Red River Bancshares(RRBI) - 2025 Q2 - Quarterly Results

Financial Performance The company reported strong year-over-year net income growth for Q2 and the first half of 2025, driven by an expanding net interest margin Second Quarter 2025 Financial Results Red River Bancshares reported Q2 2025 net income of $10.2 million, a 27.7% increase year-over-year, with strong returns on assets and equity Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | Change (QoQ) | Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Income | $10.2 million | $10.4 million | $8.0 million | -1.5% | +27.7% | | Diluted EPS | $1.51 | $1.52 | $1.16 | -0.7% | +30.2% | | Return on Assets | 1.30% | 1.32% | 1.05% | -2 bps | +25 bps | | Return on Equity | 12.27% | 12.85% | 10.69% | -58 bps | +158 bps | Year-to-Date 2025 Financial Results Net income for the first six months of 2025 increased 27.0% to $20.5 million compared to the prior year, boosting diluted EPS by 31.2% Six Months Ended June 30 Key Financial Metrics | Metric | 2025 | 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | Net Income | $20.5 million | $16.2 million | +27.0% | | Diluted EPS | $3.03 | $2.31 | +31.2% | | Return on Assets | 1.31% | 1.06% | +25 bps | | Return on Equity | 12.55% | 10.73% | +182 bps | Q2 2025 Operational Highlights The quarter featured an improved net interest margin, steady loan growth, and significant capital management activities including stock buybacks - Net interest margin FTE increased for the seventh consecutive quarter to 3.36%, driven by higher asset yields and lower deposit costs[5][7] - The company executed significant stock buybacks, including repurchasing 11,748 shares under its public program and an additional 100,000 shares through a private agreement[5] - A cash dividend of $0.12 per share was paid in Q2 2025, and the board announced a 25% increase to $0.15 per share for Q3 2025[5] - Loans held for investment (HFI) grew by $23.8 million, or 1.1%, during the quarter to $2.14 billion[5] Management's Discussion and Analysis Management discusses the drivers of financial performance, including net interest margin expansion, credit loss provisions, and operational expenses CEO's Statement The CEO highlighted solid Q2 performance driven by net interest margin expansion and affirmed the company's focus on strategic growth - The CEO emphasized that the net interest margin FTE has now increased for seven consecutive quarters, reaching 3.36% in Q2 2025[7] - Loan growth was steady but slower than Q1, with some reduced demand attributed to uncertainty around trade, tariffs, and macroeconomic factors[8] - Future strategy involves expanding the Red River Bank network, evaluating new opportunities, and adding experienced bankers to grow market share[9][10] Net Interest Income and Net Interest Margin Net interest income and margin both improved sequentially, driven by higher asset yields and lower deposit costs, with a positive outlook for H2 2025 Net Interest Income & Margin Performance (Q2 2025 vs Q1 2025) | Metric | Q2 2025 | Q1 2025 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $25.8 million | $24.6 million | +$1.2 million (+4.9%) | | Net Interest Margin FTE | 3.36% | 3.22% | +14 bps | | Cost of Deposits | 1.56% | 1.61% | -5 bps | - The improvements were attributed to higher yields on securities (+12 bps) and loans (+9 bps), and lower costs on deposits (-5 bps)[12] - Looking ahead to H2 2025, the company expects to redeploy maturing securities and loans into higher-yielding assets and maintain a fairly consistent cost of deposits[13] Provision for Credit Losses The provision for credit losses remained consistent with the prior quarter, reflecting loan growth and ongoing macroeconomic uncertainty - The provision for credit losses was $450,000, unchanged from Q1 2025[14] Noninterest Income Noninterest income decreased from the prior quarter, primarily due to lower brokerage and SBIC income reflecting reduced client activity Noninterest Income Breakdown (Q2 2025 vs Q1 2025) | Income Source | Q2 2025 | Q1 2025 | Change | | :--- | :--- | :--- | :--- | | Total Noninterest Income | $4.7 million | $5.3 million | -$554,000 (-10.5%) | | Brokerage Income | $989,000 | $1.3 million | -$336,000 (-25.4%) | | SBIC Income | $47,000 | $280,000 | -$233,000 (-83.2%) | Operating Expenses Operating expenses increased, largely because the prior quarter benefited from significant one-time vendor refunds and rebates - Total operating expenses rose by $779,000 compared to Q1 2025[18] - Data processing expense increased by $433,000, as Q1 2025 included a $447,000 periodic refund[19] - Loan and deposit expenses increased by $336,000, as Q1 2025 included a $173,000 vendor rebate[20] - Personnel expenses increased by $193,000 (1.9%) due to annual raises effective in April 2025[21] Financial Condition The company's balance sheet shows stable total assets, loan growth, and significantly improved asset quality as of June 30, 2025 Asset Overview Total assets were $3.17 billion, with strong liquidity and a 1.1% quarterly increase in loans held for investment Key Balance Sheet Items (June 30, 2025) | Metric | Amount | Change (QoQ) | | :--- | :--- | :--- | | Total Assets | $3.17 billion | -$18.3 million (-0.6%) | | Loans HFI | $2.14 billion | +$23.8 million (+1.1%) | | Total Securities | $697.3 million | -$2.3 million (-0.3%) | | Total Deposits | $2.81 billion | -$15.1 million (-0.5%) | - The liquid assets to assets ratio was 6.64% as of June 30, 2025[22] - The loans HFI to deposits ratio increased to 76.09% from 74.84% at the end of the prior quarter[22] Securities Portfolio The securities portfolio remained stable at $697.3 million, with unrealized losses on available-for-sale and held-to-maturity holdings - The company reinvested cash flows from maturing securities into higher-yielding securities during the quarter[23] Securities Unrealized Losses (June 30, 2025) | Portfolio | Fair/Amortized Value | Unrealized Loss | | :--- | :--- | :--- | | Available-for-Sale (AFS) | $567.0 million | $61.1 million | | Held-to-Maturity (HTM) | $127.3 million | $22.4 million | Loan Portfolio Loans held for investment grew 1.1% to $2.14 billion, led by growth in construction and development loans Loans HFI by Category (June 30, 2025) | Loan Category | Amount | % of Total | Change (QoQ) | | :--- | :--- | :--- | :--- | | Commercial real estate | $883.6 M | 41.3% | -1.0% | | One-to-four family residential | $623.5 M | 29.2% | +0.9% | | Construction and development | $194.2 M | 9.1% | +10.6% | | Commercial and industrial | $348.9 M | 16.3% | +2.9% | | Total loans HFI | $2,138.6 M | 100.0% | +1.1% | - The largest industry concentration is in health care loans, which represent 8.0% of total loans HFI[30] Asset Quality Asset quality improved significantly, with nonperforming assets decreasing by 74.4% to just 0.04% of total assets Asset Quality Metrics | Metric | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Nonperforming Assets (NPAs) | $1.3 million | $5.2 million (implied) | | NPAs to Assets Ratio | 0.04% | 0.16% | | ACL to Loans HFI Ratio | 1.04% | 1.03% | | Net Charge-offs to Avg. Loans | 0.00% | 0.02% | - The sharp decrease in NPAs was primarily due to a past due loan being brought current by the customer[31] Deposits Total deposits decreased slightly due to seasonal outflows, with noninterest-bearing deposits comprising 32.0% of the total - Total deposits decreased by $15.1 million during Q2 2025, with consumer deposits falling by $27.1 million while commercial deposits grew by $23.5 million[33][36] - Noninterest-bearing demand deposits were $898.0 million, making up 32.0% of total deposits[34] - Estimated uninsured deposits were $881.7 million, or 31.4% of total deposits; the bank's liquidity sources covered 210.8% of these uninsured deposits[38] Stockholders' Equity Stockholders' equity increased as net income more than offset the impact of common stock repurchases and cash dividends - The $2.0 million increase in stockholders' equity was driven by $10.2 million in net income[39] - Equity was reduced by the repurchase of 111,748 shares for $5.8 million and the payment of $801,000 in cash dividends[39] Supplementary Information This section provides background on the company, its non-GAAP disclosures, and forward-looking statement disclaimers About Red River Bancshares, Inc. Red River Bancshares is the holding company for Red River Bank, a Louisiana state-chartered bank serving customers across the state - The company operates 28 banking centers throughout Louisiana, serving markets including Alexandria, Shreveport-Bossier City, Baton Rouge, and New Orleans[43] Non-GAAP Disclosure and Forward-Looking Statements The report includes non-GAAP measures to evaluate performance and contains forward-looking statements subject to risks and uncertainties - The company uses certain non-GAAP measures, and reconciliations to the most comparable GAAP measures are provided in the financial tables[40][41][42] - The report contains forward-looking statements subject to risks and uncertainties, and readers are cautioned not to place undue reliance on them[44] Financial Tables This section contains detailed unaudited financial statements and supplementary data for the periods ended June 30, 2025 Unaudited Financial Statements This section provides detailed financial statements, including balance sheets, income statements, and non-GAAP reconciliations - Financial Highlights table provides a summary of key performance, per share, credit quality, and capital ratios[46][47] - Consolidated Balance Sheets present the company's financial position as of June 30, 2025, and comparative prior periods[48][49] - Consolidated Statements of Income detail the company's revenues and expenses for the three and six months ended June 30, 2025 and 2024[50][51] - Reconciliation of Non-GAAP Financial Measures provides a bridge from GAAP metrics to non-GAAP metrics like tangible book value per share[58][59]