Red River Bancshares (RRBI) risk factors, FY2025 10-K

Risks Related to Our Credit Activities

1. 01We may not be able to adequately measure and limit our credit risk, which could lead to unexpected losses
2. 02Our CRE loan portfolio exposes us to risks that may be greater than the risks related to other types of loans
3. 03Our business may be adversely affected by credit risk associated with residential property23% rewritten
4. 04A 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
5. 05Our ACL may prove to be insufficient to absorb losses inherent in our loan portfolio
6. 06Appraisals and other valuation techniques we use in evaluating and monitoring loans secured by real property, OREO, and repossessed personal property may not accurately describe the net value of the asset
7. 07The amount of our nonperforming assets may increase significantly, resulting in additional losses, costs, and expenses
8. 08The 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
9. 09We could be subject to losses, regulatory action, or reputational harm due to fraudulent and negligent acts on the part of loan applicants, our employees, and other parties

Risks Related to Interest Rates and Economic Conditions

1. 10We are subject to risks due to changing interest rates
2. 11A 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
3. 12As a business operating in the financial services industry, our business and operations may be adversely affected in numerous and complex ways
4. 13The borrowing needs of our customers may increase, especially during a challenging economic environment, which could result in increased borrowing against our contractual obligations to extend credit
5. 14Negative conditions in the health care sector could lead to increased credit losses in our loan portfolio47% rewritten
6. 15Volatility 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 portfolio24% rewritten
7. 16Natural disasters and other external events could result in a disruption of our operations and increases in credit losses57% rewritten
8. 17Additionally, our business could be adversely affected by the effects of war and international conflict, civil unrest, inflation, trade and tariff policies, trade wars, labor market and supply chain constraints, perceived or actual stock market bubbles, government shutdowns, or a widespread outbreak of pandemicsNew

Risks Related to Our Competition and Services

1. 18Our ability to attract and retain customers and maintain our reputation is critical to our growth, profitability, and market share28% rewritten
2. 19We may not be able to implement our expansion strategy, which may adversely affect our ability to maintain our historical earnings trends
3. 20or 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
4. 21New lines of business, products, product enhancements, services, or technologies may subject us to additional risks65% rewritten
5. 22We may be adversely affected by the soundness of other financial institutions

Risks Related to Our Financial Stability

1. 23We may need to rely on financial markets to provide needed capital in the future, and if we fail to maintain sufficient capital, we may not be able to satisfy regulatory requirements or maintain adequate protection against financial stress
2. 24A lack of liquidity could impair our ability to fund operations
3. 25The fair value of our investment securities can fluctuate due to factors outside of our control, which could have a material adverse effect on our business and profitability

Risks Related to Our Operations

1. 26We rely heavily on our executive management team, directors, and other key employees, and we could be adversely affected by an unexpected loss of their service
2. 27We are subject to laws regarding the privacy, information security, and protection of personal information. Unauthorized access, cyber-crime, and other threats to data security may require significant resources, harm our reputation, and otherwise cause harm to our business
3. 28We rely on third parties to provide key components of our business infrastructure, and a failure of these parties to perform for any reason could disrupt our operations
4. 29We are subject to claims, litigation, and other proceedings that could result in legal liability
5. 30Our financial results depend on management’s selection of accounting methods and certain assumptions and estimates
6. 31We 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
7. 32We utilize third-party companies to support our investment group, and we may be adversely affected by the condition or performance of our third-party brokerage partners
8. 33Climate related events and legislative and societal responses regarding climate change present risks to our business26% rewritten
9. 34The development and use of AI presents risks and challenges that may adversely affect our businessNew

Risks Related to an Investment in Our Common Stock

1. 35The market price of our common stock may be subject to substantial fluctuations, which may make it difficult to sell shares at the volumes, prices, or times desired
2. 36Future sales or the availability for sale of substantial amounts of our equity securities in the public market could adversely affect the prevailing market price of our common stock and could impair our ability to raise capital through future sales of equity securities
3. 37Our 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
4. 38Our directors and named executive officers have significant control over our business37% rewritten
5. 39The rights of our common shareholders may be subordinate to the holders of any debt securities or preferred stock that we may issue in the future
6. 40Our dividend policy may change without notice, and our future ability to pay dividends is subject to restrictions
7. 41Our corporate governance documents, and certain corporate and banking laws applicable to us, could make a takeover more difficult33% rewritten
8. 42capital 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 organizationNew
9. 43Securities analysts may not continue coverage on us or may publish unfavorable reports, which could adversely impact the price of our common stock

Risks Related to the Regulation of Our Industry

1. 44We operate in a highly regulated environment and the laws and regulations that govern our operations, corporate governance, executive compensation, and accounting principles, or changes in them, or our failure to comply with them, could subject us to regulatory action or penalties
2. 45New activities and expansion require regulatory approvals, and failure to obtain them may restrict our growth
3. 46Federal and state banking agencies periodically conduct examinations of our business, and our failure to comply with any supervisory actions as a result of such examinations could result in regulatory action or penalties
4. 47Legislative and regulatory actions taken now or in the future, may increase our costs21% rewritten
5. 48Federal 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
6. 49We are generally unable to control the amount of premiums that we are required to pay for FDIC insurance