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 rate and varies by pool in order to capture the performance of cohorts under a variety of different conditions, both internal and external. The 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 rate methodology takes the calculated 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.”
