Red River Bancshares, Inc. · NASDAQ:RRBI
Red River Bancshares — Gulf South Bank Conference 2023
43 slides from Red River Bancshares's conference presentation, May 2023
Slide 1: Investor Presentation – Gulf South Bank Conference
INVESTOR PRESENTATION GULF SOUTH BANK CONFERENCE MAY 7 - 9, 2023 As of March 31, 2023 Nasdaq: RRBI
Slide 2: Forward-Looking Statements and Non-GAAP Information
Forward-Looking Statements and Non-GAAP Information Statements in this presentation regarding our expectations and beliefs about our future financial performance and financial condition, as well as trends in our business and markets, are “forward-looking statements” within the meaning of Section 27A
Slide 3: Glossary of Terms
Glossary of Terms 1Q22 – First Quarter of 2022 CL(s) – Criticized Loans LPO – Loan production office 2Q22 – Second Quarter of 2022 CMBS – Commercial Mortgage-Backed LIBOR – London Inter-Bank Offered 3Q22 – Third Quarter of 2022 Securities Rate 4Q22 – Fourth Quarter of 2022 CPA – Certified Public Acc
Slide 4: Strong. Stable.
Strong. Stable. We’re your people. redriverbank.net 4
Slide 5: Company Overview
Company Overview Established in 1998 in Alexandria, Louisiana Completed IPO in May 2019 Nasdaq: RRBI Included in Russell 2000 Index As of March 31, 2023: Assets = $3.03 billion Loans HFI = $1.92 billion Securities = $765.2 million Deposits = $2.73 billion Market capitalization = $345.3 million Owner
Slide 6: Company Strengths
Company Strengths Consistent, long-term track record of financial results and steady growth Conservative credit culture with solid asset quality Granular, diversified, relationship-based loan and deposit portfolios Solid liquidity position No internet-sourced or brokered deposits No borrowings or de
Slide 7: History & Strategy
History & Strategy 7
Slide 8: Company History
Company History •Completed first stock offering of $12.4M 1998 •Red River Bank opened in Rapides Parish 1999 •Completed stock offering of $4.0M 2000 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 •Acquired Bank of Lecompte in Central Louisiana 2003 •Expanded into Northwest Market via banking
Slide 9: Book Value Growth
Book Value Growth $50.00 Realized Book Value Per Share1,2 $48.09 $44.00 Book Value Per Share2 $38.54 $38.00 Tangible Book Value Per Share1,2 $38.33 $32.00 $26.00 $20.00 $14.00 CAGR of 10.6% $8.00 $2.00 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 201
Slide 10: Leadership Team
Leadership Team • President, Chief Executive Officer, and Director • Founding management • Previously Executive Vice President of Rapides Bank & Trust Company, a subsidiary of First Commerce Corporation • Senior Vice President and Chief Credit Policy Officer1 • B.S. in Finance from Louisiana State U
Slide 11: Growth Strategies
Growth Strategies De Novo Growth Strategies Historical Asset Growth Method As of March 31, 2023 Disciplined, targeted investments for smart growth Target markets with significant disruption by competitors Concentrate on urban markets with growth potential Organic 94.7% Focus on markets where market
Slide 12: Guiding Principles – Relationship-Based Lending
Guiding Principles – Relationship-Based Lending Conservative Credit Culture Our founding management team developed the initial credit culture, predicated upon conservative underwriting principles carried over from regional bank experience. This same team has overseen the implementation and periodic
Slide 13: Digital Banking – Embracing Digital Innovation
Digital Banking – Embracing Digital Innovation Strategies and Recent Systems Robust commercial treasury systems P2P payments platform provided by Zelle® Online and mobile banking channels: Mobile deposit, digital receipts, Apple Pay, mobile wallet, and debit card controls Launched redesigned, contac
Slide 14: Competitive Landscape
Competitive Landscape Red River Bank holds 2.0% of Louisiana deposits1 60.0% of Louisiana deposits are held by large national or regional banks1 Large banks deemphasizing markets we serve In 1Q22, TD Bank Group announced an agreement to purchase First Horizon Deposits in Louisiana1 $144.0 billion 1
Slide 15: 2022 Overview
2022 Overview ae RED RIVER BANCSHARES, INC.
Slide 16: 2022 Financial and Operational Highlights
2022 Financial and Operational Highlights Assets decreased 4.4% to $3.08 billion Record high net income of $36.9 million for 2022 Non-PPP loans HFI1 increased 15.0% to $1.92 billion EPS (diluted) was $5.13 and ROA was Deposits decreased 3.8% to $2.80 billion 1.18% Repurchased 4,465 shares of common
Slide 17: 2022 Selected Income Comparison
2022 Selected Income Comparison For the Year Ended Variance … (do l l a r s i n tho usa nds) 12/31/22 .. 12/31/21 . $ . % … Interest and Dividend Income, excluding SBA PPP 1 $ 93,705 $ 71,566 $ 22,139 30.9% SBA PPP Loan Income 670 5,773 (5,103) (88.4%) Total Interest and Dividend Income $ 94,375 $ 7
Slide 18: First Quarter 2023
First Quarter 2023 18
Slide 19: First Quarter 2023 Financial Results
First Quarter 2023 Financial Results (do l l a r s i n tho usa nds, 1Q23 4Q22 1Q22 Slightly lower deposits and assets e x ce p t p e r sha r e da ta ) Net Income $ 9,598 $ 10,191 $ 7,392 Consistent loans EPS, Diluted $ 1.33 $ 1.42 $ 1.03 Book Value Per Share $ 38.54 $ 36.99 $ 36.91 Solid liquidity 1
Slide 20: Balance Sheet
Balance Sheet Loans HFI consistent at $1.92 billion As0of (do l l a r s i n tho usa nds) 3/31/23 . 12/31/22 Deposits decreased $67.6 million, or Assets 2.4%, due to customer deposit Cash and due from banks $ 34,491 $ 37,824 movement and activity, combined with seasonal drawdowns by public entity Int
Slide 21: Liquidity and Borrowing Availability
Liquidity and Borrowing Availability Liquidity Cash and cash equivalents = $229.2 million and 7.6% of assets as of 3/31/23 with $241.7 million average for 1Q23 Securities AFS, unpledged = $422.7 million Estimated cash flows from securities, assuming consistent interest rates $100.0 million principal
Slide 22: Securities
Securities Key Securities Metrics as of March 31, 2023 Securities AFS portfolio at fair value = $611.8 million, net of $71.2 million unrealized loss Securities HTM portfolio at amortized cost = $149.4 million Unrealized loss on HTM portfolio = $19.9 million 1Q23 yield = 1.69% Securities Effective du
Slide 23: Deposits
Deposits Deposits were $2.73 billion as of March 31, 2023, a decrease of $67.6 million, or 2.4%, compared to 4Q22, due to the changing interest rate environment impacting customer deposit movement and activity, combined with normal seasonal drawdowns by public entity customers Noninterest-bearing de
Slide 24: Deposit Characteristics
Deposit Characteristics Granular, diversified deposit portfolio and customer base throughout Louisiana Average deposit account size = $29,000 Public entity deposits Deposits by Customer Type As of March 31, 2023 Relationship-based Louisiana public entities (dollars in millions) Public entity deposit
Slide 25: Loan Portfolio Overview
Loan Portfolio Overview Loans HFI = $1.92 billion Largest Industry Concentrations As of March 31, 2023 Broad diversification by industry Health Care 8.4% Highest industry concentration = Health Care at 8.4% Investor 1-to-4 and Multifamily 4.8% Retail Trade 3.8% Average loan size excluding credit car
Slide 26: Health Care Loans
Health Care Loans Largest industry concentration Health care loans = $160.2 million, or 8.4%, of loans HFI Average loan size = $332,000 No shared national credits, real estate investment trusts, or assisted living facilities Skilled nursing care facilities operate under a certificate of need system
Slide 27: Commercial Real Estate Loans
Commercial Real Estate Loans CRE = $805.2 million, or 41.9% of loans HFI Investor-owned office properties = $59.7 million, or 3.1% of loans HFI C&D = $146.0 million, or 7.6% of loans HFI Low levels of CRE relative to state, regional, and national peers CRE concentration ratios as a % of risk-based c
Slide 28: CECL Update
CECL UPDATE Adopted CECL methodology as of January 1, 2023 $278,000 increase to ACL Established a $442,000 reserve for unfunded commitments Combined 3.5% increase to December 31, 2022 allowance for loan losses One-time $569,000, net of tax, decrease to stockholders’ equity No provision expense recor
Slide 29: Loans By Market
Loans By Market Expanding operations in Southwest, Acadiana, Northshore, and Capital Markets Opened an LDPO and a full-service banking center in the New Orleans Market Loans HFI Opportunities and Challenges to Future Loans Originated by geographic market As of March 31, 2023 (dollars in thousands) O
Slide 30: Asset Quality
Asset Quality NPAs consistent at $2.4 million NPAs / Assets NPAs to Assets = 0.08% (end of period) 0.09% No provision expense recorded in 1Q23 under the new CECL 0.08% 0.08% methodology ACL to loans HFI = 1.09% 0.03% 0.03% Net charge-offs to average loans since Red River Bank’s opening in 1999 = 0.0
Slide 31: Capital
Capital Well capitalized position Includes $68.5 million of net unrealized losses on securities AFS and HTM, 24.8% of capital as of March 31, 2023 Stock repurchase programs Repurchase Program renewed February 4, 2022 for $5.0 million and expired December 31, 2022 2022 – Repurchased 4,465 shares of c
Slide 32: Stockholders’ Equity Trends
Stockholders’ Equity Trends Total Stockholders’ Equity (dollars in millions) $310 2021 $299 $298 $300 $293 $290 $285 $280 $277 2023 $270 $265 $266 $260 $254 2022 $250 $243 $240 Q1 Q2 Q3 Q4 Realized Stockholders’ Equity1 (dollars in millions) $350 $345 2023 $340 $337 $330 2022 $327 $320 $317 $310 $30
Slide 33: Profitability Trends
Profitability Trends Net Income Earnings Per Share (Diluted) (dollars in thousands) $36,916 $5.13 $32,952 $4.51 $28,145 $3.83 $24,824 $3.49 $9,598 $1.33 2019 2020 2021 2022 1Q23 2019 2020 2021 2022 1Q23 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Efficiency Ratio Return on Average Assets 59.46% 1.30% 1.28% 1.22% 56.84%
Slide 34: Net Interest Margin FTE (1Q23 vs. 4Q22)
Net Interest Margin FTE (1Q23 vs. 4Q22) NIM FTE decreased 4 bps to 3.13% for 1Q23 due to deposit pressures in the banking industry Rates on new and renewed loans were 6.68% in 1Q23 compared to 6.25% in 4Q22 Increased selected deposit rates to retain and attract customers Customers moved deposits fro
Slide 35: Net Interest Margin Update
Net Interest Margin Update Rates and Betas – 1Q23 vs 4Q22 Loan yield – increased 16 bps to 4.54% (19% beta) Earning asset yield – increased 18 bps to 3.73% (21% beta) Interest-bearing transaction deposits – increased 28 bps to 0.93% (32% beta) Time deposits – increased 60 bps to 1.99% (69% beta) Cos
Slide 36: Noninterest Income (1Q23 vs. 4Q22)
Noninterest Income (1Q23 vs. 4Q22) Noninterest income decreased $279,000 to $4.3 million for 1Q23 Brokerage income decreased $206,000 from 4Q22, due to 4Q22 being benefitted by funds invested by new clients during that period Assets under management = $965.2 million Program ranked in the top 6% out
Slide 37: Operating Expenses (1Q23 vs. 4Q22)
Operating Expenses (1Q23 vs. 4Q22) Operating expenses increased $406,000 to $15.5 million for 1Q23 Personnel expenses increased $319,000 due to higher health insurance expenses Regulatory assessment expenses increased $129,000 due to the FDIC raising the deposit insurance assessment rate 2 bps, effe
Slide 38: Expansion Highlights
Expansion Highlights Southwest Market – Lake Charles, Louisiana 3Q22 – Expanded the Country Club Banking Center with a 3,600 square-foot addition 1Q23 – Closed Lake Street and moved staff to the Country Club Banking Center Acadiana Market – Lafayette, Louisiana 1Q22 – Remodeled and opened as a full-
Slide 39: Strategic Outlook
Strategic Outlook Continue building a strong, Louisiana-based, super-community bank by leveraging existing infrastructure and creating strong brand loyalty Continue disciplined capital management Manage liquidity Manage deposit pricing due to intensified rate pressure Manage net interest income and
Slide 40: Summary
Summary 2 Well positioned for the future Strong liquidity, borrowing capacity, and no debt Granular, diversified deposit portfolio Diversified loan portfolio with good asset quality Well capitalized with 11.02% leverage ratio as of March 31, 2023 40
Slide 41: Appendix
ae RED RIVER BANCSHARES, INC. APPENDIX
Slide 42: Non-GAAP Reconciliation
Non-GAAP Reconciliation As C of and for the Years Ended C (do l l a r s i n tho usa nds, e x ce pt pe r sha r e da ta ) 3/31/23 o 12/31/22 . 3/31/22 o 12/31/21 Tangible common equity Total stockholders' equity $ 276,640 $ 265,753 $ 264,874 $ 298,150 Adjustments: Intangible assets (1,546) (1,546) (1,
Slide 43: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) As of . C (do l l ar s i n tho usands, e x ce pt pe r shar e data) 3/31/23 / 12/31/22 . 9/30/22 . 6/30/22 o 3/31/22 Realized common equity Total stockholders' equity $ 276,640 $ 265,753 $ 243,413 $ 253,596 $ 264,874 Adjustments: Accumulated other comprehensive (in
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