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

PART I Financial Information Item 1. Financial Statements (Unaudited) Unaudited consolidated financial statements for Q2 2025 show total assets of $3.17 billion and net income of $10.2 million, detailing financial position and operational results Consolidated Balance Sheets Total assets reached $3.17 billion as of June 30, 2025, driven by loan growth, with stable deposits and increased stockholders' equity Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $3,168,092 | $3,149,594 | | Total Cash and Cash Equivalents | $210,442 | $268,975 | | Loans held for investment, net | $2,116,358 | $2,053,282 | | Total Securities (AFS & HTM) | $694,286 | $681,944 | | Total Liabilities | $2,832,742 | $2,829,855 | | Total Deposits | $2,810,605 | $2,805,106 | | Total Stockholders' Equity | $335,350 | $319,739 | Consolidated Statements of Income Net income for Q2 2025 increased 27.7% to $10.2 million, driven by a significant rise in net interest income for the six-month period Income Statement Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $25,819 | $21,787 | $50,429 | $43,150 | | Provision for credit losses | $450 | $300 | $900 | $600 | | Total Noninterest Income | $4,718 | $5,098 | $9,990 | $10,026 | | Total Operating Expenses | $17,367 | $16,689 | $33,955 | $32,562 | | Net Income | $10,196 | $7,987 | $20,548 | $16,175 | | Diluted EPS | $1.51 | $1.16 | $3.03 | $2.31 | Notes to Unaudited Consolidated Financial Statements Detailed notes disclose accounting policies, financial instruments, and operational specifics, covering securities, loans, deposits, regulatory capital, and stock repurchases - Total securities were $697.3 million as of June 30, 2025, with available-for-sale (AFS) securities at a fair value of $567.0 million and held-to-maturity (HTM) securities at an amortized cost of $127.3 million[41][42][43] - Total loans held for investment (HFI) grew to $2.14 billion as of June 30, 2025, from $2.08 billion at year-end 2024. The Allowance for Credit Losses (ACL) stood at $22.2 million, or 1.04% of loans HFI[54][55] - Total deposits were stable at $2.81 billion as of June 30, 2025. Noninterest-bearing deposits comprised 32.0% of total deposits[71] Company Capital Ratios (as of June 30, 2025) | Capital Ratio | Actual | Basel III Minimum | | :--- | :--- | :--- | | Total Risk-Based Capital | 18.33% | 10.50% | | Tier I Risk-Based Capital | 17.32% | 8.50% | | Common Equity Tier I Capital | 17.32% | 7.00% | | Tier I Leverage Capital | 12.18% | 4.00% | - In Q2 2025, the company repurchased 111,748 shares of common stock, including 100,000 shares in a privately negotiated transaction and 11,748 shares under its public repurchase program[95][96] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes strong H1 2025 performance to improved net interest margin and loan growth, maintaining robust financial condition, liquidity, and asset quality - Q2 2025 net income was $10.2 million ($1.51 diluted EPS), a slight decrease from $10.4 million in Q1 2025, but a significant increase from Q2 2024[109][113] - Net interest margin (FTE) increased 14 basis points to 3.36% in Q2 2025 compared to Q1 2025, driven by higher asset yields and lower deposit costs[109][118] - Asset quality remains strong, with nonperforming assets (NPAs) at only $1.3 million, or 0.04% of total assets, as of June 30, 2025[111][179] - The company executed a privately negotiated repurchase of 100,000 shares for $5.1 million and repurchased an additional 11,748 shares under its public program in Q2 2025[111][201] Results of Operations Net income for H1 2025 rose 27.0% to $20.5 million, primarily due to a 16.9% increase in net interest income, despite higher operating expenses - Net interest income for the six months ended June 30, 2025, was $50.4 million, a 16.9% increase from the same period in 2024, driven by higher asset yields and lower interest expense[121] - The provision for credit losses was $900,000 for the first six months of 2025, up from $600,000 in the prior year, reflecting loan growth and uncertainty regarding tariffs and trade[132][133] - For the first half of 2025, noninterest income was stable at $10.0 million. A $434,000 increase in brokerage income was offset by a $479,000 decrease in SBIC income[136][137][139] - Operating expenses rose 4.3% to $34.0 million for the first six months of 2025, primarily due to a $1.1 million increase in personnel expenses from higher headcount and commissions[146][147] Financial Condition Financial condition strengthened with assets at $3.17 billion, driven by 3.1% loan growth, stable deposits, improved asset quality, and a 4.9% increase in stockholders' equity - Loans HFI increased by 3.1% to $2.14 billion in the first six months of 2025, led by growth in construction & development and commercial & industrial loans[171][173] - Nonperforming assets (NPAs) decreased by 59.4% to $1.3 million as of June 30, 2025, from $3.3 million at year-end 2024. The NPA to assets ratio improved to 0.04%[179] - The Allowance for Credit Losses (ACL) increased to $22.2 million (1.04% of loans HFI) from $21.7 million at year-end, reflecting provisions for loan growth[185] - Deposits remained stable at $2.81 billion. Noninterest-bearing deposits grew by 3.6% and now represent 32.0% of total deposits, up from 30.9% at year-end 2024[189][191] Liquidity and Asset-Liability Management Strong liquidity is maintained with $210.4 million in liquid assets and $1.65 billion in borrowing capacity, positioning the asset-sensitive balance sheet to benefit from rising interest rates - As of June 30, 2025, the company had $210.4 million in liquid assets and $1.65 billion in available borrowing capacity from sources like the FHLB and Federal Reserve[205][211][212] - Total available liquidity of $1.86 billion covers estimated uninsured deposits by 210.8%[194] - The company's balance sheet is asset-sensitive. An instantaneous +100 bps rate shock is projected to increase net interest income by 1.4% over 12 months[229] - Unfunded loan commitments totaled $509.4 million and standby letters of credit were $15.0 million as of June 30, 2025[217] Quantitative and Qualitative Disclosures About Market Risk Market risk disclosures, primarily interest rate volatility, are incorporated by reference from MD&A, with active management ensuring an asset-sensitive balance sheet - The primary market risk for the company is interest rate volatility. Disclosures are provided in the MD&A section under "Interest Rate Sensitivity and Market Risk"[243] Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls over financial reporting - Management concluded that disclosure controls and procedures were effective as of the end of the reporting period[244] - No material changes were made to internal controls over financial reporting during the second quarter of 2025[245] PART II Other Information Legal Proceedings The company is involved in ordinary course legal matters, none of which are expected to materially adversely affect financial condition or operations - The company reports no legal proceedings that are expected to have a material adverse effect on its consolidated financial results[247] Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes to the risk factors disclosed in the 2024 Annual Report on Form 10-K have occurred[248] Unregistered Sales of Equity Securities and Use of Proceeds In Q2 2025, the company repurchased 111,748 shares of common stock at an average price of $51.51, with $4.3 million remaining for future repurchases Share Repurchase Activity (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Value Remaining in Program | | :--- | :--- | :--- | :--- | | April 2025 | 0 | N/A | $5.0M | | May 2025 | 105,871 | $51.26 | $4.67M | | June 2025 | 5,877 | $55.98 | $4.34M | | Total Q2 | 111,748 | $51.51 | $4.34M | - The May 2025 repurchases included a significant privately negotiated transaction for 100,000 shares, which was supplemental to the public repurchase program[249] Exhibits This section lists exhibits filed with Form 10-Q, including corporate governance documents, stock repurchase agreements, and officer certifications