Red River Bancshares Inc 10-Q for FY2020 Q1

Red River Bancshares Inc (RRBI)

10-Q 2020-05-15 For: 2020-03-31

Added on April 08, 2026

About this 10-Q

Red River Bancshares Inc filed this 10-Q on May 15, 2020, covering the quarter ended March 31, 2020 (FY2020 Q1).

Headline figures

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net income: $6.75M; up 18.4% from net income of $5.7M a year earlier
Diluted EPS: $0.92; up 8.2% from $0.85 a year earlier

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Louisiana		72-1412058
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)



1412 Centre Court Drive, Suite 501,	Alexandria,	Louisiana	71301
(Address of Principal Executive Offices)			(Zip Code)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	RRBI	The Nasdaq Stock Market, LLC



Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☒



		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.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	48

PART II	Other Information
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Used of Proceeds	52
Item 3.	Defaults Upon Senior Securities	53
Item 4.	Mine Safety Disclosures	53
Item 5.	Other Information	53
Item 6.	Exhibits and Financial Statement Schedules	54
	Signatures	55



☒	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



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



	Red River Bancshares, Inc.
	(Exact name of registrant as specified in its charter)



ABBREVIATION OR ACRONYM		DEFINITION
AFS		Available-for-sale
AOCI		Accumulated other comprehensive income or loss
ASC		Accounting Standards Codification
ASU		Accounting Standards Update
Basel III		Basel Committee's 2010 Regulatory Capital Framework (Third Accord)
BOLI		Bank-owned life insurance
bp(s)		Basis point(s)
CARES Act		Coronavirus Aid, Relief, and Economic Security Act
CBLR		Community 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
COVID-19		Coronavirus Disease 2019
Director Compensation Program		Compensation program which allows directors of the Company and the Bank an opportunity to select how to receive their annual director fees.
Economic Growth Act		Economic Growth, Regulatory Relief, and Consumer Protection Act
EPS		Earnings per share
Exchange Act		Securities Exchange Act of 1934, as amended
FDIA		Federal Deposit Insurance Act
FDIC		Federal Deposit Insurance Corporation
Federal Reserve		Board of Governors of the Federal Reserve System
FHLB		Federal Home Loan Bank of Dallas
FTE		Fully taxable equivalent basis
GAAP		Generally Accepted Accounting Principles in the United States of America
HFI		Held for investment
HFS		Held for sale
HTM		Held-to-maturity
IPO		Initial public offering
MSA		Metropolitan statistical area
NOW		Negotiable order of withdrawal
NPA(s)		Nonperforming asset(s)
OTTI		Other-than-temporary impairment
PPP		Paycheck Protection Program
SBA		Small Business Administration
SBIC		Small Business Investment Company
Securities Act		Securities Act of 1933, as amended
SEC		Securities and Exchange Commission
TDR(s)		Troubled debt restructuring(s)


•	business and economic conditions generally and in the financial services industry, nationally and within our local market areas;


•	the impact of COVID-19 on our business, the communities where we have our branches, the state of Louisiana, and the United States, related to the economy and overall financial stability;


•	government and regulatory responses to the COVID-19 pandemic;


•	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 CARES Act and other changes in banking, securities, accounting, and tax laws and regulations, and their application by our regulators;


•	increased competition in the financial services industry, particularly from regional and national institutions;


•	our ability to maintain important deposit customer relationships, our reputation, and to otherwise avoid liquidity risks;


•	changes in management personnel;


•	volatility and direction of market interest rates;


•	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;


•	risks associated with system failures or failures to protect against cybersecurity threats, such as breaches of our network security;


•	the adequacy of our reserves, including our allowance for loan losses;


•	natural disasters and adverse weather, acts of terrorism, pandemics, an outbreak of hostilities 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;


•	uncertainty regarding the future of LIBOR and the impact of any replacement alternatives on our business;


•	changes in the laws, rules, regulations, interpretations, or policies relating to financial institution, accounting, tax, trade, monetary, and fiscal matters; and


•	other risks and uncertainties listed from time to time in our reports and documents filed with the SEC.



(in thousands, except share amounts)	(Unaudited) March 31, 2020			(Audited) December 31, 2019
ASSETS
Cash and due from banks	$	31,858		$	25,937
Interest-bearing deposits in other banks	48,605			107,355
Total Cash and Cash Equivalents	80,463			133,292
Securities available-for-sale	401,944			335,573
Equity securities	3,998			3,936
Nonmarketable equity securities	1,354			1,350
Loans held for sale	6,597			5,089
Loans held for investment	1,447,362			1,438,924
Allowance for loan losses	(14,393		)	(13,937		)
Premises and equipment, net	41,711			41,744
Accrued interest receivable	5,240			5,251
Bank-owned life insurance	21,987			21,845
Intangible assets	1,546			1,546
Right-of-use assets	4,454			4,553
Other assets	8,438			9,059
Total Assets	$	2,010,701		$	1,988,225
LIABILITIES
Noninterest-bearing deposits	$	607,322		$	584,915
Interest-bearing deposits	1,120,460			1,136,205
Total Deposits	1,727,782			1,721,120
Accrued interest payable	2,307			2,222
Lease liabilities	4,511			4,603
Accrued expenses and other liabilities	11,926			8,382
Total Liabilities	1,746,526			1,736,327
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 - 7,322,532 and 7,306,221 shares	68,177			68,082
Additional paid-in capital	1,333			1,269
Retained earnings	188,877			182,571
Accumulated other comprehensive income (loss)	5,788			(24		)
Total Stockholders' Equity	264,175			251,898
Total Liabilities and Stockholders' Equity	$	2,010,701		$	1,988,225



(in thousands, except per share data)	For the Three Months Ended March 31,
	2020		2019
INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	16,466	$	15,504
Interest on securities	1,791		1,763
Interest on federal funds sold	113		212
Interest on deposits in other banks	206		416
Dividends on stock	4		9
Total Interest and Dividend Income	18,580		17,904
INTEREST EXPENSE
Interest on deposits	2,492		2,296
Interest on junior subordinated debentures	—		156
Total Interest Expense	2,492		2,452
Net Interest Income	16,088		15,452
Provision for loan losses	503		526
Net Interest Income After Provision for Loan Losses	15,585		14,926
NONINTEREST INCOME
Service charges on deposit accounts	1,228		1,026
Debit card income, net	755		695
Mortgage loan income	889		514
Brokerage income	744		365
Loan and deposit income	300		346
Bank-owned life insurance income	142		133
Gain (Loss) on equity securities	63		48
Gain (Loss) on sale of securities	383		—
SBIC income	178		120
Other income	49		49
Total Noninterest Income	4,731		3,296
OPERATING EXPENSES
Personnel expenses	7,348		6,640
Occupancy and equipment expenses	1,185		1,175
Technology expenses	586		544
Advertising	261		209
Other business development expenses	295		282
Data processing expense	450		459
Other taxes	437		353
Loan and deposit expenses	246		223
Legal and professional expenses	495		319
Regulatory assessment expenses	26		142
Other operating expenses	621		812
Total Operating Expenses	11,950		11,158
Income Before Income Tax Expense	8,366		7,064
Income tax expense	1,621		1,368
Net Income	$	6,745	$	5,696
EARNINGS PER SHARE
Basic	$	0.92	$	0.86
Diluted	$	0.92	$	0.85



(in thousands)	For the Three Months Ended March 31,
	2020			2019
Net income	$	6,745		$	5,696
Other comprehensive income (loss):
Unrealized net gain (loss) on securities arising during period	7,740			4,918
Tax effect	(1,625		)	(1,033		)
(Gain) loss on sale of securities included in net income	(383		)	—
Tax effect	80			—
Total change in other comprehensive income (loss)	5,812			3,885
Comprehensive Income	$	12,557		$	9,581



(in thousands, except share amounts)	Common Shares Issued	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholders' Equity
Balance as of December 31, 2018	6,627,358	$	41,094	$	1,042	$	159,073		$	(7,506	)	$	193,703
Net income	—	—		—		5,696			—			5,696
Stock incentive plan	—	—		49		—			—			49
Issuance of shares of common stock through exercise of stock options	7,200	80		—		—			—			80
Issuance of shares of common stock as board compensation	2,368	97		—		—			—			97
Cash dividend - $0.20 per share	—	—		—		(1,326		)	—			(1,326		)
Other comprehensive income (loss)	—	—		—		—			3,885			3,885
Balance as of March 31, 2019	6,636,926	$	41,271	$	1,091	$	163,443		$	(3,621	)	$	202,184

Balance as of December 31, 2019	7,306,221	$	68,082	$	1,269	$	182,571		$	(24	)	$	251,898
Net income	—	—		—		6,745			—			6,745
Stock incentive plan	—	—		64		—			—			64
Issuance of shares of common stock through exercise of stock options	14,720	8		—		—			—			8
Issuance of shares of common stock as board compensation	1,591	87		—		—			—			87
Cash dividend - $0.06 per share	—	—		—		(439		)	—			(439		)
Other comprehensive income (loss)	—	—		—		—			5,812			5,812
Balance as of March 31, 2020	7,322,532	$	68,177	$	1,333	$	188,877		$	5,788		$	264,175



	March 31, 2020
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities AFS:
Mortgage-backed securities	$	297,445	$	6,262	$	(22	)	$	303,685
Municipal bonds	90,726		1,060		(125		)	91,661
U.S. agency securities	6,446		152		—			6,598
Total Securities AFS	$	394,617	$	7,474	$	(147	)	$	401,944



	December 31, 2019
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities AFS:
Mortgage-backed securities	$	236,572	$	299	$	(1,200	)	$	235,671
Municipal bonds	91,929		1,108		(279		)	92,758
U.S. agency securities	7,102		46		(4		)	7,144
Total Securities AFS	$	335,603	$	1,453	$	(1,483	)	$	335,573



	Less than twelve months					Twelve months or more
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
March 31, 2020
Securities AFS:
Mortgage-backed securities	$	(21	)	$	2,896	$	(1	)	$	1,888
Municipal bonds	(104		)	15,299		(21		)	1,404
U.S. agency securities	—			—		—			—
Total Securities AFS	$	(125	)	$	18,195	$	(22	)	$	3,292

December 31, 2019
Securities AFS:
Mortgage-backed securities	$	(474	)	$	109,416	$	(726	)	$	70,425
Municipal bonds	(172		)	18,735		(107		)	9,323
U.S. agency securities	(4		)	1,020		—			—
Total Securities AFS	$	(650	)	$	129,171	$	(833	)	$	79,748



	Three Months Ended March 31,
(in thousands)	2020			2019
Proceeds⁽¹⁾	$	31,160		$	—
Gross gain	$	456		$	—
Gross loss	$	(73	)	$	—



(in thousands)	Beginning Balance December 31, 2019		Provision for Loan Losses			Loans Charged-off			Recoveries		Ending Balance March 31, 2020
Real estate:
Commercial real estate	$	3,454	$	241		$	—		$	—	$	3,695
One-to-four family residential	3,323		242			—			3		3,568
Construction and development	1,211		149			(14		)	—		1,346
Commercial and industrial	5,175		(89		)	(2		)	5		5,089
Tax-exempt	334		10			—			—		344
Consumer	440		(50		)	(77		)	38		351
Total allowance for loan losses	$	13,937	$	503		$	(93	)	$	46	$	14,393



(in thousands)	Beginning Balance December 31, 2018		Provision for Loan Losses			Loans Charged-off			Recoveries		Ending Balance December 31, 2019
Real estate:
Commercial real estate	$	3,081	$	373		$	—		$	—	$	3,454
One-to-four family residential	3,146		216			(44		)	5		3,323
Construction and development	951		172			—			88		1,211
Commercial and industrial	4,604		850			(864		)	585		5,175
Tax-exempt	372		(38		)	—			—		334
Consumer	370		237			(311		)	144		440
Total allowance for loan losses	$	12,524	$	1,810		$	(1,219	)	$	822	$	13,937



(in thousands)	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired with Deteriorated Credit Quality		Total
Allowance for loan losses:
Real estate:
Commercial real estate	$	250	$	3,445	$	—	$	3,695
One-to-four family residential	40		3,528		—		3,568
Construction and development	—		1,346		—		1,346
Commercial and industrial	2,785		2,304		—		5,089
Tax-exempt	—		344		—		344
Consumer	62		289		—		351
Total allowance for loan losses	$	3,137	$	11,256	$	—	$	14,393

Loans:
Real estate:
Commercial real estate	$	2,427	$	535,650	$	—	$	538,077
One-to-four family residential	1,192		419,849		—		421,041
Construction and development	—		142,835		—		142,835
Commercial and industrial	8,732		255,156		—		263,888
Tax-exempt	—		54,490		—		54,490
Consumer	64		26,967		—		27,031
Total loans HFI	$	12,415	$	1,434,947	$	—	$	1,447,362



	Accruing
(in thousands)	Current		30-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Total Loans
Real estate:
Commercial real estate	$	535,883	$	932	$	—	$	1,262	$	538,077
One-to-four family residential	419,392		1,055		—		594		421,041
Construction and development	142,573		262		—		—		142,835
Commercial and industrial	260,465		63		—		3,360		263,888
Tax-exempt	54,490		—		—		—		54,490
Consumer	26,978		34		1		18		27,031
Total loans HFI	$	1,439,781	$	2,346	$	1	$	5,234	$	1,447,362



(in thousands)	Unpaid Principal Balance		Recorded Investment		Related Allowance		Average Recorded Investment
With no related allowance recorded:
Real estate:
Commercial real estate	$	1,359	$	1,334	$	—	$	1,435
One-to-four family residential	1,134		1,076		—		1,030
Construction and development	—		—		—		—
Commercial and industrial	1,759		1,426		—		1,450
Tax-exempt	—		—		—		—
Consumer	2		2		—		2
Total with no related allowance	4,254		3,838		—		3,917
With allowance recorded:
Real estate:
Commercial real estate	1,269		1,093		250		1,098
One-to-four family residential	121		116		40		163
Construction and development	—		—		—		19
Commercial and industrial	8,526		7,306		2,785		7,314
Tax-exempt	—		—		—		—
Consumer	66		62		62		68
Total with related allowance	9,982		8,577		3,137		8,662
Total impaired loans	$	14,236	$	12,415	$	3,137	$	12,579