Red River Bancshares, Inc. (RRBI) Q3 2026 earnings review
Red River Bancshares grows loans fast, but troubled credits double
Red River Bancshares, a Louisiana community bank, posted record quarterly profit as commercial lending picked up, even as deposit competition kept its lending spread from widening. Net income rose 16% from a year ago to $12.6 million, helped by $60 million of net new loans and commercial deposit inflows. However, higher interest rates lowered the value of the bank's bond portfolio and reduced book value per share slightly from June.
| Net interest income | $29.9M +11.1% from a year ago |
|---|---|
| Profit per share | $1.90 +16.6% from a year ago |
| Loans held for investment | $2.32B +2.6% from last quarter |
| Q4 net interest margin outlook | Held expected to increase slightly from 3.61% |
⚖️ Verdict: 🟢 Bullish
The story got better because commercial loan growth returned after two quiet quarters, giving the bank higher-yielding assets to fund with its growing deposit base. Two cautions tempers the quarter: troubled assets more than doubled to $5.6 million from a single commercial borrower, and September's Federal Reserve rate hike means $191 million of maturing certificates of deposit will now renew at higher rates instead of lower ones.
The question now is whether repricing older loans at higher rates will outrun the rising cost of renewing those certificates of deposit. If loan yields pull ahead, the bank's lending margin expands; if deposit competition forces steeper payouts, the margin stays stuck near 3.61%. Fourth-quarter deposit costs and loan yields will settle it.
🐂 Bull Case
Commercial Lending Drove the Biggest Loan Gain in a Year
Red River Bancshares, a community bank with 28 branches across Louisiana, grew its loan book after barely moving in the first half of the year. Chief executive Blake Chatelain said loan demand rose across all of the bank's regional markets and lifted the current pipeline. Loans held for investment, which are loans the bank plans to keep on its balance sheet, rose by $59.5 million in the third quarter.
- Total loans held for investment: $2.32 billion, up 2.6% from last quarter and 6.9% from a year ago
- Commercial real estate loans: $953.7 million, up $39.7 million or 4.3% from last quarter
- Commercial and industrial business loans: $424.1 million, up $24.1 million or 6.0% from last quarter
- New and renewed loan rate: 6.47% average in the third quarter, up from 6.38% in the second quarter
That $59.5 million addition was four times the $15.3 million the lender added across the first six months of 2026 combined, by our math. Putting more money into loans rather than lower-yielding bank deposits pushed interest income on loans up by $1.0 million from the prior quarter. The bank also ended September with $93.8 million of unfunded construction commitments that will turn into funded loans over time.
What to watch: fourth-quarter loan additions alongside the $93.8 million of fixed-rate loans maturing by year-end. Another quarter above $40 million in net new loans would show that commercial demand is outrunning payoffs.
Revenue Grew Twice as Fast as Operating Costs
Red River expanded its staff to 390 employees from 381 in June as it hired bankers for new branches, yet revenue grew much faster than overhead. The efficiency ratio, which measures noninterest operating expenses as a share of total revenue so a lower figure is better, improved to 53.7% from 56.1% a year ago. Net revenue — net interest income plus fee income — rose 9.1% from a year ago by our math, while operating expenses rose 4.5%.
Personnel costs, the bank's largest expense line for salaries and benefits, rose 3.9% from a year ago to $10.9 million. By our math, that line fell by 1.6 percentage points as a share of net revenue, to 31.4% from 32.9% a year ago. What to watch: operating expenses in the first quarter of 2027, when two new branches in Lafayette and Slidell open. Holding the efficiency ratio below 55% after those openings would show the new offices are paying for themselves.
🐻 Bear Case
Rate Hikes Turn Maturing Deposits Into a Cost Headwind
"When 2026 began, we expected a slowly decreasing interest rate environment; however, that shifted to a ‘higher for longer’ rate environment during the summer," chief executive Blake Chatelain said. In September 2026, the Federal Reserve raised its benchmark federal funds rate by 0.25 percentage points to a range of 3.75% to 4.00%. Chatelain added that the balance sheet is positioned to benefit as the bank prices loans higher while managing deposit costs.
The quarter's deposit table cuts against that comfort. The bank is already "adjusting selected deposit rates in response to rate competition", and the average cost of deposits rose to 1.46% from 1.43% in the second quarter. More importantly, three months ago Red River planned to reprice maturing time deposits — certificates of deposit locked in for a set term — at lower rates. Now $190.7 million of time deposits paying 3.37% mature in the fourth quarter, and the bank expects to renew them at higher rates.
Higher loan yields barely kept ahead of deposit costs in the third quarter, leaving the net interest margin — the gap between what the bank earns on loans and securities and what it pays on funding — unchanged at 3.61%. In the fourth quarter, $93.8 million of fixed-rate loans at 5.85% mature, which is less than half the $190.7 million of time deposits resetting upward. What to watch: the average rate on time deposits in the fourth quarter. A rise above 3.55% would eat into the gain from repricing older loans.
Troubled Assets Doubled While the Credit Provision Fell
Nonperforming assets, which are loans no longer paying interest plus foreclosed property, more than doubled in the third quarter, rising $3.0 million or 113.4% to $5.6 million. Red River said the jump came primarily from "a commercial relationship that we are actively working to resolve". Troubled assets now equal 0.17% of total assets, up from 0.08% in June and the highest share in the past five quarters.
Despite that new problem credit and $59.5 million of loan growth, the lender cut its quarterly provision for credit losses — the charge taken against profit to build loan-loss reserves — to $500,000 from $750,000 in the second quarter. That decision added $250,000 to pre-tax profit compared with last quarter and let the allowance for credit losses slip to 1.08% of loans from 1.09%. What to watch: fourth-quarter net charge-offs and nonperforming loans. A charge-off on that commercial borrower would require a higher provision next quarter.
Bond Losses Reduced Book Value and Buybacks Stayed at Zero
When interest rates rose during the third quarter, the market value of Red River's bond portfolio fell. That pushed accumulated other comprehensive loss — the unrealized after-tax loss on bonds held for sale — to $58.1 million from $44.7 million in June. Because that $13.4 million hit exceeded the $12.6 million of net income after paying $1.6 million in dividends, total stockholders' equity fell 0.6% to $382.2 million.
Tangible book value per share, which is the bank's net worth per share excluding intangible assets, dropped to $57.81 from $58.17 in June. Meanwhile, the board authorized $10.0 million of share buybacks for 2026, yet the bank has bought zero shares through September 30 after repurchasing $11.1 million in 2025. What to watch: fourth-quarter buyback activity before the $10.0 million authorization expires on December 31, 2026. Letting the full year pass with zero purchases leaves excess capital sitting idle.
👓 Other Themes
Two More Louisiana Branches Open in Early 2027
Red River moved its downtown New Orleans branch and local lenders into the remodeled Energy Centre Building on July 20, 2026, incurring $46,000 of one-time moving costs. On October 22, the bank bought a former credit union building in Slidell for its second Northshore branch, and it is building a second Lafayette branch on Camellia Boulevard; both locations are scheduled to open in the first quarter of 2027.
Over $250 Billion of Louisiana Industrial Projects in the Pipeline
Chatelain highlighted more than $250.0 billion of capital projects across Louisiana that are "in the process of being built or in the planning stages". Earlier filings listed liquefied natural gas terminals, artificial intelligence data centers, and steel plants among these announcements. The bank expects those industrial investments to bring new residents and commercial activity to its local markets over the coming years.
💲 Other KPIs
Deposits rose $56.5 million, or 1.9%, from June and 4.3% from a year ago, reversing a $40.9 million dip in the second quarter. Commercial customer accounts drove the entire gain, rising $80.0 million or 6.3% from June, while consumer and public funds fell slightly. Noninterest-bearing checking accounts slipped to 30.9% of total deposits from 31.3% in June.
Fee income rose 3.9% from the second quarter after falling for two straight quarters, though it remained 2.0% below a year ago. A Small Business Investment Company (SBIC) partnership — a fund that backs small businesses — posted a $112,000 gain after a $291,000 loss in the second quarter, which offset a 24.8% drop in mortgage fees caused by higher mortgage rates.
Tier 1 risk-based capital to average assets — a core measure of a bank's capital cushion that ignores temporary bond price swings — rose from 12.77% in June and 12.17% a year ago. Retained profit has lifted this ratio in every quarter of the past year because the bank paid out only 13% of third-quarter earnings in dividends and bought back no shares.
🔮 Guidance
Unchanged. Red River still expects net interest income and its tax-adjusted net interest margin to edge up in the fourth quarter from the third quarter's $29.9 million and 3.61%. The bank has given this same directional outlook before every quarter of 2026, delivering margin gains in the second quarter and flat margins in the first and third quarters.
Unchanged. The bank expects to reinvest $93.8 million of maturing fixed-rate loans into higher-yielding loans — third-quarter new and renewed loans averaged 6.47%, or 0.62 percentage points above the maturing batch by our math. It also expects $529.5 million of floating-rate loans to reprice slightly higher after the September Federal Reserve rate hike and a possible fourth-quarter hike.
Cut. Three months ago, Red River saw maturing certificates of deposit as an opportunity to lower funding costs. After the September Federal Reserve rate hike, the bank now expects the $190.7 million of time deposits maturing in the fourth quarter at an average rate of 3.37% to renew at higher rates, and it warned that other checking and money market rates may also rise.
Unchanged. The lender expects $24.0 million of bond principal repayments yielding 3.64% during the fourth quarter, tracking in line with the $56.8 million it previously projected for the entire second half. Rather than committing to buy new bonds, Red River said it is evaluating reinvestment options alongside overall balance sheet needs.
❓ Key Questions
What industry and collateral back the new $3.0 million problem loan?
Nonperforming assets more than doubled to $5.6 million because of a single commercial relationship, yet the bank lowered its quarterly loan-loss provision to $500,000. Investors need to know whether real estate collateral covers the full balance without a charge-off.
Why has Red River used zero of its $10 million buyback plan?
The board approved $10.0 million for share repurchases in 2026 after buying $11.1 million in 2025, and Tier 1 capital sits at 12.82% of average assets. With two months left before the authorization expires, management has not said what keeps it on the sidelines.
What happened to the $31.8 million of criticized loans from June?
In the first half of 2026, criticized loans — credits showing early signs of weakness — doubled to $31.8 million, or 1.40% of total loans, as disclosed in the second-quarter filing. The third-quarter release did not include this figure; the upcoming Form 10-Q will show whether it shrank or grew.
What renewal rate is Red River paying on fourth-quarter time deposits?
The bank has $190.7 million of certificates of deposit maturing at 3.37% in the fourth quarter and now expects to renew them at higher rates. Knowing the current offering rate would show whether deposit costs will outrun the repricing of $93.8 million in fixed-rate loans.