RED RIVER BANCSHARES INC
For the period ended Sep 30, 2024. Filed Nov 8, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 8, 2024
RRBI$103.55-0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-09.
0001071236-24-000075
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-08.
0001071236-24-000088
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 223 previous paragraphs and 231 current paragraphs.
125 unchanged; 88 reworded; 15 added; 7 removed; 3 previous and 3 current paragraphs rearranged.
Tables are not compared: 29 previous and 29 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (15)
Current report
In the third quarter of 2024, the Company reported higher earnings, an improved net interest margin, and fairly consistent loans and deposits. We deployed excess funds into the securities portfolio and completed a significant stock repurchase. In mid-September, the target range of the federal funds rate was reduced by 50 bps.
Current report
•Noninterest income totaled $5.4 million for the third quarter of 2024, an increase of $321,000, or 6.3%, compared to $5.1 million for the previous quarter. Noninterest income benefited from the receipt of a $151,000 nonrecurring loan fee.
Current report
•As of September 30, 2024, total securities were $697.7 million, which was $31.1 million, or 4.7%, higher than June 30, 2024. In the third quarter of 2024, we redeployed cash flows from lower yielding securities into higher yielding securities, as well as deployed other liquid assets into the securities portfolio.
Current report
•In the third quarter of 2024, the provision for credit losses totaled $300,000. This included $200,000 for loans and $100,000 for unfunded loan commitments.
Current report
•The book value per share of common stock was $47.51 as of September 30, 2024, compared to $44.58 as of June 30, 2024. This improvement was primarily due to the decrease in the accumulated other comprehensive loss related to securities and net income added to stockholders’ equity, partially offset by stock repurchases.
Current report
Net interest income for the nine months ended September 30, 2024 was $65.6 million, which was $463,000, or 0.7%, higher than $65.1 million for the nine months ended September 30, 2023. Net interest income increased due to a $15.1 million increase in interest and dividend income, mostly offset by a $14.6 million increase in interest expense.
Current report
Equity securities are an investment in a CRA mutual fund consisting primarily of bonds. The gain or loss on equity securities is a fair value adjustment primarily driven by changes in the interest rate environment. Due to the fluctuations in market rates between quarters, equity securities had a gain of $107,000 in the third quarter of 2024, compared to a loss of $13,000 for the previous quarter.
Current report
Service charges on deposit accounts increased $119,000 to $1.5 million for the third quarter of 2024, compared to the prior quarter, due to a larger number of non-sufficient fund transactions and related fee income in the third quarter of 2024.
Current report
Loan and deposit income increased $96,000 to $588,000 for the third quarter of 2024, compared to the prior quarter. The third quarter of 2024 benefited from the receipt of a $151,000 nonrecurring loan fee.
Current report
Equity securities are an investment in a CRA mutual fund consisting primarily of bonds. The gain or loss on equity securities is a fair value adjustment primarily driven by changes in the interest rate environment. Due to fluctuations in market rates, equity securities had a gain of $63,000 for the nine months ended September 30, 2024, compared to a loss of $145,000 for the same period prior year.
Current report
Loan and deposit income increased $6,000 to $1.6 million for the nine months ended September 30, 2024, compared to the same period prior year. During the nine months ended September 30, 2024, we received $201,000 of nonrecurring loan fees, which were offset by lower deposit fees due to changing customer deposit activity.
Current report
Technology expenses increased $141,000 to $865,000 for the third quarter of 2024, compared to the prior quarter. This increase was primarily due to continued upgrades to our core banking systems and other software technology enhancements.
Current report
(1)The $900,000 provision for credit losses on the consolidated statements of income for the nine months ended September 30, 2024, includes $800,000 for loans and $100,000 for unfunded loan commitments.
Current report
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. This repurchase was supplemental to our 2024 stock repurchase program. However, in connection with the repurchase, we reduced the availability under our 2024 stock repurchase program by $3.0 million.
Current report
For the three months ended September 30, 2024, we repurchased 233 shares of our common stock from the open market at an aggregate cost of $11,000 under the stock repurchase program. For the nine months ended September 30, 2024, we repurchased 16,453 shares of our common stock from the open market at an aggregate cost of $775,000 under the stock repurchase program.
Removed paragraphs (7)
Previous report
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.
Previous report
•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.
Previous report
•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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Reworded paragraphs (88)
Previous wording
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.
Current wording
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 September 30, 2024, and on our results of operations for the quarters ended September 30, 2024 and June 30, 2024, and for the nine months ended September 30, 2024 and September 30, 2023.
Previous wording
SECOND QUARTER 2024 FINANCIAL AND OPERATIONAL HIGHLIGHTS
Current wording
THIRD QUARTER 2024 FINANCIAL AND OPERATIONAL HIGHLIGHTS
Previous wording
•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.
Current wording
•Net income for the third quarter of 2024 was $8.8 million, or $1.27 diluted EPS, an increase of $767,000, or 9.6%, compared to $8.0 million, or $1.16 diluted EPS, for the second quarter of 2024. Net income for the third quarter benefited from higher net interest income and an improved net interest margin FTE, along with higher noninterest income.
Previous wording
•For the second quarter of 2024, the return on assets was 1.05%, and the return on equity was 10.69%.
Current wording
•For the third quarter of 2024, the return on assets was 1.13%, and the return on equity was 11.11%.
Previous wording
•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.
Current wording
•Net interest income and net interest margin FTE increased for the third quarter of 2024 compared to the prior quarter. Net interest income for the third quarter of 2024 was $22.5 million compared to $21.8 million for the prior quarter. Net interest margin FTE for the third quarter of 2024 was 2.98% compared to 2.92% for the prior quarter. These increases were due to improved yields on securities and loans outpacing higher deposit rates.
Previous wording
•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.
Current wording
•As of September 30, 2024, assets were $3.10 billion, which was $53.2 million, or 1.7%, higher than June 30, 2024. The increase was mainly due to a $30.5 million increase in deposits.
Previous wording
•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.
Current wording
•Deposits totaled $2.75 billion as of September 30, 2024, an increase of $30.5 million, or 1.1%, compared to $2.72 billion as of June 30, 2024. In the third quarter of 2024, customer deposit balances remained consistent, with normal activity.
Previous wording
•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.
Current wording
•As of September 30, 2024, loans HFI were $2.06 billion, slightly higher than $2.05 billion as of June 30, 2024. In the third quarter of 2024, we closed on a high level of loan commitments, which should fund over time.
Previous wording
•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.
Current wording
•As of September 30, 2024, liquid assets, which are cash and cash equivalents, were $232.6 million, and the liquid assets to assets ratio was 7.50%. We do not have any borrowings, brokered deposits, or internet-sourced deposits.
Previous wording
•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.
Current wording
•As of September 30, 2024, NPAs were $3.1 million, or 0.10% of assets, and the ACL was $21.8 million, or 1.06% of loans HFI.
Previous wording
•We paid a quarterly cash dividend of $0.09 per common share in the second quarter of 2024.
Current wording
•We paid a quarterly cash dividend of $0.09 per common share in the third quarter of 2024.
Previous wording
•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.
Current wording
•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 third quarter of 2024, we entered into a privately negotiated stock repurchase agreement for the repurchase of 60,000 shares at an aggregate cost of $3.0 million. In connection with this repurchase, we reduced the availability under the 2024 stock repurchase program by $3.0 million. We also repurchased 233 shares at an aggregate cost of $11,000 from the open market. As of September 30, 2024, the 2024 stock repurchase program had $1.2 million remaining.
Previous wording
•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%.
Current wording
•As of September 30, 2024, capital levels were strong with a stockholders’ equity to assets ratio of 10.46%, a leverage ratio of 11.90%, and a total risk-based capital ratio of 18.07%.
Previous wording
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.
Current wording
Net income for the third quarter of 2024 was $8.8 million, or $1.27 diluted EPS, an increase of $767,000, or 9.6%, compared to $8.0 million, or $1.16 diluted EPS, for the second quarter of 2024. The increase in net income was due to a $670,000 increase in net interest income and a $321,000 increase in noninterest income, partially offset by a $161,000 increase in income tax expense and a $63,000 increase in operating expenses. The return on assets for the third quarter of 2024 was 1.13%, compared to 1.05% for the second quarter of 2024. The return on equity was 11.11% for the third quarter of 2024, compared to 10.69% for the second quarter of 2024. Our efficiency ratio for the third quarter of 2024 was 60.09%, compared to 62.07% for the second quarter of 2024.
Previous wording
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.
Current wording
Net income for the nine months ended September 30, 2024, was $24.9 million, or $3.59 diluted EPS, a decrease of $1.7 million, or 6.2%, compared to $26.6 million, or $3.70 diluted EPS, for the nine months ended September 30, 2023. The decrease in net income was due to a $1.5 million increase in operating expenses, a $482,000 decrease in noninterest income, and a $415,000 increase in the provision for credit losses, partially offset by $463,000 increase in net interest income and a $240,000 decrease in income tax expense. The return on assets for the nine months ended September 30, 2024, was 1.08%, compared to 1.18% for the nine months ended September 30, 2023. The return on equity was 10.86% for the nine months ended September 30, 2024, compared to 12.71% for the nine months ended September 30, 2023. Our efficiency ratio for the nine months ended September 30, 2024, was 60.84%, compared to 59.02% for the nine months ended September 30, 2023.
Previous wording
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.
Current wording
In 2023, the interest rate environment trended 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, then kept the rate consistent through the second quarter of 2024. Late in the third quarter of 2024, the FOMC decreased the federal funds rate by 50 bps to a target range of 4.75%-5.00%. The average effective federal funds rate was 5.26% for the third quarter of 2024, compared to 5.33% for the second quarter of 2024. For the nine months ended September 30, 2024, the average effective federal funds rate was 5.31%, compared to 4.92% for the nine months ended September 30, 2023. The net interest income and net interest margin FTE increased in the third quarter of 2024 compared to the prior quarter. The net interest income increased and the net interest margin FTE decreased for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.
Previous wording
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.
Current wording
Net interest income for the third quarter of 2024 was $22.5 million, which was $670,000, or 3.1%, higher than the second quarter of 2024, due to a $1.2 million increase in interest and dividend income, partially offset by a $550,0000 increase in interest expense. The increase in interest and dividend income was due to higher interest income on loans and securities. Loan income increased $1.0 million primarily due to higher rates on new and renewed loans compared to the existing portfolio. The average rate on new and renewed loans was 7.89% for the third quarter of 2024 and 7.98% for the prior quarter. Securities income increased $266,000 due to reinvesting lower yielding securities cash flows into higher yielding securities. The increase in interest expense was primarily due to higher rates on interest-bearing transaction deposits and time deposits.
Previous wording
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.
Current wording
The net interest margin FTE increased six bps to 2.98% for the third quarter of 2024, compared to 2.92% for the prior quarter. This increase was due to improved yields on securities and loans, partially offset by higher deposit costs. The yield on securities increased 15 bps due to reinvesting lower yielding securities cash flows into higher yielding securities. The yield on loans increased 11 bps due to higher rates on new and renewed loans compared to the existing portfolio. The cost of deposits increased six bps to 1.81% for the third quarter of 2024, compared to 1.75% for the previous quarter, primarily due to a nine bp increase in the rate on interest-bearing deposits during the third quarter, partially offset by our adjustment to certain transaction deposit rates late in the third quarter.
Previous wording
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.
Current wording
Late in the third quarter of 2024, the target range for the federal funds rate was reduced 50 bps to 4.75%-5.00%. At that time, we adjusted rates on transaction and time deposits, and we expect to continue lowering these rates in conjunction with future federal funds rate decreases. The market’s expectation is that the FOMC will continue lowering the target federal funds rate in the fourth quarter of 2024. During the twelve months ending September 30, 2025, we anticipate receiving approximately $134.0 million in securities cash flows with an average yield of 2.86%, and we project approximately $194.2 million of fixed rate loans will mature with an average yield of 5.95%. We expect to redeploy these balances into higher yielding assets. Additionally, during the twelve months ending September 30, 2025, we expect $558.5 million of time deposits to mature with an average rate of 4.47%, which we anticipate repricing into lower cost deposits. As of September 30, 2024, floating rate loans were 14.9% of loans HFI, and floating rate transaction deposits were 7.2% of interest-bearing transaction deposits. Depending on balance sheet activity and the movement in interest rates, we expect the net interest income and net interest margin FTE to improve slightly in the fourth quarter of 2024.
Previous wording
(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.
Current wording
(1)Includes average outstanding balances of loans HFS of$3.0 million and$3.2 million for the three months ended September 30, 2024 and June 30, 2024, respectively.
Previous wording
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.
Current wording
The increase in interest and dividend income for the nine months ended September 30, 2024, when compared to the nine months ended September 30, 2023, was mainly due to higher interest income on loans. Loan income increased $12.1 million primarily due to higher rates on new and renewed loans, combined with higher balances in loans HFI. The increase in interest expense for the nine months ended September 30, 2024, when compared to the nine months ended September 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.
Previous wording
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 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.
Current wording
Net interest margin FTE decreased two bps to 2.92% for the nine months ended September 30, 2024, from 2.94% for the nine months ended September 30, 2023, due to the increase in the cost of deposits exceeding the increase in the yield on earning assets. The cost of deposits increased 70 bps to 1.75% for the nine months ended September 30, 2024, from 1.05% for the nine months ended September 30, 2023, due to a 94 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 141 and 59 bps, respectively. These rates increased as we continued to respond to deposit rate pressure. However, late in the third quarter of 2024, we adjusted rates on certain transaction and time deposits in response to the federal funds rate decrease by the FOMC.
Previous wording
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.
Current wording
The net interest margin FTE was positively impacted by the increase in the yield on earning assets, for the nine months ended September 30, 2024, when compared to the nine months ended September 30, 2023. The yield on loans increased 53 bps due to higher rates on new and renewed loans due to the higher interest rate environment. The yield on securities increased 49 bps for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, due to reinvesting lower yielding securities cash flows into higher yielding securities. In addition, the yield on short-term liquid assets increased 35 bps due to having a higher average federal funds rate in 2024 than in 2023.
Previous wording
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:
Current wording
The following table presents average balance sheet information, interest income, interest expense, and the corresponding average yields earned and rates paid for the nine months ended September 30, 2024 and 2023:
Previous wording
(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.
Current wording
(1)Includes average outstanding balances of loans HFS of $2.7 million and $2.5 million for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
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.
Current wording
The provision for credit losses is the amount necessary to maintain the ACL and the reserve for unfunded commitments 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, the level of unfunded commitments, and current economic conditions.
Previous wording
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.
Current wording
The provision for credit losses for the third quarter of 2024 totaled $300,000, which included $200,000 for loans and $100,000 for unfunded loan commitments. The provision for credit losses in the second quarter was $300,000 for loans. The provision in the second and third quarters was due to potential economic challenges resulting from the recent inflationary environment, changing monetary policy, and loan growth. In the third quarter of 2024, we had an increase in unfunded loan commitments. 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
Previous wording
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.
Current wording
The provision for credit losses for the nine months ended September 30, 2024, was $900,000, an increase of $415,000, or 85.6%, from $485,000 for the nine months ended September 30, 2023. The primary drivers of the increase were the recent inflationary environment, changing monetary policy, current economic forecasts, loan growth, and an increase in unfunded loan commitments. 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.
Previous wording
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.
Current wording
Noninterest income increased $321,000 to $5.4 million for the third quarter of 2024 compared to $5.1 million for the second quarter of 2024. The increase in noninterest income was mainly due to a gain on equity securities and increases in service charges on deposit accounts, loan and deposit income, and brokerage income, partially offset by a decrease in SBIC income.
Previous wording
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.
Current wording
Brokerage income increased $94,000 to $987,000 for the third quarter of 2024, compared to the prior quarter. The higher income in the third quarter of 2024 was mainly due to increased investing activities by clients. Assets under management were $1.13 billion as of September 30, 2024, and $1.09 billion as of June 30, 2024.
Previous wording
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.
Current wording
SBIC income for the third quarter of 2024 decreased $153,000 to $301,000, compared to the prior quarter. This decrease was primarily due to lower normal income received from these partnerships in the third quarter. We expect SBIC income to be slightly higher in the fourth quarter of 2024 when compared to the third quarter.
Previous wording
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.
Current wording
Noninterest income decreased $482,000 to $15.4 million for the nine months ended September 30, 2024, compared to $15.9 million for the nine months ended September 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, a gain on equity securities, and higher net debit card income, brokerage income, and loan and deposit income.
Previous wording
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.
Current wording
SBIC income decreased $1.4 million to $1.1 million for the nine months ended September 30, 2024, compared to the same period prior year. For the nine months ended September 30, 2024, we received $114,000 of distribution payments, in addition to normal income. For the nine months ended September 30, 2023, we received income from the sale of an investment, in addition to normal income.
Previous wording
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.
Current wording
Mortgage loan income increased $314,000 to $1.8 million for the nine months ended September 30, 2024, compared to the same period prior year mainly due to an increase in the average loan amount, which generated higher mortgage loan fee income.
Previous wording
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.
Current wording
Debit card income, net, increased $188,000 to $2.9 million for the nine months ended September 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 during the nine months ended September 30, 2024.
Previous wording
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.
Current wording
Brokerage income increased $108,000 to $2.9 million for the nine months ended September 30, 2024, compared to the same period prior year. This increase was primarily due to higher investing activities by clients. Assets under management were $1.13 billion and $978.3 million as of September 30, 2024 and 2023, respectively.
Previous wording
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. Theincrease 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.
Current wording
Operating expenses increased $63,000 to $16.8 million for the third quarter of 2024, compared to $16.7 million for the second quarter of 2024. Theincrease in operating expenses was due to higher technology expenses and other tax expenses.
Previous wording
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.
Current wording
Other taxes increased $122,000 to$622,000 for the third quarter of 2024, compared to the prior quarter. The second quarter benefited from the reversal of $145,000 of stock repurchase tax expense due to finalized guidelines.
Previous wording
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. Theincrease 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.
Current wording
Operating expenses increased $1.5 million to $49.3 million for the nine months ended September 30, 2024, compared to $47.9 million for the nine months ended September 30, 2023. Theincrease in operating expenses was mainly due to higher personnel expenses, legal and professional expenses, technology expenses, other business development expenses, and occupancy and equipment expenses, partially offset by lower other taxes and loan and deposit expenses.
Previous wording
Personnel expenses increased $607,000 to$19.2 million for thesix 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.
Current wording
Personnel expenses increased $846,000 to$28.9 million for thenine months ended September 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 September 30, 2024 and 2023, we had 366 and 360 total employees, respectively.
Showing the first 40 of 88 pairs. Open the source sections for the rest.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
As of September 30, 2024, we had $1.2 million available for repurchasing our common stock under the 2024 stock repurchase program.
Current report — wording carried from elsewhere
Bank policy 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, 20.0% for a 200 bp shift, and 30.0% for a 300 bp shift.
Current report — wording carried from elsewhere
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.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
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.