RBB Bancorp Reports Second Quarter Earnings for 2022

July 25, 2022

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20220725005787/en/

David Morris
Interim President and CEO
CFO
(714) 670-2488

Source: RBB Bancorp

Press Release Details

RBB Bancorp Reports Second Quarter Earnings for 2022