What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2025-03-14 compared with 2024-03-15 · 66 added, 80 removed, 366 unchanged (29% of the section changed)

3 unchanged sentences

Financial Statements and Supplementary Data.” We believe the risks described below are the risks that are material to us as of the date of this Report.

Any of the following risks, as well as risks of which we are not now aware or currently deem immaterial, could materially and adversely affect our business, financial condition, and results of operations.

Any of the following risks, as well as risks that we are not now aware or currently deem immaterial, could materially and adversely affect our business, financial condition, and results of operations.

Further, to the extent that any of the information in this Report constitutes forward-looking statements, the risk factors below also are cautionary statements identifying important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made by us or on our behalf.

2 unchanged sentences

Our business depends on our ability to successfully measure and manage credit risk.

As a lender, we are exposed to the risk that our borrowers will be unable to repay their loans according to their terms, and that the collateral securing repayment of their loans, if any, may not be sufficient to ensure repayment.

In addition, there are risks inherent in making any loan, including risks with respect to the period of time the loan may be repaid;

risks relating to proper loan underwriting;

risks resulting from changes in economic and industry conditions such as labor and material shortages, supply chain difficulties, and inflationary pressures;

risks resulting from changes in economic and industry conditions such as inflationary pressures;

tariffs and trade wars;

and risks inherent in dealing with individual borrowers.

The creditworthiness of a borrower is affected by many factors including local market conditions and general economic conditions.

If the overall economic climate in the U.S., generally, or in Louisiana, specifically, experiences material disruption, our borrowers may experience difficulties in repaying their loans, the collateral we hold may decrease in value or become illiquid, and the level of nonperforming loans, charge-offs, and delinquencies could rise and require significant additional provisions for credit losses, which could adversely affect our net income.

If the overall economic climate in the U.S., generally, or in Louisiana, specifically, or in a particular industry our borrowers are concentrated, experiences material disruption, our borrowers may experience difficulties in repaying their loans, the collateral we hold may decrease in value or become illiquid, and the level of nonperforming loans, charge-offs, and delinquencies could rise and require significant additional provisions for credit losses, which could adversely affect our net income.

Our risk management practices, such as monitoring the concentration of our loans within specific industries and our credit approval, review, and administrative practices may not adequately reduce credit risk.

2 unchanged sentences

As a result, we may need to significantly increase our provision for credit losses, which could adversely affect our net income.

Our commercial real estate loan portfolio exposes us to risks that may be greater than the risks related to other types of loans.

Our loan portfolio includes owner occupied and non-owner occupied commercial real estate loans for individuals and businesses for various purposes, which are secured by commercial properties, as well as real estate construction and development loans.

As of December 31, 2023, our owner occupied loans totaled $412.7 million, or 20.7% of loans HFI.

Also, as of December 31, 2023, our construction and development loans, non-owner occupied commercial real estate loans, and non-real estate secured loans financing commercial real estate activities totaled $566.6 million, or 28.4% of loans HFI.

Our CRE loan portfolio exposes us to risks that may be greater than the risks related to other types of loans.

Our loan portfolio includes owner occupied and non-owner occupied CRE loans for individuals and businesses for various purposes, which are secured by commercial properties, as well as real estate construction and development loans.

As of December 31, 2024, our owner occupied CRE loans totaled $425.7 million, or 20.5% of loans HFI.

Also, as of December 31, 2024, our construction and development loans, non-owner occupied CRE loans, and non-real estate secured loans financing CRE activities totaled $615.4 million, or 29.7% of loans HFI.

The repayment of these loans is typically dependent upon income generated, or expected to be generated, by the property securing the loan in amounts sufficient to cover operating expenses and debt service.

This projected income may be adversely affected by changes in the economy, changes in interest rates, or local market conditions.

Commercial real estate loans expose us to greater credit risk than loans secured by residential real estate, because there are fewer potential purchasers for the commercial real estate collateral, which can make liquidation more difficult in the event of default of the underlying loan.

Additionally, non-owner occupied commercial real estate loans generally involve relatively large balances to single borrowers or related groups of borrowers.

Accordingly, charge-offs on non-owner occupied commercial real estate loans may be larger on an individual loan basis than those incurred with our residential or consumer loan portfolios.

Unexpected deterioration in the credit quality of our commercial real estate loan portfolio would require us to increase our provision for credit losses, which would reduce our profitability.

CRE loans expose us to greater credit risk than loans secured by residential real estate, because there are fewer potential purchasers for the CRE collateral, which can make liquidation more difficult in the event of default of the underlying loan.

Additionally, non-owner occupied CRE loans generally involve relatively large balances to single borrowers or related groups of borrowers.

Accordingly, charge-offs on non-owner occupied CRE loans may be larger on an individual loan basis than those incurred with our residential or consumer loan portfolios.

Unexpected deterioration in the credit quality of our CRE loan portfolio would require us to increase our provision for credit losses, which would reduce our profitability.

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

8 unchanged sentences

Adverse changes affecting real estate values and the liquidity of real estate in one or more of our markets could increase the credit risk associated with our loan portfolio, significantly impair the value of property pledged as collateral on loans, and affect our ability to sell the collateral upon foreclosure without a loss or additional losses.

Additionally, we may have to foreclose on the collateral property to protect our investment.

Additionally, we may have to foreclose on the collateral property.

We may thereafter own and operate such property, in which case we would be exposed to the risks inherent in the ownership of real estate, including potential environmental liability due to contamination of a property either during ownership or after the divesting of it.

21 unchanged sentences

Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts.

The determination of the amount of allowance involves a high degree of judgement and subjectivity.

The determination of the amount of allowance involves a high degree of judgment and subjectivity.

As of December 31, 2024, our ACL totaled $21.7 million, which represents approximately 1.05% of loans HFI.

19 unchanged sentences

Finally, NPAs can take significant time and resources to resolve, causing the related costs of maintaining those assets to increase.

These effects may be particularly pronounced in a market of reduced real estate values and excess inventory.

These effects may be particularly pronounced in a declining real estate market where valuations are falling and excess inventory is present.

The small to medium-sized businesses that we lend to may have fewer resources to handle adverse business developments, which may impair their ability to repay loans.

A significant portion of our business development and marketing strategy is focused on small to medium-sized businesses.

Small to medium-sized businesses:

frequently have smaller market shares than their competition;

A significant portion of our business is focused on small to medium-sized businesses, which frequently have smaller market shares than their competition;

may be more vulnerable to economic downturns, inflation, and labor market and supply chain constraints;

18 unchanged sentences

Unexpected and/or significant changes to interest rates could cause our net interest margin and net interest income to decrease, and could adversely affect the valuation of our assets and liabilities.

A decrease in the general level of interest rates may reduce the yield on short-term interest-bearing assets and on new and renewing loans and securities, and may decrease deposit rate pressure and the cost of deposits.

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

Higher interest rates could adversely affect the ability of borrowers of floating rate loans to meet their higher payment obligations, which could result in an increase in delinquencies and charge-offs, and increase the cost of deposits.

A decrease in the general level of interest rates may reduce the yield on short-term interest-bearing assets and on new and renewing loans and securities, while decreasing deposit rate pressure and the cost of deposits.

The fair market value of our securities portfolio, the investment income, and the cash flows from these securities also fluctuate depending on general economic and market conditions.

6 unchanged sentences

Natural disasters can disrupt our operations, cause widespread property damage, and severely depress the local economies in which we operate.

A deterioration in local economic conditions or in the residential or commercial real estate markets could have an adverse effect on the quality of our loan portfolio, the demand for our products and services, the ability of borrowers to timely repay loans, and the value of the collateral securing loans.

A deterioration in local economic conditions or in the residential or CRE markets could have an adverse effect on the quality of our loan portfolio, the demand for our products and services, the ability of borrowers to timely repay loans, and the value of the collateral securing loans.

As of December 31, 2024, 94.2% of loans HFI were made to borrowers who reside or conduct business in Louisiana, and substantially all of our real estate loans are secured by properties located in Louisiana.

If the population, employment, or income growth in any of our markets is negative or slower than projected, income levels, deposits, and real estate development could be adversely impacted, which could adversely affect our business and profitability.

Additionally, our business could be adversely affected by the effects of war and international conflict, civil unrest, inflation, labor market and supply chain constraints, or a widespread outbreak of pandemics.

Additionally, our business could be adversely affected by the effects of war and international conflict, civil unrest, inflation, trade policy and tariffs, labor market and supply chain constraints, or a widespread outbreak of pandemics.

Further, we are monitoring the ongoing military conflicts between Russia and Ukraine and Israel and Hamas, as well as the current tensions with China.

While we do not expect that these conflicts will be directly material to us, associated effects of the geopolitical instability, such as the imposition of sanctions against Russia and Russia’s response to such sanctions (including retaliatory acts like cyber-attacks and sanctions against other countries), could adversely affect the global economy or domestic markets, including ours.

While we do not expect that these conflicts will be directly material to us, associated effects of the geopolitical instability, such as the imposition of sanctions against any country and their response to such sanctions (including retaliatory acts like cyber-attacks and sanctions against other countries), could adversely affect the global economy or domestic markets, including ours.

If the economies in our primary markets experience an overall decline as a result of these types of external events, demand for loans and our other products and services could be reduced.

5 unchanged sentences

Changes in any of these policies are influenced by macroeconomic conditions and other factors that are beyond our control.

Federal fiscal and monetary policymaking decisions could lead to changes in interest rates, inflation, or other economic impacts such as supply chain issues, labor market constraints, and recessions.

Federal fiscal and monetary policymaking decisions could lead to changes in interest rates, inflation, or other economic impacts such as recessions.

The primary impact of inflation on our operations is our ability to manage the impact of changes in interest rates, which could impact the demand for our products and services.

1 unchanged sentence

The medium and long-term fiscal outlook of the federal government and U.S.

economy are concerns for businesses, consumers, and investors in the U.S.

economy may be concerns for businesses, consumers, and investors in the U.S.

In addition, economic conditions in foreign countries, including global political hostilities, could affect the stability of global financial markets, which could hinder domestic economic growth.

8 unchanged sentences

This could adversely affect our liquidity, which could impair our ability to fund operations and meet obligations as they become due.

Negative conditions in the health care sector could lead to increased credit losses in our loan portfolio.

Health care loans, which were $167.3 million, or 8.1% of loans HFI as of December 31, 2024, are our largest industry concentration.

These loan consist of loans to nursing and residential care facilities and physician and dental practices.

To the extent that adverse economic conditions or other factors disproportionately and negatively impact the health care sector, it could lead to increased credit losses in our loan portfolio

Volatility in oil and natural gas prices along with cyclical downturns in the energy industry, particularly in Louisiana, could lead to increased credit losses in our loan portfolio.

As of December 31, 2024, we had energy loans of $29.8 million, or 1.4% of loans HFI.

We also may have indirect exposure to energy prices, as some of our non-energy customers’ businesses may be affected by volatility with the oil and gas industry and the impact of inflation on energy prices.

We also may have indirect exposure to energy prices, as some of our non-energy customers’ businesses may be affected by volatility in the oil and gas industry and energy prices.

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

17 unchanged sentences

In addition, we participate in loans originated by other institutions, and we participate in syndicated transactions (including shared national credits) in which other lenders serve as the lead bank.

Further, high-profile bank failures have resulted in some degree of public awareness and caused widespread questions about potential concerns in the financial institutions industry.

Further, high-profile bank failures in 2023 have resulted in some degree of public awareness and caused widespread questions about potential concerns in the financial institutions industry.

Failures by, declines in the financial condition of, or even rumors or questions about one or more financial institutions, financial service companies, or the financial services industry generally, may lead to a decline in market-wide liquidity, asset quality problems, or other problems and could lead to losses or defaults by us or by other institutions.

10 unchanged sentences

therefore, some dilution of our tangible book value and earnings per common share may occur in connection with any future acquisition.

Specifically, acquisitions could result in higher than expected deposit attrition, loss of key employees, significant fair value adjustments, or other consequences that could adversely affect our business.

Specifically, acquisitions could result in higher than expected deposit attrition, loss of key employees, significant fair value adjustments,

or other consequences that could adversely affect our business.

Further, the carrying amount of any goodwill that we currently maintain or may acquire may be subject to impairment in future periods.

1 unchanged sentence

In addition, we cannot provide assurance that we will be able to successfully integrate any business or assets we acquire with our existing business.

The integration of acquired operations and assets may require

substantial management time, effort, and resources and may divert management’s focus from other strategic opportunities and operational matters.

The integration of acquired operations and assets may require substantial management time, effort, and resources and may divert management’s focus from other strategic opportunities and operational matters.

Further, we may not be able to execute on more general aspects of our expansion strategy, which may impair our ability to sustain our historical rate of growth or prevent us from growing at all.

25 unchanged sentences

Even though a majority of our certificates of deposit renew upon maturity with what we believe are competitive rates, some of our more rate-sensitive customers may move those and other deposit funds to higher-yielding alternatives.

Our other primary sources of liquidity consist of cash flows from operations, maturities and sales of investment securities, and proceeds from the issuance and sale of our equity to investors.

As a secondary source of liquidity, we have the ability to borrow overnight funds from other financial institutions with whom we have a correspondent relationship.

Our other primary sources of liquidity consist of cash flows from operations, loan repayments, maturities and sales of investment securities, and proceeds from the issuance and sale of our equity to investors.

As a secondary source of liquidity, we have the ability to borrow overnight funds from other financial institutions with whom we have a correspondent

relationship.

We also have the ability to borrow from the FHLB of Dallas and the Federal Reserve Bank’s Discount Window facility.

Also, the Federal Reserve’s Bank Term Funding Program was available from March 12, 2023 through March 11, 2024.

Historically, we have not utilized brokered or internet deposits to meet liquidity needs.

1 unchanged sentence

These factors may include disruptions in the financial markets or negative expectations about the industry’s prospects.

Our access to funding sources could also be affected by regulatory actions against us or by a decrease in the level of our business

activity due to a downturn in the Louisiana economy or in economic conditions generally.

Our access to funding sources could also be affected by regulatory actions against us or by a decrease in the level of our business activity due to a downturn in the Louisiana economy or in economic conditions generally.

A decline in available funding could adversely impact our ability to originate loans, invest in securities, meet our expenses, or fulfill obligations such as meeting deposit withdrawal demands or repaying our borrowings.

1 unchanged sentence

Factors beyond our control can significantly influence the fair value of securities in our investment portfolio, potentially resulting in adverse changes to the portfolio’s fair value.

These factors include, but are not limited to, rating agency actions related to the securities, defaults by the issuer or with respect to the underlying collateral, and changes in market interest rates and instability in the capital markets.

These factors include, but are not limited to, changes in market interest rates, rating agency actions related to the securities, defaults by the issuer or with respect to the underlying collateral, and instability in the capital markets.

Any of these factors, among others, could cause realized or unrealized losses in future periods and declines in AOCI, which could have a material adverse effect on our business, financial condition, results of operations, and capital requirements.

4 unchanged sentences

Our success depends in large part on the performance of our key personnel, as well as on our ability to attract, motivate, and retain highly qualified management and employees.

Competition for employees is intense, and the process of locating key personnel with the combination of skills and attributes required to execute our business plan may be lengthy.

Competition for employees is intense, and the process of locating key personnel with the combination of skills and attributes required to execute our business plan may be difficult.

We may not be successful in retaining our key employees.

11 unchanged sentences

Increasing sophistication of cyber-attacks makes it increasingly difficult to prevent a security breach.

For example, in mid-2023, we received notice that certain of our customer data was involved in the global incident involving the MOVEit Transfer vulnerability.

Our internal network systems were not impacted by the MOVEit Transfer vulnerability.

However, several of our third-party financial institution vendors who utilized MOVEit Transfer in their service offerings to us notified us that their systems may have been compromised.

Based on the investigation, we were notified that certain of our customers had personal information exfiltrated through the cyber-attack, and we notified our affected customers.

Further, we, or any of our vendors or third-party providers, could also experience a breach due to circumstances such as intentional or negligent conduct on the part of employees or other internal and external sources, software bugs, or other technical malfunctions.

12 unchanged sentences

Regardless of their merits, scope, validity, or ultimate outcomes, such matters are costly, time-consuming, may result in protracted litigation or otherwise divert management’s attention, and may materially and adversely affect our reputation, even if resolved favorably.

In addition, since the commencement of the PPP, numerous other banks have been subject to litigation regarding the process and procedures that those banks used in processing applications for the PPP.

We may be exposed to similar litigation from governmental agencies, customers, non‑customers, and agents that approached us regarding PPP loans and litigation regarding our procedures for processing applications, funding PPP loans, and coordinating the forgiveness of the loans.

If any such litigation is initiated against us, it may result in significant financial liability, significant litigation costs, or adversely affect our reputation.

Further, governmental agencies could audit our PPP borrowers, and any deficiencies resulting from such audit could also expose us to liability and reputational risk.

We have a continuing need for technological improvements, and we may not have the resources to effectively implement new technology, or we may experience operational challenges when implementing new technology.

12 unchanged sentences

Even if the relevant, factual assumptions are accurate, our decisions may prove to be inadequate or inaccurate because of other flaws in the design or use of analytical tools used by management.

We are dependent on the use of data and modeling in our management’s decision-making, and faulty data or modeling approaches could negatively impact our decision-making ability or subject us to regulatory scrutiny.

The use of statistical and quantitative models and other quantitative analysis is intrinsic to bank decision-making and is becoming increasingly widespread in our operations.

It is also becoming more prevalent in regulatory compliance.

We utilize data and modeling in our management’s decision-making, and faulty data or modeling approaches could negatively impact our decision-making ability or subject us to regulatory scrutiny.

The use of statistical and quantitative models and other quantitative analysis is part of bank decision-making and is used in our operations.

It is also prevalent in regulatory compliance.

While we are not currently subject to annual stress testing under the Dodd-Frank Act or the Federal Reserve’s Comprehensive Capital Analysis and Review submissions, we currently utilize asset/liability management modeling and stress testing for monitoring and managing interest rate risk and liquidity.

5 unchanged sentences

The investment products and services provided to our customers through our investment group, by virtue of these third-party channels generally are not insured by the FDIC.

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

Although we seek to limit this exposure through clear disclosure, ongoing oversight, and contractual provisions requiring indemnification, limitations of liability, insurance coverage, and other similar protections, those obligations may not always be enforceable, or our third-party service providers ultimately may not have sufficient financial strength to fully comply, all of which may increase our financial exposure and adversely affect our business.

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

Although we seek to limit this

exposure through clear disclosure, ongoing oversight, and contractual provisions requiring indemnification, limitations of liability, insurance coverage, and other similar protections, those obligations may not always be enforceable, or our third-party service providers ultimately may not have sufficient financial strength to fully comply, all of which may increase our financial exposure and adversely affect our business.

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

27 unchanged sentences

As a result, we would make payments on our potential future indebtedness before any dividends could be paid on our common stock, and, in the event of our bankruptcy, dissolution, or liquidation, the holders of our potential future indebtedness would be satisfied in full before any distributions could be made to the holders of our common stock.

Although we have not historically issued shares of preferred stock, our board of directors has the authority to issue up to 1,000,000 such shares, and to determine the terms of each issuance of preferred stock and any indebtedness, without shareholder approval, which may be senior to our common stock.

As a result, holders of our common stock bear the risk that our future issuances of debt or equity securities or our incurrence of other borrowings may negatively affect the market price of our common stock.

We are an emerging growth company, and the reduced reporting requirements applicable to emerging growth companies may make our common stock less attractive to investors.

We are an emerging growth company, as defined in the JOBS Act.

For as long as we continue to be an emerging growth company we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies.

These include, without limitation, an exemption from the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, reduced financial reporting requirements, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

We will remain an emerging growth company until the earliest of (1) the end of the fiscal year during which we have total annual gross revenues of $1.24 billion or more, (2) December 31, 2024, (3) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities, or (4) the date on which we are deemed to be a large accelerated filer under the Exchange Act.

Investors may find our common stock less attractive as long as we remain an emerging growth company, which may result in a less active trading market and increased volatility in our stock price.

We currently anticipate that we will no longer qualify as an emerging growth company as of December 31, 2024.

As a result, we will no longer be eligible to take advantage of the exemptions from various requirements applicable to emerging growth companies.

For example, we will need to comply with the independent auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2022 beginning with our Annual Report on Form 10-K for the year ending December 31, 2024, will be required to hold a say-on-pay vote and a say-on-frequency vote at our 2025 annual meeting of shareholders, and will no longer be entitled to provide the reduced executive compensation disclosures permitted by emerging growth companies beginning with our proxy statement for our 2025 annual meeting of shareholders.

We expect that our transition from an emerging growth company status will require additional attention from management and will result in increased costs to us, which could include higher legal fees, accounting and related fees, and fees associated with investor relations activities, among others.

Although we do not currently have any outstanding preferred stock, our board of directors has the authority to issue up to 1,000,000 shares of preferred stock, and to determine the terms of each issuance of preferred stock and any indebtedness, without shareholder approval, which may be senior to our common stock.

As a result, holders of our

common stock bear the risk that our future issuances of debt or equity securities or our incurrence of other borrowings may negatively affect the market price of our common stock.

Our dividend policy may change without notice, and our future ability to pay dividends is subject to restrictions.

8 unchanged sentences

Our stock repurchase program may not enhance long-term stockholder value, and stock repurchases, if any, could increase the volatility of the price of our common stock and diminish our cash reserves.

Since August 2020, we have maintained stock repurchase programs.

We maintain stock repurchase programs.

The repurchase programs authorize us to purchase up to a set amount of our outstanding shares of common stock between specific dates.

Repurchases may be made from

time to time in the open market at prevailing prices and based on market conditions, or in privately negotiated transactions.

Repurchases pursuant to our stock repurchase programs could affect our stock price and increase its volatility.

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.

We have also repurchased shares of our common stock outside of our stock repurchase programs in privately negotiated repurchases with approval from the board of directors.

Repurchases could affect our stock price and increase its volatility.

The existence of a stock repurchase program could also cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our stock.

Additionally, repurchases under our stock repurchase programs will diminish our cash reserves, which could impact our ability to pursue possible future strategic opportunities and acquisitions, support our operations, invest in securities, and pay dividends, and could result in lower overall returns on our cash balances.

Additionally, stock repurchases will diminish our cash reserves, which could impact our ability to pursue possible future strategic opportunities and acquisitions, support our operations, invest in securities, and pay dividends, and could result in lower overall returns on our cash balances.

Stock repurchases may not enhance shareholder value because the market price of our common stock may decline below the levels at which we repurchased shares of stock, and short-term stock price fluctuations could reduce the program’s effectiveness.

Repurchases may also be subject to a nondeductible excise tax under the Inflation Reduction Act of 2022 equal to 1.0% of the fair market value of the shares repurchased, subject to certain limitations.

Repurchases are subject to a nondeductible excise tax under the Inflation Reduction Act of 2022 equal to 1.0% of the fair market value of the shares repurchased, subject to certain limitations.

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

20 unchanged sentences

Rather, these laws and regulations are intended to protect consumers, customers, depositors, the FDIC Deposit Insurance Fund, and the overall financial stability of the U.S.

These laws and regulations, among other matters, prescribe minimum capital requirements, impose limitations on the business activities in which we can engage, limit the dividends or distributions that Red River Bank can pay to us and that we can pay to our shareholders, impose certain specific accounting requirements on us that may be more restrictive and may result in greater or earlier charges to earnings or reductions in our capital than GAAP would require, require us to have an effective anti-money laundering program, and prohibit discriminatory lending practices and unfair, deceptive, or abusive acts.

Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations often impose additional compliance costs.

31 unchanged sentences

and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate the Bank’s deposit insurance and place it into receivership or conservatorship.

We are subject to capital requirements, which may result in lower returns on equity, require us to raise additional capital, prevent us from accessing FHLB advances, limit growth opportunities, result in regulatory restrictions, or require us to commit capital resources to support the Bank.

We are subject to capital requirements, which may result in lower returns on equity, require us to raise additional capital, prevent us from accessing FHLB advances, restrict our access to other borrowing lines, limit growth opportunities, result in regulatory restrictions, or require us to commit capital resources to support the Bank.

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

The rules establish a regulatory capital standard based on common equity Tier I, require us and the Bank to satisfy a minimum capital adequacy requirement, and impose a CCB.

Failure to meet the CCB will result in certain limitations on dividends, stock repurchases, and discretionary bonus payments to executive officers.

The rules establish a regulatory capital standard based on common equity Tier I, which require us and the Bank to satisfy a minimum capital adequacy requirement.

Failure to meet capital guidelines could subject us to a variety of limitations on dividends, stock repurchases, and discretionary bonus payments to executive officers.

Our subsidiary, Red River Bank, is also subject to separate regulatory capital requirements imposed by the FDIC.

5 unchanged sentences

The Federal Reserve requires a bank holding company to act as a source of financial and managerial strength to its subsidiary banks and to commit resources to support its subsidiary banks.

Under this “source of strength” doctrine, the Federal Reserve may require a bank holding company to make capital injections into a troubled subsidiary bank at times when the bank holding

company may not be inclined to do so and may charge the bank holding company with engaging in unsafe and unsound practices for failure to commit resources to such a subsidiary bank.

Under this “source of strength” doctrine, the Federal Reserve may require a bank holding company to make capital injections into a troubled subsidiary bank at times when the bank holding company may not be inclined to do so and may charge the bank holding company with engaging in unsafe and unsound practices for failure to commit resources to such a subsidiary bank.

Accordingly, we could be required to make a capital injection to the Bank if it experiences financial distress.

1 unchanged sentence

Additionally, depending on our capital levels, the FHLB of Dallas may reduce or eliminate entirely our total borrowing availability with it.

This may come at a time when we have limited other funding options and could jeopardize our ability to originate loans, invest in securities, or meet other obligations such as repaying any potential borrowings or meeting deposit withdrawal demands, which could adversely impact our business or profitability.

Federal, state, and local consumer lending laws may restrict our ability to originate certain mortgage loans, increase our risk of liability with respect to such loans, increase the time and expense associated with the foreclosure process, or prevent us from foreclosing at all.

Certain federal, state, and local laws are intended to eliminate lending practices that are considered “predatory.” These laws prohibit practices such as steering borrowers away from more affordable products, selling unnecessary insurance to borrowers, repeatedly refinancing loans, and making loans without a reasonable expectation that the borrowers will be able to repay the loans irrespective of the value of the underlying property.

Our other borrowing lines may also be restricted or include increased borrowing costs.

These actions could come at a time when we have limited other funding options and could jeopardize our ability to originate loans, invest in securities, or meet other obligations such as repaying any potential borrowings or meeting deposit withdrawal demands, which could adversely impact our business or profitability.

For additional information regarding regulatory capital standards to which our business is subject, see “Item 1.

Business - Supervision and Regulation.”

Federal and state consumer lending laws may restrict our ability to originate certain mortgage loans, increase our risk of liability with respect to such loans, increase the time and expense associated with the foreclosure process, or prevent us from foreclosing at all.

Certain federal and state laws are intended to eliminate lending practices that are considered “predatory.” These laws prohibit practices such as steering borrowers away from more affordable products, selling unnecessary insurance to borrowers, repeatedly refinancing loans, and making loans without a reasonable expectation that the borrowers will be able to repay the loans irrespective of the value of the underlying property.

It is our policy not to make predatory loans, but these laws create the potential for liability with respect to our lending and loan investment activities.

6 unchanged sentences

The FDIC has the power to change deposit insurance assessment rates, the manner deposit insurance is calculated, and also to charge special assessments to FDIC-insured institutions.

Following the 2023 bank failures, banking regulators announced that the FDIC would ensure that all depositors in the failed banks would receive full coverage of all of their deposits, at no cost to taxpayers.

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 we are not subject to this special assessment, any future additional assessments, increases, or required prepayments in FDIC insurance premiums could adversely impact our earnings.

Increases in assessment rates or special assessments that apply to all banks may occur in the future, especially if there are significant financial institution failures.

Any future special assessments or increases in assessment rates could reduce our profitability, which could have an adverse effect on our business, financial condition, and results of operations.

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 1A. Risk Factors