QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2026
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 333-205986
RIVER FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
ALABAMA
46-1422125
( State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
2611 Legends Drive
Prattville, Alabama
36066
(Address of principal executive offices)
(Zip Code)
(334) 290-1012
“Registrant’s telephone number, including area code”
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
None
None
None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☒
Non-accelerated filer
☐
Smaller reporting company
☒
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of May 1, 2026, the registrant had 7,813,185 shares of common stock, $1.00 par value per share, outstanding.
This Quarterly Report on Form 10-Q contains forward-looking statements that reflect our current views with respect to, among other things, future events and financial performance, which involve substantial risks and uncertainties. Certain statements made in this Quarterly Report on Form 10-Q are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). Forward-looking statements are not historical facts and include any statement that, without limitation, may predict, forecast, indicate or imply future results, performance or achievements instead of historical or current facts and may contain words like “anticipates,” “approximately,” “believes,” “budget,” “can,” “could,” “continues,” “contemplates,” “estimates,” “expects,” “forecast,” “intends,” “may,” “might,” “objective,” “outlook,” “predicts,” “probably,” “plans,” “potential,” “project,” “seeks,” “shall,” “should,” “target,” “will,” or the negative of these terms and other words, phrases, or expressions with similar meaning.
Any forward-looking statements contained in this Quarterly Report on Form 10-Q are based upon our historical performance and on our current plans, estimates and expectations in light of information currently available to us. The inclusion of forward-looking information should not be regarded as a representation by us that the future plans, estimates or expectations will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Forward-looking statements involve risks and uncertainties which may cause actual results to differ materially from those projected in the forward-looking statements, and the Company cannot give assurances that such statements will prove to be correct. Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information or otherwise. Given these uncertainties, the reader should not place undue reliance on forward-looking statements as a prediction of actual results. Factors that could cause actual results to differ materially from those projected or estimated by us include those that are discussed herein as well as in our Annual Report on Form 10-K for the year ended December 31, 2025, under “Part I, Item 1A. – Risk Factors,” as well as other unknown risks and uncertainties. Factors that might cause such differences include, but are not limited to:
Acquisition related factors:
•
The businesses of any bank acquired by us may not be integrated successfully or the integration may be more difficult, time-consuming or costly than expected;
•
The expected growth opportunities or costs savings from such transactions may not be fully realized or may take longer to realize than expected;
•
Revenues following such transactions may be lower than expected as a result of losses of customers or other reasons;
•
Deposit attrition, operating costs, customer loss and business disruption following such transactions, including difficulties in maintaining relationships with employees, may be greater than expected;
•
Governmental approvals of such transactions may not be obtained on the proposed terms or expected timeframe;
•
Reputational risks and the reaction of the companies’ customers may be adverse to such transactions;
•
Diversion of management time on merger related issues may have negative effects on day-to-day operations.
Factors affecting our Bank generally:
•
Changes in asset quality and credit risk of our Bank;
•
Inflation;
•
Customer acceptance of our products and services;
•
Customer borrowing, repayment, investment and deposit practices;
•
The negative impact on profitability imposed on us by a compressed net interest margin on loans and other extensions of credit that affects our ability to lend profitably and to price loans effectively in the face of competitive pressures;
•
Our liquidity requirements could be adversely affected by changes in our assets and liabilities;
•
Our ability to attract, develop and retain qualified banking professionals;
•
Failure to attract or retain stable deposits at reasonable cost that is competitive with the larger international, national, and regional financial service providers with which we compete;
•
Significant reliance on loans secured by real estate and the associated vulnerability to downturns in the local real estate market, natural disasters and other variables impacting the value of real estate;
3
•
The introduction, withdrawal, success and timing of business initiatives;
•
The impact, extent, and timing of technological changes;
•
A weakening of the economies in which we conduct operations may adversely affect our operating results;
•
The U.S. legal and regulatory framework, changes in such framework, or official or informal mandates directed by state and federal regulators in reports of examination or other mandates could adversely affect our operating results;
•
Potential negative impacts upon the economy and certain industries as a result of the imposition of federal tariffs;
•
The interest rate environment may compress margins and adversely affect net interest income and negatively affect the market value of state, county and municipal securities held for investment;
•
Competition from other financial services companies in our markets could adversely affect operations; and
•
Interruption in our business and the businesses of our customers caused by a downturn in the economy and possible weather-related conditions such as tornadoes or hurricanes.
You should also consider carefully the risk factors referred to in Item 1A of Part IIof this Form 10-Q, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements and could materially and adversely affect our business, operating results and financial condition. The risks discussed in this report are factors that, individually or in the aggregate, management believes could cause our actual results to differ materially from expected and historical results. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider such disclosures to be a complete discussion of all potential risks or uncertainties. Factors not here or there listed may develop or, if currently extant, we may not have yet recognized them.
The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Securities held-to-maturity, at amortized cost (fair value of $97,085 and $98,260, respectively)
116,108
117,208
Securities available-for-sale, at fair value (amortized cost of $712,240 and $670,980, respectively)
665,953
628,625
Loans held for sale
11,596
9,483
Loans, net of deferred fees and discounts
2,739,311
2,713,516
Less allowance for credit losses
(37,871
)
(36,011
)
Net loans
2,701,440
2,677,505
Premises and equipment, net
52,064
50,816
Accrued interest receivable
17,997
17,473
Bank owned life insurance
54,578
54,121
Foreclosed assets
1,557
1,537
Deferred income taxes, net
23,578
22,648
Core deposit intangible
451
533
Goodwill
27,817
27,817
Restricted equity securities, at cost
8,026
7,882
Affordable housing tax credit investments
34,808
30,630
Other assets
9,706
9,616
Total assets
$
3,915,239
$
3,787,385
Liabilities and Shareholders' Equity
Noninterest-bearing deposits
$
703,569
$
666,615
Interest-bearing deposits
2,746,723
2,660,508
Total deposits
3,450,292
3,327,123
Federal Home Loan Bank advances
100,000
100,000
Subordinated debentures, net of loan costs
39,640
39,633
Accrued interest payable and other liabilities
21,328
20,769
Total liabilities
3,611,260
3,487,525
Common stock related to 401(k) Employee Stock Ownership Plan
6,233
6,233
Stockholders' Equity
Preferred stock ($0.01 par value; 1,000,000 shares authorized; no shares issued or outstanding)
-
-
Common stock ($1 par value; 15,000,000 shares authorized; 7,876,841 and 7,798,639 shares issued; 7,812,935 and 7,745,983 shares outstanding at March 31, 2026 and December 31, 2025, respectively)
7,877
7,799
Additional paid-in capital
142,187
140,567
Retained earnings
196,046
189,731
Accumulated other comprehensive loss
(36,101
)
(33,209
)
Unvested restricted stock
(3,575
)
(3,275
)
Treasury stock at cost (63,906 and 52,656 shares, respectively)
(2,455
)
(1,753
)
Common stock related to 401(k) Employee Stock Ownership Plan
(6,233
)
(6,233
)
Total stockholders' equity
297,746
293,627
Total equity
303,979
299,860
Total liabilities and stockholders' equity
$
3,915,239
$
3,787,385
The accompanying notes are an integral part of these consolidated financial statements.
5
RIVER FINANCIAL CORPORATION
Unaudited Consolidated Statements of Income
(in thousands except per share data)
For the Three Months Ended:
March 31,
2026
2025
Interest income:
Loans, including fees
$
43,869
$
39,976
Taxable securities
5,651
4,669
Nontaxable securities
625
388
Federal funds sold
303
181
Other interest income
667
999
Total interest income
51,115
46,213
Interest expense:
Deposits
16,390
16,406
Short-term borrowings
1
172
Federal Home Loan Bank advances
914
1,472
Subordinated debentures
469
413
Total interest expense
17,774
18,463
Net interest income
33,341
27,750
Provision for credit losses
2,013
1,686
Net interest income after provision for credit losses
31,328
26,064
Noninterest income:
Service charges and fees
2,432
2,134
Investment brokerage revenue
377
295
Mortgage operations
1,695
1,031
Bank owned life insurance income
457
408
Net gain (loss) on sales of investment securities
8
(3,399
)
Other noninterest income
762
1,391
Total noninterest income
5,731
1,860
Noninterest expense:
Salaries and employee benefits
11,605
9,758
Occupancy expenses
1,212
1,022
Equipment rentals, depreciation, and maintenance
625
547
Telephone and communications
126
112
Advertising and business development
269
256
Data processing
1,112
1,129
Foreclosed assets, net
33
14
Federal deposit insurance and other regulatory assessments
702
778
Legal and other professional services
330
1,310
Other operating expenses
2,423
1,935
Total noninterest expense
18,437
16,861
Income before income taxes
18,622
11,063
Provision for income taxes
4,475
2,605
Net income
$
14,147
$
8,458
Basic net earnings per common share
$
1.81
$
1.09
Diluted net earnings per common share
$
1.79
$
1.08
Dividends per common share
$
1.00
$
0.54
The accompanying notes are an integral part of these consolidated financial statements.
6
RIVER FINANCIAL CORPORATION
Unaudited Consolidated Statements of Comprehensive Income
(in thousands)
For the Three Months Ended
March 31,
2026
2025
Net income
$
14,147
$
8,458
Other comprehensive (loss) income, net of tax:
Investment securities available-for-sale:
Net unrealized (losses) gains
(3,783
)
11,703
Income tax effect
951
(2,939
)
Reclassification adjustments for (gains) losses realized in net income
(8
)
3,399
Income tax effect
2
(853
)
Reclassification adjustment for accretion of unrealized holding loss included in accumulated other comprehensive loss from the transfer of securities from available-for-sale to held-to-maturity
(72
)
(78
)
Income tax effect
18
20
Other comprehensive (loss) income, net of tax
(2,892
)
11,252
Comprehensive income
$
11,255
$
19,710
The accompanying notes are an integral part of these consolidated financial statements.
7
RIVER FINANCIAL CORPORATION
Unaudited Consolidated Statements of Changes in Stockholders' Equity
(in thousands except share and per share data)
For the Three Months Ended
Common Stock
Additional Paid In Capital
Retained Earnings
Accumulated Other Comprehensive Loss
Unvested Restricted Stock
Treasury Stock
Common Stock Related to ESOP
Total Stockholders' Equity
Balance at December 31, 2024
$
7,680
$
137,243
$
151,817
$
(61,658
)
$
(1,226
)
$
(1,701
)
$
(5,099
)
$
227,056
Net income
-
-
8,458
-
-
-
-
8,458
Other comprehensive income , net of tax
-
-
-
11,252
-
-
-
11,252
Exercise of stock options (14,178 shares)
14
178
-
-
-
-
-
192
Purchase of treasury stock (3,601 shares)
-
-
-
-
-
(115
)
-
(115
)
Restricted stock grants (101,000 shares)
101
3,055
-
-
(3,156
)
-
-
-
Sale of treasury shares (23,614 shares)
-
(8
)
-
-
-
760
-
752
Dividends declared ($0.54 per share)
-
-
(4,191
)
-
-
-
-
(4,191
)
Stock-based compensation expense
-
19
-
-
269
-
-
288
Change for ESOP related shares
-
-
-
-
-
-
(616
)
(616
)
Balance at March 31, 2025
$
7,795
$
140,487
$
156,084
$
(50,406
)
$
(4,113
)
$
(1,056
)
$
(5,715
)
$
243,076
Balance at December 31, 2025
$7,799
$140,567
$189,731
$(33,209)
$(3,275)
$(1,753)
$(6,233)
$293,627
Net income
-
-
14,147
-
-
-
-
14,147
Other comprehensive loss , net of tax
-
-
-
(2,892)
-
-
-
(2,892)
Exercise of stock options (60,552 shares)
61
1,027
-
-
-
-
-
1,088
Common stock withheld in net settlement upon exercise of stock options (3,042 shares)
-
(89)
-
-
-
-
-
(89)
Purchase of treasury stock (21,332 shares)
-
-
-
-
-
(926)
-
(926)
Restricted stock grants, net of forfeiture (17,650 shares)
17
560
-
-
(577)
-
-
-
Sale of treasury shares (10,082 shares)
-
106
-
-
-
224
-
330
Dividends declared ($1 per share)
-
-
(7,832)
-
-
-
-
(7,832)
Stock-based compensation expense
-
16
-
-
277
-
-
293
Balance at March 31, 2026
$7,877
$142,187
$196,046
$(36,101)
$(3,575)
$(2,455)
$(6,233)
$297,746
The accompanying notes are an integral part of these consolidated financial statements.
8
RIVER FINANCIAL CORPORATION
Unaudited Consolidated Statements of Cash Flows
(in thousands)
For the Three Months
Ended March 31,
2026
2025
Cash Flows From Operating Activities:
Net Income
$
14,147
$
8,458
Adjustments to reconcile net income to net cash from operating activities:
Provision for credit losses
2,013
1,686
Provision for losses on foreclosed assets
45
7
Amortization of securities
327
494
Accretion of securities
(413
)
(284
)
Realized net (gain) loss on sales of securities available-for-sale
(8
)
3,399
Accretion of discount on acquired loans
(2
)
(2
)
Accretion of deferred loan fees / costs
(1,580
)
(1,560
)
Amortization of core deposit intangible asset
82
110
Amortization of debt issuance costs
7
17
Stock-based compensation expense
293
289
Bank owned life insurance income
(457
)
(408
)
Depreciation and amortization of premises and equipment
861
811
(Gain) loss on sales of foreclosed assets
(12
)
3
Deferred income tax benefit
39
62
(Increase) decrease in operating assets and (decrease) increase in operating liabilities:
Loans held-for-sale
(2,113
)
861
Accrued interest receivable
(524
)
(952
)
Other assets
(90
)
36
Accrued interest payable and other liabilities
559
(550
)
Net cash from operating activities
13,174
12,477
Cash Flows Used For Investing Activities:
Activity in securities available-for-sale:
Sales of securities available-for-sale
5,172
59,459
Maturities, payments, calls of securities available-for-sale
17,085
12,092
Purchases of securities available-for-sale
(63,379
)
(70,982
)
Activity in securities held-to-maturity:
Maturities, payments, calls of securities held-to-maturity
1,127
1,146
Loan principal originations, net
(24,476
)
(47,863
)
Proceeds from sale of foreclosed assets
57
24
Purchases of premises and equipment
(2,109
)
(767
)
(Purchase) redemption of restricted equity securities, net
(144
)
2,394
Affordable housing tax credit investments, net of amortization
(4,178
)
239
Net cash used for investing activities
(70,845
)
(44,258
)
Cash Flows From Financing Activities:
Net increase in deposits
123,169
90,693
Net decrease in securities sold under agreements to repurchase
-
(1,434
)
Repayment of Federal Home Loan Bank advances
-
(55,000
)
Proceeds from exercise of common stock options
999
192
Purchase of treasury stock
(926
)
(115
)
Sale of treasury stock
330
752
Cash dividends
(7,832
)
(4,191
)
Net cash from financing activities
115,740
30,897
Net Change In Cash And Cash Equivalents
58,069
(884
)
Cash and Cash Equivalents At Beginning Of Period
128,523
185,744
Cash and Cash Equivalents At End Of Period
$
186,592
$
184,860
Supplemental Disclosures Of Cash Flows Information:
Cash Payments For:
Interest paid to depositors
$
16,450
$
16,570
Interest paid on borrowings
$
1,714
$
1,990
Non-cash investing and financing activities:
Transfer of loans to foreclosed assets
$
110
$
28
Restricted stock grant
$
577
$
3,156
The accompanying notes are an integral part of these consolidated financial statements.
9
River Financial Corporation
Notes to Unaudited Consolidated Financial Statements
(amounts in thousands, except share and per share data)
Note 1 – Basis of Presentation
General
The unaudited consolidated financial statements include the accounts of River Financial Corporation (“River” or the “Company”) and its wholly owned subsidiary, River Bank & Trust (“Bank”). The Bank provides a full range of commercial and consumer banking services primarily in the Montgomery, Alabama metropolitan area, Autauga, Baldwin, Chilton, Coffee, Elmore, Etowah, Houston, Jefferson, Lauderdale, Lee, Madison, Mobile, Morgan Tallapoosa, and Tuscaloosa counties and surrounding counties in Alabama. The Bank also has been approved for a full service office in Destin, Florida which is currently operating as a loan production office. The Bank is regulated by the Federal Deposit Insurance Corporation (FDIC) and undergoes periodic examinations by this regulatory agency and the Alabama Banking Department. The Company is regulated by the Federal Reserve Bank (FRB) and is also subject to periodic examinations.
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly River Financial Corporation’s consolidated statements of financial condition, statements of income, statements of comprehensive income, statements of changes in stockholders’ equity and statements of cash flows for the periods presented, and all such adjustments are of a normal recurring nature. All material intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the entire year.
These interim consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and, therefore, certain information and note disclosures normally presented in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been omitted or abbreviated. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes as of December 31, 2025, which are contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Note 2 – Reclassifications
Certain prior period amounts have been reclassified to conform to the presentation used in 2026. These reclassifications had no material effect on the operations, financial condition or cash flows of the Company.
10
Note 3 – Earnings Per Share
Basic earnings per common share are computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share are computed by dividing net income by the effect of the issuance of potential common shares that are dilutive and by the sum of the weighted-average number of shares of common stock outstanding. All shares owned by the Company’s 401(k) Employee Stock Ownership Plan (ESOP) are included in the earnings per share calculations.
The reconciliation of the components of the basic and diluted earnings per share is as follows (amounts in thousands):
For the Three Months
Ended March 31,
2026
2025
Net earnings available to common shareholders
$14,147
$8,458
Weighted average common shares outstanding
7,812,724
7,740,082
Dilutive effect of stock options
85,597
65,025
Diluted common shares
7,898,321
7,805,107
Basic earnings per common share
$1.81
$1.09
Diluted earnings per common share
$1.79
$1.08
Note 4 – Investment Securities
The following tables summarize the amortized cost and fair value of securities available-for-sale and securities held-to-maturity and the corresponding amounts of unrealized gains and losses recognized in accumulated other comprehensive loss at March 31, 2026 and December 31, 2025 (amounts in thousands):
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
March 31, 2026:
Securities available-for-sale:
Residential mortgage-backed
$
571,368
$
1,398
$
(37,957
)
$
534,809
U.S. treasury securities
15,036
-
(191
)
14,845
U.S. govt. sponsored enterprises
3,391
-
(266
)
3,125
State, county, and municipal
109,246
237
(8,790
)
100,693
Corporate debt obligations
13,199
18
(736
)
12,481
Total available-for-sale
$
712,240
$
1,653
$
(47,940
)
$
665,953
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
March 31, 2026:
Securities held-to-maturity:
Residential mortgage-backed
$
53,384
$
-
$
(9,113
)
$
44,271
State, county, and municipal
62,724
-
(9,910
)
52,814
Total held-to-maturity
$
116,108
$
-
$
(19,023
)
$
97,085
11
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
December 31, 2025:
Securities available-for-sale:
Residential mortgage-backed
$
537,078
$
2,386
$
(36,254
)
$
503,210
U.S. treasury securities
15,053
-
(279
)
14,774
U.S. govt. sponsored enterprises
3,389
-
(251
)
3,138
State, county, and municipal
102,266
366
(7,599
)
95,033
Corporate debt obligations
13,194
45
(769
)
12,470
Total available-for-sale
$
670,980
$
2,797
$
(45,152
)
$
628,625
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
December 31, 2025:
Securities held-to-maturity:
Residential mortgage-backed
$
54,472
$
-
$
(9,463
)
$
45,009
State, county, and municipal
62,736
-
(9,485
)
53,251
Total held-to-maturity
$
117,208
$
-
$
(18,948
)
$
98,260
The unrecognized losses on securities held-to-maturity presented in the tables above do not include unrecognized losses on securities that were transferred from available-for-sale to held-to-maturity totaling $1.89 million at March 31, 2026 and $1.97 million at December 31, 2025. These unrecognized losses that were transferred in 2022 are included as a separate component of stockholders' equity and are being amortized over the remaining term of the securities.
The Company has a zero loss expectation for its securities held-to-maturity (HTM) portfolio, except for U.S. State and Municipal securities, and therefore is not required to estimate an allowance for credit losses related to these securities. For HTM securities that do not have a zero loss expectation, the allowance for credit losses is based on the security’s amortized cost, excluding interest receivable, and represents the portion of the amortized cost that the Company does not expect to collect over the life of the security. The allowance for credit losses is determined using average industry credit ratings and historical loss experience, and is initially recognized upon acquisition of the securities, and subsequently remeasured on a recurring basis. The Company evaluates securities available for sale (AFS) that experienced a decline in fair value below amortized cost for credit impairment. In performing an assessment of whether any decline in fair value is due to a credit loss, the Company considers the extent to which the fair value is less than the amortized cost, changes in credit ratings, any adverse economic conditions, as well as all relevant information at the individual security level, such as credit deterioration of the issuer, explicit or implicit guarantees by the federal government or collateral underlying the security. If it is determined that the decline in fair value was due to credit losses, an allowance for credit losses is recorded, limited to the amount the fair value is less than the amortized cost basis. The non-credit related decrease in the fair value, such as a decline due to changes in market interest rates, is recorded in other comprehensive (loss) income, net of tax. The Company recognizes a credit related loss if the Company has the intent to sell the security, or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost.
12
The following tables summarize securities with unrealized and unrecognized losses as of March 31, 2026 and December 31, 2025 aggregated by major security type and length of time in a continuous unrealized or unrecognized loss position (amounts in thousands):
Less Than 12 Months
12 Months or More
Total
Fair Value
Unrealized Losses
Fair Value
Unrealized Losses
Fair Value
Unrealized Losses
March 31, 2026:
Securities available-for-sale:
Residential mortgage-backed
$
165,414
$
1,780
$
258,718
$
36,177
$
424,132
$
37,957
U.S. treasury securities
-
-
14,845
191
14,845
191
U.S. govt. sponsored enterprises
-
-
3,125
266
3,125
266
State, county & municipal
23,074
605
60,923
8,185
83,997
8,790
Corporate debt obligations
989
11
9,502
725
10,491
736
Total available-for-sale
$
189,477
$
2,396
$
347,113
$
45,544
$
536,590
$
47,940
Securities held-to-maturity:
Residential mortgage-backed
$
-
$
-
$
44,271
$
9,113
$
44,271
$
9,113
State, county & municipal
861
143
46,608
9,767
47,469
9,910
Total held-to-maturity
$
861
$
143
$
90,879
$
18,880
$
91,740
$
19,023
December 31, 2025:
Securities available-for-sale:
Residential mortgage-backed
$
112,311
$
514
$
263,681
$
35,740
$
375,992
$
36,254
U.S. treasury securities
-
-
14,774
279
14,774
279
U.S. govt. sponsored enterprises
-
-
3,138
251
3,138
251
State, county & municipal
11,656
204
61,847
7,395
73,503
7,599
Corporate debt obligations
-
-
9,455
769
9,455
769
Total available-for-sale
$
123,967
$
718
$
352,895
$
44,434
$
476,862
$
45,152
Securities held-to-maturity:
Residential mortgage-backed
$
-
$
-
$
45,009
$
9,463
$
45,009
$
9,463
State, county & municipal
873
131
47,033
9,354
47,906
9,485
Total held-to-maturity
$
873
$
131
$
92,042
$
18,817
$
92,915
$
18,948
The Company owned a total of 324 securities with unrealized losses of $67.0 million at March 31, 2026. The unrealized losses were primarily attributable to changes in interest rates, rather than deterioration in credit quality. The individual securities are each investment grade securities. The Company considers factors such as the financial condition of the issuer including credit ratings and specific events affecting the operations of the issuer, volatility of the security, underlying assets that collateralize the debt security, and other industry and macroeconomic conditions. The Company does not intend to sell these securities, and it is more likely than not that the Company will not be required to sell these securities before recovery of the amortized cost. The issuers of these securities continue to make timely principal and interest payments under the contractual terms of the securities. As such, there is no allowance for credit losses on securities available-for-sale or held-to-maturity recognized as of March 31, 2026 and December 31, 2025. Accrued interest receivable is not included in securities available-for-sale balances and is presented in accrued interest receivable on the consolidated statement of financial condition. Interest receivable on securities was approximately $3.2 million and $3.0 million as of March 31, 2026 and December 31, 2025, respectively, and was excluded from the estimate of credit losses.
As of March 31, 2026 and December 31, 2025, securities with a carrying value of approximately $313.6 million and $270.1 million, respectively, were pledged to secure public deposits as required by law.
During the three months ended March 31, 2026, the Company sold investment securities for proceeds of $5.2 million and realized gains of $8.3 thousand. The net gain consisted of gross gains of $8.3 thousand and no gross losses. During the three months ended March 31, 2025, the Company sold investment securities for proceeds of $59.5 million and realized losses of $3.4 million. The net loss consisted of no gross gains and gross losses of $3.4 million.
13
The amortized cost and estimated fair value of debt securities at March 31, 2026 and December 31, 2025, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities for residential mortgage backed securities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties. These securities are therefore not presented by maturity classification.
March 31, 2026
December 31, 2025
Amortized Cost
Fair Value
Amortized Cost
Fair Value
(In Thousands)
(In Thousands)
Securities available-for-sale
Less than 1 year
$
15,036
$
14,845
$
15,053
$
14,774
1 to 5 years
6,415
6,121
6,408
6,151
5 to 10 years
26,685
24,349
24,432
22,381
After 10 years
92,736
85,829
88,009
82,109
140,872
131,144
133,902
125,415
Residential mortgage-backed securities
571,368
534,809
537,078
503,210
Total available-for-sale
$
712,240
$
665,953
$
670,980
$
628,625
March 31, 2026
December 31, 2025
Amortized Cost
Fair Value
Amortized Cost
Fair Value
(In Thousands)
(In Thousands)
Securities held-to-maturity
5 to 10 years
$
37,218
$
31,947
$
37,220
$
32,175
After 10 years
25,506
20,867
25,516
21,076
62,724
52,814
62,736
53,251
Residential mortgage-backed securities
53,384
44,271
54,472
45,009
Total held-to-maturity
$
116,108
$
97,085
$
117,208
$
98,260
14
Note 5 – Loans, Allowance for Credit Losses and Credit Quality
Major classifications of loans at March 31, 2026 and December 31, 2025 are summarized as follows (amounts in thousands):
March 31, 2026
December 31, 2025
Amount
% of Total
Amount
% of Total
Residential real estate:
Closed-end 1-4 family - first lien
$
921,091
34.1
%
$
921,918
34.4
%
Closed-end 1-4 family - junior lien
18,649
0.7
%
18,392
0.7
%
Multi-family
71,842
2.7
%
53,305
2.0
%
Total residential real estate
1,011,582
37.5
%
993,615
37.1
%
Commercial real estate:
Nonfarm nonresidential
750,017
27.8
%
755,947
28.2
%
Farmland
89,851
3.3
%
82,158
3.1
%
Total commercial real estate
839,868
31.1
%
838,105
31.3
%
Construction and land development:
Residential
115,443
4.3
%
117,926
4.4
%
Other
136,661
5.1
%
134,602
5.0
%
Total construction and land development
252,104
9.4
%
252,528
9.4
%
Home equity lines of credit
165,004
6.1
%
157,914
5.9
%
Commercial loans:
Other commercial loans
321,751
11.9
%
320,162
12.0
%
Agricultural
80,399
3.0
%
81,051
3.0
%
State, county, and municipal loans
25,750
0.8
%
26,130
0.9
%
Total commercial loans
427,900
15.7
%
427,343
15.9
%
Consumer loans
51,721
1.9
%
52,686
2.0
%
Total gross loans
2,748,179
101.7
%
2,722,191
101.6
%
Allowance for credit losses
(37,871
)
-1.4
%
(36,011
)
-1.3
%
Net discounts
(2
)
0.0
%
(4
)
0.0
%
Net deferred loan fees
(8,866
)
-0.3
%
(8,671
)
-0.3
%
Net loans
$
2,701,440
100.0
%
$
2,677,505
100.0
%
The Bank grants loans and extensions of credit to individuals and a variety of businesses and corporations located in its general trade area. Although the Bank has a diversified loan portfolio, a substantial portion of the loan portfolio is collateralized by improved and unimproved real estate and is dependent upon the real estate market. Relevant risk characteristics for these portfolio segments generally include debt service coverage, loan-to-value ratios and financial performance on non-consumer loans and credit scores, debt-to-income, collateral type and loan-to-value ratios for consumer loans.
The loan portfolio has been disaggregated into segments and then further disaggregated into classes for certain disclosures. A portfolio segment is defined as the level at which an entity develops and documents a systematic method for determining its allowance for credit losses. There are three primary loan portfolio segments that include real estate, commercial, and consumer. A class is generally determined based on the initial measurement attribute, risk characteristic of the loan, and the Company’s method for monitoring and assessing credit risk. Classes within the real estate portfolio segment include residential real estate, commercial real estate, construction and land development and home equity lines of credit. The portfolio segments of non-real estate commercial loans and consumer loans have not been further segregated by class.
Under the current expected credit losses (CECL) methodology, the allowance for credit losses is measured on a collective basis for pools of loans with similar risk characteristics. For loans that do not share similar risk characteristics with the collectively evaluated pools, evaluations are performed on an individual basis. For all loan segments collectively evaluated, losses are predicted over a period of time determined to be reasonable and supportable, and at the end of the reasonable and supportable forecast period losses are reverted to long-term historical averages. The estimated loan losses for all loan segments are adjusted for changes in qualitative factors not inherently considered in the quantitative analyses.
15
The following tables present the balance in the allowance for credit losses by portfolio segment. It also includes the balance in the allowance for credit losses and the recorded investment in loans by portfolio segment and based on evaluation method for the periods indicated below (amounts in thousands).
Real Estate Loans
Construction
Home equity
and land
lines
Allowance for Credit Losses
Residential
Commercial
development
of credit
Total Real Estate Loans
Commercial
Consumer
Total
Balance - December 31, 2025
$8,635
$12,138
$3,599
$2,443
$26,815
$8,700
$496
$36,011
Provision for credit losses
1,075
653
85
261
2,074
(140)
79
2,013
Loan charge-offs
(18)
-
-
-
(18)
(150)
(36)
(204)
Loan recoveries
9
1
-
-
10
31
10
51
Balance - March 31, 2026
$9,701
$12,792
$3,684
$2,704
$28,881
$8,441
$549
$37,871
Ending balance:
Individually evaluated
$45
$21
$39
$-
$105
$955
$-
$1,060
Collectively evaluated
9,656
12,771
3,645
2,704
28,776
7,486
549
36,811
Total
$9,701
$12,792
$3,684
$2,704
$28,881
$8,441
$549
$37,871
Loans:
Individually evaluated
$8,184
$2,629
$1,208
$1,393
$13,414
$954
$-
$14,368
Collectively evaluated
1,003,398
837,239
250,896
163,611
2,255,144
426,946
51,721
2,733,811
Total
$1,011,582
$839,868
$252,104
$165,004
$2,268,558
$427,900
$51,721
$2,748,179
Real Estate Loans
Construction
Home equity
and land
lines
Allowance for Credit Losses
Residential
Commercial
development
of credit
Total Real Estate Loans
Commercial
Consumer
Total
Balance - December 31, 2024
$7,690
$10,629
$4,299
$1,887
$24,505
$7,072
$511
$32,088
Provision for credit losses
302
1,254
(817)
122
861
758
67
1,686
Loan charge-offs
-
-
-
-
-
(96)
(41)
(137)
Loan recoveries
11
3
-
9
23
121
17
161
Balance - March 31, 2025
$8,003
$11,886
$3,482
$2,018
$25,389
$7,855
$554
$33,798
Ending balance:
Individually evaluated
$11
$874
$-
$-
$885
$586
$34
$1,505
Collectively evaluated
7,992
11,012
3,482
2,018
24,504
7,269
520
32,293
Total
$8,003
$11,886
$3,482
$2,018
$25,389
$7,855
$554
$33,798
Loans:
Individually evaluated
$5,061
$4,388
$1
$142
$9,592
$586
$34
$10,212
Collectively evaluated
933,446
727,603
273,139
131,432
2,065,620
409,487
59,390
2,534,497
Total
$938,507
$731,991
$273,140
$131,574
$2,075,212
$410,073
$59,424
$2,544,709
16
The Company's unfunded lending commitments are unconditionally cancellable and therefore no allowance for credit losses has been recorded. In the event that collection of principal becomes uncertain, the Company has policies in place to reverse accrued interest in a timely manner. Therefore, the Company has made a policy election to exclude accrued interest from the measurement of the allowance for credit losses. Accrued interest on loans of $14.8 million and $14.4 million at March 31, 2026 and December 31, 2025, respectively, was included in accrued interest receivable and was excluded from the estimate of credit losses.
The following tables present the amortized cost basis of collateral dependent loans as of March 31, 2026 and December 31, 2025, by class of loans (amounts in thousands).
As of March 31, 2026
Collateral Dependent Loans
Real Estate
Equipment
Farm Land & Crops
Accounts Receivable
Total
Allowance for Credit Losses
Mortgage loans on real estate:
Residential
$
8,184
$
-
$
-
$
-
$
8,184
$
45
Commercial real estate
2,258
-
371
-
2,629
21
Construction and land development
1,208
-
-
-
1,208
39
Total mortgage loans on real estate
11,650
-
371
-
12,021
105
Home equity lines of credit
1,393
-
-
-
1,393
-
Commercial loans
56
635
-
263
954
955
Consumer loans
-
-
-
-
-
-
Total Loans
$
13,099
$
635
$
371
$
263
$
14,368
$
1,060
As of December 31, 2025
Collateral Dependent Loans
Real Estate
Equipment
Farm Land & Crops
Accounts Receivable
Total
Allowance for Credit Losses
Mortgage loans on real estate:
Residential
$
7,987
$
-
$
-
$
-
$
7,987
$
45
Commercial real estate
2,273
-
384
-
2,657
29
Construction and land development
389
-
-
-
389
13
Total mortgage loans on real estate
10,649
-
384
-
11,033
87
Home equity lines of credit
1,333
-
-
-
1,333
-
Commercial loans
-
456
-
268
724
724
Consumer loans
-
-
-
-
-
-
Total Loans
$
11,982
$
456
$
384
$
268
$
13,090
$
811
17
The following tables present the aging of the recorded investment in past due loans and non-accrual loans as of March 31, 2026 and December 31, 2025, by class of loans (amounts in thousands).
Accruing Loans
As of March 31, 2026
Current
30-89 Days Past Due
90+ Days Past Due
Nonaccrual With ACL
Nonaccrual With No ACL
Total Loans
Mortgage loans on real estate:
Residential real estate
$999,487
$4,764
$-
$160
$7,171
$1,011,582
Commercial real estate
836,968
253
-
1,246
1,401
839,868
Construction and land development
250,765
472
-
58
809
252,104
Total mortgage loans on real estate
2,087,220
5,489
-
1,464
9,381
2,103,554
Home equity lines of credit
162,757
550
-
-
1,697
165,004
Commercial loans
426,454
615
34
715
82
427,900
Consumer loans
50,898
604
-
-
219
51,721
Total Loans
$2,727,329
$7,258
$34
$2,179
$11,379
$2,748,179
Accruing Loans
As of December 31, 2025
Current
30-89 Days Past Due
90+ Days Past Due
Nonaccrual With ACL
Nonaccrual With No ACL
Total Loans
Mortgage loans on real estate:
Residential real estate
$982,042
$5,176
$83
$160
$6,154
$993,615
Commercial real estate
834,699
683
1,108
146
1,469
838,105
Construction and land development
251,778
427
-
57
266
252,528
Total mortgage loans on real estate
2,068,519
6,286
1,191
363
7,889
2,084,248
Home equity lines of credit
155,489
782
-
-
1,643
157,914
Commercial loans
426,223
530
38
379
173
427,343
Consumer loans
52,015
472
2
-
197
52,686
Total Loans
$2,702,246
$8,070
$1,231
$742
$9,902
$2,722,191
18
The Bank categorizes loans in risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Bank analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a continuous basis. The Bank uses the following definitions for its risk ratings:
Special Mention - Weakness exists that could cause future impairment, including the deterioration of financial ratios, past due status and questionable management capabilities. Collateral values generally afford adequate coverage but may not be immediately marketable.
Substandard - Specific and well-defined weaknesses exist that may include poor liquidity and deterioration of financial ratios. The loan may be past due and related deposit accounts experiencing overdrafts. Immediate corrective action is necessary.
Doubtful - Specific weaknesses characterized as Substandard that are severe enough to make collection in full unlikely. There is no reliable secondary source of full repayment. Loans classified as doubtful will be placed on non-accrual, analyzed and fully or partially charged-off based on review of collateral and other relevant factors.
19
Loans not meeting the criteria above that are evaluated individually as part of the above described process are considered to be Pass rated loans.
The following table presents loan balances classified by credit quality indicator, loan type and based on year of origination as of March 31, 2026 (amounts in thousands).
2026
2025
2024
2023
2022
Prior
Revolving Loans
Total
Residential real estate
Pass
$
58,648
$
181,938
$
101,927
$
196,651
$
297,894
$
157,542
$
1,407
$
996,007
Special Mention
-
617
784
1,830
1,982
1,432
78
6,723
Substandard
-
909
375
2,053
3,351
2,164
-
8,852
Doubtful
-
-
-
-
-
-
-
-
Total residential real estate
$
58,648
$
183,464
$
103,086
$
200,534
$
303,227
$
161,138
$
1,485
$
1,011,582
Current-period gross charge-offs
$
-
$
-
$
-
$
18
$
-
$
-
$
-
$
18
Commercial real estate
Pass
$
37,947
$
176,102
$
86,596
$
91,779
$
180,578
$
222,132
$
26,641
$
821,775
Special Mention
-
3,749
1,251
6,902
659
1,971
708
15,240
Substandard
-
-
216
2,128
-
509
-
2,853
Doubtful
-
-
-
-
-
-
-
-
Total commercial real estate
$
37,947
$
179,851
$
88,063
$
100,809
$
181,237
$
224,612
$
27,349
$
839,868
Current-period gross charge-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Construction and land development
Pass
$
28,102
$
122,812
$
42,557
$
19,131
$
15,634
$
11,352
$
11,056
$
250,644
Special Mention
-
-
-
198
9
23
-
230
Substandard
12
87
623
243
-
265
-
1,230
Doubtful
-
-
-
-
-
-
-
-
Total construction and land development
$
28,114
$
122,899
$
43,180
$
19,572
$
15,643
$
11,640
$
11,056
$
252,104
Current-period gross charge-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Home equity lines of credit
Pass
$
-
$
-
$
225
$
633
$
399
$
-
$
161,561
$
162,818
Special Mention
-
-
-
-
-
-
489
489
Substandard
-
-
-
-
-
116
1,581
1,697
Doubtful
-
-
-
-
-
-
-
-
Total home equity lines of credit
$
-
$
-
$
225
$
633
$
399
$
116
$
163,631
$
165,004
Current-period gross charge-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Commercial loans
Pass
$
21,138
$
86,786
$
53,835
$
43,976
$
34,160
$
27,940
$
154,748
$
422,583
Special Mention
-
129
28
98
114
3,718
60
4,147
Substandard
-
477
250
282
18
47
96
1,170
Doubtful
-
-
-
-
-
-
-
-
Total commercial loans
$
21,138
$
87,392
$
54,113
$
44,356
$
34,292
$
31,705
$
154,904
$
427,900
Current-period gross charge-offs
$
-
$
6
$
-
$
-
$
85
$
59
$
-
$
150
Consumer loans
Pass
$
5,440
$
16,206
$
9,165
$
7,132
$
5,425
$
5,745
$
2,098
$
51,211
Special Mention
-
62
55
11
72
-
1
201
Substandard
25
53
15
58
103
49
6
309
Doubtful
-
-
-
-
-
-
-
-
Total consumer loans
$
5,465
$
16,321
$
9,235
$
7,201
$
5,600
$
5,794
$
2,105
$
51,721
Current-period gross charge-offs
$
-
$
2
$
6
$
-
$
-
$
28
$
-
$
36
Total Loans
Pass
$
151,275
$
583,844
$
294,305
$
359,302
$
534,090
$
424,711
$
357,511
$
2,705,038
Special Mention
-
4,557
2,118
9,039
2,836
7,144
1,336
27,030
Substandard
37
1,526
1,479
4,764
3,472
3,150
1,683
16,111
Doubtful
-
-
-
-
-
-
-
-
Total loans
$
151,312
$
589,927
$
297,902
$
373,105
$
540,398
$
435,005
$
360,530
$
2,748,179
Current-period gross charge-offs
$
-
$
8
$
6
$
18
$
85
$
87
$
-
$
204
20
The following table presents loan balances classified by credit quality indicator, loan type and based on year of origination as of December 31, 2025 (amounts in thousands).
2025
2024
2023
2022
2021
Prior
Revolving Loans
Total
Residential real estate
Pass
$
177,780
$
111,050
$
213,413
$
292,315
$
89,663
$
76,033
$
18,575
$
978,829
Special Mention
621
608
2,115
1,301
136
1,116
70
5,967
Substandard
970
377
1,875
3,407
1,133
1,057
-
8,819
Doubtful
-
-
-
-
-
-
-
-
Total residential real estate
$
179,371
$
112,035
$
217,403
$
297,023
$
90,932
$
78,206
$
18,645
$
993,615
Current-period gross charge-offs
$
326
$
49
$
26
$
-
$
-
$
-
$
-
$
401
Commercial real estate
Pass
$
187,648
$
87,341
$
96,135
$
186,740
$
81,481
$
151,454
$
26,334
$
817,133
Special Mention
3,748
1,070
6,083
662
168
4,732
1,580
18,043
Substandard
-
224
2,142
-
50
513
-
2,929
Doubtful
-
-
-
-
-
-
-
-
Total commercial real estate
$
191,396
$
88,635
$
104,360
$
187,402
$
81,699
$
156,699
$
27,914
$
838,105
Current-period gross charge-offs
$
-
$
-
$
-
$
-
$
1,514
$
-
$
-
$
1,514
Construction and land development
Pass
$
127,756
$
55,482
$
21,842
$
17,114
$
7,609
$
4,086
$
17,951
$
251,840
Special Mention
-
-
200
53
-
24
-
277
Substandard
88
80
243
-
-
-
-
411
Doubtful
-
-
-
-
-
-
-
-
Total construction and land development
$
127,844
$
55,562
$
22,285
$
17,167
$
7,609
$
4,110
$
17,951
$
252,528
Current-period gross charge-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Home equity lines of credit
Pass
$
-
$
225
$
637
$
399
$
-
$
-
$
154,438
$
155,699
Special Mention
-
-
-
-
-
-
572
572
Substandard
-
-
-
-
-
-
1,643
1,643
Doubtful
-
-
-
-
-
-
-
-
Total home equity lines of credit
$
-
$
225
$
637
$
399
$
-
$
-
$
156,653
$
157,914
Current-period gross charge-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Commercial loans
Pass
$
93,122
$
61,164
$
48,646
$
36,239
$
9,381
$
21,404
$
152,055
$
422,011
Special Mention
208
29
34
80
18
3,732
191
4,292
Substandard
209
213
292
17
39
13
257
1,040
Doubtful
-
-
-
-
-
-
-
-
Total commercial loans
$
93,539
$
61,406
$
48,972
$
36,336
$
9,438
$
25,149
$
152,503
$
427,343
Current-period gross charge-offs
$
-
$
163
$
458
$
172
$
-
$
850
$
-
$
1,643
Consumer loans
Pass
$
18,607
$
10,612
$
8,046
$
5,958
$
3,142
$
3,362
$
2,402
$
52,129
Special Mention
117
44
9
96
-
-
7
273
Substandard
15
-
45
84
10
124
6
284
Doubtful
-
-
-
-
-
-
-
-
Total consumer loans
$
18,739
$
10,656
$
8,100
$
6,138
$
3,152
$
3,486
$
2,415
$
52,686
Current-period gross charge-offs
$
5
$
56
$
49
$
42
$
17
$
29
$
-
$
198
Total Loans
Pass
$
604,913
$
325,874
$
388,719
$
538,765
$
191,276
$
256,339
$
371,755
$
2,677,641
Special Mention
4,694
1,751
8,441
2,192
322
9,604
2,420
29,424
Substandard
1,282
894
4,597
3,508
1,232
1,707
1,906
15,126
Doubtful
-
-
-
-
-
-
-
-
Total loans
$
610,889
$
328,519
$
401,757
$
544,465
$
192,830
$
267,650
$
376,081
$
2,722,191
Current-period gross charge-offs
$
331
$
268
$
533
$
214
$
1,531
$
879
$
-
$
3,756
21
Note 6 – Fair Value Measurements and Disclosures
The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Securities available-for-sale are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as individually evaluated loans, foreclosed assets, and repossessed assets. These nonrecurring fair value adjustments typically involve application of the lower of cost or market accounting or write-downs of individual assets.
Fair Value Hierarchy
The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:
Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets.
Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.
The following is a description of valuation methodologies used for assets and liabilities recorded or disclosed at fair value:
Cash and cash equivalents – For disclosure purposes, for cash, due from banks, interest-bearing deposits and federal funds sold, the carrying amount is a reasonable estimate of fair value.
Certificates of deposit in banks – For disclosure purposes, the carrying amount of certificates of deposit is a reasonable estimate of fair value.
Investment Securities – Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange and securities that are traded by dealers or brokers in active over-the-counter market funds. Level 2 securities include mortgage-backed securities issued by government sponsored enterprises and municipal bonds. Securities classified as Level 3 include asset-backed securities in less liquid markets.
Loans and Mortgage Loans Held for Sale - The fair value of collateral-dependent loans with specific allocations of the allowance for credit losses is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available for similar loans and collateral underlying such loans. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge,changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Collateral-dependent loans are evaluated on a quarterly basis and adjusted in accordance with the allowance policy.
For disclosure purposes, the fair value of fixed-rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings. For variable rate loans, the carrying amount is a reasonable estimate of fair value. Mortgage loans held-for-sale are carried at cost, which is a reasonable estimate of fair value.
Accrued interest receivable – For disclosure purposes, the fair value of the accrued interest on investments and loans is the carrying value.
Bank owned life insurance – For disclosure purposes, the fair value of the cash surrender value of bank owned life insurance policies is equivalent to the carrying value.
22
Foreclosed assets – Other real estate properties and miscellaneous repossessed assets are adjusted to fair value upon transfer of the loans to foreclosed assets. Subsequently, foreclosed assets are carried at the lower of carrying value or fair value less selling costs. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price, the Company records the foreclosed asset as nonrecurring Level 2. When the fair value is based on an appraised value or management’s estimate of value, the Company records the foreclosed asset as nonrecurring Level 3.
Restricted equity securities – It is not practical to determine the fair value of restricted equity securities due to restrictions placed on transferability.
Deposits – For disclosure purposes, the fair value for demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered for deposits of similar remaining maturities.
Federal Home Loan Bank advances – For disclosure purposes, the fair value of Federal Home Loan Bank advances is estimated using discounted cash flow analyses using interest rates offered for borrowings with similar maturities.
Subordinated debentures – For disclosure purposes, the fair value is estimated using a discounted cash flow calculation that applies interest rates currently being offered for similar subordinated debenture offerings.
Accrued interest payable – For disclosure purposes, the fair value of the accrued interest payable on deposits is the carrying value.
Commitments to extend credit and standby letters of credit – Because commitments to extend credit and standby letters of credit are generally short-term and made using variable rates, the carrying value and estimated fair value associated with these instruments are immaterial.
23
Assets and liabilities measured at fair value on a recurring basis – The only assets and liabilities measured at fair value on a recurring basis are our securities available-for-sale. Information related to the Company’s assets and liabilities measured at fair value on a recurring basis at March 31, 2026 and December 31, 2025 is as follows: (amounts in thousands)
Fair Value Measurements At Reporting Date Using:
March 31, 2026
Fair Value
Quoted Prices In Active Markets For Identical Assets (Level 1)
Significant Other Observable Inputs (Level 2)
Significant Unobservable Inputs (Level 3)
Securities available-for-sale:
Residential mortgage -backed
$
534,809
$
-
$
534,809
$
-
U.S. treasury securities
14,845
-
14,845
-
U.S. government sponsored enterprises
3,125
-
3,125
-
State, county, and municipal
100,693
-
100,693
-
Corporate debt obligations
12,481
-
12,481
-
Totals
$
665,953
$
-
$
665,953
$
-
Fair Value Measurements At Reporting Date Using:
December 31, 2025
Fair Value
Quoted Prices In Active Markets For Identical Assets (Level 1)
Significant Other Observable Inputs (Level 2)
Significant Unobservable Inputs (Level 3)
Securities available-for-sale:
Residential mortgage -backed
$
503,210
$
-
$
503,210
$
-
U.S. treasury securities
14,774
-
14,774
-
U.S. government sponsored enterprises
3,138
-
3,138
-
State, county, and municipal
95,033
-
95,033
-
Corporate debt obligations
12,470
-
12,470
-
Totals
$
628,625
$
-
$
628,625
$
-
The Company's policy is to recognize transfers in and transfers out of levels 1, 2, and 3 as of the end of a reporting period. There were no transfers between levels from December 31, 2025 to March 31, 2026.
24
Assets measured at fair value on a nonrecurring basis – The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with U.S. GAAP. These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period. Assets measured at fair value on a nonrecurring basis are included in the table below as of March 31, 2026 and December 31, 2025 (amounts in thousands):
Fair Value Measurements At Reporting Date Using:
March 31, 2026
Fair Value
Quoted Prices In Active Markets For Identical Assets (Level 1)
Significant Other Observable Inputs (Level 2)
Significant Unobservable Inputs (Level 3)
Collateral dependent loans
$
13,308
$
-
$
-
$
13,308
Foreclosed assets
1,557
-
-
1,557
Totals
$
14,865
$
-
$
-
$
14,865
December 31, 2025
Fair Value
Quoted Prices In Active Markets For Identical Assets (Level 1)
Significant Other Observable Inputs (Level 2)
Significant Unobservable Inputs (Level 3)
Collateral dependent loans
$
12,279
$
-
$
-
$
12,279
Foreclosed assets
1,537
-
-
1,537
Totals
$
13,816
$
-
$
-
$
13,816
The Company has estimated the fair values of these assets using Level 3 inputs, specifically the appraised value of the collateral. Individually evaluated loan balances represent those collateral dependent loans where management has estimated the credit loss by comparing the loan’s carrying value against the expected realizable fair value of the collateral dependent loan for the amount of the credit loss. For Level 3 assets measured at fair value on a non-recurring basis as of March 31, 2026 and December 31, 2025 for the valuation technique, the Company used appraisals. For the significant unobservable input, the Company used appraisal discounts, and weighted average input of 15-20% was used for the period ended March 31, 2026 and December 31, 2025.
25
The estimated fair values, and related carrying or notional amounts, of the Company’s financial instruments as of March 31, 2026 and December 31, 2025 are as follows (amounts in thousands):
Estimated Fair Value
March 31, 2026
Carrying Amount
Level 1
Level 2
Level 3
Financial assets:
Cash and cash equivalents
$
186,592
$
186,592
$
-
$
-
Certificates of deposit in banks
2,968
-
2,968
-
Securities held-to-maturity
116,108
-
97,085
-
Securities available-for-sale
665,953
-
665,953
-
Loans held-for-sale
11,596
-
11,596
-
Loans receivable, net
2,701,440
-
2,681,688
13,308
Accrued interest receivable
17,997
-
17,997
-
Bank owned life insurance
54,578
-
54,578
-
Restricted equity securities
8,026
-
-
8,026
Financial liabilities:
Deposits
3,450,292
-
3,205,444
-
Federal Home Loan Bank advances
100,000
-
99,918
-
Subordinated debentures
39,640
-
34,349
-
Accrued interest payable
1,756
-
1,756
-
Estimated Fair Value
December 31, 2025
Carrying Amount
Level 1
Level 2
Level 3
Financial assets:
Cash and cash equivalents
$
128,523
$
128,523
$
-
$
-
Certificates of deposit in banks
2,968
-
2,968
-
Securities held-to-maturity
117,208
-
98,260
-
Securities available-for-sale
628,625
-
628,625
-
Loans held-for-sale
9,483
-
9,483
-
Loans receivable, net
2,677,505
-
2,667,041
12,279
Accrued interest receivable
17,473
-
17,473
-
Bank owned life insurance
54,121
-
54,121
-
Restricted equity securities
7,882
-
-
7,882
Financial liabilities:
Deposits
3,327,123
-
3,108,159
-
Federal Home Loan Bank advances
100,000
-
99,916
-
Subordinated debentures
39,633
-
34,126
-
Accrued interest payable
2,141
-
2,141
-
The estimated fair values of the standby letters of credit and loan commitments on which the committed interest rate is less than the current market rate are insignificant as of March 31, 2026 and December 31, 2025.
The Company assumes interest rate risk (the risk that general interest rate levels will change) as a result of its normal operations. As a result, the fair values of the Company’s financial instruments will change when interest rate levels change and that change may be either favorable or unfavorable to the Company. Management attempts to match maturities of assets and liabilities to the extent believed necessary to minimize interest rate risk. However, borrowers with fixed-rate obligations are less likely to prepay in a rising rate environment and more likely to prepay in a falling rate environment. Conversely, depositors who are receiving fixed-rates are more likely to withdraw funds before maturity in a rising rate environment and less likely to do so in a falling-rate environment. Management monitors rates and maturities of assets and liabilities, and attempts to minimize interest rate risk by adjusting terms of new loans and deposits and by investing in securities with terms that mitigate the Company’s overall interest rate risk.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 is intended to improve the disclosures for income taxes to address requests from investors, lenders, creditors and other allocators of capital (collectively, "investors") that use the financial statements to make capital allocation decisions. During the FASB's 2021 agenda consultation process and other stakeholder outreach, investors highlighted that the current system of income tax disclosures does not provide enough information to understand the tax provision for an entity that operates in multiple jurisdictions. Investors currently rely on the rate reconciliation table and other disclosures, including total income taxes paid in the statement of cash flows, to evaluate income tax risks and opportunities. The amendments in ASU 2023-09 will require consistent categories and greater disaggregation of information in the rate reconciliation disclosure as well as disclosure of income taxes paid disaggregated by jurisdiction. The amendments of ASU 2023-09 are effective for annual periods beginning after December 15, 2024, and early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company adopted the amendments of ASU 2023-09 effective January 1, 2025, and included the required disclosures in its Annual Report on Form 10-K for the year ending December 31, 2025. This standard has not had a material impact on the Company’s consolidated results of operations or financial position.
In November 2024, the FASB issued ASU 2024-03, Reporting Comprehensive Income (Topic 220): Expense Disaggregation Disclosures. ASU 2024-03 requires disclosure, in the notes to the financial statements, of specified information about certain costs and expenses. The amendments require that at each interim and annual reporting period an entity disclose the following: amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization. Additionally, the amendments of ASU 2024-03 require disclosure for the qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively as well as disclosure for the amount of selling expenses and the definition of selling expenses. The amendments of ASU 2024-03 are effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments of ASU 2024-03 should be applied prospectively to financial statements issued for reporting periods after the effective date of this update or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the changes to disclosures required by ASU 2024-03; however, adoption of ASU 2024-03 is not expected to have a material impact to the Company's consolidated financial statements or results of operations.
In November 2025, the FASB issued ASU 2025-08, Financial Instruments - Credit Losses (Topic 236): Purchased Loans. ASU 2025-08 expands the population of acquired financial assets accounted for using the gross-up approach and aims to enhance comparability, consistency, and better reflect the economics of acquiring financial assets. The amendments of ASU 2025-08 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted in an interim or annual reporting period in which financial statements have not been issued or made available for issuance. The Company is currently evaluating the changes to disclosures required by ASU 2025-08; however, adoption of ASU 2025-08 is not expected to have a material impact to the Company's consolidated financial statements or results of operations.
27
Note 9 – Defined Contribution Plan
The Company provides a 401(k) employee stock ownership plan (ESOP), which covers substantially all of the Company’s employees who are eligible, as to age and length of service. A participant may elect to make contributions up to $24.5 thousand and $23.5 thousand of the participant’s annual compensation in 2026 and 2025, respectively. The Company makes contributions up to 3% of each participant’s annual compensation and the Company matches 50% of the next 2% contributed by the employee. Contributions to the plan by the Company were approximately $281 thousand and $253 thousand for the three months ended March 31, 2026 and 2025, respectively. Outstanding shares of the Company’s common stock allocated to participants at March 31, 2026 and December 31, 2025 totaled 217,095 shares and there were no unallocated shares. These shares are treated as outstanding for purposes of calculating earnings per share and dividends on these shares are included in the Consolidated Statements of Changes in Stockholders’ Equity.
The Company’s ESOP includes a put option for shares of the Company’s common stock distributed from the ESOP. Shares are distributed from the ESOP primarily to separate vested participants and certain eligible participants who elect to diversify their account balances. Since the Company’s common stock is not currently traded on an established securities market, if the owners of distributed shares desire to sell their shares, the Company is required to purchase the shares at fair value during two put option periods following the distribution of the shares from the ESOP. The first put option period is within sixty days following the distribution of the shares from the ESOP. The second put option period begins on the first day of the fifth month of the plan year for a sixty day period. The fair value of distributed shares subject to the put option totaled $0 as of March 31, 2026 and December 31, 2025. The cost of the ESOP shares totaled $6.23 million as of March 31, 2026 and December 31, 2025. Due to the Company’s obligation under the put option, the distributed shares and ESOP shares are classified as temporary equity in the mezzanine section of the consolidated statements of financial condition and totaled $6.23 million as of March 31, 2026 and December 31, 2025. The fair value of the ESOP shares totaled $10.85 million as of March 31, 2026 and December 31, 2025.
28
Note 10 – Loans Held for Sale
The Company has entered into agreements with secondary market investors to deliver loans on a “best efforts delivery” basis. When a rate is committed to a borrower, it is based on the best price that day and locked with the investor for the customer for a thirty day period. In the event the loan is not delivered to the investor, the Company has no risk or exposure with the investor. The fair values of the Company’s agreements with investors and rate lock commitments to customers as of March 31, 2026 and December 31, 2025, respectively, were not material.
Note 11 – Leases
Operating lease assets represent the Company’s right to use an underlying asset during the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents the Company’s incremental borrowing rate at the lease commencement date. Operating lease cost, which is comprised of amortization of the operating lease asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in occupancy expenses in the consolidated statements of income.The Company leases certain full-service branch offices, land, and equipment. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Most leases include one or more options to renew and the exercise of the lease renewal options are at the Company’s sole discretion. The Company includes lease extension and termination options in the lease term if, after considering relevant economic factors, it is reasonably certain the Company will exercise the option.
The following table represents the consolidated statements of financial condition classification of the Company’s ROU assets and lease liabilities. The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months or less), or equipment leases (deemed immaterial) on the consolidated statements of financial condition.
Lease Right-of-Use Assets
Classification on Consolidated Statement of Financial Condition
March 31, 2026
December 31, 2025
Operating lease right-of-use assets
Other assets
$6,649
$6,467
Lease Liabilities
Classification on Consolidated Statement of Financial Condition
March 31, 2026
December 31, 2025
Operating lease liabilities
Accrued interest payable and other liabilities
$6,812
$6,622
29
March 31, 2026
December 31, 2025
Weighted-average remaining lease term for operating leases
9.64 Years
9.58 Years
Weighted-average discount rate for operating leases
6.00
%
6.00
%
Future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2026 are as follows:
Operating Leases
April 1, 2026 - March 31, 2027
$
1,133
April 1, 2027 - March 31, 2028
1,041
April 1, 2028 - March 31, 2029
784
April 1, 2029 - March 31, 2030
763
April 1, 2030 - March 31, 2031
751
Afterward
4,960
Total future minimum lease payments
9,432
Amounts representing interest
(2,620
)
Present value of net future minimum lease payments
$
6,812
30
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes thereto for the year ended December 31, 2025, which are contained in the Annual Report on Form 10-K for the year ended December 31, 2025. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from our expectations. Factors that could cause such differences are discussed in our 2025 Annual Report on Form 10-K under “Part I, Item 1A - Risk Factors.” We assume no obligation to update any of these forward-looking statements.
The following discussion pertains to our historical results on a consolidated basis. However, because we conduct all of our material business operations through our subsidiaries, the discussion and analysis relates to activities primarily conducted at the subsidiary level.
All dollar amounts in the tables in this section are in thousands of dollars, except per share data, yields, percentages and rates or when specifically identified. As used in this Item, the words “we,” “us,” “our,” the “Company,” “RFC,” “River” and similar terms refer to River Financial Corporation and its consolidated affiliate, unless the context indicates otherwise.
Our Business
We are a bank holding company headquartered in Prattville, Alabama. We engage in the business of banking through our wholly-owned banking subsidiary, River Bank & Trust, which we may refer to as the “Bank” or “River Bank.” Through the Bank, we provide a broad array of financial services to businesses, business owners, professionals, and consumers. As of March 31, 2026, we operated twenty-four full-service banking offices in Alabama in the cities of Montgomery, Prattville, Millbrook, Wetumpka, Auburn, Opelika, Gadsden, Alexander City, Daphne, Clanton, Dothan, Enterprise, Mobile, Decatur, Huntsville, Saraland, Birmingham, Florence, and Tuscaloosa, Alabama. The Bank also has been approved for a full service office in Destin, Florida which is currently operating as a loan production office.
Segments
While our chief decision makers monitor the revenue streams of the various banking products and services, operations are managed and financial performance is evaluated on a Company-wide basis. Accordingly, all of the Company’s banking operations are considered by management to be aggregated in one reportable operating segment. Because the overall banking operations comprise substantially all of the consolidated operations, no separate segment disclosures are presented in the accompanying consolidated financial statements.
Overview of First Quarter 2026 Results
Net income was $14.1 million in the quarter ended March 31, 2026, compared with $8.5 million in the quarter ended March 31, 2025. Several significant measures from the 2026 first quarter include:
•
Net interest margin (taxable equivalent) of 3.73%, compared with 3.31% for the first quarter of 2025.
•
Net interest income increase of $5.6 million for the quarter ended March 31, 2026, representing a 20.15% rate of increase over the quarter ended March 31, 2025.
•
Annualized return on average earning assets for the quarter ended March 31, 2026 of 1.55% compared with 0.99% for the quarter ended March 31, 2025.
•
Annualized return on average equity for the quarter ended March 31, 2026 of 18.59% compared with 14.34% for the quarter ended March 31, 2025.
•
Loan increase of $25.8 million during the quarter ended March 31, 2026, representing a 3.80% annualized growth rate.
•
Securities increase of $36.2 million during the quarter ended March 31, 2026, representing a 19.43% annualized increase for the quarter.
•
Deposit increase of $123.2 million during the quarter ended March 31, 2026, representing a 14.81% annualized growth rate.
•
Stockholders’ equity increase of $4.1 million during the quarter ended March 31, 2026, representing a 5.61% annualized increase.
•
Book value per share of $38.91 at March 31, 2026, compared with $38.71 per share at December 31, 2025.
•
Tangible book value per share of $35.29 at March 31, 2026, compared with $35.05 at December 31, 2025.
31
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared based on the application of certain accounting policies, the most significant of which are described in the notes to the financial statements for the year ended December 31, 2025, which are contained in our Annual Report filed on Form 10-K. Certain of these policies require numerous estimates and strategic or economic assumptions that may prove inaccurate or subject to variation and may significantly affect our reported results and financial position for the current period or future periods. The use of estimates, assumptions, and judgment is necessary when financial assets and liabilities are required to be recorded at or adjusted to reflect fair value. Assets carried at fair value inherently result in more financial statement volatility. Fair values and information used to record valuation adjustments for certain assets and liabilities are based on quoted market prices or are provided by other independent third-party sources, when available. When such information is not available, management estimates valuation adjustments. Changes in underlying factors, assumptions or estimates in any of these areas could have a material impact on our future financial condition and results of operations.
The following briefly describes the more complex policies involving a significant amount of judgments about valuation and the application of complex accounting standards and interpretations.
Allowance for Credit Losses
The allowance for credit losses has been determined in accordance with GAAP. The Company is responsible for the timely and periodic determination of the amount of the allowance for credit losses. Management believes that the allowance for credit losses is adequate to cover expected credit losses over the life of the loan portfolio. Although management evaluates available information to determine the adequacy of the allowance for credit losses, the level of allowance is an estimate which is subject to significant judgment and short-term change. Because of uncertainties associated with local and national economic forecasts, the operating and regulatory environment, collateral values and future cash flows from the loan portfolio, it is possible that a material change could occur in the allowance for credit losses in the near term. The evaluation of the adequacy of loan collateral is often based upon estimates and appraisals. Because of changing economic conditions, the valuations determined from such estimates and appraisals may also change.
Accordingly, the Company may ultimately incur losses that vary from management’s current estimates. Adjustments to the allowance for credit losses will be reported in the period in which such adjustments become known and can be reasonably estimated. All loan losses are charged to the allowance for credit losses when the loss actually occurs or when the collectability of the principal is unlikely. Recoveries are credited to the allowance at the time of recovery. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for credit losses. As a result of such examinations, the Company may need to recognize additions to the allowance for credit losses based on the regulators’ judgments.
In estimating the allowance for credit losses, the Company relies on models and economic forecasts developed by external parties as the primary driver of the allowance for credit losses. These models and forecasts are based on nationwide sets of data. Economic forecasts can change significantly over an economic cycle and have a significant level of uncertainty associated with them. The performance of the models is dependent on the variables used in the models being reasonable proxies for the loan portfolio’s performance. However, these variables may not capture all sources of risk within the portfolio. As a result, the Company reviews the results and makes qualitative adjustments to the models to capture limitations of the models as necessary. Such qualitative factors may include adjustments to better capture the imprecision associated with the economic forecasts, and the ability of the models to capture emerging risks within the portfolio that may not be represented in the data. These judgments are evaluated through the Company’s review process and revised on a quarterly basis to account for changes in facts and circumstances. It is difficult to estimate how potential changes in any one of the quantitative inputs or qualitative factors might affect the overall allowance for credit losses, and the Company’s current assessments may not reflect the potential future impact of changes to those inputs or factors.
32
Comparison of the Results of Operations for the three months ended March 31, 2026 and 2025
The following is a narrative discussion and analysis of significant changes in our results of operations for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.
Net Income
During the three months ended March 31, 2026, our net income was $14.1 million, compared to $8.5 million for the three months ended March 31, 2025, an increase of $5.7 million, or 67.26%. The primary reason for the increase in net income for the first quarter of 2026 as compared to the first quarter of 2025 was an increase in net interest income offset by an increase in noninterest expense. During the three months ended March 31, 2026, net interest income was $33.3 million compared to $27.8 million for the three months ended March 31, 2025, an increase of $5.6 million, or 20.15%. This increase is a result of loan growth and higher yields on new and repricing loans. Total noninterest income for the first three months of 2026 was $5.7 million compared to $1.9 million in the first three months of 2025. This increase in noninterest income was primarily the result of the gain on sales of investment securities which totaled $8.3 thousand in the first three months of 2026 compared to the loss on sales of investment securities which totaled $3.4 million in the first three months of 2025. Total noninterest expense in the first quarter of 2026 increased $1.6 million, or 9.35%, from the first quarter of 2025. The most significant increases were attributable to the $1.8 million increase in salaries and employee benefits.
33
Net Interest Income and Net Interest Margin Analysis
The largest component of our net income is net interest income – the difference between the income earned on interest earning assets and the interest paid on deposits and borrowed funds used to support assets. Net interest income divided by average interest earning assets represents our net interest margin. The major factors that affect net interest income and net interest margin are changes in volumes, the yield on interest earning assets and the cost of interest bearing liabilities. Our net interest margin can also be affected by economic conditions, the competitive environment, loan demand, and deposit flow. Management’s ability to respond to changes in these factors by using effective asset-liability management techniques is critical to maintaining the stability of the net interest margin and the primary source of earnings. This is discussed in greater detail under the heading “Interest Sensitivity and Market Risk”.
Comparison of net interest income for the three months ended March 31, 2026 and 2025
The following table shows, for the three months ended March 31, 2026 and 2025, the average balances of each principal category of our earning assets and interest bearing liabilities and the average taxable equivalent yields on assets and average costs of liabilities. These yields and costs are calculated by dividing the income or expense by the average daily balance of the associated assets or liabilities (amounts in thousands).
Three Months Ended March 31, 2026
Three Months Ended March 31, 2025
Interest
Interest
Average
Income/
Average
Average
Income/
Average
Balance
Expense
Yield/Rate
Balance
Expense
Yield/Rate
Interest earning assets
Loans
$
2,725,612
$
43,800
6.52
%
$
2,509,015
$
39,994
6.46
%
Mortgage loans held for sale
10,253
129
5.09
%
5,698
76
5.44
%
Investment securities:
Taxable securities
726,371
5,651
3.16
%
743,819
4,669
2.55
%
Tax-exempt securities
86,606
790
3.70
%
67,544
511
3.07
%
Interest bearing balances in other banks
70,744
667
3.82
%
88,483
999
4.58
%
Federal funds sold
32,700
303
3.76
%
16,278
181
4.51
%
Total interest earning assets
$
3,652,286
$
51,340
5.70
%
$
3,430,837
$
46,430
5.49
%
Interest bearing liabilities
Interest bearing transaction accounts
$
798,255
$
2,916
1.48
%
$
736,095
$
2,833
1.56
%
Savings and money market accounts
1,067,167
6,180
2.35
%
1,006,245
6,538
2.64
%
Time deposits
830,136
7,294
3.56
%
701,689
7,035
4.07
%
Short-term borrowings
100
1
4.37
%
20,882
172
3.34
%
Federal Home Loan Bank advances
100,000
914
3.71
%
150,611
1,472
3.96
%
Subordinated debentures
40,000
469
4.75
%
40,000
413
4.19
%
Total interest bearing liabilities
$
2,835,658
$
17,774
2.54
%
$
2,655,522
$
18,463
2.82
%
Noninterest-bearing funding of earning assets
816,628
-
0.00
%
775,315
-
0.00
%
Total cost of funding earning assets
$
3,652,286
$
17,774
1.97
%
$
3,430,837
$
18,463
2.18
%
Net interest rate spread
3.16
%
2.67
%
Net interest income/margin (taxable equivalent)
$
33,566
3.73
%
$
27,967
3.31
%
Tax equivalent adjustment
(225
)
(217
)
Net interest income/margin
$
33,341
3.70
%
$
27,750
3.28
%
34
The following table reflects, for the three months ended March 31, 2026 and 2025, the changes in our net interest income due to variances in the volume of interest earning assets and interest bearing liabilities and variances in the associated rates earned or paid on these assets and liabilities (amounts in thousands).
Three Months Ended March 31, 2026 vs.
Three Months Ended March 31, 2025
Variance
due to
Volume
Yield/Rate
Total
Interest earning assets
Loans
$
3,403
$
403
$
3,806
Mortgage loans held for sale
62
(9
)
53
Investment securities:
Taxable securities
(111
)
1,093
982
Tax-exempt securities
144
135
279
Interest bearing balances in other banks
(199
)
(133
)
(332
)
Federal funds sold
182
(60
)
122
Total interest earning assets
$
3,481
$
1,429
$
4,910
Interest bearing liabilities
Interest bearing transaction accounts
$
239
$
(156
)
$
83
Savings and money market accounts
397
(755
)
(358
)
Time deposits
1,289
(1,030
)
259
Short-term borrowings
(170
)
(1
)
(171
)
Federal Home Loan Bank advances
(494
)
(64
)
(558
)
Subordinated debentures
-
56
56
Total interest bearing liabilities
$
1,261
$
(1,950
)
$
(689
)
Net interest income
Net interest income (taxable equivalent)
$
2,220
$
3,379
$
5,599
Taxable equivalent adjustment
4
(12
)
(8
)
Net interest income
$
2,224
$
3,367
$
5,591
Total interest income for the three months ended March 31, 2026 was $51.1 million and total interest expense was $17.8 million, resulting in net interest income of $33.3 million for the period. For the same period of 2025, total interest income was $46.2 million and total interest expense was $18.5 million, resulting in net interest income of $27.8 million for the period. This represents a 20.15% increase in net interest income when comparing the same period from 2026 and 2025. When comparing the variances related to interest income for the three months ended March 31, 2026 and 2025, the increase was primarily attributed to increases in average volumes in loans and loan and investment security yields. The volume related increase in interest income for the three months ended March 31, 2026 was accompanied by an increase in the yield on loans and investment securities. When comparing variances related to interest expense for the three months ended March 31, 2026 and 2025, the decrease primarily resulted from a decrease in deposit interest rates and a reduction in FHLB advances outstanding. The decrease in interest expense resulting from interest rate decreases was partially offset by an increase in the average volume of deposits.
35
Provision for Credit Losses
The provision for credit losses represents a charge to earnings necessary to establish an allowance for credit losses that, in management's evaluation, is adequate to provide coverage for all expected credit losses. As a result of evaluating the allowance for credit losses at March 31, 2026, management recorded a provision for credit losses of $2.01 million in the first quarter of 2026 compared to $1.69 million in the first quarter of 2025. The increased provision for credit losses allocated was primarily due to the growth of our overall loan portfolio. In management’s evaluation, our allowance for credit losses reflects an amount we believe appropriate, based on our allowance assessment methodology, to adequately cover all expected future losses as of the date the allowance is determined.
Noninterest Income
In addition to net interest income, we generate various types of noninterest income from our operations. Our banking operations generate revenue from service charges and fees mainly on deposit accounts. Our mortgage division generates revenue from originating and selling mortgage loans. Our investment brokerage division generates revenue through a revenue-sharing relationship with a registered broker-dealer. We also own life insurance policies on several key employees and record income on the increase in the cash surrender value of these policies.
The following table sets forth the principal components of noninterest income for the periods indicated (amounts in thousands).
For the Three Months
Ended March 31,
2026
2025
Service charges and fees
$
2,432
$
2,134
Investment brokerage revenue
377
295
Mortgage operations
1,695
1,031
Bank owned life insurance income
457
408
Net gain (loss) on sales of investment securities
8
(3,399
)
Other noninterest income
762
1,391
Total noninterest income
$
5,731
$
1,860
Noninterest income for the three months ended March 31, 2026 was $5.7 million compared to $1.9 million for the same period in 2025. The most significant increase in noninterest income was due to a gain on sales of investment securities of $8.0 thousand for the three months ended March 31, 2026 compared to a $3.4 million loss on sales of investment securities for the same period in 2025. The most significant decrease in noninterest income was an overall decrease in other noninterest income of $629 thousand which related to one time contract revenue negotations that were recognized in 2025.
36
Noninterest Expense
Noninterest expenses consist primarily of salaries and employee benefits, building occupancy and equipment expenses, advertising and promotion expenses, data processing expenses, legal and professional services and miscellaneous other operating expenses.
The following table sets forth the principal components of noninterest expense for the periods indicated (amounts in thousands).
For the Three Months
Ended March 31,
2026
2025
Salaries and employee benefits
$
11,605
$
9,758
Occupancy expenses
1,212
1,022
Equipment rentals, depreciation, and maintenance
625
547
Telephone and communications
126
112
Advertising and business development
269
256
Data processing
1,112
1,129
Foreclosed assets, net
33
14
Federal deposit insurance and other regulatory assessments
702
778
Legal and other professional services
330
1,310
Other operating expense
2,423
1,935
Total noninterest expense
$
18,437
$
16,861
Noninterest expense for the three months ended March 31, 2026 totaled $18.4 million compared with $16.9 million for the same period of 2025. The overall increase was primarily a result of the increase in salaries and employee benefits that was offset by the decrease in legal and other professional services. Legal and other professional services decreased $980 thousand, or 74.81%, to $330 thousand in the first three months of 2026 from $1.3 million in the first three months of 2025. $913 thousand of the decrease related to one time professional fees paid for vendor contract negotiations in 2025. Salaries and employee benefits increased $1.8 million, or 18.93%, to $11.6 million in the in the first three months of 2026 from $9.8 million in the first three months of 2025.
Provision for Income Taxes
We recognized income tax expense of $4.5 million for the three months ended March 31, 2026, compared to $2.6 million for the three months ended March 31, 2025. The effective tax rate for the three months ended March 31, 2026 was 24.0% compared to 23.5% for the same period in 2025. The effective tax rate is affected by levels of items of income that are not subject to federal and/or state taxation and by levels of items of expense that are not deductible for federal and/or state income tax purposes.
37
Comparison of Financial Condition at March 31, 2026 and December 31, 2025
Overview
Our total assets increased $127.9 million, or 3.38%, from December 31, 2025 to March 31, 2026. Loans, net of deferred fees and discounts, increased $25.8 million, or 0.95%, from December 31, 2025 to March 31, 2026. Securities available-for-sale increased by $37.3 million, or 5.94%, and securities held-to-maturity decreased by $1.1 million, or 0.94%, from December 31, 2025 to March 31, 2026, respectively. Cash and cash equivalents increased $58.1 million, or 45.18% from December 31, 2025 to March 31, 2026. Total deposits increased $123.2 million, or 3.70%, from December 31, 2025 to March 31, 2026 which funded of our loan growth. Total stockholders’ equity increased $4.1 million, or 1.40% from December 31, 2025 to March 31, 2026.
Investment Securities
We use our securities portfolio primarily to enhance our overall yield on interest-earning assets and as a source of liquidity, as a tool to manage our balance sheet sensitivity and regulatory capital ratios, and as a base upon which to pledge assets for public deposits. When our liquidity position exceeds current needs and our expected loan demand, other investments are considered as a secondary earnings alternative. As investments mature, they are used to meet current cash needs, or they are reinvested to maintain our desired liquidity position. We have designated the majority of our securities as available-for-sale to provide flexibility, in case an immediate need for liquidity arises, and we believe that the composition of the portfolio offers needed flexibility in managing our liquidity position and interest rate sensitivity without adversely impacting our regulatory capital levels. In certain cases, we have designated securities as held-to-maturity to protect capital from changes in the value of the securities portfolio. Securities available-for-sale are reported at fair value with unrealized gains or losses reported as a separate component of other comprehensive (loss) income, net of related deferred taxes while securities held-to-maturity are reported at amortized cost. Purchase premiums and discounts are recognized in income using the interest method over the terms of the securities.
During the three months ended March 31, 2026, we purchased investment securities totaling $63.4 million and sold investment securities with proceeds received of $5.2 million including net realized gains of $8.3 thousand.
The following tables summarize the amortized cost, gross unrealized gains, gross unrealized losses, and fair value of debt securities at March 31, 2026 and December 31, 2025 (amounts in thousands).
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
March 31, 2026:
Securities available-for-sale:
Residential mortgage-backed
$
571,368
$
1,398
$
(37,957
)
$
534,809
U.S. treasury securities
15,036
-
(191
)
14,845
U.S. govt. sponsored enterprises
3,391
-
(266
)
3,125
State, county, and municipal
109,246
237
(8,790
)
100,693
Corporate debt obligations
13,199
18
(736
)
12,481
Total available-for-sale
$
712,240
$
1,653
$
(47,940
)
$
665,953
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
March 31, 2026:
Securities held-to-maturity:
Residential mortgage-backed
$
53,384
$
-
$
(9,113
)
$
44,271
State, county, and municipal
62,724
-
(9,910
)
52,814
Total held-to-maturity
$
116,108
$
-
$
(19,023
)
$
97,085
38
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
December 31, 2025:
Securities available-for-sale:
Residential mortgage-backed
$
537,078
$
2,386
$
(36,254
)
$
503,210
U.S. treasury securities
15,053
-
(279
)
14,774
U.S. govt. sponsored enterprises
3,389
-
(251
)
3,138
State, county, and municipal
102,266
366
(7,599
)
95,033
Corporate debt obligations
13,194
45
(769
)
12,470
Total available-for-sale
$
670,980
$
2,797
$
(45,152
)
$
628,625
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value
December 31, 2025:
Securities held-to-maturity:
Residential mortgage-backed
$
54,472
$
-
$
(9,463
)
$
45,009
State, county, and municipal
62,736
-
(9,485
)
53,251
Total held-to-maturity
$
117,208
$
-
$
(18,948
)
$
98,260
39
Loans
Loans are the largest category of interest earning assets and typically provide higher yields than other types of interest earning assets. Associated with the higher loan yields are the inherent credit and liquidity risks which management attempts to control and counterbalance. Total loans averaged $2.73 billion during the three months ended March 31, 2026, or 74.6% of average interest earning assets, as compared to $2.51 billion, or 73.1% of average interest earning assets, for the three months ended March 31, 2025. At March 31, 2026, total loans were $2.74 billion, compared to $2.71 billion at December 31, 2025, an increase of $25.8 million, or 0.95%.
The organic, or non-acquired, growth in our loan portfolio is attributable both to our ability to attract new customers and to our ability to benefit from the overall growth in our markets. We seek to build relationships with new customers, maintain and even improve our relationships with existing customers, and encourage our bankers to be involved in their communities. We expect our bankers to recognize business development efforts and to maintain healthy relationships with clients, and our philosophy is to be responsive to customer needs by providing decisions in a timely manner.
The following table provides a summary of the loan portfolio as of March 31, 2026, and December 31, 2025.
March 31, 2026
December 31, 2025
Amount
% of Total
Amount
% of Total
Residential real estate:
Closed-end 1-4 family - first lien
$
921,091
34.1
%
$
921,918
34.4
%
Closed-end 1-4 family - junior lien
18,649
0.7
%
18,392
0.7
%
Multi-family
71,842
2.7
%
53,305
2.0
%
Total residential real estate
1,011,582
37.5
%
993,615
37.1
%
Commercial real estate:
Nonfarm nonresidential
750,017
27.8
%
755,947
28.2
%
Farmland
89,851
3.3
%
82,158
3.1
%
Total commercial real estate
839,868
31.1
%
838,105
31.3
%
Construction and land development:
Residential
115,443
4.3
%
117,926
4.4
%
Other
136,661
5.1
%
134,602
5.0
%
Total construction and land development
252,104
9.4
%
252,528
9.4
%
Home equity lines of credit
165,004
6.1
%
157,914
5.9
%
Commercial loans:
Other commercial loans
321,751
11.9
%
320,162
12.0
%
Agricultural
80,399
3.0
%
81,051
3.0
%
State, county, and municipal loans
25,750
0.8
%
26,130
0.9
%
Total commercial loans
427,900
15.7
%
427,343
15.9
%
Consumer loans
51,721
1.9
%
52,686
2.0
%
Total gross loans
2,748,179
101.7
%
2,722,191
101.6
%
Allowance for credit losses
(37,871
)
-1.4
%
(36,011
)
-1.3
%
Net discounts
(2
)
0.0
%
(4
)
0.0
%
Net deferred loan fees
(8,866
)
-0.3
%
(8,671
)
-0.3
%
Net loans
$
2,701,440
100.0
%
$
2,677,505
100.0
%
In this context, a “real estate loan” is defined as any loan, secured by real estate, regardless of the purpose of the loan. It is common practice for financial institutions in our market areas, and for our Bank, to obtain a security interest or lien in real estate whenever possible, in addition to any other available collateral. This collateral is taken to reinforce the likelihood of the ultimate repayment of the loan and tends to increase the magnitude of the real estate loan portfolio component. In general, we prefer real estate collateral to many other potential collateral sources, such as accounts receivable, inventory and equipment.
40
Real estate loans are the largest component of our loan portfolio and include residential real estate loans, commercial real estate loans, and construction and land development loans. At March 31, 2026, this category totaled $2.10 billion, or 76.54% of total gross loans, compared to $2.08 billion, or 76.57%, at December 31, 2025. Real estate loans increased $19.3 million, or 0.93%, during the period December 31, 2025 to March 31, 2026. Commercial loans increased $557 thousand, or 0.13% during the same period. Our management team and lending officers have a great deal of experience and expertise in real estate lending and commercial lending.
The federal regulatory agencies issued two “guidance” documents that have a significant impact on real estate related lending and, thus, on the operations of the Bank. One part of the guidance could require lenders to restrict lending secured primarily by certain categories of commercial real estate to a level of 300% of their capital or to raise additional capital. This factor, combined with the current economic environment, could affect the Bank’s lending strategy away from, or to limit its expansion of, commercial real estate lending, which has been a material part of River Financial Corporation’s lending strategy. This could also have a negative impact on our lending and profitability. Management actively monitors the composition of the Bank’s loan portfolio, focusing on concentrations of credit, and the results of that monitoring activity are periodically reported to the Board of Directors.
The other guidance relates to the structuring of certain types of mortgages that allow negative amortization of consumer mortgage loans. Although the Bank does not engage at present in lending using these types of instruments, the guidance could have the effect of making the Bank less competitive in consumer mortgage lending if the local market is driving the demand for such an offering.
The repayment of loans is a source of additional liquidity for us. The following table sets forth our variable rate and fixed rate loans maturing within specific intervals at March 31, 2026.
LOAN MATURITY AND SENSITIVITY TO CHANGES IN INTEREST RATES
Over one
Over five
One year
year through
years through
Over fifteen
Variable Rate Loans:
or less
five years
fifteen years
years
Total
Residential real estate:
Closed-end 1-4 family - first lien
$
16,711
$
9,945
$
7,327
$
520,107
$
554,090
Closed-end 1-4 family - junior lien
815
3,266
147
120
4,348
Multi-family
496
19,499
-
-
19,995
Total residential real estate
18,022
32,710
7,474
520,227
578,433
Commercial real estate:
Nonfarm nonresidential
15,180
54,351
10,882
8,448
88,861
Farmland
4,449
3,392
-
-
7,841
Total commercial real estate
19,629
57,743
10,882
8,448
96,702
Construction and land development:
Residential
29,985
3,156
228
27,736
61,105
Other
30,301
20,675
6,484
-
57,460
Total construction and land development
60,286
23,831
6,712
27,736
118,565
Home equity lines of credit
8,793
6,717
127,272
-
142,782
Commercial loans:
Other commercial loans
78,738
43,132
10,421
-
132,291
Agricultural
55,831
3,231
361
-
59,423
State, county, and municipal loans
100
-
-
-
100
Total commercial loans
134,669
46,363
10,782
-
191,814
Consumer loans
1,475
1,216
-
-
2,691
Total gross variable rate loans
$
242,874
$
168,580
$
163,122
$
556,411
$
1,130,987
41
Over one
Over five
One year
year through
years through
Over fifteen
Fixed Rate Loans:
or less
five years
fifteen years
years
Total
Residential real estate:
Closed-end 1-4 family - first lien
$
45,931
$
165,848
$
53,959
$
101,263
$
367,001
Closed-end 1-4 family - junior lien
1,870
10,869
1,275
287
14,301
Multi-family
857
44,135
3,152
3,703
51,847
Total residential real estate
48,658
220,852
58,386
105,253
433,149
Commercial real estate:
Nonfarm nonresidential
65,386
407,445
184,573
3,752
661,156
Farmland
7,621
63,195
11,029
165
82,010
Total commercial real estate
73,007
470,640
195,602
3,917
743,166
Construction and land development:
Residential
51,713
2,189
-
436
54,338
Other
19,989
44,125
14,732
355
79,201
Total construction and land development
71,702
46,314
14,732
791
133,539
Home equity lines of credit
1,001
818
20,133
270
22,222
Commercial loans:
Other commercial loans
25,685
124,450
39,207
118
189,460
Agricultural
4,477
14,009
2,490
-
20,976
State, county, and municipal loans
1,491
11,211
12,948
-
25,650
Total commercial loans
31,653
149,670
54,645
118
236,086
Consumer loans
6,442
24,724
17,346
518
49,030
Total fixed rate gross loans
$
232,463
$
913,018
$
360,844
$
110,867
$
1,617,192
Over one
Over five
One year
year through
years through
Over fifteen
Total Loans:
or less
five years
fifteen years
years
Total
Residential real estate:
Closed-end 1-4 family - first lien
$
62,642
$
175,793
$
61,286
$
621,370
$
921,091
Closed-end 1-4 family - junior lien
2,685
14,135
1,422
407
18,649
Multi-family
1,353
63,634
3,152
3,703
71,842
Total residential real estate
66,680
253,562
65,860
625,480
1,011,582
Commercial real estate:
Nonfarm nonresidential
80,566
461,796
195,455
12,200
750,017
Farmland
12,070
66,587
11,029
165
89,851
Total commercial real estate
92,636
528,383
206,484
12,365
839,868
Construction and land development:
Residential
81,698
5,345
228
28,172
115,443
Other
50,290
64,800
21,216
355
136,661
Total construction and land development
131,988
70,145
21,444
28,527
252,104
Home equity lines of credit
9,794
7,535
147,405
270
165,004
Commercial loans:
Other commercial loans
104,423
167,582
49,628
118
321,751
Agricultural
60,308
17,240
2,851
-
80,399
State, county, and municipal loans
1,591
11,211
12,948
-
25,750
Total commercial loans
166,322
196,033
65,427
118
427,900
Consumer loans
7,917
25,940
17,346
518
51,721
Total gross loans
$
475,337
$
1,081,598
$
523,966
$
667,278
$
2,748,179
The information presented in the table above is based upon the contractual maturities of the individual loans, which may be subject to renewal at their contractual maturity. Renewal of such loans is subject to review and credit approval, as well as modification of terms at their maturity. Consequently, we believe that this treatment presents fairly the maturity structure of the loan portfolio.
42
Allowance for Credit Losses, Provision for Credit Losses and Asset Quality
Allowance for credit losses and provision for credit losses
The allowance for credit losses represents management’s estimate of expected lifetime credit losses in the loan portfolio. Management determines the allowance based on an ongoing evaluation of risk as it correlates to potential losses within the portfolio. Increases to the allowance for credit losses are made by charges to the provision for credit losses. Loans deemed to be uncollectible are charged against the allowance. Recoveries of previously charged-off amounts are credited to the allowance for credit losses.
The Bank recognizes that all significant factors that affect the collectability of the loan portfolio must be considered to determine the estimated credit losses as of the evaluation date. Furthermore, the methodology, in and of itself and even when selectively adjusted by comparison to market and peer data, does not provide a sufficient basis to determine the estimated credit losses. The Bank adjusts the modeled historical losses by a qualitative adjustment to incorporate all significant risks to form a sufficient basis to estimate the credit losses. These qualitative adjustments may increase or reduce reserve levels and include adjustments for lending management experience, loan review and audit results, asset quality and portfolio trends, loan portfolio growth, and concentrations, trends in underlying collateral, as well as external factors and economic conditions not already captured.
Loans that do not share risk characteristics are evaluated on an individual basis. Generally, this population includes loans on non-accrual status, however, they can also include any loan that does not share risk characteristics with its respective pool. When management determines that foreclosure is probable and the borrower is experiencing financial difficulty, the expected credit losses are based on the fair value of the collateral at the reporting date unadjusted for selling costs as appropriate. When the expected source of repayment is from a source other than the underlying collateral, impairment will generally be measured based on the present value of expected proceeds discounted at the contractual interest rate.
Management believes the data it uses in determining the allowance for credit losses is sufficient to estimate potential losses in the loan portfolio; however, actual results could differ from management’s estimate.
43
The following table presents a summary of changes in the allowance for credit losses for the periods indicated (amounts in thousands).
As of and for the
Three Months Ended:
March 31,
March 31,
2026
2025
Allowance for credit losses at beginning of period
$
36,011
$
32,088
Charge-offs:
Mortgage loans on real estate:
Residential real estate
18
-
Commercial real estate
-
-
Construction and land development
-
-
Total mortgage loans on real estate
18
-
Home equity lines of credit
-
-
Commercial
150
96
Consumer
36
41
Total
204
137
Recoveries:
Mortgage loans on real estate:
Residential real estate
9
11
Commercial real estate
1
3
Construction and land development
-
-
Total mortgage loans on real estate
10
14
Home equity lines of credit
-
9
Commercial
31
121
Consumer
10
17
Total
51
161
Net charge-offs
153
(24
)
Provision for credit losses
2,013
1,686
Allowance for credit losses at end of period
$
37,871
$
33,798
Total loans outstanding, net of deferred loan fees
2,739,311
2,536,243
Average loans outstanding, net of deferred loan fees
2,725,612
2,509,015
Allowance for credit losses to period end loans
1.38
%
1.33
%
Net charge-offs to average loans (annualized)
0.02
%
0.00
%
Allocation of the Allowance for Credit Losses
While no portion of the allowance for credits losses is in any way restricted to any individual loan or group of loans and the entire allowance is available to absorb losses from any and all loans, the following table represents management’s allocation of the allowance for credit losses to specific loan categories as of the dates indicated (amounts in thousands).
March 31, 2026
December 31, 2025
Percent of
Percent of
Amount
Total
Amount
Total
Mortgage loans on real estate:
Residential real estate
$
9,701
25.7
%
$
8,635
23.9
%
Commercial real estate
12,792
33.8
%
12,138
33.7
%
Construction and land development
3,684
9.7
%
3,599
10.0
%
Total mortgage loans on real estate
26,177
69.2
%
24,372
67.6
%
Home equity lines of credit
2,704
7.1
%
2,443
6.8
%
Commercial
8,441
22.3
%
8,700
24.2
%
Consumer
549
1.4
%
496
1.4
%
Total
$
37,871
100.0
%
$
36,011
100.0
%
44
Nonperforming Assets
The following table presents our nonperforming assets as of the dates indicated (amounts in thousands):
March 31,
December 31,
2026
2025
2025
Nonaccrual loans
$
13,558
$
8,459
$
10,644
Accruing loans past due 90 days or more
34
26
1,231
Total nonperforming loans
13,592
8,485
11,875
Foreclosed assets
1,557
124
1,537
Total nonperforming assets
$
15,149
$
8,609
$
13,412
Allowance for credit losses to period end loans
1.38
%
1.33
%
1.33
%
Allowance for credit losses to period end nonperforming loans
278.65
%
398.33
%
303.25
%
Net charge-offs to average loans (annualized)
0.02
%
0.00
%
0.13
%
Nonperforming assets to period end loans and foreclosed property
0.55
%
0.34
%
0.49
%
Nonperforming loans to period end loans
0.50
%
0.33
%
0.44
%
Nonperforming assets to total assets
0.39
%
0.24
%
0.35
%
Period end loans
$
2,739,311
$
2,536,243
$
2,713,516
Period end total assets
$
3,915,239
$
3,632,568
$
3,787,385
Allowance for credit losses
$
37,871
$
33,798
$
36,011
Average loans for the period
$
2,725,612
$
2,509,015
$
2,590,122
Net charge-offs for the period
$
153
$
(24
)
$
3,321
Period end loans plus foreclosed property
$
2,740,868
$
2,536,367
$
2,715,053
Accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions and collection efforts, that the borrower’s financial condition is such that the collection of interest is doubtful. In addition to consideration of these factors, loans that are past due 90 days or more are generally placed on nonaccrual status. When a loan is placed on nonaccrual status, all accrued interest on the loan is reversed and deducted from earnings as a reduction of reported interest income. No additional interest is accrued on the loan balance until collection of both principal and interest becomes reasonably certain. Payments received while a loan is on nonaccrual status will generally be applied to the outstanding principal balance. When a problem loan is finally resolved, there may ultimately be an actual write-down or charge-off of the principal balance of the loan that would necessitate additional charges to the allowance for credit losses. The nonperforming loans classification is made up of all loans 90 days or most past due and loans on nonaccrual status.
45
Deposits
Deposits, which include noninterest bearing demand deposits, interest bearing demand deposits, money market accounts, savings accounts, and time deposits, are the principal source of funds for the Bank. We offer a variety of products designed to attract and retain customers, with primary focus on building and expanding client relationships. Management continues to focus on establishing a comprehensive relationship with consumer and business borrowers, seeking deposits as well as lending relationships.
The following table details the composition of our deposit portfolio as of March 31, 2026, and December 31, 2025.
March 31, 2026
December 31, 2025
Percent of
Percent of
Amount
Total
Amount
Total
Demand deposits, non-interest bearing
$
703,569
20.4
%
$
666,615
20.0
%
Demand deposits, interest bearing
820,277
23.8
%
830,412
25.0
%
Money market accounts
959,619
27.8
%
912,537
27.4
%
Savings deposits
132,736
3.8
%
117,236
3.5
%
Time certificates of $250 thousand or more
486,832
14.1
%
454,244
13.7
%
Other time certificates
347,259
10.1
%
346,079
10.4
%
Totals
$
3,450,292
100.0
%
$
3,327,123
100.0
%
Total deposits were $3.45 billion at March 31, 2026, an increase of $123.2 million from December 31, 2025 with the increase resulting mainly in the balances of money market accounts and non-interest bearing demand deposit accounts. Some of our demand deposit accounts are seasonal and have expected balance fluctuations. The seasonality of these demand deposits is related to property tax collections and to agricultural production.
The following table presents the Bank’s time certificates of deposits by various maturities as of March 31, 2026 (amounts in thousands).
AllTime Deposits
Time Deposits $250 or more
Time Deposits less than $250
Three months or less
$
263,278
$
116,438
$
146,840
Greater than three months through six months
295,860
199,451
96,409
Greater than six months through one year
206,053
128,438
77,615
Greater than one year through three years
64,515
40,986
23,529
Greater than three years
4,385
1,519
2,866
Total
$
834,091
$
486,832
$
347,259
46
Other Funding Sources
We supplement our deposit funding with wholesale funding when needed for balance sheet planning and management or when the terms are attractive and will not disrupt our offering rates in our markets. A source we have used for wholesale funding is the Federal Home Loan Bank of Atlanta (FHLB). The line of credit with the FHLB is secured by pledges of various loans in our loan portfolio. At March 31, 2026, the FHLB line of credit available was $458.6 million and at December 31, 2025 it was $456.8 million. As of March 31, 2026 and December 31, 2025, we had $100.0 million Federal Home Loan Bank advances outstanding. We also have lines of credit for federal funds borrowings with other banks that totaled $120.0 million and $100.0 million at March 31, 2026 and December 31, 2025, respectively. Furthermore, we have pledged certain loans to the Federal Reserve Bank (FRB) to secure a line of credit. At March 31, 2026, the FRB line of credit available was $423.8 million and at December 31, 2025, the FRB line of credit available was $401.8 million. Another source that we have used for wholesale funding is the Federal Reserve Bank discount window. At both March 31, 2026 and December 31, 2025, we had no borrowings outstanding with the Federal Reserve Bank discount window.
On August 9, 2021, the Company entered into a line of credit agreement with ServisFirst Bank for $10 million. The line of credit agreement was amended on March 17, 2023 to increase the line to $20 million. The line of credit is to be used for general capital needs and investments. The line, when drawn, will require quarterly payments of interest only. The line of credit was amended on March 15, 2024 and extended the maturity date 24 months to March 15, 2026. Additionally, the amendment dated March 15, 2024 increased the interest rate float at Wall Street Journal Prime with a floor of 4.50% up from 3.25%. The line of credit was amended on March 15, 2026 and extended the maturity date 24 months to March 15, 2028. The line of credit is secured by 51% of the Bank's stock.
On March 9, 2021, River Financial Corporation (“the Company”) entered into a Subordinated Note Purchase Agreement (the “Purchase Agreement”) with the purchasers signatory thereto providing for a private placement of $40 million in aggregate principal amount of 4.00% fixed-to-floating rate Subordinated Notes due March 15, 2031 (the “Notes”). The Notes were issued by the Company to the purchasers at a price equal to 100% of their face amount. Interest on the Notes will accrue from March 9, 2021, and the Company will pay interest semi-annually on March 15th and September 15th of each year, beginning on September 15, 2021, until the Notes mature. The Notes will bear interest at a fixed rate of 4.00% per year, from and including March 9, 2021 to, but excluding, March 15, 2026. From and including March 15, 2026, but excluding the maturity date or early redemption date, the interest rate will reset quarterly at a variable rate equal to the then current three-month term SOFR plus 342 basis points. The Notes may not be prepaid by the Company prior to March 15, 2026. From and after March 15, 2026, the Company may prepay all or, from time to time, any part of the Notes at 100% of the principal amount (plus accrued interest) without penalty, subject to any requirement under Federal Reserve Board regulations to obtain prior approval from the Board of Governors of the Federal Reserve System before making any prepayment. The Notes may also be prepaid by the Company at any time after the occurrence of an event that would preclude the Notes from being included in the Tier 2 Capital of the Company. The Purchase Agreement contains customary representations and warranties, events of default, and affirmative and negative covenants, including the requirement that, subject to certain limitations, the Company restructure any portion of the Notes that ceases to be deemed Tier 2 Capital. The Company used approximately $19.7 million of the net proceeds from the issuance of the Notes to pay off its note with CenterState Bank dated October 31, 2018, including interest accrued on such notes, and the remaining proceeds for general corporate purposes, including providing capital to support the organic growth of its bank subsidiary, River Bank.
On December 15, 2023, the Bank entered into an irrevocable standby letter of credit agreement with the FHLB for $75 million issued in favor of the Alabama State Treasurer, SAFE Program. The letter of credit agreement was amended on June 24, 2024 to increase the amount to $200 million. The letter of credit agreement was amended on September 13, 2024 to decrease the amount to $175 million. The Bank is charged 0.09% on the amount of the irrevocable standby letter of credit. The letter of credit shall remain in effect until terminated by either the Bank or the FHLB upon written notice to the other party.
47
Liquidity
Market and public confidence in our financial strength and financial institutions in general will largely determine our access to appropriate levels of liquidity. This confidence is significantly dependent on our ability to maintain sound asset quality and appropriate levels of capital reserves.
Liquidity is defined as the ability to meet anticipated customer demands for funds under credit commitments and deposit withdrawals at a reasonable cost and on a timely basis. We measure our liquidity position by giving consideration to both on- and off-balance sheet sources of and demands for funds on a daily, weekly and monthly basis.
Liquidity risk involves the risk of being unable to fund assets with the appropriate duration and rate-based liabilities, as well as the risk of not being able to meet unexpected cash needs. Liquidity planning and management are necessary to ensure the ability to fund operations cost-effectively and to meet current and future potential obligations such as loan commitments and unexpected deposit outflows. In this process, we focus on assets and liabilities and on the manner in which they combine to provide adequate liquidity to meet our needs.
Funds are available from a number of basic banking activity sources, including the core deposit base, the repayment and maturity of loans, and investment cash flows. Other funding sources include federal funds borrowings, brokered certificates of deposit and borrowings from the FHLB and FRB.
Cash and cash equivalents at March 31, 2026 and December 31, 2025, were $186.6 million and $128.5 million, respectively. Based on recorded cash and cash equivalents, management believes River Financial Corporation’s liquidity resources were sufficient at March 31, 2026 to fund loans and meet other cash needs as necessary.
Off-Balance Sheet Arrangements
The Company is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financial needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Such instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized by the balance sheet. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.
The exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. In most cases, the Company requires collateral or other security to support financial instruments with credit risk.
Financial instruments whose contract amount represents credit risk at March 31, 2026 and December 31, 2025 were as follows (amounts in thousands):
March 31, 2026
December 31, 2025
Commitments to extend credit
$
475,525
$
450,991
Stand-by and performance letters of credit
9,100
8,786
Total
$
484,625
$
459,777
48
Contractual Obligations
While our liquidity monitoring and management considers both present and future demands for and sources of liquidity, the following table of contractual commitments focuses only on future obligations as of March 31, 2026 (amounts in thousands).
Due after 1
Due after 3
Due in 1
through
through
Due after
year or less
3 years
5 years
5 years
Total
Deposits without a stated maturity
$
2,616,201
$
-
$
-
$
-
$
2,616,201
Certificates of deposit of less than $250 thousand
320,864
23,529
2,830
36
347,259
Certificates of deposit of $250 thousand or more
444,327
40,986
1,154
365
486,832
Federal Home Loan Bank advances
-
40,000
-
60,000
100,000
Subordinated debt
-
-
40,000
-
40,000
Operating leases
1,133
1,825
1,514
4,960
9,432
Total contractual obligations
$
3,382,525
$
106,340
$
45,498
$
65,361
$
3,599,724
Capital Position and Dividends
At March 31, 2026 and December 31, 2025, total stockholders’ equity was $297.7 million and $293.6 million, respectively. The increase of approximately $4.1 million resulted mainly from the net change in retained earnings and accumulated other comprehensive loss for the three months ended March 31, 2026. Retained earnings for the first three months of 2026 increased $6.3 million while accumulated other comprehensive loss also increased $2.9 million. The ratio of stockholders’ equity to total assets was 7.60% and 7.75% at March 31, 2026 and December 31, 2025, respectively.
The Company is subject to various regulatory capital requirements administered by the federal banking agencies. Certain items such as goodwill and other intangible assets are deducted from total capital in arriving at the various regulatory capital measures such as Common Equity Tier 1 capital, Tier 1 capital, and total risk-based capital. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on River Financial Corporation’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory regulations and guidelines. The Company’s capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings, and other factors.
River Bank is eligible to utilize the community bank leverage ratio (CBLR) framework. The Bank has evaluated this option and has elected not to utilize the CBLR framework at this time, but may do so in the future.
49
Quantitative measures, established by regulation to ensure capital adequacy, require River Financial Corporation and River Bank to maintain minimum amounts and ratios (set forth in the table below) of total risk based capital, Common Equity Tier 1 capital, and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined in the regulations), and of Tier 1 capital (as defined in the regulations) to average assets (as defined in the regulations).
Management believes, as of March 31, 2026 and December 31, 2025, that the Company and Bank meet all capital adequacy requirements to which they are subject. The following tables present the Company's and Bank’s capital amounts and ratios as of March 31, 2026 and December 31, 2025 with the required minimum levels for capital adequacy purposes including the capital conservation buffer under Basel III and minimum levels to be well capitalized (as defined) under the regulatory prompt corrective action regulations.
As of March 31, 2026:
To Be Well Capitalized
Required For Capital
Under Prompt Corrective
Actual
Adequacy Purposes
Action Regulations (1)
Amount
Ratio
Amount
Ratio
Amount
Ratio
River Financial Corporation:
Total Capital (To Risk-Weighted Assets)
$
386,565
13.821
%
$
293,683
>= 10.500%
N/A
N/A
Common Equity Tier 1 Capital (To Risk-Weighted Assets)
311,928
11.152
%
195,789
>= 7.000%
N/A
N/A
Tier 1 Capital (To Risk-Weighted Assets)
311,928
11.152
%
237,744
>= 8.500%
N/A
N/A
Tier 1 Capital (To Average Assets)
311,928
8.135
%
153,383
>= 4.000%
N/A
N/A
River Bank:
Total Capital (To Risk-Weighted Assets)
$
385,353
13.778
%
$
293,682
>= 10.500%
$
279,697
>= 10.00%
Common Equity Tier 1 Capital (To Risk-Weighted Assets)
350,355
12.526
%
195,788
>= 7.000%
181,804
>= 6.50%
Tier 1 Capital (To Risk-Weighted Assets)
350,355
12.526
%
237,743
>= 8.500%
223,758
>= 8.00%
Tier 1 Capital (To Average Assets)
350,355
9.137
%
153,382
>= 4.000%
191,727
>= 5.00%
(1) the prompt corrective action provisions are applicable at the Bank level only.
As of December 31, 2025:
To Be Well Capitalized
Required For Capital
Under Prompt Corrective
Actual
Adequacy Purposes
Action Regulations (1)
Amount
Ratio
Amount
Ratio
Amount
Ratio
River Financial Corporation:
Total Capital (To Risk-Weighted Assets)
$
378,693
13.848
%
$
287,146
>= 10.500%
N/A
N/A
Common Equity Tier 1 Capital (To Risk-Weighted Assets)
304,853
11.148
%
191,430
>= 7.000%
N/A
N/A
Tier 1 Capital (To Risk-Weighted Assets)
304,853
11.148
%
232,441
>= 8.500%
N/A
N/A
Tier 1 Capital (To Average Assets)
304,853
7.945
%
153,489
>= 4.000%
N/A
N/A
River Bank:
Total Capital (To Risk-Weighted Assets)
$
378,261
13.832
%
$
287,146
>= 10.500%
$
273,472
>= 10.00%
Common Equity Tier 1 Capital (To Risk-Weighted Assets)
344,054
12.581
%
191,431
>= 7.000%
177,758
>= 6.50%
Tier 1 Capital (To Risk-Weighted Assets)
344,054
12.581
%
232,452
>= 8.500%
218,779
>= 8.00%
Tier 1 Capital (To Average Assets)
344,054
8.966
%
153,488
>= 4.000%
191,860
>= 5.00%
(1) the prompt corrective action provisions are applicable at the Bank level only.
50
River Financial Corporation’s principal source of funds for dividend payments and debt service is dividends received from River Bank. There are statutory limitations on the payment of dividends by River Bank to River Financial Corporation. As of March 31, 2026, the maximum amount the Bank could dividend to River Financial Corporation without prior regulatory authority approval was approximately $77.8 million. In addition to dividend restrictions, federal statutes prohibit unsecured loans from banks to bank holding companies.
During the three months ending March 31, 2026 there were 6,500 incentive stock options issued with a weighted average exercise price of $32.64 per share. During the same period, there were 63,594 incentive stock options exercised at a weighted average exercise price of $17.25 per share. Included in the 63,594 incentive stock options exercised during the same period were 3,042 cashless stock options. During the same period, there were no incentive stock options forfeited. During the same period, there were no stock options that expired. A total of 258,100 incentive stock options were outstanding as of March 31, 2026 with a weighted average exercise price of $28.41 per share and a weighted average remaining life of 4.21 years.
During the three months ending March 31, 2026 there were 17,650 restricted stock grants issued with a weighted average issue price of $32.70 per share. During the same time period, there were 29,500 stock grants that vested with a weighted average issue price of $31.31. During the same time period, there were no stock grants forfeited. A total of 123,683 restricted stock grants remained nonvested as of March 31, 2026 with a weighted average remaining life of 2.55 years.
51
Interest Sensitivity and Market Risk
Management monitors and manages the pricing and maturity of our assets and liabilities in order to diminish the potential adverse impact that changes in interest rates could have on net interest income. The principal monitoring technique employed by the Bank is simulation analysis.
In simulation analysis, we review each asset and liability category and its projected behavior in various different interest rate environments. These projected behaviors are based on management’s past experience and on current competitive environments, including the various environments in the different markets in which we compete. Using projected behavior and differing rate scenarios as inputs, the simulation analysis generates projections of net interest income. We also periodically verify the validity of this approach by comparing actual results with those that were projected in previous models.
Another technique used in interest rate management, but to a lesser degree than simulation analysis, is the measurement of the interest sensitivity “gap”, which is the positive or negative dollar difference between assets and liabilities that are subject to interest rate repricing within a given period of time. Interest rate sensitivity can be managed by repricing assets and liabilities, selling securities available for sale, replacing an asset or liability at maturity or by adjusting the interest rate during the life of an asset or liability.
We evaluate interest rate sensitivity risk and then formulate guidelines regarding asset generation and repricing, and sources and prices of off-balance sheet commitments in order to maintain interest sensitivity risk at levels deemed prudent by management. We use computer simulations to measure the net income effect of various rate scenarios. The modeling reflects interest rate changes and the related impact on net income over specified periods of time.
The following table illustrates our interest rate sensitivity at March 31, 2026, assuming the relevant assets and liabilities are collected and paid, respectively, based upon historical experience rather than their stated maturities (amounts in thousands).
0-1 Mos
1-3 Mos
3-12 Mos
1-2 Yrs
2-3 Yrs
>3 Yrs
Total
Interest earning assets
Loans
$
660,736
$
154,128
$
482,363
$
422,540
$
316,031
$
703,513
$
2,739,311
Securities
64,269
21,099
64,974
67,019
56,882
507,818
782,061
Certificates of deposit in banks
-
-
2,500
-
250
218
2,968
Cash balances in banks
84,840
-
-
-
-
-
84,840
Federal funds sold
66,000
-
-
-
-
-
66,000
Total interest earning assets
$
875,845
$
175,227
$
549,837
$
489,559
$
373,163
$
1,211,549
$
3,675,180
Interest bearing liabilities
Interest bearing transaction accounts
$
179,307
$
14,122
$
63,546
$
84,728
$
84,728
$
393,846
$
820,277
Savings and money market accounts
194,174
17,512
78,810
105,082
105,082
591,695
1,092,355
Time deposits
98,671
165,270
501,743
60,778
3,243
4,386
834,091
Securities sold under agreements to repurchase
-
-
-
-
-
-
-
Federal Home Loan Bank advances
-
-
-
-
40,000
60,000
100,000
Subordinated debentures, net of loan costs
-
-
-
-
-
39,640
39,640
Total interest bearing liabilities
$
472,152
$
196,904
$
644,099
$
250,588
$
233,053
$
1,089,567
$
2,886,363
Interest sensitive gap
Period gap
$
403,693
$
(21,677
)
$
(94,262
)
$
238,971
$
140,110
$
121,982
$
788,817
Cumulative gap
$
403,693
$
382,016
$
287,754
$
526,725
$
666,835
$
788,817
Cumulative gap - Rate Sensitive Assets/ Rate Sensitive Liabilities
11.0
%
10.4
%
7.8
%
14.3
%
18.1
%
21.5
%
The Bank generally benefits from increasing market interest rates when it has an asset-sensitive gap (a positive number) and generally benefits from decreasing market interest rates when it is liability sensitive (a negative number). As shown in the table above, the Bank is asset sensitive on a cumulative basis throughout the time frame. The interest sensitivity analysis presents only a static view of the timing and repricing opportunities, without taking into consideration that changes in interest rates do not affect all assets and liabilities equally. For example, rates paid on a substantial portion of core deposits may change contractually within a relatively short time frame, but those are viewed by management as significantly less interest sensitive than market-based rates such as those paid on non-core deposits. For this and other reasons, management relies more upon the simulations analysis (as noted above) in managing interest rate risk. Net interest income may be impacted by other significant factors in a given interest rate environment, including changes in volume and mix of interest earning assets and interest bearing liabilities.
52
The Bank’s earnings are dependent, to a large degree, on its net interest income, which is the difference between interest income earned on all interest earning assets, primarily loans and securities, and interest paid on all interest bearing liabilities, primarily deposits. Market risk is the risk of loss from adverse changes in market prices and interest rates. Our market risk arises primarily from inherent interest rate risk in our lending, investing and deposit gathering activities. We seek to reduce our exposure to market risk through actively monitoring and managing interest rate risk. Management relies on simulations analysis to evaluate the impact of varying levels of prevailing interest rates and the sensitivity of specific earning assets and interest bearing liabilities to changes in those prevailing rates. Simulation analysis consists of evaluating the impact on net interest income given changes from 400 basis points below the current prevailing rates to 400 basis points above current prevailing interest rates. Management makes certain assumptions as to the effect varying levels of interest rates have on certain interest earning assets and interest bearing liabilities, which assumptions consider both historical experience and consensus estimates of outside sources.
The following table illustrates the results of our simulation analysis to determine the extent to which market risk would affect net interest income for the next twelve months if prevailing interest rates increased or decreased by the specified amounts from current rates. As noted above, this model uses estimates and assumptions in asset and liability account rate reactions to changes in prevailing interest rates. However, to isolate the market risk inherent in the balance sheet, the model assumes that no growth in the balance sheet occurs during the projection period. This model also assumes an immediate and parallel shift in interest rates, which would result in no change in the shape or slope of the interest rate yield curve. Because of the inherent use of the estimates and assumptions in the simulation model to derive this market risk information, the actual results of the future impact of market risk on our net interest income may differ from that found in the table. Given the current level of prevailing interest rates, management believes prevailing market rates falling 300 basis points and 400 basis points are not reasonable assumptions. All other simulated prevailing interest rates changes modeled indicate a level of sensitivity of the Bank’s net interest income to those changes that is acceptable to management and within established Bank policy limits as of both dates shown.
Impact on net interest income
As of
As of
March 31, 2026
December 31, 2025
Change in prevailing rates:
+ 400 basis points
(6.83
)%
(8.32
)%
+ 300 basis points
(4.95
)%
(5.75
)%
+ 200 basis points
(3.22
)%
(3.35
)%
+ 100 basis points
(1.43
)%
(0.98
)%
+ 0 basis points
-
-
- 100 basis points
(3.16
)%
(2.49
)%
- 200 basis points
(4.87
)%
(2.87
)%
- 300 basis points
(5.35
)%
(2.59
)%
- 400 basis points
(4.69
)%
(1.89
)%
53
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This item is not applicable to smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company has carried out an evaluation under the supervision and with participation of management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even the effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2026, the Company’s disclosure controls and procedures are effective in ensuring that material information relating to the Company required to be disclosed in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the requisite time periods and is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure.
Changes in Internal Control over Financial Reporting
There has been no change in the Company’s internal control over financial reporting during the three months ended March 31, 2026 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
54
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time the Company is a party to legal proceedings. At the present time the Company is not part of any proceeding which the Company deems to be material.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 that could materially affect the Company’s business, financial condition or future results. The risks described in the Company’s Annual Report on Form 10-K may not be the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results in the future. No material changes in the Risk Factors previously reported have occurred.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Certificate of Incorporation of River Financial Corporation included as Exhibit 3.1 in the River Financial Corporation Form 8-K filed May 18, 2023 and incorporated herein by reference.
Bylaws of River Financial Corporation included as Exhibit 3.2 in the River Financial Corporation 8-K filed May 18, 2023 and incorporated herein by reference.
4.1
Article IV and Article V of the Certificates of Incorporation filed at Exhibit 3.1 to the Registrants’ Form 8-K filed May 18, 2023, and Article II and Article VI of the Bylaws included as Exhibit 3.2 of the Registrants’ Form 8-K filed May 18, 2023, and incorporated herein by reference.
River Financial 2025 Stock Compensation Plan filed as Exhibit 10.1 to the Registrant’s Form 8-K/A filed February 20,2025 and incorporated herein by reference.
River Financial Change in Control Agreement for Jimmy Stubbs filed as Exhibit 10.2 to the Registrant’s Registration Statement on Form S-4, registration no. 333-205986 filed on July 31, 2015 and incorporated herein by reference.
River Financial Change in Control Agreement for Joel K. Winslett filed as Exhibit 10.4 to the Registrant’s Registration Statement on Form S-4, registration no. 333-205986 filed on July 31, 2015 and incorporated herein by reference.
River Financial Change in Control Agreement for Ray Smith filed as Exhibit 10.5 to the Registrant’s Registration Statement on Form S-4, registration no. 333-205986 filed on July 31, 2015 and incorporated herein by reference.
River Financial Change in Control Agreement for Boles Pegues filed as Exhibit 10.6 to the Registrant’s Registration Statement on Form S-4, registration no. 333-205986 filed on July 31, 2015 and incorporated herein by reference.
River Financial Employment Term Sheet for Ray Smith filed as Exhibit 10.7 to the Registrant’s Registration Statement on Form S-4, registration no. 333-205986 filed on July 31, 2015 and incorporated herein by reference.
River Financial Employment Term Sheet for Boles Pegues filed as Exhibit 10.8 to the Registrant’s Registration Statement on Form S-4, registration no. 333-205986 filed on July 31, 2015 and incorporated herein by reference.
River Financial 2015 Incentive Stock Compensation Plan filed as Annex E to the Registrant’s Registration Statement on Form S-4, registration no. 333-205986 filed on July 31, 2015 and incorporated herein by reference.
Form of Subordinated Note Purchase Agreement, dated March 9, 2021, between River Financial Corporation and certain accredited investors, included as Exhibit 10.1 in the River Financial Corporation Form 8-K, filed on March 10, 2021 and incorporated herein by reference.
Loan and Security Agreement, dated August 9, 2021, between River Financial Corporation and ServisFirst Bank, included as Exhibit 10.13 in the River Financial Corporation Form 10-K, filed on March 15, 2022 and incorporated herein by reference.
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Document
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Schedules omitted. Registrant agrees to furnish a copy of any omitted schedule to the SEC upon request.
** Filed herewith.
57
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.