RRBI 10-K & 10-Q changes, risk factors and insider trading

Our business depends on our ability to successfully measure and manage credit risk. As a lender, we are exposed to the risk that our borrowers will be unable to repay their loans according to their terms, and that the collateral securing repayment of their loans, if any, may be insufficient. In addition, there are risks inherent in making any loan, including risks with respect to the period of time the loan may be repaid;repaid, risks relating to proper loan underwriting;underwriting, risks resulting from changes in economic and industry conditions such as inflationary pressures; tariffs and trade wars;conditions, and risks inherent in dealing with individual borrowers. The creditworthiness of a borrower is affected by many factors including local market conditions and general economic conditions. If the overall economic climate in the U.S., generally, or in Louisiana, specifically, or in a particular industry our borrowers are concentrated, experiences material disruption, our borrowers may experience difficulties in repaying their loans, the collateral we hold may decrease in value or become illiquid, and the level of nonperforming loans, charge-offs, and delinquencies could rise and require significant additional provisions for credit losses, which could adversely affect our net income.

Real estate values in many Louisianaour markets have experienced periods of fluctuation overin the last several years.past. As of December 31, 2024,2025, $1.65$1.77 billion, or 79.7%,78.7%, of loans HFI were secured by real estate as the primary component of collateral. We also make loans secured by real estate as a supplemental source of collateral. Real estate values and real estate markets are affected by many factors, such as changes in national, regional, or local economic conditions; the rate of unemployment; fluctuations in interest rates and the availability of loans to potential purchasers; changes in tax laws and other governmental statutes, regulations, and policies; and acts of nature, such as hurricanes, flooding, and other natural disasters. Adverse changes affecting real estate values and the liquidity of real estate in one or more of our markets could increase the credit risk associated with our loan portfolio, significantly impair the value of property pledged as collateral on loans, and affect our ability to sell the collateral upon foreclosure without a loss or additional losses.

Additionally, we may have to foreclose on the collateral property. We may thereafter own and operate such property, in which case we would be exposed to the risks inherent in the ownership of real estate, including potential environmental liability due to contamination of a property either during ownership or after the divesting of it. As of December 31, 2024,2025, we held OREO totaling $38,000.$36,000. This amount could increase in the future, depending upon the level of our real estate foreclosures and our ability to efficiently divest of the foreclosed OREO. The amount that we, as a mortgagee, may realize after a default is dependent upon factors outside of our control, including, but not limited to, general or local economic conditions, environmental cleanup liability, assessments, interest rates, real estate tax rates, operating expenses of the mortgaged properties, ability to obtain and maintain adequate occupancy of the properties, zoning laws, governmental and regulatory rules, and natural disasters. Consequently, we could be required to increase our ACL, adversely affecting our profitability.

As of December 31, 2024,2025, $614.6$628.8 million, or 29.6%,28.0%, of our total loan portfolio was secured by primary and secondary liens on one-to-four family residential loans. One-to-four family residential loans are generally sensitive to regional and local economic conditions that significantly impact the borrowers’ ability to meet their loan payment obligations. A decline in residential real estate values resulting from a downturn in the housing market in our market areas may reduce the value of the real estate collateral securing these types of loans and increase our risk of losses due to default. A downturn in the housing market coupled with elevated unemployment rates may also result in a decline in demand for our products and services. Rising insurance costs may affect the borrower’s ability to make timely payments and may also impact the value of the underlying real estate due to higher costs of ownership.

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

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

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 constraintsconstraints, tariffs, trade policy, and trade wars; may often need substantial additional capital to expand or compete; and may experience substantial volatility in operating results. Any of these factors may impair a borrower’s ability to repay a loan. In addition, the success of a small or medium-sized business often depends on the management skills, talents, and efforts of one individual or a small group of individuals. The death, disability, or resignation of one or more of these people could have an adverse impact on the business and its ability to repay loans.

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

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,charge-offs. andHigher interest rates could also increase the cost of deposits.

As a business operating in the financial services industry, our business and operations may be adversely affected in numerous and complex ways, including demand for our products and services, inflation, and financial markets.ways.

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

Health care loans, which were $167.3$194.3 million, or 8.1%8.6% of loans HFI as of December 31, 2024,2025, are our largest industry concentration. These loanloans 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

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

Also, as consolidation of the financial services industry continues, the number of appropriate targets may decrease and the price for potential acquisitions may increase, which could reduce our potential returns and reduce the attractiveness of these opportunities to us. In addition, we cannot provide assurance that we will be able to successfully integrate any business or assets we acquire with our existing business.acquire. The integration of acquired operations and assets may require substantial management time, effort, and resources and may divert management’s focus from other strategic opportunities and operational matters.

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

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

Liquidity is essential to our business. We rely on our ability to generate deposits and effectively manage the repayment and maturity schedules of our loans and investment securities, respectively, to ensure that we have adequate liquidity to fund our operations. As can be seen from events in 2023 regarding the operations and failures of other banks in the U.S., anAn inability to mitigate deposit withdrawals and to raise funds through new deposits, borrowings, the sale of investment securities at or above the value of such securities on our books, and other sources could have a material adverse effect on liquidity. Our most important source of funds is deposits. Historically, our deposits have provided a stable source of funds. However, deposit balances can decrease when customers perceive alternative investments as providing a better risk/return tradeoff or when customers have negative views related to disruption in the financial markets or the prospects for the financial services industry as a whole. If our customers move money out of bank deposits, our liquidity position could be impacted, and we would lose a relatively low-cost source of funds, increasing our funding costs, and reducing our net interest income and net income. Even though a majority of our certificates of deposit renew upon maturity with what we believe are competitive rates, some of our more rate-sensitive customers may move those and other deposit funds to higher-yielding alternatives.

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

Our success depends in large part on the performance of our key personnel, as well as on our ability to attract, motivate, and retain highly qualified managementmanagement, directors, and employees. Competition for employees is intense, and the process of locating key personnel with the combination of skills and attributes required to execute our business plan may be difficult. We may not be successful in retaining our key employees. Further, we may not be able to identify and hire qualified replacement personnel on terms acceptable to us, or at all, whether due to tightening labor conditions or otherwise. If we unexpectedly lose the services of one or more of our management team, directors, or key personnel and are unable to replace them, we would also lose the benefit of their skills, knowledge of our primary markets, and years of industry experience, which could adversely affect our business and profitability.

In the ordinary course of our business, we necessarily collect, use, and retain, on various information systems that we maintain and in those maintained by third-party providers and, in some cases, vendors retained by those third parties, personal and financial information concerning individuals and businesses with which we have a banking or other relationship. We also maintain important internal company data such as personally identifiable information about our employees and information about our operations. Threats to data security such as unauthorized access and cyber-attacks emerge and change rapidly. These threats may increase our costs for protection or remediation. They may also result in competing time constraints between applicable privacy and other requirements and our ability to secure data in accordance with customer expectations and evolving laws and regulations governing the privacy and protection of personal information.

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

The use of statistical and quantitative models and other quantitative analysis is part of bankmanagement’s decision-making and is used in our operations. It is also prevalent in regulatory compliance. While we are not currently subject to annual stress testing under the Dodd-Frank Act or the Federal Reserve’s Comprehensive Capital Analysis and Review submissions, we currently utilize asset/liability management modeling and stress testing for monitoring and managing interest rate risk and liquidity. We also use ana ACLsoftware system to model toand evaluate the ACL. While we believe the quantitative techniques and approaches of these models improve our decision-making, they also create the possibility that faulty data, flawed quantitative approaches, or misunderstanding or misuse of their outputs could negatively impact our decision-making ability or, if we become subject to regulatory stress-testing in the future, cause adverse regulatory scrutiny.

Climate change may intensify severe weather events such as hurricanes and rainstorms that recur in our market areas, which may adversely impact our locations and business and those of our customers and suppliers. In addition, there has been an increased focus among businesses, consumers and investors regarding transitioning to renewable energy and a net zero economy. If we fail to adequately anticipate and address these changing preferences, our business could be adversely impacted. We are also subject to risks relating to potential new climate change-related legislation or regulations, which could increase our and our customers’ costs. For example, in 2022, the SEC proposed new climate disclosure rules, which if adopted, would require new climate-related disclosure in SEC filings, including certain climate-related metrics and greenhouse gas emissions data, information about climate-related targets and goals, transition plans, if any, and extensive attestation requirements. Further, we may be exposed to negative publicity based on the identity and activities of those to whom we lend and with which we otherwise do business and the public’s view of the approach and performance of our customers and business partners with respect to climate-related matters. The risks associated with these matters are continuing to evolve rapidly and the ultimate impact on our business is difficult to predict with any certainty.

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

Our directors and named executive officers have significant control over our business.

As of December 31, 2024,2025, our directors and named executive officers beneficially owned approximately 15.9%16.5% of our issued and outstanding shares of common stock. Consequently, our management and board of directors may be able to significantly affect the outcome of the election of directors and the potential outcome of other matters submitted to a vote of our shareholders, such as mergers, the issuance of stock, the sale of substantially all of our assets, and other extraordinary corporate matters. The interests of these insiders could conflict with the interests of our other shareholders.

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

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

Our subsidiary, Red River Bank, is also subject to separate regulatory capital requirements imposed by the FDIC. If the Bank does not meet minimum capital requirements, it will be subject to prompt corrective action by the FDIC. Prompt corrective action can include progressively more restrictive constraints on operations, management, and capital distributions. Even if we satisfy the objectives of our capital plan and meet minimum capital requirements, it is possible that our regulators may ask us to raise additional capital. For example, banking organizations experiencing significant internal growth, making acquisitions, or experiencing financial difficulties are often expected to maintain strong capital positions substantially above the minimum supervisory levels, without significant reliance on intangible assets.levels.

The purpose of this discussion and analysis is to focus on significant changes in the financial condition and results of operations of Red River Bancshares, Inc. on a consolidated basis during the year ended December 31, 20242025 and selected prior periods. This discussion and analysis should be read in conjunction with information presented elsewhere in this Report, including our audited consolidated financial statements and notes thereto included in “Item 8. Financial Statements and Supplementary Data.”

Red River Bancshares, Inc. is the bank holding company for Red River Bank, a Louisiana state-chartered bank established in 1999 that provides a fully integrated suite of banking products and services tailored to the needs of our commercial and retail customers. As of December 31, 2024,2025, Red River Bank operated from a network of 28 banking centers throughout Louisiana and onetwo combined LDPOLDPOs, one each in New Orleans, Louisiana and Lafayette, Louisiana. Banking centers are located in the following Louisiana markets: Central, which includes the Alexandria MSA; Northwest, which includes the Shreveport-Bossier City MSA; Capital, which includes the Baton Rouge MSA; Southwest, which includes the Lake Charles MSA; the Northshore, which includes Covingtonthe Slidell-Mandeville-Covington MSA; Acadiana, which includes the Lafayette MSA; and New Orleans.Orleans, which includes the New Orleans-Metairie MSA.

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

In 2024,2025, we had steadyrecord-high improvementnet inincome theand EPS, and an improved net interest margin and EPS,margin, along with solid loanbalance activity andsheet growth. We also increased our cash dividend, had significant stock buyback activity, and expandedcontinued our organic expansion initiative, and improved our digital banking center network.systems.

•Net income for the year ended December 31, 2024,2025, was $42.8 million, or $6.38 diluted EPS, an increase of $8.5 million, or 24.9%, compared to $34.2 million, or $4.95 diluted EPS, a decrease of $644,000, or 1.8%, compared to $34.9 million, or $4.86 diluted EPS, for the year ended December 31, 2023.2024. The decreaseincrease in net income was mainly due to higher operating expenses, lower noninterest income, and higher provision for credit losses, partially offset by higher net interest income.

•AssetsAs increasedof $20.8December 31, 2025, assets were $3.35 billion, which was $201.3 million, or 0.7%,6.4%, tohigher than $3.15 billion as of December 31, 2024, compareddriven toby $3.13a billion$158.3 asmillion ofincrease Decemberin 31, 2023.deposits.

•LoansDeposits HFItotaled increased $82.2 million, or 4.1%, to $2.08$2.96 billion as of December 31, 2024,2025, an increase of $158.3 million, or 5.6%, compared to $1.99$2.81 billion as of December 31, 2023.2024. TheIn increase2025, there were increases in loansmost wasdeposit due to new loan activity in various markets across Louisiana.categories.

•NPAsThe wereprovision $3.3for million,credit orlosses 0.10%was of$2.3 assets,million asfor of2025, Decembercompared 31,to 2024.$1.2 million for 2024, mainly due to loan growth. As of December 31, 2024,2025, NPAs were $3.5 million, or 0.11% of assets, and the ACL was $21.7$23.4 million, or 1.05%1.04% of loans HFI.

•In 2024, weWe paid a quarterly cash dividenddividends per common share of $0.09$0.12 perin share,the first and second quarters of 2025, and $0.15 in the third and fourth quarters of 2025, resulting in annualtotal 2025 cash dividends per common share of $0.54. This was a 50.0% increase from $0.36 per share.common In 2023, weshare paid a quarterly cash dividend of $0.08 per share, resulting in annual cash dividends of $0.32 per share.2024. In the first quarter of 2025,2026, we declared a quarterly cash dividend of $0.12$0.25 per common share.

•The 20242025 stock repurchase program authorized us to purchase up to $5.0 million of our outstanding shares of common stock from January 1, 20242025 through December 31, 2024.2025. In 2024, under this plan, on the open market,2025, we repurchased 17,08511,748 shares of our common stock on the open market at an aggregate cost of $809,000.$656,000, Weexcluding alsoexcise completed a privately negotiated stock repurchase of 60,000 shares of our common stock for $3.0 million, which reduced the availability under the 2024 stock repurchase program.tax. The 20242025 stock repurchase program expired on December 31, 2024,2025, with $1.1$4.3 million of remainingavailable availability.capacity.

•AlsoDuring in 2024,2025, we completed two other privately negotiated stock repurchases offor an aggregate of 250,000200,000 shares of our common stock forat a total purchase price of approximately$10.4 $12.5million, million.excluding excise tax. These repurchases were supplemental to our 20242025 stock repurchase program and did not impact the amount of permitted repurchases under the program.

•In 2024,2025, we repurchased a total of 327,085211,748 shares of our common stock, or 4.6%3.12% of theour December 31, 20232024 outstanding shares. For 2024,the year ended December 31, 2025, these repurchases benefited earnings per share by $0.14.$0.10.

•On December 19,18, 2024,2025, our Board of Directors approved the renewal and increase of our stock repurchase program for 2025.2026. The 20252026 stock repurchase program authorizes us to purchase up to $5.0$10.0 million of our outstanding shares of common stock from January 1, 20252026 through December 31, 2025.2026.

◦In the first quarter of 2025, S&P Global Market Intelligence ranked Red River Bank 15th14th of the top 50 best-performingbest communitydeposit banksfranchises in 20232024 for banks with assets between $3.0 and $10.0 billion.

Net income for the year ended December 31, 2024,2025, was $42.8 million, or $6.38 diluted EPS, an increase of $8.5 million, or 24.9%, compared to $34.2 million, or $4.95 diluted EPS, a decrease of $644,000, or 1.8%, compared to $34.9 million, or $4.86 diluted EPS, for the year ended December 31, 2023.2024. The decreaseincrease in net income was mainly due to a $2.3$16.3 million increase in net interest income, partially offset by a $3.9 million increase in operating expenses, a $673,000$2.2 decreasemillion increase in noninterestincome income,tax andexpense, a $465,000$1.1 million increase in the provision for credit losses, partially offset byand a $2.9$477,000 million increasedecrease in net interestnoninterest income. The return on assets for the year ended December 31, 2024,2025, was 1.11%,1.33%, compared to 1.15%1.11% for the prior year. The return on equity was 11.02%12.58% for the year ended December 31, 2024,2025, compared to 12.44%11.02% for the prior year. Our efficiency ratio for the year ended December 31, 2024,2025, was 60.29%,55.84%, compared to 59.39%60.29% for the year ended December 31, 2023.2024.

The Federal Reserve sets the target federal funds rate, which is the cost of immediately available overnight funds, and influences other market rates, such as the prime rate. These market rates impact pricing of certain assets and liabilities used by financial institutions. In 2023, the interest rate environment trended upward. The FOMC increased the federal funds rate by 50 bps in the first quarter of 2023, by 25 bps in the second and third quarters of 2023, then kept the rate consistent through the second quarter of 2024. Late in the third quarter of 2024, the FOMC decreased the federal funds rate by 50 bps,bps in each of the third and fourth quarters, resulting in a target federal funds range of 4.25%-4.50%. In 2025, the FOMC reduced the federal funds rate by 25 bps in the third quarter and an additional 50 bps duringin the fourth quarter of 2024,quarter, reducing the target federal funds range to 4.25%-4.50%.3.50%-3.75%. The average effective federal funds rate was 5.14%4.21% for 20242025 compared to 5.03%5.14% for 2023.2024. The net interest income and net interest margin FTE increased for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024.

As of December 31, 2024,2025, the target federal funds range was 4.25%-4.50%.3.50%-3.75%. The market’s expectation is that the FOMC may lower the target federal funds range ofby 25-50 bps in 2026. Income on short-term liquid assets follows the target federal funds raterange, bywhich atwe leastexpect 25to bpsdecrease in 2025.2026. In 2025, we anticipate receiving approximately $101.0 million in securities cash flows with an average yield of 3.01%, and2026, we project approximately $194.0$261.4 million of fixed rate loans willat 5.85% to mature withand an$434.0 average yieldmillion of 6.04%.floating rate loans at 6.24% to reprice. We expect to redeploy these balances into loans with slightly higher yieldingrates. assets.We Additionally,also expect to receive $125.3 million in 2025,securities cash flows at 3.69%, which we plan to redeploy into securities at higher yields. Rates on interest-bearing transaction deposits could be lowered with target federal funds range reductions. We expect $541.9$573.9 million ofin time deposits at 3.57% to mature in 2026, with anthe averageopportunity rateto ofreprice 4.10%,slightly which we anticipate repricing into lower cost deposits.lower. As of December 31, 2024,2025, floating rate loans were 16.0%19.3% of loans HFI, and floating rate transaction deposits were 8.1% of interest-bearing transaction deposits. Depending on balance sheet activity and the movement in interest rates,rate environment, we expect the net interest income and net interest margin FTE to improveincrease slightly during the first half of 2025.2026.

(1)Includes average outstanding balances of loans HFS of $2.9 million andfor $2.4each million forof the years ended December 31, 20242025 and 2023, respectively.2024.

The provision for credit losses for the year ended December 31, 2024,2025, totaledwas $1.2$2.3 million,million for loans, an increase of $465,000$1.1 million from $735,000$1.2 million for the year ended December 31, 2023.2024. The provision for credit losses for 2024 included $1.0 million for loans and $200,000 for unfunded commitments. TheIn primary drivers of2025, the increasehigher wereprovision thewas potentialprimarily economicdriven challengesby resultingloan fromgrowth, thelingering recentimpacts inflationaryrelated environment,to changing monetary policy, current economic forecasts,inflation and loantariffs, growth.and Ingreater theuncertainty secondwith halffuture of 2024, we had an increase in unfunded loan commitments, which also contributed to the increase in provision for credit losses.unemployment. We will continue to evaluate future provision needs in relation to current economic situations, loan growth, trends in asset quality, forecasted information, and other conditions influencing loss expectations.

Noninterest income decreased $673,000$477,000 to $20.4$20.0 million for the year ended December 31, 2024,2025, compared to $21.1$20.4 million for the prior year. The decrease in noninterest income was primarily due to lower income from SBIC limited partnerships of which the Bank is a member andmember, lower loan and deposit fee income, and lower net debit card income, partially offset by higher mortgagebrokerage loanincome, incomehigher other income, and neta debitgain cardon income.equity securities.

Mortgage loanBrokerage income increased $525,000$942,000 to $2.5$4.7 million for 2024,2025, compared to $2.0 million for 2023, mainly2024, due to anincreased increaseinvesting inactivity theby averageclients. loanAssets amount,under whichmanagement generatedwere higher$1.33 mortgagebillion loanand fee$1.14 income.billion as of December 31, 2025 and 2024, respectively.

Operating expenses increased $2.3$3.9 million to $70.1 million for the year ended December 31, 2025, compared to $66.2 million for the year ended December 31, 2024, compared to $63.9 million for the year ended December 31, 2023.2024. The increase in operating expenses was mainly due to higher personnel expenses, technology expenses, legal and professional expenses, and occupancy and equipment expenses, loan and deposit expenses, other operating expenses, technology expenses, and data processing expense, partially offset by lower other taxeslegal and loan and depositprofessional expenses.

Personnel expenses are the largest component of operating expenses and include payroll expenses, incentive compensation, benefit plans, health insurance, and payroll taxes. Personnel expenses increased $1.4$3.1 million to $38.6$41.7 million for 20242025, compared to $37.2 million in 2023.2024. This increase was primarily due to higheran compensation expense as a result of net staff changes, partially offset by a decreaseincrease in medicalheadcount, insuranceincreased expense.revenue-based commission compensation, annual raises, and higher personnel-related accruals. As of December 31, 20242025 and 2023,2024, we had 369375 and 362369 total employees, respectively.

TechnologyOccupancy and equipment expenses increased $423,000$452,000 to $3.2$7.1 million for 20242025, compared to $2.8 million for 2023.2024. This increase was primarily due to implementingan newincrease softwarein maintenance expense, a full period of expenses related to our New Orleans market expansion in 2024, expenses related to our Acadiana market expansion in 2025, and $51,000nonrecurring expenses related to renovations of a banking center and to the main office building. 2024 had $111,000 of nonrecurring expenses related to our new banking center location and new administrative office, both in the New Orleans market.market, and other 2024 property renovations.

The purpose of this discussion and analysis is to focus on significant changes in the financial condition of Red River Bancshares, Inc. on a consolidated basis from December 31, 2025 through MarchJune 31,30, 2026, and on our results of operations for the quarters ended MarchJune 31, 2026 and December 31, 2025, and for the three months ended March 31,30, 2026 and March 31, 2026, and for the six months ended June 30, 2026 and June 30, 2025.

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

FIRSTSECOND QUARTER 2026 FINANCIAL AND OPERATIONAL HIGHLIGHTS

•For the firstsecond quarter of 2026, the return on assets was 1.44%,1.43%, and the return on equity was 12.95%.12.41%.

•Net interest income increased slightly,$563,000, or 2.0%, and net interest margin FTE wasincreased consistent10 atbps to 3.61% for the second quarter of 2026, compared to 3.51% for the first quarter of 2026 and the prior quarter.

•Deposits totaled $2.91 billion as of June 30, 2026, a decrease of $40.9 million, or 1.4%, from $2.95 billion as of March 31, 2026, a decrease of $17.5 million, or 0.6%, compared to $2.96 billion as of December 31, 2025.2026. This decrease was primarily due to the seasonal outflow of funds from publiccustomer entityincome customerstax exceedingpayments, increasedalong commercialwith deposits.fluctuations in lawyer trust accounts due to the timing of legal settlements.

•The 2026 stock repurchase program authorizes us to purchase up to $10.0 million of our outstanding shares of common stock from January 1, 2026 through December 31, 2026. There was no stock repurchase activity in the first quarterhalf of 2026. As of MarchJune 31,30, 2026, the 2026 stock repurchase program had $10.0 million of available capacity.

•We continuecontinued to implement our organic expansion plan.plan Thewith the following construction projects are in process:

◦In the Northwest market, therewe arecompleted twoour projectsrelocation in process with the goal of relocating personnel and vacating the Market Street location in Shreveport, Louisiana.projects. In May 2026, we plan to relocaterelocated our Northwest market leadership and lenders to our newly constructed Shreveport Commercial and Private Banking Loan and Deposit Production Office Building,LDPO, which is adjacent to our East Kings banking center. We thenalso plan to relocaterelocated the Market Street banking center, serving our retail banking centercustomers, to the nearby American TowersTower building, which will havehas a more efficient cost structure.

◦In the New Orleans market, we haverecently leased and arecompleted remodeling a portion of the bottomground floor of the Energy Centre Building on Poydras Street. CompletionOn isJuly expected20, in the third quarter of 2026. Once complete,2026, we plan to relocaterelocated the Baronne Street retail banking center and the New Orleans market leadership and lenders to this updated, convenient, and visible location.

◦In the Acadiana market, weconstruction held a ground-breaking ceremonyis in Januaryprocess 2026 foron our second full-service banking center in this market, located on Camellia Boulevard in Lafayette, Louisiana. We expect this location to open early in 2027.

Net income for the firstsecond quarter of 2026 was $11.8 million, or $1.78 diluted EPS, a decrease of $208,000, or 1.7%, compared to $12.0 million, or $1.81 diluted EPS, an increase of $556,000, or 4.9%, compared to $11.4 million, or $1.73 diluted EPS, for the fourthfirst quarter of 2025.2026. The increasedecrease in net income was due to a $1.0 million decreaseincrease in operating expensesexpenses, andpartially offset by a $163,000$563,000 increase in net interest income, partially offset by a $416,000$205,000 decreaseincrease in noninterest incomeincome, and a $192,000$60,000 increasedecrease in income tax expense. The return on assets for the firstsecond quarter of 2026 was 1.44%,1.43%, compared to 1.38%1.44% for the fourthfirst quarter of 2025.2026. The return on equity was 12.41% for the second quarter of 2026, compared to 12.95% for the first quarter of 2026, compared to 12.60% for the fourth quarter of 2025.2026. Our efficiency ratio for the firstsecond quarter of 2026 was 52.37%,54.25%, compared to 54.99%52.37% for the fourthfirst quarter of 2025.2026.

Net income for the threesix months ended MarchJune 31,30, 2026, was $12.0$23.7 million, or $1.81$3.59 diluted EPS, an increase of $1.6$3.2 million, or 15.6%,15.5%, compared to $10.4$20.5 million, or $1.52$3.03 diluted EPS, for the threesix months ended MarchJune 31,30, 2025. The increase in net income was due to a $3.8$6.9 million increase in net interest income, partially offset by a $739,000$1.6 decrease in noninterest income, a $662,000million increase in operating expenses, a $474,000$856,000 increase in income tax expense, a $719,000 decrease in noninterest income, and a $300,000$600,000 increase in the provision for credit losses. The return on assets for the threesix months ended MarchJune 31,30, 2026, was 1.44%, compared to 1.32%1.31% for the threesix months ended MarchJune 31,30, 2025. The return on equity was 12.95%12.68% for the threesix months ended MarchJune 31,30, 2026, compared to 12.85%12.55% for the threesix months ended MarchJune 31,30, 2025. Our efficiency ratio for the threesix months ended MarchJune 31,30, 2026, was 52.37%,53.32%, compared to 55.51%56.20% for the threesix months ended MarchJune 31,30, 2025.

In the first half of 2025, the target range for the federal funds rate was consistent at 4.25%-4.50%. In the second half of 2025, the FOMC decreased the federal funds rate by 25 bps in the third quarter and an additional 50 bps in the fourth quarter, reducing the target federal funds range to 3.50%-3.75%. The target range for the federal funds rate was unchanged in the first half of 2026. The average effective federal funds rate was 3.63% for the second quarter of 2026, compared to 3.64% for the first quarter of 2026. The average effective federal funds rate was 3.64% for the first quartersix months of 2026, compared to 3.90% for the fourth quarter of 2025, and 4.33% for the first quartersix months of 2025. Net interest income was slightly higher in the first quarter of 2026, compared to the prior quarter. Net interest margin FTE for the first quarter of 2026 was consistent with the previous quarter. Net interest income and net interest margin FTE increased in the firstsecond quarter of 20262026, compared to the firstprior quarterquarter. ofAlso, net interest income and net interest margin FTE increased for the six months ended June 30, 2026, compared to the six months ended June 30, 2025.

FirstSecond Quarter of 2026 vs. FourthFirst Quarter of 20252026

Net interest income for the firstsecond quarter of 2026 was $28.4$29.0 million, which was $163,000,$563,000, or 0.6%,2.0%, higher than the fourthfirst quarter of 2025,2026, due to a $217,000$385,000 decrease in interest expense,expense slightly offset byand a $54,000$178,000 decreaseincrease in interest and dividend income. The decrease in interest expense was primarily due to ourlower loweringaverage of selectedinterest-bearing deposit rates.balances. The decreaseincrease in interest and dividend income was driven by a $119,000$689,000 increase in loan income due to higher yields, and included $98,000 of additional interest income resulting from the successful resolution of nonaccrual loans in the second quarter. The increase in interest and dividend income was partially offset by a $443,000 decrease in loanincome income,on whichshort-term wasliquid impactedassets by two less accrual days in the first quarter of 2026 compared to the prior quarter. Also contributing to this decrease wasand a $29,000$66,000 decrease in securities income, whichresulting wasfrom impacted by the repricing of variable rate securities as a result of the rate decreases in the fourth quarter of 2025. Income on short-term liquid assets increased $95,000 as a result of higherlower average balances in these assets, partially offset by the lower rate environment.assets.

The net interest margin FTE was 3.51%3.61% for the firstsecond quarter of 2026, which was consistent10 withbps higher than the prior quarter. The net interest margin FTE was impacted by a consistenthigher yield on loans, a lower yield on short-term liquid assets and securities,loans and lower deposit costs. The average rate on new and renewed loans was 6.71%6.38% for the firstsecond quarter of 2026 and 6.72%6.71% for the prior quarter. The yield on short-term liquid assets decreased 23 bps due to the reduction of the target federal funds rate in December. The yield on securities decreased by 2 bps due to repricing of variable rate securities. The cost of deposits decreased 34 bps to 1.47%,1.43%, compared to 1.50%1.47% for the previous quarter, which was driven by ourlower lowering of selectedtime deposit rates.

As of MarchJune 31,30, 2026, the target federal funds range was 3.50%-3.75%. TheDue market’sto expectationuncertainty is thatregarding the forecasted interest rate environment, we are modeling a consistent federal funds range mayfor remainthe consistentsecond inhalf of 2026. During the remainder of 2026, we project $201.4$157.4 million of fixed rate loans at 5.87%5.91% to mature, which we expect to redeploy into loans with slightly higher rates. We have $463.8$489.1 million of floating rate loans at 6.16%,6.14%, which we expect to remain at a consistent rate. Based on the current rate forecast, we expect the total loan yield to be slightly higher in the secondthird quarter of 2026. WeDuring the remainder of 2026, we also expect to receive $90.9$56.8 million in securities cash flows at 3.66%,3.69%, for which we planare tocurrently redeployevaluating intoreinvestment securitiesoptions atas higherwe yields.consider balance sheet management strategies. We project $515.0$449.6 million in time deposits at 3.50%3.44% to mature, which may reprice at slightly lower rates considering maturity volumes and renewal pricing. As of MarchJune 31,30, 2026, floating rate loans were 20.6%21.6% of loans HFI, and floating rate transaction deposits were 9.2%9.7% of interest-bearing transaction deposits. Depending on balance sheet activity and interest rate competition, we expect net interest income and net interest margin FTE to increase slightly in the second quarterhalf of 2026.

The following table presents average balance sheet information, interest income, interest expense, and the corresponding average yields earned and rates paid for the three months ended June 30, 2026 and March 31, 2026 and December 31, 2025:

(1)Includes average outstanding balances of loans HFS of $2.7$4.7 million and $3.3$2.7 million for the three months ended MarchJune 31,30, 2026 and DecemberMarch 31, 2025,2026, respectively.

ThreeSix Months Ended MarchJune 31,30, 2026 vs. ThreeSix Months Ended MarchJune 31,30, 2025

Net interest income for the threesix months ended MarchJune 31,30, 2026 was $28.4$57.4 million, which was $3.8$6.9 million, or 15.4%,13.8%, higher than $24.6$50.4 million for the threesix months ended MarchJune 31,30, 2025. Net interest income increased due to a $3.3$5.9 million increase in interest and dividend income, combined with a $457,000$1.0 million decrease in interest expense.

The increase in interest and dividend income for the threesix months ended MarchJune 31,30, 2026, when compared to the threesix months ended MarchJune 31,30, 2025, was due to higher interest income on loans and securities, partially offset by a decrease in interest income on short-term liquid assets. Loan income increased $3.3$6.0 million due to higher average loan balances, combined with higher rates on new and renewed loans compared to the existing portfolio yield. Securities income increased $988,000$1.6 million primarily due to purchasing higher yielding securities, combined with higher average securities balances. Interest income on short-term liquid assets decreased $924,000$1.7 million due to lower average balances on these assets, combined with the FOMC lowering the federal funds rate in the second half of 2025.

Net interest margin FTE increased 2927 bps to 3.51%3.56% for the threesix months ended MarchJune 31,30, 2026, from 3.22%3.29% for the threesix months ended MarchJune 31,30, 2025, primarily due to higher yields on securities and loans, combined with lower deposit costs. These positive variances were partially offset by a 7576 bp decrease to the yield on short-term liquid assets, due to the FOMC lowering the federal funds rate in the second half of 2025.

The yield on securities increased 2923 bps mainly due to purchasing $145.3$113.6 million of securities in the lastsecond nine monthshalf of 2025 and an additional $24.7$36.6 million of securities in the first quarterhalf of 2026, at favorable rates. The yield on loans increased 1916 bps due to higher rates on new and renewed loans compared to the existing portfolio yield. The cost of deposits decreased 14 bps to 1.47%1.45% for the threesix months ended MarchJune 31,30, 2026, from 1.61%1.59% for the threesix months ended MarchJune 31,30, 2025, due to a 22 bp decrease in the rate on interest-bearing deposits. Within total interest-bearing deposits, the rate on time deposits and interest-bearing transaction deposits decreased 3430 and 1316 bps, respectively. These decreases occurred as we adjusted rates on selected transaction and time deposits during the second half of 2025 in response to the federal funds rate decreases by the FOMC.

The following table presents average balance sheet information, interest income, interest expense, and the corresponding average yields earned and rates paid for the threesix months ended MarchJune 31,30, 2026 and 2025:

(1)Includes average outstanding balances of loans HFS of $2.7$3.7 million and $2.6 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.

The provision for credit losses for the firstsecond quarter of 2026 was $750,000 for loans, which was consistent with the prior quarter. The provision for credit losses in the first quarterand second quarters of 2026 was due to continued loan growth, lingering impacts related to inflation and tariffs, geopolitical uncertainty, and greater uncertainty with future labor market trends.trends, Theand provision in the fourth quarter of 2025 was primarily driven byslight loan growth, lingering impacts related to inflation and tariffs, and greater uncertainty with future unemployment.growth. We will continue to evaluate future provision needs in relation to current economic situations, loan growth, trends in asset quality, forecasted information, and other conditions influencing loss expectations.

The provision for credit losses for the firstsix quartermonths ofended June 30, 2026 was $750,000$1.5 million for loans, whichan wasincrease $300,000of higher$600,000, thanor 66.7%, from $900,000 for the provisionsix formonths creditended lossesJune of30, $450,0002025. The increase for the first quartersix of 2025. The increase in the first quartermonths of 2026 was due to continued loan growth, lingering impacts related to inflation and tariffs, geopolitical uncertainty, and greater uncertainty with future labor market trends.trends, and slight loan growth. The provision infor the first quartersix months of 2025 was related to loan growth, combined with uncertainty regarding tariffs and trade.

FirstSecond Quarter of 2026 vs. FourthFirst Quarter of 20252026

Noninterest income decreasedincreased $416,000$205,000 to $4.7 million for the second quarter of 2026, compared to $4.5 million for the first quarter of 2026, compared to $4.9 million for the fourth quarter of 2025.2026. The decreaseincrease in noninterest income was mainly due to lowerhigher brokeragemortgage loan income and othernet debit card income, partially offset by higherlower SBIC income.

BrokerageMortgage loan income decreasedincreased $348,000$323,000 to $939,000$928,000 for the firstsecond quarter of 2026, compared to the prior quarter. The lower income in the first quarter of 2026 was due to decreasedincreased investingpurchase activity by clients. Assets under management were $1.35 billion as of March 31, 2026, and $1.33 billion as of December 31, 2025.activity.

The SBIC partnerships reported a loss of $105,000$291,000 in the firstsecond quarter of 2026, compared to a loss of $197,000$105,000 in the previous quarter. These losses were mainly due to fund value adjustments as an SBIC fund continues its wind-down phase. We expect SBIC income or loss to fluctuate in future quarters.

ThreeSix Months Ended MarchJune 31,30, 2026 vs. ThreeSix Months Ended MarchJune 31,30, 2025

Noninterest income decreased $739,000$719,000 to $4.5$9.3 million for the threesix months ended MarchJune 31,30, 2026, compared to $5.3$10.0 million for the threesix months ended MarchJune 31,30, 2025. The decrease in noninterest income was mainly due to lower brokerageSBIC income and SBICbrokerage income, partially offset by higher mortgage loan income.

SBIC partnerships reported a loss of $105,000$395,000 for the threesix months ended MarchJune 31,30, 2026, compared to $280,000$327,000 of income for the same period prior year. This variance was mainly due to fund value adjustments as an SBIC fund entered its wind-down phase in mid-2025.

FirstSecond Quarter of 2026 vs. FourthFirst Quarter of 20252026

Operating expenses decreasedincreased $1.0 million to $18.3 million for the second quarter of 2026, compared to $17.3 million for the first quarter of 2026, compared to $18.3 million for the fourth quarter of 2025.2026. The decreaseincrease in operating expenses was mainly due to lower personnel expenses,higher data processing expense, personnel expenses, loan and deposit expenses, and otheroccupancy taxes.and equipment expenses.

Data processing expense decreasedincreased $336,000$381,000 to $377,000$758,000 for firstthe second quarter of 2026, compared to the prior quarter. ThisThe decreasefirst wasquarter mainlyof attributable2026 tobenefited from the receipt of a $389,000 periodic refund from our data processing center in the first quarter of 2026.center.