RED RIVER BANCSHARES INC
For the period ended Dec 31, 2024. Filed Mar 14, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 14, 2025
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-K
Period ended 2023-12-31; filed 2024-03-15.
0001071236-24-000035
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-14.
0001071236-25-000026
Item 7. 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 241 previous paragraphs and 244 current paragraphs.
126 unchanged; 90 reworded; 26 added; 24 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 31 previous and 31 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 (26)
Current report
In 2024, we had steady improvement in the net interest margin and EPS, along with solid loan activity and growth. We also increased our cash dividend, had significant stock buyback activity, and expanded our banking center network.
Current report
•Deposits totaled $2.81 billion as of December 31, 2024, consistent with December 31, 2023. In 2024, customer deposit balances were consistent, with normal activity.
Current report
•Provision expense was $1.2 million for 2024 compared to $735,000 for 2023.
Current report
•NPAs were $3.3 million, or 0.10% of assets, as of December 31, 2024. As of December 31, 2024, the ACL was $21.7 million, or 1.05% of loans HFI.
Current report
•Also in 2024, we completed two other privately negotiated stock repurchases of an aggregate of 250,000 shares of our common stock for a total purchase price of approximately $12.5 million. These repurchases were supplemental to our 2024 stock repurchase program and did not impact the amount of permitted repurchases under the program.
Current report
•In 2024, we repurchased a total of 327,085 shares of our common stock, or 4.6% of the December 31, 2023 outstanding shares. For 2024, these repurchases benefited earnings per share by $0.14.
Current report
◦In the second quarter of 2024, we opened a second Red River Bank full-service banking center in the New Orleans, Louisiana market.
Current report
◦In the fourth quarter of 2024, Red River Bank purchased property in Lafayette, Louisiana and plans to build a new banking center at that location, which would be our second banking center in the Acadiana market.
Current report
•In 2024, the Company and Red River Bank, were included in various financial industry ranking reports:
Current report
◦Bank Director Magazine ranked the Company 9th in the top 30 best-performing publicly traded financial institutions with assets less than $5.0 billion.
Current report
The following is a discussion of results of operations for the year ended December 31, 2024, compared to the year ended December 31, 2023. A discussion regarding our results of operations for the year ended December 31, 2023, compared to the year ended December 31, 2022, can be found in “Part II - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 15, 2024.
Current report
FOMC that began late in the third quarter of 2024, we lowered selected deposit rates in the third and fourth quarters, which reduced deposit costs at the end of 2024.
Current report
SBIC income decreased $1.4 million to $1.5 million for 2024, compared to $2.9 million for 2023. In 2024, we received $114,000 of distribution payments, in addition to normal income. In 2023, we received income from the sale of an investment, in addition to normal income.
Current report
Loan and deposit income decreased $106,000 to $2.0 million for 2024, compared to $2.1 million for 2023. The decrease was primarily related to lower deposit fees due to changing customer deposit activity, partially offset by higher nonrecurring loan related fees.
Current report
Mortgage loan income increased $525,000 to $2.5 million for 2024, compared to $2.0 million for 2023, mainly due to an increase in the average loan amount, which generated higher mortgage loan fee income.
Current report
Debit card income, net, increased $273,000 to $3.8 million for 2024, compared to $3.6 million for 2023. 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.
Current report
Technology expenses increased $423,000 to $3.2 million for 2024 compared to $2.8 million for 2023. This increase was primarily due to implementing new software and $51,000 of nonrecurring expenses related to our new banking center location and new administrative office, both in the New Orleans market.
Current report
Legal and professional expenses increased $279,000 to $2.7 million for 2024 compared to $2.4 million for 2023. This increase was due to higher contracted services, higher public company expenses, and higher professional and advisory services mainly related to a newly negotiated debit card provider contract effective January 2024.
Current report
Other taxes decreased $314,000 to $2.4 million for 2024 compared to $2.7 million for 2023. This decrease was primarily due to a decrease in State of Louisiana bank stock tax resulting from lower deposit account balances and lower net income for the applicable tax years.
Current report
(1)The $1.2 million provision for credit losses on the consolidated statements of income for the year ended December 31, 2024, includes $1.0 million for loans and $200,000 for unfunded loan commitments.
Current report
On March 13, 2024, we entered into a privately negotiated stock repurchase agreement for the purchase of 200,000 shares of our common stock for a total purchase price of approximately $10.0 million. This repurchase was supplemental to our 2024 stock repurchase program and did not impact the amount of permitted repurchases thereunder.
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
On November 5, 2024, we entered into a privately negotiated stock repurchase agreement for the purchase of 50,000 shares of our common stock for a total purchase price of approximately $2.5 million. This repurchase was supplemental to our 2024 stock repurchase program and did not impact the amount of permitted repurchases thereunder.
Current report
For the year ended December 31, 2024, we repurchased 17,085 shares of our common stock on the open market at an aggregate cost of $809,000 under the stock repurchase program.
Current report
The 2024 stock repurchase program expired on December 31, 2024, with $1.1 million of remaining availability.
Current report
Another borrowing source is the Federal Reserve Bank’s Discount Window. Effective the third quarter of 2023, the Bank pledged securities to have borrowing access to the Federal Reserve Bank’s Discount Window. In addition, effective March 2024, the Bank was approved for the Discount Window’s Borrower-In-Custody “BIC” program, which provides borrowing capacity through the pledging of eligible Red River Bank loans that are not pledged to the FHLB. As of December 31, 2024, we had a total borrowing capacity of $157.8 million, including $118.7 million through the BIC program, compared to a total borrowing capacity of $45.5 million as of December 31, 2023. There were no outstanding borrowings from the Federal Reserve Bank’s Discount Window as of December 31, 2024 and 2023.
Removed paragraphs (24)
Previous report
2023 was a challenging year due to the failure of a few financial institutions in the first half of the year. These issues and the changing interest rate environment impacted most financial institutions. However, we navigated these challenges and had steady and solid financial results for 2023. We also implemented the CECL methodology, completed the 2023 stock repurchase program, increased the cash dividend, and improved our banking center network.
Previous report
•Deposits totaled $2.80 billion as of December 31, 2023, consistent with December 31, 2022. During 2023, there was a deposit mix shift as customers moved funds from lower yielding categories to higher yielding categories.
Previous report
•The CECL methodology became effective for us on January 1, 2023. The adoption of CECL resulted in a $720,000 adjustment to the ACL and reserve for unfunded commitments. This adjustment was 3.5% of the December 31, 2022 ALL. Provision expense was $735,000 for 2023 compared to $1.8 million for 2022.
Previous report
◦In our Southwest market, we closed one of our banking centers in the first quarter of 2023 and relocated the staff and services to an existing, expanded banking center.
Previous report
◦In the third quarter of 2023, Red River Bank held a groundbreaking ceremony for a banking center in Metairie, Louisiana, which is our third banking location in our New Orleans market. Construction on this new banking center is in process, and it is projected to open for business in the third quarter of 2024.
Previous report
•On January 25, 2024, Michael J. Brown, CFA was appointed to the boards of the Company and the Bank.
Previous report
Effective January 1, 2023, we adopted ASC 326, the CECL methodology for estimating credit losses. The guidance for CECL replaces our previous incurred loss methodology with a methodology that reflects the current expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit losses.
Previous report
SBIC income increased $2.3 million to $2.9 million for 2023, compared to $563,000 for 2022. The increase was primarily due to the sale of an investment by the SBIC in the second quarter of 2023, which resulted in higher income being distributed by the SBIC.
Previous 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. In 2023, we sold $7.0 million of the CRA mutual fund. The mutual fund had a loss of $14,000 in 2023, compared to a $468,000 loss in 2022.
Previous report
Loan and deposit income increased $417,000 to $2.1 million for 2023, compared to $1.7 million for 2022. The increase was primarily associated with fees related to customers moving funds from lower yielding deposit accounts to higher yielding deposit accounts.
Previous report
Brokerage income increased $249,000 to $3.8 million for 2023, compared to $3.5 million for 2022. The increase was primarily due to investing activities of new clients. Assets under management were $1.04 billion and $915.1 million as of December 31, 2023 and 2022, respectively.
Previous report
Mortgage loan income decreased $1.1 million to $2.0 million for 2023, compared to $3.1 million for 2022 due to higher mortgage interest rates and reduced purchase activity.
Previous report
Debit card income, net, decreased $334,000 to $3.6 million for 2023, compared to $3.9 million for 2022. The decrease was primarily related to higher debit card processing expenses.
Previous report
Regulatory assessment expenses increased $587,000 to $1.6 million for 2023 compared to $1.1 million for 2022. This increase was primarily due to the FDIC raising the deposit insurance assessment rate by two bps, effective January 1, 2023, for all insured depository institutions.
Previous report
Legal and professional expenses increased $381,000 to $2.4 million for 2023 compared to $2.0 million for 2022. This increase was primarily due to higher audit and compliance fees.
Previous report
Other business development expenses increased $342,000 to $2.0 million for 2023 compared to $1.6 million for 2022. This increase was mainly the result of an increase in community sponsorships and CRA related contributions, as well as expenses associated with an SBIC limited partnership.
Previous report
LIBOR
Previous report
In July 2017, the United Kingdom Financial Conduct Authority, the authority that regulates LIBOR, announced its intent to stop compelling banks to submit rates for the calculation of LIBOR after 2021. Subsequently, on March 5, 2021, it was announced that certain U.S. Dollar LIBOR rates would cease to be published after June 30, 2023. As of December 31, 2023, there were no loans HFI tied to a LIBOR-based rate.
Previous report
On January 1, 2023, we adopted ASC 326, as amended, using the modified retrospective method. For reporting periods beginning on or after January 1, 2023, we maintain an ACL on all loans that reflects management’s best estimate of expected credit losses to be recognized over the lifetime of the loans. The determination of the amount of allowance involves a high degree of judgement and subjectivity. Refer to “Item 8. Financial Statements and Supplementary Data - Note 1. Significant Accounting Policies - Securities” and “- Loans Held for Investment” in this Report for more information regarding our ACL methodologies.
Previous report
For reporting periods prior to January 1, 2023, the ALL was established for known and inherent losses in the loan portfolio based upon management’s best assessment of the loan portfolio. It was maintained at a level estimated to be adequate to absorb potential losses through periodic changes to loan losses.
Previous report
In 2022, we implemented the IntraFi Network Insured Cash Sweep and related reciprocal balance programs for qualified commercial customers. The IntraFi Network Insured Cash Sweep program provides our customers a demand deposit sweep account that has a competitive interest rate as well as full FDIC insurance coverage. As of December 31, 2023, we had $129.1 million swept off our balance sheet. The related reciprocal program brings deposit balances back on to our balance sheet as interest-bearing demand deposit accounts. As of December 31, 2023, we had $138.4 million of interest-bearing demand deposit accounts.
Previous report
On January 1, 2023, we adopted the CECL methodology for estimating credit losses. In the first quarter of 2023, the implementation of CECL resulted in a $720,000 adjustment to the ACL and reserve for unfunded commitments, and a $569,000, net of tax, adjustment to retained earnings.
Previous report
Interest-bearing deposits in other banks are our main source of meeting daily liquidity needs and were our third-largest component of assets as of December 31, 2023. As of December 31, 2023, interest-bearing deposits in other banks were $252.4 million and were 8.1% of assets, an increase of $11.8 million, or 4.9%, compared to $240.6 million and 7.8% of assets as of December 31, 2022. Excess liquidity that is not being deployed into loans or securities is placed in these accounts.
Previous report
In addition, effective the third quarter of 2023, we pledged securities to have borrowing access to the Federal Reserve Bank’s Discount Window facility. As of December 31, 2023, our borrowing capacity through this facility was $45.5 million; however, we had no borrowings under this facility. As of December 31, 2022, we had no borrowing capacity through this facility as collateral had not been pledged.
Reworded paragraphs (90)
Previous wording
Red River Bancshares, Inc. is the bank holding company for Red River Bank, a Louisiana state-chartered bank established in 1999 that provides a fully integrated suite of banking products and services tailored to the needs of our commercial and retail customers. As of December 31, 2023, Red River Bank operated from a network of 27 banking centers throughout Louisiana and one combined LDPO in New Orleans, Louisiana. Banking centers are located in the following Louisiana markets: Central, which includes the Alexandria MSA; Northwest, which includes the Shreveport-Bossier City MSA; Capital, which includes the Baton Rouge MSA; Southwest, which includes the Lake Charles MSA; the Northshore, which includes Covington; Acadiana, which includes the Lafayette MSA; and New Orleans.
Current wording
Red River Bancshares, Inc. is the bank holding company for Red River Bank, a Louisiana state-chartered bank established in 1999 that provides a fully integrated suite of banking products and services tailored to the needs of our commercial and retail customers. As of December 31, 2024, Red River Bank operated from a network of 28 banking centers throughout Louisiana and one combined LDPO in New Orleans, Louisiana. Banking centers are located in the following Louisiana markets: Central, which includes the Alexandria MSA; Northwest, which includes the Shreveport-Bossier City MSA; Capital, which includes the Baton Rouge MSA; Southwest, which includes the Lake Charles MSA; the Northshore, which includes Covington; Acadiana, which includes the Lafayette MSA; and New Orleans.
Previous wording
•Net income for the year ended December 31, 2023, was $34.9 million, or $4.86 diluted EPS, a decrease of $2.0 million, or 5.5%, compared to $36.9 million, or $5.13 diluted EPS, for the year ended December 31, 2022. These decreases were mainly due to higher operating expenses, partially offset by higher noninterest income and lower provision for credit losses. Net interest income was consistent between the years with offsetting increases in interest income and interest expense.
Current wording
•Net income for the year ended December 31, 2024, was $34.2 million, or $4.95 diluted EPS, a decrease of $644,000, or 1.8%, compared to $34.9 million, or $4.86 diluted EPS, for the year ended December 31, 2023. The decrease in net income was mainly due to higher operating expenses, lower noninterest income, and higher provision for credit losses, partially offset by higher net interest income.
Previous wording
•The return on assets was 1.15% for 2023 and 1.18% for 2022.
Current wording
•The return on assets was 1.11% for 2024 and 1.15% for 2023.
Previous wording
•The return on equity was 12.44% for 2023 and 13.98% for 2022.
Current wording
•The return on equity was 11.02% for 2024 and 12.44% for 2023.
Previous wording
•Assets increased $46.1 million, or 1.5%, to $3.13 billion as of December 31, 2023, compared to $3.08 billion as of December 31, 2022.
Current wording
•Assets increased $20.8 million, or 0.7%, to $3.15 billion as of December 31, 2024, compared to $3.13 billion as of December 31, 2023.
Previous wording
•Loans HFI increased $76.6 million, or 4.0%, to $1.99 billion as of December 31, 2023, compared to $1.92 billion as of December 31, 2022. The increase in loans was due to improved loan activity in various markets across Louisiana.
Current wording
•Loans HFI increased $82.2 million, or 4.1%, to $2.08 billion as of December 31, 2024, compared to $1.99 billion as of December 31, 2023. The increase in loans was due to new loan activity in various markets across Louisiana.
Previous wording
•As of December 31, 2023, total securities were $714.3 million, or 22.8% of assets, compared to $776.1 million, or 25.2% of assets, as of December 31, 2022. Securities decreased $61.8 million mainly due to maturities and principal repayments exceeding purchases, partially offset by a smaller net unrealized loss on securities AFS.
Current wording
•As of December 31, 2024, total securities were $684.9 million, or 21.7% of assets, compared to $714.3 million, or 22.8% of assets, as of December 31, 2023. Securities decreased $29.4 million mainly due to maturities and principal repayments exceeding purchases.
Previous wording
•For 2023, average liquid assets, which are cash and cash equivalents, decreased $186.8 million to $237.9 million, compared to $424.8 million for 2022. The liquid assets to assets ratio was 9.8% as of December 31, 2023 and 9.0% as of December 31, 2022.
Current wording
•For 2024, liquid assets, which are cash and cash equivalents, decreased $36.5 million to $269.0 million, compared to $305.4 million for 2023. The liquid assets to assets ratio was 8.54% as of December 31, 2024 and 9.76% as of December 31, 2023.
Previous wording
•Net interest income was fairly consistent for 2023 and 2022, with offsetting increases in interest income and interest expense. The net interest margin FTE increased slightly to 2.91% for 2023 compared to 2.86% for the prior year. The 2023 net interest income and net interest margin FTE were impacted by the higher interest rate environment in 2023, an improved asset mix, and increased deposit costs.
Current wording
•Net interest income increased between 2024 and 2023 with higher interest income being partially offset by higher interest expense. The net interest margin FTE increased 5 bps to 2.96% for 2024 compared to 2.91% for the prior year. The 2024 net interest income and net interest margin FTE were impacted by the changing interest rate environment, combined with repricing activity in loans, securities, and deposits.
Previous wording
•In 2023, we paid a quarterly cash dividend of $0.08 per share, resulting in annual cash dividends of $0.32 per share. In 2022, we paid a quarterly cash dividend of $0.07 per share, resulting in annual cash dividends of $0.28 per share. In the first quarter of 2024, we declared a quarterly cash dividend of $0.09 per share.
Current wording
•In 2024, we paid a quarterly cash dividend of $0.09 per share, resulting in annual cash dividends of $0.36 per share. In 2023, we paid a quarterly cash dividend of $0.08 per share, resulting in annual cash dividends of $0.32 per share. In the first quarter of 2025, we declared a quarterly cash dividend of $0.12 per share.
Previous wording
•The 2023 stock repurchase program authorized us to purchase up to $5.0 million of our outstanding common stock from January 1, 2023 through December 31, 2023. In 2023, we repurchased 101,298 shares of our common stock at an aggregate cost of $5.0 million and completed the program. On December 14, 2023, our board of directors approved the renewal of our stock repurchase program for 2024. The 2024 stock repurchase program authorizes us to purchase up to $5.0 million of our outstanding shares of common stock from January 1, 2024 through December 31, 2024.
Current wording
•The 2024 stock repurchase program authorized us to purchase up to $5.0 million of our outstanding common stock from January 1, 2024 through December 31, 2024. In 2024, under this plan, on the open market, we repurchased 17,085 shares of our common stock at an aggregate cost of $809,000. We also completed a privately negotiated stock repurchase of 60,000 shares of our common stock for $3.0 million, which reduced the availability under the 2024 stock repurchase program. The 2024 stock repurchase program expired on December 31, 2024, with $1.1 million of remaining availability.
Previous wording
•In mid-2023, S&P Market Intelligence ranked Red River Bank 45th of the top 50 best-performing community banks in 2022 with assets between $3.0 and $10.0 billion.
Current wording
◦S&P Global Market Intelligence ranked Red River Bank 15th of the top 50 best-performing community banks in 2023 with assets between $3.0 and $10.0 billion.
Previous wording
•In the fourth quarter of 2023, the American Banker publication included Red River Bank in its “2023 Best Banks to Work For” ranking.
Current wording
◦The American Banker publication included Red River Bank in its “2024 Best Banks to Work For” ranking.
Previous wording
Net income for the year ended December 31, 2023, was $34.9 million, or $4.86 diluted EPS, a decrease of $2.0 million, or 5.5%, compared to $36.9 million, or $5.13 diluted EPS, for the year ended December 31, 2022. The decrease in net income was mainly due to a $5.2 million increase in operating expenses, partially offset by a $2.4 million increase in noninterest income and a $1.0 million decrease in the provision for credit losses. The return on assets for the year ended December 31, 2023, was 1.15%, compared to 1.18% for the prior year. The return on equity was 12.44% for the year ended December 31, 2023, compared to 13.98% for the prior year. Our efficiency ratio for the year ended December 31, 2023, was 59.39%, compared to 56.60% for the year ended December 31, 2022.
Current wording
Net income for the year ended December 31, 2024, was $34.2 million, or $4.95 diluted EPS, a decrease of $644,000, or 1.8%, compared to $34.9 million, or $4.86 diluted EPS, for the year ended December 31, 2023. The decrease in net income was mainly due to a $2.3 million increase in operating expenses, a $673,000 decrease in noninterest income, and a $465,000 increase in the provision for credit losses, partially offset by a $2.9 million increase in net interest income. The return on assets for the year ended December 31, 2024, was 1.11%, compared to 1.15% for the prior year. The return on equity was 11.02% for the year ended December 31, 2024, compared to 12.44% for the prior year. Our efficiency ratio for the year ended December 31, 2024, was 60.29%, compared to 59.39% for the year ended December 31, 2023.
Previous wording
The Federal Reserve sets the target federal funds rate, which is the cost of immediately available overnight funds, and influences other market rates, such as the prime rate. These market rates impact pricing of certain assets and liabilities used by financial institutions. Between March 2020 and September 2023, the interest rate environment changed significantly. In March 2020, the target federal funds range decreased 150 bps to a range of 0.00% to 0.25% and remained at that level until March 2022, when the FOMC began increasing the target federal funds range. The FOMC increased the federal funds rate by 425 bps in 2022, by 50 bps in the first quarter of 2023, by 25 bps in the second quarter of 2023, by 25 bps in the third quarter of 2023, and kept the rate consistent during the fourth quarter of 2023, ending 2023 with a target range of 5.25% to 5.50%. The average effective federal funds rate was 5.03% for 2023 compared to 1.68% for 2022. The net interest income and net interest margin FTE for the twelve months ended December 31, 2023, were both impacted by the federal funds rate increases by the FOMC in 2023.
Current wording
The Federal Reserve sets the target federal funds rate, which is the cost of immediately available overnight funds, and influences other market rates, such as the prime rate. These market rates impact pricing of certain assets and liabilities used by financial institutions. 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, and by an additional 50 bps during the fourth quarter of 2024, reducing the target federal funds range to 4.25%-4.50%. The average effective federal funds rate was 5.14% for 2024 compared to 5.03% for 2023. The net interest income and net interest margin FTE increased for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Previous wording
Net interest income for the year ended December 31, 2023, was $86.4 million, which was fairly consistent with the year ended December 31, 2022. Net interest income was impacted by a $24.4 million increase in interest expense, mostly offset by a $24.2 million increase in interest and dividend income.
Current wording
Net interest income for the year ended December 31, 2024, was $89.3 million, which was $2.9 million, or 3.3%, higher than the year ended December 31, 2023. Net interest income increased due to an $18.7 million increase in interest and dividend income, partially offset by a $15.8 million increase in interest expense.
Previous wording
Interest expense increased during 2023 primarily due to increased deposit rates as a result of deposit rate pressures, combined with larger balances in higher cost deposit accounts. We also 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 year ended December 31, 2023, when compared to the year ended December 31, 2022, was primarily due to higher interest income on loans and short-term liquid assets. Loan income increased $17.6 million due to higher rates on new, renewed, and floating rate loans and a $126.8 million increase in the average balance of loans, when compared to the year ended December 31, 2022. Interest income on short-term liquid assets increased $5.9 million due to the FOMC’s increases to the target federal funds range, partially offset by a $179.3 million decrease in the average balance of these short-term liquid assets.
Current wording
The increase in interest and dividend income for the year ended December 31, 2024, when compared to the year ended December 31, 2023, was primarily due to higher interest income on loans and securities. Loan income increased $15.5 million primarily due to higher rates on new and renewed loans, combined with higher balances in loans HFI. Securities income increased $2.8 million due to reinvesting lower yielding securities cash flows into higher yielding securities. The increase in interest expense for the year ended December 31, 2024, when compared to the year ended December 31, 2023, was due to high deposit rates through the third quarter of 2024, as we responded to deposit rate pressure, combined with larger balances in higher cost deposit accounts. However, in the fourth quarter of 2024, deposit rates were reduced in conjunction with the federal funds rate decreases by the FOMC.
Previous wording
Net interest margin FTE increased five bps to 2.91% for the year ended December 31, 2023, from 2.86% for the year ended December 31, 2022, primarily due to the higher interest rate environment and an improved asset mix. The yield on loans increased 62 bps due to higher rates on new, renewed, and floating rate loans resulting from the higher interest rate environment. The average rate on new and renewed loans was 7.19% for the year ended December 31, 2023. Our deployment of lower-yielding short-term liquid assets into these higher-yielding loans further benefited the net interest margin FTE. Also, the yield on securities increased 15 bps for the same period, primarily due to reinvesting securities cash flows received during 2023 into new securities at higher yields. In addition, the yield on short-term liquid assets was 388 bps higher for the year ended December 31, 2023, compared to the prior year.
Current wording
Net interest margin FTE increased 5 bps to 2.96% for the year ended December 31, 2024, from 2.91% for the year ended December 31, 2023, as a result of interest rate environment fluctuations along with our balance sheet repricing structure. The net interest margin FTE improved each quarter in 2024. This improvement was due to having increased yields on loans and securities throughout the year, combined with the lower cost of deposits in the fourth quarter of 2024. The yield on securities increased 52 bps due to reinvesting lower yielding securities cash flows into higher yielding securities. The yield on loans increased 50 bps due to higher rates on new and renewed loans as a result of the higher interest rate environment through the third quarter of 2024. The average rate on new and renewed loans was 7.62% for the year ended December 31, 2024, compared to 7.19% for the prior year.
Previous wording
The net interest margin FTE was negatively impacted by an increase in the cost of deposits. The cost of deposits increased 91 bps to 1.18% for the year ended December 31, 2023, from 0.27% for the year ended December 31, 2022, due to a 140 bp increase in the rate on interest-bearing deposits, combined with customers moving deposits from lower yielding categories to higher yielding categories in 2023. Within total interest-bearing deposits, the rate on time deposits and interest-bearing transaction deposits increased 197 and 111 bps, respectively. These rates increased as we responded to deposit rate pressure that began in the second half of 2022 and continued into 2023.
Current wording
The net interest margin FTE for the year ended December 31, 2024, when compared to the year ended December 31, 2023, was impacted by an increase in the cost of deposits. The cost of deposits increased 56 bps to 1.74% for the year ended December 31, 2024, from 1.18% for the year ended December 31, 2023. For the same time periods, the rates on time deposits and interest-bearing transaction deposits increased 111 and 44 bps, respectively. The cost of deposits increased through the third quarter of 2024, due to deposit rate pressure and customers moving deposits from lower yielding categories to higher yielding categories. However, in conjunction with the federal funds rate decreases by the
Previous wording
In the fourth quarter of 2023, the target range for the federal funds rate was 5.25% to 5.50%. The expectation is that the FOMC will lower the federal funds rate in 2024. During 2024, we anticipate receiving approximately $145.0 million in securities cash flows. We expect to redeploy these cash flows into higher yielding assets, which should benefit both net interest income and net interest margin FTE. As of December 31, 2023, floating rate loans were 11.7% of loans HFI, and floating rate transaction deposits were 6.1% of interest-bearing transaction deposits. Depending on balance sheet activity and the movement of interest rates, we expect the net interest margin FTE to improve slightly in the first half of 2024.
Current wording
As of December 31, 2024, the target federal funds range was 4.25%-4.50%. The market’s expectation is that the FOMC may lower the target range of the federal funds rate by at least 25 bps in 2025. In 2025, we anticipate receiving approximately $101.0 million in securities cash flows with an average yield of 3.01%, and we project approximately $194.0 million of fixed rate loans will mature with an average yield of 6.04%. We expect to redeploy these balances into higher yielding assets. Additionally, in 2025, we expect $541.9 million of time deposits to mature with an average rate of 4.10%, which we anticipate repricing into lower cost deposits. As of December 31, 2024, floating rate loans were 16.0% of loans HFI, and floating rate transaction deposits were 8.1% 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 to improve slightly during the first half of 2025.
Previous wording
(1)Includes average outstanding balances of loans HFS of $2.4 million and $3.3 million for the years ended December 31, 2023 and 2022, respectively.
Current wording
(1)Includes average outstanding balances of loans HFS of $2.9 million and $2.4 million for the years ended December 31, 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 year ended December 31, 2023, was $735,000, a decrease of $1.0 million from $1.8 million for the year ended December 31, 2022. The primary drivers of the decrease were the current inflationary environment, changing monetary policy, current economic forecasts, and lower 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 year ended December 31, 2024, totaled $1.2 million, an increase of $465,000 from $735,000 for the year ended December 31, 2023. The provision for credit losses for 2024 included $1.0 million for loans and $200,000 for unfunded commitments. The primary drivers of the increase were the potential economic challenges resulting from the recent inflationary environment, changing monetary policy, current economic forecasts, and loan growth. In the second half of 2024, we had an increase in unfunded loan commitments, which also contributed to the increase in provision for credit losses. 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
Noninterest income increased $2.4 million to $21.1 million for the year ended December 31, 2023, compared to $18.7 million for the prior year. The increase in noninterest income was due to higher income from an SBIC limited partnership of which Red River Bank is a member, a decreased loss on equity securities, and higher loan and deposit and brokerage income. These increases were partially offset by lower mortgage and net debit card income.
Current wording
Noninterest income decreased $673,000 to $20.4 million for the year ended December 31, 2024, compared to $21.1 million for the prior year. The decrease in noninterest income was due to lower income from SBIC limited partnerships of which the Bank is a member and lower loan and deposit fee income, partially offset by higher mortgage loan income and net debit card income.
Previous wording
Operating expenses increased $5.2 million to $63.9 million for the year ended December 31, 2023, compared to $58.7 million for the year ended December 31, 2022. The increase in operating expenses was mainly due to higher personnel expenses, regulatory assessment expenses, occupancy and equipment expenses, legal and professional expenses, other business development expenses, and loan and deposit expenses.
Current wording
Operating expenses increased $2.3 million to $66.2 million for the year ended December 31, 2024, compared to $63.9 million for the year ended December 31, 2023. Theincrease in operating expenses was mainly due to higher personnel expenses, technology expenses, legal and professional expenses, and occupancy and equipment expenses, partially offset by lower other taxes and loan and deposit expenses.
Previous wording
Personnel expenses are the largest component of operating expenses and include payroll expenses, incentive compensation, benefit plans, health insurance, and payroll taxes. Personnel expenses increased $2.7 million to $37.2 million for 2023 compared to $34.6 million for 2022. This increase was primarily due to higher personnel health insurance expenses and additional staff added during the year. As of December 31, 2023 and 2022, we had 362 and 351 total employees, respectively.
Current wording
Personnel expenses are the largest component of operating expenses and include payroll expenses, incentive compensation, benefit plans, health insurance, and payroll taxes. Personnel expenses increased $1.4 million to $38.6 million for 2024 compared to$37.2 million in 2023. This increase was primarily due to higher compensation expense as a result of net staff changes, partially offset by a decrease in medical insurance expense. As of December 31, 2024 and 2023, we had 369 and 362 total employees, respectively.
Previous wording
Occupancy and equipment expenses increased $472,000 to $6.6 million for 2023 compared to $6.1 million for 2022. This increase was mainly due to opening the new operations center building in the first quarter of 2023, the expansion of a banking center in the Southwest market in the second quarter of 2023, and renovations of the main office building in Alexandria, Louisiana, in the second half of 2023.
Current wording
Occupancy and equipment expenses increased $110,000 to $6.7 million for 2024 compared to $6.6 million for 2023. This increase was primarily due to $111,000 of nonrecurring expenses related to our new banking center location and new administrative office, both in the New Orleans market, and other 2024 property renovations. The same period prior year had $255,000 of nonrecurring expenses related to opening our new operations center building, the expansion of a banking center in the Southwest market, and renovations of the main office building in Alexandria, Louisiana.
Previous wording
Loan and deposit expenses increased $325,000 to $984,000 for 2023 compared to $659,000 for 2022. Deposit expenses in 2022 benefited from the receipt of a $122,000 negotiated, variable rebate from a vendor, resulting in lower loan and deposit expenses during that period.
Current wording
Loan and deposit expenses decreased $89,000 to $895,000 for 2024 compared to $984,000 for 2023. 2024 benefited from the receipt of a $262,000 negotiated, variable rebate from a vendor. This decrease was partially offset by an increase in collection and loan expenses.
Previous wording
For the years ended December 31, 2023 and 2022, income tax expense remained consistent at $8.1 million. The comparability in income tax expense was primarily due to the decrease in pre-tax income offset by an increase in the effective income tax rate due to permanent book versus tax differences. The effective income tax rate for 2023 was 18.8%, compared to 17.9% for 2022.
Current wording
For the years ended December 31, 2024 and 2023, income tax expense remained consistent at $8.1 million. The comparability in income tax expense was primarily due to the decrease in pre-tax income offset by an increase in the effective income tax rate due to permanent book versus tax differences. The effective income tax rate for 2024 was 19.2%, compared to 18.8% for 2023.
Previous wording
As of December 31, 2023, assets were $3.13 billion, which was $46.1 million, or 1.5%, higher than $3.08 billion as of December 31, 2022. During 2023, loans HFI increased $76.6 million, or 4.0%, during the year to $1.99 billion as of December 31, 2023. The increase in loans was due to improved loan activity in various markets across Louisiana. Cash and cash equivalents increased $27.0 million, or 9.7%, to $305.4 million and were 9.8% of assets as of December 31, 2023. Total securities decreased $61.8 million, or 8.0%, to $714.3 million and were 22.8% of assets as of December 31, 2023. The decrease in securities was due to maturities and principal repayments exceeding purchases, partially offset by a smaller net unrealized loss on securities AFS. Deposits were consistent at $2.80 billion as of December 31, 2023 and 2022. During 2023, there was a deposit mix shift as customers moved funds from lower yielding categories to higher yielding categories. We had no outstanding borrowings as of December 31, 2023 and 2022. During 2023, stockholders’ equity increased $38.1 million to $303.9 million as of December 31, 2023. As of December 31, 2023, the loans HFI to deposits ratio was 71.13%, compared to 68.46% as of December 31, 2022, and the noninterest-bearing deposits to total deposits ratio was 32.71%, compared to 38.96% as of December 31, 2022.
Current wording
As of December 31, 2024, assets were $3.15 billion, which was $20.8 million, or 0.7%, higher than $3.13 billion as of December 31, 2023. During 2024, loans HFI increased $82.2 million, or 4.1%, to $2.08 billion as of December 31, 2024. The increase in loans was due to improved loan activity in various markets across Louisiana. Cash and cash equivalents decreased $36.5 million, or 11.9%, to $269.0 million and were 8.5% of assets as of December 31, 2024. Cash and cash equivalents decreased due to loan growth exceeding deposit growth. Total securities decreased $29.4 million, or 4.1%, to $684.9 million and were 21.7% of assets as of December 31, 2024. The decrease in securities was due to maturities and principal repayments exceeding purchases. Deposits were fairly consistent at $2.81 billion as of December 31, 2024 and $2.80 billion as of December 31, 2023. We had no outstanding borrowings as of December 31, 2024 and 2023. During 2024, stockholders’ equity increased $15.9 million to $319.7 million as of December 31, 2024. As of December 31, 2024, the loans HFI to deposits ratio was 73.97%, compared to 71.13% as of December 31, 2023, and the noninterest-bearing deposits to total deposits ratio was 30.89%, compared to 32.71% as of December 31, 2023.
Previous wording
Interest-bearing deposits in other banks were the third-largest component of earning assets as of December 31, 2023. As of December 31, 2023, interest-bearing deposits in other banks were $252.4 million and were 8.1% of assets, an increase of $11.8 million, or 4.9%, compared to $240.6 million and 7.8% of assets as of December 31, 2022. Excess liquidity that is not being deployed into loans or securities is placed in these accounts.
Current wording
Interest-bearing deposits in other banks were the third-largest component of earning assets as of December 31, 2024. As of December 31, 2024, interest-bearing deposits in other banks were $238.4 million and were 7.6% of assets, a decrease of $13.9 million, or 5.5%, compared to $252.4 million and 8.1% of assets as of December 31, 2023. Excess liquidity that is not being deployed into loans or securities is placed in these accounts.
Previous wording
Our securities portfolio is the second-largest component of earning assets and provides a significant source of revenue. Securities are classified as AFS, HTM, and equity securities. As of December 31, 2023, our total securities portfolio was 22.8% of assets. It is designed primarily to provide and maintain liquidity, generate a favorable return on investments without incurring unnecessary interest rate and credit risk, and complement our lending activities. We may invest in various types of liquid assets that are permissible under governing regulations and approved by our investment policy, which include U.S. Treasury obligations, U.S. government agency obligations, certificates of deposit of insured domestic banks, mortgage-backed and mortgage-related securities, corporate notes having an investment rating of “A” or better, municipal bonds, and certain equity securities.
Current wording
Our securities portfolio is the second-largest component of earning assets and provides a significant source of revenue. Securities are classified as AFS, HTM, and equity securities. As of December 31, 2024, our total securities portfolio was 21.7% of assets. It is designed primarily to provide and maintain liquidity, generate a favorable return on investments without incurring unnecessary interest rate and credit risk, and complement our lending activities. We may invest in various types of liquid assets that are permissible under governing regulations and approved by our investment policy, which include U.S. Treasury obligations, U.S. government agency obligations, certificates of deposit of insured domestic banks, mortgage-backed and mortgage-related securities, corporate notes having an investment rating of “A” or better, municipal bonds, and certain equity securities.
Previous wording
Securities AFS and securities HTM are debt securities. Total debt securities were $711.3 million as of December 31, 2023, a decrease of $54.8 million, or 7.1%, from $766.1 million as of December 31, 2022.
Current wording
Securities AFS and securities HTM are debt securities. Total debt securities on the consolidated balance sheets were $681.9 million as of December 31, 2024, a decrease of $29.4 million, or 4.1%, from $711.3 million as of December 31, 2023.
Previous wording
Securities AFS are held for indefinite periods of time and are carried at estimated fair value. As of December 31, 2023, the estimated fair value of securities AFS was $570.1 million. The carrying values of our securities AFS are adjusted for unrealized gain or loss, and any unrealized gain or loss is reported on an after-tax basis as a component of AOCI in stockholders’ equity. The net unrealized loss on securities AFS decreased $12.0 million for the year ended December 31, 2023, resulting in a net unrealized loss of $62.2 million as of December 31, 2023, compared to a net unrealized loss of $74.1 million as of December 31, 2022.
Current wording
Securities AFS are held for indefinite periods of time and are carried at estimated fair value. As of December 31, 2024, the estimated fair value of securities AFS was $550.1 million. The carrying values of our securities AFS are adjusted for unrealized gain or loss, and any unrealized gain or loss is reported on an after-tax basis as a component of AOCI in stockholders’ equity. The net unrealized loss on securities AFS increased $1.0 million for the year ended December 31, 2024, resulting in a net unrealized loss of $63.2 million as of December 31, 2024, compared to a net unrealized loss of $62.2 million as of December 31, 2023.
Previous wording
Securities HTM, which we have the intent and ability to hold until maturity, are carried at amortized cost. As of December 31, 2023, the amortized cost of securities HTM was $141.2 million. Securities HTM had an unrealized loss of $22.2 million as of December 31, 2023, compared to an unrealized loss of $19.3 million as of December 31, 2022.
Current wording
Securities HTM, which we have the intent and ability to hold until maturity, are carried at amortized cost. As of December 31, 2024, the amortized cost of securities HTM was $131.8 million. Securities HTM had an unrealized loss of $22.8 million as of December 31, 2024, compared to an unrealized loss of $22.2 million as of December 31, 2023.
Previous wording
Investment activity for the year ended December 31, 2023, included $163.1 million in maturities, principal repayments, and calls, partially offset by $96.4 million of securities purchased. There were no sales of securities AFS, and there were no purchases or sales of securities HTM for the same period.
Current wording
Investment activity for the year ended December 31, 2024, included $157.3 million in maturities, principal repayments, and calls, partially offset by $128.9 million of securities purchased. There were no sales of securities AFS, and there were no purchases or sales of securities HTM for the same period.
Previous wording
Securities AFS purchased for the year ended December 31, 2023, consisted of $53.0 million in mortgage-backed securities, $23.7 million in U.S. agency securities, and $19.8 million in U.S. Treasury securities. The U.S. agency securities purchased had a yield of 5.78% and an average life of 5.22 years. The mortgage-backed securities purchased had a yield of 5.35% and an average life of 4.37 years. The U.S. Treasury securities purchased had a yield of 5.30% and an average life of 0.15 years.
Current wording
Securities AFS purchased for the year ended December 31, 2024, consisted of $94.6 million in mortgage-backed securities and $34.2 million in U.S. agency securities. The mortgage-backed securities purchased had a yield of 5.26% and an average life of 3.99 years. The U.S. agency securities purchased had a yield of 5.71% and an average life of 4.08 years.
Previous wording
The securities AFS portfolio tax-equivalent yield was 1.90% for the year ended December 31, 2023, compared to 1.75% for the year ended December 31, 2022. The increase in yield for the year ended December 31, 2023, was primarily due to reinvesting securities cash flows received during 2023 into new securities at higher yields.
Current wording
The securities portfolio tax-equivalent yield was 2.43% for the year ended December 31, 2024, compared to 1.90% for the year ended December 31, 2023. The increase in yield for the year ended December 31, 2024, was primarily due to reinvesting lower yielding securities cash flows received during 2024 into higher yielding securities.
Previous wording
The contractual maturity of mortgage-backed securities and collateralized mortgage obligations is not a reliable indicator of their expected lives because borrowers have the right to prepay their obligations at any time. Mortgage-backed securities and collateralized mortgage obligations are typically issued with stated principal amounts and are backed by pools of mortgage loans and other loans with varying maturities. The term of the underlying mortgages and loans may vary significantly due to the ability of a borrower to prepay. Monthly pay downs on mortgage-backed securities may cause the average lives of the securities to be much different than the stated contractual maturity. During a period of rising interest rates, fixed rate mortgage-backed securities are not likely to experience heavy prepayments of principal, and consequently, the average lives of these securities are typically lengthened. If interest rates begin to fall, prepayments may increase, thereby shortening the estimated average lives of these securities. As of December 31, 2023, the average life of our securities portfolio was 7.1 years with an estimated effective duration of 5.0 years. As of December 31, 2022, the average life of our securities portfolio was 6.8 years with an estimated effective duration of 5.0 years.
Current wording
The contractual maturity of mortgage-backed securities and collateralized mortgage obligations is not a reliable indicator of their expected lives because borrowers have the right to prepay their obligations at any time. Mortgage-backed securities and collateralized mortgage obligations are typically issued with stated principal amounts and are backed by pools of mortgage loans and other loans with varying maturities. The term of the underlying mortgages and loans may vary significantly due to the ability of a borrower to prepay. Monthly pay downs on mortgage-backed securities may cause the average lives of the securities to be much different than the stated contractual maturity. During a period of rising interest rates, fixed rate mortgage-backed securities are not likely to experience heavy prepayments of principal, and consequently, the average lives of these securities are typically lengthened. If interest rates begin to fall, prepayments may increase, thereby shortening the estimated average lives of these securities. As of December 31, 2024, the average life of our securities portfolio was 7.0 years with an estimated effective duration of 4.9 years. As of December 31, 2023, the average life of our securities portfolio was 7.1 years with an estimated effective duration of 5.0 years.
Previous wording
Equity securities are carried at fair value on the consolidated balance sheets with periodic changes in value recorded through the consolidated statements of income. As of December 31, 2022, equity securities had a fair value of $10.0 million with a recognized loss of $468,000 for the year ended December 31, 2022. The loss on equity securities during 2022 was due to a significant increase in interest rates. During 2023, we sold $7.0 million of the mutual fund. As of December 31, 2023, equity securities had a fair value of $3.0 million with a recognized loss of $14,000 for the year ended December 31, 2023.
Current wording
Equity securities are carried at fair value on the consolidated balance sheets with periodic changes in value recorded through the consolidated statements of income. As of December 31, 2024, equity securities had a fair value of $2.9 million with a recognized loss of $28,000 for the year ended December 31, 2024. As of December 31, 2023, equity securities had a fair value of $3.0 million with a recognized loss of $14,000 for the year ended December 31, 2023.
Showing the first 40 of 90 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
•On December 19, 2024, our Board of Directors approved the renewal of our stock repurchase program for 2025. The 2025 stock repurchase program authorizes us to purchase up to $5.0 million of our outstanding shares of common stock from January 1, 2025 through December 31, 2025.
Current report — wording carried from elsewhere
Reserve Bank of Atlanta are also available. Purchased funds from correspondent banks and overnight advances can be utilized to meet funding obligations.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
•NPAs were $2.6 million, or 0.08% of assets, as of December 31, 2023. As of December 31, 2023, the ACL was $21.3 million, or 1.07% of loans HFI.