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Press Release

RBB Bancorp Reports Second Quarter Earnings for 2022

July 25, 2022 at 4:05 PM EDT

Conference Call and Webcast Scheduled for Tuesday, July 26, 2022 at 11:00 a.m. Pacific Time/2:00 p.m. Eastern Time

Second Quarter 2022 Highlights

  • Net income of $15.5 million, or $0.80 diluted earnings per share, increased $860,000, or 5.9%, from the prior quarter and increased $2.1 million, or 15.7%, from the second quarter of 2021
  • Loans grew by $35.9 million, or 4.8% annualized, from the end of the prior quarter
  • Declared $0.14 per share quarterly dividend

LOS ANGELES--(BUSINESS WIRE)--Jul. 25, 2022-- 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, 2022.

The Company reported net income of $15.5 million, or $0.80 diluted earnings per share, for the three months ended June 30, 2022, compared to net income of $14.6 million, or $0.74 diluted earnings per share, and $13.4 million, or $ 0.67 diluted earnings per share, for the three months ended March 31, 2022 and June 30, 2021, respectively.

“Our performance in the second quarter demonstrated the strength of our differentiated business model as the Bank delivered strong earnings, improving margins, and loan growth,” said David Morris, Interim President and CEO of RBB Bancorp. “Expenses were higher than expected due to the ongoing costs related to the Board of Directors investigation, which we expect to wind down in the third quarter. We were pleased to announce several new hires and re-hires during the quarter and look forward to working with our new colleagues to build shareholder value.”

"The excellent second quarter results demonstrate the value of Royal Business Bank," said Dr. James Kao, Chairman of RBB Bancorp. “The Bank is well-positioned to continue to generate attractive returns and shareholder value.”

Key Performance Ratios

Net income of $15.5 million for the second quarter of 2022 produced an annualized return on average assets ("ROA") of 1.60%, an annualized return on average tangible common shareholders' equity ("ROTCE") of 15.89%, and an annualized return on average shareholders' equity ("ROE") of 13.30%. This compares to an annualized ROA of 1.39%, an annualized ROTCE of 14.91%, and an annualized ROE of 12.59% for the first quarter of 2022. The efficiency ratio for the second quarter of 2022 was 43.47%, compared to 42.90% for the prior quarter.

Net Interest Income and Net Interest Margin

Net interest income, before provision for loan losses, was $37.1 million for the second quarter of 2022, compared to $34.5 million for the first quarter of 2022. The $2.6 million increase was primarily attributable to 1.25% increase in interest rate by Federal Reserve Bank in the second quarter of 2022. Accretion of purchase discounts from prior acquisitions contributed $75,000 to net interest income in the second quarter of 2022, compared to $246,000 in the first quarter of 2022.

Compared to the second quarter of 2021, net interest income, before provision for loan losses, increased $7.0 million from $30.1 million. The increase was primarily attributable to a $289.3 million increase in average loans and a 1.25% increase in interest rate by the Federal Reserve Bank in the second quarter of 2022. The increases in average earning assets were primarily due to increased loan originations.

Net interest margin was 4.08% for the second quarter of 2022, an increase of 59 basis points from 3.49% in the first quarter of 2022. Loan discount accretion contributed 1 basis point to the net interest margin in the second quarter of 2022, compared to 2 basis points in the first quarter of 2022.

Noninterest Income

Noninterest income was $3.4 million for the second quarter of 2022, an increase of $478,000 from $2.9 million in the first quarter of 2022. The increase was primarily driven by a $757,000 increase in gain on sale of corporate real estate, a $272,000 decrease in loss on derivatives and a $94,000 increase in recoveries on purchased loans, partially offset by an $830,000 decrease in gain on sale of loans during the quarter.

The Company sold $12.6 million in FNMA qualified mortgage loans for a net gain of $284,000 during the second quarter of 2022 compared to $26.9 million in FNMA qualified mortgage loans sold for a net gain of $711,000 during the first quarter of 2022. The Company sold $1.1 million in SBA loans during the second quarter of 2022 for a net gain of $60,000, compared to $8.3 million SBA loans sold for a net gain of $463,000 during the first quarter of 2022.

Compared to the second quarter of 2021, noninterest income decreased by $749,000 from $4.2 million. The decrease was primarily attributable to a $2.2 million decrease in gain on sale of loans, partially offset by a $757,000 increase in gain on corporate real estate, a $354,000 increase in loan servicing fees, an $113,000 increase in income from bank owned life insurance and a $93,000 increase in recoveries on purchased loans.

Noninterest Expense

Noninterest expense for the second quarter of 2022 was $17.6 million, compared to $16.1 million for the first quarter of 2022. The $1.6 million increase was primarily attributable to a $1.2 million increase in legal and professional expenses due to a Board of Director special investigation and a $259,000 increase in salaries and employee benefits expense due to additional new hires and salary adjustments to reflect economic inflation.

Noninterest expense increased from $14.7 million in the second quarter of 2021. The $2.9 million increase was primarily due to a $1.7 million increase in legal and professional expenses due to a Board of Director special investigation, an $886,000 increase in salaries and employee benefits expenses and a $270,000 increase in business promotion and CRA donation expenses.

Income Taxes

The effective tax rate was 29.6% for the second quarter of 2022, 30.4% for the first quarter of 2022, and 29.3% for the second quarter of 2021. The Company recognized a tax benefit from stock option exercises of $279,000, $23,000 and $68,000 for the second quarter of 2022, the first quarter of 2022, and the second quarter of 2021, respectively.

Loan and Securities Portfolio

Loans held for investment, net of deferred fees and discounts, totaled $3.05 billion as of June 30, 2022, an increase of $39.5 million from March 31, 2022, and an increase of $336.7 million from June 30, 2021. The increase from the prior quarter was primarily due to a $141.2 million increase in single-family residential mortgage loans and a $10.0 million increase in construction & land development loans, partially offset by a $57.6 million decrease in commercial real estate loans and a $42.8 million decrease in commercial and industrial loans. The increase from June 30, 2021 was primarily due to a $221.4 million increase in single-family residential mortgages and a $119.8 million increase in construction & land development loans.

During the second quarter of 2022, single-family residential mortgage production was $216.9 million while net payoffs and paydowns were $66.8 million. During the first quarter of 2022, single-family residential mortgage production was $132.6 million while payoffs and paydowns were $48.1 million.

There were no mortgage loans held for sale as of June 30, 2022 compared to $3.6 million as of March 31, 2022 and $9.2 million as of June 30, 2021. The Company originated approximately $1.2 million in FNMA mortgage loans for sale for the second quarter of 2022, compared with $23.4 million during the prior quarter.

In the second quarter of 2022, SBA loan production was $1.4 million and total SBA loan sales were $1.1 million compared to SBA loan production of $11.9 million and total SBA loan sales of $8.3 million in the first quarter of 2022.

As of June 30, 2022, the Bank’s total Available-for-Sale securities maturing in over 12 months were $249.2 million, and the Bank recorded an unrealized loss of $20.2 million under the Accumulated Other Comprehensive Income (AOCI) since January 1, 2022.

Deposits

Deposits were $3.0 billion at June 30, 2022, which was a decrease of $140.7 million compared to March 31, 2022. During the second quarter of 2022, noninterest-bearing deposits decreased by $114.7 million, interest-bearing non-maturity deposits decreased by $16.7 million, and time deposits decreased by $9.3 million. As of June 30, 2022, there were $50.0 million in brokered CDs, as compared to no brokered CDs as of March 31, 2022 and $17.4 million brokered CDs as of June 30, 2021. Compared to June 30, 2021, total deposits decreased by $42.4 million primarily due to a $157.0 million decrease in time deposits, partially offset by a $105.0 million increase in noninterest-bearing demand deposits.

Asset Quality

Nonperforming assets totaled $14.2 million, or 0.36% of total assets at June 30, 2022, compared to $21.0 million, or 0.52% of total assets at March 31, 2022. The decrease in nonperforming assets was due to the pay-off of certain nonperforming loans in the second quarter. 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.

In the second quarter of 2022, there were $53,000 in net charge-offs, compared to net recoveries of $14,000 in the first quarter of 2022 and net charge-offs of $71,000 in the second quarter of 2021.

The Company recorded a provision for credit losses of $915,000 for the second quarter of 2022 which was primarily attributable to loan growth and was an increase from $366,000 in the prior quarter. Allowance for loan losses continue to include $599,000 of reserves taken as a precaution against COVID-19 losses in 2020 and 2021.

The allowance for loan losses totaled $34.2 million, or 1.12% of loans held for investment at June 30, 2022, compared with $33.3 million, or 1.11%, of total loans at March 31, 2022.

During the second quarter of 2022, the Company repurchased 525,754 common shares at a weighted average price of $21.10.

Corporate Overview

RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. As of June 30, 2022, the company had total assets of $4.0 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, in Brooklyn, Queens, and Manhattan in New York, in Edison, New Jersey, in the Chicago neighborhoods of Chinatown and Bridgeport, Illinois, and on Oahu, Hawaii. 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 nine branches in Los Angeles County, two branches in Ventura County, one branch in Orange County, California, one branch in Las Vegas, Nevada, three branches and one loan operation center in Brooklyn, three branches in Queens, one branch in Manhattan in New York, one branch in Edison, New Jersey, two branches in Chicago, Illinois, and one branch in Honolulu, Hawaii. 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 Ave., 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 tomorrow, July 26, 2022, to discuss the Company’s second quarter 2022 financial results.

To listen to the conference call, please dial 1-866-459-5346 or 1-203-518-9544, conference ID RBBQ222. A replay of the call will be made available at 1-877-274-8334 or 1-402-220-2326 (no passcode required) approximately one hour after the conclusion of the call and will remain available through August 2, 2022.

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 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; expectations regarding the impact of the COVID-19 pandemic; the costs or effects of acquisitions or dispositions we may make, 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, including ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments”, commonly referenced as the Current Expected Credit Loss (“CECL”) model, which will change how we estimate credit losses and may increase the required level of our allowance for credit losses after adoption; 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 DFPI (formerly 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/A and Form 10-K for the year ended December 31, 2021, 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, except for December 31, 2021)

(Dollars in thousands)

 
June 30, March 31, December 31, September 30, June 30,

2022

2022

2021

2021

2021

Assets
Cash and due from banks

$

224,736

 

$

149,767

 

$

501,372

 

$

206,927

 

$

493,653

 

Federal funds sold and other cash equivalents

 

100,000

 

 

200,000

 

 

193,000

 

 

170,000

 

 

110,000

 

Total cash and cash equivalents

 

324,736

 

 

349,767

 

 

694,372

 

 

376,927

 

 

603,653

 

Interest-bearing deposits in other financial institutions

 

600

 

 

600

 

 

600

 

 

600

 

 

600

 

Investment securities available for sale

 

358,135

 

 

420,448

 

 

368,260

 

 

345,000

 

 

339,568

 

Investment securities held to maturity

 

5,741

 

 

6,246

 

 

6,252

 

 

6,258

 

 

6,664

 

Mortgage loans held for sale

 

 

 

3,572

 

 

5,957

 

 

15,188

 

 

9,246

 

Loans held for investment

 

3,045,946

 

 

3,006,484

 

 

2,931,350

 

 

2,840,354

 

 

2,709,206

 

Allowance for loan losses

 

(34,154

)

 

(33,292

)

 

(32,912

)

 

(32,231

)

 

(31,352

)

Net loans held for investment

 

3,011,792

 

 

2,973,192

 

 

2,898,438

 

 

2,808,123

 

 

2,677,854

 

Premises and equipment, net

 

27,104

 

 

27,455

 

 

27,199

 

 

27,157

 

 

27,039

 

Federal Home Loan Bank (FHLB) stock

 

15,000

 

 

15,000

 

 

15,000

 

 

15,000

 

 

15,000

 

Cash surrender value of life insurance

 

56,642

 

 

56,313

 

 

55,988

 

 

55,656

 

 

55,325

 

Goodwill

 

71,498

 

 

71,498

 

 

69,243

 

 

69,243

 

 

69,243

 

Servicing assets

 

10,456

 

 

11,048

 

 

11,517

 

 

12,141

 

 

12,558

 

Core deposit intangibles

 

4,248

 

 

4,525

 

 

4,075

 

 

4,327

 

 

4,608

 

Right-of-use assets- operating leases

 

21,166

 

 

22,451

 

 

22,454

 

 

23,735

 

 

25,050

 

Accrued interest and other assets

 

57,153

 

 

51,454

 

 

48,839

 

 

42,452

 

 

44,230

 

Total assets

$

3,964,271

 

$

4,013,569

 

$

4,228,194

 

$

3,801,807

 

$

3,890,638

 

Liabilities and shareholders' equity
Deposits:
Noninterest-bearing demand

$

1,045,009

 

$

1,159,703

 

$

1,291,484

 

$

824,771

 

$

940,041

 

Savings, NOW and money market accounts

 

868,307

 

 

885,050

 

 

927,609

 

 

931,517

 

 

858,597

 

Time deposits, less than $250,000

 

574,050

 

 

570,274

 

 

587,940

 

 

614,146

 

 

658,393

 

Time deposits, greater than or equal to $250,000

 

540,199

 

 

553,226

 

 

578,499

 

 

597,379

 

 

612,894

 

Total deposits

 

3,027,565

 

 

3,168,253

 

 

3,385,532

 

 

2,967,813

 

 

3,069,925

 

Reserve for unfunded commitments

 

1,070

 

 

1,186

 

 

1,203

 

 

1,304

 

 

1,216

 

FHLB advances

 

250,000

 

 

150,000

 

 

150,000

 

 

150,000

 

 

150,000

 

Long-term debt, net of debt issuance costs

 

173,296

 

 

173,152

 

 

173,007

 

 

172,862

 

 

172,718

 

Subordinated debentures

 

14,611

 

 

14,556

 

 

14,502

 

 

14,447

 

 

14,393

 

Lease liabilities - operating leases

 

22,057

 

 

23,314

 

 

23,282

 

 

24,524

 

 

25,798

 

Accrued interest and other liabilities

 

11,965

 

 

18,283

 

 

13,985

 

 

14,833

 

 

14,263

 

Total liabilities

 

3,500,564

 

 

3,548,744

 

 

3,761,511

 

 

3,345,783

 

 

3,448,313

 

Shareholders' equity:
Shareholder's equity

 

479,382

 

 

475,077

 

 

468,267

 

 

456,490

 

 

442,086

 

Non-controlling interest

 

72

 

 

72

 

 

72

 

 

72

 

 

72

 

Accumulated other comprehensive (loss) income - Net of tax

 

(15,747

)

 

(10,324

)

 

(1,656

)

 

(538

)

 

167

 

Total shareholders' equity

 

463,707

 

 

464,825

 

 

466,683

 

 

456,024

 

 

442,325

 

Total liabilities and shareholders’ equity

$

3,964,271

 

$

4,013,569

 

$

4,228,194

 

$

3,801,807

 

$

3,890,638

 

RBB BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share amounts)

 
For the Three Months Ended
June 30, 2022 March 31, 2022 June 30, 2021
Interest and dividend income:
Interest and fees on loans

$

40,157

$

37,886

 

$

34,669

 

Interest on interest-bearing deposits

 

111

 

171

 

 

125

 

Interest on investment securities

 

1,419

 

1,007

 

 

794

 

Dividend income on FHLB stock

 

222

 

227

 

 

225

 

Interest on federal funds sold and other

 

429

 

275

 

 

158

 

Total interest income

 

42,338

 

39,566

 

 

35,971

 

Interest expense:
Interest on savings deposits, NOW and money market accounts

 

844

 

718

 

 

708

 

Interest on time deposits

 

1,506

 

1,574

 

 

2,410

 

Interest on subordinated debentures and long term debt

 

2,379

 

2,348

 

 

2,356

 

Interest on other borrowed funds

 

519

 

435

 

 

440

 

Total interest expense

 

5,248

 

5,075

 

 

5,914

 

Net interest income before provision for loan losses

 

37,090

 

34,491

 

 

30,057

 

Provision for loan losses

 

915

 

366

 

 

628

 

Net interest income after provision for loan losses

 

36,175

 

34,125

 

 

29,429

 

Noninterest income:
Service charges, fees and other

 

1,382

 

1,241

 

 

1,332

 

Gain on sale of loans

 

344

 

1,174

 

 

2,572

 

Loan servicing fees, net of amortization

 

472

 

432

 

 

118

 

Recoveries on loans acquired in business combinations

 

98

 

5

 

 

5

 

Unrealized (loss) on equity investments

 

 

 

 

(35

)

Gain (loss) on derivatives

 

39

 

(233

)

 

(38

)

Increase in cash surrender value of life insurance

 

330

 

325

 

 

217

 

Gain on sale of fixed assets

 

757

 

 

 

 

Total noninterest income

 

3,422

 

2,944

 

 

4,171

 

Noninterest expense:
Salaries and employee benefits

 

9,628

 

9,369

 

 

8,742

 

Occupancy and equipment expenses

 

2,174

 

2,206

 

 

2,135

 

Data processing

 

1,293

 

1,258

 

 

1,231

 

Legal and professional

 

2,254

 

1,006

 

 

536

 

Office expenses

 

358

 

293

 

 

272

 

Marketing and business promotion

 

501

 

307

 

 

231

 

Insurance and regulatory assessments

 

478

 

441

 

 

354

 

Core deposit premium

 

277

 

279

 

 

287

 

OREO expenses

 

5

 

8

 

 

4

 

Merger expenses

 

23

 

37

 

 

17

 

Other expenses

 

621

 

857

 

 

871

 

Total noninterest expense

 

17,612

 

16,061

 

 

14,680

 

Income before income taxes

 

21,985

 

21,008

 

 

18,920

 

Income tax expense

 

6,508

 

6,391

 

 

5,540

 

Net income

$

15,477

$

14,617

 

$

13,380

 

 
Net income per share
Basic

$

0.81

$

0.75

 

$

0.69

 

Diluted

$

0.80

$

0.74

 

$

0.67

 

Cash Dividends declared per common share

$

0.14

$

0.14

 

$

0.13

 

Weighted-average common shares outstanding
Basic

 

19,066,621

 

19,377,407

 

 

19,432,204

 

Diluted

 

19,368,860

 

19,799,323

 

 

19,874,969

 

RBB BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share amounts)

 
For the Six Months Ended
June 30, 2022 June 30, 2021
Interest and dividend income:
Interest and fees on loans

$

78,043

 

$

69,185

 

Interest on interest-earning deposits

 

282

 

 

173

 

Interest on investment securities

 

2,426

 

 

1,421

 

Dividend income on FHLB stock

 

449

 

 

417

 

Interest on federal funds sold and other

 

704

 

 

315

 

Total interest income

 

81,904

 

 

71,511

 

Interest expense:
Interest on savings deposits, NOW and money market accounts

 

1,562

 

 

1,406

 

Interest on time deposits

 

3,080

 

 

5,374

 

Interest on subordinated debentures and long term debt

 

4,727

 

 

4,314

 

Interest on other borrowed funds

 

954

 

 

875

 

Total interest expense

 

10,323

 

 

11,969

 

Net interest income

 

71,581

 

 

59,542

 

Provision for loan losses

 

1,282

 

 

2,128

 

Net interest income after provision for loans losses

 

70,299

 

 

57,414

 

Noninterest income:
Service charges, fees and other (1)

 

2,622

 

 

2,800

 

Gain on sale of loans

 

1,518

 

 

6,413

 

Loan servicing fees, net of amortization

 

904

 

 

364

 

Recoveries on loans acquired in business combinations

 

103

 

 

10

 

Unrealized (loss) gain on equity investments

 

 

 

(55

)

(Loss) gain on derivatives

 

(194

)

 

129

 

Increase in cash surrender value of life insurance

 

654

 

 

404

 

Gain on sale of fixed assets

 

757

 

 

 

Total noninterest income

 

6,364

 

 

10,065

 

Noninterest expense:
Salaries and employee benefits

 

18,997

 

 

17,984

 

Occupancy and equipment expenses

 

4,380

 

 

4,377

 

Data processing

 

2,551

 

 

2,671

 

Legal and professional

 

3,260

 

 

1,341

 

Office expenses

 

651

 

 

527

 

Marketing and business promotion

 

808

 

 

415

 

Insurance and regulatory assessments

 

919

 

 

702

 

Core deposit premium

 

556

 

 

588

 

OREO expenses

 

13

 

 

9

 

Merger expenses

 

60

 

 

59

 

Other expenses

 

1,475

 

 

1,799

 

Total noninterest expense

 

33,670

 

 

30,472

 

Income before income taxes

 

42,993

 

 

37,007

 

Income tax expense

 

12,899

 

 

11,171

 

Net income

$

30,094

 

$

25,836

 

 
Net income per share
Basic

$

1.56

 

$

1.32

 

Diluted

$

1.54

 

$

1.30

 

Cash Dividends declared per common share

$

0.28

 

$

0.25

 

Weighted-average common shares outstanding
Basic

 

19,221,155

 

 

19,453,889

 

Diluted

 

19,582,902

 

 

19,844,077

 

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, 2022 March 31, 2022 June 30, 2021
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)

$

249,738

$

762

1.22

%

$

628,634

$

673

0.43

%

$

582,554

$

508

0.35

%

Securities
Available for sale (2)

 

399,321

 

1,393

1.40

%

 

392,858

 

974

1.01

%

 

328,004

 

751

0.92

%

Held to maturity (2)

 

5,744

 

50

3.49

%

 

6,250

 

57

3.70

%

 

6,667

 

60

3.61

%

Mortgage loans held for sale

 

892

 

13

5.85

%

 

3,652

 

43

4.78

%

 

21,033

 

173

3.30

%

Loans held for investment: (3)
Real estate

 

2,663,753

 

35,207

5.30

%

 

2,602,382

 

33,095

5.16

%

 

2,292,145

 

29,794

5.21

%

Commercial

 

325,861

 

4,937

6.08

%

 

380,978

 

4,748

5.05

%

 

388,049

 

4,702

4.86

%

Total loans

 

2,989,614

 

40,144

5.39

%

 

2,983,360

 

37,843

5.14

%

 

2,680,194

 

34,496

5.16

%

Total earning assets

 

3,645,309

$

42,362

4.66

%

 

4,014,754

$

39,590

4.00

%

 

3,618,452

$

35,988

3.99

%

Noninterest-earning assets

 

243,227

 

241,235

 

230,049

Total assets

$

3,888,536

$

4,255,989

$

3,848,501

 
Interest-bearing liabilities
NOW

$

75,637

$

50

0.27

%

$

75,399

$

43

0.23

%

$

66,777

$

45

0.27

%

Money Market

 

631,807

 

759

0.48

%

 

720,197

 

643

0.36

%

 

640,026

 

628

0.39

%

Saving deposits

 

148,400

 

35

0.09

%

 

145,327

 

32

0.09

%

 

140,418

 

35

0.10

%

Time deposits, less than $250,000

 

553,282

 

724

0.52

%

 

600,563

 

754

0.51

%

 

657,494

 

1,163

0.71

%

Time deposits, $250,000 and over

 

526,164

 

782

0.60

%

 

570,210

 

820

0.58

%

 

604,429

 

1,247

0.83

%

Total interest-bearing deposits

 

1,935,290

 

2,350

0.49

%

 

2,111,696

 

2,292

0.44

%

 

2,109,144

 

3,118

0.59

%

FHLB advances

 

182,749

 

519

1.14

%

 

150,000

 

435

1.18

%

 

150,000

 

440

1.18

%

Long-term debt

 

173,201

 

2,195

5.08

%

 

173,058

 

2,194

5.14

%

 

172,622

 

2,206

5.13

%

Subordinated debentures

 

14,575

 

184

5.06

%

 

14,521

 

154

4.30

%

 

14,357

 

150

4.19

%

Total interest-bearing liabilities

 

2,305,815

 

5,248

0.91

%

 

2,449,275

 

5,075

0.84

%

 

2,446,123

 

5,914

0.97

%

Noninterest-bearing liabilities
Noninterest-bearing deposits

 

1,082,793

 

1,301,497

 

913,442

Other noninterest-bearing liabilities

 

33,325

 

34,319

 

46,549

Total noninterest-bearing liabilities

 

1,116,118

 

1,335,816

 

959,991

Shareholders' equity

 

466,603

 

470,898

 

442,387

Total liabilities and shareholders' equity

$

3,888,536

$

4,255,989

$

3,848,501

Net interest income / interest rate spreads

$

37,114

3.75

%

$

34,515

3.16

%

$

30,074

3.02

%

Net interest margin

4.08

%

3.49

%

3.33

%

(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.

RBB 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, 2022 June 30, 2021
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)

$

438,140

$

1,435

0.66

%

$

399,907

$

905

0.46

%

Securities
Available for sale (2)

 

396,107

 

2,367

1.21

%

 

284,129

 

1,323

0.94

%

Held to maturity (2)

 

5,996

 

107

3.60

%

 

6,832

 

126

3.72

%

Mortgage loans held for sale

 

2,265

 

56

4.99

%

 

37,436

 

584

3.15

%

Loans held for investment: (3)
Real estate

 

2,633,237

 

68,302

5.23

%

 

2,299,746

 

59,315

5.20

%

Commercial

 

353,267

 

9,685

5.53

%

 

386,256

 

9,286

4.85

%

Total loans

 

2,986,504

 

77,987

5.27

%

 

2,686,002

 

68,601

5.15

%

Total earning assets

 

3,829,012

$

81,952

4.32

%

 

3,414,306

$

71,539

4.23

%

Noninterest-earning assets

 

242,235

 

229,032

Total assets

$

4,071,247

$

3,643,338

 
Interest-bearing liabilities
NOW

$

75,519

$

94

0.25

%

$

65,690

$

88

0.27

%

Money Market

 

675,758

 

1,401

0.42

%

 

609,854

 

1,251

0.41

%

Saving deposits

 

146,872

 

67

0.09

%

 

135,810

 

67

0.10

%

Time deposits, less than $250,000

 

576,792

 

1,478

0.52

%

 

660,246

 

2,659

0.81

%

Time deposits, $250,000 and over

 

548,065

 

1,602

0.59

%

 

599,234

 

2,716

0.91

%

Total interest-bearing deposits

 

2,023,006

 

4,642

0.46

%

 

2,070,834

 

6,781

0.66

%

FHLB advances

 

166,465

 

954

1.16

%

 

150,000

 

875

1.18

%

Long-term debt

 

173,129

 

4,388

5.11

%

 

142,349

 

4,015

5.69

%

Subordinated debentures

 

14,548

 

339

4.70

%

 

14,330

 

298

4.19

%

Total interest-bearing liabilities

 

2,377,148

$

10,323

0.88

%

 

2,377,513

$

11,969

1.02

%

Noninterest-bearing liabilities
Noninterest-bearing deposits

 

1,191,540

 

784,276

Other noninterest-bearing liabilities

 

33,820

 

43,352

Total noninterest-bearing liabilities

 

1,225,360

 

827,628

Shareholders' equity

 

468,739

 

438,197

Total liabilities and shareholders' equity

$

4,071,247

$

3,643,338

Net interest income / interest rate spreads

$

71,629

3.44

%

$

59,570

3.21

%

Net interest margin

3.77

%

3.52

%

(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.

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,

 

2022

 

 

2022

 

 

2021

 

Per share data (common stock)
Earnings
Basic

$

0.81

 

$

0.75

 

$

0.69

 

Diluted

$

0.80

 

$

0.74

 

$

0.67

 

Dividends declared

$

0.14

 

$

0.14

 

$

0.13

 

Book value

$

24.56

 

$

24.15

 

$

22.86

 

Tangible book value

$

20.55

 

$

20.20

 

$

19.04

 

Weighted average shares outstanding
Basic

 

19,066,621

 

 

19,377,407

 

 

19,432,204

 

Diluted

 

19,368,860

 

 

19,799,323

 

 

19,874,969

 

Shares outstanding at period end

 

18,881,829

 

 

19,247,970

 

 

19,349,802

 

Performance ratios
Return on average assets, annualized

 

1.60

%

 

1.39

%

 

1.39

%

Return on average shareholders' equity, annualized

 

13.30

%

 

12.59

%

 

12.13

%

Return on average tangible common equity, annualized

 

15.89

%

 

14.91

%

 

14.57

%

Noninterest income to average assets, annualized

 

0.35

%

 

0.28

%

 

0.43

%

Noninterest expense to average assets, annualized

 

1.82

%

 

1.53

%

 

1.53

%

Yield on average earning assets

 

4.66

%

 

4.00

%

 

3.99

%

Cost of average total deposits

 

0.31

%

 

0.27

%

 

0.41

%

Cost of average interest-bearing deposits

 

0.49

%

 

0.44

%

 

0.59

%

Cost of average interest-bearing liabilities

 

0.91

%

 

0.84

%

 

0.97

%

Accretion on loans to average earning assets

 

0.01

%

 

0.02

%

 

0.02

%

Net interest spread

 

3.75

%

 

3.16

%

 

3.02

%

Net interest margin

 

4.08

%

 

3.49

%

 

3.33

%

Efficiency ratio

 

43.47

%

 

42.90

%

 

42.89

%

Common stock dividend payout ratio

 

17.28

%

 

18.67

%

 

18.84

%

 

RBB BANCORP AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

 
For the six months ended June 30,

 

2022

 

 

2021

 

Per share data (common stock)
Earnings
Basic

$

1.56

 

$

1.32

 

Diluted

$

1.54

 

$

1.30

 

Dividends declared

$

0.28

 

$

0.25

 

Book value

$

24.56

 

$

22.86

 

Tangible book value

$

20.55

 

$

19.04

 

Weighted average shares outstanding
Basic

 

19,221,155

 

 

19,453,889

 

Diluted

 

19,582,902

 

 

19,844,077

 

Shares outstanding at period end

 

18,881,829

 

 

19,349,802

 

Performance ratios
Return on average assets, annualized

 

1.49

%

 

1.43

%

Return on average shareholders' equity, annualized

 

12.95

%

 

11.89

%

Return on average tangible common equity, annualized

 

15.40

%

 

14.31

%

Noninterest income to average assets, annualized

 

0.32

%

 

0.56

%

Noninterest expense to average assets, annualized

 

1.67

%

 

1.69

%

Yield on average earning assets

 

4.32

%

 

4.23

%

Cost of average deposits

 

0.29

%

 

0.48

%

Cost of average interest-bearing deposits

 

0.46

%

 

0.66

%

Cost of average interest-bearing liabilities

 

0.88

%

 

1.02

%

Accretion on loans to average earning assets

 

0.02

%

 

0.04

%

Net interest spread

 

3.44

%

 

3.21

%

Net interest margin

 

3.77

%

 

3.52

%

Efficiency ratio

 

43.20

%

 

43.78

%

Common stock dividend payout ratio

 

17.95

%

 

18.94

%

 

RBB BANCORP AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

 
As of
June 30, March 31, June 30,

 

2022

 

 

2022

 

 

2021

 

Loan to deposit ratio

 

100.61

%

 

94.89

%

 

88.25

%

Core deposits / total deposits

 

82.16

%

 

82.54

%

 

80.04

%

Net non-core funding dependence ratio

 

-0.44

%

 

-0.28

%

 

0.87

%

 
Credit Quality Data:
Loans 30-89 days past due

$

8,346

 

$

17,635

 

$

5,449

 

Loans 30-89 days past due to total loans

 

0.27

%

 

0.59

%

 

0.20

%

Nonperforming loans

$

13,937

 

$

20,691

 

$

19,243

 

Nonperforming loans to total loans

 

0.46

%

 

0.69

%

 

0.71

%

Nonperforming assets

$

14,230

 

$

20,984

 

$

19,536

 

Nonperforming assets to total assets

 

0.36

%

 

0.52

%

 

0.50

%

Allowance for loan losses to total loans

 

1.12

%

 

1.11

%

 

1.16

%

Allowance for loan losses to nonperforming loans

 

245.06

%

 

160.90

%

 

162.93

%

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

 

0.01

%

 

0.00

%

 

0.01

%

 
Regulatory and other capital ratios—Company
Tangible common equity to tangible assets

 

9.98

%

 

9.87

%

 

9.65

%

Tier 1 leverage ratio

 

10.96

%

 

9.90

%

 

10.20

%

Tier 1 common capital to risk-weighted assets

 

14.84

%

 

14.12

%

 

14.76

%

Tier 1 capital to risk-weighted assets

 

15.38

%

 

14.63

%

 

15.33

%

Total capital to risk-weighted assets

 

22.98

%

 

21.96

%

 

23.48

%

 
Regulatory capital ratios—Bank only
Tier 1 leverage ratio

 

13.90

%

 

12.29

%

 

12.34

%

Tier 1 common capital to risk-weighted assets

 

19.55

%

 

18.15

%

 

18.58

%

Tier 1 capital to risk-weighted assets

 

19.55

%

 

18.15

%

 

18.58

%

Total capital to risk-weighted assets

 

20.80

%

 

19.37

%

 

19.83

%

 

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

 

2022

 

 

2022

 

 

2021

 

 

2021

 

 

2021

 

Interest income
Loans, including fees

$

40,157

 

$

37,886

 

$

36,783

 

$

35,601

 

$

34,669

 

Investment securities and other

 

2,181

 

 

1,680

 

 

1,661

 

 

1,507

 

 

1,302

 

Total interest income

 

42,338

 

 

39,566

 

 

38,444

 

 

37,108

 

 

35,971

 

Interest expense
Deposits

 

2,350

 

 

2,292

 

 

2,431

 

 

2,745

 

 

3,118

 

Interest on subordinated debentures and other

 

2,379

 

 

2,348

 

 

2,343

 

 

2,342

 

 

2,356

 

Other borrowings

 

519

 

 

435

 

 

445

 

 

445

 

 

440

 

Total interest expense

 

5,248

 

 

5,075

 

 

5,219

 

 

5,532

 

 

5,914

 

Net interest income before provision for loan losses

 

37,090

 

 

34,491

 

 

33,225

 

 

31,576

 

 

30,057

 

Provision for loan losses

 

915

 

 

366

 

 

635

 

 

1,196

 

 

628

 

Net interest income after provision for loan losses

 

36,175

 

 

34,125

 

 

32,590

 

 

30,380

 

 

29,429

 

Noninterest income

 

3,422

 

 

2,944

 

 

3,156

 

 

5,524

 

 

4,171

 

Noninterest expense

 

17,612

 

 

16,061

 

 

13,300

 

 

14,420

 

 

14,680

 

Earnings before income taxes

 

21,985

 

 

21,008

 

 

22,446

 

 

21,484

 

 

18,920

 

Income taxes

 

6,508

 

 

6,391

 

 

6,740

 

 

6,120

 

 

5,540

 

Net income

$

15,477

 

$

14,617

 

$

15,706

 

$

15,364

 

$

13,380

 

Net income per common share - basic

$

0.81

 

$

0.75

 

$

0.81

 

$

0.79

 

$

0.69

 

Net income per common share - diluted

$

0.80

 

$

0.74

 

$

0.79

 

$

0.77

 

$

0.67

 

Cash dividends declared per common share

$

0.14

 

$

0.14

 

$

0.13

 

$

0.13

 

$

0.13

 

Cash dividends declared on common shares

$

2,687

 

$

2,724

 

$

2,537

 

$

2,516

 

$

2,540

 

Yield on average assets, annualized

 

1.60

%

 

1.39

%

 

1.52

%

 

1.54

%

 

1.39

%

Yield on average earning assets

 

4.66

%

 

4.00

%

 

3.97

%

 

3.97

%

 

3.99

%

Cost of average deposits

 

0.31

%

 

0.27

%

 

0.30

%

 

0.35

%

 

0.41

%

Cost of average interest-bearing deposits

 

0.49

%

 

0.44

%

 

0.47

%

 

0.51

%

 

0.59

%

Cost of average interest-bearing liabilities

 

0.91

%

 

0.84

%

 

0.86

%

 

0.89

%

 

0.97

%

Accretion on loans to average earning assets

 

0.01

%

 

0.02

%

 

0.02

%

 

0.03

%

 

0.02

%

Net interest margin

 

4.08

%

 

3.49

%

 

3.43

%

 

3.38

%

 

3.33

%

 

RBB BANCORP AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS

(Unaudited, except for December 31, 2021)

(Dollars in thousands, except per share amounts)

 
Loan Portfolio Detail As of
June 30, 2022
As of
March 31, 2022
As of
December 31, 2021
As of
September 30, 2021
As of
June 30, 2021
(dollars in thousands) $ % $ % $ % $ % $ %
Loans:
Commercial and industrial

$

238,045

 

7.8

%

$

280,825

 

9.3

%

$

268,709

 

9.2

%

$

276,387

 

9.7

%

$

277,080

 

10.2

%

SBA

 

59,303

 

1.9

%

 

67,688

 

2.3

%

 

76,136

 

2.6

%

 

88,784

 

3.1

%

 

98,572

 

3.6

%

Construction and land development

 

356,772

 

11.7

%

 

346,766

 

11.5

%

 

303,144

 

10.3

%

 

271,764

 

9.6

%

 

236,965

 

8.7

%

Commercial real estate (1)

 

1,160,350

 

38.1

%

 

1,217,985

 

40.5

%

 

1,247,999

 

42.6

%

 

1,205,630

 

42.4

%

 

1,102,467

 

40.7

%

Single-family residential mortgages

 

1,205,732

 

39.6

%

 

1,064,581

 

35.4

%

 

1,004,576

 

34.3

%

 

974,780

 

34.3

%

 

984,311

 

36.3

%

Other loans

 

25,744

 

0.9

%

 

28,639

 

1.0

%

 

30,786

 

1.0

%

 

23,009

 

0.9

%

 

9,811

 

0.5

%

Total loans (2)

$

3,045,946

 

100.0

%

$

3,006,484

 

100.0

%

$

2,931,350

 

100.0

%

$

2,840,354

 

100.0

%

$

2,709,206

 

100.0

%

Allowance for loan losses

 

(34,154

)

 

(33,292

)

 

(32,912

)

 

(32,231

)

 

(31,352

)

Total loans, net

$

3,011,792

 

$

2,973,192

 

$

2,898,438

 

$

2,808,123

 

$

2,677,854

 

(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)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Beginning balance

$

33,292

 

$

30,795

 

$

32,912

 

$

29,337

 

Additions to the allowance charged to expense

 

915

 

 

628

 

 

1,282

 

 

2,128

 

Net recoveries (charge-offs) on loans

 

(53

)

 

(71

)

 

(40

)

 

(113

)

Ending balance

$

34,154

 

$

31,352

 

$

34,154

 

$

31,352

 

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, 2022 and 2021, and March 31, 2022.

 
(dollars in thousands, except per share data) June 30, 2022 March 31, 2022 June 30, 2021
Tangible common equity:
Total shareholders' equity

$

463,707

 

$

464,825

 

$

442,325

 

Adjustments
Goodwill

 

(71,498

)

 

(71,498

)

 

(69,243

)

Core deposit intangible

 

(4,248

)

 

(4,525

)

 

(4,608

)

Tangible common equity

$

387,961

 

$

388,802

 

$

368,474

 

Tangible assets:
Total assets-GAAP

$

3,964,271

 

$

4,013,569

 

$

3,890,638

 

Adjustments
Goodwill

 

(71,498

)

 

(71,498

)

 

(69,243

)

Core deposit intangible

 

(4,248

)

 

(4,525

)

 

(4,608

)

Tangible assets

$

3,888,525

 

$

3,937,546

 

$

3,816,787

 

Common shares outstanding

$

18,881,829

 

 

19,247,970

 

 

19,349,802

 

Tangible common equity to tangible assets ratio

 

9.98

%

 

9.87

%

 

9.65

%

Book value per share

$

24.56

 

$

24.15

 

$

22.86

 

Tangible book value per share

$

20.55

 

$

20.20

 

$

19.04

 

 

David Morris
Interim President and CEO
CFO

(714) 670-2488

Source: RBB Bancorp