Red River Bancshares(RRBI) - 2020 Q1 - Quarterly Report

Financial Performance - Net income for Q1 2020 was $6.7 million, or $0.92 diluted EPS, an increase of 18.4% compared to $5.7 million, or $0.85 diluted EPS, for Q1 2019[121] - Net income for Q1 2020 was $6.7 million, or $0.92 diluted EPS, an increase of 18.4% from $5.7 million, or $0.85 diluted EPS, in Q1 2019[126] - Net interest income for Q1 2020 was $16.1 million, a 4.1% increase from $15.5 million in Q1 2019, primarily due to a $117.6 million increase in average interest-earning assets[131] - The return on average assets for Q1 2020 was 1.36%, compared to 1.24% for Q1 2019[127] - The efficiency ratio improved to 57.40% in Q1 2020 from 59.52% in Q1 2019[127] - Noninterest income rose by $1.4 million, or 43.5%, to $4.7 million, driven by gains on the sale of securities and increased mortgage loan income[140][141] - The provision for loan losses for Q1 2020 was $503,000, down $23,000, or 4.4%, from $526,000 in Q1 2019[185] Asset and Equity Growth - Total assets increased to $2,010,701 thousand as of March 31, 2020, up 1.1% from $1,988,225 thousand as of December 31, 2019[123] - Total stockholders' equity increased to $264,175 thousand as of March 31, 2020, a 4.9% increase from $251,898 thousand as of December 31, 2019[123] - Total stockholders' equity as of March 31, 2020, was $264.2 million, an increase of $12.3 million, or 4.9%, from $251.9 million as of December 31, 2019[189] - Tangible book value per common share rose to $36.08 as of March 31, 2020, up from $34.48 as of December 31, 2019[217] - Tangible common equity to tangible assets ratio improved to 13.07% as of March 31, 2020, from 12.60% as of December 31, 2019[217] Loan and Deposit Activity - Noninterest-bearing deposits increased by $223.2 million, or 36.7%, to $830.5 million as of April 30, 2020, primarily due to government stimulus funds and PPP loan proceeds[116] - Loans held for investment (HFI) increased to $1.45 billion as of March 31, 2020, reflecting a growth of $8.4 million, or 0.6%, from $1.44 billion as of December 31, 2019[168] - Average total loans increased by $61.3 million, or 4.4%, for the three months ended March 31, 2020, compared to the average total loans for the twelve months ended December 31, 2019[194] - Total deposits increased by $6.7 million, or 0.4%, to $1.73 billion as of March 31, 2020, from $1.72 billion as of December 31, 2019[187] - Noninterest-bearing deposits rose by $22.4 million, or 3.8%, to $607.3 million, representing 35.15% of total deposits as of March 31, 2020[187] Impact of COVID-19 - The company anticipates an increased level of problem loans due to economic pressures from the COVID-19 pandemic[111] - Operating expenses for Q2 2020 are expected to increase due to costs associated with managing the COVID-19 pandemic and implementing the PPP[119] - The company has suspended or reduced various fees to assist customers during the crisis, which is expected to adversely affect ongoing noninterest income[118] - Short-term loan modifications were made on $113.4 million of loans HFI to provide temporary relief to borrowers affected by COVID-19[171] - The company processed over 1,000 PPP applications within five days of accepting applications, demonstrating rapid response to the crisis[107] Interest Rate and Risk Management - The net interest margin for Q1 2020 was 3.41%, negatively impacted by two significant Federal Reserve rate decreases in March 2020[121] - The average effective federal funds rate decreased to 1.26% in Q1 2020 from 2.40% in Q1 2019, impacting yields on interest-earning assets[130] - The estimated net interest income at risk for a 100 basis point shift should not decline by more than 10.0% for the subsequent one-year period[205] - The company's exposure to interest rate risk is managed by the Asset-Liability Management Committee, which monitors strategies based on interest rate risk levels[203] Securities and Investments - The company sold $31.2 million of securities in the first quarter of 2020, resulting in significant gains and a strategic reallocation of funds[159] - The total AFS securities fair value was $401.944 million as of March 31, 2020, compared to $335.573 million as of December 31, 2019[166] - As of March 31, 2020, the net unrealized gain of the AFS securities portfolio was $7.3 million, compared to a net unrealized loss of $30,000 as of December 31, 2019[162] - The securities portfolio tax-equivalent yield decreased to 2.21% for the three months ended March 31, 2020, from 2.29% for the same period in 2019[161]