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Red River Bancshares, Inc. Reports Third Quarter 2019 Earnings

ALEXANDRIA, La., Oct. 29, 2019 (GLOBE NEWSWIRE) -- Red River Bancshares, Inc. (the “Company”) (RRBI), the holding company for Red River Bank (the “Bank”), announced today its financial results for the third quarter of 2019.

Net income for the third quarter of 2019 was $6.8 million, or $0.93 per diluted common share ("EPS"), an increase of $1.3 million, or 23.6%, compared to $5.5 million, or $0.78 EPS, for the second quarter of 2019, and an increase of $705,000, or  11.5%, compared to $6.1 million, or $0.91 EPS, for the third quarter of 2018.

Net income for the nine months ended September 30, 2019, was $18.1 million, or $2.57 EPS, an increase of $1.2 million, or 7.0%, compared to $16.9 million, or $2.50 EPS, for the nine months ended September 30, 2018.

Third Quarter 2019 Performance and Operational Highlights

  • The Company completed its first full quarter of operations as a public company.
  • The Company had record high net income for the third quarter of 2019, resulting in quarterly return on assets of 1.42% and return on equity of 11.20%. Compared to the prior quarter, net income for the third quarter of 2019 improved with increased net interest income and noninterest income, combined with lower provision for loan losses and operating expenses.
  • Net interest margin, fully tax equivalent basis ("FTE"), increased by four basis points to 3.55% for the third quarter of 2019, from 3.51% for the second quarter of 2019.
  • Loans held for investment ("HFI") increased 1.4% from June 30, 2019 and 6.4% from December 31, 2018.
  • Deposits increased 2.6% from June 30, 2019 and 1.9% from December 31, 2018.
  • As of September 30, 2019, the loans HFI to deposits ratio was 84.27%, and the noninterest-bearing deposits to total deposits ratio was 36.68%.
  • Nonperforming assets ("NPA(s)") to total assets ratio improved to 0.41% as of September 30, 2019, from 0.70% as of June 30, 2019.
  • The net charge-offs to average loans ratios for both the quarter and nine months ended September 30, 2019, were 0.00%.
  • The Bank did not have an FDIC insurance assessment for the third quarter of 2019.
  • As planned, a portion of the proceeds from the May 2019 initial public offering ("IPO") were used to redeem all of our junior subordinated debentures in June and August of 2019.
  • In the third quarter of 2019, we continued to execute our organic growth plan in our newest market. The new Northshore market, including the city of Covington, Louisiana, is located on the north shore of Lake Pontchartrain, near New Orleans, Louisiana. In April 2019, we opened a temporary loan production office in Covington. In the second and third quarters of 2019, the Northshore banking team was fully staffed and trained to provide full banking services. In late September 2019, we closed the Covington loan production office and opened a full-service banking center. As of September 30, 2019, Red River Bank had approximately $21.1 million of loans in the Northshore market.

R. Blake Chatelain, President and Chief Executive Officer stated, "The Company had record high net income in the third quarter of 2019 with improvements in many categories. Despite two Federal Reserve rate decreases in the third quarter, our net interest margin (FTE) increased from the second quarter primarily due to the payoff of our junior subordinated debentures. Also, a few asset quality challenges were resolved and the nonperforming assets to total assets ratio improved to 0.41%."

Regarding the third quarter activities, Mr. Chatelain added, "One of the purposes of the IPO was to utilize a portion of the funds to redeem our junior subordinated debentures. As of August 8, 2019, all junior subordinated debentures have been paid off, eliminating all of our long-term, high interest rate debt and associated interest expense. In Covington, we have transitioned from a loan production office to a brand new full-service banking center. We have a great team of bankers in Covington and have been encouraged by the reception we are receiving in this market. We look forward to continued opportunities to extend our reach in the Northshore area."

Net Interest Income and Net Interest Margin (FTE)
Net interest income for the third quarter of 2019 was $16.2 million, $543,000, or 3.5%, higher than the second quarter of 2019. The increase in net interest income was due to a $525,000 increase in interest and dividend income and an $18,000 decrease in interest expense, combined with a 1.4% increase in average interest-earning assets.

The net interest margin (FTE) improved four basis points to 3.55% for the third quarter of 2019, compared to the prior quarter. The net interest margin for the third quarter was impacted by the payoff of the junior subordinated debentures and the two Federal Reserve rate decreases. The payoff of the junior subordinated debentures resulted in a two basis point improvement to the net interest margin, on a stand-alone basis. The yield on loans increased one basis point as the rates on new and renewing loans offset the lower yields on most floating rate loans. As of September 30, 2019, floating rate loans were 16.0% of the loan portfolio. The yield on taxable securities decreased two basis points due to the negative effects of increased investment premium amortization from the lower rate environment, partially offset by higher yields from a portfolio realignment completed in July 2019. The cost of deposits was stable at 0.60% for both the second and third quarters of 2019.

Noninterest Income
Noninterest income totaled $4.4 million for the third quarter of 2019, an increase of $287,000, or 7.0%, compared to $4.1 million for the previous quarter. The increase was mainly due to higher mortgage loan income and higher deposit service charges, offset by lower dividend income from a Small Business Investment Company limited partnership ("SBIC") of which Red River Bank is a member.

Mortgage loan income for the third quarter of 2019 totaled $1.0 million, an increase of $357,000, or 54.3%, from the second quarter of 2019. This increase was primarily driven by increased demand for new and refinanced mortgage loans as a result of the lower interest rate environment.

Service charges on deposit accounts increased $112,000, or 10.3%, for the third quarter of 2019, compared to the second quarter of 2019. This was due to new deposit fees being implemented at the end of the second quarter of 2019.

Other income decreased by $166,000 from the prior quarter. This decrease was primarily a result of a $214,000 dividend received from the SBIC in the second quarter of 2019. No dividend was received in the third quarter of 2019 from the SBIC.

Operating Expense

Operating expense for the third quarter 2019 totaled $11.9 million, a decrease of $519,000, or 4.2%, compared to $12.4 million for the second quarter of 2019. The decrease was mainly due to lower advertising, occupancy, loan and FDIC insurance assessment expenses.

Advertising expense decreased by $180,000, or 45.5%, between the second and third quarters of 2019. This decrease was due to expanded media campaigns and marketing events in the second quarter of 2019 in our newer markets that did not reoccur in the third quarter of 2019.

Occupancy and equipment expenses for the third quarter of 2019 totaled $1.2 million, a decrease of $135,000, or 10.1%, compared to the second quarter of 2019. This decrease was due to $130,000 of nonrecurring expenses resulting from the completion of our new market headquarters building in Baton Rouge in the second quarter.

Loan and deposit expenses totaled $285,000 for the third quarter of 2019, a decrease of $107,000, or 27.3%, from the prior quarter. The decrease in the third quarter was primarily due to a $68,000 reduction of loan development expenses and $47,000 for the reimbursement of collection expenses related to receiving payoffs of past due loans.

Other operating expenses decreased by $144,000, or 12.8%, between the second and third quarter of 2019. This decrease was mainly due to a $121,000 decrease in our FDIC insurance assessment expense. The Bank was notified by the FDIC that it did not have an FDIC insurance assessment for the third quarter of 2019. Therefore, no FDIC insurance assessment expense was incurred for the third quarter compared to $121,000 for the second quarter of 2019.

Loans and Asset Quality

Loans HFI as of September 30, 2019, were $1.41 billion, an increase of $20.0 million, or 1.4%, from June 30, 2019. The increase in loans in the third quarter of 2019 was primarily due to normal loan origination activity spread across all of our markets, with our newer markets experiencing the most growth. Energy related credits were 2.3% of loans HFI as of September 30, 2019, compared to 2.5% as of June 30, 2019.

Asset quality levels improved in the third quarter of 2019, with the receipt of $5.1 million in payoffs on loans reported as past due in second quarter 2019. NPAs dropped to $8.0 million as of September 30, 2019, from $13.2 million as of June 30, 2019. The ratio of NPAs to total assets improved to 0.41% as of September 30, 2019, from 0.70% as of June 30, 2019.

As of September 30, 2019, the allowance for loan losses ("ALL") was $13.9 million and the ratio of ALL to loans HFI was 0.98%. The net charge-off ratio was 0.00% for the second and third quarters of 2019, as well as year to date 2019. The provision for loan losses recorded in the third quarter of 2019 totaled $378,000 compared to $529,000 for the second quarter of 2019.

Deposits
Deposits as of September 30, 2019, were $1.68 billion, an increase of $42.3 million, or 2.6%, compared to June 30, 2019. Average deposits for the third quarter of 2019 were $1.65 billion, an increase of $18.5 million, or 1.1%, from the prior quarter.

Noninterest-bearing deposits totaled $615.1 million as of September 30, 2019, up $38.1 million, or 6.6%, from June 30, 2019. As of September 30, 2019, noninterest-bearing deposits were 36.68% of total deposits.

Interest-bearing deposits totaled $1.06 billion as of September 30, 2019, up $4.1 million, or 0.4%, compared to June 30, 2019.

Junior Subordinated Debentures
As anticipated, on August 8, 2019, the remaining $5.2 million of junior subordinated debentures were redeemed with a rate at payoff of 5.58%, and the related business trust was terminated, leaving no outstanding long-term debt as of September 30, 2019. In June 2019, $6.2 million of junior subordinated debentures were redeemed with an average rate at payoff of 5.21%, and the related business trusts were terminated. Interest expense for the junior subordinated debentures was $73,000 for the third quarter of 2019 and $156,000 for the second quarter of 2019.

Stockholders’ Equity

Total stockholders’ equity increased to $245.4 million as of September 30, 2019, from $237.9 million as of June 30, 2019. The increase of $7.5 million in stockholders’ equity during the third quarter of 2019 was attributable to $6.8 million of net income, and $567,000 of other comprehensive income.

Non-GAAP Disclosure

Our accounting and reporting policies conform to United States generally accepted accounting principles ("GAAP") and the prevailing practices in the banking industry. Certain financial measures used by management to evaluate our operating performance are discussed as supplemental non-GAAP performance measures. In accordance with the Security and Exchange Commission'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. Non-GAAP financial measures do not include operating and other statistical measures or ratios or statistical measures calculated using exclusively either financial measures calculated in accordance with GAAP, operating measures or other measures that are not non-GAAP financial measures, or both.

The non-GAAP financial measures that we discuss 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 in which we calculate the non-GAAP financial measures that are discussed 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 by us when comparing such non-GAAP financial measures.

We provide these measures in addition to, not as a substitute for, net income and earnings per share, which are reported in adherence to GAAP. Management and the board of directors review tangible book value per share and tangible common equity to tangible assets as part of managing operating performance. We believe that these non-GAAP performance measures, while not substitutes for GAAP net income, earnings per share, and total expenses, are useful for both management and investors when evaluating our underlying operating and financial performance and our available resources.

A reconciliation of non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables.

About Red River Bancshares, Inc.
The Company 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 commercial and retail customers. Red River Bank operates from a network of 24 banking centers throughout Louisiana. Banking centers are located in the following markets: Central Louisiana, which includes the Alexandria metropolitan statistical area ("MSA"); Northwest Louisiana, which includes the Shreveport-Bossier City MSA; Southeast Louisiana, which includes the Baton Rouge MSA; Southwest Louisiana, which includes the Lake Charles MSA; and the Northshore, which includes Covington.

Forward-Looking Statements

Statements in this news release regarding our expectations and beliefs about our future financial performance and financial condition, as well as trends in our business and markets, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” “outlook,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” The forward-looking statements in this news release are based on current information and on assumptions that we make about future events and circumstances that are subject to a number of risks and uncertainties that are often difficult to predict and beyond our control. As a result of those risks and uncertainties, our actual financial results in the future could differ, possibly materially, from those expressed in or implied by the forward-looking statements contained in this news release and could cause us to make changes to our future plans. Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in the section titled “Risk Factors” in our Prospectus filed with the SEC on May 3, 2019, relating to our initial public offering, and in other documents that we file with the SEC from time to time. In addition, our actual financial results in the future may differ from those currently expected due to additional risks and uncertainties of which we are not currently aware or which we do not currently view as, but in the future may become, material to our business or operating results. Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this news release or to make predictions based solely on historical financial performance. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, express or implied, included in this news release are qualified in their entirety by this cautionary statement.

FINANCIAL HIGHLIGHTS (UNAUDITED)
 
  As of and for the
three months ended
  As of and for the
nine months ended
(Dollars in thousands, except per share data) Sept. 30,
2019
  June 30,
2019
  Sept. 30,
2018
  Sept. 30,
2019
  Sept. 30,
2018
                   
Net Income $ 6,847     $ 5,538     $ 6,142     $ 18,081     $ 16,905  
                   
Per Common Share Data:(1)                  
Earnings per share, basic $ 0.94     $ 0.79     $ 0.91     $ 2.59     $ 2.51  
Earnings per share, diluted $ 0.93     $ 0.78     $ 0.91     $ 2.57     $ 2.50  
Book value per share $ 33.59     $ 32.59     $ 28.09     $ 33.59     $ 28.09  
Tangible book value per share $ 33.37     $ 32.38     $ 27.86     $ 33.37     $ 27.86  
Cash dividends per share $     $     $     $ 0.20     $ 0.15  
Weighted average shares outstanding, basic 7,304,273     7,037,834     6,732,886     6,993,990     6,726,487  
Weighted average shares outstanding, diluted 7,340,498     7,074,769     6,768,171     7,032,059     6,763,789  
                   
Summary Performance Ratios:                  
Return on average assets 1.42 %   1.18 %   1.36 %   1.28 %   1.28 %
Return on average equity 11.20 %   9.92 %   12.96 %   10.91 %   12.35 %
Net interest margin 3.50 %   3.46 %   3.49 %   3.48 %   3.42 %
Net interest margin (FTE) 3.55 %   3.51 %   3.54 %   3.53 %   3.46 %
Efficiency ratio 57.75 %   62.81 %   58.12 %   60.00 %   59.48 %
Loans HFI to deposits ratio 84.27 %   85.23 %   83.04 %   84.27 %   83.04 %
Noninterest-bearing deposits to deposits ratio 36.68 %   35.30 %   35.04 %   36.68 %   35.04 %
Noninterest income to average assets 0.91 %   0.87 %   0.87 %   0.84 %   0.81 %
Operating expense to average assets 2.47 %   2.65 %   2.47 %   2.51 %   2.45 %
                   
Summary Credit Quality Ratios:                  
Nonperforming assets to total assets 0.41 %   0.70 %   0.57 %   0.41 %   0.57 %
Nonperforming loans to loans HFI 0.47 %   0.87 %   0.72 %   0.47 %   0.72 %
Allowance for loan losses to loans HFI 0.98 %   0.98 %   0.92 %   0.98 %   0.92 %
Net charge-offs to average loans outstanding 0.00 %   0.00 %   0.00 %   0.00 %   0.01 %
                   
Capital Ratios:                  
Total stockholders' equity to total assets 12.66 %   12.57 %   10.41 %   12.66 %   10.41 %
Tangible common equity to tangible assets 12.59 %   12.50 %   10.34 %   12.59 %   10.34 %
Total risk-based capital to risk weighted assets 17.76 %   17.90 %   16.36 %   17.76 %   16.36 %
Tier 1 risk-based capital to risk-weighted assets 16.80 %   16.95 %   15.46 %   16.80 %   15.46 %
Common equity tier 1 capital to risk-weighted assets 16.80 %   16.60 %   14.64 %   16.80 %   14.64 %
Tier 1 risk-based capital to average assets 12.77 %   12.83 %   11.59 %   12.77 %   11.59 %
                             

(1) 2018 amounts adjusted to give effect to a 2-for-1 stock split with a record date of October 1, 2018.

RED RIVER BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
 
  (Unaudited)   (Unaudited)   (Unaudited)   (Audited)   (Unaudited)
(in thousands) Sept. 30, 2019   June 30, 2019   March 31, 2019   December 31, 2018   Sept. 30, 2018
ASSETS                  
Cash and due from banks $ 32,724     $ 29,854     $ 32,371     $ 34,070     $ 26,823  
Interest-bearing deposits in other banks 73,598     71,761     145,593     117,836     82,434  
Securities available-for-sale 341,900     318,082     319,353     307,877     296,025  
Securities held-to-maturity                 7,746  
Equity securities 3,954     3,924     3,869     3,821     3,784  
Nonmarketable equity securities 1,347     1,342     1,303     1,299     1,295  
Loans held for sale 4,113     6,029     2,210     2,904     2,076  
Loans held for investment 1,413,162     1,393,154     1,349,181     1,328,438     1,333,362  
Allowance for loans losses (13,906 )   (13,591 )   (13,101 )   (12,524 )   (12,249 )
Premises and equipment, net 39,828     40,032     40,033     39,690     36,853  
Accrued interest receivable 4,928     5,570     4,988     5,013     5,099  
Bank-owned life insurance 21,707     21,570     21,434     21,301     21,852  
Intangible assets 1,546     1,546     1,546     1,546     1,546  
Right-of-use assets 4,651     4,748     4,844          
Other assets 9,302     8,897     8,494     9,317     9,650  
Total Assets $ 1,938,854     $ 1,892,918     $ 1,922,118     $ 1,860,588     $ 1,816,296  
                   
LIABILITIES                  
Noninterest-bearing deposits $ 615,051     $ 576,934     $ 565,757     $ 547,880     $ 562,575  
Interest-bearing deposits 1,061,800     1,057,656     1,125,377     1,097,703     1,043,161  
Total Deposits 1,676,851     1,634,590     1,691,134     1,645,583     1,605,736  
Other borrowed funds                 46  
Junior subordinated debentures     5,155     11,341     11,341     11,341  
Accrued interest payable 1,925     1,998     1,967     1,757     1,504  
Lease liabilities 4,688     4,773     4,856          
Accrued expenses and other liabilities 10,001     8,491     10,636     8,204     8,538  
Total Liabilities 1,693,465     1,655,007     1,719,934     1,666,885     1,627,165  
COMMITMENTS AND CONTINGENCIES                  
STOCKHOLDERS' EQUITY                  
Preferred stock, no par value                  
Common stock, no par value 68,082     68,082     41,271     41,094     45,678  
Retained earnings 177,033     170,122     164,534     160,115     153,914  
Accumulated other comprehensive income (loss) 274     (293 )   (3,621 )   (7,506 )   (10,461 )
Total Stockholders' Equity 245,389     237,911     202,184     193,703     189,131  
Total Liabilities and Stockholders' Equity $ 1,938,854     $ 1,892,918     $ 1,922,118     $ 1,860,588     $ 1,816,296  
                                       


RED RIVER BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                   
  Three months ended   Nine months ended
(in thousands) Sept. 30,
2019
  June 30,
 2019
  Sept. 30,
2018
  Sept. 30,
2019
  Sept. 30,
2018
INTEREST AND DIVIDEND INCOME                  
Interest and fees on loans $ 16,578     $ 15,945     $ 15,285     $ 48,026     $ 43,307  
Interest on securities 1,800     1,784     1,689     5,347     5,254  
Interest on federal funds sold 178     212     82     603     196  
Interest on deposits in other banks 213     306     197     935     423  
Dividends on stock 12     9     13     30     27  
Total Interest and Dividend Income 18,781     18,256     17,266     54,941     49,207  
INTEREST EXPENSE                  
Interest on deposits 2,514     2,449     1,818     7,260     5,018  
Interest on other borrowed funds         3         6  
Interest on junior subordinated debentures 73     156     150     385     410  
Total Interest Expense 2,587     2,605     1,971     7,645     5,434  
NET INTEREST INCOME 16,194     15,651     15,295     47,296     43,773  
Provision for loan losses 378     529     526     1,432     1,464  
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 15,816     15,122     14,769     45,864     42,309  
NONINTEREST INCOME                  
Service charges on deposit accounts 1,195     1,083     1,162     3,304     3,486  
Debit card income, net 833     785     786     2,314     2,254  
Mortgage loan income 1,014     657     623     2,186     1,675  
Brokerage income 561     626     469     1,552     1,395  
Loan and deposit income 404     382     346     1,131     943  
Bank-owned life insurance income 137     137     139     407     415  
Gain (Loss) on equity securities 30     56     (30 )   133     (122 )
Gain (Loss) on sale of investments 5         (9 )   5     32  
Other income 207     373     455     749     686  
Total Noninterest Income 4,386     4,099     3,941     11,781     10,764  
OPERATING EXPENSES                  
Personnel expenses 7,007     7,005     6,625     20,652     19,255  
Occupancy and equipment expenses 1,199     1,334     1,152     3,708     3,313  
Technology expenses 595     558     507     1,697     1,549  
Advertising 216     396     193     821     579  
Other business development expenses 266     277     303     827     850  
Data processing expense 479     483     437     1,420     1,257  
Other taxes 425     455     325     1,234     1,016  
Loan and deposit expenses 285     392     242     901     644  
Legal and professional expenses 436     383     382     1,138     1,050  
Other operating expenses 977     1,121     1,015     3,049     2,924  
Total Operating Expenses 11,885     12,404     11,181     35,447     32,437  
INCOME BEFORE INCOME TAX EXPENSE 8,317     6,817     7,529     22,198     20,636  
Income tax expense 1,470     1,279     1,387     4,117     3,731  
NET INCOME $ 6,847     $ 5,538     $ 6,142     $ 18,081     $ 16,905  
                                       


RED RIVER BANCSHARES, INC.
NET INTEREST INCOME AND NET INTEREST MARGIN (UNAUDITED)
 
  For the Three Months Ended
  September 30, 2019   June 30, 2019   September 30, 2018
(dollars in thousands) Average
Balance
Outstanding
  Interest
Earned/
Interest
Paid
  Average
Yield/
Rate
  Average
Balance
Outstanding
  Interest
Earned/
Interest
Paid
  Average
Yield/
Rate
  Average
Balance
Outstanding
  Interest
Earned/
Interest
Paid
  Average
Yield/
Rate
Assets                                  
Interest-earning assets:                                  
Loans(1,2) $ 1,408,146     $ 16,578     4.61 %   $ 1,372,020     $ 15,945     4.60 %   $ 1,333,720     $ 15,285     4.49 %
Securities - taxable 255,846     1,352     2.11 %   252,742     1,344     2.13 %   270,179     1,368     2.02 %
Securities - tax-exempt 77,047     448     2.33 %   73,863     440     2.38 %   56,242     321     2.29 %
Federal funds sold 32,461     178     2.15 %   35,390     212     2.37 %   15,761     82     2.02 %
Interest-bearing balances due from banks 38,676     213     2.16 %   52,477     306     2.31 %   39,657     197     1.95 %
Nonmarketable equity securities 1,342     10     2.99 %   1,333     4     1.30 %   1,292     9     2.71 %
Investment in trusts 64     2     10.91 %   324     5     5.99 %   341     4     5.23 %
Total interest-earning assets 1,813,582     $ 18,781     4.06 %   1,788,149     $ 18,256     4.05 %   1,717,192     $ 17,266     3.95 %
Allowance for loan losses (13,755 )           (13,299 )           (11,962 )        
Noninterest earning assets 110,062             105,677             88,833          
Total assets $ 1,909,889             $ 1,880,527             $ 1,794,063          
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:                                  
Interest-bearing transaction deposits $ 724,219     $ 972     0.53 %   $ 733,328     $ 995     0.54 %   $ 697,485     $ 689     0.39 %
Time deposits 338,330     1,542     1.81 %   332,474     1,454     1.75 %   320,955     1,129     1.40 %
Total interest-bearing deposits 1,062,549     2,514     0.94 %   1,065,802     2,449     0.92 %   1,018,440     1,818     0.71 %
Junior subordinated debentures 2,129     73     13.64 %   10,763     156     5.81 %   11,341     150     5.25 %
Other borrowings 22         2.80 %           %   303     3     3.24 %
Total interest-bearing liabilities 1,064,700     $ 2,587     0.96 %   1,076,565     $ 2,605     0.97 %   1,030,084     $ 1,971     0.76 %
Noninterest-bearing liabilities:
Noninterest-bearing deposits 586,664             564,911             566,056          
Accrued interest and other liabilities 16,084             15,158             9,863          
Total noninterest-bearing liabilities: 602,748             580,069             575,919          
Stockholders’ equity 242,441             223,893             188,060          
Total liabilities and stockholders’ equity $ 1,909,889             $ 1,880,527             $ 1,794,063          
Net interest income     $ 16,194             $ 15,651             $ 15,295      
Net interest spread         3.10 %           3.08 %           3.19 %
Net interest margin         3.50 %           3.46 %           3.49 %
Net interest margin FTE(3)         3.55 %           3.51 %           3.54 %
Cost of deposits         0.60 %           0.60 %           0.46 %
Cost of funds         0.57 %           0.58 %           0.46 %
                                         

(1) Includes average outstanding balances of loans held for sale of $6.0 million, $3.6 million, and $3.2 million for the three months ended September 30, 2019, June 30, 2019, and September 30, 2018, respectively.
(2) Nonaccrual loans are included as loans carrying a zero yield.
(3) Net interest margin FTE includes an FTE adjustment using a 21% federal income tax rate on tax-exempt securities and tax-exempt loans.

RED RIVER BANCSHARES, INC.
NET INTEREST INCOME AND NET INTEREST MARGIN (UNAUDITED)
 
  For the Nine Months Ended September 30,
  2019   2018
(dollars in thousands) Average
Balance
Outstanding
  Interest
Earned/
Interest
Paid
  Average
Yield/
Rate
  Average
Balance
Outstanding
  Interest
Earned/
Interest
Paid
  Average
Yield/
Rate
Assets                      
Interest-earning assets:                      
Loans(1,2) $ 1,375,129     $ 48,026     4.61 %   $ 1,302,848     $ 43,307     4.38 %
Securities - taxable 256,618     4,074     2.12 %   281,683     4,255     2.01 %
Securities - tax-exempt 71,892     1,273     2.36 %   58,032     999     2.30 %
Federal funds sold 34,019     603     2.34 %   14,547     196     1.78 %
Interest-bearing balances due from banks 53,759     935     2.30 %   31,880     423     1.75 %
Nonmarketable equity securities 1,325     19     1.86 %   1,283     14     1.43 %
Investment in trusts 242     11     6.23 %   341     13     4.91 %
Total interest-earning assets 1,792,984     $ 54,941     4.05 %   1,690,614     $ 49,207     3.85 %
Allowance for loan losses (13,267 )           (11,482 )        
Noninterest earning assets 105,793             88,552          
Total assets $ 1,885,510             $ 1,767,684          
Liabilities and Stockholders’ Equity                      
Interest-bearing liabilities:                      
Interest-bearing transaction deposits $ 736,947     $ 2,930     0.53 %   $ 705,099     $ 1,909     0.36 %
Time deposits 335,201     4,330     1.73 %   319,239     3,109     1.30 %
Total interest-bearing deposits 1,072,148     7,260     0.91 %   1,024,338     5,018     0.65 %
Junior subordinated debentures 8,044     385     6.39 %   11,341     410     4.83 %
Other borrowings 7         2.80 %   246     6     3.46 %
Total interest-bearing liabilities 1,080,199     $ 7,645     0.95 %   1,035,925     $ 5,434     0.70 %
Noninterest-bearing liabilities:                      
Noninterest-bearing deposits 568,053             539,269          
Accrued interest and other liabilities 15,756             9,439          
Total noninterest-bearing liabilities: 583,809             548,708          
Stockholders’ equity 221,502             183,051          
Total liabilities and stockholders’ equity $ 1,885,510             $ 1,767,684          
Net interest income     $ 47,296             $ 43,773      
Net interest spread         3.10 %           3.15 %
Net interest margin         3.48 %           3.42 %
Net interest margin FTE(3)         3.53 %           3.46 %
Cost of deposits         0.59 %           0.43 %
Cost of funds         0.57 %           0.43 %
                           

(1) Includes average outstanding balances of loans held for sale of $4.1 million and $2.9 million for the nine months ended September 30, 2019 and 2018, respectively.
(2) Nonaccrual loans are included as loans carrying a zero yield.
(3) Net interest margin FTE includes an FTE adjustment using a 21% federal income tax rate on tax-exempt securities and tax-exempt loans.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
 
(dollars in thousands except per share data) Sept. 30, 2019   June 30, 2019   Sept. 30, 2018
Tangible common equity          
Total stockholders' equity $ 245,389     $ 237,911     $ 189,131  
Adjustments:          
Intangible assets (1,546 )   (1,546 )   (1,546 )
Total tangible common equity $ 243,843     $ 236,365     $ 187,585  
Common shares outstanding(1) 7,306,221     7,300,246     6,733,848  
Book value per common share(1) $ 33.59     $ 32.59     $ 28.09  
Tangible book value per common share(1) $ 33.37     $ 32.38     $ 27.86  
           
Tangible assets          
Total assets $ 1,938,854     $ 1,892,918     $ 1,816,296  
Adjustments:          
Intangible assets (1,546 )   (1,546 )   (1,546 )
Total tangible assets $ 1,937,308     $ 1,891,372     $ 1,814,750  
Total stockholder's equity to assets 12.66 %   12.57 %   10.41 %
Tangible common equity to tangible assets 12.59 %   12.50 %   10.34 %
                 

(1) September 30, 2018 amount adjusted to give effect to a 2-for-1 stock split with a record date of October 1, 2018.

SOURCE: Red River Bancshares, Inc.

Contact:
Isabel V. Carriere, CPA, CGMA
Executive Vice-President and Chief Financial Officer
318-561-4023
icarriere@redriverbank.net