Red River Bancshares, Inc. — Q1 2024 Form 10-Q
Business context and reporting period. Louisiana-based bank holding company operating Red River Bank, with 27 banking centers and one loan and deposit production office. This unaudited report covers the quarter ended March 31, 2024; balance-sheet comparisons are to December 31, 2023, and earnings comparisons are to Q1 2023 unless stated otherwise. Amounts are in U.S. dollars.
Key financial results
| Metric | Q1 2024 | Comparable period / change |
|---|---|---|
| Net interest income | $21.4 million | Down 6.7% from Q1 2023; up $69,000 from Q4 2023 |
| Net interest margin | 2.80%; 2.83% FTE | 2.83% FTE in Q4 2023; 3.13% in Q1 2023 |
| Net income | $8.2 million | Down 14.7% from $9.6 million in Q1 2023; down 1.3% from $8.3 million in Q4 2023 |
| Diluted EPS | $1.16 | $1.33 in Q1 2023; $1.16 in Q4 2023 |
| Noninterest income / expenses | $4.9 million / $15.9 million | Income up $588,000 and expenses up $385,000 year over year |
| Operating cash flow | $14.4 million | $13.3 million in Q1 2023 |
Q1 2024 return on average assets was 1.07%, return on average equity 10.77%, and efficiency ratio 60.37%. The effective tax rate was 19.1%.
Financial position, liquidity, and credit
- Assets were $3.07 billion, down $55.5 million (1.8%) from year-end. Loans held for investment grew $45.2 million (2.3%) to $2.04 billion; deposits fell $56.0 million (2.0%) to $2.75 billion.
- Cash and cash equivalents declined $75.6 million to $229.8 million, or 7.48% of assets. Cash flow reflected $23.4 million used in investing and $66.6 million used in financing, primarily deposit outflows and the $10.0 million share repurchase.
- Management reported $1.65 billion of additional borrowing capacity and no outstanding borrowings. Estimated uninsured deposits were $809.5 million (29.5% of deposits), or $635.7 million excluding collateralized public deposits.
- Equity was $299.3 million; stockholders’ equity to assets was 9.74%. Company total risk-based capital was 17.84%; the Bank’s was 17.51%, and management said the Bank was well-capitalized.
- Nonperforming assets were $2.53 million (0.08% of assets). The allowance for credit losses was $21.6 million, or 1.06% of loans. Nonaccrual loans increased to $2.26 million from $1.96 million at year-end; there were no loans classified doubtful or loss.
- Available-for-sale securities had a $65.3 million net unrealized loss; held-to-maturity securities had a $24.5 million unrealized loss. The securities portfolio’s average life was 7.7 years and estimated effective duration 5.2 years.
Material changes, outlook, and risks
- Compared with Q1 2023, higher loan and securities yields lifted interest income by $5.3 million, but deposit interest expense rose $6.8 million. Deposit cost increased to 1.70% from 0.71%, contributing to lower net interest income and margin.
- Management expects approximately $100 million of securities cash flows during the remainder of 2024 and plans to reinvest them in higher-yielding assets. It expects net interest margin FTE to improve slightly through 2024, subject to balance-sheet activity and interest rates; this is not a formal earnings forecast.
- Management attributed the $56 million deposit decline primarily to seasonal public-entity outflows, partly offset by consumer time deposits. Loan growth reflected new activity across Louisiana markets.
- Management said Q1 earnings benefited from approximately $800,000 of nonrecurring income payments and operating-expense reductions. Disclosed items included $145,000 of debit-card contract termination income, a $262,000 vendor rebate, and a $284,000 data-processing refund.
- The company repurchased 200,000 shares for $10.0 million in a privately negotiated transaction, separate from its renewed $5.0 million 2024 repurchase authorization. The quarterly dividend increased to $0.09 per share from $0.08 in 2023.
- Key risks include interest-rate and deposit-cost volatility, deposit retention and liquidity, borrower and collateral deterioration, inflation and economic conditions, securities fair-value losses, and operational and cybersecurity risks. The company disclosed no legal proceedings expected by management to materially harm results, financial condition, or cash flows; it reported no material changes to its previously disclosed risk factors.
Important facts for investors to verify
- Whether deposit outflows were seasonal and how deposit balances, mix, uninsured balances, and funding costs develop in subsequent quarters.
- Whether loan growth persists without deterioration in delinquency, nonaccrual, criticized-loan, or charge-off trends, and whether the allowance remains adequate.
- Whether margin improvement materializes as securities cash flows are reinvested, given ongoing deposit repricing and the rate outlook.
- The extent to which earnings rely on the identified nonrecurring income and expense items, and the sustainability of recurring fee income and operating costs.
- How securities unrealized losses, liquidity access, and capital respond to interest-rate changes; the filing’s model estimates a 1.1% decline in one-year net interest income under a 100-basis-point rate decrease.
- The effects of the $10.0 million buyback, remaining repurchase authorization, and higher dividend on capital and per-share results.