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Press Release

RBB Bancorp Reports Second Quarter Earnings for 2019

July 22, 2019 at 4:22 PM EDT

- Conference Call and Webcast Scheduled for Tuesday, July 23, 2019 at 11:00 a.m. Pacific Time/2:00 p.m. Eastern Time

- Net income was $10.1 million, or $0.50 diluted earnings per share

- Total deposits increased by $51.0 million, or 9.4% annualized growth, from the end of the prior quarter

- Sold approximately $175.0 million of mortgage loans for a net gain on sale of $2.5 million

LOS ANGELES, July 22, 2019 /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 June 30, 2019.

The Company reported net income of $10.1 million, or $0.50 diluted earnings per share, for the three months ended June 30, 2019, compared to net income of $10.4 million, or $0.51 diluted earnings per share, and $9.4 million, or 0.54 diluted earnings per share, for the three months ended March 31, 2019 and June 30, 2018, respectively.

"We are pleased with our operating performance for the second quarter," said Mr. Alan Thian, Chairman, President and CEO. "We made significant progress on our balance sheet initiatives, selling $175.0 million in residential mortgage loans during the quarter and reducing our reliance on wholesale funding by $235.0 million. Our focus on increasing core deposits helped drive our deposit growth and we continued to experience low credit costs and well-managed expenses.  These factors all contributed to another solid quarter of net income.

"Our integration of First American International Corp. is nearly complete. We have optimized its operational footprint, with the closing of two non-banking offices and one branch and the opening of one new branch. We have also renegotiated and entered into new contracts with our core system vendor.  We are making good progress on introducing our business deposit and commercial lending products to the First American branch network and anticipate future growth from that franchise.  Our last project is to implement a common residential mortgage origination platform for both regions.

"With our balance sheet repositioning nearly complete and given our loan pipeline, we are looking forward to resuming growth at a more normalized rate. In addition to organic growth opportunities, we plan to continue to expand our franchise through a combination of acquisitions and de novo branch openings," concluded Mr. Thian.

Key Performance Ratios

Net income of $10.1 million for the second quarter of 2019 produced an annualized return on average assets of 1.43%, an annualized return on average tangible common equity of 12.51%, and an annualized return on average equity of 10.42%.  This compares to an annualized return on average assets of 1.44%, an annualized return on average tangible common equity of 13.26%, and an annualized return on average equity of 10.98% for the first quarter of 2019.  The efficiency ratio for the second quarter of 2019 was 50.0%, compared to 50.9% for the prior quarter. Normalizing for the 1,035,000 shares issued for options in 2018 and the 3,011,787 shares issued as a result of the First American International Corp. acquisition, diluted earnings per share would have been $0.52 for the quarter ended June 30, 2019 and $0.48 for the quarter ended June 30, 2018.

Net Interest Income and Net Interest Margin

Net interest income, before provision for loan losses, was $24.3 million for the second quarter of 2019, compared to $25.9 million for the first quarter of 2019.  The $1.6 million decrease was primarily attributable to a $94.7 million decrease in average loans held for sale and a $6.3 million decrease in average total loans held for investment, partially offset by a $74.3 million decrease in average interest-bearing liabilities.  Net interest income was also impacted by a 20 basis point decrease in the net interest margin.  Accretion of purchase discounts contributed $753,000 to net interest income in the second quarter of 2019, compared to $1.1 million in the first quarter of 2019.

Compared to the second quarter of 2018, net interest income, before provision for loan losses, increased from $17.8 million. The increase was primarily attributable to a $1.0 billion increase in average earning assets, partially offset by a 73 basis point decrease in the net interest margin.

Net interest margin was 3.64% for the second quarter of 2019, a decrease from 3.84% in the first quarter of 2019. The decrease was primarily attributable to a 12 basis point increase in the cost of interest bearing liabilities, and a 14 basis point decrease in the yield on average earning assets resulting from lower average loan yields.  Loan discount accretion contributed 11 basis points to the net interest margin in the second quarter of 2019, compared to 16 basis points in the first quarter of 2019.

Noninterest Income

Noninterest income was $5.5 million for the second quarter of 2019, an increase of $1.3 million from $4.2 million in the first quarter of 2019.  The increase was driven by an increase in gain on loan sales of $922,000, higher service charges and fees of $402,000, higher net loan servicing fees of $59,000, and an increase in recoveries on loans acquired in business combinations of $49,000. These were partially offset by a decrease in unrealized gain on equity investments of $147,000.

The Company sold $175.0 million in mortgage loans for a net gain of $2.5 million during the second quarter of 2019, compared to $129.8 million in mortgage loan sales for a net gain of $1.9 million during the first quarter. The Company originated $28.3 million in mortgage loans for sale for the second quarter of 2019, compared with $49.0 million during the prior quarter.

The Company sold $10.0 million in SBA loans for a net gain of $616,000 during the second quarter of 2019, compared to $3.7 million in SBA loans sold for a net gain of $125,000 during the first quarter of 2019. 

The Company sold $1.6 million in commercial real estate loans for a net gain of $24,000 in the second quarter of 2019.  In the prior quarter, $8.8 million loans were sold for a gain of $154,000

Compared to the second quarter of 2018, noninterest income increased by $2.7 million from $2.8 million. The increase was primarily attributable to an increase of $1.0 million in gain on sale of loans and a $776,000 increase in service charges and fees, and an increase of $841,000 in net loan servicing fees, mostly attributable to the First American International Bank merger.

Noninterest Expense

Noninterest expense for the second quarter of 2019 was $14.9 million, compared to $15.3 million for the first quarter of 2019.  The $426,000 decrease was primarily attributable to a $949,000 decrease in salaries and employee benefits expenses and a $235,000 decrease in merger and other expenses, partially offset by a $422,000 increase in occupancy and equipment expenses, of which $225,000 was for prior period New York City property taxes, a $231,000 increase in legal and professional expenses and a $210,000 increase in data processing expenses, of which $82,000 was for duplicative services which were not yet converted.

Compared to the second quarter of 2018, noninterest expense increased from $8.2 million to $14.9 million. The $6.7 million increase was primarily due to an increase in salaries and employee benefits of $3.5 million, occupancy and equipment expenses of $1.8 million, data processing expenses of $732,000, and amortization of intangibles of $308,000.  The increase in salary expense is attributable to additional staff for expansion and the First American acquisition.  The increase in occupancy expense is mainly due to the First American International Corp. acquisition, including the new branch in Flushing, NY and our new Irvine location in Orange County, CA.

Income Taxes

The effective tax rate was 30.3%, including the tax impact for stock options exercised in the amount of $52,000 for the second quarter of 2019, 27.1%, including the impact of a deduction for stock options exercised in the amount of $92,000, for the first quarter, and 19.5% for the second quarter of 2018, which included the impact of a deduction for stock options exercised in the amount of $1.2 million

Loan Portfolio

Loans held for investment, net of deferred fees and discounts, totaled $2.1 billion as of June 30, 2019, a decrease of $28.0 million from March 31, 2019, and an increase of $808.4 million from June 30, 2018.  The slight decline in loans held for investment from the end of the first quarter was primarily due to loans sold that were previously classified as loans held for investment of $107.7 million, partially offset by an increase in loan production.

Mortgage loans held for sale were $249.6 million as of June 30, 2019, a decrease of $125.8 million from $375.4 million at March 31, 2019. 

Deposits

Deposits were $2.2 billion at June 30, 2019, an increase of $51.0 million from March 31, 2019, and an increase of $810.9 million from June 30, 2018. The increase in total deposits from the end of the prior quarter was primarily attributable to a $91.3 million increase in retail time deposits, partially offset by a decrease of $47.9 million in brokered time deposits.  We continue to experience customers moving funds to time deposits from savings, NOW and money market accounts, given the current expectations for lower interest rates. Non-maturity deposits decreased by $1.8 million in the quarter. As of June 30, 2019, deposits included $135.0 million in brokered CDs.

In the second quarter, noninterest-bearing deposits increased $16.7 million to $435.6 million as of June 30, 2019. The increase was due to a partial return of deposits that were withdrawn in the first quarter due to customer concern over uncertain international trade issues. Compared to June 30, 2018, noninterest-bearing deposits increased $129.3 million from $306.4 million

Asset Quality

Nonperforming assets totaled $8.6 million, or 0.31% of total assets at June 30, 2019, compared to $4.6 million, or 0.16%, of total assets at March 31, 2019. The increase in nonperforming assets was primarily due to the addition of a $2.9 million SBA loan. Nonperforming assets consist of Other Real Estate Owned, loans modified under troubled debt restructurings (TDR), non-accrual loans, and loans past due 90 days or more and still accruing interest. 

Loans held-for-investment 30 to 89 days past due decreased to $3.4 million at June 30, 2019, from $5.2 million at March 31, 2019. 

In the second quarter of 2019, there was one charge-off of $32,000 attributed to a commercial and industrial loan.  There were $109,000 in net recoveries in the first quarter.

The Company recorded a provision for loan losses of $357,000 for the second quarter of 2019, which was primarily attributable to a change in the loan mix during the quarter. 

The allowance for loan losses totaled $18.6 million, or 0.89% of total loans held for investment at June 30, 2019, compared with $18.2 million, or 0.86%, of total loans at March 31, 2019. 

Properties

Our headquarters office is located at 1055 Wilshire Blvd. in Los Angeles, California. In 2019, we have closed one non-banking office and one branch and opened one new branch in New York City, with one additional non-banking office vacant but still paying rent.

Corporate Overview

RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California.  The Company has total assets of $2.8 billion. Its wholly-owned subsidiary, the Bank is a full service commercial bank, which provides business banking services to the Chinese-American communities in Los Angeles County, Orange County and Ventura County in California, in Las Vegas, Nevada, and in Brooklyn, Queens, and Manhattan in New York.  Bank services include 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, automobile lending, trade finance, a full range of depository account products and wealth management services.  The Bank has ten branches in Los Angeles County, two branches in Ventura County, one branch in Irvine, California, one branch in Las Vegas, Nevada, and nine branches and two loan offices in Brooklyn, Queens and Manhattan in New York. The Company's administrative and lending center is located at 1055 Wilshire Blvd., Los Angeles, California 90017, and its finance and operations center is located at 7025 Orangethorpe Avenue, Buena Park, California 90621. The Company's website address is www.royalbusinessbankusa.com.

Conference Call

Management will hold a conference call at 11:00 a.m. Pacific time/2:00 p.m. Eastern time on Tuesday, July 23, 2019, to discuss the Company's second quarter 2019 financial results.

To listen to the conference call, please dial 1-833-659-7620 or 1-430-775-1348, passcode 4677186. A replay of the call will be made available at 1-855-859-2056 or 1-404-537-3406, passcode 4677186, approximately one hour after the conclusion of the call and will remain available through July 30, 2019.

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. This webcast will be recorded and available for replay on our website approximately two hours after the conclusion of the conference call.

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, including our recently completed acquisition of FAIC, whether we are able to obtain any required governmental or shareholder 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 10-K for the year ended December 31, 2018, 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)

 
   

June 30

   

March 31

   

December 31,

   

September 30,

   

June 30,

   

2019

   

2019

   

2018

   

2018

   

2018

Assets

                                     

Cash and due from banks

 

$

185,643

   

$

250,079

   

$

147,685

   

$

171,553

   

$

72,788

Federal funds sold and other cash equivalents

   

20,000

     

     

     

     

Total cash and cash equivalents

   

205,643

     

250,079

     

147,685

     

171,553

     

72,788

Interest-bearing deposits in other financial institutions

   

1,196

     

1,196

     

600

     

600

     

600

Investment securities available for sale

   

71,629

     

58,537

     

73,762

     

87,066

     

61,299

Investment securities held to maturity

   

8,733

     

9,449

     

9,961

     

9,974

     

9,986

Mortgage loans held for sale

   

249,596

     

375,430

     

434,522

     

378,943

     

281,755

Loans held for investment

   

2,092,438

     

2,120,413

     

2,142,015

     

1,381,218

     

1,284,082

Allowance for loan losses

   

(18,561)

     

(18,236)

     

(17,577)

     

(16,178)

     

(14,657)

Net loans held for investment

   

2,073,877

     

2,102,177

     

2,124,438

     

1,365,040

     

1,269,425

Premises and equipment, net

   

17,214

     

17,342

     

17,307

     

8,119

     

7,502

Federal Home Loan Bank (FHLB) stock

   

15,000

     

8,899

     

9,707

     

7,738

     

7,738

Net deferred tax assets

   

4,318

     

4,389

     

4,642

     

7,320

     

7,089

Income tax receivable

   

3,001

     

     

656

     

1,845

     

2,170

Other real estate owned (OREO)

   

2,075

     

2,056

     

1,101

     

293

     

293

Cash surrender value of life insurance

   

33,963

     

33,769

     

33,578

     

33,380

     

33,180

Goodwill

   

58,383

     

58,383

     

58,383

     

29,940

     

29,940

Servicing assets

   

17,587

     

17,288

     

17,370

     

6,248

     

6,134

Core deposit intangibles

   

6,828

     

7,212

     

7,601

     

1,203

     

1,280

Accrued interest and other assets

   

32,913

     

31,912

     

32,689

     

27,577

     

25,693

Total assets

 

$

2,801,956

   

$

2,978,118

   

$

2,974,002

   

$

2,136,839

   

$

1,816,872

Liabilities and shareholders' equity

                                     

Deposits:

                                     

Noninterest-bearing demand

 

$

435,629

   

$

418,953

   

$

438,764

   

$

287,274

   

$

306,362

Savings, NOW and money market accounts

   

462,448

     

480,959

     

579,247

     

462,737

     

424,261

Time deposits

   

1,337,257

     

1,284,428

     

1,126,030

     

814,953

     

693,783

Total deposits

   

2,235,334

     

2,184,340

     

2,144,041

     

1,564,964

     

1,424,406

Reserve for unfunded commitments

   

621

     

639

     

688

     

550

     

483

Income tax payable

   

1,610

     

3,009

     

     

     

FHLB advances

   

40,000

     

275,000

     

319,500

     

210,000

     

40,000

Long-term debt, net of debt issuance costs

   

103,878

     

103,793

     

103,708

     

49,637

     

49,601

Subordinated debentures

   

9,590

     

9,548

     

9,506

     

3,492

     

3,470

Accrued interest and other liabilities

   

17,103

     

16,986

     

21,938

     

13,198

     

12,710

Total liabilities

   

2,408,136

     

2,593,315

     

2,599,381

     

1,841,841

     

1,530,670

Shareholders' equity:

                                     

Shareholder's equity

   

393,758

     

385,395

     

375,887

     

296,514

     

287,509

Non-controlling interest

   

72

     

72

     

72

     

     

Accumulated other comprehensive income (loss) - Net of tax

   

(10)

     

(664)

     

(1,338)

     

(1,516)

     

(1,307)

Total shareholders' equity

   

393,820

     

384,803

     

374,621

     

294,998

     

286,202

Total liabilities and stockholders' equity

 

$

2,801,956

   

$

2,978,118

   

$

2,974,002

   

$

2,136,839

   

$

1,816,872

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share amounts) 

 
   

For the three months ended

   

June 30, 2019

   

March 31, 2019

   

June 30, 2018

Interest and dividend income:

                     

Interest and fees on loans

 

$

34,240

   

$

35,839

   

$

21,132

Interest on interest-bearing deposits

   

515

     

468

     

209

Interest on investment securities

   

685

     

588

     

603

Dividend income on FHLB stock

   

379

     

198

     

134

Interest on federal funds sold and other

   

124

     

113

     

206

Total interest income

   

35,943

     

37,206

     

22,284

Interest expense:

                     

Interest on savings deposits, NOW and money market accounts

   

1,238

     

1,294

     

998

Interest on time deposits

   

7,797

     

5,953

     

2,410

Interest on subordinated debentures and long term debt

   

1,929

     

1,933

     

920

Interest on other borrowed funds

   

662

     

2,114

     

129

Total interest expense

   

11,626

     

11,294

     

4,457

Net interest income

   

24,317

     

25,912

     

17,827

Provision for loan losses

   

357

     

550

     

700

Net interest income after provision for loan losses

   

23,960

     

25,362

     

17,127

Noninterest income:

                     

Service charges, fees and other

   

1,222

     

820

     

446

Gain on sale of loans

   

3,120

     

2,198

     

2,085

Loan servicing fees, net of amortization

   

899

     

840

     

58

Recoveries on loans acquired in business combinations

   

55

     

6

     

5

Unrealized gain on equity investments

   

     

147

     

Increase in cash surrender value of life insurance

   

194

     

191

     

199

Gain on sale of fixed assets

   

6

     

     

     

5,496

     

4,202

     

2,793

Noninterest expense:

                     

Salaries and employee benefits

   

8,169

     

9,118

     

4,709

Occupancy and equipment expenses

   

2,674

     

2,252

     

834

Data processing

   

1,219

     

1,009

     

487

Legal and professional

   

656

     

425

     

423

Office expenses

   

294

     

336

     

192

Marketing and business promotion

   

316

     

362

     

262

Insurance and regulatory assessments

   

284

     

298

     

213

Amortization of intangibles

   

385

     

388

     

77

OREO expenses

   

81

     

81

     

Merger expenses

   

15

     

71

     

183

Other expenses

   

806

     

985

     

811

     

14,899

     

15,325

     

8,191

Income before income taxes

   

14,557

     

14,239

     

11,729

Income tax expense

   

4,415

     

3,859

     

2,292

Net income

 

$

10,142

   

$

10,380

   

$

9,437

                       

Net income per share

                     

Basic

 

$

0.51

   

$

0.52

   

$

0.58

Diluted

 

$

0.50

   

$

0.51

   

$

0.54

Cash Dividends declared per common share

 

$

0.10

   

$

0.10

   

$

0.09

Weighted-average common shares outstanding

                     

Basic

   

20,074,651

     

20,047,716

     

16,407,439

Diluted

   

20,445,013

     

20,436,741

     

17,322,800

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share amounts) 

 
   

For the six months ended

   

June 30, 2019

   

June 30, 2018

Interest and dividend income:

             

Interest and fees on loans

 

$

70,079

   

$

40,206

Interest on interest-earning deposits

   

983

     

395

Interest on investment securities

   

1,273

     

1,163

Dividend income on FHLB stock

   

577

     

253

Interest on federal funds sold and other

   

237

     

443

 Total interest income

   

73,149

     

42,460

Interest expense:

             

Interest on savings deposits, NOW and money market accounts

   

2,532

     

1,700

Interest on time deposits

   

13,750

     

4,456

Interest on subordinated debentures and long term debt

   

3,862

     

1,833

Interest on other borrowed funds

   

2,776

     

200

Total interest expense

   

22,920

     

8,189

Net interest income

   

50,229

     

34,271

Provision for loan losses

   

907

     

884

Net interest income after provision for loans losses

   

49,322

     

33,387

Noninterest income:

             

Service charges, fees and other

   

2,042

     

912

Gain on sale of loans

   

5,318

     

3,900

Loan servicing fees, net of amortization

   

1,739

     

27

Recoveries on loans acquired in business combinations

   

61

     

11

Unrealized gain on equity investments

   

147

     

Increase in cash surrender value of life insurance

   

385

     

398

Gain on sale of fixed assets

   

6

     

     

9,698

     

5,248

Noninterest expense:

             

Salaries and employee benefits

   

17,287

     

9,660

Occupancy and equipment expenses

   

4,926

     

1,626

Data processing

   

2,228

     

960

Legal and professional

   

1,081

     

680

Office expenses

   

630

     

363

Marketing and business promotion

   

678

     

465

Insurance and regulatory assessments

   

582

     

422

Amortization of intangibles

   

773

     

158

OREO expenses

   

162

     

7

Merger expenses

   

86

     

223

Other expenses

   

1,791

     

1,916

     

30,224

     

16,480

Income before income taxes

   

28,796

     

22,155

Income tax expense

   

8,274

     

3,872

Net income

 

$

20,522

   

$

18,283

               

Net income per share

             

Basic

 

$

1.02

   

$

1.13

Diluted

 

$

1.00

   

$

1.06

Cash Dividends declared per common share

 

$

0.20

   

$

0.17

Weighted-average common shares outstanding

             

Basic

   

20,061,258

     

16,246,063

Diluted

   

20,440,900

     

17,248,125

RBB BANCORP AND SUBSIDIARIES

 

AVERAGE BALANCE SHEET AND NET INTEREST INCOME

 

(Unaudited)

 

(Dollars in thousands, except per share amounts)

 
   
   

For the three months ended

 
   

June 30, 2019

 

March 31, 2019

   

June 30, 2018

 
   

Average

   

Interest

   

Yield /

   

Average

   

Interest

   

Yield /

   

Average

   

Interest

   

Yield /

 

(tax-equivalent basis, dollars in thousands)

 

Balance

   

& Fees

   

Rate

   

Balance

   

& Fees

   

Rate

   

Balance

   

& Fees

   

Rate

 

Earning assets:

                                                                   

Federal funds sold, cash equivalents & other (1)

 

$

120,818

   

$

1,018

   

3.38

%

 

$

92,692

   

$

779

   

3.41

%

 

$

79,065

   

$

549

     

2.78

%

Securities (2)

                                                                   

Available for sale

   

87,347

     

610

   

2.80

%

   

68,708

     

508

   

3.00

%

   

74,836

     

519

     

2.78

%

Held to maturity

   

9,127

     

84

   

3.69

%

   

9,629

     

89

   

3.75

%

   

9,992

     

92

     

3.68

%

Mortgage loans held for sale

   

355,168

     

4,245

   

4.79

%

   

449,828

     

5,490

   

4.95

%

   

209,423

     

2,428

     

4.65

%

Loans held for investment: (3)

                                                                   

Real estate

   

1,763,749

     

24,394

   

5.55

%

   

1,764,813

     

24,486

   

5.63

%

   

885,630

     

12,635

     

5.72

%

Commercial (4)

   

347,236

     

5,601

   

6.47

%

   

352,428

     

5,864

   

6.75

%

   

377,077

     

6,069

     

6.46

%

Total loans

   

2,110,985

     

29,995

   

5.70

%

   

2,117,241

     

30,350

   

5.81

%

   

1,262,707

     

18,704

     

5.94

%

Total earning assets

   

2,683,445

   

$

35,952

   

5.37

%

   

2,738,098

   

$

37,216

   

5.51

%

   

1,636,023

   

$

22,292

     

5.47

%

Noninterest-earning assets

   

166,719

                   

176,813

                   

100,442

                 

Total assets

 

$

2,850,164

                 

$

2,914,911

                 

$

1,736,465

                 
                                                                     

Interest-bearing liabilities

                                                                   

NOW and money market deposits

 

$

387,363

   

$

1,188

   

1.23

%

 

$

413,952

   

$

1,241

   

1.22

%

 

$

387,116

   

$

968

     

1.00

%

Savings deposits

   

97,584

     

50

   

0.21

%

   

100,623

     

53

   

0.21

%

   

29,499

     

30

     

0.40

%

Time deposits

   

1,338,631

     

7,797

   

2.34

%

   

1,139,214

     

5,953

   

2.12

%

   

666,493

     

2,410

     

1.45

%

Total interest-bearing deposits

   

1,823,578

     

9,035

   

1.99

%

   

1,653,789

     

7,247

   

1.78

%

   

1,083,108

     

3,408

     

1.26

%

FHLB short-term advances

   

95,220

     

662

   

2.79

%

   

339,406

     

2,114

   

2.53

%

   

34,011

     

129

     

1.52

%

Long-term debt

   

103,826

     

1,748

   

6.75

%

   

103,742

     

1,747

   

6.83

%

   

49,583

     

849

     

6.87

%

Subordinated debentures

   

9,564

     

181

   

7.59

%

   

9,523

     

186

   

7.92

%

   

3,459

     

71

     

8.26

%

Total interest-bearing liabilities

   

2,032,188

     

11,626

   

2.29

%

   

2,106,460

     

11,294

   

2.17

%

   

1,170,161

     

4,457

     

1.53

%

Noninterest-bearing liabilities

                                                                   

Noninterest-bearing deposits

   

408,219

                   

405,190

                   

271,920

                 

Other noninterest-bearing liabilities

   

19,183

                   

19,987

                   

12,930

                 

Total noninterest-bearing liabilities

   

427,402

                   

425,177

                   

284,850

                 

Shareholders' equity

   

390,574

                   

383,274

                   

281,454

                 

Total liabilities and shareholders' equity

 

$

2,850,164

                 

$

2,914,911

                 

$

1,736,465

                 

Net interest income / interest rate spreads

         

$

24,326

   

3.08

%

         

$

25,922

   

3.34

%

         

$

17,835

     

3.94

%

Net interest margin

                 

3.64

%

                 

3.84

%

                   

4.37

%

           

(1)

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

(2)

Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis.

(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.

BANCORP AND SUBSIDIARIES

AVERAGE BALANCE SHEET AND NET INTEREST INCOME

(Unaudited)

(Dollars in thousands, except per share amounts) 

   
   

For the six months ended June 30,

 
   

2019

 

2018

 
   

Average

   

Interest

   

Yield /

   

Average

   

Interest

   

Yield /

 

(tax-equivalent basis, dollars in thousands)

 

Balance

   

& Fees

   

Rate

   

Balance

   

& Fees

   

Rate

 

Earning assets:

                                             

Federal funds sold, cash equivalents & other (1)

 

$

111,601

   

$

1,798

   

3.25

%

 

$

85,509

   

$

1,092

     

2.58

%

Securities (2)

                                             

Available for sale

   

78,079

     

1,118

   

2.89

%

   

72,453

     

996

     

2.77

%

Held to maturity

   

9,377

     

173

   

3.72

%

   

9,997

     

184

     

3.71

%

Mortgage loans held for sale

   

402,237

     

9,735

   

4.88

%

   

184,315

     

4,266

     

4.67

%

Loans held for investment: (3)

                                             

Real estate

   

1,764,278

     

48,879

   

5.59

%

   

865,589

     

23,732

     

5.53

%

Commercial (4)

   

349,818

     

11,465

   

6.61

%

   

380,740

     

12,208

     

6.47

%

Total loans

   

2,114,097

     

60,344

   

5.76

%

   

1,246,329

     

35,940

     

5.82

%

Total earning assets

   

2,715,391

   

$

73,168

   

5.43

%

   

1,598,603

   

$

42,478

     

5.36

%

Noninterest-earning assets

   

166,967

                   

95,754

                 

Total assets

 

$

2,882,358

                 

$

1,694,357

                 
                                               

Interest-bearing liabilities

                                             

NOW and money market deposits

 

$

400,584

   

$

2,430

   

1.22

%

 

$

365,909

   

$

1,636

     

0.90

%

Savings deposits

   

99,095

     

102

   

0.21

%

   

30,709

     

65

     

0.43

%

Time deposits

   

1,239,474

     

13,750

   

2.24

%

   

653,837

     

4,456

     

1.37

%

Total interest-bearing deposits

   

1,739,153

     

16,282

   

1.89

%

   

1,050,455

     

6,157

     

1.18

%

FHLB short-term advances

   

216,638

     

2,776

   

2.58

%

   

32,565

     

200

     

1.24

%

Long-term debt

   

103,784

     

3,495

   

6.79

%

   

49,567

     

1,698

     

6.91

%

Subordinated debentures

   

9,544

     

367

   

7.75

%

   

3,449

     

135

     

7.92

%

Total interest-bearing liabilities

   

2,069,119

   

$

22,920

   

2.23

%

   

1,136,036

   

$

8,190

     

1.45

%

Noninterest-bearing liabilities

                                             

Noninterest-bearing deposits

   

406,713

                   

269,957

                 

Other noninterest-bearing liabilities

   

19,582

                   

12,114

                 

Total noninterest-bearing liabilities

   

426,295

                   

282,071

                 

Shareholders' equity

   

386,944

                   

276,250

                 

Total liabilities and shareholders' equity

 

$

2,882,358

                 

$

1,694,357

                 

Net interest income / interest rate spreads

         

$

50,248

   

3.20

%

         

$

34,288

     

3.91

%

Net interest margin

                 

3.73

%

                   

4.33

%

           

(1)

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

(2)

Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis.

(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

 
   

June 30,

   

March 31,

   

June 30,

 
   

2019

   

2019

   

2018

 

Per share data (common stock)

                       

Earnings

                       

Basic

 

$

0.51

   

$

0.52

   

$

0.58

 

Diluted

 

$

0.50

   

$

0.51

   

$

0.54

 

Dividends declared

 

$

0.10

   

$

0.10

   

$

0.09

 

Basic, excluding merger expense

 

$

0.51

   

$

0.52

   

$

0.58

 

Diluted, excluding merger expense

 

$

0.50

   

$

0.51

   

$

0.55

 

Book value

 

$

19.61

   

$

19.17

   

$

17.30

 

Tangible book value

 

$

16.37

   

$

15.90

   

$

15.41

 

Weighted average shares outstanding

                       

Basic

   

20,074,651

     

20,047,716

     

16,407,439

 

Diluted

   

20,445,013

     

20,436,741

     

17,322,800

 

Shares outstanding at period end

   

20,077,524

     

20,073,991

     

16,544,627

 

Performance ratios

                       

Return on average assets, annualized

 

1.43

%

   

1.44

%

   

2.18

%

Return on average shareholders' equity, annualized

 

10.42

%

   

10.98

%

   

13.45

%

Return on average tangible common equity, annualized

 

12.51

%

   

13.26

%

   

15.13

%

Noninterest income to average assets, annualized

 

0.77

%

   

0.58

%

   

0.65

%

Noninterest expense to average assets, annualized

 

2.10

%

   

2.13

%

   

1.89

%

Yield on average earning assets

 

5.37

%

   

5.51

%

   

5.47

%

Cost of average deposits

 

1.62

%

   

1.43

%

   

1.01

%

Cost of average interest-bearing deposits

 

1.99

%

   

1.78

%

   

1.26

%

Cost of average interest-bearing liabilities

 

2.29

%

   

2.17

%

   

1.53

%

Accretion on loans to average earning assets

 

0.11

%

   

0.16

%

   

0.23

%

Net interest spread

 

3.08

%

   

3.34

%

   

3.94

%

Net interest margin

 

3.64

%

   

3.84

%

   

4.37

%

Efficiency ratio

 

49.97

%

   

50.89

%

   

39.72

%

Common stock dividend payout ratio

 

19.61

%

   

19.69

%

   

16.67

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

 
   

For the six months ended June 30,

 
   

2019

   

2018

 

Per share data (common stock)

               

Earnings

               

Basic

 

$

1.02

   

$

1.13

 

Diluted

 

$

1.00

   

$

1.06

 

Basic, excluding merger expense

 

$

1.03

   

$

1.14

 

Diluted, excluding merger expense

 

$

1.01

   

$

1.07

 

Dividends declared

 

$

0.20

   

$

0.17

 

Book value

 

$

19.61

   

$

17.30

 

Tangible book value

 

$

16.37

   

$

15.41

 

Weighted average shares outstanding

               

Basic

   

20,061,258

     

16,246,063

 

Diluted

   

20,440,900

     

17,248,125

 

Shares outstanding at period end

   

20,077,524

     

16,544,627

 

Performance ratios

               

Return on average assets, annualized

 

1.44

%

   

2.18

%

Return on average shareholders' equity, annualized

 

10.70

%

   

13.35

%

Return on average tangible common equity, annualized

 

12.88

%

   

15.05

%

Noninterest income to average assets, annualized

 

0.68

%

   

0.62

%

Noninterest expense to average assets, annualized

 

2.11

%

   

1.96

%

Yield on average earning assets

 

5.43

%

   

5.36

%

Cost of average deposits

 

1.53

%

   

0.94

%

Cost of average interest-bearing deposits

 

1.89

%

   

1.18

%

Cost of average interest-bearing liabilities

 

2.23

%

   

1.45

%

Accretion on loans to average earning assets

 

0.13

%

   

0.11

%

Net interest spread

 

3.20

%

   

3.90

%

Net interest margin

 

3.73

%

   

4.33

%

Efficiency ratio

 

50.43

%

   

41.70

%

Common stock dividend payout ratio

 

19.61

%

   

16.01

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

 
   

As of

 
   

June 30,

   

March 31,

   

June 30,

 
   

2019

   

2019

   

2018

 

Loan to deposit ratio

 

93.61

%

 

97.07

%

 

90.15

%

Core deposits / total deposits

 

67.22

%

 

66.79

%

   

82.43

%

Net non-core funding dependence ratio

   

18.46

%

   

22.81

%

   

17.43

%

                         

Credit Quality Data:

                       

Loans 30-89 days past due

 

$

4,230

   

$

5,666

   

$

1,064

 

Loans 30-89 days past due to total loans

 

0.20

%

   

0.27

%

   

0.08

%

Nonperforming loans

 

$

6,354

   

$

2,586

   

$

6,553

 

Nonperforming loans to total loans

 

0.30

%

   

0.12

%

   

0.51

%

Nonperforming assets

 

$

8,429

   

$

4,642

   

$

6,846

 

Nonperforming assets to total assets

 

0.30

%

   

0.16

%

   

0.38

%

Allowance for loan losses to total loans

 

0.89

%

 

0.86

%

 

1.14

%

Allowance for loan losses to nonperforming loans

 

292.12

%

 

705.18

%

 

223.67

%

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

   

0.01

%

   

-0.02

%

   

0.00

%

                         

Regulatory and other capital ratios—Company

                       

Tangible common equity to tangible assets

   

12.01

%

   

10.96

%

   

14.28

%

Tier 1 leverage ratio

   

12.19

%

   

11.61

%

   

15.23

%

Tier 1 common capital to risk-weighted assets

   

16.96

%

   

16.29

%

   

18.29

%

Tier 1 capital to risk-weighted assets

   

17.45

%

   

16.77

%

   

18.54

%

Total capital to risk-weighted assets

   

23.77

%

   

22.98

%

   

23.16

%

                         

Regulatory capital ratios—bank only

                       

Tier 1 leverage ratio

   

14.17

%

   

13.43

%

   

14.84

%

Tier 1 common capital to risk-weighted assets

   

20.31

%

   

19.39

%

   

18.06

%

Tier 1 capital to risk-weighted assets

   

20.31

%

   

19.39

%

   

18.06

%

Total capital to risk-weighted assets

   

21.30

%

   

20.35

%

   

19.14

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

 
   

2nd Quarter

   

1st Quarter

   

4th Quarter

   

3rd Quarter

   

2nd
Quarter

 

Quarterly Consolidated Statements of Earnings

 

2019

   

2019

   

2018

   

2018

   

2018

 

Interest income

                                       

Loans, including fees

 

$

34,240

   

$

35,839

   

$

33,829

   

$

23,445

   

$

21,132

 

Investment securities and other

   

1,703

     

1,367

     

1,352

     

1,028

     

1,152

 

Total interest income

   

35,943

     

37,206

     

35,181

     

24,473

     

22,284

 

Interest expense

                                       

Deposits

   

9,035

     

7,247

     

6,661

     

4,139

     

3,408

 

Interest on subordinated debentures and other

   

1,929

     

1,747

     

1,325

     

925

     

920

 

Other borrowings

   

662

     

2,300

     

1,613

     

793

     

129

 

Total interest expense

   

11,626

     

11,294

     

9,599

     

5,857

     

4,457

 

Net interest income before provision for loan losses

   

24,317

     

25,912

     

25,582

     

18,616

     

17,827

 

Provision for loan losses

   

357

     

550

     

1,890

     

1,695

     

700

 

Net interest income after provision for loan losses

   

23,960

     

25,362

     

23,692

     

16,921

     

17,127

 

Noninterest income

   

5,496

     

4,202

     

5,489

     

2,105

     

2,793

 

Noninterest expense

   

14,899

     

15,325

     

15,503

     

8,654

     

8,191

 

Earnings before income taxes

   

14,557

     

14,239

     

13,678

     

10,372

     

11,729

 

Income taxes

   

4,415

     

3,859

     

4,188

     

2,041

     

2,292

 

Net income

 

$

10,142

   

$

10,380

   

$

9,490

   

$

8,331

   

$

9,437

 

Net income per common share - basic

 

$

0.51

   

$

0.52

   

$

0.49

   

$

0.50

   

$

0.58

 

Net income per common share - diluted

 

$

0.50

   

$

0.51

   

$

0.48

   

$

0.48

   

$

0.54

 

Cash dividends declared per common share

 

$

0.10

   

$

0.10

   

$

-

   

$

0.09

   

$

0.09

 

Cash dividends declared

 

$

2,007

   

$

2,007

   

$

-

   

$

1,489

   

$

1,470

 

Yield on average assets, annualized

 

1.43

%

   

1.44

%

   

1.35

%

   

1.73

%

   

2.18

%

Yield on average earning assets

 

5.37

%

   

5.51

%

   

5.45

%

   

5.40

%

   

5.47

%

Cost of average deposits

 

1.62

%

   

1.43

%

   

1.28

%

   

1.17

%

   

1.01

%

Cost of average interest-bearing deposits

 

1.99

%

   

1.78

%

   

1.61

%

   

1.46

%

   

1.26

%

Cost of average interest-bearing liabilities

 

2.29

%

   

2.17

%

   

1.91

%

   

1.75

%

   

1.53

%

Accretion on loans to average earning assets

 

0.11

%

   

0.16

%

   

0.14

%

   

0.05

%

   

0.23

%

Net interest margin

 

3.64

%

   

3.84

%

   

3.88

%

   

4.11

%

   

4.37

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

 

Loan Portfolio Detail

 

As of June 30,

2019

   

As of March 31,

2019

   

As of December 31,

2018

   

As of  September 30,

2018

   

As of  June 30,

2018

(dollars in thousands)

 

$

   

%

   

$

   

%

   

$

   

%

   

$

   

%

   

$

   

%

Loans:

                                                                             

Commercial and industrial

 

$

283,919

     

13.6

   

$

269,556

     

12.7

   

$

304,084

     

14.2

   

$

299,817

     

21.7

   

$

311,186

     

24.2

SBA

   

79,474

     

3.8

     

82,571

     

3.9

     

84,500

     

3.9

     

87,406

     

6.3

     

97,142

     

7.6

Construction and land development

   

118,807

     

5.7

     

125,686

     

5.9

     

113,235

     

5.3

     

110,710

     

8.0

     

94,901

     

7.4

Commercial real estate (1)

   

756,452

     

36.2

     

756,313

     

35.7

     

758,721

     

35.4

     

524,174

     

38.0

     

492,993

     

38.4

Single-family residential mortgages

   

853,404

     

40.7

     

885,951

     

41.8

     

881,249

     

41.2

     

359,111

     

26.0

     

287,860

     

22.4

Other loans

   

382

     

0.0

     

336

     

0.0

     

226

     

0.0

     

     

     

     

Total loans (2)

 

$

2,092,438

     

100.0

   

$

2,120,413

     

100.0

   

$

2,142,015

     

100.0

   

$

1,381,218

     

100.0

   

$

1,284,082

     

100.0

Allowance for loan losses

   

(18,561)

             

(18,236)

             

(17,577)

             

(16,178)

             

(14,657)

       

Total loans, net

 

$

2,073,877

           

$

2,102,177

           

$

2,124,438

           

$

1,365,040

           

$

1,269,425

       
           

(1)

Includes non-farm and non-residential loans, multi-family residential loans and non-owner occupied single family residential loans.

(2)

Net of discounts and deferred fees and costs.

   

Three months ended

   

Six months ended

Change in Allowance for Loan Losses

 

June 30,

   

June 30,

(dollars in thousands)

 

2019

   

2018

   

2019

   

2018

Beginning balance

 

$

18,236

   

$

13,957

   

$

17,577

   

$

13,773

Additions to the allowance charged to expense

   

357

     

700

     

907

     

884

Recoveries (charged-off) on loans

   

(32)

     

     

77

     

Ending balance

   

18,561

     

14,657

     

18,561

     

14,657

Tangible Book Value Reconciliations (non-GAAP)

The tangible book value per share is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company's performance. The following is a reconciliation of tangible book value to the Company shareholders' equity computed in accordance with GAAP, as well as a calculation of tangible book value per share as of June 30, 2019 and 2018.

   

June 30,

 

(dollars in thousands, except per share data)

 

2019

   

2018

 
                 

Tangible common equity:

               

Total shareholders' equity

 

$

393,820

   

$

286,202

 

Adjustments

               

Goodwill

   

(58,383)

     

(29,940)

 

Core deposit intangible

   

(6,828)

     

(1,280)

 

Tangible common equity

 

$

328,609

   

$

254,982

 

Tangible assets:

               

Total assets-GAAP

 

$

2,801,956

   

$

1,816,872

 

Adjustments

               

Goodwill

   

(58,383)

     

(29,940)

 

Core deposit intangible

   

(6,828)

     

(1,280)

 

Tangible assets

 

$

2,736,745

   

$

1,785,652

 

Common shares outstanding

   

20,077,524

     

16,544,627

 

Tangible common equity to tangible assets ratio

   

12.01

%

   

14.28

%

Tangible book value per share

 

$

16.37

   

$

15.41

 

SOURCE RBB Bancorp

Related Links

http://www.royalbusinessbankusa.com