RRBI Red River Bancshares Inc - 10-K

Item 1A. Risk Factors

Ownership of our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all other information included in this Report, including the disclosures in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included in “Item 8. Financial Statements and Supplementary Data.” We believe the risks described below are the risks that are material to us as of the date of this Report. 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. Further, to the extent that any of the information in this Report constitutes forward-looking statements, the risk factors below also are cautionary statements identifying important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made by us or on our behalf.

Risks Related to Our Credit Activities

We may not be able to adequately measure and limit our credit risk, which could lead to unexpected losses.

Our business depends on our ability to successfully measure and manage credit risk. 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. 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, and risks inherent in dealing with individual borrowers. The creditworthiness of a borrower is affected by many factors including local market conditions and general economic conditions. 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.

Our risk management practices, such as monitoring the concentration of our loans within specific industries and our credit approval, review, and administrative practices may not adequately reduce credit risk. Further, our credit administration personnel, policies, and procedures may not adequately adapt to changes in economic or any other conditions affecting customers and the quality of our loan portfolio. A failure to effectively measure and limit our credit risk could result in loan defaults, foreclosures, and additional charge-offs. As a result, we may need to significantly increase our provision for credit losses, which could adversely affect our net income.

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. As of December 31, 2025, our owner occupied CRE loans totaled $461.7 million, or 20.5% of loans HFI. Also, as of December 31, 2025, our construction and development loans, non-owner occupied CRE loans, and non-real estate secured loans financing CRE activities totaled $683.3 million, or 30.4% of loans HFI. The repayment of these loans is typically dependent upon income generated, or expected to be generated, by the property securing the loan in amounts sufficient to cover operating expenses and debt service. This projected income may be adversely affected by changes in the economy, changes in interest rates, or local market conditions. 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. 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.

A significant portion of our loan portfolio consists of real estate loans, which subjects us to the potential impairment of the collateral securing the loan if the real estate market experiences negative changes and the costs and potential risks associated with the ownership of the real property if we are forced to foreclose.

Real estate values in our markets have experienced periods of fluctuation in the past. As of December 31, 2025, $1.77 billion, or 78.7%, 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. Real estate values and real estate markets are affected by many factors, such as changes in national, regional, or local economic conditions; the rate of unemployment; fluctuations in interest rates and the availability of loans to potential purchasers; changes in tax laws and other governmental statutes, regulations, and policies; and acts of nature, such as hurricanes, flooding, and other natural disasters. 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.

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Additionally, we may have to foreclose on the collateral property. 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, 2025, we held OREO totaling $36,000. This amount could increase in the future, depending upon the level of our real estate foreclosures and our ability to efficiently divest the foreclosed OREO. The amount that we, as a mortgagee, may realize after a default is dependent upon factors outside of our control, including, but not limited to, general or local economic conditions, environmental cleanup liability, assessments, interest rates, real estate tax rates, operating expenses of the mortgaged properties, ability to obtain and maintain adequate occupancy of the properties, zoning laws, governmental and regulatory rules, and natural disasters. 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, 2025, $628.8 million, or 28.0%, of our total loan portfolio was secured by primary and secondary liens on one-to-four family residential loans. One-to-four family residential loans are generally sensitive to regional and local economic conditions that significantly impact the borrowers’ ability to meet their loan payment obligations. A decline in residential real estate values resulting from a downturn in the housing market in our market areas may reduce the value of the real estate collateral securing these types of loans and increase our risk of losses due to default. A downturn in the housing market coupled with elevated unemployment rates may also result in a decline in demand for our products and services. Rising insurance costs may affect the borrower’s ability to make timely payments and may also impact the value of the underlying real estate due to higher costs of ownership.

In addition, in a declining interest rate environment, there may be an increase in prepayments on residential loans as borrowers refinance their loans at lower rates, which may adversely affect our business and profitability. By contrast, interest rate increases often result in larger payment requirements for our borrowers with variable rate loans, which increases the potential for default and could result in a decrease in the demand for residential loans. At the same time, the marketability of the property securing a residential loan may be adversely affected by any reduced demand resulting from higher interest rates.

A portion of our loan portfolio is comprised of commercial and industrial loans secured by receivables, inventory, equipment, or other commercial collateral, and the deterioration in the collateral’s value could expose us to credit losses.

As of December 31, 2025, approximately $392.8 million, or 17.5%, 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. These commercial and industrial loans are typically larger in amount than loans to individuals and therefore have the potential for larger losses on an individual loan basis. Additionally, the repayment of commercial and industrial loans is subject to the ongoing business operations of the borrower. The collateral securing such loans generally includes movable property, such as equipment and inventory, which may decline in value more rapidly than we anticipate, exposing us to increased credit risk. In addition, a portion of our customer base, including customers in the energy and real estate business, may be exposed to volatile businesses or industries that are sensitive to commodity prices, real estate values, or liquidity, which could impair the value of the collateral securing these loans. Significant adverse changes in the economy or local market conditions where our commercial lending customers operate could cause rapid declines in loan collectability and the values associated with general business assets resulting in inadequate collateral coverage.

Our ACL may prove to be insufficient to absorb losses inherent in our loan portfolio.

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. 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, 2025, our ACL totaled $23.4 million, which represents approximately 1.04% of loans HFI. The actual amount of credit losses is affected by changes in economic, operating, and other conditions within our markets, as well as changes in the financial condition, cash flows, and operations of our borrowers. All of these factors are beyond our control, and such losses may exceed our current estimates.

Additional credit losses will likely occur in the future and may occur at a rate greater than we have previously experienced or greater than we anticipate. We may be required to make additional provisions for credit losses to further supplement our ACL, due either to our management’s decision or as a regulatory requirement. In addition, bank regulatory agencies will periodically review our ACL and the value attributed to nonaccrual loans or to real estate acquired through foreclosure. Such regulatory agencies may require us to recognize future charge-offs.

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Appraisals and other valuation techniques we use in evaluating and monitoring loans secured by real property, OREO, and repossessed personal property may not accurately describe the net value of the asset.

In considering whether to make a loan secured by real property, we generally require an appraisal of the property. However, an appraisal is only an estimate of the value of the property at the time the appraisal is made. Because real estate values may change significantly in relatively short periods of time (especially in periods of heightened economic uncertainty), this estimate may not accurately describe the net value of the real property collateral after the loan is made. As a result, we may not be able to realize the full amount of any remaining indebtedness when we foreclose on and sell the relevant property. In addition, we rely on appraisals and other valuation techniques to establish the value of our OREO and personal property that we acquire through foreclosure and to determine certain estimated losses. If any of these valuations are inaccurate, our consolidated financial statements may not reflect the correct value of our OREO or personal property, and our ACL may not reflect accurate estimated losses.

The amount of our nonperforming assets may increase significantly, resulting in additional losses, costs, and expenses.

As of December 31, 2025, we had NPAs of $3.5 million, or 0.11% 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. When we take collateral in foreclosures and similar proceedings, we are required to mark the related asset to the market value of the collateral, which may ultimately result in a loss. An increase in the level of NPAs also increases our risk profile, which may cause our regulators to require additional amounts of capital. 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.

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 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, labor market and supply chain constraints, tariffs, trade policy, and trade wars; 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. 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.

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.

In deciding whether and upon what terms to extend credit or enter into other transactions with customers and counterparties, we may rely on information furnished to us by or on behalf of customers and counterparties, including financial statements, property appraisals, title information, employment and income documentation, account information, and other financial information. We may also rely on representations of customers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. Any misrepresentation or incorrect or incomplete information, whether fraudulent or inadvertent, may not be detected prior to entering into a transaction. In addition, there could be a significant breakdown or failure in our systems or processes in compiling that information, either as a result of human error or where an individual purposefully sabotages or fraudulently manipulates our loan documentation, operations, or systems. Whether a misrepresentation is made by the applicant, an employee, or another third party, we generally bear the risk of loss associated with the misrepresentation. We are often contractually required to indemnify counterparties for losses caused by a material misrepresentation, and a loan subject to a material misrepresentation is typically not marketable or, if sold, is subject to repurchase. The sources of the misrepresentations may also be difficult to locate, and we may be unable to recover any of the monetary losses we may suffer as a result.

Risks Related to Interest Rates and Economic Conditions

We are subject to risks due to changing interest rates.

The majority of our banking assets are monetary in nature and subject to risk from changes in interest rates that are highly sensitive to many factors that are beyond our control. Like most financial institutions, our profitability is dependent upon our net interest income. Net interest income is the primary component of our earnings and is affected by both local economic conditions and competition, as well as national monetary policy and market interest rates. Unexpected and/or significant changes to interest rates could cause our net interest margin and net interest income to decrease, and could adversely affect the valuation of our assets and liabilities.

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.

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An increase in the general level of interest rates may reduce loan demand and loan fees, decrease loan repayments, create deposit rate pressure, while increasing the yield on short-term interest-bearing assets and on new and renewing loans and securities. 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. Higher interest rates could also increase the cost of deposits.

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. Changes in market values impact the net unrealized gains and losses on securities AFS and the related accumulated other comprehensive income in equity. Also, any such losses could be realized into earnings if it becomes necessary to sell securities AFS in a loss position.

Although management believes it has implemented effective asset and liability management strategies to manage the effects of changes in interest rates, any significant and unexpected change in market rates could have a material negative effect on our financial condition and earnings, and our strategies may not always be successful in managing the risks associated with changes in interest rates.

As a business operating in the financial services industry, our business and operations may be adversely affected in numerous and complex ways.

Our business and operations, which primarily consist of lending money to customers in the form of loans, borrowing money from customers in the form of deposits, and investing in securities, are sensitive to general business and economic conditions in the U.S. Our business environment can be impacted by uncertainty about the federal fiscal and monetary policymaking process, as well as events such as government debt ceilings and shutdowns. 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. The primary impact of inflation on our operations is our ability to manage the impact of changes in interest rates, which could impact the demand for our products and services. In addition, we could also experience increased operating costs related to providing our products and services as a result of inflation, supply chain disruptions, or increased wage pressure.

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. Uncertainty regarding both short and long-term interest rates impacts our ability to attract deposits and manage net interest margin.

The borrowing needs of our customers may increase, especially during a challenging economic environment, which could result in increased borrowing against our contractual obligations to extend credit.

A commitment to extend credit is a formal agreement to lend funds to a customer as long as there is no violation of any condition established under the agreement. The actual borrowing needs of our customers under these credit commitments have historically been lower than the contractual amount of the commitments. 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, 2025, we had $560.2 million in unfunded credit commitments to our customers. Actual borrowing needs of our customers may exceed our expectations, especially during a challenging economic environment when our customers may be more dependent on our credit commitments due to reduced income or the lack of available credit elsewhere, the increasing costs of credit, or the limited availability of financings from alternative sources. 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 $194.3 million, or 8.6% of loans HFI as of December 31, 2025, are our largest industry concentration. These loans consist of loans to nursing and residential care facilities and physician and dental practices. 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.

As of December 31, 2025, we had energy loans of $27.7 million, or 1.2% 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. General uncertainty resulting from continued volatility could have other adverse impacts such as job losses in industries tied to energy, lower borrowing needs, higher transaction deposit balances, or a number of other effects that are difficult to isolate or quantify, particularly in states with significant dependence on the energy industry like Louisiana, all of which could lead to increased credit losses in our loan portfolio.

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Natural disasters and other external events could result in a disruption of our operations and increases in credit losses.

We are a community banking franchise concentrated in Louisiana. A significant portion of our business is generated from Louisiana markets that have been, and may continue to be, impacted by major hurricanes, floods, tropical storms, tornadoes, ice storms, and other natural disasters. Natural disasters can disrupt our operations, cause widespread property damage, and severely depress the local economies in which we operate. 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. As of December 31, 2025, 94.4% 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. If the population, employment, or income growth in any of our markets is negative or slower than projected, income levels, deposits, and real estate development could be adversely impacted, which could adversely affect our business and profitability.

Additionally, our business could be adversely affected by the effects of war and international conflict, civil unrest, inflation, trade and tariff policies, trade wars, labor market and supply chain constraints, perceived or actual stock market bubbles, government shutdowns, or a widespread outbreak of pandemics.

Further, we are monitoring the ongoing military conflicts between Russia and Ukraine, as well as current tensions in Venezuela, China, and the Middle East, including Iran, and between China and Taiwan. While we do not expect that these conflicts or tensions 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.

If the economies in our primary markets experience an overall decline as a result of these types of external events, demand for loans and our other products and services could be reduced. In addition, the rate of delinquencies, foreclosures, bankruptcies, and losses on loan portfolios may increase substantially, as uninsured property losses or sustained job interruption or loss may materially impair our borrowers’ ability to repay their loans. Such external events could, therefore, result in decreased revenue and increased credit losses for us.

Risks Related to Our Competition and Services

Our ability to attract and retain customers and maintain our reputation is critical to our growth, profitability, and market share.

We operate in the highly competitive banking industry and face significant competition for customers from bank and non-bank competitors. Our business plan emphasizes relationship banking in order to originate loans, attract deposits, and provide other financial services. As a result, our reputation is one of the most valuable components of our business. We face deposit and other competition from both bank and non-bank providers through a variety of new and evolving alternative payment mechanisms. These alternative payment mechanisms include cryptocurrencies and crypto assets, especially stablecoins, prepaid systems, and payment services targeting users of social networks, communications platforms, and gaming, which may attract funds from traditional banking channels like ours. Some of our competitors are larger and may have significantly more resources, greater name recognition, and more extensive and established branch networks or geographic footprints. Because of their scale, many of these competitors can be more aggressive on loan and deposit pricing. Also, many of our non-bank competitors have fewer regulatory constraints and may have lower cost structures. Credit unions have become more active through organic growth and growth through acquisitions, and their tax-exempt status may enable them to compete more effectively on rates. We expect competition to continue to intensify due to financial institution consolidation; legislative, regulatory, and technological changes; and the emergence of alternative sources for financial services, including fintech companies, all of which could cause us to lose some of our existing customers, and we may not be successful attracting new customers. Our failure to compete effectively in our primary markets could cause us to lose market share.

We may not be able to implement our expansion strategy, which may adversely affect our ability to maintain our historical earnings trends.

Our strategy is to expand market share in existing markets and engage in opportunistic new market de novo expansion, supplemented by strategic acquisitions of financial institutions in desirable geographic areas with customer-oriented, compatible philosophies. De novo expansion carries with it certain potential risks, including possibly significant startup costs and anticipated initial operating losses; an inability to gain regulatory approval; an inability to secure the services of qualified senior management to operate the de novo banking centers and successfully integrate and promote our corporate culture; poor market reception for de novo banking centers established in markets where we do not have a preexisting reputation; challenges posed by local economic conditions; challenges associated with securing attractive locations at a reasonable cost; and additional strain on management resources and internal systems and controls.

Acquisitions typically involve the payment of a premium over book and market values; therefore, some dilution of our tangible book value and earnings per common share may occur in connection with any future acquisition. Specifically, acquisitions could result in higher than expected deposit attrition, loss of key employees, significant fair value adjustments,

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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.

Also, as consolidation of the financial services industry continues, the number of appropriate targets may decrease and the price for potential acquisitions may increase, which could reduce our potential returns and reduce the attractiveness of these opportunities to us. In addition, we cannot provide assurance that we will be able to successfully integrate any business or assets we acquire. 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.

Further, we may not be able to execute on more general aspects of our expansion strategy, which may impair our ability to sustain our historical rate of growth or prevent us from growing at all. For example, we may not be able to generate sufficient new loans and deposits within acceptable risk and expense tolerances, obtain the personnel or funding necessary for additional growth, or find suitable acquisition candidates. Various factors, such as economic conditions and competition with other financial institutions, may impede or prohibit the growth of our operations, the opening of new banking centers, and the consummation of acquisitions. The success of our strategy also depends on our ability to effectively manage growth, which is dependent upon a number of factors, including our ability to adapt our credit, operational, technology, and governance infrastructure to accommodate expanded operations. If we fail to implement one or more aspects of our expansion strategy, we may be unable to maintain our historical growth and earnings trends.

New lines of business, products, product enhancements, services, or technologies may subject us to additional risks.

As we continue to grow, our success will be partially dependent upon our ability to address the needs of our customers and enhance operational efficiencies. From time to time, we may implement new lines of business; offer new products, services, or technologies; or offer product enhancements within our existing lines of business. In doing so, we may invest significant time and resources. At the same time, we may not allocate the appropriate level of resources or expertise necessary to make these new efforts successful or to realize their expected benefits. Further, initial timetables for the introduction and development of new lines of business, products, product enhancements, services, or technologies may not be achieved, and price and profitability targets may not prove feasible. As a result, we may not fully realize the anticipated benefits from these efforts, or we may incur significant costs to overcome related challenges in a timely manner. External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the ultimate implementation. For example, many of our larger competitors have substantially greater resources to invest in these efforts. As a result, they may be able to offer additional or superior products, which would put us at a competitive disadvantage. Accordingly, we may lose customers seeking technology-driven products and services that we are not able to provide. Any new line of business, product, product enhancement, service, or technology could also have a significant impact on the effectiveness of our system of internal controls and subject us to additional, unknown risks.

We may be adversely affected by the soundness of other financial institutions.

Our ability to engage in routine funding transactions could be adversely affected by the actions and soundness of other financial institutions. Financial services companies are interrelated as a result of trading, clearing, counterparty, and other relationships. We have exposure to different industries and counterparties and exposure through transactions with counterparties in the financial services industry, including broker-dealers, commercial banks, investment banks, and other financial intermediaries. 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. Failures by, declines in the financial condition of, or even rumors or questions about one or more financial institutions, financial service companies, or the financial services industry generally, may lead to a decline in market-wide liquidity, asset quality problems, or other problems and could lead to losses or defaults by us or by other institutions.

Risks Related to Our Financial Stability

We may need to rely on financial markets to provide needed capital in the future, and if we fail to maintain sufficient capital, we may not be able to satisfy regulatory requirements or maintain adequate protection against financial stress.

We may need to raise additional capital, in the form of additional debt or equity, in the future to have sufficient capital resources and liquidity to satisfy our current or future regulatory capital requirements, meet our commitments, and fund our business needs and future growth. Our ability to raise additional capital depends on a number of factors, including, without limitation, our financial condition and performance, conditions in the capital markets, economic conditions, investor perceptions regarding the banking industry, and governmental activities. Many of these factors are beyond our control, and as such, there is no assurance we will be able to issue debt or equity securities if needed or on terms acceptable to us. If we fail to maintain capital sufficient to meet regulatory requirements, we may not be able to withstand periods of financial stress, and we could be subject to enforcement actions or other regulatory consequences.

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A lack of liquidity could impair our ability to fund operations.

Liquidity is essential to our business. We rely on our ability to generate deposits and effectively manage the repayment and maturity schedules of our loans and investment securities, respectively, to ensure that we have adequate liquidity to fund our operations. An inability to mitigate deposit withdrawals and to raise funds through new deposits, borrowings, the sale of investment securities at or above the value of such securities on our books, and other sources could have a material adverse effect on liquidity. Our most important source of funds is deposits. Historically, our deposits have provided a stable source of funds. However, deposit balances can decrease when customers perceive alternative investments as providing a better risk/return tradeoff or when customers have negative views related to disruption in the financial markets or the prospects for the financial services industry as a whole. If our customers move money out of bank deposits, our liquidity position could be impacted, and we would lose a relatively low-cost source of funds, increasing our funding costs, and reducing our net interest income and net income. Even though a majority of our certificates of deposit renew upon maturity with what we believe are competitive rates, some of our more rate-sensitive customers may move those and other deposit funds to higher-yielding alternatives.

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. 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. We also have the ability to borrow from the FHLB of Dallas and the Federal Reserve Bank’s Discount Window facility. 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. 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. A decline in available funding could adversely impact our ability to originate loans, invest in securities, meet our expenses, or fulfill obligations such as meeting deposit withdrawal demands or repaying our borrowings.

The fair value of our investment securities can fluctuate due to factors outside of our control, which could have a material adverse effect on our business and profitability.

Factors beyond our control can significantly influence the fair value of securities in our investment portfolio, potentially resulting in adverse changes to the portfolio’s fair value. 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. Any of these factors, among others, could cause realized or unrealized losses in future periods and declines in AOCI, which could have a material adverse effect on our business, financial condition, results of operations, and capital requirements. In addition, the process for determining impairment of a security often requires complex, subjective judgments about whether there has been a significant deterioration in the financial condition of the issuer, whether management has the intent or ability to hold a security for a period of time sufficient to allow for any anticipated recovery in fair value, the future financial performance and liquidity of the issuer and any underlying collateral, and other relevant factors. As a result, any failure or deficiency in making these judgments could have a material adverse effect on our business and profitability.

Risks Related to Our Operations

We rely heavily on our executive management team, directors, and other key employees, and we could be adversely affected by an unexpected loss of their service.

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, directors, 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. We may not be successful in retaining our key employees. Further, we may not be able to identify and hire qualified replacement personnel on terms acceptable to us, or at all, whether due to tightening labor conditions or otherwise. If we unexpectedly lose the services of one or more of our management team, directors, or key personnel and are unable to replace them, we would also lose the benefit of their skills, knowledge of our primary markets, and years of industry experience, which could adversely affect our business and profitability.

We are subject to laws regarding the privacy, information security, and protection of personal information. Unauthorized access, cyber-crime, and other threats to data security may require significant resources, harm our reputation, and otherwise cause harm to our business.

In the ordinary course of our business, we necessarily collect, use, and retain, on various information systems that we maintain and in those maintained by third-party providers and, in some cases, vendors retained by those third parties, personal and financial information concerning individuals and businesses with which we have a banking or other relationship. We also maintain important internal company data such as personally identifiable information about our employees and information about our operations. Threats to data security such as unauthorized access and cyber-attacks

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emerge and change rapidly. These threats may increase our costs for protection or remediation. They may also result in competing time constraints between applicable privacy and other requirements and our ability to secure data in accordance with customer expectations and evolving laws and regulations governing the privacy and protection of personal information.

It is difficult or impossible to defend against every risk posed by changing technologies and cyber-crime. 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.

Further, we, or any of our vendors or third-party providers, could also experience a breach due to circumstances such as intentional or negligent conduct on the part of employees or other internal and external sources, software bugs, or other technical malfunctions. Any of these threats may cause our customer accounts and financial systems to become vulnerable to takeover schemes or cyber-fraud. If personal, confidential, or proprietary information of customers, employees, or others were to be mishandled or misused by us or third parties with access to that information, we could be exposed to litigation or regulatory sanctions under personal information laws and regulations. A breach of our security that results in unauthorized access to our data could expose us to disruption or challenges relating to our daily operations as well as to data loss, litigation, fines, penalties, damages, inquiries, examinations, investigations, significant increases in compliance costs, and reputational damage, which could cause us to lose customers or potential customers.

We rely on third parties to provide key components of our business infrastructure, and a failure of these parties to perform for any reason could disrupt our operations.

Third parties provide key components of our business infrastructure such as data processing, internet connections, network access, core application processing, statement production, and account analysis. Our business depends on the successful and uninterrupted functioning of our IT and telecommunications systems and third-party servicers. The failure of these systems, or the termination of a third-party software license or service agreement on which any of these systems is based, could interrupt our operations. Because our IT and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity. Additionally, our operations could be interrupted if any of our third-party service providers experience financial difficulty, are inadvertently or intentionally negligent, are subject to cybersecurity breaches or other cyber events, fail to effectively manage their providers, terminate their services, or fail to comply with applicable banking regulations.

We are subject to claims, litigation, and other proceedings that could result in legal liability.

From time to time, we are, or may be, involved in various legal matters arising in the ordinary course of business. One or more unfavorable outcomes of these ordinary course claims or litigation against us could have a material adverse effect on our business. Regardless of their merits, scope, validity, or ultimate outcomes, such matters are costly, time-consuming, may result in protracted litigation or otherwise divert management’s attention, and may materially and adversely affect our reputation, even if resolved favorably.

Our financial results depend on management’s selection of accounting methods and certain assumptions and estimates.

The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, disclosure of contingent assets and liabilities, and the reported amount of related revenues and expenses. Certain accounting policies are inherently based to a greater extent on estimates, assumptions, and judgments of management and, as such, have a greater possibility of producing results that could be materially different than originally estimated. These policies include the ACL, accounting for income taxes, the determination of fair value for financial instruments, and accounting for stock-based compensation. Management’s judgment and the data relied upon by management may be based on assumptions that prove to be inaccurate, particularly in times of market stress or other unforeseen circumstances. 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.

The use of statistical and quantitative models and other quantitative analysis is part of management’s decision-making and is used in our operations. It is also 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. We also use a software system to model and evaluate the ACL. 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.

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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. 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 may have exposure for illegal, negligent, fraudulent, or other acts of these investment advisors and brokers. 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.

Climate related events and legislative and societal responses regarding climate change present risks to our business.

Climate change may intensify severe weather events such as hurricanes and rainstorms that recur in our market areas, which may adversely impact our locations and business and those of our customers and suppliers. In addition, there has been an increased focus among businesses, consumers and investors regarding transitioning to renewable energy and a net zero economy. If we fail to adequately anticipate and address these changing preferences, our business could be adversely impacted. We are also subject to risks relating to potential new climate change-related legislation or regulations, which could increase our and our customers’ costs. Further, we may be exposed to negative publicity based on the identity and activities of those to whom we lend and with which we otherwise do business and the public’s view of the approach and performance of our customers and business partners with respect to climate-related matters. The risks associated with these matters are continuing to evolve rapidly and the ultimate impact on our business is difficult to predict with any certainty.

The development and use of AI presents risks and challenges that may adversely affect our business.

We or our third-party (or fourth-party) vendors, clients, or counterparties may develop or incorporate AI technology in certain business processes, services, or products. The development and use of AI presents a number of risks and challenges to our business. The legal and regulatory environment relating to AI is uncertain and rapidly evolving. These evolving laws and regulations could require changes in our implementation of AI technology and increase our compliance costs and the risk of non-compliance. AI models, particularly generative AI models, may produce output or take action that is incorrect, that reflects biases included in the data on which they are trained, or that is otherwise harmful. We may rely on AI models developed by third parties, and, to that extent, would be dependent in part on the manner in which such third parties develop and train their models, including risks arising from the inclusion of any unauthorized material in the training data for their models and the effectiveness of the steps these third parties have taken to limit the risks associated with the output of their models, all of which are matters into which we may have limited visibility. Any of these risks could expose us to liability or adverse legal or regulatory consequences and harm our reputation and the public perception of our business.

Risks Related to an Investment in Our Common Stock

The market price of our common stock may be subject to substantial fluctuations, which may make it difficult to sell shares at the volumes, prices, or times desired.

An investment in our common stock is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency and is subject to price fluctuations and risk of loss. There are many factors that may impact the market price and trading volume of our common stock. In particular, the realization of any of the risks described in this “Item 1A. Risk Factors” of this Report could have a material adverse effect on the market price of our common stock, causing the price of our common stock to decline. The stock market and, in particular, the market for financial institution stocks, has experienced substantial fluctuations, which may or may not be related to the operating performance and prospects of particular companies. In addition, significant fluctuations in the trading volume in our common stock may cause significant price variations to occur. Increased market volatility could have an adverse effect on the market price of our common stock, which could make it difficult for investors to sell shares at volumes, prices, or times desired and could result in a risk of loss.

Future sales or the availability for sale of substantial amounts of our equity securities in the public market could adversely affect the prevailing market price of our common stock and could impair our ability to raise capital through future sales of equity securities.

We may issue shares of equity securities as consideration for future acquisitions and investments and under compensation and incentive plans. We may also grant registration rights covering those shares of our equity securities in connection with any such acquisition or investment. Sales of substantial amounts of our equity securities, or the perception that such sales could occur, may adversely affect prevailing market prices for our common stock and could impair our ability to raise capital through future sales of our securities.

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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 a stock repurchase program. The repurchase program authorizes 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. In the past few years we have also repurchased shares of our common stock outside of our stock repurchase programs in privately negotiated repurchases with approval from our board of directors.

Repurchases 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. Additionally, stock repurchases could 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. Stock repurchases may not enhance shareholder value because the market price of our common stock may decline below the levels at which we repurchased shares of stock, and short-term stock price fluctuations could reduce the program’s effectiveness. 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 directors and named executive officers have significant control over our business.

As of December 31, 2025, our directors and named executive officers beneficially owned approximately 16.5% of our issued and outstanding shares of common stock. Consequently, our management and board of directors may be able to significantly affect the outcome of the election of directors and the potential outcome of other matters submitted to a vote of our shareholders, such as mergers, the issuance of stock, the sale of substantially all of our assets, and other extraordinary corporate matters. 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, 2025, we did not have any outstanding long-term debt. However, any future indebtedness that we may incur may be senior to our common stock. As a result, we would make payments on our potential future indebtedness before any dividends could be paid on our common stock, and, in the event of our bankruptcy, dissolution, or liquidation, the holders of our potential future indebtedness would be satisfied in full before any distributions could be made to the holders of 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. 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.

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. Although we anticipate paying quarterly dividends going forward, we have no obligation to continue paying dividends, and we may change our dividend policy at any time without notice to our shareholders. Our ability to pay dividends may also be limited on account of any potential future outstanding indebtedness, as we generally would make payments on outstanding indebtedness before any dividends could be paid on our common stock. Also, because our primary earning asset is our investment in the capital stock of the Bank, we are dependent upon dividends from the Bank to pay our operating expenses, satisfy our obligations, and pay dividends on our common stock. The Bank’s ability to pay dividends on its common stock will substantially depend upon its earnings and financial condition, liquidity and capital requirements, the general economic and regulatory climate, and other factors deemed relevant by its board of directors. There are numerous laws and banking regulations and guidance that limit our and the Bank’s ability to pay dividends. For more information on dividend regulations, see “Item 1. Business - Supervision and Regulation.”

Our corporate governance documents, and certain corporate and banking laws applicable to us, could make a takeover more difficult.

Certain provisions of our articles of incorporation and bylaws, each as amended and restated, and corporate and federal banking laws, could make it more difficult for a third party to acquire control of our organization or conduct a proxy contest, even if those events were perceived by many of our shareholders as beneficial to their interests. These provisions, and the corporate and banking laws and regulations applicable to us, enable our board of directors to issue additional shares of authorized, but unissued capital stock; specify that our shareholders do not have preemptive rights; issue “blank check” preferred stock with such designations, rights, and preferences as may be determined from time to time by the board; increase the size of the board and fill the vacancies created by the increase; not be elected by cumulative voting; amend our bylaws without shareholder approval; require the request of holders of at least 25.0% of the outstanding shares of our

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capital stock entitled to vote at a meeting to call a special shareholders’ meeting; establish an advance notice procedure for director nominations and other shareholder proposals; and require prior regulatory application and approval of any transaction involving a change in control of our organization.

These provisions may discourage potential acquisition proposals and could delay or prevent a change in control, including under circumstances in which our shareholders might otherwise receive a premium over the market price of our shares.

Securities analysts may not continue coverage on us or may publish unfavorable reports, which could adversely impact the price of our common stock.

The trading market for our common stock depends, in part, on the research and reports that securities analysts publish about us and our business. We do not have any control over these securities analysts, and they may not cover us. If one or more of these analysts cease to cover us or fail to publish regular reports on us, we could lose visibility in the financial markets, which could cause the price or trading volume of our common stock to decline. If we are covered by securities analysts and are the subject of an unfavorable report, the price of our common stock may decline.

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.

We are subject to extensive regulation, supervision, and legal requirements that govern almost all aspects of our operations. These laws and regulations are not intended to protect our shareholders or creditors. Rather, these laws and regulations are intended to protect consumers, customers, depositors, the FDIC Deposit Insurance Fund, and the overall financial stability of the U.S. 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. Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations often impose additional compliance costs. Our failure to comply with these laws and regulations, even if the failure follows good faith efforts or reflects a difference in interpretation, could subject us to restrictions on our business activities, fines, and other penalties, any of which could adversely affect our results of operations, capital base, the price of our securities, and result in reputational damage. 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.”

New activities and expansion require regulatory approvals, and failure to obtain them may restrict our growth.

As opportunities arise, we plan to continue establishing de novo banking centers as a part of our organic growth strategy. In addition, we may complement and expand our business by pursuing strategic acquisitions of financial institutions and other complementary businesses. Generally, we must receive state and federal regulatory approval before we can acquire an FDIC-insured depository institution or related business or open new de novo banking centers. Such regulatory approvals may not be granted on terms that are acceptable to us, or at all. We may also be required to open or sell banking centers as a condition to receiving regulatory approval, which condition may not be acceptable to us or, if acceptable to us, may reduce the benefit of any acquisition.

Federal and state banking agencies periodically conduct examinations of our business, and our failure to comply with any supervisory actions as a result of such examinations could result in regulatory action or penalties.

As part of the bank regulatory process, the FDIC, the OFI, and the Federal Reserve periodically conduct examinations of our business, including our compliance with laws and regulations. If, as a result of an examination, a federal or state banking agency were to determine that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity, or other aspects of any of our operations had become unsatisfactory, or that we or the Bank were in violation of any law or regulation, such agency may take a number of different remedial actions that it deems appropriate. These 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.

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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.

Because we and the Bank do not intend to utilize the simplified CBLR framework, we both remain subject to rules designed to implement the recommendations with respect to regulatory capital standards, commonly known as Basel III. 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.

Our subsidiary, Red River Bank, is also subject to separate regulatory capital requirements imposed by the FDIC. If the Bank does not meet minimum capital requirements, it will be subject to prompt corrective action by the FDIC. Prompt corrective action can include progressively more restrictive constraints on operations, management, and capital distributions. Even if we satisfy the objectives of our capital plan and meet minimum capital requirements, it is possible that our regulators may ask us to raise additional capital. For example, banking organizations experiencing significant internal growth, making acquisitions, or experiencing financial difficulties are often expected to maintain strong capital positions substantially above the minimum supervisory levels.

In addition, the Federal Reserve may require us to commit capital resources to support the Bank. The Federal Reserve requires a bank holding company to act as a source of financial and managerial strength to its subsidiary banks and to commit resources to support its subsidiary banks. 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. Accordingly, we could be required to make a capital injection to the Bank if it experiences financial distress. Such a capital injection may be required at a time when our resources are limited, and we may be required to raise additional debt or equity capital to make the required capital injection.

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. 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.

For additional information regarding regulatory capital standards 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.

The impact of past economic conditions, particularly in the financial markets, have resulted in government regulatory agencies and political bodies placing increased focus and scrutiny on the financial services industry. New proposals for legislation and regulation will continue to be introduced in the U.S. Congress and by regulatory agencies, which could substantially increase regulation of the financial services industry; impose restrictions on the operations and general ability of firms within the industry to conduct business consistent with historical practices, including in the areas of compensation, interest rates, fees on products and services (including overdraft fees and NSF fees), financial product offerings, and disclosures; and have an effect on collection and bankruptcy proceedings with respect to consumer residential real estate mortgages, among other things. While the current administration has generally favored less regulatory burden on financial institutions, the priorities of the current administration or of future administrations could change

Certain aspects of future regulatory or legislative changes, if enacted or adopted, may impact the profitability of our business activities by requiring more oversight or changing certain of our business practices, including our ability to offer new products, obtain financing, attract deposits, make loans, and achieve satisfactory interest rate spreads. They also may require us to invest significant management attention and resources to make necessary operational changes to comply, which could further impact the profitability of our business activities and increase our costs.

In addition, future changes in tax laws may have an adverse effect on our income tax expense, deferred tax balances, and the amount of taxes payable, which could have an adverse effect on our business and profitability.

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.

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. It is our policy not to make predatory loans, but these laws create the potential for liability with respect to our lending and loan investment activities. They increase our cost of doing business and, ultimately, may prevent us from making certain loans. They also may cause us to reduce the

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average percentage rate or the points and fees on loans that we do make. Additionally, consumer protection initiatives or changes in state or federal law may substantially increase the time and expense associated with the foreclosure process or prevent us from foreclosing at all.

We are generally unable to control the amount of premiums that we are required to pay for FDIC insurance.

Deposits are insured by the FDIC up to legal limits and subject to the payment of FDIC deposit insurance assessments. The Bank’s regular assessments are determined by the level of its assessment base and its risk classification under an FDIC risk-based assessment system. The FDIC has the power to change deposit insurance assessment rates, the manner deposit insurance is calculated, and also to charge special assessments to FDIC-insured institutions. Increases in assessment rates or special assessments that apply to all banks may occur in the future, especially if there are significant financial institution failures. Any future special assessments or increases in assessment rates could reduce our profitability, which could have an adverse effect on our business, financial condition, and results of operations.

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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 the financial condition and results of operations of Red River Bancshares, Inc. on a consolidated basis during the year ended December 31, 2025 and selected prior periods. This discussion and analysis should be read in conjunction with information presented elsewhere in this Report, including our audited consolidated financial statements and notes thereto included in “Item 8. Financial Statements and Supplementary Data.”

The following discussion contains forward-looking statements that reflect our current views with respect to, among other things, future events and our financial performance. We caution that assumptions, expectations, projections, intentions, or beliefs about future events may, and often do, vary from actual results and the differences can be material. See the risk factors and other cautionary statements described in “Cautionary Note Regarding Forward-Looking Statements” and “Item 1A. Risk Factors” in this Report. We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.

CORPORATE SUMMARY

Red River Bancshares, Inc. is the bank holding company for Red River Bank, a Louisiana state-chartered bank established in 1999 that provides a fully integrated suite of banking products and services tailored to the needs of our commercial and retail customers. As of December 31, 2025, Red River Bank operated from a network of 28 banking centers throughout Louisiana and two combined LDPOs, one each in New Orleans, Louisiana and Lafayette, Louisiana. Banking centers are located in the following Louisiana markets: Central, which includes the Alexandria MSA; Northwest, which includes the Shreveport-Bossier City MSA; Capital, which includes the Baton Rouge MSA; Southwest, which includes the Lake Charles MSA; the Northshore, which includes the Slidell-Mandeville-Covington MSA; Acadiana, which includes the Lafayette MSA; and New Orleans, which includes the New Orleans-Metairie MSA.

Our priority is to drive shareholder value through the establishment of a market-leading commercial banking franchise based in Louisiana. We provide our services through relationship-oriented bankers who are committed to their customers and the communities where we offer our products and services. Our strategy is to expand market share in existing markets and engage in opportunistic new market de novo expansion, supplemented by strategic acquisitions of financial institutions with customer-oriented, compatible philosophies located in desirable geographic areas.

2025 FINANCIAL AND OPERATIONAL HIGHLIGHTS

In 2025, we had record-high net income and EPS, and an improved net interest margin, along with solid balance sheet growth. We also increased our cash dividend, had significant stock buyback activity, continued our organic expansion initiative, and improved our digital banking systems.

• Net income for the year ended December 31, 2025, was $42.8 million, or $6.38 diluted EPS, an increase of $8.5 million, or 24.9%, compared to $34.2 million, or $4.95 diluted EPS, for the year ended December 31, 2024. The increase in net income was mainly due to higher net interest income.

• The return on assets was 1.33% for 2025 and 1.11% for 2024.

• The return on equity was 12.58% for 2025 and 11.02% for 2024.

• Net interest income and net interest margin FTE increased for 2025 compared to 2024. Net interest income for 2025 was $105.6 million, which was $16.3 million, or 18.2%, higher than $89.3 million for the prior year. Net interest margin FTE increased 42 bps to 3.38% for 2025, compared to 2.96% for the prior year. These improvements were due to higher loans and securities yields, lower cost of deposits, and an improved earning asset mix.

• As of December 31, 2025, loans HFI were $2.25 billion, which was $173.7 million, or 8.4%, higher than $2.08 billion as of December 31, 2024. In 2025, we had robust new loan and commitment activity, combined with funding of loan construction commitments.

• As of December 31, 2025, assets were $3.35 billion, which was $201.3 million, or 6.4%, higher than $3.15 billion as of December 31, 2024, driven by a $158.3 million increase in deposits.

• Deposits totaled $2.96 billion as of December 31, 2025, an increase of $158.3 million, or 5.6%, compared to $2.81 billion as of December 31, 2024. In 2025, there were increases in most deposit categories.

• As of December 31, 2025, total securities were $773.0 million, which was $88.1 million, or 12.9%, higher than $684.9 million as of December 31, 2024. This increase was mainly due to utilizing securities cash flows, along with other liquid funds, to purchase $182.1 million of securities at favorable yields.

• The provision for credit losses was $2.3 million for 2025, compared to $1.2 million for 2024, mainly due to loan growth. As of December 31, 2025, NPAs were $3.5 million, or 0.11% of assets, and the ACL was $23.4 million, or 1.04% of loans HFI.

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• We paid quarterly cash dividends per common share of $0.12 in the first and second quarters of 2025, and $0.15 in the third and fourth quarters of 2025, resulting in total 2025 cash dividends per common share of $0.54. This was a 50.0% increase from $0.36 per common share paid in 2024. In the first quarter of 2026, we declared a quarterly cash dividend of $0.25 per common share.

• The 2025 stock repurchase program authorized us to purchase up to $5.0 million of our outstanding shares of common stock from January 1, 2025 through December 31, 2025. In 2025, we repurchased 11,748 shares of our common stock on the open market at an aggregate cost of $656,000, excluding excise tax. The 2025 stock repurchase program expired on December 31, 2025, with $4.3 million of available capacity.

• During 2025, we completed two privately negotiated stock repurchases for an aggregate of 200,000 shares of our common stock at a total purchase price of $10.4 million, excluding excise tax. These repurchases were supplemental to our 2025 stock repurchase program.

• In 2025, we repurchased a total of 211,748 shares of our common stock, or 3.12% of our December 31, 2024 outstanding shares. For the year ended December 31, 2025, these repurchases benefited earnings per share by $0.10.

• On December 18, 2025, our Board of Directors approved the renewal and increase of our stock repurchase program for 2026. The 2026 stock repurchase program authorizes us to purchase up to $10.0 million of our outstanding shares of common stock from January 1, 2026 through December 31, 2026.

• In 2025 and early 2026, we also completed various projects and other events:

◦ In the first quarter of 2025, Red River Bank’s online, mobile banking, and bill payment systems were upgraded in order to improve our digital services for all customers.

◦ In the first quarter of 2025, S&P Global Market Intelligence ranked Red River Bank 14th of the top 50 best deposit franchises in 2024 for banks with assets between $3.0 and $10.0 billion.

◦ On March 14, 2025, our board of directors and executive management had the privilege of ringing the closing bell at the Nasdaq Market Site in New York to commemorate being a public company for six years.

◦ In the second quarter of 2025, we changed our credit card program provider to align with our debit card program provider.

◦ In the third quarter of 2025, we opened an LDPO in the Pinhook Tower building in Lafayette, Louisiana.

◦ In early January 2026, we held a ground-breaking ceremony for our second full-service banking center in the Acadiana market.

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, 2025, 2024, and 2023, except for the selected ratios, is derived from our audited consolidated financial statements. Our historical results may not be indicative of our future performance.

As of December 31,

(in thousands)

Selected Period End Balance Sheet Data:

Total assets

Interest-bearing deposits in other banks

Securities available-for-sale, at fair value

Securities held-to-maturity, at amortized cost

Loans held for investment

Total deposits

Total stockholders’ equity

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As of and for the Years Ended December 31,

(dollars in thousands, except per share data)

Net Income

Per Common Share Data:

Earnings per share, basic

Earnings per share, diluted

Book value per share

Tangible book value per share (1,2)

Realized book value per share (1,3)

Cash dividends per share

Shares outstanding

Weighted average shares outstanding, basic

Weighted average shares outstanding, diluted

Summary Performance Ratios:

Return on average assets

Return on average equity

Net interest margin

Net interest margin FTE (4)

Efficiency ratio (5)

Loans HFI to deposits ratio

Noninterest-bearing deposits to deposits ratio

Noninterest income to average assets

Operating expense to average assets

Summary Credit Quality Ratios:

NPAs to assets

Nonperforming loans to loans HFI

ACL to loans HFI

Net charge-offs to average loans

Capital Ratios:

Stockholders’ equity to assets

Tangible common equity to tangible assets (1,6)

Total risk-based capital to risk-weighted assets

Tier I risk-based capital to risk-weighted assets

Common equity Tier I capital to risk-weighted assets

Tier I risk-based capital to average assets

(1) Non-GAAP financial measure. Calculations of this measure and reconciliations to GAAP are included in “- Non-GAAP Financial Measures” in this Report. This measure has not been audited.

(2) We calculate tangible book value per share as total stockholders’ equity, less intangible assets, divided by the outstanding number of shares of our common stock at the end of the relevant period.

(3) We calculate realized book value per share as total stockholders’ equity, less AOCI, divided by the outstanding number of shares of our common stock at the end of the relevant period.

(4) Net interest margin FTE includes an FTE adjustment using a 21.0% federal income tax rate on tax-exempt securities and tax-exempt loans.

(5) Efficiency ratio represents operating expenses divided by the sum of net interest income and noninterest income.

(6) We calculate tangible common equity as total stockholders’ equity, less intangible assets, net of accumulated amortization, and we calculate tangible assets as total assets, less intangible assets, net of accumulated amortization.

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RESULTS OF OPERATIONS

The following is a discussion of results of operations for the year ended December 31, 2025, compared to the year ended December 31, 2024. A discussion regarding our results of operations for the year ended December 31, 2024, compared to the year ended December 31, 2023, can be found in “Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 14, 2025.

General

Net income for the year ended December 31, 2025, was $42.8 million, or $6.38 diluted EPS, an increase of $8.5 million, or 24.9%, compared to $34.2 million, or $4.95 diluted EPS, for the year ended December 31, 2024. The increase in net income was mainly due to a $16.3 million increase in net interest income, partially offset by a $3.9 million increase in operating expenses, a $2.2 million increase in income tax expense, a $1.1 million increase in the provision for credit losses, and a $477,000 decrease in noninterest income. The return on assets for the year ended December 31, 2025, was 1.33%, compared to 1.11% for the prior year. The return on equity was 12.58% for the year ended December 31, 2025, compared to 11.02% for the prior year. Our efficiency ratio for the year ended December 31, 2025, was 55.84%, compared to 60.29% for the year ended December 31, 2024.

Net Interest Income and Net Interest Margin

Our operating results depend primarily on our net interest income. Fluctuations in market interest rates impact the yield on interest-earning assets and the rate paid on interest-bearing liabilities. 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. Since noninterest-bearing sources of funds, such as noninterest-bearing deposits and stockholders’ equity, also fund interest-earning assets, net interest margin includes the benefit of these noninterest-bearing funding sources.

The Federal Reserve sets the target federal funds rate, which is the cost of immediately available overnight funds, and influences other market rates, such as the prime rate. These market rates impact pricing of certain assets and liabilities used by financial institutions. In 2024, the FOMC decreased the federal funds rate by 50 bps in each of the third and fourth quarters, resulting in a target federal funds range of 4.25%-4.50%. In 2025, the FOMC reduced the federal funds rate by 25 bps in the third quarter and an additional 50 bps in the fourth quarter, reducing the target federal funds range to 3.50%-3.75%. The average effective federal funds rate was 4.21% for 2025 compared to 5.14% for 2024. The net interest income and net interest margin FTE increased for the year ended December 31, 2025, compared to the year ended December 31, 2024.

Net interest income for the year ended December 31, 2025, was $105.6 million, which was $16.3 million, or 18.2%, higher than the year ended December 31, 2024, and was driven by a $12.7 million increase in interest and dividend income and a $3.6 million decrease in interest expense. For 2025, loan income increased $11.1 million, primarily due to higher rates on new and renewed loans compared to the existing portfolio yield, combined with higher average loan balances. Securities income increased $4.2 million due to purchasing higher yielding securities, combined with higher average securities balances. Interest income on short-term liquid assets decreased $2.6 million, primarily due to the FOMC lowering the target federal funds range in 2025. For 2025, interest expense decreased $3.6 million due to lower rates on total interest-bearing deposits, slightly offset by higher interest-bearing deposit balances.

Net interest margin FTE increased 42 bps to 3.38% for the year ended December 31, 2025, from 2.96% for the year ended December 31, 2024, with improvements in each quarter in 2025. These improvements were due to having higher yields on securities and loans, combined with a lower cost of deposits. These positive variances were partially offset by a 96 bp decrease to the yield on short-term liquid assets, due to the lower average federal funds rate for the year ended December 31, 2025.

The yield on securities increased 47 bps due to purchasing $182.1 million of securities with an average rate of 4.91%. The yield on loans increased 28 bps due to higher rates on new and renewed loans compared to the existing portfolio yield. The average rate on new and renewed loans was 6.95% for the year ended December 31, 2025, compared to 7.62% for the prior year. The cost of deposits decreased 18 bps to 1.56% for the year ended December 31, 2025, from 1.74% for the year ended December 31, 2024. For the same time periods, the rates on time deposits and interest-bearing transaction deposits decreased 54 and 15 bps, respectively. These decreases occurred as we adjusted rates on selected transaction and time deposits in response to the federal funds rate decreases by the FOMC in 2024 and 2025.

As of December 31, 2025, the target federal funds range was 3.50%-3.75%. The market’s expectation is that the FOMC may lower the target federal funds range by 25-50 bps in 2026. Income on short-term liquid assets follows the target federal funds range, which we expect to decrease in 2026. In 2026, we project $261.4 million of fixed rate loans at 5.85% to mature and $434.0 million of floating rate loans at 6.24% to reprice. We expect to redeploy these balances into loans with slightly higher rates. We also expect to receive $125.3 million in securities cash flows at 3.69%, which we plan to redeploy into securities at higher yields. Rates on interest-bearing transaction deposits could be lowered with target

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federal funds range reductions. We expect $573.9 million in time deposits at 3.57% to mature in 2026, with the opportunity to reprice slightly lower. As of December 31, 2025, floating rate loans were 19.3% of loans HFI, and floating rate transaction deposits were 8.1% of interest-bearing transaction deposits. Depending on balance sheet activity and the interest rate environment, we expect net interest income and net interest margin FTE to increase slightly during the first half of 2026.

The following table presents average balance sheet information, interest income, interest expense, and the corresponding average yields earned and rates paid for the years presented:

For the Years Ended December 31,

(dollars in thousands)

Average

Balance

Outstanding

Interest

Income/Expense

Average

Yield/

Rate

Average

Balance

Outstanding

Interest

Income/Expense

Average

Yield/

Rate

Assets

Interest-earning assets:

Loans (1,2)

Securities - taxable

Securities - tax-exempt

Interest-bearing deposits in other banks

Nonmarketable equity securities

Total interest-earning assets

Allowance for credit losses

Noninterest-earning assets

Total assets

Liabilities and Stockholders’ Equity

Interest-bearing liabilities:

Interest-bearing transaction deposits

Time deposits

Total interest-bearing deposits

Other borrowings

Total interest-bearing liabilities

Noninterest-bearing liabilities:

Noninterest-bearing deposits

Accrued interest and other liabilities

Total noninterest-bearing liabilities

Stockholders’ equity

Total liabilities and stockholders’ equity

Net interest income

Net interest spread

Net interest margin

Net interest margin FTE (3)

Cost of deposits

Cost of funds

(1) Includes average outstanding balances of loans HFS of $2.9 million for each of the years ended December 31, 2025 and 2024.

(2) Nonaccrual loans are included as loans carrying a zero yield.

(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.

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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 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, 2025 and 2024.

For the Years Ended December 31,

Increase (Decrease)

Due to Change in

Total

Increase

(in thousands)

Volume

Rate

(Decrease) (1)

Interest-earning assets:

Loans

Securities - taxable

Securities - tax-exempt

Interest-bearing deposits in other banks

Nonmarketable equity securities

Total interest-earning assets

Interest-bearing liabilities:

Interest-bearing transaction deposits

Time deposits

Total interest-bearing deposits

Other borrowings

Total interest-bearing liabilities

Increase (decrease) in net interest income

(1) The change in interest attributable to rate has been determined by applying the change in rate between periods to average balances outstanding in the earlier period. The change in interest due to volume has been determined by applying the rate from the earlier period to the change in average balances outstanding between periods. Changes attributable to both rate and volume that cannot be segregated have been allocated to rate.

Provision for Credit Losses

The provision for credit losses is the amount necessary to maintain the ACL and the reserve for unfunded commitments at a level considered appropriate by management. Factors impacting the provision include loan portfolio growth, changes in the quality and composition of the loan portfolio, the level of nonperforming loans, delinquency and charge-off trends, the level of unfunded commitments, and current economic conditions.

The table below presents, for the periods indicated, the provision for credit losses:

For the Years Ended December 31,

(dollars in thousands)

Increase (Decrease)

Provision for credit losses

The provision for credit losses for the year ended December 31, 2025, was $2.3 million for loans, an increase of $1.1 million from $1.2 million for the year ended December 31, 2024. The provision for credit losses for 2024 included $1.0 million for loans and $200,000 for unfunded commitments. In 2025, the higher provision was primarily driven by loan growth, lingering impacts related to inflation and tariffs, and greater uncertainty with future unemployment. We will continue to evaluate future provision needs in relation to current economic situations, loan growth, trends in asset quality, forecasted information, and other conditions influencing loss expectations.

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 $477,000 to $20.0 million for the year ended December 31, 2025, compared to $20.4 million for the prior year. The decrease in noninterest income was primarily due to lower income from SBIC limited partnerships of which the Bank is a member, lower loan and deposit fee income, and lower net debit card income, partially offset by higher brokerage income, higher other income, and a gain on equity securities.

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The table below presents, for the periods indicated, the major categories of noninterest income:

For the Years Ended December 31,

(dollars in thousands)

Increase (Decrease)

Noninterest income:

Service charges on deposit accounts

Debit card income, net

Mortgage loan income

Brokerage income

Loan and deposit income

Bank-owned life insurance income

Gain (Loss) on equity securities

SBIC income (loss)

Other income

Total noninterest income

SBIC income decreased $1.4 million to $55,000 for 2025, compared to 2024. This decrease was mainly due to fund value adjustments as an SBIC fund entered its wind-down phase in 2025.

Loan and deposit income decreased $310,000 to $1.7 million for 2025, compared to 2024. Credit card income, net of expenses, is reported in loan and deposit income. In the second quarter of 2025, we changed our credit card program provider to align with our debit card program provider, which resulted in increased credit card expenses. Also, 2025 and 2024 benefited from $89,000 and $201,000 of nonrecurring loan-related fees, respectively.

Debit card income, net, was $3.8 million for 2025 and 2024. 2025 included higher debit card activity and net revenue. 2024 benefited from $145,000 of nonrecurring income due to the termination of our prior debit card provider contract.

Brokerage income increased $942,000 to $4.7 million for 2025, compared to 2024, due to increased investing activity by clients. Assets under management were $1.33 billion and $1.14 billion as of December 31, 2025 and 2024, respectively.

Other income increased $319,000 to $659,000 for 2025, compared to 2024. We participate as a member in JAM FINTOP. During the third quarter of 2025, JAM FINTOP completed the sale of an investment, which led to distributions of capital and income. As a result, other income for 2025 included $379,000 of nonrecurring JAM FINTOP partnership income.

Equity securities are an investment in a CRA mutual fund consisting primarily of bonds. The gain or loss on equity securities is a fair value adjustment primarily driven by changes in the interest rate environment. Due to the fluctuations in market rates, equity securities had a gain of $94,000 in 2025, compared to a loss of $28,000 in 2024.

Operating Expenses

Operating expenses are composed of all employee expenses and costs associated with operating our facilities, obtaining and retaining customer relationships, and providing services.

Operating expenses increased $3.9 million to $70.1 million for the year ended December 31, 2025 , compared to $66.2 million for the year ended December 31, 2024 . The increase in operating expenses was mainly due to higher personnel expenses, occupancy and equipment expenses, loan and deposit expenses, other operating expenses, technology expenses, and data processing expense, partially offset by lower legal and professional expenses.

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The following table presents, for the periods indicated, the major categories of operating expenses:

For the Years Ended December 31,

(dollars in thousands)

Increase (Decrease)

Operating expenses:

Personnel expenses

Non-staff expenses:

Occupancy and equipment expenses

Technology expenses

Advertising

Other business development expenses

Data processing expense

Other taxes

Loan and deposit expenses

Legal and professional expenses

Regulatory assessment expenses

Other operating expenses

Total operating expenses

Personnel expenses are the largest component of operating expenses and include payroll expenses, incentive compensation, benefit plans, health insurance, and payroll taxes. Personnel expenses increased $3.1 million to $41.7 million for 2025, compared to 2024 . This increase was primarily due to an increase in headcount, increased revenue-based commission compensation, annual raises, and higher personnel-related accruals. As of December 31, 2025 and 2024 , we had 375 and 369 total employees, respectively.

Occupancy and equipment expenses increased $452,000 to $7.1 million for 2025, compared to 2024. This increase was primarily due to an increase in maintenance expense, a full period of expenses related to our New Orleans market expansion in 2024, expenses related to our Acadiana market expansion in 2025, and nonrecurring expenses related to renovations of a banking center and to the main office building. 2024 had $111,000 of nonrecurring expenses related to our new banking center location and new administrative office, both in the New Orleans market, and other 2024 property renovations.

Loan and deposit expenses increased $236,000 to $1.1 million for 2025, compared to 2024. In 2025, we received a $173,000 negotiated, variable rebate from a vendor, compared to a $262,000 similar rebate in 2024. Also, in 2025, there was an overall increase in both loan and deposit-related expenses.

Other operating expenses increased $210,000 to $4.5 million for 2025, compared to 2024. This increase was mainly due to an increase in employee-related expenses.

Technology expenses increased $196,000 to $3.4 million for 2025, compared to 2024. This increase was primarily due to continued software technology enhancements and upgrades, partially offset by lower technology communication expenses from a new vendor relationship.

Data processing expense increased $116,000 to $2.4 million for 2025, compared to 2024. This increase was due to new expenses and $31,000 of nonrecurring implementation fees related to our first quarter 2025 online, mobile banking, and bill payment system upgrades. This increase was partially offset by the receipt of a $447,000 periodic refund from our data processing center in 2025, compared to a $284,000 similar refund in 2024.

Legal and professional expenses decreased $258,000 to $2.4 million for 2025, compared to 2024. This decrease was mainly due to lower audit-related expenses.

Income Tax Expense

The amount of income tax expense is influenced by the amounts of our pre-tax income, tax-exempt income, and other nondeductible expenses. Deferred tax assets and liabilities are reflected at currently enacted income tax rates in effect for the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

Our accrued tax rate is based on an annualized projection and changes considering our most recent financial results and balances. 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.

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The table below presents, for the periods indicated, income tax expense:

For the Years Ended December 31,

(dollars in thousands)

Increase (Decrease)

Income tax expense

For the years ended December 31, 2025 and 2024, income tax expense totaled $10.4 million and $8.1 million, respectively. The increase in income tax expense was primarily due to the increase in pre-tax income. Our effective income tax rates for the years ended December 31, 2025 and 2024, were 19.5% and 19.2%, respectively.

FINANCIAL CONDITION

As of December 31, 2025, assets were $3.35 billion, which was $201.3 million, or 6.4%, higher than $3.15 billion as of December 31, 2024. During 2025, loans HFI increased $173.7 million, or 8.4%, to $2.25 billion as of December 31, 2025. The increase in loans was the result of robust new loan and commitment activity, combined with the funding of loan construction commitments. Total securities increased $88.1 million, or 12.9%, to $773.0 million and were 23.1% of assets as of December 31, 2025. The increase in securities was mainly due to utilizing securities cash flows, along with other liquid funds, to purchase $182.1 million of securities at favorable yields. Deposits increased $158.3 million, or 5.6%, to $2.96 billion as of December 31, 2025, due to increases in most deposit categories. Cash and cash equivalents decreased $55.6 million, or 20.7%, to $213.4 million and were 6.4% of assets as of December 31, 2025. Cash and cash equivalents decreased due to loan and securities growth exceeding deposit growth. We had no outstanding borrowings as of December 31, 2025 and 2024. During 2025, stockholders’ equity increased $45.4 million to $365.2 million as of December 31, 2025. As of December 31, 2025, the loans HFI to deposits ratio was 75.88%, compared to 73.97% as of December 31, 2024, and the noninterest-bearing deposits to total deposits ratio was 30.84%, compared to 30.89% as of December 31, 2024.

Interest-Bearing Deposits in Other Banks

Interest-bearing deposits in other banks were the third-largest component of earning assets as of December 31, 2025. Liquidity that is not being deployed in loans or securities is placed in these accounts. As of December 31, 2025, interest-bearing deposits in other banks were $187.7 million and were 5.6% of assets, a decrease of $50.7 million, or 21.3%, compared to $238.4 million and 7.6% of assets as of December 31, 2024. This decrease was primarily due to funding loan and securities growth, which exceeded deposit growth during 2025.

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, 2025, our total securities portfolio was 23.1% of assets. It is designed primarily to provide and maintain liquidity, generate a favorable return on investments without incurring unnecessary interest rate and credit risk, and complement our lending activities. We may invest in various types of liquid assets that are permissible under governing regulations and approved by our investment policy, which include U.S. Treasury obligations, U.S. government agency obligations, certificates of deposit of insured domestic banks, mortgage-backed and mortgage-related securities, corporate notes having an investment rating of “A” or better, municipal bonds, and certain equity securities.

Securities AFS and Securities HTM

Securities AFS and securities HTM are debt securities. Total debt securities on the consolidated balance sheets were $769.9 million as of December 31, 2025, an increase of $88.0 million, or 12.9%, from $681.9 million as of December 31, 2024.

Securities AFS are held for indefinite periods of time and are carried at estimated fair value. As of December 31, 2025, the estimated fair value of securities AFS was $647.3 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. The net unrealized loss on securities AFS decreased $20.1 million for the year ended December 31, 2025, resulting in a net unrealized loss of $43.2 million as of December 31, 2025, compared to a net unrealized loss of $63.2 million as of December 31, 2024.

Securities HTM, which we have the intent and ability to hold until maturity, are carried at amortized cost. As of December 31, 2025, the amortized cost of securities HTM was $122.6 million. Securities HTM had an unrealized loss of $18.2 million as of December 31, 2025, compared to an unrealized loss of $22.8 million as of December 31, 2024.

Investment activity for the year ended December 31, 2025, included $182.1 million of securities purchased, partially offset by $114.4 million in maturities, principal repayments, and calls. There were no sales of securities AFS, and there were no purchases or sales of securities HTM for the same period.

Securities AFS purchased for the year ended December 31, 2025, consisted of $166.1 million in mortgage-backed securities and $16.0 million in U.S. agency securities. The mortgage-backed securities purchased had a yield of 4.92%

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and an average life of 4.50 years. The U.S. agency securities purchased had a yield of 4.88% and an average life of 4.64 years.

The securities portfolio tax-equivalent yield was 2.89% for the year ended December 31, 2025, compared to 2.43% for the year ended December 31, 2024. The increase in yield for the year ended December 31, 2025, was primarily due to reinvesting lower yielding securities cash flows received during 2025, along with other liquid funds, 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. Mortgage-backed securities and collateralized mortgage obligations are typically issued with stated principal amounts and are backed by pools of mortgage loans and other loans with varying maturities. The term of the underlying mortgages and loans may vary significantly due to the ability of a borrower to prepay. Monthly pay downs on mortgage-backed securities may cause the average lives of the securities to be much different than the stated contractual maturity. During a period of rising interest rates, fixed rate mortgage-backed securities are not likely to experience heavy prepayments of principal, and consequently, the average lives of these securities are typically lengthened. If interest rates begin to fall, prepayments may increase, thereby shortening the estimated average lives of these securities. As of December 31, 2025, the average life of our securities portfolio was 6.1 years with an estimated effective duration of 4.2 years. 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.

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, 2025, 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.

December 31, 2025

(in thousands)

Amortized

Cost

Gross

Unrealized

Gains

Gross

Unrealized

Losses

Fair Value

Securities AFS:

Mortgage-backed securities

Municipal bonds

U.S. agency securities

Total Securities AFS

Securities HTM:

Mortgage-backed securities

U.S. agency securities

Total Securities HTM

December 31, 2024

(in thousands)

Amortized

Cost

Gross

Unrealized

Gains

Gross

Unrealized

Losses

Fair Value

Securities AFS:

Mortgage-backed securities

Municipal bonds

U.S. Treasury securities

U.S. agency securities

Total Securities AFS

Securities HTM:

Mortgage-backed securities

U.S. agency securities

Total Securities HTM

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The following table shows the fair value of securities AFS that mature during each of the periods indicated. The contractual maturity of a mortgage-backed security is the date the last underlying mortgage matures. Yields are weighted-average tax equivalent yields that are calculated by dividing projected annual income by the average amortized cost of the applicable securities while using a 21.0% federal income tax rate, when applicable.

Contractual Maturity as of December 31, 2025

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 AFS:

Mortgage-backed securities

Municipal bonds

U.S. agency securities

Total Securities AFS

(1) Tax equivalent projected book yield as of December 31, 2025.

The following table shows the amortized cost of securities HTM that mature during each of the periods indicated. The contractual maturity of a mortgage-backed security is the date the last underlying mortgage matures. Yields are weighted-average tax equivalent yields that are calculated by dividing projected annual income by the average amortized cost of the applicable securities while using a 21.0% federal income tax rate, when applicable.

Contractual Maturity as of December 31, 2025

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

U.S. agency securities

Total Securities HTM

Equity Securities

Equity securities are an investment in a CRA mutual fund, consisting primarily of bonds. We invest in the mutual fund as part of our strategy to meet our obligations described within the CRA, which encourages financial institutions to help meet the credit needs of their entire market area, including low and moderate income neighborhoods, consistent with safe and sound banking principles. Through this fund, mortgage-backed securities are purchased according to our allocations, with their underlying collateral located in our market areas, which strengthens our efforts to meet our CRA obligations.

Equity securities are carried at fair value on the consolidated balance sheets with periodic changes in value recorded through the consolidated statements of income. As of December 31, 2025, equity securities had a fair value of $3.0 million with a recognized gain of $94,000 for the year ended December 31, 2025. As of December 31, 2024, equity securities had a fair value of $2.9 million with a recognized loss of $28,000 for the year ended December 31, 2024.

Loan Portfolio

Our loan portfolio is our largest category of earning assets, and interest income earned on our loan portfolio is our primary source of income. We maintain a diversified loan portfolio with a focus on CRE, one-to-four family residential, and commercial and industrial loans. As of December 31, 2025, loans HFI were $2.25 billion, an increase of $173.7 million, or 8.4%, compared to $2.08 billion as of December 31, 2024. In 2025, we had robust new loan and commitment activity, combined with funding of loan construction commitments.

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Loans by Category

Loans HFI by category and loans HFS are summarized below as of the dates indicated:

December 31, 2025

December 31, 2024

Change from

December 31, 2024 to December 31, 2025

(dollars in thousands)

Amount

Percent

Amount

Percent

$ Change

% Change

Real estate:

Commercial real estate

One-to-four family residential

Construction and development

Commercial and industrial

Tax-exempt

Consumer

Total loans HFI

Total loans HFS

Average loan HFI size, excluding credit cards

Commercial Real Estate Loans. 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. CRE loans increased $35.7 million, or 4.0%, to $920.3 million as of December 31, 2025, from $884.6 million as of December 31, 2024. The average CRE loan size was $1.0 million as of December 31, 2025 and $953,000 as of December 31, 2024.

Non-owner occupied CRE loans were $458.6 million, or 20.4% of loans HFI, and represented 108.7% of the Bank’s total risk-based capital as of December 31, 2025. Non-owner occupied office loans were $54.3 million, or 2.4% of loans HFI, as of December 31, 2025, and are primarily centered in low-rise suburban areas. The owner occupied and non-owner occupied components of the CRE portfolio are summarized below:

December 31,

(dollars in thousands)

Amount

Percent of Loans HFI

Amount

Percent of Loans HFI

Commercial real estate

Owner occupied

Non-owner occupied

Total commercial real estate

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Industry concentrations, based on NAICS, within the CRE loan portfolio are presented below:

December 31,

(dollars in thousands)

Amount

Percent of Loans HFI

Amount

Percent of Loans HFI

Owner Occupied

Retail trade

Health care

Investor one-to-four family and multifamily

Religious and other nonprofit

Agriculture, forestry, fishing, and hunting

Repair and maintenance

Hospitality services

Professions, scientific, and technical services

Transportation and warehousing

Energy

Arts, entertainment, and recreation

All other

Total owner occupied

Non-Owner Occupied

Health care

Investor one-to-four family and multifamily

Hospitality services

Finance and insurance

Construction

Wholesale trade

Energy

Management of companies and enterprises

Educational services

Information

Retail trade

All other

Total non-owner occupied

Total commercial real estate

One-to-Four Family Residential 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 $14.2 million, or 2.3%, to $628.8 million as of December 31, 2025, compared to $614.6 million as of December 31, 2024.

Construction and Development Loans. 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. Construction and development loans increased $66.0 million, or 42.5%, to $221.2 million as of December 31, 2025, compared to $155.2 million as of December 31, 2024.

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. 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 $65.7 million, or 20.1%, to $392.8 million as of December 31, 2025, from $327.1 million as of December 31, 2024.

Tax-Exempt Loans. 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

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for by ad valorem taxes. Tax-exempt loans decreased $7.4 million, or 11.4%, to $57.5 million as of December 31, 2025, compared to $64.9 million as of December 31, 2024.

Consumer Loans. Consumer loans are made to individuals for personal, family, and household purposes and include secured and unsecured installment and term loans. Consumer loans are offered as an accommodation to existing customers and are not marketed to persons without a pre-existing relationship with us.

Industry Concentrations

Industry concentrations, based on NAICS, stated as a percentage of loans HFI are presented below:

December 31, 2025

Health care

Investor one-to-four family and multifamily

Construction

Retail trade

Hospitality services

Finance and insurance

Public administration

Religious and other nonprofit

Energy

Manufacturing

All other

Total loans HFI by industry concentration

Health care loans are our largest industry concentration and are made up of a diversified portfolio of health care providers. As of December 31, 2025, health care loans were $194.3 million, or 8.6% of loans HFI, compared to $167.3 million, or 8.1% of loans HFI, as of December 31, 2024. The average health care loan size was $414,000 as of December 31, 2025, and $372,000 as of December 31, 2024. Within the health care sector, loans to nursing and residential care facilities were 4.6% of loans HFI as of December 31, 2025, and 4.4% as of December 31, 2024. Loans to physician and dental practices were 3.5% of loans HFI as of December 31, 2025, and 3.4% as of December 31, 2024.

Geographic Markets

As of December 31, 2025, the Bank operated in seven geographic markets throughout the state of Louisiana. The following table summarizes loans HFI by market of origin:

December 31, 2025

(dollars in thousands)

Amount

Percent of Loans HFI

Central

Capital

Northwest

New Orleans

Southwest

Northshore

Acadiana

Total loans HFI

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Loan Portfolio Maturity Analysis

The maturity distribution for loans HFI are summarized below:

December 31, 2025

(dollars in thousands)

Within One Year

After One Year but Within Five Years

After Five Years but Within 15 Years

After 15 Years

Total

Real estate:

Commercial real estate

One-to-four family residential

Construction and development

Commercial and industrial

Tax-exempt

Consumer

Total loans HFI

Fixed and Floating Rate Loans

The dollar amount, as of December 31, 2025, of fixed and floating rate loans HFI that mature after December 31, 2026, are presented in the following table:

December 31, 2025

(dollars in thousands)

Fixed Rate Loans

Floating Rate Loans

Total

Real estate:

Commercial real estate

One-to-four family residential

Construction and development

Commercial and industrial

Tax-exempt

Consumer

Total

Nonperforming Assets

NPAs consist of nonperforming loans and property acquired through foreclosures or repossession. Nonperforming loans include loans that are contractually past due 90 days or more and loans that are on nonaccrual status. Loans are considered past due when principal and interest payments have not been received as of the date such payments are due.

Asset quality is managed through disciplined underwriting policies, continual monitoring of loan performance, and focused management of NPAs. There can be no assurance, however, that the loan portfolio will not become subject to losses due to declines in economic conditions, deterioration in the financial condition of our borrowers, or a decline in the value of collateral.

NPAs totaled $3.5 million as of December 31, 2025, an increase of $264,000, or 8.1%, from $3.3 million as of December 31, 2024. The increase was primarily due to an increase in nonaccrual loans. The ratio of NPAs to assets was 0.11% and 0.10% as of December 31, 2025 and December 31, 2024, respectively.

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Nonperforming loan and asset information is summarized below:

December 31,

(dollars in thousands)

Nonperforming loans:

Nonaccrual loans

Accruing loans 90 or more days past due

Total nonperforming loans

Foreclosed assets:

Real estate

Total foreclosed assets

Total NPAs

Nonaccrual loans to loans HFI

Nonperforming loans to loans HFI

NPAs to assets

Nonaccrual loans are summarized below by category:

December 31,

(in thousands)

Real estate:

Commercial real estate

One-to-four family residential

Construction and development

Commercial and industrial

Tax-exempt

Consumer

Total nonaccrual loans

Potential Problem Loans

From a credit risk standpoint, we classify loans in one of five categories: pass, special mention, substandard, doubtful, or loss. Loan classifications reflect a judgment about the risk of default and loss associated with the loans. Classifications are reviewed periodically and adjusted to reflect the degree of risk and loss believed to be inherent in each loan. The methodology is structured so that reserve allocations are increased in accordance with deterioration in credit quality (and a corresponding increase in risk and loss) or decreased in accordance with improvement in credit quality (and a corresponding decrease in risk and loss).

Loans classified as pass are of satisfactory quality and do not require a more severe classification.

Loans classified as special mention have potential weaknesses that deserve management’s close attention. If these weaknesses are not corrected, repayment possibilities for the loan may deteriorate. However, the loss potential does not warrant substandard classification.

Loans classified as substandard have well-defined weaknesses that jeopardize normal repayment of principal and interest. Prompt corrective action is required to reduce exposure and to assure adequate remedial actions are taken by the borrower. If these weaknesses do not improve, loss is possible.

Loans classified as doubtful have well-defined weaknesses that make full collection improbable.

Loans classified as loss are considered uncollectible and charged-off to the ACL.

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The following table summarizes loans HFI by risk rating:

December 31, 2025

December 31, 2024

(dollars in thousands)

Amount

Percent

Amount

Percent

Pass

Special Mention

Substandard

Total loans HFI

There were no loans classified as doubtful or loss as of December 31, 2025 or 2024.

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. The ACL is determined using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts.

As of December 31, 2025, the ACL was $23.4 million, or 1.04% of loans HFI. As of December 31, 2024, the ACL was $21.7 million, or 1.05%, of loans HFI. The $1.7 million increase in the ACL for the year ended December 31, 2025, was due to $2.3 million from the provision for credit losses on loans, partially offset by $632,000 of net charge-offs.

The provision for credit losses for the year ended December 31, 2025, was $2.3 million for loans, an increase of $1.1 million from $1.2 million for the year ended December 31, 2024. The provision for credit losses for 2024 included $1.0 million for loans and $200,000 for unfunded commitments. In 2025, the higher provision was primarily driven by loan growth, lingering impacts related to inflation and tariffs, and greater uncertainty with future unemployment. We will continue to evaluate future provision needs in relation to current economic situations, loan growth, trends in asset quality, forecasted information, and other conditions influencing loss expectations.

Net charge-offs for the year ended December 31, 2025, were $632,000, an increase of $27,000 from $605,000 for the year ended December 31, 2024. The ratio of net charge-offs to average loans HFI was 0.03% for the years ended December 31, 2025 and 2024.

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The following table displays activity in the ACL for December 31, 2025 and 2024:

As of and for the Years Ended December 31,

(dollars in thousands)

Loans HFI

Nonaccrual loans

Average loans

Allowance at beginning of period

Provision for credit losses (1)

Charge-offs:

Real estate:

Commercial real estate

One-to-four family residential

Construction and development

Commercial and industrial

Consumer

Total charge-offs

Recoveries:

Real estate:

One-to-four family residential

Commercial and industrial

Consumer

Total recoveries

Net (charge-offs)/recoveries

Allowance at end of period

ACL to loans HFI

ACL to nonaccrual loans

Net charge-offs to average loans

(1) The $1.2 million provision for credit losses on the consolidated statements of income for the year ended December 31, 2024, includes $1.0 million for loans and $200,000 for unfunded loan commitments.

We believe that we have established our ACL in accordance with GAAP and that the ACL was adequate to provide for known and inherent losses in the portfolio at all times shown above. 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, unemployment, tariffs and trade, 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.

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The following table displays the allocation of the ACL among the loan classifications as of the dates indicated. The allocations shown below should neither be interpreted as an indication of future charge-offs, nor as an indication that charge-offs in the future will necessarily occur in these amounts or in the indicated proportions. The total ACL is available to absorb losses from any loan classification.

December 31,

(dollars in thousands)

Amount

Percent

Amount

Percent

Real estate:

Commercial real estate

One-to-four family residential

Construction and development

Commercial and industrial

Tax-exempt

Consumer

Total allowance for credit losses

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,

Real estate:

Commercial real estate

One-to-four family residential

Construction and development

Commercial and industrial

Tax-exempt

Consumer

Total net charge-offs to average loans HFI

Deposits

Deposits are the primary funding source for loans and investments. We offer a variety of deposit products designed to attract and retain consumer, commercial, and public entity customers. These products consist of noninterest and interest-bearing checking accounts, savings accounts, money market accounts, and time deposit accounts. Deposits are gathered from individuals, partnerships, corporations, and public entities located primarily in our market areas. We do not have any internet-sourced or brokered deposits.

Total deposits increased $158.3 million, or 5.6%, to $2.96 billion as of December 31, 2025, from $2.81 billion as of December 31, 2024. The increase was primarily a result of higher customer deposit balances combined with the timing of funds from public entity customers. Noninterest-bearing deposits increased by $47.4 million, or 5.5%, to $913.9 million as of December 31, 2025. Noninterest-bearing deposits as a percentage of total deposits were 30.84% as of December 31, 2025, compared to 30.89% as of December 31, 2024. Interest-bearing deposits increased $110.9 million, or 5.7%, during 2025 to $2.05 billion as of December 31, 2025, with the largest increase in interest-bearing demand deposits.

The Bank has a granular, diverse deposit portfolio with customers in a variety of industries throughout Louisiana. The average deposit account size was approximately $29,000 as of December 31, 2025, compared to $28,000 as of December 31, 2024.

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The following table presents our deposits by account type as of the dates indicated:

December 31, 2025

December 31, 2024

Change from

December 31, 2024 to December 31, 2025

(dollars in thousands)

Balance

% of Total

Balance

% of Total

$ Change

% Change

Noninterest-bearing demand deposits

Interest-bearing deposits:

Interest-bearing demand deposits

NOW accounts

Money market accounts

Savings accounts

Time deposits less than or equal to $250,000

Time deposits greater than $250,000

Total interest-bearing deposits

Total deposits

The following table presents deposits by customer type as of the dates indicated:

December 31, 2025

December 31, 2024

Change from

December 31, 2024 to December 31, 2025

(dollars in thousands)

Balance

% of Total

Balance

% of Total

Balance

% of Total

Consumer

Commercial

Public

Total deposits

We manage our interest expense on deposits through a deposit pricing strategy that is based on competitive pricing, economic conditions, and current or anticipated funding needs. We adjust deposit rates in part based upon our anticipated funding needs and liquidity position. We also consider the potential interest rate risk caused by extended maturities of time deposits when adjusting deposit rates.

Our average deposit balance was $2.84 billion for the year ended December 31, 2025, an increase of $88.8 million, or 3.2%, from $2.75 billion for the year ended December 31, 2024. For 2025, average public entity deposits were 8.4% of average total deposits. The average cost of interest-bearing deposits and total deposits for 2025 was 2.31% and 1.56%, respectively, compared to 2.60% and 1.74% for 2024, respectively. The decrease in the average cost of interest-bearing deposits and total deposits in 2025 as compared to 2024 was due to reducing rates on selected interest-bearing deposit accounts in conjunction with target federal funds range reductions. Also, as of December 31, 2025, 8.1% of interest-bearing transaction deposits had floating rates, which adjust with market rates.

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,

(dollars in thousands)

Average

Balance

Average

Rate

Average

Balance

Average

Rate

Noninterest-bearing demand deposits

Interest-bearing deposits:

Interest-bearing demand deposits

NOW accounts

Money market accounts

Savings accounts

Time deposits

Total interest-bearing deposits

Total average deposits

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As of December 31, 2025, our estimated uninsured deposits, which are the portion of deposit accounts that exceed the FDIC insurance limit (currently $250,000), were approximately $955.9 million, or 32.3% of total deposits, compared to $879.8 million, or 31.4% of total deposits, as of December 31, 2024. These amounts were estimated based on the same methodologies and assumptions used for regulatory reporting purposes. Also, as of December 31, 2025, our estimated uninsured deposits, excluding collateralized public entity deposits, were approximately $722.0 million, or 24.4% of total deposits, compared to $667.6 million, or 23.8% of total deposits, as of December 31, 2024. As of December 31, 2025, our cash and cash equivalents of $213.4 million, combined with our available borrowing capacity of $1.66 billion, equaled 195.7% of our estimated uninsured deposits and 259.1% of our estimated uninsured deposits, excluding collateralized public entity deposits.

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, 2025

Three months or less

Over three months through six months

Over six months through 12 months

Over 12 months

Total

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. We had no outstanding borrowings as of December 31, 2025 or 2024.

Federal Home Loan Bank Advances. We utilize the FHLB of Dallas as needed as a funding source. As of December 31, 2025 and 2024, availability under our FHLB of Dallas line was $1.03 billion and $1.04 billion, respectively. This line is secured by a blanket lien on selected Red River Bank loans that meet FHLB of Dallas collateral requirements. At various times, we may obtain letters of credit from the FHLB of Dallas as collateral for our public entity deposits. As of December 31, 2025 and 2024, we held unfunded letters of credit from the FHLB of Dallas in the amount of $119.5 million and $104.3 million, respectively. As of December 31, 2025 and 2024, we had net borrowing capacity of $906.6 million and $931.6 million, respectively, under this arrangement. As of December 31, 2025 and 2024, 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. In addition, effective March 2024, the Bank was approved for the BIC program, which provides borrowing capacity through the pledging of eligible Red River Bank loans that are not pledged to the FHLB. As of December 31, 2025, we had a total borrowing capacity of $125.5 million through the Federal Reserve Bank’s Discount Window, including $85.1 million through the BIC program, compared to a total borrowing capacity of $157.8 million, including $118.7 million through the BIC program as of December 31, 2024.

Other Borrowings. We may also utilize federal funds lines from various correspondent financial institutions as a source of short-term funding. As of December 31, 2025 and 2024, we had $100.0 million and $95.0 million, respectively, in federal funds lines available from these funding sources. We had no outstanding balances from these sources as of December 31, 2025 or 2024.

Stockholders’ Equity

Total stockholders’ equity as of December 31, 2025, was $365.2 million, compared to $319.7 million as of December 31, 2024. The $45.4 million, or 14.2%, increase in stockholders’ equity was attributable to $42.8 million of net income for the year ended December 31, 2025, a $16.9 million, net of tax, market adjustment to AOCI related to securities, and $495,000 of stock compensation, partially offset by the repurchase of 211,748 shares of common stock for $11.2 million, including excise tax, and $3.6 million in cash dividends.

In 2022, we reclassified $166.3 million, net of $17.9 million of unrealized loss, from securities AFS to securities HTM. The securities were transferred at fair value, which became the cost basis for the securities HTM. At the date of transfer, the net unrealized loss of $17.9 million, of which $14.2 million, net of tax, was included in AOCI and is being amortized over the remaining life of the securities as a yield adjustment, in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses recognized as a result of the transfer. As of December 31, 2025, the net unamortized, unrealized loss remaining on the transferred securities included in the consolidated balance sheets totaled $11.7 million, of which $9.2 million, net of tax, was included in AOCI.

On December 19, 2024, our board of directors approved the renewal of the 2024 stock repurchase program that expired on December 31, 2024. The 2025 stock repurchase program authorized us to purchase up to $5.0 million of our

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outstanding shares of common stock from January 1, 2025 through December 31, 2025. Repurchases were made from time to time in the open market at prevailing prices and based on market conditions, and in privately negotiated transactions. For the year ended December 31, 2025, we repurchased 11,748 shares of our common stock on the open market at an aggregate cost of $656,000, excluding excise tax, under the stock repurchase program. The 2025 stock repurchase program expired on December 31, 2025, with $4.3 million of remaining availability.

On May 22, 2025, we entered into a privately negotiated stock repurchase agreement for the purchase of 100,000 shares of our common stock for a total purchase price of approximately $5.1 million, excluding excise tax. This repurchase was supplemental to our 2025 stock repurchase program and did not impact the amount of permitted repurchases thereunder.

On August 7, 2025, we entered into a privately negotiated stock repurchase agreement for the purchase of 100,000 shares of our common stock for a total purchase price of approximately $5.3 million, excluding excise tax. This repurchase was supplemental to our 2025 stock repurchase program and did not impact the amount of permitted repurchases thereunder.

Effective January 1, 2023, stock 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. For the year ended December 31, 2025, we recorded $111,000 of stock repurchase excise tax.

On December 18, 2025, our board of directors approved the renewal and increase of the 2025 stock repurchase program that expired on December 31, 2025. The renewed and increased 2026 stock repurchase program authorizes us to purchase up to $10.0 million of our outstanding shares of common stock from January 1, 2026 through December 31, 2026. 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.

Regulatory Capital Requirements

Capital management consists of maintaining equity and other instruments that qualify as regulatory capital to support current and future operations. Banking regulators view capital levels as important indicators of an institution’s financial soundness. As a general matter, bank holding companies and FDIC-insured depository institutions are required to maintain minimum capital relative to the amount and types of assets they hold.

As we deploy our capital and continue to grow our operations, our capital levels may decrease depending on our level of earnings. However, we expect to monitor and control our growth in order to remain in compliance with all regulatory capital standards applicable to us.

For additional information on regulatory capital guidelines and limits for the Bank and the Company, see “Item 8. Financial Statements and Supplementary Data - Note 15. Regulatory Capital Requirements.”

LIQUIDITY AND ASSET-LIABILITY MANAGEMENT

Liquidity

As of December 31, 2025, we had sufficient liquid assets available and $1.66 billion accessible from other liquidity sources.

Liquidity involves our ability to raise funds to support asset growth and potential acquisitions, reduce assets to meet deposit withdrawals and other payment obligations, maintain reserve requirements, and otherwise operate on an ongoing basis and manage unexpected events. For the years ended December 31, 2025 and 2024, liquidity needs were primarily met by core deposits, security and loan maturities, and cash flows from amortizing security and loan portfolios. While maturities and scheduled amortization of loans are predictable sources of funds, deposit outflows, mortgage prepayments, and prepayments on amortizing securities are greatly influenced by market interest rates, economic conditions, and the competitive environment in which we operate; therefore, these cash flows are monitored regularly.

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.

Our primary source of funds is deposits, and our primary use of funds is the funding of loans. We invest excess deposits in interest-earning deposit accounts at other banks or at the Federal Reserve, federal funds sold, securities, or other short-term liquid investments until the deposits are needed to fund loan growth or other obligations. Our average deposits increased $88.8 million, or 3.2%, for the year ended December 31, 2025, compared to the average deposits for the year ended December 31, 2024. The increase in average total deposits was primarily a result of higher balances in customer deposit accounts and the timing of funds from public entity customers. Our average total loans increased $98.8 million, or 4.8%, for the year ended December 31, 2025, compared to average total loans for the year ended December 31, 2024. The increase in average total loans was primarily due to the increase in real estate and commercial and industrial activity.

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As of December 31, 2025, liquid assets were $213.4 million, compared to $269.0 million as of December 31, 2024. The decrease of $55.6 million, or 20.7%, was due to the funding of loan and securities growth, which exceeded deposit growth for the year. The liquid assets to assets ratio was 6.37% as of December 31, 2025, compared to 8.54% as of December 31, 2024.

Our securities portfolio is an alternative source for meeting liquidity needs and was our second-largest component of assets as of December 31, 2025. The securities portfolio generates cash flow through principal repayments, calls, and maturities, and certain securities can be sold or used as collateral in borrowings that allow for their conversion to cash. Securities AFS can generally be sold, while securities HTM have significant restrictions related to sales. As of December 31, 2025, we project receipt of approximately $125.3 million of principal repayments and maturities through December 31, 2026. As of December 31, 2025, approximately $525.0 million, or 69.6%, of the fair value of the securities portfolio was available to be sold or used as collateral in borrowings as a liquidity source.

We also utilize the FHLB of Dallas as needed as a viable funding source. FHLB of Dallas advances may be used to meet the Bank’s liquidity needs, particularly if the prevailing interest rate on an FHLB of Dallas advance compares favorably to the rates that would be required to attract the necessary deposits. 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, 2025 and 2024, our net borrowing capacity from the FHLB of Dallas was $906.6 million and $931.6 million, respectively. There were no outstanding borrowings from the FHLB as of December 31, 2025 and 2024.

Another borrowing source is the Federal Reserve Bank’s Discount Window. The Bank has pledged securities to have borrowing access to the Federal Reserve Bank’s Discount Window facility. In addition, the Bank was approved for the BIC program, which provides borrowing capacity through the pledging of eligible Red River Bank loans that are not pledged to the FHLB. As of December 31, 2025, we had a total borrowing capacity of $125.5 million through the Federal Reserve Bank’s Discount Window, including $85.1 million through the BIC program, compared to a total borrowing capacity of $157.8 million, including $118.7 million through the BIC program as of December 31, 2024. There were no outstanding borrowings from the Federal Reserve Bank’s Discount Window as of December 31, 2025 and 2024.

Other sources available for meeting liquidity needs include federal funds lines, repurchase agreements, and other lines of credit. We maintain four federal funds lines of credit with commercial banks that provided for the availability to borrow up to an aggregate of $100.0 million and $95.0 million in federal funds as of December 31, 2025 and 2024, respectively. The rates for the federal funds lines are determined by the applicable commercial bank at the time of borrowing. We had no outstanding balances from these sources as of December 31, 2025 and 2024.

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. Some instruments may not be reflected in the accompanying consolidated financial statements until they are funded, although they expose us to varying degrees of credit risk and interest rate risk in much the same way as funded loans. We may also enter into contractual obligations.

For more information about our commitments to extend credit and standby letters of credit, see “Item 8. Financial Statements and Supplementary Data - Note 3. Loans and Asset Quality - Commitments to Extend Credit.” For more information about our financial commitments with time deposits and other off-balance sheet commitments, see “Item 8. Financial Statements and Supplementary Data - Note 5. Deposits” 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. Our asset-liability management policies provide management with guidelines for effective funds management, and we have established a measurement system for monitoring our net interest rate sensitivity position. We have historically managed our rate sensitivity position within our established policy guidelines.

Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on most of our assets and liabilities and the market value of all interest-earning assets and interest-bearing liabilities, other than those that have a short term to maturity. Interest rate risk is the potential of economic losses due to future interest rate changes. These economic losses can be reflected as a loss of future net interest income and/or a loss of current fair market values. The objective is to measure the effect on net interest income and to adjust the balance sheet to minimize the inherent risk while at the same time maximizing income.

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. 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 0.39% as of December 31, 2025.

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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. In determining the appropriate level of interest rate risk, the committee considers the impact on both earnings and capital given the current outlook on interest rates, regional economies, liquidity, business strategies, and other related factors.

The committee meets quarterly to review, among other things, the sensitivity of assets and liabilities to interest rate changes, the book and economic values of assets and liabilities, unrealized gains and losses, purchase and sale activities, commitments to originate loans, and the maturities of investments and borrowings. Additionally, the committee reviews liquidity, cash flow flexibility, maturities of deposits, and consumer and commercial deposit activity. We employ methodologies to manage interest rate risk, which include an analysis of relationships between interest-earning assets and interest-bearing liabilities, as well as an interest rate simulation model and shock analysis.

In conjunction with our interest rate risk management process, on a quarterly basis, we run various simulations within a static balance sheet. This model tests the impact on net interest income and fair value of equity from changes in market interest rates under various scenarios. We use parallel rate shock scenarios that assume instantaneous parallel movements in the yield curve compared to a flat yield curve scenario. We also deploy a ramped rate scenario over a 12-month and 24-month horizon based upon parallel yield curve shifts. Our nonparallel rate shock model simulation involves analysis of interest income and expense under various changes in the shape of the yield curve. Contractual maturities and repricing opportunities of loans are incorporated into the model, as are prepayment assumptions and maturity data and call options within the securities portfolio. The average life of non-maturity deposit accounts are based on assumptions developed from non-maturity deposit decay studies, which calculate average lives using historic closure rates.

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. In accordance with Bank policy regarding economic value at risk simulations performed by our risk model for instantaneous parallel shifts of the yield curve, estimated fair value of equity for the subsequent one-year period should not decline by more than 10.0% for a 100 bp shift, 20.0% for a 200 bp shift, and 30.0% for a 300 bp shift.

The following table shows the impact of an instantaneous and parallel change in rates, at the levels indicated, and summarizes the simulated change in net interest income and fair value of equity over a 12-month horizon as of the dates indicated.

December 31, 2025

December 31, 2024

% 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)

Base

The results above, as of December 31, 2025 and 2024, 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. Our repricing opportunity is captured in a gap analysis, which is the process by which we measure the repricing gap between interest rate-sensitive assets versus interest rate-sensitive liabilities.

As of December 31, 2025, the reported percentage of changes in net interest income and fair value of equity remained within the policy thresholds. These values are reported at each quarterly Asset-Liability Management Committee meeting. The net interest income at risk and the fair value of equity will continue to be monitored, and appropriate mitigating action will be taken if needed.

The impact of our floating rate loans and floating rate transaction deposits are also reflected in the results shown in the above table. As of December 31, 2025, floating rate loans were 19.3% of loans HFI, and floating rate transaction deposits were 8.1% of interest-bearing transaction deposits.

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. Actual results will differ from the model’s simulated results due to timing, magnitude, and frequency of interest rate changes, as well as changes in market conditions and the application and timing of various management strategies and the slope of the yield curve.

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Impact of Inflation

Our consolidated financial statements and related notes included in “Item 8. Financial Statements and Supplementary Data” of this Report have been prepared in accordance with GAAP. GAAP requires the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative value of money over time due to inflation or recession. Changes in interest rates affect the financial condition of a financial institution to a much greater degree than changes in the inflation rate. While interest rates are greatly influenced by changes in the inflation rate, they do not necessarily change at the same rate or by the same level as the inflation rate. The primary effect of inflation on our operations is our ability to manage the impact of changes in interest rates. In addition, inflation could also increase our operating costs related to our products and services.

NON-GAAP FINANCIAL MEASURES

Our accounting and reporting policies conform to GAAP and the prevailing practices in the banking industry. Certain financial measures used by management to evaluate our operating performance are discussed in this Report as supplemental non-GAAP performance measures. In accordance with the SEC’s rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the U.S.

Management and the board of directors review tangible book value per share, tangible common equity to tangible assets, and realized book value per share as part of managing operating performance. However, these non-GAAP financial measures that we discuss in this Report should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. 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. 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.

Tangible Book Value Per Share . 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. We calculate tangible book value per share as total stockholders’ equity, less intangible assets, divided by the outstanding number of shares of our common stock at the end of the relevant period. Intangible assets have the effect of increasing total book value while not increasing tangible book value. 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, 2025, total intangible assets were $1.5 million, which is less than 1.0% of total assets.

Tangible Common Equity to Tangible Assets . Tangible common equity to tangible assets is a non-GAAP measure generally 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 the relative changes from period to period of tangible common equity to tangible assets, each exclusive of changes in intangible assets. Intangible assets have the effect of increasing both total stockholders’ equity and assets while not increasing our tangible common equity or tangible assets. We calculate tangible common equity as total stockholders’ equity less intangible assets, and we calculate tangible assets as total assets less intangible assets. The most directly comparable GAAP financial measure for tangible common equity to tangible assets is total common stockholders’ equity to total assets.

Realized Book Value Per Share. Realized book value per share is a non-GAAP measure that we use to evaluate our operating performance. We believe that this measure is important because it allows us to monitor changes from period to period in book value per share exclusive of changes in AOCI. Our AOCI is impacted primarily by the unrealized gains and losses on securities AFS. These unrealized gains or losses on securities AFS are driven by market factors and may also be temporary and vary greatly from period to period. Due to the possibly temporary and greatly variable nature of these changes, we find it useful to monitor realized book value per share. We calculate realized book value per share as total stockholders’ equity less AOCI, divided by the outstanding number of shares of our common stock at the end of the relevant period. AOCI has the effect of increasing or decreasing total book value while not increasing or decreasing realized book value. The most directly comparable GAAP financial measure for realized book value per share is book value per share.

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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)

Tangible common equity

Total stockholders’ equity

Adjustments:

Intangible assets

Total tangible common equity (non-GAAP)

Realized common equity

Total stockholders’ equity

Adjustments:

Accumulated other comprehensive (income) loss

Total realized common equity (non-GAAP)

Common shares outstanding

Book value per share

Tangible book value per share (non-GAAP)

Realized book value per share (non-GAAP)

Tangible assets

Total assets

Adjustments:

Intangible assets

Total tangible assets (non-GAAP)

Total stockholders’ equity to assets

Tangible common equity to tangible assets (non-GAAP)

CRITICAL ACCOUNTING ESTIMATES

Our consolidated financial statements are prepared in accordance with GAAP and with general practices within the financial services industry. Application of these principles requires management to make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under current circumstances. We evaluate our estimates on an ongoing basis. Use of alternative assumptions may have resulted in significantly different estimates. Actual results may differ from these estimates.

The following discussion presents an overview of our accounting policies that require difficult, subjective, or complex judgments and assumptions that are inherent in our policies and estimates and the potential sensitivity of the financial statements. Due to the complexity of these judgments and assumptions, an understanding of our financial condition and results of operations is critical. We believe that the judgments, estimates, and assumptions used in the preparation of the consolidated financial statements are appropriate. Refer to “Item 8. Financial Statements and Supplementary Data - Note 1. 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. 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. This reasonable and supportable forecast period is currently one year and incorporates the Company’s and its peer’s historical losses. 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. 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.

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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. Factors considered in measuring the extent of expected credit losses include payment status, collateral value, borrower financial condition, guarantor support, and the probability of collecting scheduled principal and interest payments when due. For loans evaluated on an individual bases that are collateral dependent, the specific allowance is estimated by calculating the difference between the fair value of the underlying collateral less estimated selling costs and the Bank’s exposure. If the loan is not collateral dependent, the discounted cash flow methodology is used.

In estimating an allowance for loans that share similar risk characteristics, loans are segmented into pools based on regulatory call report codes that are considered to share similar risk characteristics or areas of risk concentration. Expected credit losses are estimated using the cohort loss rate and remaining life loss rate methodologies. The cohort loss rate methodology tracks a closed pool of loans over their remaining lives to determine their loss behavior. Once the losses have been tracked, the results are averaged together to determine the average remaining life loss rate to be applied to the current loans in the cohort and are adjusted for reasonable and supportable forecast periods, which is not to exceed a two-year period. Additionally, a lookback period and delay period are established for each pool, which affects the average remaining life loss rate. The lookback period defines how many quarterly cohort periods will be averaged together to form the average remaining life loss rate and varies by pool in order to capture the performance of cohorts under a variety of different conditions, both internal and external. The delay period defines the most recent cohort that will be used in the historical average and varies by pool due to the differing terms and remaining lives that may exist in different pools. 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.

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 qualitative assumptions as part of its allowance review and believes the ACL level is appropriate based on information available through the financial statement date.

RECENT ACCOUNTING PRONOUNCEMENTS

See “Item 8. Financial Statements and Supplementary Data - Note 1. Significant Accounting Policies - Accounting Standards Adopted in 2025” and “- Recent Accounting Pronouncements.”