in the table below: (dollars in thousands, except per share data) Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (1)(2) October 1 - October 31, 2023 18,919 $ 47.40 18,919 $ 2,000 November 1 - November 30, 2023 30,316 $ 49.09 30,316 $ 510 December 1 - December 31, 2023 9,813 $ 51.98 9,813 $ — Total 59,048 $ 49.01 59,048 $ — (1) On November 4, 2022, we announced that our board of directors approved the renewal of the 2022 stock repurchase program that expired on December 31, 2022.
Business - Supervision and Regulation - Bank Holding Company Regulation - Regulatory Restrictions on Dividends; Source of Strength” and “- Bank Regulation - Regulatory Restrictions on Dividends.” Issuer Purchases of Equity Securities Our purchases of shares of common stock made during the quarter under our publicly announced stock repurchase program are summarized in the table below: (dollars in thousands, except per share data) Period Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (2)(4)(5) October 1 - October 31, 2024 — $ — — $ 1,224 November 1 - November 30, 2024 (3) 50,632 $ 50.04 632 $ 1,103 December 1 - December 31, 2024 — $ — — $ 1,103 Total 50,632 $ 50.04 632 $ 1,103 (1) Average price paid per share includes the commission expense paid on the share repurchases, but excludes the excise tax recorded on the share repurchases.
Added
(3) On November 5, 2024, we entered into a privately negotiated stock repurchase agreement for the purchase of 50,000 shares of our common stock for a total purchase price of approximately $2.5 million. The repurchase was supplemental to the 2024 stock repurchase program and did not impact the amount of permitted repurchases thereunder.
Added
Repurchases may be made from time to time in the open market at prevailing prices and based on market conditions, or in privately negotiated transactions. (5) The approximate dollar value of shares that may yet be purchased under the program is reduced by the amount of the commission expense and the excise tax recorded on the share repurchases.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

158 edited+42 added−48 removed80 unchanged
Biggest changeThe owner occupied and non-owner occupied components of the commercial real estate portfolio are summarized below: December 31, 2023 2022 (dollars in thousands) Amount Percent of Loans HFI Amount Percent of Loans HFI Commercial real estate Owner occupied $ 412,743 20.7 % $ 393,404 20.6 % Non-owner occupied 438,839 22.0 % 401,319 20.9 % Total commercial real estate $ 851,582 42.7 % $ 794,723 41.5 % 49 Table of Contents Industry concentrations, based on NAICS, within the commercial real estate loan portfolio are presented below: December 31, 2023 2022 (dollars in thousands) Amount Percent of Loans HFI Amount Percent of Loans HFI Owner Occupied Retail trade $ 41,768 2.1 % $ 40,898 2.1 % Health care 36,709 1.8 % 45,685 2.4 % Religious and other nonprofit 21,092 1.1 % 21,577 1.1 % Agriculture, forestry, fishing, and hunting 20,389 1.0 % 21,397 1.2 % Repair and maintenance 16,810 0.8 % 12,269 0.7 % Investor one-to-four family and multifamily 14,532 0.7 % 10,445 0.5 % Hospitality services 14,362 0.7 % 14,004 0.7 % Energy 13,118 0.7 % 14,888 0.8 % Transportation and warehousing 12,103 0.6 % 6,172 0.3 % Professional, scientific, and technical services 11,543 0.6 % 9,626 0.5 % Arts, entertainment, and recreation 9,894 0.5 % 4,672 0.3 % All other 200,423 10.1 % 191,771 10.0 % Total owner occupied $ 412,743 20.7 % $ 393,404 20.6 % Non-Owner Occupied Health care $ 53,449 2.7 % $ 56,379 2.9 % Investor one-to-four family and multifamily 46,439 2.3 % 34,318 1.8 % Hospitality services 31,766 1.6 % 33,999 1.8 % Wholesale trade 7,880 0.3 % 8,200 0.4 % Construction 6,599 0.3 % 4,833 0.3 % Energy 6,132 0.3 % 6,504 0.3 % Educational services 3,876 0.2 % 4,700 0.2 % Management of company and enterprises 3,742 0.2 % 2,525 0.1 % Retail trade 3,582 0.2 % 3,782 0.2 % Information 3,200 0.2 % 1,391 0.1 % Finance and insurance 3,199 0.2 % 3,343 0.2 % All other 268,975 13.5 % 241,345 12.6 % Total non-owner occupied $ 438,839 22.0 % $ 401,319 20.9 % Total commercial real estate $ 851,582 42.7 % $ 794,723 41.5 % One-to-Four Family Residential Loans.
Biggest changeThe owner occupied and non-owner occupied components of the CRE portfolio are summarized below: December 31, 2024 2023 (dollars in thousands) Amount Percent of Loans HFI Amount Percent of Loans HFI Commercial real estate Owner occupied $ 425,709 20.5 % $ 412,743 20.7 % Non-owner occupied 458,932 22.1 % 438,839 22.0 % Total commercial real estate $ 884,641 42.6 % $ 851,582 42.7 % 48 Table of Contents Industry concentrations, based on NAICS, within the CRE loan portfolio are presented below: December 31, 2024 2023 (dollars in thousands) Amount Percent of Loans HFI Amount Percent of Loans HFI Owner Occupied Retail trade $ 43,531 2.1 % $ 41,768 2.1 % Health care 34,411 1.6 % 36,709 1.8 % Religious and other nonprofit 25,351 1.2 % 21,092 1.1 % Agriculture, forestry, fishing, and hunting 24,058 1.2 % 20,389 1.0 % Repair and maintenance 16,524 0.8 % 16,810 0.8 % Hospitality services 13,812 0.7 % 14,362 0.7 % Investor one-to-four family and multifamily 13,805 0.7 % 14,532 0.7 % Energy 12,608 0.6 % 13,118 0.7 % Professions, scientific, and technical services 11,535 0.5 % 11,543 0.6 % Transportation and warehousing 11,371 0.5 % 12,103 0.6 % Arts, entertainment, and recreation 9,685 0.5 % 9,894 0.5 % All other 209,018 10.1 % 200,423 10.1 % Total owner occupied $ 425,709 20.5 % $ 412,743 20.7 % Non-Owner Occupied Health care $ 73,374 3.5 % $ 53,449 2.7 % Investor one-to-four family and multifamily 43,519 2.1 % 46,439 2.3 % Hospitality services 31,273 1.5 % 31,766 1.6 % Finance and insurance 7,888 0.4 % 3,199 0.1 % Wholesale trade 7,863 0.4 % 7,880 0.4 % Construction 7,276 0.4 % 6,599 0.3 % Energy 5,792 0.3 % 6,132 0.3 % Management of companies and enterprises 4,187 0.2 % 3,742 0.2 % Educational services 3,384 0.1 % 3,876 0.2 % Retail trade 2,841 0.1 % 3,582 0.2 % Information 2,448 0.1 % 3,200 0.2 % All other 269,087 13.0 % 268,975 13.5 % Total non-owner occupied $ 458,932 22.1 % $ 438,839 22.0 % Total commercial real estate $ 884,641 42.6 % $ 851,582 42.7 % One-to-Four Family Residential Loans.
Additionally, for loans that share similar risk characteristics, the ACL considers factors for each loan pool to adjust for differences between the historical period and expected conditions over the remaining lives of the loans in the portfolio related to: • Lending policies and procedures; • International, national, regional, and local economic business conditions; • The nature of the loan portfolio, including the volume of the portfolio and terms of the loans; • The experience, depth, and ability of our lending management; • The volume and severity of past due loans and other similar conditions; • The quality of the loan review and process; • The value of underlying collateral for collateral dependent loans; • The existence and effect of any concentrations of credit and changes in the level of such concentrations; and • The effect of other external factors, such as competition and legal and regulatory requirements, on the level of estimated credit losses in the existing portfolio.
Additionally, for loans that share similar risk characteristics, the ACL considers qualitative factors for each loan pool to adjust for differences between the historical period and expected conditions over the remaining lives of the loans in the portfolio related to: • Lending policies and procedures; • International, national, regional, and local economic business conditions; • The nature of the loan portfolio, including the volume of the portfolio and terms of the loans; • The experience, depth, and ability of our lending management; • The volume and severity of past due loans and other similar conditions; • The quality of the loan review and process; • The value of underlying collateral for collateral dependent loans; • The existence and effect of any concentrations of credit and changes in the level of such concentrations; and • The effect of other external factors, such as competition and legal and regulatory requirements, on the level of estimated credit losses in the existing portfolio.
These qualitative factors serve to compensate for additional areas of uncertainty inherent in the portfolio that are not reflected in the historical loss experience for these expectations. Management considers the appropriateness of these critical assumptions as part of its allowance review and believes the ACL level is appropriate based on information available through the financial statement date.
These qualitative factors serve to compensate for additional areas of uncertainty inherent in the portfolio that are not reflected in the historical loss experience for these expectations. Management considers the appropriateness of these qualitative assumptions as part of its allowance review and believes the ACL level is appropriate based on information available through the financial statement date.
Commercial real estate loans are primarily made for commercial property that is owner occupied as well as commercial property owned by real estate investors. Real estate securing these loans includes many property types, such as retail centers, nursing homes, offices and office buildings, medical facilities, warehouses, churches and related facilities, production facilities, and multifamily properties.
CRE loans are primarily made for commercial property that is owner occupied as well as commercial property owned by real estate investors. Real estate securing these loans includes many property types, such as retail centers, nursing homes, offices and office buildings, medical facilities, warehouses, churches and related facilities, production facilities, and multifamily properties.
Bank policy regarding interest rate risk simulations performed by our risk model currently specifies that for instantaneous parallel shifts of the yield curve, estimated net interest income at risk for the subsequent one-year period should not decline by more than 10.0% for a 100 bp shift and 15.0% for a 200 bp shift.
Bank policy regarding interest rate risk simulations performed by our risk model currently specifies that for instantaneous parallel shifts of the yield curve, estimated net interest income at risk for the subsequent one-year period should not decline by more than 10.0% for a 100 bp shift, 15.0% for a 200 bp shift, and 20.0% for a 300 bp shift.
(3) Net interest margin FTE includes an FTE adjustment using a 21.0% federal income tax rate on tax-exempt securities and tax-exempt loans. 42 Table of Contents Rate/Volume Analysis Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates.
(3) Net interest margin FTE includes an FTE adjustment using a 21.0% federal income tax rate on tax-exempt securities and tax-exempt loans. 41 Table of Contents Rate/Volume Analysis Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates.
The most directly comparable GAAP financial measure for tangible book value per share is book value per share. As a result of previous acquisitions, we have a small amount of intangible assets. As of December 31, 2023, total intangible assets were $1.5 million, which is less than 1.0% of total assets. Tangible Common Equity to Tangible Assets .
The most directly comparable GAAP financial measure for tangible book value per share is book value per share. As a result of previous acquisitions, we have a small amount of intangible assets. As of December 31, 2024, total intangible assets were $1.5 million, which is less than 1.0% of total assets. Tangible Common Equity to Tangible Assets .
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The purpose of this discussion and analysis is to focus on significant changes in financial condition and results of operations of Red River Bancshares, Inc. on a consolidated basis during the year ended December 31, 2023 and selected prior periods.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The purpose of this discussion and analysis is to focus on significant changes in financial condition and results of operations of Red River Bancshares, Inc. on a consolidated basis during the year ended December 31, 2024 and selected prior periods.
As of December 31, 2023, other than securities issued by U.S. government agencies or government-sponsored enterprises, our securities portfolio did not contain securities of any one issuer with an aggregate book value in excess of 10.0% of our stockholders’ equity.
As of December 31, 2024, other than securities issued by U.S. government agencies or government-sponsored enterprises, our securities portfolio did not contain securities of any one issuer with an aggregate book value in excess of 10.0% of our stockholders’ equity.
Tax-exempt loans are made to political subdivisions of the State of Louisiana including parishes, municipalities, utility districts, school districts, and development authorities. These loans are typically secured by and paid 50 Table of Contents for by ad valorem taxes.
Tax-exempt loans are made to political subdivisions of the State of Louisiana including parishes, municipalities, utility districts, school districts, and development authorities. These loans are typically secured by and paid 49 Table of Contents for by ad valorem taxes.
In determining the ACL for loans HFI, we estimate losses on a collective pool basis when similar risk characteristics and risk profiles exist. Loans that do not share similar risk characteristics are evaluated individually and excluded from the collective evaluation.
Allowance for Credit Losses In determining the ACL for loans HFI, we estimate losses on a collective pool basis when similar risk characteristics and risk profiles exist. Loans that do not share similar risk characteristics are evaluated individually and excluded from the collective evaluation.
Future provisions for credit losses are subject to ongoing evaluations of the factors and loan portfolio risks, including economic pressures related to inflation, labor market and supply chain constraints, and natural disasters affecting the state of Louisiana.
Future provisions for credit losses on loans are subject to ongoing evaluations of the factors and loan portfolio risks, including economic pressures related to inflation, labor market and supply chain constraints, and natural disasters affecting the state of Louisiana.
A decline in market area economic conditions, deterioration of asset quality, or growth in portfolio size could cause the allowance to become inadequate, and material additional provisions for credit losses could be required. 55 Table of Contents The following table displays the allocation of the ACL and ALL among the loan classifications as of the dates indicated.
A decline in market area economic conditions, deterioration of asset quality, or growth in portfolio size could cause the allowance to become inadequate, and material additional provisions for credit losses could be required. 54 Table of Contents The following table displays the allocation of the ACL among the loan classifications as of the dates indicated.
December 31, 2023 December 31, 2022 % Change in Net Interest Income % Change in Fair Value of Equity % Change in Net Interest Income % Change in Fair Value of Equity Change in Interest Rates (bps) +300 4.8 % (5.3 %) 6.4 % (2.0 %) +200 3.5 % (3.0 %) 4.1 % (1.2 %) +100 2.3 % (1.0 %) 2.2 % — % Base — % — % — % — % -100 (0.4 %) 0.3 % (2.6 %) (1.2 %) -200 (3.5 %) (1.4 %) (6.3 %) (5.4 %) The results above, as of December 31, 2023 and 2022, demonstrate that our balance sheet is asset sensitive, which means our assets have the opportunity to reprice at a faster pace than our liabilities, over the 12-month horizon.
December 31, 2024 December 31, 2023 % Change in Net Interest Income % Change in Fair Value of Equity % Change in Net Interest Income % Change in Fair Value of Equity Change in Interest Rates (bps) +300 4.7 % (0.4 %) 4.8 % (5.3 %) +200 3.2 % 0.3 % 3.5 % (3.0 %) +100 1.6 % 0.6 % 2.3 % (1.0 %) Base — % — % — % — % -100 (1.5 %) (0.2 %) (0.4 %) 0.3 % -200 (4.4 %) (4.1 %) (3.5 %) (1.4 %) -300 (7.2 %) (11.1 %) (7.6 %) (5.2 %) The results above, as of December 31, 2024 and 2023, demonstrate that our balance sheet is asset sensitive, which means our assets have the opportunity to reprice at a faster pace than our liabilities, over the 12-month horizon.
Liquidity levels are dependent on our operating, financing, lending, and investing activities during any given period. Access to purchased funds from correspondent banks and overnight advances from the FHLB of Dallas and the Federal Reserve Bank of Atlanta are also available. Purchased funds from correspondent banks and overnight advances can be utilized to meet funding obligations.
Liquidity levels are dependent on our operating, financing, lending, and investing activities during any given period. Access to purchased funds from correspondent banks and overnight advances from the FHLB of Dallas and the Federal 58 Table of Contents Reserve Bank of Atlanta are also available. Purchased funds from correspondent banks and overnight advances can be utilized to meet funding obligations.
We manage exposure to interest rates by structuring the balance sheet appropriately during the ordinary course of business. We have the ability to enter into interest rate swaps to mitigate interest rate risk in limited circumstances, but it 60 Table of Contents is not our policy to enter into such transactions on a regular basis.
We manage exposure to interest rates by structuring the balance sheet appropriately during the ordinary course of business. We have the ability to enter into interest rate swaps to mitigate interest rate risk in limited circumstances, but it is not our policy to enter into such transactions on a regular basis.
Our exposure to interest rate risk is managed by Red River Bank’s Asset-Liability Management Committee. The committee formulates strategies based on appropriate levels of interest rate risk and monitors the results of those strategies.
Our exposure to interest rate risk is managed by the Bank’s Asset-Liability Management Committee. The committee formulates strategies based on appropriate levels of interest rate risk and monitors the results of those strategies.
The following table presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities for the years ended December 31, 2023 and 2022.
The following table presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities for the years ended December 31, 2024 and 2023.
Industry Concentrations Industry concentrations, based on NAICS, stated as a percentage of loans HFI are presented below: December 31, 2023 Health care 7.7 % Investor one-to-four family and multifamily 5.7 % Construction 4.2 % Retail trade 3.4 % Hospitality services 3.1 % Public administration 2.3 % Finance and insurance 1.8 % Energy 1.7 % Religious and other nonprofit 1.5 % Manufacturing 1.0 % All other 67.6 % Total loans HFI by industry concentration 100.0 % Health care loans are our largest industry concentration and are made up of a diversified portfolio of health care providers.
Industry Concentrations Industry concentrations, based on NAICS, stated as a percentage of loans HFI are presented below: December 31, 2024 Health care 8.1 % Investor one-to-four family and multifamily 6.0 % Construction 4.3 % Retail trade 3.4 % Hospitality services 2.9 % Public administration 2.0 % Finance and insurance 1.8 % Religious and other nonprofit 1.6 % Energy 1.4 % Manufacturing 0.6 % All other 67.9 % Total loans HFI by industry concentration 100.0 % Health care loans are our largest industry concentration and are made up of a diversified portfolio of health care providers.
For the years ended December 31, 2023 and 2022, liquidity needs were primarily met by core deposits, security and loan maturities, and cash flows from amortizing security and loan portfolios.
For the years ended December 31, 2024 and 2023, liquidity needs were primarily met by core deposits, security and loan maturities, and cash flows from amortizing security and loan portfolios.
Financial Statements and Supplementary Data - Note 5. Deposits,” “- Note 7. Leases,” and “- Note 12. Off-Balance Sheet Contractual Obligations and Contingencies,” respectively. Interest Rate Sensitivity and Market Risk As a financial institution, our primary component of market risk is interest rate volatility.
Financial Statements and Supplementary Data - Note 5. Deposits,” “- Note 7. Leases,” and “- Note 12. Off-Balance Sheet Contractual Obligations and Contingencies,” respectively. 59 Table of Contents Interest Rate Sensitivity and Market Risk As a financial institution, our primary component of market risk is interest rate volatility.
We do not enter into instruments such as financial options, financial futures contracts, or forward delivery contracts for the purpose of reducing interest rate risk. We are not subject to foreign exchange risk, and our commodity price risk is immaterial, as the percentage of our agricultural loans to loans HFI was only 0.37% as of December 31, 2023.
We do not enter into instruments such as financial options, financial futures contracts, or forward delivery contracts for the purpose of reducing interest rate risk. We are not subject to foreign exchange risk, and our commodity price risk is immaterial, as the percentage of our agricultural loans to loans HFI was only 0.35% as of December 31, 2024.
RECENT ACCOUNTING PRONOUNCEMENTS See “Item 8. Financial Statements and Supplementary Data - Note 1. Significant Accounting Policies - Accounting Standards Adopted in 2023” and “- Recent Accounting Pronouncements.”
RECENT ACCOUNTING PRONOUNCEMENTS See “Item 8. Financial Statements and Supplementary Data - Note 1. Significant Accounting Policies - Accounting Standards Adopted in 2024” and “- Recent Accounting Pronouncements.”
In the first quarter of 2024, we declared a quarterly cash dividend of $0.09 per share. • The 2023 stock repurchase program authorized us to purchase up to $5.0 million of our outstanding common stock from January 1, 2023 through December 31, 2023.
In the first quarter of 2025, we declared a quarterly cash dividend of $0.12 per share. • The 2024 stock repurchase program authorized us to purchase up to $5.0 million of our outstanding common stock from January 1, 2024 through December 31, 2024.
Within the health care sector, loans to nursing and residential care facilities were 4.0% of loans HFI as of December 31, 2023, and 4.4% as of December 31, 2022. Loans to physician and dental practices were 3.6% of loans HFI as of December 31, 2023, and 3.9% as of December 31, 2022.
Within the health care sector, loans to nursing and residential care facilities were 4.4% of loans HFI as of December 31, 2024, and 4.0% as of December 31, 2023. Loans to physician and dental practices were 3.4% of loans HFI as of December 31, 2024, and 3.6% as of December 31, 2023.
Our effective income tax rates have differed from the U.S. statutory rate due to the effect of tax-exempt income from loans, securities, life insurance policies, income tax effects associated with stock-based compensation, and permanent and temporary tax differences. 45 Table of Contents The table below presents, for the periods indicated, income tax expense: For the Years Ended December 31, (dollars in thousands) 2023 2022 Increase (Decrease) Income tax expense $ 8,065 $ 8,065 $ — — % For the years ended December 31, 2023 and 2022, income tax expense remained consistent at $8.1 million.
Our effective income tax rates have differed from the U.S. statutory rate due to the effect of tax-exempt income from loans, securities, life insurance policies, income tax effects associated with stock-based compensation, and permanent and temporary tax differences. 44 Table of Contents The table below presents, for the periods indicated, income tax expense: For the Years Ended December 31, (dollars in thousands) 2024 2023 Increase (Decrease) Income tax expense $ 8,146 $ 8,065 $ 81 1.0 % For the years ended December 31, 2024 and 2023, income tax expense remained consistent at $8.1 million.
The construction and development portfolio includes loans to small and medium-sized businesses to construct owner occupied facilities, loans to developers of commercial real estate investment properties and residential developments, and, to a lesser extent, loans to individual clients for construction of single-family homes.
The construction and development portfolio includes loans to small and medium-sized businesses to construct owner occupied facilities, loans to developers of CRE investment properties and residential developments, and, to a lesser extent, loans to individual clients for construction of single-family homes.
The increase in yield for the year ended December 31, 2023, was primarily due to reinvesting securities cash flows received during 2023 into new securities at higher yields. The contractual maturity of mortgage-backed securities and collateralized mortgage obligations is not a reliable indicator of their expected lives because borrowers have the right to prepay their obligations at any time.
The increase in yield for the year ended December 31, 2024, was primarily due to reinvesting lower yielding securities cash flows received during 2024 into higher yielding securities. The contractual maturity of mortgage-backed securities and collateralized mortgage obligations is not a reliable indicator of their expected lives because borrowers have the right to prepay their obligations at any time.
The remaining life loss rate methodology takes the calculated loss rate and applies that rate to a pool of loans on a periodic basis based on the remaining life expectation of that pool and further adjusts for current conditions and for reasonable and supportable forecast periods.
The remaining life loss rate methodology takes the calculated loss rate and applies that rate to a pool of loans on a periodic basis based on the remaining life expectation of that pool and is further adjusted for current conditions and reasonable and supportable economic forecast periods.
We currently are classified as having “blanket lien collateral status,” which means that advances can be executed at any time without further collateral requirements. As of December 31, 2023 and 2022, our net borrowing capacity from the FHLB of Dallas was $829.2 million and $774.9 million, respectively.
We currently are classified as having “blanket lien collateral status,” which means that advances can be executed at any time without further collateral requirements. As of December 31, 2024 and 2023, our net borrowing capacity from the FHLB of Dallas was $931.6 million and $829.2 million, respectively.
Collateral typically includes a lien on general business assets including, among other things, accounts receivable, inventory, equipment, and available real estate. A personal guaranty is generally obtained from the borrower or principal. Commercial and industrial loans increased $5.3 million, or 1.7%, to $315.3 million as of December 31, 2023, from $310.1 million as of December 31, 2022. Tax-Exempt Loans.
Collateral typically includes a lien on general business assets including, among other things, accounts receivable, inventory, equipment, and available real estate. A personal guaranty is generally obtained from the borrower or principal. Commercial and industrial loans increased $11.8 million, or 3.7%, to $327.1 million as of December 31, 2024, from $315.3 million as of December 31, 2023. Tax-Exempt Loans.
Excess liquidity that is not being deployed into loans or securities is placed in these accounts. Securities Our securities portfolio is the second-largest component of earning assets and provides a significant source of revenue. Securities are classified as AFS, HTM, and equity securities. As of December 31, 2023, our total securities portfolio was 22.8% of assets.
Excess liquidity that is not being deployed into loans or securities is placed in these accounts. Securities Our securities portfolio is the second-largest component of earning assets and provides a significant source of revenue. Securities are classified as AFS, HTM, and equity securities. As of December 31, 2024, our total securities portfolio was 21.7% of assets.
As of December 31, 2023, Red River Bank operated from a network of 27 banking centers throughout Louisiana and one combined LDPO in New Orleans, Louisiana.
As of December 31, 2024, Red River Bank operated from a network of 28 banking centers throughout Louisiana and one combined LDPO in New Orleans, Louisiana.
If interest rates begin to fall, prepayments may increase, thereby shortening the estimated average lives of these securities. As of December 31, 2023, the average life of our securities portfolio was 7.1 years with an estimated effective duration of 5.0 years.
If interest rates begin to fall, prepayments may increase, thereby shortening the estimated average lives of these securities. As of December 31, 2024, the average life of our securities portfolio was 7.0 years with an estimated effective duration of 4.9 years.
As of December 31, 2022, the average life of our securities portfolio was 6.8 years with an estimated effective duration of 5.0 years. The following tables summarize the amortized cost and estimated fair value of our securities by type as of the dates indicated.
As of December 31, 2023, the average life of our securities portfolio was 7.1 years with an estimated effective duration of 5.0 years. The following tables summarize the amortized cost and estimated fair value of our securities by type as of the dates indicated.
These amounts were estimated based on the same methodologies and assumptions used for regulatory reporting purposes. Also, as of December 31, 2023, our estimated uninsured deposits, excluding collateralized public entity deposits, were approximately $643.6 million, or 23.0% of total deposits, compared to $786.9 million, or 28.1% of total deposits, as of December 31, 2022.
These amounts were estimated based on the same methodologies and assumptions used for regulatory reporting purposes. Also, as of December 31, 2024, our estimated uninsured deposits, excluding collateralized public entity deposits, were approximately $667.6 million, or 23.8% of total deposits, compared to $643.6 million, or 23.0% of total deposits, as of December 31, 2023.
Securities HTM, which we have the intent and ability to hold until maturity, are carried at amortized cost. As of December 31, 2023, the amortized cost of securities HTM was $141.2 million. Securities HTM had an unrealized loss of $22.2 million as of December 31, 2023, compared to an unrealized loss of $19.3 million as of December 31, 2022.
Securities HTM, which we have the intent and ability to hold until maturity, are carried at amortized cost. As of December 31, 2024, the amortized cost of securities HTM was $131.8 million. Securities HTM had an unrealized loss of $22.8 million as of December 31, 2024, compared to an unrealized loss of $22.2 million as of December 31, 2023.
The comparability in income tax expense was primarily due to the decrease in pre-tax income offset by an increase in the effective income tax rate due to permanent book versus tax differences. The effective income tax rate for 2023 was 18.8%, compared to 17.9% for 2022.
The comparability in income tax expense was primarily due to the decrease in pre-tax income offset by an increase in the effective income tax rate due to permanent book versus tax differences. The effective income tax rate for 2024 was 19.2%, compared to 18.8% for 2023.
We had no outstanding borrowings as of December 31, 2023 or 2022. Federal Home Loan Bank Advances. We utilize the FHLB of Dallas as needed as a funding source. As of December 31, 2023 and 2022, our total FHLB of Dallas line availability was $934.1 million and $875.8 million, respectively.
We had no outstanding borrowings as of December 31, 2024 or 2023. Federal Home Loan Bank Advances. We utilize the FHLB of Dallas as needed as a funding source. As of December 31, 2024 and 2023, availability under our FHLB of Dallas line was $1.04 billion and $934.1 million, respectively.
The increase in loans was due to improved loan activity in various markets across Louisiana. • Deposits totaled $2.80 billion as of December 31, 2023, consistent with December 31, 2022.
The increase in loans was due to new loan activity in various markets across Louisiana. • Deposits totaled $2.81 billion as of December 31, 2024, consistent with December 31, 2023.
Noninterest Income Our primary sources of noninterest income are fees related to the sale of mortgage loans, service charges on deposit accounts, debit card fees, brokerage income from advisory services, and other loan and deposit fees. Noninterest income increased $2.4 million to $21.1 million for the year ended December 31, 2023, compared to $18.7 million for the prior year.
Noninterest Income Our primary sources of noninterest income are fees related to the sale of mortgage loans, service charges on deposit accounts, debit card fees, brokerage income from advisory services, and other loan and deposit fees. Noninterest income decreased $673,000 to $20.4 million for the year ended December 31, 2024, compared to $21.1 million for the prior year.
The following table presents the amount of time deposits, by account, that are in excess of the FDIC insurance limit (currently $250,000) by time remaining until maturity for the period indicated: (in thousands) December 31, 2023 Three months or less $ 31,970 Over three months through six months 26,983 Over six months through 12 months 22,448 Over 12 months 4,976 Total $ 86,377 Borrowings Although deposits are our primary source of funds, we may, from time to time, utilize borrowings as a cost-effective source of funds when such borrowings can then be invested at a positive interest rate spread for additional capacity to fund loan demand or to meet our liquidity needs.
The following table presents the amount of time deposits, by account, that are in excess of the FDIC insurance limit (currently $250,000) by time remaining until maturity for the period indicated: (in thousands) December 31, 2024 Three months or less $ 29,295 Over three months through six months 32,415 Over six months through 12 months 25,740 Over 12 months 4,063 Total $ 91,513 Borrowings Although deposits are our primary source of funds, we may, from time to time, utilize borrowings as a cost-effective source of funds when such borrowings can then be invested at a positive interest rate spread for additional capacity to fund loan demand or to meet our liquidity needs.
As of December 31, 2023 and 2022, we held unfunded letters of credit from the FHLB of Dallas in the amount of $104.8 million and $100.9 million, respectively. As of December 31, 2023 and 2022, we had net borrowing capacity of $829.2 million and $774.9 million, respectively, under this arrangement.
As of December 31, 2024 and 2023, we held unfunded letters of credit from the FHLB of Dallas in the amount of $104.3 million and $104.8 million, respectively. As of December 31, 2024 and 2023, we had net borrowing capacity of $931.6 million and $829.2 million, respectively, under this arrangement.
The liquid assets to assets ratio was 9.8% as of December 31, 2023, compared to 9.0% as of December 31, 2022. 59 Table of Contents Our securities portfolio is an alternative source for meeting liquidity needs and was our second-largest component of assets as of December 31, 2023.
The liquid assets to assets ratio was 8.54% as of December 31, 2024, compared to 9.76% as of December 31, 2023. Our securities portfolio is an alternative source for meeting liquidity needs and was our second-largest component of assets as of December 31, 2024.
The net unrealized loss on securities AFS decreased $12.0 million for the year ended December 31, 2023, resulting in a net unrealized loss of $62.2 million as of December 31, 2023, compared to a net unrealized loss of $74.1 million as of December 31, 2022.
The net unrealized loss on securities AFS increased $1.0 million for the year ended December 31, 2024, resulting in a net unrealized loss of $63.2 million as of December 31, 2024, compared to a net unrealized loss of $62.2 million as of December 31, 2023.
Geographic Markets As of December 31, 2023, Red River Bank operated in seven geographic markets throughout the state of Louisiana.
Geographic Markets As of December 31, 2024, the Bank operated in seven geographic markets throughout the state of Louisiana.
Tax-exempt loans decreased $10.3 million, or 12.3%, to $72.9 million as of December 31, 2023, compared to $83.2 million as of December 31, 2022. Consumer Loans. Consumer loans are made to individuals for personal, family, and household purposes and include secured and unsecured installment and term loans.
Tax-exempt loans decreased $8.0 million, or 10.9%, to $64.9 million as of December 31, 2024, compared to $72.9 million as of December 31, 2023. Consumer Loans. Consumer loans are made to individuals for personal, family, and household purposes and include secured and unsecured installment and term loans.
To evaluate net interest income, we measure and monitor: (1) yields on loans and other interest-earning assets; (2) the cost of deposits and other funding sources; (3) net interest spread; and (4) net interest margin.
Changes in the amount and type of interest-earning assets and interest-bearing liabilities impact our net interest income. To evaluate net interest income, we measure and monitor: (1) yields on loans and other interest-earning assets; (2) the cost of deposits and other funding sources; (3) net interest spread; and (4) net interest margin.
As of December 31, 2023, total health care loans were $153.8 million, or 7.7% of loans HFI, compared to $160.3 million, or 8.4% of loans HFI, as of December 31, 2022. The average health care loan size was $334,000 as of December 31, 2023, and $338,000 as of December 31, 2022.
As of December 31, 2024, total health care loans were $167.3 million, or 8.1% of loans HFI, compared to $153.8 million, or 7.7% of loans HFI, as of December 31, 2023. The average health care loan size was $372,000 as of December 31, 2024, and $334,000 as of December 31, 2023.
The ratio of NPAs to assets was 0.08% as of December 31, 2023 and 2022. 52 Table of Contents Nonperforming loan and asset information is summarized below: December 31, (dollars in thousands) 2023 2022 Nonperforming loans: Nonaccrual loans $ 1,959 $ 2,364 Accruing loans 90 or more days past due 574 2 Total nonperforming loans 2,533 2,366 Foreclosed assets: Real estate 69 — Total foreclosed assets 69 — Total NPAs $ 2,602 $ 2,366 Nonaccrual loans to loans HFI 0.10 % 0.12 % Nonperforming loans to loans HFI 0.13 % 0.12 % NPAs to assets 0.08 % 0.08 % Nonaccrual loans are summarized below by category: December 31, (in thousands) 2023 2022 Real estate: Commercial real estate $ 714 $ 720 One-to-four family residential 269 243 Construction and development — 9 Commercial and industrial 844 1,291 Tax-exempt — — Consumer 132 101 Total nonaccrual loans $ 1,959 $ 2,364 Potential Problem Loans From a credit risk standpoint, we classify loans in one of five categories: pass, special mention, substandard, doubtful, or loss.
The ratio of NPAs to assets was 0.10% as of December 31, 2024 and 0.08% as of December 31, 2023. 51 Table of Contents Nonperforming loan and asset information is summarized below: December 31, (dollars in thousands) 2024 2023 Nonperforming loans: Nonaccrual loans $ 2,968 $ 1,959 Accruing loans 90 or more days past due 266 574 Total nonperforming loans 3,234 2,533 Foreclosed assets: Real estate 38 69 Total foreclosed assets 38 69 Total NPAs $ 3,272 $ 2,602 Nonaccrual loans to loans HFI 0.14 % 0.10 % Nonperforming loans to loans HFI 0.16 % 0.13 % NPAs to assets 0.10 % 0.08 % Nonaccrual loans are summarized below by category: December 31, (in thousands) 2024 2023 Real estate: Commercial real estate $ 734 $ 714 One-to-four family residential 686 269 Construction and development 920 — Commercial and industrial 554 844 Tax-exempt — — Consumer 74 132 Total nonaccrual loans $ 2,968 $ 1,959 Potential Problem Loans From a credit risk standpoint, we classify loans in one of five categories: pass, special mention, substandard, doubtful, or loss.
Off-Balance Sheet Items In the normal course of business, we enter into certain financial instruments, such as commitments to extend credit and letters of credit, to meet the financing needs of our customers. These commitments involve elements of credit risk, interest rate risk, and liquidity risk.
The Bank did not utilize this program while it was being offered. Off-Balance Sheet Items In the normal course of business, we enter into certain financial instruments, such as commitments to extend credit and letters of credit, to meet the financing needs of our customers. These commitments involve elements of credit risk, interest rate risk, and liquidity risk.
Investment activity for the year ended December 31, 2023, included $163.1 million in maturities, principal repayments, and calls, partially offset by $96.4 million of securities purchased. There were no sales of securities AFS, and there were no purchases or sales of securities HTM for the same period.
Investment activity for the year ended December 31, 2024, included $157.3 million in maturities, principal repayments, and calls, partially offset by $128.9 million of securities purchased. There were no sales of securities AFS, and there were no purchases or sales of securities HTM for the same period.
As of December 31, (in thousands) 2023 2022 2021 Selected Period End Balance Sheet Data: Total assets $ 3,128,810 $ 3,082,686 $ 3,224,710 Interest-bearing deposits in other banks $ 252,364 $ 240,568 $ 761,721 Securities available-for-sale, at fair value $ 570,092 $ 614,407 $ 659,178 Securities held-to-maturity, at amortized cost $ 141,236 $ 151,683 $ — Loans held for investment $ 1,992,858 $ 1,916,267 $ 1,683,832 Total deposits $ 2,801,888 $ 2,798,936 $ 2,910,348 Total stockholders' equity $ 303,851 $ 265,753 $ 298,150 39 Table of Contents As of and for the Years Ended December 31, (dollars in thousands, except per share data) 2023 2022 2021 Net Income $ 34,879 $ 36,916 $ 32,952 Per Common Share Data: Earnings per share, basic $ 4.87 $ 5.14 $ 4.53 Earnings per share, diluted $ 4.86 $ 5.13 $ 4.51 Book value per share $ 42.85 $ 36.99 $ 41.52 Tangible book value per share (1,2) $ 42.63 $ 36.78 $ 41.31 Realized book value per share (1,3) $ 51.38 $ 46.90 $ 42.05 Cash dividends per share $ 0.32 $ 0.28 $ 0.28 Shares outstanding 7,091,637 7,183,915 7,180,155 Weighted average shares outstanding, basic 7,164,314 7,180,975 7,281,136 Weighted average shares outstanding, diluted 7,181,728 7,197,453 7,299,720 Summary Performance Ratios: Return on average assets 1.15 % 1.18 % 1.13 % Return on average equity 12.44 % 13.98 % 11.21 % Net interest margin 2.87 % 2.80 % 2.54 % Net interest margin FTE (4) 2.91 % 2.86 % 2.60 % Efficiency ratio (5) 59.39 % 56.60 % 56.39 % Loans HFI to deposits ratio 71.13 % 68.46 % 57.86 % Noninterest-bearing deposits to deposits ratio 32.71 % 38.96 % 39.50 % Noninterest income to average assets 0.70 % 0.60 % 0.84 % Operating expense to average assets 2.11 % 1.87 % 1.87 % Summary Credit Quality Ratios: NPAs to assets 0.08 % 0.08 % 0.03 % Nonperforming loans to loans HFI 0.13 % 0.12 % 0.02 % ACL to loans HFI 1.07 % 1.08 % 1.14 % Net charge-offs to average loans 0.02 % 0.02 % 0.04 % Capital Ratios: Stockholders’ equity to assets 9.71 % 8.62 % 9.25 % Tangible common equity to tangible assets (1,6) 9.67 % 8.57 % 9.20 % Total risk-based capital to risk-weighted assets 18.28 % 17.39 % 17.83 % Tier I risk-based capital to risk-weighted assets 17.24 % 16.38 % 16.76 % Common equity Tier I capital to risk-weighted assets 17.24 % 16.38 % 16.76 % Tier I risk-based capital to average assets 11.56 % 10.71 % 9.67 % (1) Non-GAAP financial measure.
As of December 31, (in thousands) 2024 2023 2022 Selected Period End Balance Sheet Data: Total assets $ 3,149,594 $ 3,128,810 $ 3,082,686 Interest-bearing deposits in other banks $ 238,417 $ 252,364 $ 240,568 Securities available-for-sale, at fair value $ 550,148 $ 570,092 $ 614,407 Securities held-to-maturity, at amortized cost $ 131,796 $ 141,236 $ 151,683 Loans held for investment $ 2,075,013 $ 1,992,858 $ 1,916,267 Total deposits $ 2,805,106 $ 2,801,888 $ 2,798,936 Total stockholders’ equity $ 319,739 $ 303,851 $ 265,753 38 Table of Contents As of and for the Years Ended December 31, (dollars in thousands, except per share data) 2024 2023 2022 Net Income $ 34,235 $ 34,879 $ 36,916 Per Common Share Data: Earnings per share, basic $ 4.96 $ 4.87 $ 5.14 Earnings per share, diluted $ 4.95 $ 4.86 $ 5.13 Book value per share $ 47.18 $ 42.85 $ 36.99 Tangible book value per share (1,2) $ 46.95 $ 42.63 $ 36.78 Realized book value per share (1,3) $ 56.07 $ 51.38 $ 46.90 Cash dividends per share $ 0.36 $ 0.32 $ 0.28 Shares outstanding 6,777,238 7,091,637 7,183,915 Weighted average shares outstanding, basic 6,898,286 7,164,314 7,180,975 Weighted average shares outstanding, diluted 6,918,060 7,181,728 7,197,453 Summary Performance Ratios: Return on average assets 1.11 % 1.15 % 1.18 % Return on average equity 11.02 % 12.44 % 13.98 % Net interest margin 2.91 % 2.87 % 2.80 % Net interest margin FTE (4) 2.96 % 2.91 % 2.86 % Efficiency ratio (5) 60.29 % 59.39 % 56.60 % Loans HFI to deposits ratio 73.97 % 71.13 % 68.46 % Noninterest-bearing deposits to deposits ratio 30.89 % 32.71 % 38.96 % Noninterest income to average assets 0.66 % 0.70 % 0.60 % Operating expense to average assets 2.14 % 2.11 % 1.87 % Summary Credit Quality Ratios: NPAs to assets 0.10 % 0.08 % 0.08 % Nonperforming loans to loans HFI 0.16 % 0.13 % 0.12 % ACL to loans HFI 1.05 % 1.07 % 1.08 % Net charge-offs to average loans 0.03 % 0.02 % 0.02 % Capital Ratios: Stockholders’ equity to assets 10.15 % 9.71 % 8.62 % Tangible common equity to tangible assets (1,6) 10.11 % 9.67 % 8.57 % Total risk-based capital to risk-weighted assets 18.13 % 18.28 % 17.39 % Tier I risk-based capital to risk-weighted assets 17.12 % 17.24 % 16.38 % Common equity Tier I capital to risk-weighted assets 17.12 % 17.24 % 16.38 % Tier I risk-based capital to average assets 11.86 % 11.56 % 10.71 % (1) Non-GAAP financial measure.
The carrying values of our securities AFS are adjusted for unrealized gain or loss, and any unrealized gain or loss is reported on an after-tax basis as a component of AOCI in stockholders’ equity.
As of December 31, 2024, the estimated fair value of securities AFS was $550.1 million. The carrying values of our securities AFS are adjusted for unrealized gain or loss, and any unrealized gain or loss is reported on an after-tax basis as a component of AOCI in stockholders’ equity.
Contractual Maturity as of December 31, 2023 Within One Year After One Year but Within Five Years After Five Years but Within Ten Years After Ten Years Total (dollars in thousands) Amount Yield (1) Amount Yield (1) Amount Yield (1) Amount Yield (1) Amount Yield (1) Securities HTM: Mortgage-backed securities $ — — % $ — — % $ — — % $ 140,314 2.37 % $ 140,314 2.37 % U.S. agency securities — — % — — % 922 2.61 % — — % 922 2.61 % Total Securities HTM $ — — % $ — — % $ 922 2.61 % $ 140,314 2.37 % $ 141,236 2.37 % Equity Securities Equity securities are an investment in a CRA mutual fund, consisting primarily of bonds.
Contractual Maturity as of December 31, 2024 Within One Year After One Year but Within Five Years After Five Years but Within Ten Years After Ten Years Total (dollars in thousands) Amount Yield (1) Amount Yield (1) Amount Yield (1) Amount Yield (1) Amount Yield (1) Securities HTM: Mortgage-backed securities $ — — % $ — — % $ — — % $ 130,864 2.45 % $ 130,864 2.45 % U.S. agency securities — — % — — % 932 2.61 % — — % 932 2.61 % Total Securities HTM $ — — % $ — — % $ 932 2.61 % $ 130,864 2.45 % $ 131,796 2.45 % Equity Securities Equity securities are an investment in a CRA mutual fund, consisting primarily of bonds.
December 31, 2023 2022 (dollars in thousands) Amount Percent Amount Percent Real estate: Commercial real estate $ 9,118 42.7 % $ 7,720 37.4 % One-to-four family residential 7,484 35.1 % 5,682 27.6 % Construction and development 1,309 6.1 % 1,654 8.0 % Commercial and industrial 2,553 12.0 % 4,350 21.1 % Tax-exempt 575 2.7 % 751 3.6 % Consumer 297 1.4 % 471 2.3 % Total allowance for credit losses $ 21,336 100.0 % $ 20,628 100.0 % The following table displays the ratio of net charge-offs to average loans HFI outstanding by category for the periods shown: For the Years Ended December 31, 2023 2022 Real estate: Commercial real estate —% —% One-to-four family residential —% —% Construction and development —% —% Commercial and industrial —% —% Tax-exempt —% —% Consumer 0.02% 0.02% Total net charge-offs to average loans HFI 0.02% 0.02% Deposits Deposits are the primary funding source for loans and investments.
December 31, 2024 2023 (dollars in thousands) Amount Percent Amount Percent Real estate: Commercial real estate $ 9,047 41.6 % $ 9,118 42.7 % One-to-four family residential 6,452 29.7 % 7,484 35.1 % Construction and development 1,653 7.6 % 1,309 6.1 % Commercial and industrial 4,123 19.0 % 2,553 12.0 % Tax-exempt 103 0.5 % 575 2.7 % Consumer 353 1.6 % 297 1.4 % Total allowance for credit losses $ 21,731 100.0 % $ 21,336 100.0 % The following table displays the ratio of net charge-offs to average loans HFI outstanding by category for the periods shown: For the Years Ended December 31, 2024 2023 Real estate: Commercial real estate —% —% One-to-four family residential —% —% Construction and development —% —% Commercial and industrial 0.02% —% Tax-exempt —% —% Consumer 0.01% 0.02% Total net charge-offs to average loans HFI 0.03% 0.02% Deposits Deposits are the primary funding source for loans and investments.
The most directly comparable GAAP financial measure for realized book value per share is book value per share. 62 Table of Contents The following table reconciles, as of the dates set forth below, stockholders’ equity to tangible common equity, stockholders’ equity to realized common equity, and assets to tangible assets, and presents related resulting ratios: December 31, (dollars in thousands, except per share data) 2023 2022 2021 Tangible common equity Total stockholders’ equity $ 303,851 $ 265,753 $ 298,150 Adjustments: Intangible assets (1,546) (1,546) (1,546) Total tangible common equity (non-GAAP) $ 302,305 $ 264,207 $ 296,604 Realized common equity Total stockholders’ equity $ 303,851 $ 265,753 $ 298,150 Adjustments: Accumulated other comprehensive (income) loss 60,494 71,166 3,773 Total realized common equity (non-GAAP) $ 364,345 $ 336,919 $ 301,923 Common shares outstanding 7,091,637 7,183,915 7,180,155 Book value per share $ 42.85 $ 36.99 $ 41.52 Tangible book value per share (non-GAAP) $ 42.63 $ 36.78 $ 41.31 Realized book value per share (non-GAAP) $ 51.38 $ 46.90 $ 42.05 Tangible assets Total assets $ 3,128,810 $ 3,082,686 $ 3,224,710 Adjustments: Intangible assets (1,546) (1,546) (1,546) Total tangible assets (non-GAAP) $ 3,127,264 $ 3,081,140 $ 3,223,164 Total stockholders’ equity to assets 9.71 % 8.62 % 9.25 % Tangible common equity to tangible assets (non-GAAP) 9.67 % 8.57 % 9.20 % CRITICAL ACCOUNTING ESTIMATES Our consolidated financial statements are prepared in accordance with GAAP and with general practices within the financial services industry.
The most directly comparable GAAP financial measure for realized book value per share is book value per share. 62 Table of Contents The following table reconciles, as of the dates set forth below, stockholders’ equity to tangible common equity, stockholders’ equity to realized common equity, and assets to tangible assets, and presents related resulting ratios: December 31, (dollars in thousands, except per share data) 2024 2023 2022 Tangible common equity Total stockholders’ equity $ 319,739 $ 303,851 $ 265,753 Adjustments: Intangible assets (1,546) (1,546) (1,546) Total tangible common equity (non-GAAP) $ 318,193 $ 302,305 $ 264,207 Realized common equity Total stockholders’ equity $ 319,739 $ 303,851 $ 265,753 Adjustments: Accumulated other comprehensive (income) loss 60,247 60,494 71,166 Total realized common equity (non-GAAP) $ 379,986 $ 364,345 $ 336,919 Common shares outstanding 6,777,238 7,091,637 7,183,915 Book value per share $ 47.18 $ 42.85 $ 36.99 Tangible book value per share (non-GAAP) $ 46.95 $ 42.63 $ 36.78 Realized book value per share (non-GAAP) $ 56.07 $ 51.38 $ 46.90 Tangible assets Total assets $ 3,149,594 $ 3,128,810 $ 3,082,686 Adjustments: Intangible assets (1,546) (1,546) (1,546) Total tangible assets (non-GAAP) $ 3,148,048 $ 3,127,264 $ 3,081,140 Total stockholders’ equity to assets 10.15 % 9.71 % 8.62 % Tangible common equity to tangible assets (non-GAAP) 10.11 % 9.67 % 8.57 % CRITICAL ACCOUNTING ESTIMATES Our consolidated financial statements are prepared in accordance with GAAP and with general practices within the financial services industry.
Interest-Bearing Deposits in Other Banks Interest-bearing deposits in other banks were the third-largest component of earning assets as of December 31, 2023. As of December 31, 2023, interest-bearing deposits in other banks were $252.4 million and were 8.1% of assets, an increase of $11.8 million, or 4.9%, compared to $240.6 million and 7.8% of assets as of December 31, 2022.
Interest-Bearing Deposits in Other Banks Interest-bearing deposits in other banks were the third-largest component of earning assets as of December 31, 2024. As of December 31, 2024, interest-bearing deposits in other banks were $238.4 million and were 7.6% of assets, a decrease of $13.9 million, or 5.5%, compared to $252.4 million and 8.1% of assets as of December 31, 2023.
Loans classified as loss are considered uncollectible and charged-off to the ACL. 53 Table of Contents The following table summarizes loans HFI by risk rating: December 31, 2023 December 31, 2022 (dollars in thousands) Amount Percent Amount Percent Pass $ 1,968,575 98.8 % $ 1,893,491 98.8 % Special Mention 19,429 1.0 % 17,249 0.9 % Substandard 4,854 0.2 % 5,527 0.3 % Total loans HFI $ 1,992,858 100.0 % $ 1,916,267 100.0 % There were no loans classified as doubtful or loss as of December 31, 2023 or 2022.
Loans classified as loss are considered uncollectible and charged-off to the ACL. 52 Table of Contents The following table summarizes loans HFI by risk rating: December 31, 2024 December 31, 2023 (dollars in thousands) Amount Percent Amount Percent Pass $ 2,060,335 99.3 % $ 1,968,575 98.8 % Special Mention 8,330 0.4 % 19,429 1.0 % Substandard 6,348 0.3 % 4,854 0.2 % Total loans HFI $ 2,075,013 100.0 % $ 1,992,858 100.0 % There were no loans classified as doubtful or loss as of December 31, 2024 or 2023.
One-to-four family residential loans are predominantly first lien mortgage loans secured by owner occupied one-to-four family residential properties. One-to-four family residential loans increased $56.0 million, or 10.3%, to $599.5 million as of December 31, 2023, compared to $543.5 million as of December 31, 2022. Construction and Development Loans.
One-to-four family residential loans are predominantly first lien mortgage loans secured by owner occupied one-to-four family residential properties. One-to-four family residential loans increased $15.1 million, or 2.5%, to $614.6 million as of December 31, 2024, compared to $599.5 million as of December 31, 2023. Construction and Development Loans.
After the forecast period, the Company reverts to an average historical loss rate over a two-year period. The determination of the amount of allowance involves a high degree of judgement and subjectivity.
After the forecast period, the Company reverts to an average historical loss rate over a two-year period. The determination of the amount of allowance involves a high degree of judgment and subjectivity. The ACL is available to absorb losses on loans HFI.
Construction and development loans decreased $32.1 million, or 20.4%, to $125.2 million as of December 31, 2023, compared to $157.4 million as of December 31, 2022. Commercial and Industrial Loans. Commercial and industrial loans are made for a variety of business purposes, including, but not limited to, inventory, equipment, capital expansion, and working capital enhancement.
Construction and development loans increased $30.0 million, or 23.9%, to $155.2 million as of December 31, 2024, compared to $125.2 million as of December 31, 2023. Commercial and Industrial Loans. Commercial and industrial loans are made for a variety of business purposes, including, but not limited to, inventory, equipment, capital expansion, and working capital enhancement.
The process and methodology employed to establish an ACL consist of two components: (1) a component involving individual loans that do not share similar risk characteristics with other loans and the measurement of expected credit losses for such individual loans and (2) a pooled component for estimated expected credit losses for pools of loans that share similar risk characteristics.
The process and methodology employed to establish an ACL consist of two components: (1) a component involving individual loans that do not share similar risk characteristics with other loans and the measurement of expected credit losses for such individual loans and (2) a pooled component for estimated expected credit losses for pools of loans that share similar risk characteristics. 63 Table of Contents Management establishes an allowance for individual loans that do not share similar risk characteristics with other loans based on the amount of expected credit losses calculated on those individual loans and any amounts determined to be uncollectible.
Operating expenses increased $5.2 million to $63.9 million for the year ended December 31, 2023, compared to $58.7 million for the year ended December 31, 2022.
Operating expenses increased $2.3 million to $66.2 million for the year ended December 31, 2024 , compared to $63.9 million for the year ended December 31, 2023 .
As of December 31, 2023, we project receipt of approximately $145.0 million of principal repayments and maturities through December 31, 2024. As of December 31, 2023, approximately $480.4 million, or 67.3%, of the securities portfolio was available to be sold or used as collateral in borrowings as a liquidity source.
As of December 31, 2024, we project receipt of approximately $101.0 million of principal repayments and maturities through December 31, 2025. As of December 31, 2024, approximately $434.8 million, or 65.7%, of the fair value of the securities portfolio was available to be sold or used as collateral in borrowings as a liquidity source.
The average cost of interest-bearing deposits and total deposits for 2023 was 1.86% and 1.18%, respectively, compared to 0.46% and 0.27% for 2022, respectively.
The average cost of interest-bearing deposits and total deposits for 2024 was 2.60% and 1.74%, respectively, compared to 1.86% and 1.18% for 2023, respectively.
The ACL is a valuation account that is deducted from the amortized cost basis of loans HFI to present management’s best estimate of the expected credit losses to be recognized over the lifetime of the loans.
Significant Accounting Policies” for details on the significant accounting principles and practices we follow. Allowance for Credit Losses The ACL is a valuation account that is deducted from the amortized cost basis of loans HFI to present management’s best estimate of the expected credit losses to be recognized over the lifetime of the loans.
The following table presents our average deposits by account type and the average rate paid for the periods indicated: For the Years Ended December 31, 2023 2022 (dollars in thousands) Average Balance Average Rate Average Balance Average Rate Noninterest-bearing demand deposits $ 1,004,107 0.00 % $ 1,161,995 0.00 % Interest-bearing deposits: Interest-bearing demand deposits 103,578 3.93 % 10,579 2.93 % NOW accounts 423,441 1.00 % 464,699 0.26 % Money market accounts 539,085 1.66 % 687,699 0.34 % Savings accounts 183,155 0.15 % 197,635 0.11 % Time deposits 470,522 3.08 % 329,480 1.11 % Total interest-bearing deposits $ 1,719,781 1.86 % $ 1,690,092 0.46 % Total average deposits $ 2,723,888 1.18 % $ 2,852,087 0.27 % 57 Table of Contents As of December 31, 2023, our estimated uninsured deposits, which are the portion of deposit accounts that exceed the FDIC insurance limit (currently $250,000), were approximately $887.8 million, or 31.7% of total deposits, compared to $975.1 million, or 34.8% of total deposits, as of December 31, 2022.
The following table presents our average deposits by account type and the average rate paid for the periods indicated: For the Years Ended December 31, 2024 2023 (dollars in thousands) Average Balance Average Rate Average Balance Average Rate Noninterest-bearing demand deposits $ 910,507 0.00 % $ 1,004,107 0.00 % Interest-bearing deposits: Interest-bearing demand deposits 126,055 4.05 % 103,578 3.93 % NOW accounts 399,966 1.32 % 423,441 1.00 % Money market accounts 549,711 2.27 % 539,085 1.66 % Savings accounts 170,796 0.15 % 183,155 0.15 % Time deposits 593,817 4.19 % 470,522 3.08 % Total interest-bearing deposits $ 1,840,345 2.60 % $ 1,719,781 1.86 % Total average deposits $ 2,750,852 1.74 % $ 2,723,888 1.18 % 56 Table of Contents As of December 31, 2024, our estimated uninsured deposits, which are the portion of deposit accounts that exceed the FDIC insurance limit (currently $250,000), were approximately $879.8 million, or 31.4% of total deposits, compared to $887.8 million, or 31.7% of total deposits, as of December 31, 2023.
As of December 31, 2023, the loans HFI to deposits ratio was 71.13%, compared to 68.46% as of December 31, 2022, and the noninterest-bearing deposits to total deposits ratio was 32.71%, compared to 38.96% as of December 31, 2022.
As of December 31, 2024, the loans HFI to deposits ratio was 73.97%, compared to 71.13% as of December 31, 2023, and the noninterest-bearing deposits to total deposits ratio was 30.89%, compared to 32.71% as of December 31, 2023.
Total debt securities were $711.3 million as of December 31, 2023, a decrease of $54.8 million, or 7.1%, from $766.1 million as of December 31, 2022. Securities AFS are held for indefinite periods of time and are carried at estimated fair value. As of December 31, 2023, the estimated fair value of securities AFS was $570.1 million.
Total debt securities on the consolidated balance sheets were $681.9 million as of December 31, 2024, a decrease of $29.4 million, or 4.1%, from $711.3 million as of December 31, 2023. Securities AFS are held for indefinite periods of time and are carried at estimated fair value.
We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per share exclusive of changes in intangible assets.
Tangible book value per share is a non-GAAP measure commonly used by investors, financial analysts, and investment bankers to evaluate financial institutions. We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per share exclusive of changes in intangible assets.
This increase was attributable to $34.9 million of net income for the year ended December 31, 2023, a $10.7 million, net of tax, market adjustment to AOCI related to securities, and $404,000 of stock compensation, partially offset by the repurchase of 101,298 shares of common stock for $5.0 million, $2.3 million in cash dividends, and a $569,000, net of tax, adjustment to retained earnings related to the adoption of CECL.
This increase was attributable to $34.2 million of net income for the year ended December 31, 2024, $411,000 of stock compensation, and a $247,000, net of tax, market adjustment to AOCI related to securities, partially offset by the repurchase of 327,085 shares of common stock for $16.5 million and $2.5 million in cash dividends.
As of December 31, 2023, floating rate loans were 11.7% of loans HFI, and floating rate transaction deposits were 6.1% of interest-bearing transaction deposits.
As of December 31, 2024, floating rate loans were 16.0% of loans HFI, and floating rate transaction deposits were 8.1% of interest-bearing transaction deposits.
Brown, CFA was appointed to the boards of the Company and the Bank. The following tables set forth selected historical consolidated financial information for each of the periods indicated. The historical financial information as of and for the years ended December 31, 2023, 2022, and 2021, except for the selected ratios, is derived from our audited consolidated financial statements.
The following tables set forth selected historical consolidated financial information for each of the periods indicated. The historical financial information as of and for the years ended December 31, 2024, 2023, and 2022, except for the selected ratios, is derived from our audited consolidated financial statements. Our historical results may not be indicative of our future performance.
Moreover, the manner that we calculate the non-GAAP financial measures that are discussed in this Report may differ from that of other companies’ reporting measures with similar names. It is important to understand how such other banking organizations calculate and name their financial measures similar to the non-GAAP financial measures discussed in this Report when comparing such non-GAAP financial measures.
Moreover, the manner we calculate the non-GAAP financial measures that are discussed in this Report may differ from that of other companies’ reporting measures with similar names.
The table below presents, for the periods indicated, the provision for credit losses: For the Years Ended December 31, (dollars in thousands) 2023 2022 Increase (Decrease) Provision for credit losses $ 735 $ 1,750 $ (1,015) (58.0 %) The provision for credit losses for the year ended December 31, 2023, was $735,000, a decrease of $1.0 million from $1.8 million for the year ended December 31, 2022.
The table below presents, for the periods indicated, the provision for credit losses: For the Years Ended December 31, (dollars in thousands) 2024 2023 Increase (Decrease) Provision for credit losses $ 1,200 $ 735 $ 465 63.3 % The provision for credit losses for the year ended December 31, 2024, totaled $1.2 million, an increase of $465,000 from $735,000 for the year ended December 31, 2023.
Federal Reserve Bank’s Discount Window . In the third quarter of 2023, we pledged securities to have borrowing access to the Federal Reserve Bank’s Discount Window facility. As of December 31, 2023, our borrowing capacity through this facility was $45.5 million; however, we had no outstanding borrowings under this facility.
As of December 31, 2024 and 2023, we had no outstanding borrowings under these agreements. Federal Reserve Bank’s Discount Window . In 2023, we pledged securities to have borrowing access to the Federal Reserve Bank’s Discount Window facility.
As of December 31, 2023, our cash and cash equivalents of $305.4 million combined with our available borrowing capacity of $1.46 billion equaled 198.4% of our estimated uninsured deposits and 273.7% of our estimated uninsured deposits, excluding collateralized public entity deposits.
As of December 31, 2024, our cash and cash equivalents of $269.0 million combined with our available borrowing capacity of $1.62 billion equaled 214.6% of our estimated uninsured deposits and 282.8% of our estimated uninsured deposits, excluding collateralized public entity deposits.
On December 14, 2023, our board of directors approved the renewal of the 2023 stock repurchase program that was completed in the fourth quarter of 2023 after reaching its purchase limit.
On December 14, 2023, our board of directors approved the renewal of the 2023 stock repurchase program that was completed in the fourth quarter of 2023 after reaching its purchase limit. The 2024 stock repurchase program authorized us to purchase up to $5.0 million of our outstanding shares of common stock from January 1, 2024 through December 31, 2024.
As of December 31, 2023, floating rate loans were 11.7% of loans HFI, and floating rate transaction deposits were 6.1% of interest-bearing transaction deposits. 61 Table of Contents The assumptions incorporated into the model are inherently uncertain, and as a result, the model cannot precisely measure future net interest income or precisely predict the impact of fluctuations in market interest rates on net interest income.
The assumptions incorporated into the model are inherently uncertain, and as a result, the model cannot precisely measure future net interest income or precisely predict the impact of fluctuations in market interest rates on net interest income.

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