Red River Bancshares surges on earnings beat, doubled buyback
Regional bank record net income up 24.9% as dividend increases 50% and repurchase program expands to $10M
Red River Bancshares shares climbed more than 2% on Friday after the Louisiana-based regional bank delivered stronger-than-expected quarterly earnings and rewarded investors with an expanded share repurchase program and higher dividend payouts.
The Alexandria bank holding company reported fourth quarter net income of $11.4 million, or $1.73 per diluted share, comfortably beating analyst estimates of $1.54 per share. Revenue of $33.2 million also exceeded the $31.3 million consensus projection. The strong quarterly performance capped a record year, with full-year 2025 net income reaching $42.8 million, a 24.9% increase from the prior year, according to company results released Thursday.
The earnings beat was driven by expanding net interest margins, a critical metric for bank profitability. Red River's net interest margin on a fully taxable equivalent basis increased 8 basis points to 3.51%, marking the ninth consecutive quarter of margin improvement. Net interest income grew 5% from the prior quarter to $28.2 million, boosted by a 3.5% increase in loans held for investment to $2.25 billion.
"We delivered record-high financial results for both the fourth quarter and full year 2025, reflecting our continued focus on organic growth and prudent balance sheet management," said Blake Chatelain, president and chief executive officer.
Beyond the earnings beat, Red River took multiple shareholder-friendly actions that amplified the positive market reaction. On December 18, the board of directors approved renewing and doubling the stock repurchase program to $10 million for 2026, up from $5 million in 2025. The company repurchased 211,748 shares in 2025 at a total cost of approximately $11.1 million, contributing $0.10 to earnings per share.
Simultaneously, Red River increased its dividend by 50% in 2025, paying total cash dividends of $0.54 per share compared to $0.36 in 2024. The bank paid a quarterly dividend of $0.15 per share in the fourth quarter, representing a 25% increase from the previous quarter's payout. For 2026, the annualized dividend sits at $0.60 per share.
The combination of expanding profitability and returning capital to shareholders has analysts maintaining a positive outlook on the stock. Raymond James rates Red River shares "Outperform" with a price target of $81.67, implying further upside from current levels. The broader analyst consensus remains a "Moderate Buy."
Red River's valuation appears attractive relative to both the broader market and financial sector, with a forward price-to-earnings ratio of approximately 11.3 times. The stock has been volatile over the past year, trading between $46.02 and $81.45, but currently sits near its 52-week high at $78.31.
Looking ahead to 2026, Red River provided guidance that net interest income and net interest margin are expected to increase slightly in the first quarter. The company projects that $261.4 million of fixed-rate loans and $434 million of floating-rate loans will mature or reprice in 2026, which it plans to redeploy into higher-yielding assets. Additionally, $573.9 million in time deposits are expected to mature during the year, providing opportunities to lower funding costs.
The bank's organic growth strategy continues with physical expansion. A new lending headquarters in Shreveport is expected to be completed in summer 2026, and a groundbreaking ceremony for a second full-service banking center in the Acadiana market occurred in early January.
Credit quality remains strong, with nonperforming assets totaling just $3.5 million, representing 0.11% of total assets. The provision for credit losses was $750,000 in the fourth quarter, primarily reflecting loan growth rather than deterioration in credit quality.
Despite concerns about the regional banking sector following last year's industry turmoil, Red River has demonstrated resilience through consistent loan growth, expanding margins, and strong credit metrics. The bank's community-focused model and strategic positioning in Louisiana markets have helped it navigate the challenging interest rate environment better than many peers.