What changed in this filing

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Item 1. Business

2025-03-14 compared with 2024-03-15 · 124 added, 102 removed, 403 unchanged (36% of the section changed)

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Our mission is to be the premier statewide banking organization in Louisiana.

We completed an initial public offering of our common stock in May 2019 as an emerging growth company under the JOBS Act.

We completed an initial public offering of our common stock in May 2019.

Our common stock is listed on the Nasdaq Global Select Market under the symbol “RRBI.”

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We operate one banking center in our Acadiana market, which we define to include Lafayette Parish.

In our New Orleans market, which we define to include Orleans Parish, we operate one banking center and one combined LDPO.

In our New Orleans market, which we define to include Orleans and Jefferson Parishes, we operate two banking centers and one combined LDPO.

We believe our current markets provide ample opportunities for the continued growth of our customer base, loans, and deposits, as well as the expansion of our overall market share in each area.

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When evaluating potential new market opportunities, our standard due diligence includes both an assessment of the local economy as well as analysis of the local banking landscape.

As part of our new market expansion plan, we expanded operations to four new markets between 2017 and 2022.

Our target markets include markets with significant disruption by competitors and where market share is held by large national and regional banks.

We generally establish a presence with an LDPO and then build or buy and remodel a banking center.

Since 2017, as part of our new market expansion plan, we expanded operations into four new markets.

In 2017, we began operations in the Southwest Louisiana market, which includes the Lake Charles, Louisiana MSA.

During 2018 and 2019, we entered the Northshore market, located on the north shore of Lake Pontchartrain, near New Orleans, Louisiana.

In 2020, we entered the Acadiana market, which includes the Lafayette, Louisiana MSA, by opening a combined LDPO in Lafayette.

We also entered the New Orleans market in 2021 by opening a combined LDPO in downtown New Orleans, Louisiana.

In Lafayette, Louisiana, in the first quarter of 2022, we opened our first full-service banking center, which we purchased in 2020.

In the second quarter of 2022, we relocated the staff and services from the Lafayette LDPO to the new banking center and closed the LDPO located there.

In the New Orleans market, we remodeled and received regulatory approval on a leased banking center location in downtown New Orleans, which we opened as the Bank’s first full-service banking center in New Orleans in the third quarter of 2022.

In the third quarter of 2023, we held a groundbreaking ceremony for our third banking location in the New Orleans market.

Construction of this banking center is in process, and it is projected to open for business in the third quarter of 2024.

During 2019, we entered the Northshore market, located on the north shore of Lake Pontchartrain, near New Orleans, Louisiana.

In 2020, we entered the Acadiana market, which includes the Lafayette, Louisiana MSA.

In 2021, we entered the New Orleans market by opening a combined LDPO in downtown New Orleans, Louisiana, which was followed by a full-service banking center in 2022.

In the second quarter of 2024, we opened our third banking location in the New Orleans market with a full-service banking center in Metairie, Louisiana.

In the fourth quarter of 2024, we purchased property in Lafayette, Louisiana, and plan to build a new banking center at that location, which would be our second full-service banking center in the Acadiana market.

Disciplined Acquisition Strategy

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We offer each of these customers sophisticated products and services similar to those of much larger banks but delivered by bankers who can provide local and responsive decision-making, personal assistance, and an interest in our customers’ personal goals and the success of their businesses.

Lending activities originate from the efforts of our bankers, with an emphasis on lending to small and medium-sized businesses, commercial companies, individuals, and professionals.

Lending activities originate from the efforts of our bankers, with an emphasis on lending to small and medium-sized businesses, professionals, and individual consumers.

Our lending policies and underwriting standards seek to maintain asset quality through an emphasis on local market knowledge, long-term customer relationships, and consistent and thorough underwriting for all loans, including debt service capacity requirements, collateral requirements, and loan-to-value limits, among other established criteria.

Our loan approval policies establish concentrations limits with respect to industry and certain loan product types to enhance portfolio diversification.

Additionally, our loan concentrations policy sets limits on certain concentrations within the CRE portfolio based on factors such as industry and property type.

These limits are reviewed quarterly as part of our management reporting to our Directors’ Loan Committee and the board.

These limits are adjusted as deemed necessary by our Directors’ Loan Committee and the board.

Real Estate Loans

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We focus on the banking needs of established operating companies, which includes owner occupied office and industrial real estate loans.

Risks associated with owner occupied commercial real estate include fluctuations in the value of real estate, the overall strength of the economy, new job creation trends, environmental contamination, and the quality of the borrower’s management.

Risks associated with owner occupied CRE include fluctuations in the value of real estate, the overall strength of the economy, new job creation trends, environmental contamination, and the quality of the borrower’s management.

In addition to a proven management team and track record, we focus on businesses with a history of strong, recurring cash flows.

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We believe this portfolio segment is well-diversified by industry type.

As of December 31, 2023, our owner occupied commercial real estate loans were 20.7% of loans HFI.

As of December 31, 2024, our owner occupied CRE loans were 20.5% of loans HFI.

Commercial Real Estate Loans (Non-Owner Occupied) .

Our pursuit of non-owner occupied commercial real estate properties is reserved primarily for developers and other persons or entities of influence who present additional business and personal relationship opportunities.

Our pursuit of non-owner occupied CRE properties is reserved primarily for developers and other persons or entities of influence who present additional business and personal relationship opportunities.

This strategy is evidenced by our modest level of these loans relative to our capital, which has been consistent for many years.

Risks associated with non-owner occupied commercial real estate include fluctuations in the value of real estate, the overall strength of the economy, new job creation trends, tenant vacancy rates, environmental contamination, and the quality of the borrower’s management.

Risks associated with non-owner occupied CRE include fluctuations in the value of real estate, the overall strength of the economy, new job creation trends, tenant vacancy rates, environmental contamination, and the quality of the borrower’s management.

We target property types with a greater ability to withstand changes in market forces.

Our underwriting criteria for non-owner occupied properties is even more conservative than our underwriting criteria for owner occupied properties due to the higher inherent risks generally associated with the former.

Our target rate of return is also higher for non-owner occupied commercial real estate loans.

As of December 31, 2023, our non-owner occupied commercial real estate loans were 22.0% of loans HFI.

Our target rate of return is also higher for non-owner occupied CRE loans.

As of December 31, 2024, our non-owner occupied CRE loans were 22.1% of loans HFI.

One-to-Four Family Residential Loans.

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Our retail consumer real estate lending products are offered primarily to consumer customers.

Although our consumer real estate loan portfolio presents lower levels of risk than our commercial and industrial, commercial real estate, and construction and

development loan portfolios, we are exposed to risks based on fluctuations in the value of the real estate collateral securing the loan, as well as changes in the borrower’s financial condition, which could be affected by numerous factors, including divorce, job loss, illness, or other personal hardship.

Although our consumer real estate loan portfolio presents lower levels of risk than our commercial and industrial, CRE, and construction and development loan portfolios, we are exposed to risks based on fluctuations in the value of the real estate collateral securing the loan, as well as changes in the borrower’s financial condition, which could be affected by numerous factors, including divorce, job loss, illness, or other personal hardship.

As of December 31, 2024, our one-to-four family residential loans were 29.6% of loans HFI.

Construction and Development Loans.

Our construction and development portfolio includes loans to small and medium-sized businesses to construct owner occupied facilities, loans to developers of commercial real estate investment properties and residential developments, and, to a lesser extent, loans to individual clients for construction of single-family homes.

Our construction and development portfolio includes loans to small and medium-sized businesses to construct owner occupied facilities, loans to developers of CRE investment properties and residential developments, and, to a lesser extent, loans to individual clients for construction of single-family homes.

Risks associated with construction loans include fluctuations in the value of real estate, project completion risk, and change in market trends.

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We believe that our relations with our employees are very good.

We believe that we maintain employment and benefit programs that are appropriate with respect to position responsibilities, competitive with the external market, and capable of attracting, retaining, and motivating competent employees.

We recognize the importance of our employee’s financial health and well-being and strive to provide comprehensive compensation and benefits packages to help meet those needs.

Compensation and benefits include

market-competitive pay, health insurance, dental insurance, vision insurance, employer paid and voluntary life insurance, health and dependent care flexible spending accounts, paid holidays, paid vacation and sick time, and other insurance and benefit options.

We also offer a 401(k) Plan, which includes our stock as an investment option, and we make matching contributions to that plan.

Compensation and benefits include market-competitive pay, health insurance, dental insurance, vision insurance, employer paid and voluntary life insurance, health and dependent care flexible spending accounts, paid holidays, paid vacation and sick time, and other insurance and benefit options.

We also offer a 401(k) Plan, and we make matching contributions to that plan.

In addition, we offer stock-based compensation to key employees as a way to attract and retain talent.

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publicly traded companies.

The Dodd-Frank Act (1) requires certain publicly traded companies to give shareholders a non-binding vote on executive

compensation and golden parachute payments;

The Dodd-Frank Act (1) requires certain publicly traded companies to give shareholders a non-binding vote on executive compensation and golden parachute payments;

(2) enhances independence requirements for compensation committee members;

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One of the Economic Growth Act’s highlights, with implications for us, was the asset threshold under the Policy Statement being increased from $1.0 billion to $3.0 billion, which benefits bank holding companies by, among various other items, allowing for an 18-month safety and soundness examination cycle as opposed to a 12-month examination cycle, changing to scaled biannual regulatory reporting requirements as opposed to quarterly regulatory reporting requirements, and not subjecting bank holding companies to capital adequacy guidelines on a consolidated basis.

Because we had less than $3.0 billion in assets as of each of the June 30th measurement dates starting with the Economic Growth Act’s enactment and going through June 30, 2021, we have received benefits under the Policy Statement through 2022, except with regard to the timing of the Red River Bank safety and soundness exam by the FDIC and the OFI.

Due to the timing of the asset balance determination for the Red River Bank safety and soundness examination, a 12-month examination cycle began in the second half of 2022.

As of June 30, 2022 and 2023, the last applicable measurement dates, we had more than $3.0 billion in assets.

Therefore, effective January 1, 2023, we no longer receive any benefits under the Policy Statement and became subject to consolidated capital requirements.

Effective January 1, 2023, we no longer receive any benefits under the Policy Statement and became subject to consolidated capital requirements.

As of the June 30, 2024 measurement date, we had more than $3.0 billion in assets and remain subject to consolidated capital requirements.

Another significant provision was the Economic Growth Act’s directive that federal bank regulatory agencies adopt a threshold for a CBLR framework.

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The purpose of the rule is to increase transparency and combat discrimination in small business lending.

Currently, the U.S.

Supreme Court is considering a case challenging the constitutionality of the CFPB’s funding mechanism.

As of the date of this Report, implementation and enforcement of the rule has been delayed until the U.S.

Supreme Court renders its decision on the constitutionality of such funding mechanism.

For banks with moderate volume lending, the compliance deadline is January 16, 2026.

On October 22, 2024, the CFPB issued its final rule implementing Section 1033 of the Dodd-Frank Act with respect to personal financial data rights, more commonly known as the “Open Banking Rule.” The final rule, among other things, requires banks, credit unions, and other financial service providers to make a consumer’s data available upon request to the consumer and their authorized third parties in a secure and reliable manner, and establishes obligations for third parties accessing consumers’ data, including data security and privacy protections.

According to the CFPB, the rule is designed to foster competition and innovation in the financial services industry by making it easier for consumers to switch financial providers and for new companies to offer innovative products and services.

The compliance deadline is phased-in based on the asset size of the financial institution.

For banks with $3.0 billion to $10.0 billion in total assets, the compliance deadline is April 1, 2028.

At this time, it is difficult to anticipate the continued impact the above-described legislation may have on our business, our customers, and the financial industry generally.

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Failure to comply with any new requirements may negatively impact our results of operations and financial condition.

Additionally, the future implementation and enforcement of regulations may be affected by the result of the Fall 2024 U.S.

Presidential election, which is resulting in significant changes in the leadership of the various bank regulatory agencies.

In early February 2025, the CFPB’s Acting Director issued directives to cease virtually all CFPB activities, including supervision, examinations, rulemaking, enforcement actions, and pending investigations.

CFPB staff were instructed to suspend the effective dates of all rules that have been issued, but have not yet gone into effect.

Further, the Acting Director announced that the CFPB would not be taking its next draw of unappropriated funding.

A new CFPB Director has recently been nominated and is subject to Senate confirmation.

The future of the CFPB is uncertain at this time.

Holding Company Capital Requirements

As previously referenced in “- Financial Services Industry Reform,” effective January 1, 2023, we became subject to, on a consolidated basis, the same minimum capital ratios under Basel III as Red River Bank.

These minimum capital requirements are set forth below under the heading “- Bank Regulation - Capital Adequacy Requirements.”

These minimum capital requirements are set forth below under the heading “- Bank Regulation - Capital Adequacy Requirements.” The Federal Reserve monitors the capital adequacy of the Company and considers its capital levels when taking action on various types of applications and when conducting supervisory activities related to the safety and soundness of the Company.

Imposition of Liability for Undercapitalized Subsidiaries

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In evaluating applications with respect to these transactions, the Federal Reserve is required to consider, among other things, the effect of the acquisition on competition;

the financial condition, managerial resources, and future prospects of the bank holding company and the bank(s) concerned;

the financial condition, managerial resources, and prospects of the bank holding company and the bank(s) concerned;

the convenience and needs of the communities to be served (including the record of performance under the CRA);

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Subject to various exceptions, the BHCA and the Change in Bank Control Act, together with related regulations, require Federal Reserve approval or non-objection prior to any person or company (or group acting in concert) acquiring “control” of a bank holding company.

Although “control” is based on all of the facts and circumstances surrounding the investment, control is conclusively presumed to exist if a person or company (or group acting in concert) acquires 25.0% or more of any class of voting securities of the bank holding company.

Although “control” is based on the facts and circumstances surrounding the investment, control is conclusively presumed to exist if a person or company (or group acting in concert) acquires 25.0% or more of any class of voting securities of the bank holding company.

Control of a bank holding company is rebuttably presumed to exist under the Change in Bank Control Act if the acquiring person or entity (or group acting in concert) will own 10.0% or more of any class of voting securities immediately following the transaction and either no other person will hold a greater percentage of that class of voting securities after the acquisition or the bank holding company has publicly registered securities.

The BHCA’s definition of “control” can also be triggered when a company acquires 5.0% or more of any class of voting securities and certain other factors are present.

The BHCA’s definition of “control” can also be triggered when a company acquires 5.0% or more of any class of voting securities and certain other factors are present or when a company acquires one-third or more of total equity (both voting and non-voting).

Regulatory Restrictions on Dividends;

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Failure to comply with the supervisory letter could result in a supervisory finding that the bank holding company is operating in an unsafe and unsound manner.

In addition, our ability to pay dividends may also be limited as a result of the CCB under the Basel III regulatory capital framework.

In addition, our ability to pay dividends may also be limited because of the CCB under the Basel III regulatory capital framework.

In the current financial and economic environment, the Federal Reserve has indicated that bank holding companies should carefully review their dividend policy and has discouraged payment ratios that are at maximum allowable levels unless both asset quality and capital are very strong.

The Federal Reserve may further restrict the payment of dividends by engaging in supervisory action to restrict dividends or by requiring us to maintain a higher level of capital than would otherwise be required under any applicable minimum capital requirements.

Our ability to pay dividends and make other distributions depends in part upon the receipt of dividends from our subsidiary bank, which is subject to certain restrictions on dividends as discussed in more detail below.

Under longstanding Federal Reserve policy, which has been codified by the Dodd-Frank Act, we are expected to act as a source of financial strength to, and to commit resources to support, Red River Bank.

Our ability to pay dividends and make other distributions depends in part upon the receipt of dividends from the Bank, which is subject to certain restrictions on dividends as discussed in more detail below.

Under longstanding Federal Reserve policy, which has been codified by the Dodd-Frank Act, we are expected to act as a source of financial strength to, and to commit resources to support, the Bank.

This support may be required at times when we may not be inclined to provide it.

In addition, any capital loans that we make to Red River Bank are subordinate in right of payment to deposits and to certain other indebtedness of Red River Bank.

As discussed above, in certain circumstances, we could also be required to guarantee the capital restoration plan of Red River Bank, if the Bank became undercapitalized for purposes of the FDIC’s prompt corrective action regulations.

In the event of our bankruptcy, any commitment by us to a federal bank regulatory agency to maintain the capital of Red River Bank under a capital restoration plan would be assumed by the bankruptcy trustee and entitled to a priority of payment.

In addition, any capital loans that we make to the Bank are subordinate in right of payment to deposits and to certain other indebtedness of the Bank.

As discussed above, in certain circumstances, we could also be required to guarantee the capital restoration plan of the Bank, if the Bank became undercapitalized for purposes of the FDIC’s prompt corrective action regulations.

In the event of our bankruptcy, any commitment by us to a

federal bank regulatory agency to maintain the capital of the Bank under a capital restoration plan would be assumed by the bankruptcy trustee and entitled to a priority of payment.

Scope of Permissible Activities

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A bank holding company may also make an investment of up to 5.0% of any class of voting securities of any company that is otherwise a non-controlling investment.

pose a substantial risk to the safety and soundness of a depository institution or to the financial system generally.

If a bank holding company has elected to become a financial holding company, it may engage in activities that are (1) financial in nature or incidental to such financial activity, or (2) complementary to a financial activity and which do not pose a substantial risk to the safety and soundness of a depository institution or to the financial system generally.

These activities include securities dealing, underwriting and market making, insurance underwriting and agency activities, merchant banking, and insurance company portfolio investments.

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banking activities by banking regulators, securities activities by securities regulators, and insurance activities by insurance regulators.

A bank holding company may elect to be treated as a financial holding company if all of its depository institution subsidiaries are “well-capitalized” and “well-managed,” and have received a rating of not less than “Satisfactory” on its most recent examination under the CRA.

We currently have no plans to make a financial holding company election, although we may make a financial holding company election in the future if we engage in any lines of business that are impermissible for bank holding companies but permissible for financial holding companies.

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Red River Bank is a commercial bank chartered under the laws of the State of Louisiana.

As such, Red River Bank is subject to extensive regulation, supervision, and examination by the OFI and the FDIC.

In addition, Red River Bank’s deposits are insured to the maximum extent permitted by law by the FDIC.

As such, the Bank is subject to extensive regulation, supervision, and examination by the OFI and the FDIC.

In addition, the Bank’s deposits are insured to the maximum extent permitted by law by the FDIC.

The bank regulatory agencies have the power to enforce compliance with applicable banking laws and regulations.

These requirements and restrictions include requirements to maintain reserves against deposits, restrictions on the nature and amount of loans that may be made and the interest that may be charged thereon, and restrictions relating to investments and other activities of Red River Bank.

Capital Adequacy Requirements

The FDIC and OFI monitor the capital adequacy of Red River Bank by using a combination of risk-based guidelines and leverage ratios.

The FDIC and OFI monitor the capital adequacy of the Bank by using a combination of risk-based guidelines and leverage ratios.

These agencies consider the Bank’s capital levels when taking action on various types of applications and when conducting supervisory activities related to the safety and soundness of the Bank and the banking system.

Due to the full phase-in of the CCB, the required ratios are 2.50% higher than the year ended December 31, 2022 and prior years.

The CCB is designed to ensure that banks build up capital buffers outside periods of stress, which can be drawn down as losses are incurred.

An institution that does not satisfy the CCB will be subject to restrictions on certain activities including payment of dividends, stock repurchases, and discretionary bonuses to executive officers.

Under the Basel III capital rules, Red River Bank is required to maintain four minimum capital standards:

(1) a leverage ratio of at least 4.00%, (2) a common equity Tier I risk-based capital ratio of at least 7.00%, (3) a Tier I risk-based capital ratio of at least 8.50%, and (4) a total risk-based capital ratio of at least 10.50%.

Under the Basel III capital rules, an institution’s assets and off-balance sheet items, such as letters of credit and unfunded loan commitments, are assigned to broad risk categories, each with appropriate risk weightings.

Regulatory capital, in turn, is classified in one of two tiers.

“Tier I” capital includes two components:

(1) common equity Tier I capital and (2) additional Tier I capital.

Common equity Tier I capital consists solely of common stock (plus related surplus), retained

earnings, and limited amounts of minority interests that are in the form of common stock.

Additional Tier I capital includes other perpetual instruments historically included in Tier I capital, such as non-cumulative perpetual preferred stock.

“Tier II” capital includes, among other things, qualifying subordinated debt and allowances for credit losses, subject to limitations.

The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance sheet items.

Pursuant to the regulatory capital rules, the Bank has made an election not to include unrealized gains and losses in the investment securities portfolio for purposes of calculating “Tier I” capital and “Tier II” capital.

Under the current Basel III regulatory framework, we are required to maintain certain minimum regulatory capital ratios.

In addition to these minimum regulatory capital ratios, the Basel III regulations establish the CCB with respect to three of the four capital ratios.

Specifically, banking organizations must hold common equity Tier I capital in excess of their minimum regulatory capital ratios by at least 2.50% of risk-weighted assets in order to avoid limits on capital distributions (including dividend payments, discretionary payments on Tier I instruments, and stock buybacks) and certain discretionary bonus payments to executive officers.

A summary of the regulatory capital ratios and the CCB are presented below:

Minimum Regulatory Capital Ratio CCB Minimum Regulatory Capital Ratio plus CCB

Total Risk-Based Capital (Tier I capital plus Tier II capital to total risk-weighted assets) 8.00 % 2.50 % 10.50 %

Tier I Risk-Based Capital (Tier I capital to total risk-weighted assets) 6.00 % 2.50 % 8.50 %

Common Equity Tier I Capital (Common equity tier I capital to total risk-weighted assets) 4.50 % 2.50 % 7.00 %

Tier I Leverage Capital (Tier I capital to adjusted total assets) 4.00 % — % 4.00 %

These capital requirements are minimum requirements.

The FDIC or OFI may also set higher capital requirements if warranted by the risk profile of Red River Bank, economic conditions impacting its markets, or other circumstances particular to the Bank.

The FDIC or OFI may also set higher capital requirements if warranted by the risk profile of the Bank, economic conditions impacting its markets, or other circumstances particular to the Bank.

For example, FDIC guidance provides that higher capital may be required to take adequate account of, among other things, interest rate risk and the risks posed by concentrations of credit, nontraditional activities, or securities trading activities.

In addition, the FDIC’s prompt corrective action regulations discussed below also apply to the Bank.

Failure to meet capital guidelines could subject Red River Bank to a variety of enforcement remedies, including issuance of a capital directive, restrictions on business activities, and other measures under the FDIC’s prompt corrective action regulations.

Failure to meet capital guidelines could subject the Bank to a variety of enforcement remedies, including issuance of a capital directive, restrictions on business activities, and other measures under the FDIC’s prompt corrective action regulations.

As part of the directive under the Economic Growth Act, in September 2019, the FDIC and other federal bank regulatory agencies approved the CBLR framework.

This optional framework became effective January 1, 2020, and is available to

the Company and the Bank as an alternative to the Basel III risk-based capital framework.

This optional framework became effective January 1, 2020, and is available to the Company and the Bank as an alternative to the Basel III risk-based capital framework.

The CBLR framework provides for a simple measure of capital adequacy for certain community banking organizations.

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The FDIC may not accept such a plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the bank’s capital.

Significantly undercapitalized banks may be subject to a number of requirements and restrictions, including orders to sell sufficient shares or obligations to become adequately capitalized, limitations on asset growth, and cessation of receipt of deposits from correspondent banks.

Significantly undercapitalized banks may be subject to requirements and restrictions, including orders to sell sufficient shares or obligations to become adequately capitalized, limitations on asset growth, and cessation of receipt

of deposits from correspondent banks.

Generally, subject to a narrow exception, the FDIC must appoint a receiver or conservator for an institution that is critically undercapitalized.

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The Bank Merger Act prohibits the reviewing agency from approving any proposed merger transaction that would result in certain significant anti-competitive effects.

In every proposed merger transaction, the reviewing agency must also consider the financial and managerial resources and future prospects of the existing and proposed institutions, the convenience and needs of the community to be served, the bank’s CRA performance, and the effectiveness of each insured depository institution involved in the proposed merger transaction in combating money-laundering activities.

In every proposed merger transaction, the reviewing agency must also consider the financial and managerial resources and prospects of the existing and proposed institutions, the convenience and needs of the community to be served, the bank’s CRA performance, and the effectiveness of each insured depository institution involved in the proposed merger transaction in combating money-laundering activities.

In addition to FDIC approval, the Bank must also obtain the prior approval of the OFI before acquiring or merging with another bank.

The OFI will consider similar criteria when reviewing an application.

Under Louisiana law, Red River Bank is permitted to establish additional branch offices within Louisiana, subject to the approval of the OFI.

Under Louisiana law, the Bank is permitted to establish additional branch offices within Louisiana, subject to the approval of the OFI.

As a result of the Dodd-Frank Act, the Bank may also establish additional branch offices outside of Louisiana, subject to prior regulatory approval, provided that the laws of the state where the branch is to be located would permit a state bank chartered in that state to establish a branch.

Any new branch, whether located inside or outside of Louisiana, must also be approved by the FDIC, as the Bank’s primary federal regulator.

Red River Bank may also establish offices in other states by merging with banks or by purchasing branches of banks in other states, subject to certain restrictions.

The Bank may also establish offices in other states by merging with banks or by purchasing branches of banks in other states, subject to certain restrictions (including obtaining the prior approval of the OFI and FDIC).

Restrictions on Transactions with Affiliates and Insiders

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Sections 23A and 23B of the Federal Reserve Act, and the Federal Reserve’s Regulation W, impose quantitative limits, qualitative standards, and collateral requirements on certain transactions by a bank with, or for the benefit of, its affiliates.

Generally, Sections 23A and 23B (1) limit the extent to which the bank or its subsidiaries may engage in “covered transactions” with any one affiliate to an amount equal to 10.0% of such bank’s capital stock and surplus, and limit the aggregate of all such transactions with all affiliates to an amount equal to 20.0% of such capital stock and surplus, and (2) require that all such transactions be on terms substantially the same, or at least as favorable, to the

bank or subsidiary as those that would be provided to a non-affiliate.

The term “covered transaction” includes the making of loans to the affiliate, purchase of assets from the affiliate, issuance of a guarantee on behalf of the affiliate, and several other types of transactions.

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Red River Bank is subject to certain restrictions on dividends under federal and state laws, regulations, and policies.

In general, Louisiana law provides that Red River Bank may not pay any dividends to the Company unless the Bank has surplus at least equal to 50.0% of its capital stock and such surplus will not be reduced below 50.0% following payment of the dividend.

Prior approval of the OFI is required for Red River Bank to pay any dividend that would exceed its net profits earned during the current year combined with its retained net profits of the immediately preceding year.

In addition, under federal law, Red River Bank may not pay any dividend to the Company if it is undercapitalized or the payment of the dividend would cause it to become undercapitalized.

In general, Louisiana law provides that the Bank may not pay any dividends to the Company unless the Bank has surplus at least equal to 50.0% of its capital stock and such surplus will not be reduced below 50.0% following payment of the dividend.

Prior approval of the OFI is required for the Bank to pay any dividend that would exceed its net profits earned during the current year combined with its retained net profits of the immediately preceding year.

In addition, under federal law, the Bank may not pay any dividend to the Company if it is undercapitalized or the payment of the dividend would cause it to become undercapitalized.

The FDIC and the OFI may further restrict the payment of dividends by engaging in supervisory action to restrict dividends or by requiring the Bank to maintain a higher level of capital than would otherwise be required to be adequately capitalized for regulatory purposes.

Under the Basel III regulatory capital framework, the failure to maintain an adequate CCB, as discussed above, may also result in dividend restrictions.

Moreover, if, in the opinion of the FDIC and the OFI, Red River Bank is engaged in an unsound practice (which could include the payment of dividends), the FDIC may require, generally after notice and hearing, the Bank to cease such practice.

Moreover, if, in the opinion of the FDIC and the OFI, the Bank is engaged in an unsafe or unsound practice

(which could include the payment of dividends), the FDIC may require, generally after notice and hearing, the Bank to cease such practice.

The FDIC has indicated that paying dividends that deplete a depository institution’s capital base to an inadequate level would be an unsafe banking practice.

The FDIC has also issued guidance providing that a bank generally should pay dividends only when (1) the bank’s net income available to common shareholders over the past year has been sufficient to fully fund the dividends, and (2) the prospective rate of earnings retention appears consistent with the bank’s capital needs, asset quality, and overall financial condition.

Incentive Compensation Guidance

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The FDIC can also impose special assessments in certain instances.

On November 16, 2023, the FDIC Board of Directors approved a final rule to implement a special assessment from banking organizations with $5.0 billion or more in total assets to recover the loss to the Deposit Insurance Fund associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank.

The FDIA requires the FDIC to take this action in connection with the systemic risk determination announced on March 12, 2023.

While Red River Bank is not subject to this special assessment, Red River Bank may be required to pay higher FDIC insurance premiums if there are additional bank or financial institution failures or if the FDIC otherwise determines to increase assessment rates.

Concentrated Commercial Real Estate Lending Regulations

The federal banking regulatory agencies have promulgated guidance governing financial institutions with concentrations in commercial real estate lending.

The guidance provides that a bank may have a concentration in commercial real estate lending if (1) total reported loans for construction, land development, and other land represent 100.0% or more of total risk-based capital, or (2) total non-owner occupied commercial real estate loans, excluding owner occupied properties, represent 300.0% or more of the bank’s total risk-based capital and the outstanding balance of the bank’s commercial real estate loan portfolio has increased 50.0% or more during the prior 36 months.

If a concentration is present, the bank will be subject to further regulatory scrutiny with respect to its risk management practices for commercial real estate lending.

As of December 31, 2023, Red River Bank’s total reported loans for construction, land development, and other land represented less than 100.0% of the Bank’s total risk-based capital, and its total commercial real estate loans, excluding owner occupied properties, represented less than 300.0% of the Bank’s total risk-based capital.

As a result, the Bank does not have a concentration in commercial real estate lending.

For example, the Bank may be required to pay higher FDIC insurance premiums if there are bank or financial institution failures or if the FDIC otherwise determines to increase assessment rates in order to replenish the Deposit Insurance Fund.

Concentrated CRE Lending Regulations

The federal banking regulatory agencies have promulgated guidance governing financial institutions with concentrations in CRE lending.

The guidance provides that a bank may have a concentration in CRE lending if (1) total reported loans for construction, land development, and other land represent 100.0% or more of total risk-based capital, or (2) total non-owner occupied CRE loans, excluding owner occupied properties, represent 300.0% or more of the bank’s total risk-based capital and the outstanding balance of the bank’s CRE loan portfolio has increased 50.0% or more during the prior 36 months.

If a concentration is present, the bank will be subject to further regulatory scrutiny with respect to its risk management practices for CRE lending.

As of December 31, 2024, the Bank’s total reported loans for construction, land development, and other land represented less than 100.0% of the Bank’s total risk-based capital, and its total CRE loans, excluding owner occupied properties, represented less than 300.0% of the Bank’s total risk-based capital.

As a result, the Bank does not have a concentration in CRE lending.

Community Reinvestment Act

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An unsatisfactory CRA record could substantially delay approval or result in denial of an application.

Red River Bank received a “Satisfactory” rating in its most recent CRA examination in 2022.

The Bank received a “Satisfactory” rating in its most recent CRA examination in 2022.

On October 24, 2023, the federal banking agencies adopted a final rule to modernize the CRA regulations.

Under the final rule, (1) the federal banking agencies will evaluate bank performance across the varied activities they conduct and communities in which they operate in order to encourage banks to expand access to credit, investment, and banking services in low- and moderate-income communities, (2) the CRA regulations are updated to evaluate lending outside traditional assessment areas generated by the growth of non-branch delivery systems, such as online and mobile banking, branchless banking, and hybrid models, (3) a new metrics-based approach was adopted to evaluate bank retail lending and community development financing, using benchmarks based on peer and demographic data, and (4) CRA evaluations and data collection are tailored according to bank size and type.

traditional assessment areas generated by the growth of non-branch delivery systems, such as online and mobile banking, branchless banking, and hybrid models, (3) a new metrics-based approach was adopted to evaluate bank retail lending and community development financing, using benchmarks based on peer and demographic data, and (4) CRA evaluations and data collection are tailored according to bank size and type.

In addition, the final rule also exempts small and intermediate sized banks from new data requirements that apply to banks with assets of at least $2.0 billion and limits certain new data requirements to large banks with assets greater than $10.0 billion.

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There has been an enhanced focus by certain bank regulatory agencies with respect to industry practices relating to overdraft fees and non-sufficient funds fees.

For example, the CFPB issued a Request for Information in January 2022 seeking public input with respect to financial institution practices relating to, among other areas, credit card fees, overdraft fees and non-sufficient funds fees and stated its intent to reduce these types of fees through crafting rules, issuing

industry guidance, and focusing supervision and enforcement resources to achieve this goal.

In August 2022, the FDIC issued guidance with respect to banking practices involving charging multiple non-sufficient funds fees on the representment of the same unpaid transaction on a deposit account.

In October 2022, the CFPB issued guidance with respect to certain practices relating to overdraft fees, and it included overdraft fees in its fall 2023 rulemaking agenda.

In February 2023, the CFPB issued a proposed rule seeking to impose certain restrictions on credit card late fee practices.

In March 2024, the CFPB finalized a rule imposing certain restrictions on credit card late fee practices.

This final rule is currently stayed pending litigation over the rule.

In December 2024, the CFPB issued a final rule generally requiring financial institutions with over $10.0 billion in assets to either cap overdraft fees at $5.00 or otherwise follow TILA requirements when providing deposit account overdraft services.

The Dodd-Frank Act created the CFPB, which has broad authority to regulate the offering and provision of consumer financial products.

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conduct examinations;

and bring enforcement actions with regard to consumer financial products and services.

In general, banks with assets of $10.0 billion or less, such as Red River Bank, will continue to be examined for consumer compliance, and subject to enforcement actions, by their primary federal regulator.

and bring enforcement actions regarding consumer financial products and services.

In general, banks with assets of $10.0 billion or less, such as the Bank, will continue to be examined for consumer compliance, and subject to enforcement actions, by their primary federal regulator.

However, the CFPB may participate in examinations of these smaller institutions on a “sampling basis” and may refer potential enforcement actions against such institutions to their primary federal regulators.

In addition, the Dodd-Frank Act permits states to adopt consumer protection laws and regulations that are stricter than those regulations promulgated by the CFPB, and state attorneys general are permitted to enforce certain consumer protection rules adopted by the CFPB against certain institutions.

As previously referenced in “- Bank Holding Company Regulation - Financial Services Industry Reform,” the future of the CFPB is presently uncertain.

Mortgage Lending Rules

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The rules also define “qualified mortgages” based on adherence to certain underwriting standards and certain restrictions on loan terms.

Points and fees are subject to a relatively stringent cap, and the terms include a wide array of payments that may be made in the course of closing a loan.

Points and fees are subject to a relatively stringent cap, and the terms include a wide array of payments that may be made while closing a loan.

Certain loans, including interest-only loans and negative amortization loans, cannot be “qualified mortgages.” Also, the Dodd-Frank Act and the CFPB’s final rule on loan originator compensation prohibit certain compensation payments to loan originators and the steering of consumers to loans not in their interest, particularly if the loans will result in greater compensation for a loan originator.

The Dodd-Frank Act and the CFPB’s implementing regulations, including the TILA-RESPA integrated disclosure rules, also impose disclosure requirements with respect to the origination and sale of residential mortgages.

The Dodd-Frank Act and the

CFPB’s implementing regulations, including the TILA-RESPA integrated disclosure rules, also impose disclosure requirements with respect to the origination and sale of residential mortgages.

Anti-Money Laundering and OFAC

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These regulations affect how consumer information is transmitted through financial services companies and conveyed to outside vendors.

In addition, consumers may also prevent disclosure of certain information among affiliated

companies that is assembled or used to determine eligibility for a product or service, such as that shown on consumer credit reports and asset and income information from applications.

In addition, consumers may also prevent disclosure of certain information among affiliated companies that is assembled or used to determine eligibility for a product or service, such as that shown on consumer credit reports and asset and income information from applications.

Consumers also have the option to direct banks and other financial institutions not to share information about transactions and experiences with affiliated companies for the purpose of marketing products or services.

In addition to applicable federal privacy regulations, Red River Bank is subject to certain state privacy laws.

In addition to applicable federal privacy regulations, the Bank is subject to certain state privacy laws.

Federal laws and regulations also include certain information security guidelines that require a bank, under the supervision and ongoing oversight of its board of directors or an appropriate committee of the board, to develop, implement, and maintain a comprehensive written information security program designed to ensure the security and confidentiality of customer information, to protect against anticipated threats or hazards to the security or integrity of such information, and to protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any customer.

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Any advances from a FHLB must be secured by specified types of collateral, and all long-term advances may be obtained only for the purpose of providing funds for the financing of residential housing.

As a member of the FHLB of Dallas, Red River Bank is required to acquire and hold shares of capital stock in the FHLB of Dallas.

All loans, advances, letters of credit, and other extensions of credit made by the FHLB of Dallas to Red River Bank are secured by a portion of Red River Bank’s loan portfolio, as well as capital stock of the FHLB of Dallas held by Red River Bank.

Additionally, in the event that a member financial institution defaults on its debt, the right of the FHLB to seek repayment of this debt will take priority over the rights of all other creditors.

As a member of the FHLB of Dallas, the Bank is required to acquire and hold shares of capital stock in the FHLB of Dallas.

All loans, advances, letters of credit, and other extensions of credit made by the FHLB of Dallas to the Bank are secured by a portion of the Bank’s loan portfolio, as well as capital stock of the FHLB of Dallas held by the Bank.

Additionally, if a member financial institution defaults on its debt, the right of the FHLB to seek repayment of this debt will take priority over the rights of all other creditors.

Enforcement Powers

The bank regulatory agencies have broad enforcement powers, including the power to terminate deposit insurance and impose substantial fines and other civil and criminal penalties.

Failure to comply with applicable laws, regulations, and supervisory agreements, breaches of fiduciary duty, or the maintenance of unsafe and unsound conditions or practices, could subject us or our subsidiaries, including Red River Bank, as well as their respective officers, directors, and other institution-affiliated parties, to administrative sanctions and potentially substantial civil money penalties.

Failure to comply with applicable laws, regulations, and

supervisory agreements, breaches of fiduciary duty, or the maintenance of unsafe and unsound conditions or practices, could subject us or our subsidiaries, including the Bank, as well as their respective officers, directors, and other institution-affiliated parties, to administrative sanctions, enforcement actions, and potentially substantial civil money penalties.

FDIC Conservatorship or Receivership

The bank regulatory agencies may appoint the FDIC as conservator or receiver for a bank (or the FDIC may appoint itself, under certain circumstances) if any one or more of a number of circumstances exist, including, without limitation, the fact that the bank is undercapitalized and has no reasonable prospect of becoming adequately capitalized, fails to become adequately capitalized when required to do so, fails to submit a timely and acceptable capital restoration plan, or materially fails to implement an accepted capital restoration plan.

Effect of Governmental Monetary Policies

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These policies have a significant influence on the overall growth of bank loans, investments, and deposits, and the interest rates charged on loans or paid on deposits.

We cannot predict the nature of future fiscal and monetary policies or the effect of these policies on our operations and activities, financial condition, results of operations, growth plans, or future prospects.

Impact of Current Laws and Regulations

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We cannot predict whether or in what form any proposed regulation or statute will be adopted or the extent to which our business may be affected by any new regulation or statute.

Future legislation, regulation, and policies, and the effects of such legislation, regulation, and policies, may have a significant influence on our operations and activities, financial condition, results of operations, growth plans, or future prospects, and the overall growth and distribution of loans, investments, and deposits.

Such legislation, regulation, and policies have had a significant effect on the operations and activities, financial condition, results of operations, growth plans, and future prospects of commercial banks in the past and are expected to continue to do so.

Future legislation, regulation, and policies, and the effects of such legislation, regulation, and policies, may have a significant influence on our operations and activities, financial condition, results of operations, growth plans, or prospects, and the overall growth and distribution of loans, investments, and deposits.

Such legislation, regulation, and policies have had a significant effect on the operations and activities, financial condition, results of operations, growth plans, and prospects of commercial banks in the past and are expected to continue to do so.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business