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Press Release

RBB Bancorp Reports Fourth Quarter Earnings for 2017

January 22, 2018 at 5:15 PM EST
Conference Call and Webcast Now Scheduled for Tuesday, January 23, 2018 at 10:00 a.m. Pacific Time/1:00 p.m. Eastern Time
- Net income was $4.9 million or $0.29 diluted earnings per share, including a $2.4 million or $0.14 diluted earnings per share write-down of net deferred tax assets
- Total loans increased by $52.6 million, or 17.4% annualized growth, from the end of the prior quarter
- Total deposits increased by $19.0 million, or 5.7% annualized growth, from the end of the prior quarter

LOS ANGELES, Jan. 22, 2018 /PRNewswire/ -- RBB Bancorp (NASDAQ:RBB) and its subsidiaries, Royal Business Bank ("the Bank") and RBB Asset Management Company ("RAM"), collectively referred to herein as "the Company", announced financial results for the quarter ended December 31, 2017.

The Company reported net income of $4.9 million, or $0.29 diluted earnings per share, for the three months ended December 31, 2017, compared to net income of $6.6 million, or $0.42 diluted earnings per share, and $5.4 million, or $0.39 diluted earnings per share, for the three months ended September 30, 2017 and December 31, 2016, respectively. Included in the fourth quarter 2017 results is a $2.4 million, or $0.14 per diluted share, write-down related to the reduction in the value of the Company's net deferred tax assets as a result of the decrease in the federal corporate tax rate.

"We had a milestone year in 2017, completing our initial public offering and generating the highest level of net income in the history of the Company," said Mr. Alan Thian, Chairman, President and CEO of RBB Bancorp. "We continued our positive momentum in the fourth quarter, generating strong loan growth, an improvement in our efficiency ratio, and pristine asset quality."

"In 2018, we plan to continue expanding our franchise through a combination of organic growth, acquisitions and de novo branch openings. In addition, we are investing in the business to diversify our revenue mix and provide additional catalysts for generating organic growth.  Our Wealth Management unit is up and running.  In addition we have hired a specialist to start our income property unit, mainly apartments, mobile home parks and student housing properties. We are also finalizing the hiring of a new SBA manager who will lead our business development efforts, as well as recruit new team members," concluded Mr. Thian.

Key Performance Ratios

Net income of $4.9 million for the fourth quarter of 2017 produced an annualized return on average equity of 7.31% and an annualized return on average assets of 1.18%. The efficiency ratio for the fourth quarter of 2017 was 31.8%, compared to 39.0% for the prior quarter. Adjusted annualized return on average assets and average tangible common equity for the fourth quarter of 2017 was 1.51% and 10.60%, respectively compared to 1.55% and 11.97% for the third quarter of 2017. (See adjusted earnings metrics table on the last page).

Net Interest Income and Net Interest Margin

Net interest income, before provision for loan losses, was $17.9 million for the fourth quarter of 2017, compared to $14.7 million for the third quarter of 2017.  The increase was primarily attributable to a $43.3 million increase in average earning assets, combined with a 71 basis point increase in the net interest margin.  Accretion of purchase discounts contributed $2.7 million to net interest income in the fourth quarter of 2017, compared to $0.6 million in the third quarter of 2017. The increase in accretion income was primarily attributable to the early payoff of one large acquired loan.

Compared to the fourth quarter of 2016, net interest income, before provision for loan losses, increased from $13.5 million. The increase was primarily attributable to a $187.8 million increase in average earning assets, partially resulting from the proceeds from the Company's July 2017 IPO, combined with a 64 basis point increase in the net interest margin.

Net interest margin was 4.62% for the fourth quarter of 2017, an increase from 3.91% in the third quarter of 2017. The increase was primarily attributable to a 67 basis point increase in the yield on earning assets (primarily due to a favorable shift in the mix of earning assets and to higher loan discount accretion income). Loan discount accretion contributed 71 basis points to the net interest margin in the fourth quarter of 2017, compared to 17 basis points in the third quarter of 2017.

Compared to the fourth quarter of 2016, net interest margin increased from 3.98%. The increase was primarily attributable to a 62 basis point increase in the yield on earning assets, primarily due to a favorable shift in the mix of earning assets.

Noninterest Income

Noninterest income was $3.8 million for the fourth quarter of 2017, unchanged from $3.8 million in the third quarter of 2017.  In the fourth quarter, gain on loan sales increased by $366,000, but was offset by a $163,000 net decrease in service charges and loan servicing fees and a $142,000 decrease in gain on OREO sale.

The Company sold $90.3 million in mortgage loans for a net gain of $2.0 million during the quarter ended December 31, 2017, compared to $43.4 million in mortgage loans for a net gain of $1.0 million during the quarter ended September 30, 2017. The Company originated $120.5 million in mortgage loans for the quarter ended December 31, 2017, compared with $118.6 million during the quarter ended September 30, 2017.

The Company sold $16.6 million in SBA loans for a net gain of $1.0 million during the fourth quarter of 2017, compared to $22.6 million in SBA loans for a net gain of $1.6 million during the third quarter of 2017.  SBA loan originations for the fourth quarter were $1.9 million, compared to $19.3 million for the third quarter of 2017. The decrease in SBA loan originations was attributable to the departure of certain SBA business development officers.

Compared to the fourth quarter of 2016, noninterest income increased from $2.7 million. The increase was primarily attributable to an additional $1.2 million in gains on loan sales.

Noninterest Expense

Noninterest expense for the fourth quarter of 2017 was $6.9 million, compared to $7.2 million for the third quarter of 2017.  The decrease was primarily attributable to a $215,000 reduction in legal and professional expenses.

Compared to the fourth quarter of 2016, noninterest expense increased from $5.5 million. The $1.4 million increase was primarily due to an increase in salaries and employee benefits of $979,000 and an increase in other expenses of $491,000, partially offset by decreases in data processing costs.

Income Taxes

On December 22, 2017, "H.R.1", formerly known as the "Tax Cuts and Jobs Act", was signed into law. Among other items, H.R.1 reduces the federal corporate tax rate to 21% effective January 1, 2018.  As a result, RBB concluded that the reduction in the federal corporate tax rate required the revaluation of the Company's net deferred tax assets.  The Company's net deferred tax assets represents net operating loss carryforwards that will be used to reduce corporate taxes expected to be paid in the future as well as differences between the carrying amounts and tax bases of assets and liabilities carried on the Company's balance sheet.  The Company performed an analysis and determined that the value of the deferred tax assets had declined by $2.4 million.   To reflect the decline in the value of the deferred tax assets, the Company recorded additional tax expense of $2.4 million during the fourth quarter of 2017.

The effective tax rate for the three and twelve months ended December 31, 2017 was 60.5% and 45.5%, respectively, compared with 41.9% and 41.4% for the three and twelve months ended December 31, 2016, respectively.

As a result of the newly enacted tax legislation, the Company estimates that its effective tax rate for 2018 will be in the range of 29% and 31%. The estimated annual effective tax rate will vary depending upon tax-advantaged income, stock option exercises, and available tax credits.

Loan Portfolio

Loans held for investment, net of deferred fees and discounts, totaled $1.25 billion as of December 31, 2017, an increase of $52.6 million, or 17.4% annualized growth, from $1.2 billion at September 30, 2017, and an increase of $138.6 million, or 12.5%, from December 31, 2016.  The increase in loans held for investment from the end of the prior quarter was primarily attributable to growth in the commercial & industrial and residential real estate portfolios.

Mortgage loans held for sale were $125.8 million as of December 31, 2017, essentially unchanged from $125.7 million at September 30, 2017. 

Deposits

Deposits were at $1.34 billion at December 31, 2017, an increase of $19.0 million, or 5.7% annualized growth, from $1.32 billion at September 30, 2017, and an increase of $184.5 million, or 16.0%, from December 31, 2016. The increase in total deposits from the end of the prior quarter was attributable to growth in interest-bearing non-maturity deposits, partially offset by decreases in certificates of deposit.

Noninterest-bearing deposits decreased slightly to $285.7 million as of December 31, 2017, compared to $287.6 million at September 30, 2017 and $174.3 million at December 31, 2016. 

Asset Quality

Nonperforming assets totaled $2.9 million, or 0.17% of total assets at December 31, 2017, a decline from $4.2 million, or 0.26% of total assets, at September 30, 2017.  Nonperforming assets consist of Other Real Estate Owned (foreclosed properties), loans modified under troubled debt restructurings (TDRs), non-accrual loans, and loans past due 90 days or more and still accruing interest. Nonperforming assets exclude PCI loans acquired in prior acquisitions.

Loans held-for-investment 30 to 89 days past due increased to $2.9 million at December 31, 2017, up from $2.4 million at September 30, 2017.  One loan held-for-sale in the amount of $697,000 that was 30 to 89 days past due at December 31, 2017, was brought current in January.

Net charge-offs were 0.01% of average loans during the fourth quarter of 2017, consisting of $83,000 in gross charge-offs, and no loan loss recoveries.

The Company recorded provision for loan losses of $2.4 million for the fourth quarter of 2017, which was primarily attributable to the growth in total loans during the quarter.  During the fourth quarter a Tomato Bank loan was paid off, eliminating the associated credit discount and thus requiring an additional $1.0 million replenishment of our loan loss provision.

The allowance for loan losses totaled $13.8 million, or 1.10% of total loans, at December 31, 2017, compared with $11.4 million, or 0.95% of total loans, at September 30, 2017. 

Properties

Our headquarters office is located at 660 South Figueroa Street, Suite 1888, Los Angeles, California. It is in downtown Los Angeles at "Metro Center" and houses our risk management unit, including compliance and BSA groups, and our single-family residential mortgage group. The lease expires in June 2018. In October 2017, the Company signed a lease for a new headquarters office at 1055 Wilshire Boulevard, Suite 1220, Los Angeles, California, which we expect to occupy in June 2018.

Corporate Overview

RBB Bancorp is a $1.7 billion in assets bank holding company headquartered in Los Angeles, California. Its wholly-owned subsidiary, Royal Business Bank (the "Bank"), is a full service commercial bank which provides business banking services to the Chinese-American communities in Los Angeles County, Orange County, Ventura County and in Las Vegas, Nevada, including remote deposit, E-banking, mobile banking, commercial and investor real estate loans, business loans and lines of credit, commercial and industrial loans, SBA 7A and 504 loans, 1-4 single family residential loans, trade finance and a full range of depository accounts. The Bank has ten branches in Los Angeles County, located in downtown Los Angeles, San Gabriel, Torrance, Rowland Heights, Monterey Park, Silver Lake, Arcadia, Cerritos, Diamond Bar, and west Los Angeles, two branches in Ventura County, located in Oxnard and Westlake Village, and one branch in Las Vegas, Nevada. The Company's administrative and lending center is located at 123 E. Valley Blvd., San Gabriel, California 91176, and its finance and operations center is located at 7025 Orangethorpe Avenue, Buena Park, California 90621. RBB's website address is www.royalbusinessbankusa.com.

Conference Call

Management will hold a conference call at 10:00 a.m. PST/1:00 p.m. EST on Tuesday, January 23, 2018, to discuss the Company's fourth quarter 2017 financial results.

To listen to the conference call, please dial 1-833-659-7620, passcode 7797327. A replay of the call will be made available at 1-855-859-2056, passcode 7797327, approximately one hour after the conclusion of the call and will remain available through January 31, 2018 at 5:00 p.m. PST/8:00 p.m. EST.

The conference call will also be simultaneously webcast over the Internet; please visit our Royal Business Bank website at www.royalbusinessbankusa.com and click on the "Investors" tab to access the call from the site. Please access the website 15 minutes prior to the call to download any necessary audio software. This webcast will be recorded and available for replay on the Company's website approximately two hours after the conclusion of the conference call, and will be available on the website for approximately 12 months.

Disclosure

This press release contains certain non-GAAP financial disclosures for tangible common equity and tangible assets and adjusted earnings. The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of such financial performance. Please refer to the tables at the end of this release for a presentation of performance ratios in accordance with GAAP and a reconciliation of the non-GAAP financial measures to the GAAP financial measures.

Safe Harbor

Certain matters set forth herein (including the exhibits hereto) constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to the Company's current business plans and expectations and our future financial position and operating results. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance and/or achievements to differ materially from those projected. These risks and uncertainties include, but are not limited to, local, regional, national and international economic and market conditions and events and the impact they may have on us, our customers and our assets and liabilities; our ability to attract deposits and other sources of funding or liquidity; supply and demand for real estate and periodic deterioration in real estate prices and/or values in California or other states where we lend, including both residential and commercial real estate; a prolonged slowdown or decline in real estate construction, sales or leasing activities; changes in the financial performance and/or condition of our borrowers, depositors or key vendors or counterparties; changes in our levels of delinquent loans, nonperforming assets, allowance for loan losses and charge-offs; the costs or effects of acquisitions or dispositions we may make, whether we are able to obtain any required governmental approvals in connection with any such acquisitions or dispositions, and/or our ability to realize the contemplated financial or business benefits associated with any such acquisitions or dispositions; the effect of changes in laws, regulations and applicable judicial decisions (including laws, regulations and judicial decisions concerning financial reforms, taxes, banking capital levels, consumer, commercial or secured lending, securities and securities trading and hedging, compliance, employment, executive compensation, insurance, vendor management and information security) with which we and our subsidiaries must comply or believe we should comply; changes in estimates of future reserve requirements and minimum capital requirements based upon the periodic review thereof under relevant regulatory and accounting requirements, including changes in the Basel Committee framework establishing capital standards for credit, operations and market risk; inflation, interest rate, securities market and monetary fluctuations; changes in government interest rates or monetary policies; changes in the amount and availability of deposit insurance; cyber-security threats, including loss of system functionality or theft or loss of Company or customer data or money; political instability; acts of war or terrorism, or natural disasters, such as earthquakes, drought, or the effects of pandemic diseases; the timely development and acceptance of new banking products and services and the perceived overall value of these products and services by our customers and potential customers; the Company's relationships with and reliance upon vendors with respect to the operation of certain of the Company's key internal and external systems and applications; changes in commercial or consumer spending, borrowing and savings preferences or behaviors; technological changes and the expanding use of technology in banking (including the adoption of mobile banking and funds transfer applications); the ability to retain and increase market share, retain and grow customers and control expenses; changes in the competitive and regulatory environment among financial and bank holding companies, banks and other financial service providers; volatility in the credit and equity markets and its effect on the general economy or local or regional business conditions; fluctuations in the price of the Company's common stock or other securities; and the resulting impact on the Company's ability to raise capital or make acquisitions, the effect of changes in accounting policies and practices, as may be adopted from time-to-time by our regulatory agencies, as well as by the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard-setters; changes in our organization, management, compensation and benefit plans, and our ability to retain or expand our workforce, management team and/or our board of directors; the costs and effects of legal, compliance and regulatory actions, changes and developments, including the initiation and resolution of legal proceedings (such as securities, consumer or employee class action litigation), regulatory or other governmental inquiries or investigations, and/or the results of regulatory examinations or reviews; our ongoing relations with our various federal and state regulators, including the SEC, FDIC, FRB and California DBO; our success at managing the risks involved in the foregoing items and all other factors set forth in the Company's public reports, including its Annual Report as filed under Form S-1 for the year ended December 31, 2016, and particularly the discussion of risk factors within that document. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements except as required by law. Any statements about future operating results, such as those concerning accretion and dilution to the Company's earnings or shareholders, are for illustrative purposes only, are not forecasts, and actual results may differ.

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands)




December 31,


September 30,


June 30,


March 31,


December 31,



2017


2017


2017


2017


2016

Assets
















Cash and due from banks


$

70,048


$

69,552


$

104,366


$

147,547


$

74,213

Federal funds sold and other cash equivalents



80,000



96,500



58,500



20,000



44,500

Total cash and cash equivalents



150,048



166,052



162,866



167,547



118,713

Interest-bearing deposits in other financial institutions



600



100



100



100



345

Investment securities available for sale



64,957



55,697



40,241



39,155



39,277

Investment securities held to maturity



10,009



5,191



6,199



6,206



6,214

Mortgage loans held for sale



125,847



125,704



83,263



66,555



44,345

Loans held for investment



1,249,074



1,196,522



1,146,005



1,139,563



1,110,446

Allowance for loan losses



(13,773)



(11,420)



(10,627)



(14,186)



(14,162)

Net loans held for investment



1,235,301



1,185,102



1,135,378



1,125,377



1,096,284

Premises and equipment, net



6,583



6,300



6,441



6,538



6,585

Federal Home Loan Bank (FHLB) stock



6,770



6,770



6,770



6,770



6,770

Net deferred tax assets



6,086



9,517



10,214



11,068



11,097

Income tax receivable



272









Other real estate owned (OREO)



293



293



833



833



833

Cash surrender value of life insurance



32,782



32,578



32,358



32,142



21,958

Goodwill



29,940



29,940



29,940



29,940



29,940

Servicing assets



5,957



5,370



4,661



4,223



3,704

Core deposit intangibles



1,438



1,525



1,612



1,699



1,793

Accrued interest and other assets



14,176



12,575



12,723



7,595



7,693

Total assets


$

1,691,059


$

1,642,714


$

1,533,599


$

1,505,748


$

1,395,551

Liabilities and shareholders' equity
















Deposits:
















Noninterest-bearing demand


$

285,690


$

287,574


$

215,716


$

215,652


$

174,272

Savings, NOW and money market accounts



411,663



362,018



348,627



325,589



296,699

Time deposits



639,928



668,700



714,105



707,016



681,792

Total deposits



1,337,281



1,318,292



1,278,448



1,248,257



1,152,763

Reserve for unfunded commitments



282



489



517



985



604

Income tax payable









4,664



793

FHLB advances



25,000







10,000



Long-term debt



49,528



49,492



49,456



49,419



49,383

Subordinated debentures



3,424



3,402



3,379



3,357



3,334

Accrued interest and other liabilities



10,368



10,708



9,462



5,570



7,089

Total liabilities



1,425,883



1,382,383



1,341,262



1,322,252



1,213,966

Shareholders' equity:
















Shareholder's equity



265,620



260,468



192,427



183,695



181,852

Accumulated other comprehensive income (loss) - Net of tax



(444)



(137)



(90)



(199)



(267)

Total shareholders' equity



265,176



260,331



192,337



183,496



181,585

Total liabilities and stockholders' equity


$

1,691,059


$

1,642,714


$

1,533,599


$

1,505,748


$

1,395,551

 

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share amounts) 



Three Months Ended


December 31, 2017


September 30, 2017


December 31, 2016

Interest and dividend income:









Interest and fees on loans

$

20,297


$

17,200


$

15,846

Interest on interest-bearing deposits


209



371



98

Interest on investment securities


484



331



252

Dividend income on FHLB stock


119



118



384

Interest on federal funds sold and other


370



326



136

Total interest income


21,479



18,346



16,716

Interest expense:









Interest on savings deposits, NOW and money market accounts


684



649



486

Interest on time deposits


1,987



2,061



1,824

Interest on subordinated debentures and other


909



908



723

Interest on other borrowed funds


7





193

Total interest expense


3,587



3,618



3,226

Net interest income


17,892



14,728



13,490

Provision for loan losses


2,436



700



1,375

Net interest income after provision for loan losses


15,456



14,028



12,115

Noninterest income:









Service charges, fees and other


487



518



573

Gain on sale of loans


2,949



2,584



1,711

Loan servicing fees, net of amortization


151



314



231

Recoveries on loans acquired in business combinations


7



19



31

Increase in cash surrender value of life insurance


204



219



137

Gain on sale of OREO




142





3,798



3,796



2,683

Noninterest expense:









Salaries and employee benefits


4,216



4,178



3,237

Occupancy and equipment expenses


764



705



710

Data processing


358



458



530

Legal and professional


104



318



87

Amortization of intangibles


87



87



104

Other expenses


1,355



1,454



864



6,884



7,200



5,532

Income before income taxes


12,370



10,624



9,266

Income tax expense


7,481



4,013



3,880

Net income

$

4,889


$

6,611


$

5,386

Net income per share









Basic

$

0.31


$

0.45


$

0.42

Diluted

$

0.29


$

0.42


$

0.39

 

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share amounts) 



Twelve Months Ended


December 31,


2017


2016

Interest and dividend income:






Interest and fees on loans

$

70,289


$

65,888

Interest on interest-bearing deposits


940



334

Interest on investment securities


1,406



872

Dividend income on FHLB stock


472



800

Interest on federal funds sold and other


997



295

Total interest income


74,104



68,189

Interest expense:






Interest on savings deposits, NOW and money market accounts


2,382



1,975

Interest on time deposits


7,891



6,968

Interest on subordinated debentures and other


3,629



2,547

Interest on other borrowed funds


36



217

Total interest expense


13,938



11,707

Net interest income


60,166



56,482

Provision (recapture) for loan losses


(1,053)



4,974

Net interest income after provision (recapture) for loans losses


61,219



51,508

Noninterest income:






Service charges, fees and other


2,111



1,758

Gain on sale of loans


9,318



5,847

Loan servicing fees, net of amortization


722



615

Recoveries on loans acquired in business combinations


84



170

Increase in cash surrender value of life insurance


824



560

Gain on Sale of Securities




19

Gain on Sale of OREO


142



Loss on sale of fixed assets




(3)



13,201



8,966

Noninterest expense:






Salaries and employee benefits


16,821



13,784

Occupancy and equipment expenses


2,940



3,098

Data processing


1,622



2,018

Legal and professional


331



1,565

Amortization of intangibles


355



372

Other expenses


5,554



7,069



27,623



27,906

Income before income taxes


46,797



32,568

Income tax expense


21,269



13,489

Net income

$

25,528


$

19,079

Net income per share






Basic

$

1.81


$

1.49

Diluted

$

1.68


$

1.39

Cash Dividends declared per common share

$

0.38


$

0.20

 

RBB BANCORP AND SUBSIDIARIES

AVERAGE BALANCE SHEET AND NET INTEREST INCOME

(Unaudited)

(Dollars in thousands, except per share amounts) 




For the three months ended


December 31, 2017



September 30, 2017  



December 31, 2016


(tax-equivalent basis, dollars in thousands)

Average

Balance


Interest

& Fees


Yield /

Rate



Average

Balance


Interest

& Fees


Yield /

Rate



Average

Balance


Interest

& Fees


Yield /

Rate


Earning assets:



























Federal funds sold, cash equivalents & other (1)

$

155,403


$

698


1.78

%


$

202,005


$

815


1.60

%


$

126,300


$

618


1.95

%

Securities (2)



























Available for sale


61,386



424


2.74

%



43,075



276


2.54

%



35,710



191


2.13

%

Held to maturity


6,472



60


3.68

%



5,533



55


3.92

%



6,219



61


3.90

%

Mortgage loans held for sale


132,170



1,531


4.60

%



98,807



1,149


4.61

%



58,168



699


4.78

%

Loans held for investment: (3)



























Real estate


802,024



13,279


6.57

%



766,911



10,672


5.52

%



758,184



10,774


5.65

%

Commercial (4)


379,651



5,487


5.73

%



377,501



5,379


5.65

%



364,713



4,373


4.77

%

Total loans


1,181,675



18,766


6.30

%



1,144,412



16,051


5.56

%



1,122,897



15,147


5.37

%

Total earning assets


1,537,106


$

21,479


5.54

%



1,493,832


$

18,346


4.87

%



1,349,294


$

16,716


4.93

%

Noninterest-earning assets


104,056









96,555









79,651







Total assets

$

1,641,162








$

1,590,387








$

1,428,945







Interest-bearing liabilities



























NOW and money market deposits

$

357,972


$

643


0.71

%


$

333,471


$

606


0.72

%


$

269,972


$

443


0.65

%

Savings deposits


35,118



41


0.46

%



36,746



43


0.46

%



35,966



44


0.49

%

Time deposits


645,178



1,987


1.22

%



690,378



2,061


1.18

%



696,167



1,824


1.04

%

Total interest-bearing deposits


1,038,268



2,671


1.02

%



1,060,595



2,710


1.01

%



1,002,105



2,311


0.92

%

FHLB short-term advances


3,043



7


0.91

%









8,120



10


0.49

%

Long-term debt


49,505



848


6.80

%



49,470



848


6.80

%



49,359



849


6.84

%

Subordinated debentures


3,411



61


7.10

%



3,388



60


7.03

%



3,257



56


6.84

%

Total interest-bearing liabilities


1,094,227


$

3,587


1.30

%



1,113,453


$

3,618


1.29

%



1,062,841


$

3,226


1.21

%

Noninterest-bearing liabilities



























Noninterest-bearing deposits


268,588









227,855









174,967







Other noninterest-bearing liabilities


13,151









11,599









11,497







Total noninterest-bearing liabilities


281,738









239,454









186,464







Shareholders' equity


265,197









237,480









179,640







Total liabilities and shareholders' equity

$

1,641,162








$

1,590,387








$

1,428,945







Net interest income / interest rate spreads




$

17,892


4.24

%





$

14,728


3.58

%





$

13,490


3.72

%

Net interest margin







4.62

%








3.91

%








3.98

%








(1)

Includes income and average balances for FHLB stock, term federal funds, interest-bearing time deposits and other miscellaneous interest-bearing assets.

(2)

We have an insignificant amount of tax-exempt loans and securities, less than $1 million. Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis as of December 31, 2017 and 2016.

(3)

Average loan balances include nonaccrual loans and loans held for sale. Interest income on loans includes - amortization of deferred loan fees, net of deferred loan costs.

(4)

Includes purchased receivables, which are short term loans made to investment grade companies and are used for cash - management purposes by the Company.

 

RBB BANCORP AND SUBSIDIARIES


AVERAGE BALANCE SHEET AND NET INTEREST INCOME


(Unaudited)


(Dollars in thousands, except per share amounts) 






For the twelve months ended December 31,




2017



2016



(tax-equivalent basis, dollars in thousands)

Average

Balance


Interest

& Fees


Yield /

Rate



Average

Balance


Interest

& Fees


Yield /

Rate


Earning assets:


















Federal funds sold, cash equivalents & other (1)

$

152,674


$

2,409


1.58

%


$

91,979


$

1,429


1.55

%

Securities (2)


















Available for sale


46,035



1,170


2.54

%



30,464



624


2.05

%

Held to maturity


6,104



236


3.87

%



6,338



248


3.91

%

Mortgage loans held for sale


88,834



4,149


4.67

%



64,638



3,120


4.84

%

Loans held for investment: (3)


















Real estate


775,809



45,268


5.83

%



739,679



45,655


6.17

%

Commercial (4)


376,156



20,872


5.55

%



340,769



17,113


5.02

%

Total loans


1,151,965



66,140


5.74

%



1,080,448



62,768


5.81

%

Total earning assets


1,445,612


$

74,104


5.13

%



1,273,867


$

68,189


5.35

%

Noninterest-earning assets


95,906









83,367







Total assets

$

1,541,518








$

1,357,234







Interest-bearing liabilities


















NOW and money market deposits

$

315,550


$

2,220


0.70

%


$

271,320


$

1,813


0.67

%

Savings deposits


34,939



162


0.46

%



34,149



162


0.47

%

Time deposits


682,457



7,891


1.16

%



666,804



6,968


1.05

%

Total interest-bearing deposits


1,032,946



10,273


0.99

%



972,273



8,943


0.92

%

FHLB short-term advances


4,603



36


0.78

%



6,494



35


0.54

%

Long-term debt


49,451



3,395


6.87

%



37,113



2,547


6.86

%

Subordinated debentures


3,377



234


6.93

%



2,820



182


6.45

%

Total interest-bearing liabilities


1,090,377


$

13,938


1.28

%



1,018,700


$

11,707


1.15

%

Noninterest-bearing liabilities


















Noninterest-bearing deposits


221,425









151,441







Other noninterest-bearing liabilities


10,998









15,953







Total noninterest-bearing liabilities


232,424









167,394







Shareholders' equity


218,717









172,140







Total liabilities and shareholders' equity

$

1,541,518








$

1,358,234







Net interest income / interest rate spreads




$

60,166


3.85

%





$

56,482


4.20

%

Net interest margin







4.16

%








4.43

%








(1)

Includes income and average balances for FHLB stock, term federal funds, interest-bearing time deposits and other miscellaneous interest-bearing assets.

(2)

We have an insignificant amount of tax-exempt loans and securities, less than $1 million. Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis as of December 31, 2017 and 2016.

(3)

Average loan balances include nonaccrual loans and loans held for sale. Interest income on loans includes - amortization of deferred loan fees, net of deferred loan costs.

(4)

Includes purchased receivables, which are short term loans made to investment grade companies and are used for cash - management purposes by the Company.

 

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)



For the three months ended



December 31,



September 30,



December 31,



2017



2017



2016


Per share data (common stock)












Earnings












Basic

$

0.31



$

0.45



$

0.42


Diluted

$

0.29



$

0.42



$

0.39


Book value

$

16.67



$

16.49



$

14.16


Tangible book value

$

14.70



$

14.49



$

11.68


Weighted average shares outstanding












Basic


15,849,285




14,767,457




12,800,990


Diluted


16,981,009




15,851,929




13,695,900


Shares outstanding at period end


15,908,893




15,790,611




12,827,803


Performance ratios












Return on average assets, annualized


1.18

%



1.65

%



2.38

%

Return on average shareholders' equity, annualized


7.31

%



11.04

%



18.90

%

Return on average tangible common equity, annualized


8.30

%



12.73

%



22.84

%

Noninterest income to average assets, annualized


0.92

%



0.95

%



0.88

%

Noninterest expense to average assets, annualized


1.66

%



1.80

%



1.94

%

Yield on average earning assets


5.54

%



4.87

%



4.93

%

Cost of average deposits


0.81

%



0.83

%



0.78

%

Cost of average interest-bearing deposits


1.02

%



1.01

%



0.92

%

Cost of average interest-bearing liabilities


1.30

%



1.29

%



1.21

%

Accretion on loans to average earning assets


0.71

%



0.17

%



0.38

%

Net interest spread


4.24

%



3.58

%



3.72

%

Net interest margin


4.62

%



3.91

%



3.98

%

Efficiency ratio


31.74

%



38.87

%



37.65

%

 

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)



For the twelve months ended December 31,



2017



2016


Per share data (common stock)








Earnings








Basic

$

1.81



$

1.49


Diluted

$

1.68



$

1.39


Dividends declared

$

0.38



$

0.20


Book value

$

16.67



$

14.16


Tangible book value

$

14.70



$

11.68


Weighted average shares outstanding








Basic


14,078,281




12,800,990


Diluted


15,238,365




13,695,900


Shares outstanding at period end


15,908,893




12,827,803


Performance ratios








Return on average assets, annualized


1.66

%



1.41

%

Return on average shareholders' equity, annualized


11.67

%



11.08

%

Return on average tangible common equity, annualized


13.52

%



13.14

%

Noninterest income to average assets, annualized


0.86

%



0.66

%

Noninterest expense to average assets, annualized


1.79

%



2.06

%

Yield on average earning assets


5.13

%



5.35

%

Cost of average deposits


1.09

%



1.06

%

Cost of average interest-bearing deposits


0.99

%



0.92

%

Cost of average interest-bearing liabilities


1.28

%



1.15

%

Accretion on loans to average earning assets


0.23

%



0.64

%

Net interest spread


3.85

%



4.20

%

Net interest margin


4.16

%



4.43

%

Efficiency ratio


37.65

%



42.64

%

Common stock dividend payout ratio


20.95

%



13.42

%

 

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)



For the periods ending



December 31,



September 30,



December 31,



2017



2017



2016


Loan to deposit ratio


93.40

%



90.76

%



96.33

%

Core deposits / total deposits


74.09

%



73.37

%



67.83

%

Net non-core funding dependence ratio


18.11

%



22.81

%



12.20

%













Credit Quality Data:












Loans 30-89 days past due

$

3,636



$

2,432



$

343


Loans 30-89 days past due to total loans


0.29

%



0.19

%



0.03

%

Nonperforming loans

$

2,575



$

3,950



$

6,133


Nonperforming loans to total loans


0.21

%



0.33

%



0.55

%

Nonperforming assets

$

2,868



$

4,243



$

6,966


Nonperforming assets to total assets


0.17

%



0.26

%



0.50

%

Allowance for loan losses to total loans


1.10

%



0.95

%



1.28

%

Allowance for loan losses to nonperforming loans


534.87

%



289.12

%



230.91

%

Net charge-offs to average loans (for the quarter-to-date period)


0.01

%



-0.07

%



0.05

%













Regulatory and other capital ratios—Company












Tangible common equity to tangible assets


14.09

%



14.20

%



10.99

%

Tier 1 leverage ratio


14.77

%



14.91

%



10.99

%

Tier 1 common capital to risk-weighted assets


17.71

%



18.23

%



13.30

%

Tier 1 capital to risk-weighted assets


17.96

%



18.49

%



13.55

%

Total capital to risk-weighted assets


22.76

%



23.37

%



19.16

%













Regulatory capital ratios—bank only












Tier 1 leverage ratio


14.51

%



14.57

%



12.81

%

Tier 1 common capital to risk-weighted assets


17.66

%



18.13

%



15.81

%

Tier 1 capital to risk-weighted assets


17.66

%



18.13

%



15.81

%

Total capital to risk-weighted assets


18.73

%



19.08

%



17.06

%

 

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)



4Q



3Q



2Q



1Q



4Q


Quarterly Consolidated Statements of Earnings

2017



2017



2017



2017



2016


Interest income




















Loans, including fees

$

20,297



$

17,200



$

16,759



$

16,033



$

15,846


Investment securities and other


1,182




1,146




762




726




870


Total interest income


21,479




18,346




17,521




16,759




16,716


Interest expense




















Deposits


2,671




2,710




2,568




2,323




2,310


Interest on subordinated debentures and other


909




908




907




905




723


Other borrowings


7







12




17




193


Total interest expense


3,587




3,618




3,487




3,245




3,226


Net interest income before provision for loan losses


17,892