Red River Bancshares, Inc. · NASDAQ:RRBI
Red River Bancshares — Janney Community Bank Forum 2022
44 slides from Red River Bancshares's conference presentation, Sep 19, 2022
Slide 1: Investor Presentation - Janney Community Bank Forum
INVESTOR PRESENTATION JANNEY COMMUNITY BANK FORUM SEPTEMBER 19 - 20, 2022 As of June 30, 2022 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 C&I – Commercial and industrial loans LIBOR – London Inter-Bank Offered 2Q22 – Second Quarter of 2022 CAGR – Compound annual growth rate Rate 3Q22 – Third Quarter of 2022 CECL – Current Expected Credit Losses M – Dollars in millions 1H22 – First Half of
Slide 4: Red River Bank
8 RED RIVER BANK Member Were your people. FDIC
Slide 5: Company Overview
Company Overview Fourth largest Louisiana-headquartered bank based on assets as of June 30, 2022 Named among the top 2.7% of all banks nationwide as "best-in-state"1 Established in 1998 in Alexandria, Louisiana Completed IPO in May 2019 Nasdaq: RRBI Included in Russell 2000 Index As of June 30, 2022
Slide 6: 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 7: Tangible Book Value Growth
Tangible Book Value Growth $50.00 Realized Book Value Per Share1,2 $44.00 $44.23 Book Value Per Share2 $38.00 $35.34 $32.00 Tangible Book Value Per Share1,2 $35.12 $26.00 $20.00 $14.00 $8.00 CAGR of 10.5% $2.00 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 8: Company Strengths
Company Strengths Consistent, long-term track record of financial results and steady growth Primarily de novo growth strategy with selective strategic expansion into new markets Conservative credit culture with solid asset quality Stable, low-cost core deposit base Strategic banking center network O
Slide 9: 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 10: Growth Strategies
Growth Strategies De Novo Growth Strategies Disciplined, targeted investments for smart growth Historical Asset Growth Method As of June 30, 2022 Target markets with significant disruption by competitors Concentrate on urban markets with growth potential Organic 94.9% Focus on markets where market s
Slide 11: Competitive Landscape
Competitive Landscape Red River Bank has 1.9% of Louisiana deposits1 61.9% of Louisiana deposits are held by large national or regional banks1 Competitor Disruption Deposits in Louisiana1 TD Bank Group announced in 1Q22 an agreement to $138.2 billion As of June 30, 2021 purchase First Horizon with e
Slide 12: Deposit Market Share as of June 30, 2021
Deposit Market Share as of June 30, 2021 1 Red River Bank Total % of Markets . Rank .2 Marketshare .3 $M .4 .$M. st Central Mark et 1 36.94% $ 1,484 $ 4,017 Northwest Mark et 6th 5.41% $ 556 $ 10,280 Capital Mark et 8th 2.11% $ 480 $ 22,777 S outhwest Mark et 14th 0.63% $ 43 $ 6,814 Northshore Mark
Slide 13: Expansion Highlights
Expansion Highlights Country Club Banking Center Southwest Market – Lake Charles, Louisiana 4Q20 – Purchased an existing banking center in Lake Charles, Louisiana 3Q21 – Remodeled and opened as the third location in the Southwest market and the 26th Red River Bank banking center on July 6, 2021 3Q22
Slide 14: Expansion Highlights (continued)
Expansion Highlights (continued) Covington Banking Center Northshore Market – Covington, Louisiana 2019 – Entered Northshore Market via LPO, opened a full- service banking center, and hired a market president 4Q21 – Hired an additional, experienced commercial lender Essen Banking Center Capital Mark
Slide 15: Expansion Highlights (continued)
Expansion Highlights (continued) New Orleans LDPO New Orleans Market – New Orleans, Louisiana Poydras Street LDPO 3Q21 – Hired a market president with extensive banking experience and knowledge of the New Orleans market 4Q21 – Hired seven additional local bankers and opened an LDPO in downtown New O
Slide 16: 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 17: 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 deposit account opening and mortgage applications Online and mobile banking channels: Mobile deposit, digital receipts, Apple Pay, mobile wa
Slide 18: Second Quarter 2022 Financial Results
Second Quarter 2022 Financial Results (do l l a r s i n tho usa nds, e x ce pt pe r sha r e da ta ) 2Q22 1Q22 2Q21 Net income increased $1.8 million from 1Q22 Net Income $ 9,147 $ 7,392 $ 8,239 EPS, Diluted $ 1.27 $ 1.03 $ 1.13 to $9.1 million for 2Q22 Book Value Per Share $ 35.34 $ 36.91 $ 40.21 1
Slide 19: Quarterly Selected Income Comparison
Quarterly Selected Income Comparison For the Quarter Ended Variance … (do l l a r s i n tho usa nds) 6/30/22 .. 3/31/22 . $ . % … Net Income $ 9,147 $ 7,392 $ 1,755 23.7% Net Interest Income $ 21,149 $ 18,728 $ 2,421 12.9% PPP Loan Income $ 150 $ 485 $ (335) (69.1%) Net Interest Income 1 (excluding
Slide 20: June 30, 2022 Year-to-date Financial Results
June 30, 2022 Year-to-date Financial Results Net income increased $235,000 to $16.5 million for Non-PPP loan income increased $3.8 million due to a 1H22 compared to 1H21. 1H21 included robust PPP $238.7 million increase in non-PPP loan average and mortgage loan income. balances Net interest income i
Slide 21: YTD Selected Income Comparison
YTD Selected Income Comparison For the Six Months Ended Variance … (do l l a r s i n tho usa nds) 6/30/22 .. 6/30/21 . $ . % … Net Income $ 16,539 $ 16,304 $ 235 1.4% Net Interest Income $ 39,877 $ 34,838 $ 5,039 14.5% PPP Loan Income $ 635 $ 3,195 $ (2,560) (80.1%) Net Interest Income (excluding PP
Slide 22: Balance Sheet
Balance Sheet 0 As of 0 Improved asset mix during 1H22 (do l l a r s i n tho usa nds) 6/30/22 . 3/31/22 . 12/31/21 Non-PPP loans HFI1 increased $105.6 Assets million, or 6.1%, from 1Q22 to $1.84 billion Cash and due from banks $ 39,339 $ 40,137 $ 23,143 for 2Q22 due to increased loan activity in Int
Slide 23: Loan Portfolio Overview
Loan Portfolio Overview Non-PPP loans1 = $1.84 billion Largest Industry Concentrations As of June 30, 2022 Broad diversification by industry (excluding PPP Loans)1 Health Care 8.0% Highest industry concentration = health care at 8.0% Investor 1-to-4 and Multifamily 4.7% (excluding PPP loans)1 Constr
Slide 24: 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 Non-PPP Loans HFI1 Opportunities and Challenges to Future Loans Originated by geographic market As of June 30, 2022 (in thousands) O
Slide 25: Health Care Loans
Health Care Loans Largest industry concentration Health care loans = $147.4 million, or 8.0%, of non-PPP loans HFI1 Average loan size = $323,000 No shared national credits, real estate investment trusts, or Health Care Loans by Subtype As of June 30, 2022 assisted living facilities Skilled nursing c
Slide 26: Energy Portfolio Loans
Energy Portfolio Loans Energy loans = $27.0 million, or 1.5%, of non-PPP loans HFI1 EP / Non-PPP Loans HFI1 2.9% No nonperforming energy loans 2.2% Average loan size = $644,000 1.5% 1.3% 1.2% Charge-offs since 2017 were $2.8 million No reserve-based lending 2018 2019 2020 2021 2Q22 Energy Portfolio
Slide 27: Commercial Real Estate Loans
Commercial Real Estate Loans CRE loans = $765.1 million, or 41.6%, of loans HFI; C&D = $139.0 million, or 7.5%, of loans HFI Low levels of CRE relative to state, regional, and national peers CRE concentration ratios as a % of risk-based capital are well below bank regulatory guidelines C&D Ratio = 4
Slide 28: Asset Quality
Asset Quality NPAs decreased slightly due to payments on nonaccrual loans Provision for loan loss expense was consistent from 2Q21 to 1Q22. The 2Q22 increase was due to potential economic challenges resulting from the current inflationary environment, changing monetary policy, and loan growth. Reser
Slide 29: CECL Update
CECL UPDATE CECL replaces the current incurred loss methodology with a life-of-loan concept Effective for RRBI on January 1, 2023 Requires consideration of historical loss experience and current conditions adjusted for economic forecasts CECL system implementation in process Based upon our prelimina
Slide 30: Paycheck Protection Program
Paycheck Protection Program PPP Loans = $1.3 million, or 0.1%, of total loans HFI $30,000 in deferred fees remain outstanding PPP forgiveness and income decreased in 2Q22 from the prior quarter Expect PPP loan forgiveness to be substantially completed in 3Q22 Total PPP Loans As of June 30, 2022 (dol
Slide 31: Securities
Securities Investment Activity 2Q22 Strategic changes made to the securities portfolio. Completed various restructuring transactions, including reclassification of $166.3 million, net of $17.9 million of unrealized loss, or 20.5%, of the securities portfolio from AFS to HTM. Total securities purchas
Slide 32: Liquidity and Debt Securities
Liquidity and Debt Securities Liquidity as of June 30, 2022 Interest-bearing deposits in other banks = $317.1 million, 10.2% of assets Future Liquidity and Debt Securities Strategies Monitor for potential deposit outflows and customer activity Monitor all sources of cash flow Redeploy securities cas
Slide 33: Deposits
Deposits Deposits decreased $77.5 million, or 2.6%, from 1Q22 to $2.85 billion for 2Q22, due to anticipated customer deposit activity Cost of deposits = 0.19% Total Deposits (in millions) Attractive core deposit base $2,910 $2,850 No internet-sourced or brokered deposits Deposit Mix As of June 30, 2
Slide 34: Capital
Capital Well capitalized Stock repurchase programs $3.0 million August 2020 program completed July 2021 $5.0 million September 2021 program completed November 2021 2021 – Repurchased 153,553 shares of common stock for $7.9 million New $5.0 million program effective February 2022 to December 2022 1Q2
Slide 35: Profitability Trends
Profitability Trends Net Income Earnings Per Share (Diluted) (in thousands) $4.51 $32,952 $3.83 $28,145 $3.41 $3.49 $24,824 $23,056 $2.30 $16,539 2018 2019 2020 2021 1H22 2018 2019 2020 2021 1H22 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Efficiency Ratio Return on Average Assets 1.29% 1.30% 1.22% 59.46% 58.86% 1.13%
Slide 36: Net Interest Margin FTE (2Q22 vs. 1Q22)
Net Interest Margin FTE (2Q22 vs. 1Q22) NIM FTE increased 29 bps to 2.75% for 2Q22 due to an improved asset mix and the higher interest rate environment NIM Opportunity NIM Challenges Asset sensitive Uncertainty regarding customer deposit activity Benefit in higher rate environment Competition for n
Slide 37: Noninterest Income (2Q22 vs. 1Q22)
Noninterest Income (2Q22 vs. 1Q22) Noninterest income increased $458,000 to $4.9 million for 2Q22 Loss on Equity Securities decreased $283,000 to $82,000 for 2Q22 Sold Equity Securities portfolio in April 2022 SBIC income increased $131,000 to $151,000 for 2Q22 Debit card income, net increased $120,
Slide 38: Operating Expenses (2Q22 vs. 1Q22)
Operating Expenses (2Q22 vs. 1Q22) Operating expenses increased $409,000 to $14.5 million for 2Q22 Data processing expense increased $248,000 to $564,000 for 2Q22, due to $230,000 periodic refund from our data processing center in 1Q22 Personnel expenses increased $122,000 to $8.6 million for 2Q22,
Slide 39: Strategic Outlook
Strategic Outlook Continue building a strong, Louisiana-based, super-community bank by leveraging existing infrastructure Continue de novo, organic expansion strategy Disciplined focus on personal, relationship banking and building shareholder value Manage net interest income and net interest margin
Slide 40: Summary
Summary 2 Improved profitability with increasing NIM % and net interest income Diversified loan portfolio with solid asset quality and allowance Strong core deposit base Continued organic expansion into largest Louisiana market for future growth Well capitalized with 9.73% leverage ratio as of June
Slide 41: Appendix
ae RED RIVER BANCSHARES, INC. APPENDIX
Slide 42: Non-GAAP Reconciliation
Non-GAAP Reconciliation As of and for the Years Ended C (do l l ar s i n tho usands, e x ce pt pe r shar e data) 6/30/22 0 3/31/22 . 12/31/21 o 6/30/21 Tangible common equity Total stockholders' equity $ 253,596 $ 264,874 $ 298,150 $ 292,924 Adjustments: Intangible assets (1,546) (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) 6/30/22 / 3/31/22 . 12/31/21 . 9/30/21 o 6/30/21 Non-PPP loans HFI Loans HFI $ 1,841,585 $ 1,741,026 $ 1,683,832 $ 1,622,593 $ 1,600,388 Adjustments: PPP loans, net (1,349) (6,397) (17,550) (45,962) (82,972) Non-PPP loans HFI
Slide 44: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) For the Three Months Ended C For the Six Months C Ended (do l l ar s i n tho usands) 6/30/22 . 3/31/22 o 6/30/22. o 6/30/21 Net interest income Net interest income $ 21,149 $ 18,728 $ 39,877 $ 34,838 Adjustments: PPP loan income (150) (485) (635) (3,195) Net inter
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