Ray Smith
About Ray Smith
Gerald R. (Ray) Smith, Jr., age 71, is President of River Financial Corporation and River Bank & Trust and has served on the board since 2015; he brings ~50 years of banking experience, including prior roles as Keystone Bank CEO, AmSouth City President, and Area Executive for North Alabama (“The Bank”/AmSouth) . Core credentials emphasize loan and deposit operations and central underwriting, with recent governance responsibility on the Directors’ Committee overseeing the Bank’s AML/CFT Consent Order remediation . Company performance during 2024: net income rose 17.1% year over year to $31.3 million, net interest margin expanded to 3.01%, and loans grew 11.0% to $2.49 billion, reflecting stronger earning assets mix and yields . Shares trade privately over-the-counter; last known trade price was $32.50 per share (range $28.25–$34.00 in the last year), limiting traditional TSR analysis .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| River Financial Corporation / River Bank & Trust | President; Director | 2015–present | Lead growth and profitability; board leadership across regions |
| Keystone Bank | Chief Executive Officer; Founding Director | Not disclosed (pre‑2015 merger) | Built franchise; integrated in River via merger |
| AmSouth Bank (“The Bank”) | City President (Gadsden); Area Executive – North Alabama | Not disclosed | Regional leadership; underwriting and operations expertise |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Community involvement (Gadsden, AL) | Various civic/business roles | Not disclosed | Local market relationships and brand equity |
Fixed Compensation
| Item | 2023 ($) | 2024 ($) |
|---|---|---|
| Base Salary | 293,192 | 304,615 |
| Non-Equity Incentive (Cash Bonus) | 75,000 | 179,010 |
| All Other Compensation (incl. director fees, benefits) | 47,716 | 49,984 |
| Total | 415,908 | 533,609 |
Notes:
- Director fees included in “All Other Compensation” ($20,000 in 2023; $22,000 in 2024) .
- No stock or option awards in 2023–2024; prior restricted stock grants (see Performance Compensation) .
Performance Compensation
| Metric | Weighting | Target | Actual | Payout | Vesting |
|---|---|---|---|---|---|
| Annual Cash Incentive tied to Company Net Income vs budget | Not disclosed | Not disclosed | Net income $26.7M (2023); $31.3M (2024) | $75,000 (2023); $179,010 (2024) | Cash; immediate |
| Restricted Stock (grant 1/1/2022; 4,000 shares) | Time-based | N/A | 1,333 vested; 2,667 non-vested at 12/31/2023 | N/A | 3-year vest (33.33%/yr) |
| Stock Options (time-vested awards) | Time-based | N/A | Outstanding (see table) | N/A | 3–5 year vest schedules |
Option Awards Detail (Ray Smith):
| Grant Date | # Options (Exercisable) | Exercise Price | Expiration | Vesting |
|---|---|---|---|---|
| 1/20/2016 | 10,000 | $16.00 | 1/20/2026 | 5 years (20%/yr) |
| 11/1/2018 | 20,000 | $27.00 | 11/1/2028 | 3 years (33.33%/yr) |
| 11/1/2019 | 15,000 | $27.73 | 11/1/2029 | 3 years (33.33%/yr) |
- As of 2025, Ray’s vested options increased to 49,000 not yet exercised ; last known share price $32.50 implies options are in-the-money (potential exercise/selling pressure) .
Equity Ownership & Alignment
| Date | Beneficial Ownership (shares) | % of Outstanding | Composition Notes |
|---|---|---|---|
| March 19, 2025 (Proxy record date) | 149,250 | 1.92% | Includes 45,000 vested options; 10,000 unvested restricted shares with voting rights |
| March 20, 2024 (Proxy record date) | 139,250 | 1.82% | Includes 45,000 vested options; 2,667 unvested restricted shares with voting rights |
| March 22, 2023 (Proxy record date) | 140,250 | 2.10% | Includes 45,000 vested options; 4,000 unvested restricted shares with voting rights |
Additional alignment and policies:
- Shares trade privately; last known trade $32.50; weighted average $31.37 during prior year .
- No pledging/hedging policy disclosure found; Insider Trading Policy adopted Dec 20, 2023 with trading windows and allowance for Rule 10b5‑1 plans .
- ESOP holds 202,084 shares (2.60% of outstanding as of 3/19/2025), aligning employee interests broadly .
Employment Terms
- Employment agreements: Company does not have employment agreements with executive officers (including Ray Smith) .
- SERP: Non-qualified supplemental executive retirement plan; estimated annual benefit for Mr. Smith is ~$88.5k, paid annually post-retirement subject to vesting and good-standing conditions .
- Change-of-control: Awards (options/SARs/restricted stock/RSUs) accelerate vesting upon death, disability, or change-of-control; options may be cashed out at transaction price . Potential excise tax/Company deduction loss if payments constitute “excess parachute payments” under IRC §280G (20% excise tax to employee; non-deductibility to Company) .
- Clawback/forfeiture: If committee determines embezzlement, fraud, dishonesty, breach of fiduciary duty or other “bad act,” participant is not entitled to exercise or receive payment for awards .
- Non-compete / non-solicit / garden leave: Not disclosed.
Board Governance
- Board service: Director since 2015; President; role on Directors’ Committee established to oversee AML/CFT Consent Order compliance (with Neighbors, David Smith, Taylor) .
- Independence: Board determined all directors are independent except the CEO (Stubbs) and President (Smith), reflecting dual executive-director status .
- Committee memberships: RB&T Audit/Compliance Committee membership disclosed (not listing Smith); Company relies on Bank’s Audit/Compliance Committee for FDIC Part 363 duties; Murray Neighbors designated “financial expert” .
- Leadership structure: Chairman (Larry Puckett) separate from CEO (Stubbs); separation emphasized to enhance oversight; President (Smith) is management director .
Director Compensation
| Year | Cash Fees | Stock Awards | Total |
|---|---|---|---|
| 2024 | $22,000 per director; directors may elect stock instead of cash | Director stock awards of $22,000 for certain directors (vest immediately) | $22,000 each (mix cash/stock; committee fees included) |
- For Mr. Smith, director fees are included within “All Other Compensation” in the NEO table ($22,000 in 2024; $20,000 in 2023) .
Performance & Track Record
| Metric | 2023 | 2024 |
|---|---|---|
| Net Income ($MM) | 26.739 | 31.317 |
| Net Interest Income ($MM) | 79.309 | 94.449 |
| Loans, net ($MM) | 2,240.006 | 2,486.822 |
| Deposits ($MM) | 2,730.655 | 3,067.159 |
| Net Interest Margin (%) | 2.82% | 3.01% |
| ROAA (%) | 0.87% | 0.92% |
Selected operational highlights:
- Yield on loans increased from 5.52% to 6.29%; average loans up ~15% .
- Strong organic loan and deposit growth across Alabama markets .
- Regulatory remediation: Directors’ Committee (including Smith) appointed February 21, 2024 to oversee AML/CFT Consent Order compliance; status updates indicate significant steps implemented (training, staffing, controls, look-back) .
Compensation Structure Analysis
- Cash vs. equity mix shifted toward cash in 2023–2024 (no new grants), while prior 2022 restricted stock remains outstanding; pay responsive to net income outcomes (2024 bonus rose to $179k) .
- Incentive metric: single financial metric (Company net income vs budget) creates clear line-of-sight but limited multi-metric balance (no explicit TSR/ESG metrics disclosed) .
- Equity plans updated: 2025 Incentive Stock Compensation Plan authorizes 500,000 shares; per-participant annual limit 40,000 shares; awards include ISOs, NQOs, SARs, restricted stock, RSUs .
- Single-trigger acceleration under change-of-control for equity awards may increase payout certainty independent of sustained post-transaction performance .
Related Party Transactions & Independence
- Banking transactions with directors/officers conducted on market terms consistent with Regulation O; no adverse features expected .
- Director independence explicitly assessed with exceptions for executive directors (Stubbs, Smith) .
Risk Indicators & Red Flags
- Regulatory: FDIC/ASBD AML/CFT Consent Order finalized March 12, 2024; Directors’ Committee oversight (incl. Smith) mitigates risk but indicates heightened compliance scrutiny .
- Dual role: Executive-director status (non-independent) carries inherent governance conflict risk; Chairman and CEO roles are separate, partially offsetting .
- Equity award acceleration: Single-trigger change-of-control vesting could be viewed as shareholder-unfriendly in some governance frameworks .
- No disclosed clawback beyond “bad act” forfeiture; no non-compete terms disclosed .
Compensation Committee Analysis
- Administration: Executive Compensation Committee administers equity plan and approves incentive payouts; Committee and full board approve grants via Executive Session .
- Independent consultant usage: Not disclosed.
- Peer group benchmarking/target percentile: Not disclosed.
Say-on-Pay & Shareholder Feedback
- Say-on-pay voting history: Not disclosed in DEF 14A; 2025 proxy focused on director elections and approval of 2025 Incentive Stock Compensation Plan .
Investment Implications
- Alignment: Smith’s meaningful ownership (1.9% of outstanding as of 2025) and in-the-money options align interests; SERP adds retention incentive but with modest annual benefit ($88.5k) .
- Selling pressure: 49,000 vested options (strikes $16–$27.73) are in-the-money vs $32.50 last trade, creating potential exercise/sell dynamics around liquidity windows .
- Pay-for-performance: Cash bonus sensitive to net income outcomes; 2024 earnings strength supported higher payout; lack of multi-metric design could overemphasize short-term profitability .
- Governance: Executive-director status reduces independence; however, separation of Chair/CEO and directors’ oversight of AML remediation provides mitigating oversight signals .
- Execution risk: Ongoing AML/CFT program enhancements under Consent Order require sustained board and management focus; progress reported, but regulatory follow-through remains a monitoring item for investors .
Values retrieved from S&P Global for any metrics not explicitly cited above.*