Companies: 10,793     total market cap: $139.209 T
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Red River Bancshares
RRBI
#6881
Rank
$0.61 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
$94.22
Share price
0.47%
Change (1 day)
81.86%
Change (1 year)
๐Ÿฆ Banks๐Ÿ’ณ Financial services
Categories
  1. Red River Bancshares
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2024 Q2

Red River Bancshares - 10-Q quarterly report FY2024 Q2


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended: June 30, 2024

or
 
☐Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from                      to                     

Commission File Number: 001-38888 
Red River Bancshares, Inc.
(Exact name of registrant as specified in its charter)
Louisiana 
72-1412058
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification Number)
1412 Centre Court Drive, Suite 301, Alexandria, Louisiana
 71301
(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (318) 561-4000
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, no par valueRRBIThe Nasdaq Stock Market, LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒   No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☐Accelerated filer
☒
Non-accelerated filer☐Smaller reporting company
☐
Emerging growth company
☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
As of July 31, 2024, the registrant had 6,886,353 shares of common stock, no par value, issued and outstanding. 


TABLE OF CONTENTS
Page
Glossary of Terms
3
Cautionary Note Regarding Forward-Looking Statements
4
PART I
Financial Information
Item 1.
Financial Statements (Unaudited)
Consolidated Balance Sheets
5
Consolidated Statements of Income
6
Consolidated Statements of Comprehensive Income
7
Consolidated Statements of Changes in Stockholders’ Equity
8
Consolidated Statements of Cash Flows
9
Notes to Unaudited Consolidated Financial Statements
11
Item 2.
27
Item 3.
52
Item 4.
52
PART II
Other Information
Item 1.
Legal Proceedings
53
Item 1A.
Risk Factors
53
Item 2.
53
Item 3.
Defaults Upon Senior Securities
53
Item 4.
Mine Safety Disclosures
53
Item 5.
Other Information
53
Item 6.
Exhibits
54
Signatures
55
2
GLOSSARY OF TERMS
Unless the context indicates otherwise, references in this filing to “we,” “our,” “us,” “the Company,” and “our company” refer to Red River Bancshares, Inc., a Louisiana corporation and bank holding company, and its consolidated subsidiaries. All references in this filing to “Red River Bank,” “the bank,” and “the Bank” refer to Red River Bank, our wholly owned bank subsidiary.
Other abbreviations or acronyms used in this filing are defined below.
ABBREVIATION OR ACRONYMDEFINITION
ACLAllowance for credit losses
AFSAvailable-for-sale
AOCIAccumulated other comprehensive income or loss
ASCAccounting Standards Codification
ASUAccounting Standards Update
Basel IIIBasel Committee’s 2010 Regulatory Capital Framework (Third Accord)
BOLIBank-owned life insurance
bp(s)Basis point(s)
CBLRCommunity bank leverage ratio
CECL
Current Expected Credit Losses, related to ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
CRACommunity Reinvestment Act
Director Compensation ProgramAmended and Restated Director Compensation program, which allows directors of the Company and the Bank an opportunity to select how to receive their annual director fees.
Economic Aid ActEconomic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act
Economic Growth ActEconomic Growth, Regulatory Relief, and Consumer Protection Act
EPSEarnings per share
Exchange ActSecurities Exchange Act of 1934, as amended
FDICFederal Deposit Insurance Corporation
Federal ReserveBoard of Governors of the Federal Reserve System
FHLBFederal Home Loan Bank of Dallas
FOMCFederal Open Market Committee
FTEFully taxable equivalent basis
GAAPGenerally Accepted Accounting Principles in the United States of America
HFIHeld for investment
HFSHeld for sale
HTMHeld-to-maturity
LDPOLoan and deposit production office
MSAMetropolitan statistical area
NOWNegotiable order of withdrawal
NPA(s)Nonperforming asset(s)
Policy StatementFederal Reserve’s Small Bank Holding Company Policy Statement
PPPPaycheck Protection Program
ReportQuarterly Report on Form 10-Q
SBASmall Business Administration
SBICSmall Business Investment Company
Securities ActSecurities Act of 1933, as amended
SECSecurities and Exchange Commission
3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, which reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would,” and “outlook,” or the negative version of those words, or such other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts and are based on current expectations, estimates and projections about our industry, management’s beliefs, and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.
There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following:
•volatility and direction of market interest rates;
•business and economic conditions generally, in the financial services industry, nationally, and within our local market areas;
•government intervention in the U.S. financial system, including the effects of recent and future legislative, tax, accounting, and regulatory actions and reforms, including the Economic Aid Act, which established the SBA PPP, the Inflation Reduction Act of 2022, and other stimulus legislation or changes in banking, securities, accounting, and tax laws and regulations, and their application by our regulators;
•changes in management personnel;
•increased competition in the financial services industry, particularly from regional and national institutions;
•our ability to maintain important deposit customer relationships and our reputation, and to otherwise avoid liquidity risks;
•factors that can impact the performance of our loan portfolio, including real estate values and liquidity in our primary market areas, the financial health of our commercial borrowers, and the success of construction projects that we finance, including any loans acquired in acquisition transactions;
•changes in the value of collateral securing our loans;
•risks associated with system failures or failures to protect against cybersecurity threats, such as breaches of our network security;
•deterioration of our asset quality;
•the adequacy of our reserves, including our ACL;
•operational risks associated with our business;
•natural disasters and adverse weather, acts of terrorism, pandemics, an outbreak of hostilities, including the ongoing military conflicts between Russia and Ukraine and Israel and Hamas, as well as the current tensions with China, or other international or domestic calamities, and other matters beyond our control;
•our ability to prudently manage our growth and execute our strategy;
•compliance with the extensive regulatory framework that applies to us;
•changes in the laws, rules, regulations, interpretations, or policies relating to financial institutions, accounting, tax, trade, monetary, and fiscal matters; and
•the risk factors found in “Part I - Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, as well as in “Part II - Item 1A. Risk Factors” of this Report and other reports and documents we file from time to time with the SEC.
The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this Report. Additional information on these and other risk factors can be found in “Part II - Item 1A. Risk Factors” of this Report and in “Part I - Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by applicable law. New risks emerge from time to time, and it is not possible for us to predict what risks will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

RED RIVER BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share amounts)June 30,
2024		December 31,
2023
ASSETS
Cash and due from banks$35,035 $53,062 
Interest-bearing deposits in other banks178,038 252,364 
Total Cash and Cash Equivalents213,073 305,426 
Securities available-for-sale, at fair value (amortized cost of $591,291 and $632,258, respectively)
526,890 570,092 
Securities held-to-maturity, at amortized cost (fair value of $113,975 and $119,029, respectively)
136,824 141,236 
Equity securities, at fair value2,921 2,965 
Nonmarketable equity securities2,283 2,239 
Loans held for sale3,878 1,306 
Loans held for investment2,047,890 1,992,858 
Less: Allowance for credit losses(21,627)(21,336)
Loans held for investment, net2,026,263 1,971,522 
Premises and equipment, net57,910 57,088 
Accrued interest receivable9,570 9,945 
Bank-owned life insurance29,947 29,529 
Intangible assets1,546 1,546 
Right-of-use assets2,973 3,629 
Other assets34,450 32,287 
Total Assets$3,048,528 $3,128,810 
LIABILITIES
Noninterest-bearing deposits$892,942 $916,456 
Interest-bearing deposits1,823,704 1,885,432 
Total Deposits2,716,646 2,801,888 
Accrued interest payable8,747 8,000 
Lease liabilities3,100 3,767 
Accrued expenses and other liabilities13,045 11,304 
Total Liabilities2,741,538 2,824,959 
COMMITMENTS AND CONTINGENCIES— — 
STOCKHOLDERS’ EQUITY
Preferred stock, no par value:
Authorized - 1,000,000 shares; None Issued and Outstanding
— — 
Common stock, no par value:
Authorized - 30,000,000 shares;
Issued and Outstanding - 6,886,928 and 7,091,637 shares, respectively
44,413 55,136 
Additional paid-in capital2,590 2,407 
Retained earnings321,719 306,802 
Accumulated other comprehensive income (loss)(61,732)(60,494)
Total Stockholders’ Equity306,990 303,851 
Total Liabilities and Stockholders’ Equity$3,048,528 $3,128,810 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
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RED RIVER BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Three Months Ended June 30, For the Six Months Ended June 30, 
(in thousands, except per share data)2024202320242023
INTEREST AND DIVIDEND INCOME
Interest and fees on loans$26,882 $22,851 $52,775 $44,616 
Interest on securities4,068 3,665 8,132 7,231 
Interest on federal funds sold— 251 — 886 
Interest on deposits in other banks2,709 1,671 5,748 3,409 
Dividends on stock22 33 44 61 
Total Interest and Dividend Income33,681 28,471 66,699 56,203 
INTEREST EXPENSE
Interest on deposits11,894 6,933 23,549 11,756 
Interest on other borrowed funds— 28 — 28 
Total Interest Expense11,894 6,961 23,549 11,784 
Net Interest Income21,787 21,510 43,150 44,419 
Provision for credit losses300 300 600 300 
Net Interest Income After Provision for Credit Losses21,487 21,210 42,550 44,119 
NONINTEREST INCOME
Service charges on deposit accounts1,367 1,435 2,735 2,828 
Debit card income, net949 924 1,971 1,858 
Mortgage loan income650 645 1,106 920 
Brokerage income893 923 1,880 1,730 
Loan and deposit income492 517 984 995 
Bank-owned life insurance income216 188 418 366 
Gain (Loss) on equity securities(13)(64)(44)(32)
SBIC income454 1,380 806 1,559 
Other income (loss)90 59 170 123 
Total Noninterest Income5,098 6,007 10,026 10,347 
OPERATING EXPENSES
Personnel expenses9,603 9,547 19,154 18,547 
Occupancy and equipment expenses1,698 1,554 3,314 3,271 
Technology expenses724 642 1,433 1,390 
Advertising408 343 745 624 
Other business development expenses593 494 1,068 930 
Data processing expense651 638 998 1,038 
Other taxes500 693 1,237 1,378 
Loan and deposit expenses309 284 267 489 
Legal and professional expenses729 580 1,347 1,097 
Regulatory assessment expenses401 397 805 804 
Other operating expenses1,073 960 2,194 2,052 
Total Operating Expenses16,689 16,132 32,562 31,620 
Income Before Income Tax Expense9,896 11,085 20,014 22,846 
Income tax expense1,909 2,117 3,839 4,280 
Net Income$7,987 $8,968 $16,175 $18,566 
EARNINGS PER SHARE
Basic$1.16 $1.25 $2.32 $2.59 
Diluted$1.16 $1.25 $2.31 $2.58 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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RED RIVER BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
For the Three Months Ended June 30, For the Six Months Ended June 30, 
(in thousands)2024202320242023
Net income$7,987 $8,968 $16,175 $18,566 
Other comprehensive income (loss):
Unrealized net gain (loss) on securities arising during period872 (1,849)(2,235)1,108 
Tax effect(183)389 470 (231)
Change in unrealized net loss on securities transferred to held-to-maturity353 390 667 755 
Tax effect(74)(82)(140)(159)
Total other comprehensive income (loss)968 (1,152)(1,238)1,473 
Comprehensive Income (Loss)$8,955 $7,816 $14,937 $20,039 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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RED RIVER BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
(dollars in thousands, except per share amounts)Common
Shares Issued		Common
Stock		Additional Paid-In CapitalRetained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Total
Stockholders’
Equity
Balance as of December 31, 20227,183,915 $60,050 $2,088 $274,781 $(71,166)$265,753 
Net income— — — 9,598 — 9,598 
Stock incentive plan— — 69 — — 69 
Forfeiture of restricted shares of common stock(1,130)— — — — — 
Issuance of shares of common stock as board compensation1,660 84 — — — 84 
Repurchase of common stock(6,795)(346)— — — (346)
Cash dividend - $0.08 per share
— — — (574)— (574)
Cumulative effect of change in accounting principle— — — (569)— (569)
Other comprehensive income (loss)— — — — 2,625 2,625 
Balance as of March 31, 20237,177,650 $59,788 $2,157 $283,236 $(68,541)$276,640 
Net income— — — 8,968 — 8,968 
Stock incentive plan— — 91 — — 91 
Issuance of restricted shares of common stock through stock incentive plan9,300 — — — — — 
Repurchase of common stock(11,894)(601)— — — (601)
Cash dividend - $0.08 per share
— — — (574)— (574)
Other comprehensive income (loss)— — — — (1,152)(1,152)
Balance as of June 30, 20237,175,056 $59,187 $2,248 $291,630 $(69,693)$283,372 

Balance as of December 31, 20237,091,637 $55,136 $2,407 $306,802 $(60,494)$303,851 
Net income— — — 8,188 — 8,188 
Stock incentive plan— — 78 — — 78 
Issuance of shares of common stock as board compensation811 41 — — — 41 
Repurchase of common stock(200,000)(10,000)— — — (10,000)
Cash dividend - $0.09 per share
— — — (638)— (638)
Other comprehensive income (loss)— — — — (2,206)(2,206)
Balance as of March 31, 20246,892,448 $45,177 $2,485 $314,352 $(62,700)$299,314 
Net income— — — 7,987 — 7,987 
Stock incentive plan— — 105 — — 105 
Issuance of restricted shares of common stock through stock incentive plan10,700 — — — — — 
Repurchase of common stock(16,220)(764)— — — (764)
Cash dividend - $0.09 per share
— — — (620)— (620)
Other comprehensive income (loss)— — — — 968 968 
Balance as of June 30, 20246,886,928 $44,413 $2,590 $321,719 $(61,732)$306,990 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
8
RED RIVER BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30, 
(in thousands)20242023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$16,175 $18,566 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation1,202 1,068 
Amortization278 277 
Share-based compensation earned183 160 
Share-based board compensation earned42 22 
Net (accretion) amortization on securities AFS627 851 
Net (accretion) amortization on securities HTM(652)(736)
(Gain) Loss on equity securities44 32 
Provision for credit losses600 300 
Deferred income tax (benefit) expense38 (459)
Net (increase) decrease in loans HFS(2,572)(4,068)
Net (increase) decrease in accrued interest receivable375 591 
Net (increase) decrease in BOLI(418)(366)
Net increase (decrease) in accrued interest payable747 2,535 
Net increase (decrease) in accrued income taxes payable(522)(747)
Other operating activities, net685 (108)
Net cash provided by (used in) operating activities16,832 17,918 
CASH FLOWS FROM INVESTING ACTIVITIES
Activity in securities AFS:
Maturities, principal repayments, and calls75,248 54,754 
Purchases(34,908)(28,568)
Activity in securities HTM:
Maturities, principal repayments, and calls5,064 5,850 
Sale of equity securities— 6,000 
Purchase of nonmarketable equity securities— (852)
Capital contribution in partnerships(40)(816)
Net (increase) decrease in loans HFI(55,341)(31,507)
Proceeds from sales of foreclosed assets69 — 
Proceeds from sales of premises and equipment11 — 
Purchases of premises and equipment(2,024)(2,252)
Net cash provided by (used in) investing activities(11,921)2,609 
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits(85,242)(134,753)
Proceeds from other borrowed funds— 60,000 
Repurchase of common stock(10,764)(947)
Cash dividends(1,258)(1,148)
Net cash provided by (used in) financing activities(97,264)(76,848)
Net change in cash and cash equivalents(92,353)(56,321)
Cash and cash equivalents - beginning of period305,426 278,392 
Cash and cash equivalents - end of period$213,073 $222,071 



The accompanying notes are an integral part of these unaudited consolidated financial statements.
9
RED RIVER BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30, 
(in thousands)20242023
SUPPLEMENTAL DISCLOSURES
Cash paid during the year for:
Interest$22,802 $9,249 
Income taxes$4,256 $5,480 
SUPPLEMENTAL INFORMATION FOR NON-CASH INVESTING AND FINANCING ACTIVITIES
Assets acquired in settlement of loans$— $22 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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RED RIVER BANCSHARES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1.Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements of the Company were prepared in accordance with GAAP for interim financial information, general practices within the financial services industry, and instructions for Form 10-Q and Regulation S-X. Accordingly, these interim financial statements do not include all of the information or footnotes required by GAAP for annual financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial statements have been included. The results of operations for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for the entire fiscal year. These statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Certain prior period amounts have been reclassified to conform to the current period presentation. These changes in presentation did not have a material impact on the Company’s financial condition or results of operations.
Critical Accounting Policies and Estimates
In preparing the financial statements, the Company is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the Company’s financial condition, results of operations, comprehensive income, changes in stockholders’ equity, and cash flows for the interim period presented. These adjustments are of a normal recurring nature and include appropriate estimated provisions.
Recent Accounting Pronouncements
ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The guidance issued in this update requires improvement to the disclosures about a public entity’s reportable segments and more detailed information about a reportable segment’s expenses and other segment items. Even though the Company has a single reportable segment, all the disclosures required by this update are required. Under this guidance, public entities are required to disclose segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment that are currently required annually. The goal of these disclosures is to enable investors to develop more decision-useful financial analyses. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments in this update should be applied retrospectively to all previous periods presented. The Company does not expect the adoption of this standard to have a material impact on the Company’s consolidated financial statements.
ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The guidance in this update provides enhanced transparency and decision usefulness of income tax disclosures. The amendment addresses investor requests for income tax information through improvements to income tax disclosures related to the rate reconciliation and income taxes paid information. The guidance requires public business entities to disclose in their rate reconciliation table additional categories of information about federal, state, and foreign income taxes and to provide more details about the reconciling items in some categories if the items meet a quantitative threshold. The guidance also requires all entities to disclose annually income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and to disaggregate the information by jurisdiction based on a quantitative threshold. Investors anticipate theses disclosures will provide an understanding of an entity’s exposures to changes in tax legislation and allow investors to better assess income tax information that affects cash flow forecasts and capital allocation decisions, as well as identify opportunities to increase future cash flows. The standard is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted. The amendments should be applied on a prospective basis, but retrospective application is permitted. The Company does not expect the adoption of this standard to have a material impact on the Company’s consolidated financial statements.
ASU No. 2024-01, Compensation - Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards. The guidance issued in this update was designed to improve GAAP by adding an illustrative example that clarifies when the scope guidance of Topic 718 should be applied, since diversity in practice exists. This ASU does not change existing guidance. The standard is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted. The amendments in this update should be applied retrospectively to all prior periods presented or prospectively. The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements.
ASU No. 2024-02, Codification Improvements - Amendments to Remove References to the Concept Statements. The guidance issued in this update amends the codification to remove references to various Financial Accounting Standards
11
Board Concept Statements. The codification will be updated to clarify or correct unintended application of guidance that is not expected to have any significant effect on current accounting practice or cost to most entities. The standard is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on the Company’s consolidated financial statements.
2.    Securities
Securities are classified as AFS, HTM, and equity securities. Total securities were $666.6 million as of June 30, 2024.
Securities AFS and Securities HTM
Securities AFS and securities HTM are debt securities. Securities AFS are held for indefinite periods of time and are carried at estimated fair value. As of June 30, 2024, the estimated fair value of securities AFS was $526.9 million. The net unrealized loss on securities AFS increased $2.2 million for the six months ended June 30, 2024, resulting in a net unrealized loss of $64.4 million as of June 30, 2024.
Securities HTM, which the Company has the intent and ability to hold until maturity, are carried at amortized cost. As of June 30, 2024, the amortized cost of securities HTM was $136.8 million.
Investment activity for the six months ended June 30, 2024, included $80.3 million in maturities, principal repayments, and calls, partially offset by $34.9 million of securities purchased. There were no sales of securities AFS, and there were no purchases or sales of securities HTM for the same period.
The amortized cost and estimated fair value of securities AFS and securities HTM are summarized in the following tables:
June 30, 2024
(in thousands)Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Securities AFS:
Mortgage-backed securities$288,908 $311 $(29,982)$259,237 
Municipal bonds204,724 — (32,280)172,444 
U.S. Treasury securities48,000 — (719)47,281 
U.S. agency securities49,659 18 (1,749)47,928 
Total Securities AFS$591,291 $329 $(64,730)$526,890 
Securities HTM:
Mortgage-backed securities$135,897 $— $(22,742)$113,155 
U.S. agency securities927 — (107)820 
Total Securities HTM$136,824 $— $(22,849)$113,975 
December 31, 2023
(in thousands)Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Securities AFS:
Mortgage-backed securities$288,793 $395 $(31,228)$257,960 
Municipal bonds211,848 13 (27,732)184,129 
U.S. Treasury securities92,054 — (1,912)90,142 
U.S. agency securities39,563 5 (1,707)37,861 
Total Securities AFS$632,258 $413 $(62,579)$570,092 
Securities HTM:
Mortgage-backed securities$140,314 $— $(22,098)$118,216 
U.S. agency securities922 — (109)813 
Total Securities HTM$141,236 $— $(22,207)$119,029 
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The amortized cost and estimated fair value of securities AFS and securities HTM as of June 30, 2024, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers have the right to call or repay obligations with or without call or prepayment penalties.
June 30, 2024
(in thousands)Amortized
Cost		Fair
Value
Securities AFS:
Within one year$56,343 $55,477 
After one year but within five years27,494 26,423 
After five years but within ten years115,518 107,295 
After ten years391,936 337,695 
Total Securities AFS$591,291 $526,890 
Securities HTM:
Within one year$— $— 
After one year but within five years— — 
After five years but within ten years927 820 
After ten years135,897 113,155 
Total Securities HTM$136,824 $113,975 
Accounting for Credit Losses – Securities AFS and Securities HTM
The Company evaluates securities AFS for impairment when there has been a decline in fair value below the amortized cost basis of a security to determine whether there is a credit loss associated with the decline in fair value on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Due to the zero credit loss assumption and the considerations applied to the securities AFS, there was no ACL recorded for securities AFS as of June 30, 2024 and December 31, 2023. Also, as part of the Company’s evaluation of its intent and ability to hold investments for a period of time sufficient to allow for any anticipated recovery in the market, the Company considers its investment strategy, cash flow needs, liquidity position, capital adequacy, and interest rate risk position. Management does not intend to sell these securities prior to recovery, and it is more likely than not that the Company will have the ability to hold them, primarily due to adequate liquidity, until each security has recovered its cost basis.
Due to the zero credit loss assumption on the securities HTM portfolio, there was no ACL recorded for securities HTM as of June 30, 2024 and December 31, 2023.
Accrued interest receivable totaled $2.9 million and $3.0 million as of June 30, 2024 and December 31, 2023, respectively, for securities AFS and securities HTM and was reported in accrued interest receivable on the consolidated balance sheets.
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Information pertaining to securities AFS with gross unrealized losses as of June 30, 2024 and December 31, 2023, aggregated by investment category and length of time that individual securities have been in a continuous loss position, is described as follows:
June 30, 2024
Less than twelve monthsTwelve months or more
(in thousands)Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses		Fair
Value
Securities AFS:
Mortgage-backed securities$(133)$21,311 $(29,849)$194,942 
Municipal bonds(115)2,990 (32,165)169,454 
U.S. Treasury securities— — (719)47,281 
U.S. agency securities(116)26,096 (1,633)13,574 
Total Securities AFS$(364)$50,397 $(64,366)$425,251 
December 31, 2023
Less than twelve monthsTwelve months or more
(in thousands)Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses		Fair
Value
Securities AFS:
Mortgage-backed securities$(35)$19,383 $(31,193)$206,518 
Municipal bonds(83)4,815 (27,649)176,098 
U.S. Treasury securities— — (1,912)90,142 
U.S. agency securities(82)19,301 (1,625)14,475 
Total Securities AFS$(200)$43,499 $(62,379)$487,233 
As of June 30, 2024, the Company held 474 securities AFS that were in unrealized loss positions. The aggregate unrealized loss of these securities AFS as of June 30, 2024, was 10.95% of the amortized cost basis of total debt securities.
For the three and six months ended June 30, 2024 and 2023, there were no proceeds from sales and calls of debt securities.
Equity Securities
Equity securities are an investment in a CRA mutual fund, consisting primarily of bonds. Equity securities are carried at fair value on the consolidated balance sheets with periodic changes in value recorded through the consolidated statements of income. As of June 30, 2024, equity securities had a fair value of $2.9 million with a recognized loss of $44,000 for the six months ended June 30, 2024. As of December 31, 2023, equity securities had a fair value of $3.0 million with a recognized loss of $14,000 for the year ended December 31, 2023.
Pledged Securities
Securities with carrying values of approximately $218.6 million and $230.9 million were used as collateral as of June 30, 2024 and December 31, 2023, respectively.
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3.    Loans and Asset Quality
Loans
Loans HFI by category and loans HFS are summarized below:
(in thousands)June 30, 2024December 31, 2023
Real estate:
Commercial real estate$865,645 $851,582 
One-to-four family residential611,904 599,487 
Construction and development129,197 125,238 
Commercial and industrial344,071 315,327 
Tax-exempt67,941 72,913 
Consumer29,132 28,311 
Total loans HFI$2,047,890 $1,992,858 
Total loans HFS$3,878 $1,306 
Accrued interest receivable on loans HFI totaled $6.6 million and $6.8 million as of June 30, 2024 and December 31, 2023, respectively, and was reported in accrued interest receivable on the accompanying consolidated balance sheets.
Allowance for Credit Losses
Effective January 1, 2023, the Company adopted the provisions of ASC 326 using the modified retrospective method. The Company maintains an ACL on all loans that reflects management’s estimate of expected credit losses for the full life of the loan portfolio.
The following table summarizes the activity in the ACL by category for the six months ended June 30, 2024:
(in thousands)
Beginning Balance December 31, 2023
Provision for Credit LossesCharge-offsRecoveries
Ending Balance June 30, 2024
Real estate:
Commercial real estate$9,118 $(52)$— $— $9,066 
One-to-four family residential7,484 131 — 5 7,620 
Construction and development1,309 69 — — 1,378 
Commercial and industrial2,553 348 (211)54 2,744 
Tax-exempt575 (45)— — 530 
Consumer297 149 (231)74 289 
Total allowance for credit losses$21,336 $600 $(442)$133 $21,627 
The following table summarizes the activity in the ACL by category for the six months ended June 30, 2023:
(in thousands)Beginning Balance December 31, 2022
Impact of ASC 326 Adoption
 Provision for Credit Losses Charge-offsRecoveries
Ending Balance June 30, 2023
Real estate:
Commercial real estate$7,720 $876 $(293)$— $— $8,303 
One-to-four family residential5,682 1,231 91 — 5 7,009 
Construction and development1,654 (444)184 (9)— 1,385 
Commercial and industrial4,350 (822)(18)(33)23 3,500 
Tax-exempt751 (427)264 — — 588 
Consumer471 (136)72 (182)75 300 
Total allowance for credit losses$20,628 $278 $300 $(224)$103 $21,085 
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Nonaccrual and Past Due Loans
The following table presents nonaccrual loans as of June 30, 2024:
(in thousands)Nonaccrual with No ACLNonaccrual with ACLTotal Nonaccrual
Real estate:
Commercial real estate$— $737 $737 
One-to-four family residential— 700 700 
Construction and development— 920 920 
Commercial and industrial553 164 717 
Tax-exempt— — — 
Consumer— 94 94 
Total loans HFI$553 $2,615 $3,168 
The following table presents nonaccrual loans as of December 31, 2023:
(in thousands)Nonaccrual with No ACLNonaccrual with ACLTotal Nonaccrual
Real estate:
Commercial real estate$— $714 $714 
One-to-four family residential— 269 269 
Construction and development— — — 
Commercial and industrial709 135 844 
Tax-exempt— — — 
Consumer— 132 132 
Total loans HFI$709 $1,250 $1,959 
No material interest income was recognized in the consolidated statements of income on nonaccrual loans for the six months ended June 30, 2024 and 2023.
The following table presents the aging analysis of the past due loans and loans 90 days or more past due and still accruing interest by loan category as of June 30, 2024:
Past Due
(in thousands)30-59 Days60-89 Days90 Days or MoreCurrentTotal Loans HFI90 Days or More Past Due and Accruing
Real estate:
Commercial real estate$32 $— $705 $864,908 $865,645 $— 
One-to-four family residential124 378 577 610,825 611,904 39 
Construction and development— — 918 128,279 129,197 — 
Commercial and industrial315 — 685 343,071 344,071 2 
Tax-exempt— — — 67,941 67,941 — 
Consumer11 7 13 29,101 29,132 — 
Total loans HFI$482 $385 $2,898 $2,044,125 $2,047,890 $41 
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The following table presents the aging analysis of the past due loans and loans 90 days or more past due and still accruing interest by loan category as of December 31, 2023:
Past Due
(in thousands)30-59 Days60-89 Days90 Days or MoreCurrentTotal Loans HFI90 Days or More Past Due and Accruing
Real estate:
Commercial real estate$36 $— $678 $850,868 $851,582 $— 
One-to-four family residential392 251 409 598,435 599,487 260 
Construction and development— — 265 124,973 125,238 265 
Commercial and industrial132 60 847 314,288 315,327 45 
Tax-exempt— — — 72,913 72,913 — 
Consumer27 16 46 28,222 28,311 4 
Total loans HFI$587 $327 $2,245 $1,989,699 $1,992,858 $574 
Loan Modifications
Modifications are made to a borrower experiencing financial difficulty, and the modified terms are in the form of principal forgiveness, interest rate reduction, other-than-insignificant payment delay, or a term extension in the current reporting period.
The amortized cost basis of loans that were modified to borrowers experiencing financial difficulty during the six months ended June 30, 2024, is as follows:
(dollars in thousands)Term ExtensionPercent of Loan CategoryFinancial Effect
Real estate:
Commercial real estate$— — %
One-to-four family residential$485 0.1 %
Amortization period was extended by a weighted-average of 4.79 years
Construction and development$— — %
Commercial and industrial$— — %
Tax-exempt$— — %
Consumer$— — %
Total loans modified$485 0.1 %
No loan modifications were made to borrowers experiencing financial difficulty during the six months ended June 30, 2023.
Credit Quality Indicators
Loans are categorized based on the degree of risk inherent in the credit and the ability of the borrower to service the debt. A description of the general characteristics of the Bank’s risk rating grades follows:
Pass - These loans are of satisfactory quality and do not require a more severe classification.
Special mention - This category includes loans with potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan. However, the loss potential does not warrant substandard classification.
Substandard - Loans in this category have well-defined weaknesses that jeopardize normal repayment of principal and interest. Prompt corrective action is required to reduce exposure and to assure adequate remedial actions are taken by the borrower. If these weaknesses do not improve, loss is possible.
Doubtful - Loans in this category have well-defined weaknesses that make full collection improbable.
Loss - Loans classified in this category are considered uncollectible and charged-off to the ACL.
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As of June 30, 2024, the Company had no loans classified as doubtful or loss. The following table summarizes loans by risk rating and year of origination as of June 30, 2024, and gross charge-offs for the six months ended June 30, 2024:
Year of Origination
(in thousands)20242023202220212020Prior YearsRevolving LinesTotal
Real estate:
Commercial real estate
Pass$61,911 $121,276 $247,987 $231,137 $72,736 $104,277 $20,783 $860,107 
Special Mention— — — — — 3,182 — 3,182 
Substandard— 183 756 680 — 737 — 2,356 
Total$61,911 $121,459 $248,743 $231,817 $72,736 $108,196 $20,783 $865,645 
One-to-four family residential
Pass$52,186 $113,509 $126,497 $120,471 $84,617 $94,952 $17,082 $609,314 
Special Mention136 — — — — 257 — 393 
Substandard— — 368 43 35 941 810 2,197 
Total$52,322 $113,509 $126,865 $120,514 $84,652 $96,150 $17,892 $611,904 
Construction and development
Pass$30,381 $62,017 $27,265 $4,411 $1,015 $1,978 $954 $128,021 
Special Mention— 918 — — — — — 918 
Substandard— — — — — 258 — 258 
Total$30,381 $62,935 $27,265 $4,411 $1,015 $2,236 $954 $129,197 
Commercial and industrial
Pass$48,828 $63,218 $37,570 $47,195 $10,767 $6,206 $128,585 $342,369 
Special Mention— 26 891 — — — — 917 
Substandard— 3 — 44 2 93 643 785 
Total$48,828 $63,247 $38,461 $47,239 $10,769 $6,299 $129,228 $344,071 
Tax-exempt
Pass$2,116 $1,031 $14,977 $6,634 $13,229 $29,954 $— $67,941 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Total$2,116 $1,031 $14,977 $6,634 $13,229 $29,954 $— $67,941 
Consumer
Pass$10,583 $10,253 $4,477 $1,805 $548 $282 $1,082 $29,030 
Special Mention— — — — — — — — 
Substandard— — — — — 95 7 102 
Total$10,583 $10,253 $4,477 $1,805 $548 $377 $1,089 $29,132 
Total loans HFI$206,141 $372,434 $460,788 $412,420 $182,949 $243,212 $169,946 $2,047,890 
Gross charge-offs$1 $25 $24 $— $— $153 $239 $442 
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As of December 31, 2023, the Company had no loans classified as doubtful or loss. The following table summarizes loans by risk rating and year of origination as of December 31, 2023, and gross charge-offs for the year ended December 31, 2023:
Year of Origination
(in thousands)20232022202120202019Prior YearsRevolving LinesTotal
Real estate:
Commercial real estate
Pass$124,134 $256,707 $239,364 $76,754 $63,475 $61,957 $18,467 $840,858 
Special Mention73 — 3,186 — 1,031 4,082 — 8,372 
Substandard184 779 675 — — 714 — 2,352 
Total$124,391 $257,486 $243,225 $76,754 $64,506 $66,753 $18,467 $851,582 
One-to-four family residential
Pass$122,004 $134,583 $129,388 $90,190 $31,110 $74,077 $16,472 $597,824 
Special Mention— — — — — 261 — 261 
Substandard— 79 — 37 385 827 74 1,402 
Total$122,004 $134,662 $129,388 $90,227 $31,495 $75,165 $16,546 $599,487 
Construction and development
Pass$54,189 $55,515 $10,333 $1,742 $2,158 $1,015 $286 $125,238 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Total$54,189 $55,515 $10,333 $1,742 $2,158 $1,015 $286 $125,238 
Commercial and industrial
Pass$73,653 $49,637 $51,012 $13,863 $7,409 $813 $107,171 $303,558 
Special Mention1,208 937 4,659 — 310 509 3,173 10,796 
Substandard4 — 59 5 54 51 800 973 
Total$74,865 $50,574 $55,730 $13,868 $7,773 $1,373 $111,144 $315,327 
Tax-exempt
Pass$959 $15,679 $8,174 $13,919 $4,250 $29,932 $— $72,913 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Total$959 $15,679 $8,174 $13,919 $4,250 $29,932 $— $72,913 
Consumer
Pass$16,947 $6,385 $2,325 $858 $363 $133 $1,173 $28,184 
Special Mention— — — — — — — — 
Substandard— 29 — — — 90 8 127 
Total$16,947 $6,414 $2,325 $858 $363 $223 $1,181 $28,311 
Total loans HFI$393,355 $520,330 $449,175 $197,368 $110,545 $174,461 $147,624 $1,992,858 
Gross charge-offs$12 $20 $1 $— $10 $25 $405 $473 
Commitments to Extend Credit
Commitments to extend credit are agreements to lend to a customer if all conditions of the commitment have been met. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if it is deemed necessary by the Company upon extension of credit, is based on management’s evaluation of the customer’s ability to repay. As of June 30, 2024 and December 31, 2023, unfunded loan commitments totaled approximately $407.3 million and $372.0 million, respectively.
Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including
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commercial paper, bond financing, and similar transactions. As of June 30, 2024 and December 31, 2023, commitments under standby letters of credit totaled approximately $12.4 million and $15.4 million, respectively. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.
Effective January 1, 2023, the Company adopted the provision of ASC 326 using the modified retrospective method and established a reserve for unfunded commitments based on estimates of expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. As of June 30, 2024 and December 31, 2023, the reserve on unfunded commitments was $442,000.
4.    Deposits
Deposits were $2.72 billion and $2.80 billion as of June 30, 2024 and December 31, 2023, respectively. The $85.2 million decrease was primarily a result of the seasonal outflow of funds from public entity customers and income tax payments, partially offset by an increase in new customer time deposit activity. Deposits are summarized below:
(in thousands)June 30, 2024December 31, 2023
Noninterest-bearing demand deposits$892,942 $916,456 
Interest-bearing deposits:
Interest-bearing demand deposits135,543 138,380 
NOW accounts377,385 468,483 
Money market accounts547,715 541,607 
Savings accounts170,050 173,741 
Time deposits less than or equal to $250,000399,981 392,094 
Time deposits greater than $250,000193,030 171,127 
Total interest-bearing deposits1,823,704 $1,885,432 
Total deposits$2,716,646 $2,801,888 
Collateral for Deposits
As of June 30, 2024 and December 31, 2023, securities and FHLB letters of credit with values of approximately $210.7 million and $287.4 million, respectively, were pledged as collateral to secure public entity deposits.
5.    Other Borrowed Funds
The Company has established borrowing capacity with the FHLB, the Federal Reserve Bank’s Discount Window facility, and other correspondent banks to provide additional sources of operating funds. As of June 30, 2024 and December 31, 2023, the Company had no outstanding borrowings under these agreements.
6.     Contingencies
The Company and the Bank are involved, from time to time, in various legal matters arising in the ordinary course of business. While the outcome of these claims or litigation cannot be determined at this time, in the opinion of management, neither the Company nor the Bank are involved in such legal proceedings that the resolution is expected to have a material adverse effect on the consolidated results of operations, financial condition, or cash flows.
7.     Fair Value
The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Fair Value Disclosure
Securities AFS, loans HFS, and equity securities are recorded at fair value on a recurring basis. Additionally, the Company may be required to record at fair value other assets on a nonrecurring basis, such as collateral dependent loans, foreclosed assets, and other certain assets. The nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets.
ASC 820, Fair Value Measurements and Disclosures indicates that assets and liabilities are recorded at fair value according to a fair value hierarchy comprised of three levels:
•Level 1 pricing represents quotes on the exact financial instrument that is traded in active markets. Quoted prices on actively traded equities, for example, are in this category.
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•Level 2 pricing is derived from observable data including market spreads, current and projected rates, prepayment data, and credit quality. The valuation may be based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
•Level 3 pricing is derived without the use of observable data. In such cases, mark-to-model strategies are typically employed. Often, these types of instruments have no active market, possess unique characteristics, and are thinly traded.
The Company used the following methods and significant assumptions to estimate fair value:
Securities AFS and Equity Securities: The fair values for securities AFS are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).
Loans HFS: Residential mortgage loans originated and held for sale are carried at the lower of cost or estimated fair value on an individual basis. The fair values of mortgage loans HFS are based on commitments on hand from investors within the secondary market for loans with similar characteristics. As such, the fair value adjustments for mortgage loans HFS are recurring Level 2.
Loans HFI: The Company does not record loans HFI at fair value on a recurring basis. Loans for which it was probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are evaluated individually to determine if any credit loss exists. For loans evaluated on an individual basis that are collateral dependent, the fair value is estimated by applying a discount factor to the collateral value then deducting the estimated cost to sell. For loans evaluated on an individual basis that are not collateral dependent, the discounted cash flow method is utilized to determine the fair value. When a loan experiences a credit loss with specific allocated losses determined by the fair value method, the Company considers the collateral dependent loan as nonrecurring Level 3.
Foreclosed Assets: Foreclosed assets, consisting of properties obtained through foreclosure or in satisfaction of loans, are reported at fair value, determined on the basis of current appraisals, comparable sales, and other estimates of value obtained principally from independent sources, adjusted for estimated selling costs (Level 2). However, foreclosed assets are considered Level 3 in the fair value hierarchy because management has qualitatively applied a discount due to the size, supply of inventory, and the incremental discounts applied to the appraisals. Management also considers other factors, including changes in absorption rates, length of time the property has been on the market, and anticipated sales values, which have resulted in adjustments to the collateral value estimates indicated in certain appraisals.
Fair Value of Assets Measured on a Recurring Basis
The table below presents the recorded amount of assets measured at fair value on a recurring basis:
(in thousands)Fair ValueLevel 1Level 2Level 3
June 30, 2024
Loans HFS$3,878 $— $3,059 $— 
Securities AFS:
Mortgage-backed securities$259,237 $— $259,237 $— 
Municipal bonds$172,444 $— $172,444 $— 
U.S. Treasury securities$47,281 $— $47,281 $— 
U.S. agency securities$47,928 $— $47,928 $— 
Equity securities$2,921 $2,921 $— $— 
December 31, 2023
Loans HFS$1,306 $— $1,306 $— 
Securities AFS:
Mortgage-backed securities$257,960 $— $257,960 $— 
Municipal bonds$184,129 $— $184,129 $— 
U.S. Treasury securities$90,142 $— $90,142 $— 
U.S. agency securities$37,861 $— $37,861 $— 
Equity securities$2,965 $2,965 $— $— 
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There were no transfers between Level 1, 2, or 3 during the six months ended June 30, 2024 or the year ended December 31, 2023.
Fair Value of Assets and Liabilities Measured on a Nonrecurring Basis
Financial Assets and Financial Liabilities: Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis and are subject to fair value adjustments in certain circumstances. Financial assets measured at fair value on a nonrecurring basis include certain individually evaluated collateral dependent loans reported at fair value of the underlying collateral if repayment is expected solely from the collateral. Prior to foreclosure of these loans, fair value of the collateral is estimated using Level 3 inputs based on customized discounting criteria.
The table below presents certain individually evaluated collateral dependent loans that were remeasured and reported at fair value through the ACL based upon the fair value of the underlying collateral as of the dates indicated:
(in thousands)June 30, 2024December 31, 2023
Carrying value before allowance$1,128 $633 
Specific allowance(123)(100)
Fair value$1,005 $533 
The Company had no financial liabilities measured at fair value on a nonrecurring basis as of June 30, 2024 and December 31, 2023.
Nonfinancial Assets and Liabilities: Certain nonfinancial assets and nonfinancial liabilities are measured at fair value on a nonrecurring basis. These include certain foreclosed assets, which are remeasured and reported at fair value through a charge-off to the ACL upon initial recognition as a foreclosed asset. Subsequent to their initial recognition, certain foreclosed assets are remeasured at fair value through an adjustment included in other noninterest income. The fair value of foreclosed assets is estimated using Level 3 inputs based on customized discounting criteria less estimated selling costs.
The following table presents foreclosed assets that were remeasured and reported at fair value as of the dates indicated:
(in thousands)June 30, 2024December 31, 2023
Foreclosed assets remeasured at initial recognition:
Carrying value of foreclosed assets prior to remeasurement$— $69 
Charge-offs— — 
Fair value of foreclosed assets$— $69 
There were no foreclosed assets that were remeasured subsequent to initial recognition as of June 30, 2024 and December 31, 2023.
The Company had no nonfinancial liabilities measured at fair value on a nonrecurring basis as of June 30, 2024 and December 31, 2023.
The unobservable inputs used for the Level 3 fair value measurements on a nonrecurring basis were as follows:
(dollars in thousands)Fair ValueValuation TechniqueUnobservable InputDiscount RangesWeighted Average Discount
June 30, 2024
Collateral dependent loans$2,345 Discounted appraisalsCollateral discounts and costs to sell
0% - 100%
18.63%
Foreclosed assets$— Discounted appraisalsCollateral discounts and costs to sellN/AN/A
December 31, 2023
Collateral dependent loans$1,754 Discounted appraisalsCollateral discounts and costs to sell
0% - 100%
24.05%
Foreclosed assets$69 Discounted appraisalsCollateral discounts and costs to sellN/AN/A
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Fair Value of Financial Instruments
The carrying amounts and estimated fair values of financial instruments as of June 30, 2024 and December 31, 2023, were as follows:
(in thousands)Carrying
Amount		Fair ValueLevel 1Level 2Level 3
June 30, 2024
Financial assets:
Cash and due from banks$35,035 $35,035 $35,035 $— $— 
Interest-bearing deposits in other banks$178,038 $178,038 $178,038 $— $— 
Securities AFS$526,890 $526,890 $— $526,890 $— 
Securities HTM$136,824 $113,975 $— $113,975 $— 
Equity securities$2,921 $2,921 $2,921 $— $— 
Nonmarketable equity securities$2,283 $2,283 $— $2,283 $— 
Loans HFS$3,878 $3,878 $— $3,878 $— 
Loans HFI, net of allowance$2,026,263 $1,881,756 $— $— $1,881,756 
Accrued interest receivable$9,570 $9,570 $— $— $9,570 
Financial liabilities:
Deposits$2,716,646 $2,710,924 $— $2,710,924 $— 
Accrued interest payable$8,747 $8,747 $— $8,747 $— 
December 31, 2023
Financial assets:
Cash and due from banks$53,062 $53,062 $53,062 $— $— 
Interest-bearing deposits in other banks$252,364 $252,364 $252,364 $— $— 
Securities AFS$570,092 $570,092 $— $570,092 $— 
Securities HTM$141,236 $119,029 $— $119,029 $— 
Equity securities$2,965 $2,965 $2,965 $— $— 
Nonmarketable equity securities$2,239 $2,239 $— $2,239 $— 
Loans HFS$1,306 $1,306 $— $1,306 $— 
Loans HFI, net of allowance$1,971,522 $1,820,573 $— $— $1,820,573 
Accrued interest receivable$9,945 $9,945 $— $— $9,945 
Financial liabilities:
Deposits$2,801,888 $2,796,303 $— $2,796,303 $— 
Accrued interest payable$8,000 $8,000 $— $8,000 $— 
8.    Regulatory Capital Requirements
The Company and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies.
Basel III Capital Requirements
The Company and the Bank are subject to Basel III capital guidelines. Basel III requires the Company and the Bank to maintain certain minimum ratios to meet capital adequacy requirements. It is management’s belief that, as of June 30, 2024, both the Company and the Bank met all capital adequacy requirements under Basel III. Management expects that the capital ratios for the Company and the Bank under Basel III will continue to exceed capital adequacy requirements. Management believes that, as of June 30, 2024, the Bank is well-capitalized under the regulatory framework for prompt corrective action.
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Bank holding companies that qualify as “small bank holding companies” under the Policy Statement are exempt from the Federal Reserve’s consolidated capital adequacy ratios at the holding company level and instead are evaluated at the bank level. In May 2018, the Economic Growth Act was enacted. One of the Economic Growth Act’s highlights, with implications for us, was the asset threshold under the Policy Statement being increased from $1.0 billion to $3.0 billion, which benefits bank holding companies by, among various other items, allowing for an 18-month safety and soundness examination cycle as opposed to a 12-month examination cycle, changing to scaled biannual regulatory reporting requirements as opposed to quarterly regulatory reporting requirements, and not subjecting bank holding companies to capital adequacy guidelines on a consolidated basis. Effective January 1, 2023, the Company no longer receives any benefits under the Policy Statement and became subject to consolidated capital requirements. As of the June 30, 2024 measurement date, the Company had more than $3.0 billion in assets and remains subject to consolidated capital requirements.
Capital amounts and ratios for the Company as of June 30, 2024 and December 31, 2023, are presented in the following table (Basel III Minimum includes the capital conservation buffer):
ActualBasel III Minimum
(dollars in thousands)AmountRatioAmountRatio
June 30, 2024
Total Risk-Based Capital$389,245 18.01 %$226,894 10.50 %
Tier I Risk-Based Capital$367,176 16.99 %$183,676 8.50 %
Common Equity Tier I Capital$367,176 16.99 %$151,263 7.00 %
Tier I Leverage Capital$367,176 11.74 %$125,098 4.00 %
December 31, 2023
Total Risk-Based Capital$384,577 18.28 %$220,905 10.50 %
Tier I Risk-Based Capital$362,799 17.24 %$178,828 8.50 %
Common Equity Tier I Capital$362,799 17.24 %$147,270 7.00 %
Tier I Leverage Capital$362,799 11.56 %$125,575 4.00 %
Capital amounts and ratios for the Bank as of June 30, 2024 and December 31, 2023, are presented in the following table (Basel III Minimum includes the capital conservation buffer):
Regulatory Requirements
ActualBasel III Minimum
Well-Capitalized(1)
(dollars in thousands)AmountRatioAmountRatioAmountRatio
June 30, 2024
Total Risk-Based Capital$381,452 17.66 %$226,818 10.50 %$216,017 10.00 %
Tier I Risk-Based Capital$359,383 16.64 %$183,615 8.50 %$172,814 8.00 %
Common Equity Tier I Capital$359,383 16.64 %$151,212 7.00 %$140,411 6.50 %
Tier I Leverage Capital$359,383 11.49 %$125,062 4.00 %$156,328 5.00 %
December 31, 2023
Total Risk-Based Capital$378,582 18.00 %$220,850 10.50 %$210,333 10.00 %
Tier I Risk-Based Capital$356,804 16.96 %$178,783 8.50 %$168,266 8.00 %
Common Equity Tier I Capital$356,804 16.96 %$147,233 7.00 %$136,716 6.50 %
Tier I Leverage Capital$356,804 11.37 %$125,538 4.00 %$156,923 5.00 %
(1)This column refers to the prompt corrective action requirements applicable to banks.
Community Bank Leverage Ratio Framework
As part of the directive under the Economic Growth Act, in September 2019, the FDIC and other federal bank regulatory agencies approved the CBLR framework. This optional framework became effective January 1, 2020, and is available to the Company and the Bank as an alternative to the Basel III risk-based capital framework. The CBLR framework provides for a simple measure of capital adequacy for certain community banking organizations. Specifically, depository institutions and depository institution holding companies that have less than $10.0 billion in total consolidated assets and meet other qualifying criteria, including a Tier 1 leverage ratio of greater than 9.00%, are considered qualifying community banking organizations eligible to opt into the CBLR framework and replace the applicable Basel III risk-based capital requirements.
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As of June 30, 2024, the Company and the Bank qualify for the CBLR framework. Management does not intend to utilize the CBLR framework.
9.    Earnings Per Common Share
Basic EPS is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period, after giving retroactive effect to stock splits. Diluted EPS includes accrued but unissued shares relating to the Director Compensation Program, stock options, and restricted stock determined using the treasury stock method. The dilutive EPS calculation assumes all outstanding stock options to purchase common stock have been exercised at the beginning of the year, and the pro forma proceeds from the exercised options and restricted stock are used to purchase common stock at the average fair market valuation price.
The computations of basic and diluted earnings per common share for the Company were as follows:
For the Three Months Ended June 30, For the Six Months Ended June 30, 
(in thousands, except share amounts)2024202320242023
Numerator:
Net income - basic$7,987 $8,968 $16,175 $18,566 
Net income - diluted$7,987 $8,968 $16,175 $18,566 
 
Denominator:
Weighted - average shares outstanding - basic6,896,030 7,177,621 6,973,039 7,180,187 
Plus: Effect of Director Compensation Program406 238 875 450 
Plus: Effect of restricted stock17,704 16,775 17,704 16,775 
Weighted - average shares outstanding - diluted6,914,140 7,194,634 6,991,618 7,197,412 
 
Earnings per common share:
Basic$1.16 $1.25 $2.32 $2.59 
Diluted$1.16 $1.25 $2.31 $2.58 
10.    Equity
Stock Repurchases
On December 14, 2023, the Company’s board of directors approved the renewal of its 2023 stock repurchase program that was completed in the fourth quarter of 2023 after reaching its purchase limit. The renewed program authorizes the Company to purchase up to $5.0 million of its outstanding shares of common stock from January 1, 2024 through December 31, 2024. Repurchases may be made from time to time in the open market at prevailing prices and based on market conditions, or in privately negotiated transactions. For the six months ended June 30, 2024, the Company repurchased 16,220 shares of its common stock at an aggregate cost of $764,000 under the stock repurchase program. As of June 30, 2024, the Company had $4.2 million available for repurchasing its common stock under this program.
On March 13, 2024, the Company entered into a privately negotiated stock repurchase agreement for the purchase of 200,000 shares of the Company’s common stock for a total purchase price of $10.0 million. The repurchase was supplemental to the Company’s $5.0 million stock repurchase program and did not impact the amount of permitted repurchases thereunder.
AOCI - Transfer of Unrealized Gain (Loss) of Securities AFS and HTM
During the second quarter of 2022, the Company reclassified $166.3 million, net of $17.9 million of unrealized loss, from AFS to HTM. The securities were transferred at fair value, which became the cost basis for the securities HTM. At the date of the transfer, the net unrealized loss of $17.9 million, of which $14.2 million, net of tax, was included in AOCI and is being amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses recognized as a result of the transfer. As of June 30, 2024, the net unamortized, unrealized loss remaining on the transferred securities included in the consolidated balance sheets totaled $13.7 million, of which $10.9 million, net of tax, was included in AOCI.
11.    Subsequent Events
On August 8, 2024, the Company entered into a privately negotiated stock repurchase agreement for the purchase of 60,000 shares of the Company’s common stock, no par value per share, for a total purchase price of approximately
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$3.0 million. In connection with the repurchase, the Company reduced the availability under its 2024 stock repurchase program by $3.0 million. After this transaction, the Company will have approximately $1.2 million available for repurchasing its common stock under the 2024 stock repurchase program.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The purpose of this discussion and analysis is to focus on significant changes in the financial condition of Red River Bancshares, Inc. on a consolidated basis from December 31, 2023 through June 30, 2024, and on our results of operations for the quarters ended June 30, 2024 and March 31, 2024, and for the six months ended June 30, 2024 and June 30, 2023.
This discussion and analysis should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2023, included in our Annual Report on Form 10-K for the year ended December 31, 2023, and information presented elsewhere in this Report, particularly the unaudited consolidated financial statements and related notes appearing in Item 1.
The following discussion contains forward-looking statements that reflect our current views with respect to, among other things, future events and our financial performance. We caution that assumptions, expectations, projections, intentions, or beliefs about future events may, and often do, vary from actual results and the differences can be material. See “Cautionary Note Regarding Forward-Looking Statements” and “Part II - Item 1A. Risk Factors” in this Report. Also, see risk factors and other cautionary statements described in “Part I - Item 1A. Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2023. We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.
CORPORATE SUMMARY
Red River Bancshares, Inc. is the bank holding company for Red River Bank, a Louisiana state-chartered bank established in 1999 that provides a fully integrated suite of banking products and services tailored to the needs of our commercial and retail customers. Red River Bank operates from a network of 28 banking centers throughout Louisiana and one combined LDPO in New Orleans, Louisiana. Banking centers are located in the following Louisiana markets: Central, which includes the Alexandria MSA; Northwest, which includes the Shreveport-Bossier City MSA; Capital, which includes the Baton Rouge MSA; Southwest, which includes the Lake Charles MSA; the Northshore, which includes Covington; Acadiana, which includes the Lafayette MSA; and New Orleans.
Our priority is to drive shareholder value through the establishment of a market-leading commercial banking franchise based in Louisiana. We provide our services through relationship-oriented bankers who are committed to their customers and the communities where we offer our products and services. Our strategy is to expand market share in existing markets and engage in opportunistic new market de novo expansion, supplemented by strategic acquisitions of financial institutions with customer-oriented, compatible philosophies and in desirable geographic areas.
SECOND QUARTER 2024 FINANCIAL AND OPERATIONAL HIGHLIGHTS
In the second quarter of 2024, the Company had an improved net interest margin along with fairly consistent earnings and loan and deposit balances. Stock buyback activity was steady, and Red River Bank opened a new banking center location in the New Orleans market.
•Net income for the second quarter of 2024 was $8.0 million, or $1.16 diluted EPS, a decrease of $201,000, or 2.5%, compared to $8.2 million, or $1.16 diluted EPS, for the first quarter of 2024. Net income for the second quarter benefited from higher net interest income and an improved net interest margin FTE. Net income for the first quarter of 2024 benefited from approximately $800,000 of nonrecurring noninterest income payments and operating expense reduction items.
•For the second quarter of 2024, the return on assets was 1.05%, and the return on equity was 10.69%.
•Net interest income and net interest margin FTE increased for the second quarter of 2024 compared to the prior quarter. Net interest income for the second quarter of 2024 was $21.8 million compared to $21.4 million for the prior quarter. Net interest margin FTE for the second quarter of 2024 was 2.92% compared to 2.83% for the prior quarter. These increases were due to improved yields on loans and securities outpacing higher deposit rates.
•As of June 30, 2024, assets were $3.05 billion, which was $24.8 million, or 0.8%, lower than March 31, 2024. The decrease was due to a $29.2 million decrease in deposits.
•Deposits totaled $2.72 billion as of June 30, 2024, a decrease of $29.2 million, or 1.1%, compared to $2.75 billion as of March 31, 2024. In the second quarter of 2024, deposit activity was normal and included the seasonal outflow of funds for income tax payments.
•As of June 30, 2024, loans HFI were $2.05 billion, slightly higher than $2.04 billion as of March 31, 2024. In the second quarter of 2024, new loan activity was steady throughout all markets.
•As of June 30, 2024, NPAs were $3.2 million, or 0.11% of assets, and the ACL was $21.6 million, or 1.06% of loans HFI.
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•As of June 30, 2024, liquid assets, which are cash and cash equivalents, were $213.1 million, and the liquid assets to assets ratio was 6.99%. We do not have any borrowings, brokered deposits, or internet-sourced deposits.
•We paid a quarterly cash dividend of $0.09 per common share in the second quarter of 2024.
•The 2024 stock repurchase program authorizes us to purchase up to $5.0 million of our outstanding shares of common stock from January 1, 2024 through December 31, 2024. In the second quarter of 2024, we repurchased 16,220 shares of our common stock at an aggregate cost of $764,000. As of June 30, 2024, the 2024 stock repurchase program had $4.2 million remaining.
•As of June 30, 2024, capital levels were strong with a stockholders’ equity to assets ratio of 10.07%, a leverage ratio of 11.74%, and a total risk-based capital ratio of 18.01%.
•We continue to implement our organic expansion plan. In June 2024, we opened a second Red River Bank full-service banking center in the New Orleans market, and in July 2024, we held a grand opening ceremony at this newly constructed location on Veterans Memorial Boulevard in Metairie, Louisiana.
•In July 2024, Bank Director Magazine ranked the Company 9th in the top 30 best-performing publicly traded financial institutions in 2023 with assets less than $5.0 billion.
The following tables contain selected financial information regarding our financial position and performance as of and for the periods indicated:
As ofChange from
December 31, 2023 to June 30, 2024
(in thousands)June 30,
2024		December 31,
2023		$ Change% Change
Selected Period End Balance Sheet Data:
Total assets$3,048,528 $3,128,810 (80,282)(2.6)%
Interest-bearing deposits in other banks$178,038 $252,364 (74,326)(29.5)%
Securities available-for-sale, at fair value$526,890 $570,092 (43,202)(7.6)%
Securities held-to-maturity, at amortized cost$136,824 $141,236 (4,412)(3.1)%
Loans held for investment$2,047,890 $1,992,858 55,032 2.8 %
Total deposits$2,716,646 $2,801,888 (85,242)(3.0)%
Total stockholders’ equity$306,990 $303,851 3,139 1.0 %
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As of and for the
Three Months Ended		As of and for the
Six Months Ended
(dollars in thousands, except per share data)June 30,
2024		March 31,
2024		June 30,
2023		June 30,
2024		June 30,
2023
Net Income$7,987 $8,188 $8,968 $16,175 $18,566 
Per Common Share Data:
Earnings per share, basic$1.16 $1.16 $1.25 $2.32 $2.59 
Earnings per share, diluted$1.16 $1.16 $1.25 $2.31 $2.58 
Book value per share$44.58 $43.43 $39.49 $44.58 $39.49 
Tangible book value per share (1,2)
$44.35 $43.20 $39.28 $44.35 $39.28 
Realized book value per share (1,3)
$53.54 $52.52 $49.21 $53.54 $49.21 
Cash dividends per share$0.09 $0.09 $0.08 $0.18 $0.16 
Shares outstanding6,886,928 6,892,448 7,175,056 6,886,928 7,175,056 
Weighted average shares outstanding, basic6,896,030 7,050,048 7,177,621 6,973,039 7,180,187 
Weighted average shares outstanding, diluted6,914,140 7,066,709 7,194,634 6,991,618 7,197,412 
 
Summary Performance Ratios:
Return on average assets1.05 %1.07 %1.20 %1.06 %1.24 %
Return on average equity10.69 %10.77 %12.78 %10.73 %13.54 %
Net interest margin2.87 %2.80 %2.91 %2.83 %2.99 %
Net interest margin FTE(4)
2.92 %2.83 %2.96 %2.89 %3.04 %
Efficiency ratio(5)
62.07 %60.37 %58.63 %61.23 %57.74 %
Loans HFI to deposits ratio75.38 %74.22 %73.10 %75.38 %73.10 %
Noninterest-bearing deposits to deposits ratio32.87 %32.61 %37.14 %32.87 %37.14 %
Noninterest income to average assets0.67 %0.64 %0.81 %0.66 %0.69 %
Operating expense to average assets2.19 %2.07 %2.16 %2.13 %2.11 %
 
Summary Credit Quality Ratios:
NPAs to assets0.11 %0.08 %0.07 %0.11 %0.07 %
Nonperforming loans to loans HFI0.16 %0.12 %0.10 %0.16 %0.10 %
ACL to loans HFI1.06 %1.06 %1.08 %1.06 %1.08 %
Net charge-offs to average loans0.01 %0.00 %0.00 %0.02 %0.01 %
 
Capital Ratios:
Stockholders’ equity to assets10.07 %9.74 %9.36 %10.07 %9.36 %
Tangible common equity to tangible assets(1,6)
10.02 %9.69 %9.31 %10.02 %9.31 %
Total risk-based capital to risk-weighted assets18.01 %17.84 %18.13 %18.01 %18.13 %
Tier 1 risk-based capital to risk-weighted assets16.99 %16.82 %17.09 %16.99 %17.09 %
Common equity Tier 1 capital to risk-weighted assets16.99 %16.82 %17.09 %16.99 %17.09 %
Tier 1 risk-based capital to average assets11.74 %11.44 %11.48 %11.74 %11.48 %
(1)Non-GAAP financial measure. Calculations of this measure and reconciliations to GAAP are included in “ - Non-GAAP Financial Measures” in this Report. This measure has not been audited.
(2)We calculate tangible book value per share as total stockholders’ equity, less intangible assets, divided by the outstanding number of shares of our common stock at the end of the relevant period.
(3)We calculate realized book value per share as total stockholders’ equity, less AOCI, divided by the outstanding number of shares of our common stock at the end of the relevant period.
(4)Net interest margin FTE includes an FTE adjustment using a 21.0% federal income tax rate on tax-exempt securities and tax-exempt loans.
(5)Efficiency ratio represents operating expenses divided by the sum of net interest income and noninterest income.
(6)We calculate tangible common equity as total stockholders’ equity, less intangible assets, net of accumulated amortization, and we calculate tangible assets as total assets, less intangible assets, net of accumulated amortization.
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RESULTS OF OPERATIONS
Net income for the second quarter of 2024 was $8.0 million, or $1.16 diluted EPS, a decrease of $201,000, or 2.5%, compared to $8.2 million, or $1.16 diluted EPS, for the first quarter of 2024. The decrease in net income was due to an $816,000 increase in operating expenses, partially offset by a $424,000 increase in net interest income, a $170,000 increase in noninterest income, and a $21,000 decrease in income tax expense. The return on assets for the second quarter of 2024 was 1.05%, compared to 1.07% for the first quarter of 2024. The return on equity was 10.69% for the second quarter of 2024, compared to 10.77% for the first quarter of 2024. Our efficiency ratio for the second quarter of 2024 was 62.07%, compared to 60.37% for the first quarter of 2024.
Net income for the six months ended June 30, 2024, was $16.2 million, or $2.31 diluted EPS, a decrease of $2.4 million, or 12.9%, compared to $18.6 million, or $2.58 diluted EPS, for the six months ended June 30, 2023. The decrease in net income was due to a $1.3 million decrease in net interest income, a $942,000 increase in operating expenses, a $321,000 decrease in noninterest income, and a $300,000 increase in the provision for credit losses, partially offset by a $441,000 decrease in income tax expense. The return on assets for the six months ended June 30, 2024, was 1.06%, compared to 1.24% for the six months ended June 30, 2023. The return on equity was 10.73% for the six months ended June 30, 2024, compared to 13.54% for the six months ended June 30, 2023. Our efficiency ratio for the six months ended June 30, 2024, was 61.23%, compared to 57.74% for the six months ended June 30, 2023.
Net Interest Income and Net Interest Margin
Our operating results depend primarily on our net interest income. Fluctuations in market interest rates impact the yield on interest-earning assets and the rate paid on interest-bearing liabilities. Changes in the amount and type of interest-earning assets and interest-bearing liabilities impact our net interest income. To evaluate net interest income, we measure and monitor: (1) yields on loans and other interest-earning assets; (2) the cost of deposits and other funding sources; (3) net interest spread; and (4) net interest margin. Since noninterest-bearing sources of funds, such as noninterest-bearing deposits and stockholders’ equity, also fund interest-earning assets, net interest margin includes the benefit of these noninterest-bearing funding sources.
In 2023, the interest rate environment continued to trend upward. The FOMC increased the federal funds rate by 50 bps in the first quarter of 2023, by 25 bps in the second and third quarters of 2023, and kept the rate consistent through the second quarter of 2024 with a target range of 5.25%-5.50%. The average effective federal funds rate was 5.33% for the first and second quarters of 2024, compared to 4.75% for the first six months of 2023. The net interest income and net interest margin FTE increased in the second quarter of 2024 compared to the prior quarter. The net interest income and net interest margin FTE decreased for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.
Second Quarter of 2024 vs. First Quarter of 2024
Net interest income for the second quarter of 2024 was $21.8 million, which was $424,000, or 2.0%, higher than the first quarter of 2024, due to a $663,000 increase in interest and dividend income, partially offset by a $239,000 increase in interest expense. The increase in interest and dividend income was due to higher interest income on loans, partially offset by lower interest income on short-term liquid assets. Loan income increased $989,000 due to higher rates on new and renewed loans, combined with higher balances in loans HFI. The average rate on new and renewed loans was 7.98% for the second quarter of 2024, compared to 7.56% for the prior quarter. Interest income on short-term liquid assets decreased due to lower balances in these accounts during the second quarter. The increase in interest expense was primarily due to higher rates on new and renewed time deposits, combined with larger balances in these accounts.
The net interest margin FTE increased nine bps to 2.92% for the second quarter of 2024, compared to 2.83% for the prior quarter. This increase was due to improved yields on loans and securities, partially offset by higher deposit costs. The yield on loans increased 12 bps due to higher rates on new and renewed loans. The yield on securities increased eight bps due to reinvesting securities cash flows received into new securities at higher yields. These increases were partially offset by an eight bp increase in the rate on interest-bearing deposits during the second quarter. The cost of deposits increased five bps to 1.75% for the second quarter of 2024, compared to 1.70% for the previous quarter.
In the second quarter of 2024, the target range for the federal funds rate remained at 5.25%-5.50%. The market’s expectation is that the FOMC will lower the target federal funds rate in the second half of 2024. During the 12 months ending June 30, 2025, we anticipate receiving approximately $126.0 million in securities cash flows with an average yield of 2.40%, and we project approximately $215.3 million of fixed rate loans will mature with an average yield of 5.55%. We expect to redeploy these balances into higher yielding assets, which should benefit both net interest income and net interest margin FTE. As of June 30, 2024, floating rate loans were 13.9% of loans HFI, and floating rate transaction deposits were 6.5% of interest-bearing transaction deposits. Depending on balance sheet activity and the movement in interest rates, we expect the net interest margin FTE to improve slightly in the third and fourth quarters of 2024.
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The following table presents average balance sheet information, interest income, interest expense, and the corresponding average yields earned and rates paid for the three months ended June 30, 2024 and March 31, 2024:
For the Three Months Ended
June 30, 2024March 31, 2024
(dollars in thousands)Average Balance OutstandingInterest
Income/
Expense		Average
Yield/
Rate		Average Balance OutstandingInterest
Income/
Expense		Average
Yield/
Rate
Assets
Interest-earning assets:
Loans(1,2)
$2,042,602 $26,882 5.21 %$2,015,063 $25,893 5.09 %
Securities - taxable546,466 3,069 2.25 %569,600 3,048 2.14 %
Securities - tax-exempt193,954 999 2.06 %197,817 1,016 2.05 %
Interest-bearing deposits in other banks199,668 2,709 5.43 %224,301 3,039 5.42 %
Nonmarketable equity securities2,262 22 3.96 %2,240 22 3.95 %
Total interest-earning assets2,984,952 $33,681 4.48 %3,009,021 $33,018 4.35 %
Allowance for credit losses(21,653)(21,402)
Noninterest-earning assets96,631 100,486 
Total assets$3,059,930 $3,088,105 
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing transaction deposits$1,230,474 $5,701 1.86 %$1,261,361 $5,680 1.81 %
Time deposits595,120 6,193 4.19 %582,847 5,975 4.12 %
Total interest-bearing deposits1,825,594 11,894 2.62 %1,844,208 11,655 2.54 %
Other borrowings1 — 5.78 %— — — %
Total interest-bearing liabilities1,825,595 $11,894 2.62 %1,844,208 $11,655 2.54 %
Noninterest-bearing liabilities:
Noninterest-bearing deposits908,930 913,114 
Accrued interest and other liabilities24,868 25,055 
Total noninterest-bearing liabilities933,798 938,169 
Stockholders’ equity300,537 305,728 
Total liabilities and stockholders’ equity$3,059,930 $3,088,105 
Net interest income$21,787 $21,363 
Net interest spread1.86 %1.81 %
Net interest margin2.87 %2.80 %
Net interest margin FTE(3)
2.92 %2.83 %
Cost of deposits1.75 %1.70 %
Cost of funds1.60 %1.56 %
(1)Includes average outstanding balances of loans HFS of $3.2 million and $2.0 million for the three months ended June 30, 2024 and March 31, 2024, respectively.
(2)Nonaccrual loans are included as loans carrying a zero yield.
(3)Net interest margin FTE includes an FTE adjustment using a 21.0% federal income tax rate on tax-exempt securities and tax-exempt loans.
Six Months Ended June 30, 2024 vs. Six Months Ended June 30, 2023
Net interest income for the six months ended June 30, 2024 was $43.2 million, which was $1.3 million, or 2.9%, lower than $44.4 million for the six months ended June 30, 2023. Net interest income decreased due to an $11.8 million increase in interest expense, partially offset by a $10.5 million increase in interest and dividend income.
The increase in interest expense for the six months ended June 30, 2024, when compared to the six months ended June 30, 2023, was due to an increase in deposit rates as we responded to deposit rate pressure, combined with larger balances in higher cost deposit accounts. During 2023, we experienced a change in the deposit mix due to customers moving deposits from lower yielding categories to higher yielding categories. The increase in interest and dividend income for the six months ended June 30, 2024, compared to the same period prior year, was primarily due to higher interest income on loans and short-term liquid assets. Loan income increased $8.2 million due to higher rates on new, renewed, and floating rate loans and a $103.0 million increase in the average balance of loans, when compared to the same period prior year. The interest income on short-term liquid assets increased $1.5 million due to the higher interest rate environment and a $32.0 million increase in the average balance of these assets.
Net interest margin FTE decreased 15 bps to 2.89% for the six months ended June 30, 2024, from 3.04% for the six months ended June 30, 2023, due to the increase in the cost of deposits exceeding the increase in the yield on earning
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assets. The cost of deposits increased 85 bps to 1.72% for the six months ended June 30, 2024, from 0.87% for the six months ended June 30, 2023, due to a 117 bp increase in the rate on interest-bearing deposits, combined with customers moving deposits from lower yielding categories to higher yielding categories. Within total interest-bearing deposits, the rate on time deposits and interest-bearing transaction deposits increased 177 and 73 bps, respectively. These rates increased as we continued to respond to deposit rate pressure.
The net interest margin FTE was positively impacted by the increase in the yield on earning assets, for the six months ended June 30, 2024, when compared to the six months ended June 30, 2023. The yield on loans increased 54 bps due to higher rates on new, renewed, and floating rate loans due to the higher interest rate environment. The yield on securities increased 44 bps for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, due to reinvesting securities cash flows received into new securities at higher yields. In addition, the yield on short-term liquid assets increased 65 bps due to the FOMC’s increases to the target federal funds range, compared to the same period prior year.
The following table presents average balance sheet information, interest income, interest expense, and the corresponding average yields earned and rates paid for the six months ended June 30, 2024 and 2023:
For the Six Months Ended
June 30, 2024June 30, 2023
(dollars in thousands)Average Balance OutstandingInterest
Income/
Expense		Average
Yield/
Rate		Average Balance OutstandingInterest
Income/
Expense		Average
Yield/
Rate
Assets
Interest-earning assets:
Loans(1,2)
$2,028,833 $52,775 5.15 %$1,925,821 $44,616 4.61 %
Securities - taxable558,032 6,117 2.19 %635,640 5,160 1.63 %
Securities - tax-exempt195,886 2,015 2.06 %204,856 2,071 2.02 %
Federal funds sold— — — %37,497 886 4.70 %
Interest-bearing deposits in other banks211,985 5,748 5.42 %142,452 3,409 4.77 %
Nonmarketable equity securities2,251 44 3.94 %3,506 61 3.48 %
Total interest-earning assets2,996,987 $66,699 4.41 %2,949,772 $56,203 3.79 %
Allowance for credit losses(21,528)(20,854)
Noninterest-earning assets98,559 89,026 
Total assets$3,074,018 $3,017,944 
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing transaction deposits$1,245,917 $11,381 1.84 %$1,283,073 $7,042 1.11 %
Time deposits588,984 12,168 4.15 %399,848 4,714 2.38 %
Total interest-bearing deposits1,834,901 23,549 2.58 %1,682,921 11,756 1.41 %
Other borrowings1 — 4.78 %995 28 5.50 %
Total interest-bearing liabilities1,834,902 $23,549 2.58 %1,683,916 $11,784 1.41 %
Noninterest-bearing liabilities:
Noninterest-bearing deposits911,022 1,037,540 
Accrued interest and other liabilities24,961 19,914 
Total noninterest-bearing liabilities935,983 1,057,454 
Stockholders’ equity303,133 276,574 
Total liabilities and stockholders’ equity$3,074,018 $3,017,944 
Net interest income$43,150 $44,419 
Net interest spread1.83 %2.38 %
Net interest margin2.83 %2.99 %
Net interest margin FTE(3)
2.89 %3.04 %
Cost of deposits1.72 %0.87 %
Cost of funds1.58 %0.81 %
(1)Includes average outstanding balances of loans HFS of $2.6 million and $2.4 million for the six months ended June 30, 2024 and 2023, respectively.
(2)Nonaccrual loans are included as loans carrying a zero yield.
(3)Net interest margin FTE includes an FTE adjustment using a 21.0% federal income tax rate on tax-exempt securities and tax-exempt loans.
32
Rate/Volume Analysis
Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates. The following table presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities for the periods presented. It distinguishes between the changes related to outstanding balances and those due to changes in interest rates.
For the Three Months EndedFor the Six Months Ended
June 30, 2024 vs.
March 31, 2024
June 30, 2024 vs.
June 30, 2023
Increase (Decrease)
Due to Change in
Total
Increase
Increase (Decrease)
Due to Change in
Total
Increase
(in thousands)VolumeRate
(Decrease)(1)
VolumeRate
(Decrease)(1)
Interest-earning assets:
Loans
$354 $635 $989 $2,387 $5,772 $8,159 
Securities - taxable(124)145 21 (631)1,588 957 
Securities - tax-exempt(20)3 (17)(91)35 (56)
Federal funds sold— — — (886)— (886)
Interest-bearing deposits in other banks(332)2 (330)1,644 695 2,339 
Nonmarketable equity securities— — — (22)5 (17)
Total interest-earning assets$(122)$785 $663 $2,401 $8,095 $10,496 
Interest-bearing liabilities:
Interest-bearing transaction deposits$(139)$160 $21 $(204)$4,543 $4,339 
Time deposits126 92 218 2,230 5,224 7,454 
Total interest-bearing deposits(13)252 239 2,026 9,767 11,793 
Other borrowings— — — (27)(1)(28)
Total interest-bearing liabilities$(13)$252 $239 $1,999 $9,766 $11,765 
Increase (decrease) in net interest income$(109)$533 $424 $402 $(1,671)$(1,269)
(1)The change in interest attributable to rate has been determined by applying the change in rate between periods to average balances outstanding in the earlier period. The change in interest due to volume has been determined by applying the rate from the earlier period to the change in average balances outstanding between periods. Changes attributable to both rate and volume that cannot be segregated have been allocated to rate.
Provision for Credit Losses
The provision for credit losses is the amount necessary to maintain the ACL at a level considered appropriate by management. Factors impacting the provision include loan portfolio growth, changes in the quality and composition of the loan portfolio, the level of nonperforming loans, delinquency and charge-off trends, and current economic conditions.
The table below presents, for the periods indicated, the provision for credit losses:
For the Three Months Ended
(dollars in thousands)June 30,
2024		March 31,
2024		Increase (Decrease)
Provision for credit losses$300 $300 $— — %
The provision for credit losses for the second quarter of 2024 was $300,000, which was consistent with the first quarter of 2024. The provision in the first and second quarters was due to potential economic challenges resulting from the current inflationary environment, changing monetary policy, and loan growth. We will continue to evaluate future provision needs in relation to current economic situations, loan growth, trends in asset quality, forecasted information, and other conditions influencing loss expectations.
The table below presents, for the periods indicated, the provision for credit losses:
For the Six Months Ended
(dollars in thousands)June 30,
2024		June 30,
2023		Increase (Decrease)
Provision for credit losses$600 $300 $300 100.0 %
33
The provision for credit losses for the six months ended June 30, 2024, was $600,000, an increase of $300,000, or 100.0%, from $300,000 for the six months ended June 30, 2023. The primary drivers of the increase were the current inflationary environment, changing monetary policy, current economic forecasts, and loan growth. Effective January 1, 2023, we adopted ASC 326, the CECL methodology for estimating credit losses. For the cumulative effect of adopting ASC 326, we recorded a $569,000, net of tax, decrease to stockholders’ equity as of January 1, 2023. No provision expense was recorded for the first quarter of 2023 under the new CECL methodology.
Noninterest Income
Our primary sources of noninterest income are fees related to the sale of mortgage loans, service charges on deposit accounts, debit card fees, brokerage income from advisory services, and other loan and deposit fees.
Second Quarter of 2024 vs. First Quarter of 2024
Noninterest income increased $170,000 to $5.1 million for the second quarter of 2024 compared to $4.9 million for the first quarter of 2024. The increase in noninterest income was mainly due to an increase in mortgage loan income and income from SBIC limited partnerships of which Red River Bank is a member, partially offset by a decrease in brokerage income and net debit card income.
The table below presents, for the periods indicated, the major categories of noninterest income:
For the Three Months Ended
(dollars in thousands)June 30,
2024		March 31,
2024		Increase (Decrease)
Noninterest income:
Service charges on deposit accounts$1,367 $1,368 $(1)(0.1 %)
Debit card income, net949 1,022 (73)(7.1 %)
Mortgage loan income650 456 194 42.5 %
Brokerage income893 987 (94)(9.5 %)
Loan and deposit income492 492 — — %
Bank-owned life insurance income216 202 14 6.9 %
Gain (Loss) on equity securities(13)(31)18 58.1 %
SBIC income454 352 102 29.0 %
Other income (loss)90 80 10 12.5 %
Total noninterest income$5,098 $4,928 $170 3.4 %
Mortgage loan income increased $194,000 to $650,000 for the second quarter of 2024, compared to the prior quarter due to increased purchase activity.
SBIC income increased $102,000 to $454,000 for the second quarter of 2024, compared to the prior quarter. This increase was primarily due to higher normal income received from these partnerships in the second quarter. In the first quarter of 2024, we received a distribution payment of $114,000, in addition to normal income from these partnerships. We expect SBIC income to be lower in future quarters.
Brokerage income decreased $94,000 to $893,000 for the second quarter of 2024, compared to the prior quarter. The lower income in the second quarter of 2024 was mainly due to lower investing activities by clients. Assets under management were $1.09 billion as of June 30, 2024, and $1.07 billion as of March 31, 2024.
Debit card income, net, decreased $73,000 to $949,000 for the second quarter of 2024, compared to the prior quarter. In the first quarter of 2024, we terminated our previous debit card provider contract, which resulted in $145,000 of nonrecurring income. In January 2024, a newly negotiated debit card provider contract became effective. The second quarter of 2024 benefited from a higher number of debit card transactions and related income.
Six Months Ended June 30, 2024 vs. Six Months Ended June 30, 2023
Noninterest income decreased $321,000 to $10.0 million for the six months ended June 30, 2024, compared to $10.3 million for the six months ended June 30, 2023. The decrease in noninterest income was mainly due to lower income from SBIC limited partnerships of which Red River Bank is a member, partially offset by higher mortgage loan income, brokerage income, and net debit card income.
34
The table below presents, for the periods indicated, the major categories of noninterest income:
For the Six Months Ended
(dollars in thousands)June 30,
2024		June 30,
2023		Increase (Decrease)
Noninterest income:
Service charges on deposit accounts$2,735 $2,828 $(93)(3.3 %)
Debit card income, net1,971 1,858 113 6.1 %
Mortgage loan income1,106 920 186 20.2 %
Brokerage income1,880 1,730 150 8.7 %
Loan and deposit income984 995 (11)(1.1 %)
Bank-owned life insurance income418 366 52 14.2 %
Gain (Loss) on equity securities(44)(32)(12)(37.5 %)
SBIC income806 1,559 (753)(48.3 %)
Other income (loss)170 123 47 38.2 %
Total noninterest income$10,026 $10,347 $(321)(3.1 %)
SBIC income decreased $753,000 to $806,000 for the six months ended June 30, 2024, compared to the same period prior year. In the first half of 2024, we received $114,000 of distribution payments, in addition to normal income. In the first half of 2023, we received income from the sale of an investment, in addition to normal income.
Mortgage loan income increased $186,000 to $1.1 million for the six months ended June 30, 2024, compared to the same period prior year mainly due to adjusted mortgage loan fees.
Brokerage income increased $150,000 to $1.9 million for the six months ended June 30, 2024, compared to the same period prior year. This increase was primarily due to higher investing activities by clients. Assets under management were $1.09 billion and $997.3 million as of June 30, 2024 and 2023, respectively.
Debit card income, net, increased $113,000 to $2.0 million for the six months ended June 30, 2024, compared to the same period prior year. In the first quarter of 2024, we terminated our previous debit card provider contract, which resulted in $145,000 of nonrecurring income. In January 2024, a newly negotiated debit card provider contract became effective, which resulted in an increase in debit card income. These increases were partially offset by higher debit card processing expenses in the first half of 2024.
Operating Expenses
Operating expenses are composed of all employee expenses and costs associated with operating our facilities, obtaining and retaining customer relationships, and providing services.
Second Quarter of 2024 vs. First Quarter of 2024
Operating expenses increased $816,000 to $16.7 million for the second quarter of 2024, compared to $15.9 million for the first quarter of 2024. The increase in operating expenses was due to higher loan and deposit expenses, data processing expense, other business development expenses, legal and professional expenses, and occupancy and equipment expenses, partially offset by lower other taxes.
35
The following table presents, for the periods indicated, the major categories of operating expenses:
For the Three Months Ended
(dollars in thousands)June 30,
2024		March 31,
2024		Increase (Decrease)
Operating expenses:
Personnel expenses$9,603 $9,550 $53 0.6 %
Non-staff expenses:
Occupancy and equipment expenses1,698 1,616 82 5.1 %
Technology expenses724 709 15 2.1 %
Advertising408 337 71 21.1 %
Other business development expenses593 475 118 24.8 %
Data processing expense651 347 304 87.6 %
Other taxes500 737 (237)(32.2 %)
Loan and deposit expenses309 (42)351 835.7 %
Legal and professional expenses729 618 111 18.0 %
Regulatory assessment expenses401 404 (3)(0.7 %)
Other operating expenses1,073 1,122 (49)(4.4 %)
Total operating expenses$16,689 $15,873 $816 5.1 %
Loan and deposit expenses increased $351,000 to $309,000 for the second quarter of 2024, compared to the prior quarter. The first quarter of 2024 benefited from the receipt of a $262,000 negotiated, variable rebate from a vendor.
Data processing expense increased $304,000 to $651,000 for the second quarter of 2024, compared to the prior quarter. The first quarter of 2024 benefited from the receipt of a $284,000 periodic refund from our data processing center.
Other business development expenses increased $118,000 to $593,000 for the second quarter of 2024, compared to the prior quarter. This increase was mainly the result of an increase in CRA-related contributions, as well as higher expenses associated with the SBIC limited partnerships.
Legal and professional expenses increased $111,000 to $729,000 for the second quarter of 2024, compared to the prior quarter. This increase was primarily due to higher public company expenses and audit expenses.
Occupancy and equipment expenses increased $82,000 to $1.7 million for the second quarter of 2024, compared to the prior quarter. This increase was primarily due to $67,000 of nonrecurring expenses related to our new location in the New Orleans market and other property renovations.
Other taxes decreased $237,000 to $500,000 for the second quarter of 2024, compared to the prior quarter. This decrease was primarily attributable to the reversal of $145,000 of stock repurchase tax expense in the second quarter of 2024 due to finalized guidelines. Stock repurchase tax expense was $100,000 in the first quarter of 2024.
Six Months Ended June 30, 2024 vs. Six Months Ended June 30, 2023
Operating expenses increased $942,000 to $32.6 million for the six months ended June 30, 2024, compared to $31.6 million for the six months ended June 30, 2023. The increase in operating expenses was mainly due to higher personnel expenses, legal and professional expenses, other business development expenses, and occupancy and equipment expenses, partially offset by lower loan and deposit expenses and other taxes.
36
The following table presents, for the periods indicated, the major categories of operating expenses:
For the Six Months Ended
(dollars in thousands)June 30,
2024		June 30,
2023		Increase (Decrease)
Operating expenses:
Personnel expenses$19,154 $18,547 $607 3.3 %
Non-staff expenses:
Occupancy and equipment expenses3,314 3,271 43 1.3 %
Technology expenses1,433 1,390 43 3.1 %
Advertising745 624 121 19.4 %
Other business development expenses1,068 930 138 14.8 %
Data processing expense998 1,038 (40)(3.9 %)
Other taxes1,237 1,378 (141)(10.2 %)
Loan and deposit expenses267 489 (222)(45.4 %)
Legal and professional expenses1,347 1,097 250 22.8 %
Regulatory assessment expenses805 804 1 0.1 %
Other operating expenses2,194 2,052 142 6.9 %
Total operating expenses$32,562 $31,620 $942 3.0 %
Personnel expenses increased $607,000 to $19.2 million for the six months ended June 30, 2024, compared to the same period prior year. This increase was primarily due to higher compensation expense as a result of net staff changes, offset by a decrease in medical insurance expense. As of June 30, 2024 and 2023, we had 361 and 353 total employees, respectively.
Legal and professional expenses increased $250,000 to $1.3 million for the six months ended June 30, 2024, compared to the same period prior year. This increase was due to higher contracted services, higher public company expenses, and higher professional and advisory services mainly related to a newly negotiated debit card provider contract effective January 2024.
Other business development expenses increased $138,000 to $1.1 million for the six months ended June 30, 2024, compared to the same period prior year. This increase was mainly the result of an increase in CRA-related contributions, as well as higher marketing expenses.
Occupancy and equipment expenses increased $43,000 to $3.3 million for the six months ended June 30, 2024, compared to the same period prior year. This increase was primarily due to a full period of expenses related to properties that were expanded or opened in 2023 and $67,000 of nonrecurring expenses related to our new location in the New Orleans market and other 2024 property renovations. The first half of 2023 had $189,000 of nonrecurring expenses related to opening our new operations center building and the expansion of a banking center in the Southwest market.
Loan and deposit expenses decreased $222,000 to $267,000 for the six months ended June 30, 2024, compared to the same period prior year. The first half of 2024 benefited from the receipt of a $262,000 negotiated, variable rebate from a vendor.
Other taxes decreased $141,000 to $1.2 million for the six months ended June 30, 2024, compared to the same period prior year. This decrease was primarily due to a decrease in State of Louisiana bank stock tax resulting from lower deposit account balances and lower net income for the applicable tax years.
Income Tax Expense
The amount of income tax expense is influenced by the amounts of our pre-tax income, tax-exempt income, and other nondeductible expenses. Deferred tax assets and liabilities are reflected at currently enacted income tax rates in effect for the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.
Our accrued tax rate is based on an annualized projection and changes considering our most recent financial results and balances. Our effective income tax rates have differed from the U.S. statutory rate due to the effect of tax-exempt income from loans, securities, life insurance policies, income tax effects associated with stock-based compensation, and permanent and temporary tax differences.
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The table below presents, for the periods indicated, income tax expense:
For the Three Months Ended
(dollars in thousands)June 30,
2024		March 31,
2024		Increase (Decrease)
Income tax expense$1,909 $1,930 $(21)(1.1)%
For the quarters ended June 30, 2024 and March 31, 2024, income tax expense remained consistent at $1.9 million. The slight decrease in income tax expense was primarily due to a slight decrease in pre-tax income. Our effective income tax rates for the quarters ended June 30, 2024 and March 31, 2024, were 19.3% and 19.1%, respectively.
The table below presents, for the periods indicated, income tax expense:
For the Six Months Ended
(dollars in thousands)June 30,
2024		June 30,
2023		Increase
(Decrease)
Income tax expense$3,839 $4,280 $(441)(10.3 %)
For the six months ended June 30, 2024 and 2023, income tax expense totaled $3.8 million and $4.3 million, respectively. The decrease in income tax expense was primarily due to a decrease in pre-tax income. Our effective income tax rates for the six months ended June 30, 2024 and 2023, were 19.2% and 18.7%, respectively.
FINANCIAL CONDITION
As of June 30, 2024, assets were $3.05 billion, which was $80.3 million, or 2.6%, lower than $3.13 billion as of December 31, 2023, primarily due to a decrease in deposits. Total deposits decreased $85.2 million, or 3.0%, to $2.72 billion as of June 30, 2024, from $2.80 billion as of December 31, 2023. Cash and cash equivalents decreased $92.4 million, or 30.2%, to $213.1 million and were 6.99% of assets as of June 30, 2024. Total securities decreased $47.7 million, or 6.7%, to $666.6 million and were 21.87% of assets as of June 30, 2024. During the first six months of the year, loans HFI increased $55.0 million, or 2.8%, to $2.05 billion as of June 30, 2024. As of June 30, 2024, and December 31, 2023, we had no borrowings. Stockholders’ equity increased $3.1 million during the first six months of 2024 to $307.0 million as of June 30, 2024. As of June 30, 2024, the loans HFI to deposits ratio was 75.38%, compared to 71.13% as of December 31, 2023, and the noninterest-bearing deposits to total deposits ratio was 32.87%, compared to 32.71% as of December 31, 2023.
Interest-bearing Deposits in Other Banks
Interest-bearing deposits in other banks were the third-largest component of earning assets as of June 30, 2024. Excess liquidity that is not being deployed into loans or securities is placed in these accounts. As of June 30, 2024, interest-bearing deposits in other banks were $178.0 million and were 5.8% of assets, a decrease of $74.3 million, or 29.5%, compared to $252.4 million and 8.1% of assets as of December 31, 2023. This decrease was primarily due to the outflow of customer deposits during the first half of 2024.
Securities
Our securities portfolio is the second-largest component of earning assets and provides a significant source of revenue. Securities are classified as AFS, HTM, and equity securities. As of June 30, 2024, our total securities portfolio was 21.9% of assets. It is designed primarily to provide and maintain liquidity, generate a favorable return on investments without incurring unnecessary interest rate and credit risk, and complement our lending activities. We may invest in various types of liquid assets that are permissible under governing regulations and approved by our investment policy, which include U.S. Treasury obligations, U.S. government agency obligations, certificates of deposit of insured domestic banks, mortgage-backed and mortgage-related securities, corporate notes having an investment rating of “A” or better, municipal bonds, and certain equity securities.
Securities AFS and Securities HTM
Securities AFS and securities HTM are debt securities. Total debt securities on the consolidated balance sheets were $663.7 million as of June 30, 2024, a decrease of $47.6 million, or 6.7%, from $711.3 million as of December 31, 2023.
Securities AFS are held for indefinite periods of time and are carried at estimated fair value. As of June 30, 2024, the estimated fair value of securities AFS was $526.9 million. The carrying values of our securities AFS are adjusted for unrealized gain or loss, and any unrealized gain or loss is reported on an after-tax basis as a component of AOCI in stockholders’ equity. The net unrealized loss on securities AFS increased $2.2 million for the six months ended June 30, 2024, resulting in a net unrealized loss of $64.4 million as of June 30, 2024, compared to a net unrealized loss of $62.2 million as of December 31, 2023.
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Securities HTM, which we have the intent and ability to hold until maturity, are carried at amortized cost. As of June 30, 2024, the amortized cost of securities HTM was $136.8 million. Securities HTM had an unrealized loss of $22.8 million as of June 30, 2024, compared to an unrealized loss of $22.2 million as of December 31, 2023.
Investment activity for the six months ended June 30, 2024, included $80.3 million in maturities, principal repayments, and calls, partially offset by $34.9 million of securities purchased. There were no sales of securities AFS, and there were no purchases or sales of securities HTM for the same period.
The securities portfolio tax-equivalent yield was 2.30% for the six months ended June 30, 2024, compared to 1.85% for the six months ended June 30, 2023. The increase in yield for the six months ended June 30, 2024, was primarily due to reinvesting securities cash flows received between June 30, 2023 and June 30, 2024, into new securities at higher yields.
The contractual maturity of mortgage-backed securities and collateralized mortgage obligations is not a reliable indicator of their expected lives because borrowers have the right to prepay their obligations at any time. Mortgage-backed securities and collateralized mortgage obligations are typically issued with stated principal amounts and are backed by pools of mortgage loans and other loans with varying maturities. The term of the underlying mortgages and loans may vary significantly due to the ability of a borrower to prepay. Monthly pay downs on mortgage-backed securities may cause the average lives of the securities to be much different than the stated contractual maturity. During a period of rising interest rates, fixed rate mortgage-backed securities are not likely to experience heavy prepayments of principal, and consequently, the average lives of these securities are typically lengthened. If interest rates begin to fall, prepayments may increase, thereby shortening the estimated average lives of these securities. As of June 30, 2024, the average life of our securities portfolio was 6.9 years with an estimated effective duration of 5.0 years. As of December 31, 2023, the average life of our securities portfolio was 7.1 years with an estimated effective duration of 5.0 years.
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The following tables summarize the amortized cost and estimated fair value of our securities by type as of the dates indicated. As of June 30, 2024, other than securities issued by U.S. government agencies or government-sponsored enterprises, our securities portfolio did not contain securities of any one issuer with an aggregate book value in excess of 10.0% of our stockholders’ equity.
June 30, 2024
(in thousands)
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Securities AFS:
Mortgage-backed securities$288,908 $311 $(29,982)$259,237 
Municipal bonds204,724 — (32,280)172,444 
U.S. Treasury securities48,000 — (719)47,281 
U.S. agency securities49,659 18 (1,749)47,928 
Total Securities AFS$591,291 $329 $(64,730)$526,890 
Securities HTM:
Mortgage-backed securities$135,897 $— $(22,742)$113,155 
U.S. agency securities927 — (107)820 
Total Securities HTM$136,824 $— $(22,849)$113,975 
December 31, 2023
(in thousands)
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Securities AFS:
Mortgage-backed securities$288,793 $395 $(31,228)$257,960 
Municipal bonds211,848 13 (27,732)184,129 
U.S. Treasury securities92,054 — (1,912)90,142 
U.S. agency securities39,563 5 (1,707)37,861 
Total Securities AFS$632,258 $413 $(62,579)$570,092 
Securities HTM:
Mortgage-backed securities$140,314 $— $(22,098)$118,216 
U.S. agency securities922 — (109)813 
Total Securities HTM$141,236 $— $(22,207)$119,029 
The following table shows the fair value of securities AFS that mature during each of the periods indicated. The contractual maturity of a mortgage-backed security is the date the last underlying mortgage matures. Yields are weighted-average tax equivalent yields that are calculated by dividing projected annual income by the average amortized cost of the applicable securities while using a 21.0% federal income tax rate, when applicable.
Contractual Maturity as of June 30, 2024
Within
One Year		After One Year
but Within
Five Years		After Five Years
but Within
Ten Years		After
Ten Years		Total
(dollars in thousands)Amount
Yield(1)
Amount
Yield(1)
Amount
Yield(1)
Amount
Yield(1)
Amount
Yield(1)
Securities AFS:
Mortgage-backed securities$1,886 3.73 %$10,158 4.80 %$46,299 1.61 %$200,894 2.54 %$259,237 2.47 %
Municipal bonds5,495 1.69 %11,862 1.99 %25,985 2.23 %129,102 2.08 %172,444 2.09 %
U.S. Treasury securities47,281 1.36 %— — %— — %— — %47,281 1.36 %
U.S. agency securities815 5.35 %4,403 2.73 %35,011 5.63 %7,699 2.50 %47,928 4.79 %
Total Securities AFS$55,477 1.53 %$26,423 3.16 %$107,295 3.00 %$337,695 2.35 %$526,890 2.44 %
(1)Tax equivalent projected book yield as of June 30, 2024.
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The following table shows the amortized cost of securities HTM that mature during each of the periods indicated. The contractual maturity of a mortgage-backed security is the date the last underlying mortgage matures. Yields are weighted-average tax equivalent yields that are calculated by dividing projected annual income by the average amortized cost of the applicable securities while using a 21.0% federal income tax rate, when applicable.
Contractual Maturity as of June 30, 2024
Within
One Year		After One Year
but Within
Five Years		After Five Years
but Within
Ten Years		After
Ten Years		Total
(dollars in thousands)Amount
Yield(1)
Amount
Yield(1)
Amount
Yield(1)
Amount
Yield(1)
Amount
Yield(1)
Securities HTM:
Mortgage-backed securities$— —% $— —% $— —% $135,897 2.46% $135,897 2.46% 
U.S. agency securities— —% — —% 927 2.61% — —% 927 2.61% 
Total Securities AFS$— —% $— —% $927 2.61% $135,897 2.46% $136,824 2.46% 
(1)Tax equivalent projected book yield as of June 30, 2024.
Equity Securities
Equity securities are an investment in a CRA mutual fund, consisting primarily of bonds. Equity securities are carried at fair value on the consolidated balance sheets with periodic changes in value recorded through the consolidated statements of income. As of June 30, 2024, equity securities had a fair value of $2.9 million with a recognized loss of $44,000 for the six months ended June 30, 2024. As of December 31, 2023, equity securities had a fair value of $3.0 million with a recognized loss of $14,000 for the year ended December 31, 2023.
Loan Portfolio
Our loan portfolio is our largest category of earning assets, and interest income earned on our loan portfolio is our primary source of income. We maintain a diversified loan portfolio with a focus on commercial real estate, one-to-four family residential, and commercial and industrial loans. As of June 30, 2024, loans HFI were $2.05 billion, an increase of $55.0 million, or 2.8%, compared to $1.99 billion as of December 31, 2023. In the first six months of 2024, loans HFI increased primarily due to new loan activity in various markets across Louisiana.
Loans by Category
Loans HFI by category, loans HFI, and loans HFS are summarized below as of the dates indicated:
June 30, 2024December 31, 2023
(dollars in thousands)AmountPercentAmountPercent
Real estate:
Commercial real estate$865,645 42.3 %$851,582 42.7 %
One-to-four family residential611,904 29.9 %599,487 30.1 %
Construction and development129,197 6.3 %125,238 6.3 %
Commercial and industrial344,071 16.8 %315,327 15.8 %
Tax-exempt67,941 3.3 %72,913 3.7 %
Consumer29,132 1.4 %28,311 1.4 %
Total loans HFI$2,047,890 100.0 %$1,992,858 100.0 %
Total loans HFS$3,878 $1,306 
Average loan HFI size, excluding credit cards$246 $239 
Commercial real estate loans are collateralized by owner occupied and non-owner occupied properties mainly in Louisiana. Non-owner occupied office loans were $57.4 million, or 2.8%, of loans HFI as of June 30, 2024, and $62.3 million, or 3.1% of loans HFI, as of December 31, 2023. The properties are primarily centered in low-rise suburban areas.
Industry Concentrations
Health care loans are our largest loan industry concentration and are made up of a diversified portfolio of health care providers. As of June 30, 2024, health care loans were $167.4 million, or 8.2% of loans HFI, compared to $153.8 million, or 7.7% of loans HFI, as of December 31, 2023. The average health care loan size was $361,000 as of June 30, 2024 and $334,000 as of December 31, 2023. Within the health care sector, loans to nursing and residential care facilities were 4.5% of loans HFI as of June 30, 2024, and 4.0% as of December 31, 2023. Loans to physician and dental practices were 3.5% of loans HFI as of June 30, 2024, and 3.6% as of December 31, 2023.
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Energy loans were 1.7% of loans HFI as of June 30, 2024 and December 31, 2023.
Geographic Markets
As of June 30, 2024, Red River Bank operates in seven geographic markets throughout the state of Louisiana. The following table summarizes loans HFI by market of origin:
June 30, 2024
(dollars in thousands)AmountPercent
Central$626,878 30.6 %
Capital538,861 26.3 %
Northwest364,508 17.8 %
Southwest173,031 8.5 %
New Orleans131,283 6.4 %
Northshore130,791 6.4 %
Acadiana82,538 4.0 %
Total loans HFI$2,047,890 100.0 %
Nonperforming Assets
NPAs consist of nonperforming loans and property acquired through foreclosures or repossession. Nonperforming loans include loans that are contractually past due 90 days or more and loans that are on nonaccrual status. Loans are considered past due when principal and interest payments have not been received as of the date such payments are due.
Asset quality is managed through disciplined underwriting policies, continual monitoring of loan performance, and focused management of NPAs. There can be no assurance, however, that the loan portfolio will not become subject to losses due to declines in economic conditions, deterioration in the financial condition of our borrowers, or a decline in the value of collateral.
NPAs totaled $3.2 million as of June 30, 2024, an increase of $607,000, or 23.3%, from $2.6 million as of December 31, 2023. This increase was primarily due to an increase in nonaccrual loans, partially offset by a decrease in past due loans. The ratio of NPAs to assets was 0.11% as of June 30, 2024, and 0.08% as of December 31, 2023.
Nonperforming loan and asset information is summarized below:
(dollars in thousands)June 30, 2024December 31, 2023
Nonperforming loans:
Nonaccrual loans$3,168 $1,959 
Accruing loans 90 days or more past due41 574 
Total nonperforming loans3,209 2,533 
Foreclosed assets:
Real estate— 69 
Total foreclosed assets— 69 
Total NPAs$3,209 $2,602 
Nonaccrual loans to loans HFI0.15% 0.10 %
Nonperforming loans to loans HFI
0.16% 0.13 %
NPAs to assets0.11% 0.08 %
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Nonaccrual loans are summarized below by category:
(in thousands)June 30, 2024December 31, 2023
Real estate:
Commercial real estate$737 $714 
One-to-four family residential700 269 
Construction and development920 — 
Commercial and industrial717 844 
Tax-exempt— — 
Consumer94 132 
Total nonaccrual loans$3,168 $1,959 
Potential Problem Loans
From a credit risk standpoint, we classify loans in one of five categories: pass, special mention, substandard, doubtful, or loss. Loan classifications reflect a judgment about the risk of default and loss associated with the loans. Classifications are reviewed periodically and adjusted to reflect the degree of risk and loss believed to be inherent in each loan. The methodology is structured so that reserve allocations are increased in accordance with deterioration in credit quality (and a corresponding increase in risk and loss) or decreased in accordance with improvement in credit quality (and a corresponding decrease in risk and loss).
Loans classified as pass are of satisfactory quality and do not require a more severe classification.
Loans classified as special mention have potential weaknesses that deserve management’s close attention. If these weaknesses are not corrected, repayment possibilities for the loan may deteriorate. However, the loss potential does not warrant substandard classification.
Loans classified as substandard have well-defined weaknesses that jeopardize normal repayment of principal and interest. Prompt corrective action is required to reduce exposure and to assure adequate remedial actions are taken by the borrower. If these weaknesses do not improve, loss is possible.
Loans classified as doubtful have well-defined weaknesses that make full collection improbable.
Loans classified as loss are considered uncollectible and charged-off to the ACL.
The following table summarizes loans HFI by risk rating:
June 30, 2024December 31, 2023
(dollars in thousands)AmountPercentAmountPercent
Pass$2,036,782 99.5 %$1,968,575 98.8 %
Special Mention5,410 0.2 %19,429 1.0 %
Substandard5,698 0.3 %4,854 0.2 %
Total loans HFI$2,047,890 100.0 %$1,992,858 100.0 %
There were no loans as of June 30, 2024 or December 31, 2023, classified as doubtful or loss.
Allowance for Credit Losses
In determining the ACL for loans HFI, we estimate losses on a collective pool basis when similar risk characteristics and risk profiles exist. Loans that do not share similar risk characteristics are evaluated individually and excluded from the collective evaluation. The ACL is determined using the CECL model, which considers relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts.
As of June 30, 2024, the ACL was $21.6 million, or 1.06% of loans HFI. As of December 31, 2023, the ACL totaled $21.3 million, or 1.07% of loans HFI. The $291,000 increase in the ACL for the six months ended June 30, 2024, was due to $600,000 from the provision for credit losses, partially offset by $309,000 of net charge-offs.
The provision for credit losses for the six months ended June 30, 2024, was $600,000, an increase of $300,000, or 100.0%, from $300,000 for the six months ended June 30, 2023. The primary drivers of the increase were the current inflationary environment, changing monetary policy, current economic forecasts, and loan growth. Effective January 1, 2023, we adopted ASC 326, the CECL methodology for estimating credit losses. For the cumulative effect of adopting ASC 326, we recorded a $569,000, net of tax, decrease to stockholders’ equity as of January 1, 2023. We will continue to
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evaluate future provision needs in relation to current economic situations, loan growth, trends in asset quality, forecasted information, and other conditions influencing loss expectations.
The following table displays activity in the ACL for June 30, 2024, and June 30, 2023:
As of and For the Six Months Ended
(dollars in thousands)June 30,
2024		June 30,
2023
Loans HFI$2,047,890 $1,947,631 
Nonaccrual loans$3,168 $1,840 
Average loans$2,028,833 $1,925,821 
Allowance at beginning of period$21,336 $20,628 
Impact of adopting ASC 326— 278 
Provision for credit losses600 300 
Charge-offs:
Real estate:
Construction and development— (9)
Commercial and industrial(211)(33)
Consumer(231)(182)
Total charge-offs(442)(224)
Recoveries:
Real estate:
One-to-four family residential5 5 
Commercial and industrial54 23 
Consumer74 75 
Total recoveries133 103 
Net (charge-offs)/recoveries(309)(121)
Allowance at end of period$21,627 $21,085 
ACL to loans HFI1.06 %1.08 %
ACL to nonaccrual loans682.67% 1,145.92% 
Net charge-offs to average loans0.02 %0.01 %
We believe that we have established our ACL in accordance with GAAP and that the ACL was adequate to provide for known and inherent losses in the portfolio at all times shown above. Future provisions for credit losses are subject to ongoing evaluations of the factors and loan portfolio risks, including economic pressures related to inflation, labor market and supply chain constraints, and natural disasters affecting the state of Louisiana. A decline in market area economic conditions, deterioration of asset quality, or growth in portfolio size could cause the allowance to become inadequate, and material additional provisions for credit losses could be required.
Deposits
Deposits are the primary funding source for loans and investments. We offer a variety of deposit products designed to attract and retain consumer, commercial, and public entity customers. These products consist of noninterest and interest-bearing checking accounts, savings accounts, money market accounts, and time deposit accounts. Deposits are gathered from individuals, partnerships, corporations, and public entities located primarily in our market areas. We do not have any internet-sourced or brokered deposits.
Total deposits decreased $85.2 million, or 3.0%, to $2.72 billion as of June 30, 2024, from $2.80 billion as of December 31, 2023. This decrease was primarily a result of the seasonal outflow of funds from public entity customers and income tax payments, partially offset by an increase in new customer time deposit activity. Noninterest-bearing deposits decreased by $23.5 million, or 2.6%, to $892.9 million as of June 30, 2024. Noninterest-bearing deposits as a percentage of total deposits were 32.87% as of June 30, 2024, compared to 32.71% as of December 31, 2023. Interest-bearing deposits decreased by $61.7 million, or 3.3%, to $1.82 billion as of June 30, 2024.
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Red River Bank has a granular, diverse deposit portfolio with customers in a variety of industries throughout Louisiana. As of June 30, 2024 and December 31, 2023, the average deposit account size was approximately $27,000 and $28,000, respectively.
The following table presents our deposits by account type as of the dates indicated:
June 30, 2024December 31, 2023Change from
December 31, 2023 to June 30, 2024
(dollars in thousands)Balance% of TotalBalance% of Total$ Change% Change
Noninterest-bearing demand deposits$892,942 32.9 %$916,456 32.7 %$(23,514)(2.6 %)
Interest-bearing deposits:
Interest-bearing demand deposits135,543 5.0 %138,380 5.0 %(2,837)(2.1 %)
NOW accounts377,385 13.9 %468,483 16.7 %(91,098)(19.4 %)
Money market accounts547,715 20.1 %541,607 19.3 %6,108 1.1 %
Savings accounts170,050 6.3 %173,741 6.2 %(3,691)(2.1 %)
Time deposits less than or equal to $250,000399,981 14.7 %392,094 14.0 %7,887 2.0 %
Time deposits greater than $250,000193,030 7.1 %171,127 6.1 %21,903 12.8 %
Total interest-bearing deposits1,823,704 67.1 %1,885,432 67.3 %(61,728)(3.3 %)
Total deposits$2,716,646 100.0 %$2,801,888 100.0 %$(85,242)(3.0 %)
The following table presents deposits by customer type as of the dates indicated:
June 30, 2024December 31, 2023Change from
December 31, 2023 to June 30, 2024
(dollars in thousands)Balance% of TotalBalance% of Total$ Change% Change
Consumer$1,351,709 49.8 %$1,343,448 47.9 %$8,261 0.6 %
Commercial1,149,023 42.3 %1,170,670 41.8 %(21,647)(1.8 %)
Public215,914 7.9 %287,770 10.3 %(71,856)(25.0 %)
Total deposits$2,716,646 100.0 %$2,801,888 100.0 %$(85,242)(3.0 %)
We manage our interest expense on deposits through a deposit pricing strategy that is based on competitive pricing, economic conditions, and current or anticipated funding needs. We adjust deposit rates in part based upon our anticipated funding needs and liquidity position. We also consider the potential interest rate risk caused by extended maturities of time deposits when adjusting deposit rates.
Our average deposit balance was $2.73 billion for the three months ended June 30, 2024, a decrease of $22.8 million, or 0.8%, from $2.76 billion for the three months ended March 31, 2024. The average cost of interest-bearing deposits and total deposits for the second quarter of 2024 was 2.62% and 1.75%, respectively, compared to 2.54% and 1.70% for the prior quarter, respectively. The increase in the average cost of interest-bearing deposits and total deposits in the second quarter of 2024 as compared to the prior quarter was due to time deposit activity. Also, as of June 30, 2024, 6.5% of interest-bearing transaction deposits had floating rates, which adjust with market rates.
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The following table presents our average deposits by account type and the average rate paid for the periods indicated:
For the Three Months Ended
June 30, 2024March 31, 2024
(dollars in thousands)Average
Balance		Average
Rate		Average
Balance		Average
Rate
Noninterest-bearing demand deposits$908,930 0.00 %$913,114 0.00 %
Interest-bearing deposits:
Interest-bearing demand deposits113,466 4.27 %116,953 4.27 %
NOW accounts393,425 1.33 %427,143 1.24 %
Money market accounts550,767 2.29 %543,336 2.27 %
Savings accounts172,816 0.15 %173,929 0.15 %
Time deposits595,120 4.19 %582,847 4.12 %
Total interest-bearing deposits1,825,594 2.62 %1,844,208 2.54 %
Total average deposits$2,734,524 1.75 %$2,757,322 1.70 %
As of June 30, 2024, our estimated uninsured deposits, which are the portion of deposit accounts that exceed the FDIC insurance limit (currently $250,000), were approximately $804.6 million, or 29.6% of total deposits, compared to $887.8 million, or 31.7% of total deposits, as of December 31, 2023. These amounts were estimated based on the same methodologies and assumptions used for regulatory reporting purposes. Also, as of June 30, 2024, our estimated uninsured deposits, excluding collateralized public entity deposits, were approximately $633.2 million, or 23.3% of total deposits, compared to $643.6 million, or 23.0% of total deposits, as of December 31, 2023. As of June 30, 2024, our cash and cash equivalents of $213.1 million combined with our available borrowing capacity of $1.68 billion equaled 235.6% of our estimated uninsured deposits and 299.4% of our estimated uninsured deposits, excluding collateralized public entity deposits.
The following table presents the amount of time deposits by account that are in excess of the FDIC insurance limit (currently $250,000) by time remaining until maturity for the period indicated:
(in thousands)June 30, 2024
Three months or less$10,856 
Over three months through six months46,168 
Over six months through 12 months31,746 
Over 12 months4,510 
Total$93,280 
Borrowings
Although deposits are our primary source of funds, we may, from time to time, utilize borrowings as a cost-effective source of funds when such borrowings can be invested at a positive interest rate spread for additional capacity to fund loan demand or to meet our liquidity needs. We established borrowing capacity with the FHLB, the Federal Reserve Bank’s Discount Window facility, and other correspondent banks to provide additional sources of operating funds. Our FHLB line of credit is collateralized by eligible Red River Bank loans. Our Federal Reserve Bank’s Discount Window line of credit is collateralized by eligible securities and eligible Red River Bank loans that are not pledged to the FHLB. As of June 30, 2024 and December 31, 2023, we had no outstanding borrowings under these agreements.
Stockholders’ Equity
Total stockholders’ equity as of June 30, 2024, was $307.0 million compared to $303.9 million as of December 31, 2023. The $3.1 million, or 1.0%, increase in stockholders’ equity was attributable to $16.2 million of net income for the six months ended June 30, 2024, and $224,000 of stock compensation, partially offset by the repurchase of 216,220 shares of common stock for $10.8 million, $1.3 million in cash dividends, and a $1.2 million, net of tax, market adjustment to AOCI related to securities.
During the second quarter of 2022, we reclassified $166.3 million, net of $17.9 million of unrealized loss, from AFS to HTM. The securities were transferred at fair value, which became the cost basis for the securities HTM. At the date of the transfer, the net unrealized loss of $17.9 million, of which $14.2 million, net of tax, was included in AOCI and is being amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses recognized as a result of the transfer. As of June 30, 2024, the net unamortized, unrealized loss remaining on the
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transferred securities included in the consolidated balance sheets totaled $13.7 million, of which $10.9 million, net of tax, was included in AOCI.
On December 14, 2023, our board of directors approved the renewal of the 2023 stock repurchase program that was completed in the fourth quarter of 2023 after reaching its purchase limit. The renewed program authorizes us to purchase up to $5.0 million of our outstanding shares of common stock from January 1, 2024 through December 31, 2024. Repurchases may be made from time to time in the open market at prevailing prices and based on market conditions, or in privately negotiated transactions. For the six months ended June 30, 2024, we repurchased 16,220 shares of our common stock at an aggregate cost of $764,000 under the stock repurchase program. As of June 30, 2024, we had $4.2 million available for repurchasing our common stock under this program.
On March 13, 2024, we entered into a privately negotiated stock repurchase agreement for the purchase of 200,000 shares of our common stock for a total purchase price of $10.0 million. The repurchase was supplemental to our $5.0 million stock repurchase program and did not impact the amount of permitted repurchases thereunder.
Effective January 1, 2023, repurchases are subject to a nondeductible excise tax under the Inflation Reduction Act of 2022 equal to 1.0% of the fair market value of the shares repurchased, subject to certain limitations. While we may complete transactions subject to the new excise tax, we do not expect a material impact to our financial condition or results of operations.
Regulatory Capital Requirements
Capital management consists of maintaining equity and other instruments that qualify as regulatory capital to support current and future operations. Banking regulators view capital levels as important indicators of an institution’s financial soundness. As a general matter, bank holding companies and FDIC-insured depository institutions are required to maintain minimum capital relative to the amount and types of assets they hold.
As we deploy our capital and continue to grow our operations, our capital levels may decrease depending on our level of earnings. However, we expect to monitor and control our growth in order to remain in compliance with all regulatory capital standards applicable to us.
For additional information on regulatory capital guidelines and limits for Red River Bank and Red River Bancshares, Inc., see “Item 1. Financial Statements - Notes to the Unaudited Consolidated Financial Statements - Note 8. Regulatory Capital Requirements.”
LIQUIDITY AND ASSET-LIABILITY MANAGEMENT
Liquidity
As of June 30, 2024, we had sufficient liquid assets available and $1.68 billion accessible from other liquidity sources.
Liquidity involves our ability to raise funds to support asset growth and potential acquisitions, reduce assets to meet deposit withdrawals and other payment obligations, maintain reserve requirements, and otherwise operate on an ongoing basis and manage unexpected events. For the six months ended June 30, 2024, and the year ended December 31, 2023, liquidity needs were primarily met by core deposits, security and loan maturities, and cash flows from amortizing security and loan portfolios. While maturities and scheduled amortization of loans are predictable sources of funds, deposit outflows, mortgage prepayments, and prepayments on amortizing securities are greatly influenced by market interest rates, economic conditions, and the competitive environment in which we operate; therefore, these cash flows are monitored regularly.
Liquidity levels are dependent on our operating, financing, lending, and investing activities during any given period. Access to purchased funds from correspondent banks and overnight advances from the FHLB and the Federal Reserve Bank of Atlanta are also available. Purchased funds from correspondent banks and overnight advances can be utilized to meet funding obligations.
Our primary source of funds is deposits, and our primary use of funds is the funding of loans. We invest excess deposits in interest-earning deposit accounts at other banks or at the Federal Reserve, federal funds sold, securities, or other short-term liquid investments until the deposits are needed to fund loan growth or other obligations. Our average deposits increased $22.0 million, or 0.81%, for the first six months of 2024, compared to the average deposits for the twelve months ended December 31, 2023. The increase in average total deposits was primarily due to new time deposit activity, partially offset by the seasonal outflow of funds from public entity customers and income tax payments. Our average total loans increased $85.5 million, or 4.40%, for the for the first six months of 2024, compared to average total loans for the twelve months ended December 31, 2023. The increase in average total loans was primarily due to the increase in commercial and industrial and real estate activity.
As of June 30, 2024, liquid assets were $213.1 million, compared to $305.4 million as of December 31, 2023. The decrease of $92.4 million, or 30.2%, was due to the outflow of deposits and the funding of loans, partially offset by net securities cash flows received during the first six months of 2024. The liquid assets to assets ratio was 6.99% as of June 30, 2024, compared to 9.76% as of December 31, 2023.
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Our securities portfolio is an alternative source for meeting liquidity needs and was our second-largest component of assets as of June 30, 2024. The securities portfolio generates cash flow through principal repayments, calls, and maturities, and certain securities can be sold or used as collateral in borrowings that allow for their conversion to cash. Securities AFS can generally be sold, while securities HTM have significant restrictions related to sales. As of June 30, 2024, we project receipt of approximately $126.0 million of principal repayments and maturities through June 30, 2025. As of June 30, 2024, approximately $424.1 million, or 66.0%, of the securities portfolio was available to be sold or to be used as collateral in borrowings as a liquidity source.
We also utilize the FHLB as needed as a viable funding source. FHLB advances may be used to meet the Bank’s liquidity needs, particularly if the prevailing interest rate on an FHLB advance compares favorably to the rates that would be required to attract the necessary deposits. We currently are classified as having “blanket lien collateral status,” which means that advances can be executed at any time without further collateral requirements. As of June 30, 2024 and December 31, 2023, our net borrowing capacity from the FHLB was $989.2 million and $829.2 million, respectively. There were no outstanding borrowings from the FHLB as of June 30, 2024 and December 31, 2023.
Another borrowing source is the Federal Reserve Bank’s Discount Window. Effective the third quarter of 2023, the Bank pledged securities to have borrowing access to the Federal Reserve Bank’s Discount Window. In addition, effective March 2024, the Bank was approved for the Discount Window’s Borrower-In-Custody “BIC” program, which provides borrowing capacity through the pledging of eligible Red River Bank loans that are not pledged to the FHLB. As of June 30, 2024, we had a total borrowing capacity of $168.3 million, including $129.5 million through the BIC program, compared to a total borrowing capacity of $45.5 million as of December 31, 2023. There were no outstanding borrowings from the Federal Reserve Bank’s Discount Window as of June 30, 2024 and December 31, 2023.
Other sources available for meeting liquidity needs include federal funds lines, repurchase agreements, and other lines of credit. We maintain four federal funds lines of credit with commercial banks that provided for the availability to borrow up to an aggregate of $95.0 million in federal funds as of June 30, 2024 and December 31, 2023. The rates for the federal funds lines are determined by the applicable commercial bank at the time of borrowing. We also maintain an additional $6.0 million revolving line of credit at one of our correspondent banks. As of June 30, 2024 and December 31, 2023, we had total borrowing capacity of $101.0 million through these combined funding sources. We had no outstanding balances from either of these sources as of June 30, 2024 and December 31, 2023.
The Federal Reserve’s Bank Term Funding Program ended on March 11, 2024. The Bank did not utilize this program while it was being offered.
Commitments to Extend Credit
In the normal course of business, we enter into certain financial instruments, such as commitments to extend credit and letters of credit, to meet the financing needs of our customers. These commitments involve elements of credit risk, interest rate risk, and liquidity risk. Some instruments may not be reflected in the accompanying consolidated financial statements until they are funded, although they expose us to varying degrees of credit risk and interest rate risk in much the same way as funded loans.
Commitments to extend credit are agreements to lend to a customer if all conditions of the commitment have been met. Commitments include revolving and nonrevolving credit lines and are primarily issued for commercial purposes. Commitments to extend credit generally have fixed expiration dates or other termination clauses. Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions.
As of June 30, 2024, we had $407.3 million in unfunded loan commitments and $12.4 million in commitments associated with outstanding standby letters of credit. As of December 31, 2023, we had $372.0 million in unfunded loan commitments and $15.4 million in commitments associated with outstanding standby letters of credit. As commitments associated with letters of credit and commitments to extend credit may expire unused, the total outstanding commitments may not necessarily reflect the actual future cash funding requirements.
Investment Commitments
The Company is party to various investment commitments in the normal course of business. The Company’s exposure is represented by the contractual amount of these commitments.
In 2014, the Company committed to an investment into an SBIC limited partnership. As of June 30, 2024, there was a $226,000 outstanding commitment to this partnership.
In 2020, the Company committed to an additional investment into an SBIC limited partnership. As of June 30, 2024, there was a $2.6 million outstanding commitment to this partnership.
In 2021, the Company committed to an investment into a bank technology limited partnership. As of June 30, 2024, there was a $452,000 outstanding commitment to this partnership.
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Purchase Commitment
The Company has committed to an agreement to buy real estate for approximately $1.9 million as of June 30, 2024.
Construction Commitment
The Company has one committed construction agreement to construct a banking center, and there was approximately $189,000 remaining on this commitment as of June 30, 2024.
Interest Rate Sensitivity and Market Risk
As a financial institution, our primary component of market risk is interest rate volatility. Our asset-liability management policies provide management with guidelines for effective funds management, and we have established a measurement system for monitoring our net interest rate sensitivity position. We have historically managed our rate sensitivity position within our established policy guidelines.
Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on most of our assets and liabilities and the market value of all interest-earning assets and interest-bearing liabilities, other than those that have a short term to maturity. Interest rate risk is the potential of economic losses due to future interest rate changes. These economic losses can be reflected as a loss of future net interest income and/or a loss of current fair market values. The objective is to measure the effect on net interest income and to adjust the balance sheet to minimize the inherent risk while at the same time maximizing income.
We manage exposure to interest rates by structuring the balance sheet appropriately during the ordinary course of business. We have the ability to enter into interest rate swaps to mitigate interest rate risk in limited circumstances, but it is not our policy to enter into such transactions on a regular basis. We do not enter into instruments such as financial options, financial futures contracts, or forward delivery contracts for the purpose of reducing interest rate risk. We are not subject to foreign exchange risk, and our commodity price risk is immaterial, as the percentage of our agricultural loans to loans HFI was only 0.6% as of June 30, 2024.
Our exposure to interest rate risk is managed by Red River Bank’s Asset-Liability Management Committee. The committee formulates strategies based on appropriate levels of interest rate risk and monitors the results of those strategies. In determining the appropriate level of interest rate risk, the committee considers the impact on both earnings and capital given the current outlook on interest rates, regional economies, liquidity, business strategies, and other related factors.
The committee meets quarterly to review, among other things, the sensitivity of assets and liabilities to interest rate changes, the book and economic values of assets and liabilities, unrealized gains and losses, purchase and sale activities, commitments to originate loans, and the maturities of investments and borrowings. Additionally, the committee reviews liquidity, cash flow flexibility, maturities of deposits, and consumer and commercial deposit activity. We employ methodologies to manage interest rate risk, which include an analysis of relationships between interest-earning assets and interest-bearing liabilities, as well as an interest rate simulation model and shock analysis.
In conjunction with our interest rate risk management process, on a quarterly basis, we run various simulations within a static balance sheet model. This model tests the impact on net interest income and fair value of equity from changes in market interest rates under various scenarios. We use parallel rate shock scenarios that assume instantaneous parallel movements in the yield curve compared to a flat yield curve scenario. We also deploy a ramped rate scenario over a 12-month and 24-month horizon based upon parallel yield curve shifts. Our nonparallel rate shock model simulation involves analysis of interest income and expense under various changes in the shape of the yield curve. Contractual maturities and repricing opportunities of loans are incorporated into the model, as are prepayment assumptions and maturity date and call options within the securities portfolio. The average life of non-maturity deposit accounts are based on assumptions developed from non-maturity deposit decay studies, which calculate average lives using historic closure rates.
Bank policy regarding interest rate risk simulations performed by our risk model currently specifies that for instantaneous parallel shifts of the yield curve, estimated net interest income at risk for the subsequent one-year period should not decline by more than 10.0% for a 100 bp shift and 15.0% for a 200 bp shift. In accordance with Bank policy that was approved in September 2023, regarding economic value at risk simulations performed by our risk model for instantaneous parallel shifts of the yield curve, estimated fair value of equity for the subsequent one-year period should not decline by more than 10.0% for a 100 bp shift and 20.0% for a 200 bp shift.
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The following table shows the impact of an instantaneous and parallel change in rates, at the levels indicated, and summarizes the simulated change in net interest income and fair value of equity over a 12-month horizon as of the dates indicated.
June 30, 2024December 31, 2023
% Change in
Net Interest
Income
% Change in
Fair Value
of Equity
% Change in
Net Interest
Income
% Change in
Fair Value
of Equity
Change in Interest Rates (Bps) 
+3002.5 %(8.7 %)4.8 %(5.3 %)
+2001.7 %(5.5 %)3.5 %(3.0 %)
+1001.0 %(2.5 %)2.3 %(1.0 %)
Base
— %— %— %— %
-100(0.9 %)3.5 %(0.4 %)0.3 %
-200(3.2 %)2.7 %(3.5 %)(1.4 %)
The results above, as of June 30, 2024 and December 31, 2023, demonstrate that our balance sheet is asset sensitive, which means our assets have the opportunity to reprice at a faster pace than our liabilities, over the 12-month horizon. Our repricing opportunity is captured in a gap analysis, which is the process by which we measure the repricing gap between interest-rate sensitive assets versus interest rate-sensitive liabilities.
As of June 30, 2024, the reported percentage changes in net interest income and fair value of equity remained within the policy thresholds. These values are reported at each quarterly Asset-Liability Committee meeting. The net interest income at risk and the fair value of equity will continue to be monitored, and appropriate mitigating action will be taken if needed.
The impact of our floating rate loans and floating rate transaction deposits are also reflected in the results shown in the above table. As of June 30, 2024, floating rate loans were 13.9% of loans HFI, and floating rate transaction deposits were 6.5% of interest-bearing transaction deposits.
The assumptions incorporated into the model are inherently uncertain, and as a result, the model cannot precisely measure future net interest income or precisely predict the impact of fluctuations in market interest rates on net interest income. Actual results will differ from the model’s simulated results due to timing, magnitude, and frequency of interest rate changes, as well as changes in market conditions and the application and timing of various management strategies and the slope of the yield curve.
NON-GAAP FINANCIAL MEASURES
Our accounting and reporting policies conform to GAAP and the prevailing practices in the banking industry. Certain financial measures used by management to evaluate our operating performance are discussed in this Report as supplemental non-GAAP performance measures. In accordance with the SEC’s rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the U.S.
Management and the board of directors review tangible book value per share, tangible common equity to tangible assets, and realized book value per share as part of managing operating performance. However, these non-GAAP financial measures that we discuss in this Report should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner that we calculate the non-GAAP financial measures that are discussed in this Report may differ from that of other companies’ reporting measures with similar names. It is important to understand how such other banking organizations calculate and name their financial measures similar to the non-GAAP financial measures discussed in this Report when comparing such non-GAAP financial measures.
Tangible Book Value Per Share. Tangible book value per share is a non-GAAP measure commonly used by investors, financial analysts, and investment bankers to evaluate financial institutions. We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per share exclusive of changes in intangible assets. We calculate tangible book value per share as total stockholders’ equity, less intangible assets, divided by the outstanding number of shares of our common stock at the end of the relevant period. Intangible assets have the effect of increasing total book value while not increasing tangible book value. The most directly comparable GAAP financial measure for tangible book value per share is book value per share.
As a result of previous acquisitions, we have a small amount of intangible assets. As of June 30, 2024, total intangible assets were $1.5 million, which is less than 1.0% of total assets.
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Tangible Common Equity to Tangible Assets. Tangible common equity to tangible assets is a non-GAAP measure generally used by investors, financial analysts, and investment bankers to evaluate financial institutions. We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period of tangible common equity to tangible assets, each exclusive of changes in intangible assets. Intangible assets have the effect of increasing both total stockholders’ equity and assets while not increasing our tangible common equity or tangible assets. We calculate tangible common equity as total stockholders’ equity less intangible assets, and we calculate tangible assets as total assets less intangible assets. The most directly comparable GAAP financial measure for tangible common equity to tangible assets is total common stockholders’ equity to total assets.
Realized Book Value Per Share. Realized book value per share is a non-GAAP measure that we use to evaluate our operating performance. We believe that this measure is important because it allows us to monitor changes from period to period in book value per share exclusive of changes in AOCI. Our AOCI is impacted primarily by the unrealized gains and losses on securities AFS. These unrealized gains or losses on securities AFS are driven by market factors and may also be temporary and vary greatly from period to period. Due to the possibly temporary and greatly variable nature of these changes, we find it useful to monitor realized book value per share. We calculate realized book value per share as total stockholders’ equity less AOCI, divided by the outstanding number of shares of our common stock at the end of the relevant period. AOCI has the effect of increasing or decreasing total book value while not increasing or decreasing realized book value. The most directly comparable GAAP financial measure for realized book value per share is book value per share.
The following table reconciles, as of the dates set forth below, stockholders’ equity to tangible common equity, stockholders’ equity to realized common equity, and assets to tangible assets, and presents related resulting ratios.
(dollars in thousands, except per share data)June 30,
2024		March 31,
2024		June 30,
2023
Tangible common equity
Total stockholders’ equity$306,990 $299,314 $283,372 
Adjustments:
Intangible assets(1,546)(1,546)(1,546)
Total tangible common equity (non-GAAP)$305,444 $297,768 $281,826 
Realized common equity
Total stockholders’ equity$306,990 $299,314 $283,372 
Adjustments:
Accumulated other comprehensive (income) loss61,732 62,700 69,693 
Total realized common equity (non-GAAP)$368,722 $362,014 $353,065 
Common shares outstanding6,886,928 6,892,448 7,175,056 
Book value per share$44.58 $43.43 $39.49 
Tangible book value per share (non-GAAP)$44.35 $43.20 $39.28 
Realized book value per share (non-GAAP)$53.54 $52.52 $49.21 
Tangible assets
Total assets$3,048,528 $3,073,298 $3,027,194 
Adjustments:
Intangible assets(1,546)(1,546)(1,546)
Total tangible assets (non-GAAP)$3,046,982 $3,071,752 $3,025,648 
Total stockholders’ equity to assets10.07 %9.74 %9.36 %
Tangible common equity to tangible assets (non-GAAP)10.02 %9.69 %9.31 %
CRITICAL ACCOUNTING ESTIMATES
Our consolidated financial statements are prepared in accordance with GAAP and with general practices within the financial services industry. Application of these principles requires management to make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under
51
current circumstances. We evaluate our estimates on an ongoing basis. Use of alternative assumptions may have resulted in significantly different estimates. Actual results may differ from these estimates.
There were no other material changes or developments during the reporting period with respect to methodologies that we use when developing critical accounting estimates as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023. For details on the significant accounting principles and practices we follow, see “Item 1. Financial Statements - Note 1. Summary of Significant Accounting Policies” in this Report and “Part II - Item 8. Financial Statements and Supplementary Data - Note 1. Significant Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2023.
RECENT ACCOUNTING PRONOUNCEMENTS
See “Item 1. Financial Statements – Note 1. Summary of Significant Accounting Policies – Recent Accounting Pronouncements.”
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Quantitative and qualitative disclosures about market risk are presented in our Annual Report on Form 10-K for the year ended December 31, 2023, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Asset-Liability Management - Interest Rate Sensitivity and Market Risk.” Additional information as of June 30, 2024, is included herein under “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Asset-Liability Management - Interest Rate Sensitivity and Market Risk.” The foregoing information is incorporated into this Item 3 by reference.
Item 4. Controls and Procedures
Evaluation of disclosure controls and procedures
As of the end of the period covered by this Report, an evaluation was performed by our management, with the participation of our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer), of the effectiveness of the design and operation of our disclosure controls and procedures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well-designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply judgment in evaluating our controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) were effective as of the end of the period covered by this Report.
Changes in internal control over financial reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the second quarter of 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
52
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we, including our subsidiaries, are or may be involved in various legal matters arising in the ordinary course of business. In the opinion of management, neither we, nor any of our subsidiaries, are involved in such legal proceedings that the resolution is expected to have a material adverse effect on our consolidated results of operations, financial condition, or cash flows. However, one or more unfavorable outcomes in these ordinary claims or litigation against us or our subsidiaries could have a material adverse effect for the period in which they are resolved. In addition, regardless of their merits or ultimate outcomes, such matters are costly, divert management’s attention, and may materially and adversely affect our reputation or that of our subsidiaries, even if resolved favorably.
Item 1A. Risk Factors
For information regarding risk factors that could affect our business, financial condition, and results of operations, see the information in “Part I - Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes to the risk factors disclosed in our most recent Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Our purchases of shares of common stock made during the quarter are summarized in the table below:
(dollars in thousands, except per share data)
PeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Program
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program(1)(2)
April 1 - April 30, 2024—$— —$5,000 
May 1 - May 31, 202414,295$47.33 14,295$4,323 
June 1 - June 30, 20241,925$45.15 1,925$4,236 
Total16,220$47.07 16,220$4,236 
(1)On December 14, 2023, we announced that our board of directors approved the renewal of the 2023 stock repurchase program that was completed in the
fourth quarter of 2023 after reaching its purchase limit. The 2024 stock repurchase program has terms similar to the 2023 stock repurchase program and
authorizes us to purchase up to $5.0 million of our outstanding shares of common stock from January 1, 2024 through December 31, 2024. Repurchases may be made from time to time in the open market at prevailing prices and based on market conditions, or in privately negotiated transactions.
(2)On August 8, 2024, we entered into a privately negotiated stock repurchase agreement for the purchase of 60,000 shares of our common stock for a total purchase price of approximately $3.0 million. In connection with the repurchase, we reduced the availability under our 2024 stock repurchase program by $3.0 million. After this transaction, we will have approximately $1.2 million available for repurchasing our common stock under the 2024 stock repurchase program.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
On August 6, 2024, the Supplemental Executive Retirement Benefits Agreement (“SERP”) with each of Isabel V. Carriere, Andrew B. Cutrer, G. Bridges Hall, IV, Bryon C. Salazar, Tammi R. Salazar, and Debbie B. Triche was amended to adjust the vesting schedule of each officer’s benefits. Each SERP previously provided that the officer would be entitled to receive the maximum annual benefit provided under the SERP (“Full Benefit”) when he or she reached the age of 65. As amended, each SERP now provides that the officer will be entitled to the Full Benefit on December 31, 2028. The total benefits payable to each officer under his or her SERP was not changed by the amendments.
Also on August 6, 2024, the SERP with R. Blake Chatelain was restated, to consolidate his original SERP and all previous amendments into a single document, and to make non-substantive changes. No material changes were made in the restatement of Mr. Chatelain’s SERP.
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Table of Contents    
Item 6. Exhibits
NUMBERDESCRIPTION
3.1
3.2
10.1
10.2
10.3
31.1
31.2
32.1
32.2
101The following financial information from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, is formatted in Inline Extensible Business Reporting Language (XBRL): (i) the Unaudited Consolidated Balance Sheets, (ii) the Unaudited Consolidated Statements of Income, (iii) the Unaudited Consolidated Statements of Comprehensive Income, (iv) the Unaudited Consolidated Statements of Changes in Stockholders' Equity, (v) the Unaudited Consolidated Statements of Cash Flows, and (vi) the Notes to Unaudited Consolidated Financial Statements.
101.INSInline XBRL Instance Document* - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document*
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEFInline XBRL Taxonomy Extension Definitions Linkbase Document*
101.LABInline XBRL Taxonomy Extension Label Linkbase Document*
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document*
104Cover Page Interactive Data File* - Formatted as Inline XBRL and contained within the Inline XBRL Instance Document in Exhibit 101.
*Filed herewith
**These exhibits are furnished herewith and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.
+Indicates a management contract or compensatory plan.
#
Certain exhibits to the Agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. We will furnish the omitted exhibits to the SEC upon request.
54
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
RED RIVER BANCSHARES, INC.
Date: August 9, 2024By:/s/ R. Blake Chatelain
R. Blake Chatelain
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 9, 2024By:/s/ Isabel V. Carriere
Isabel V. Carriere, CPA, CGMA
Executive Vice President, Chief Financial Officer, and Assistant Corporate Secretary
(Principal Financial Officer and Principal Accounting Officer)
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