rbb20240816_8k.htm
false 0001499422 0001499422 2024-10-21 2024-10-21
 
 


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 

 
FORM 8-K
 

 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): October 21, 2024 (October 21, 2024
 

 
RBB BANCORP
(Exact name of Registrant as Specified in Its Charter)
 

 
California
001-38149
27-2776416
(State or Other Jurisdiction
of Incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
     
1055 Wilshire Blvd., 12th floor,
Los Angeles, California
 
90017
(Address of Principal Executive Offices)
 
(Zip Code)
 
Registrant’s Telephone Number, Including Area Code: (213) 627-9888
 
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
 

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12 (b) of the Act:
 
Title of each class
 
Trading
Symbol(s)
 
Name of exchange on which registered
Common Stock, No Par Value
 
RBB
 
NASDAQ Global Select Market
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
 
Emerging growth company 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


 
 

 
Item 2.02 Results of Operations and Financial Condition.
 
On October 21, 2024, RBB Bancorp (the “Company”) issued a press release setting forth the financial results for the quarter ended September 30, 2024, and information relating to our quarterly conference call and webcast. A copy of this press release is attached hereto as Exhibit 99.1 and is hereby incorporated by reference.
 
The information furnished under Item 2.02 and Exhibit 99.1 of Item 9.01 of this Current Report on Form 8-K shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such Section, nor shall such information be deemed incorporated by reference into any registration statement or other filings of the Company under the Securities Act of 1933, as amended (the “Securities Act”), except as shall be expressly set for by specific reference in such filing.
 
Item 7.01 Regulation FD Disclosure.
 
On October 22, 2024, RBB Bancorp will hold a conference call to discuss its financial results for the quarter ended September 30, 2024 and other matters relating to the Company. The Company has also made available on its website, www.royalbusinessbankusa.com, presentation materials containing certain historical and forward-looking information relating to the Company (the “Presentation Materials”). The Presentation Materials are furnished as Exhibit 99.2 hereto and are incorporated by reference herein. All information in Exhibit 99.2 is presented as of the particular date or dates referenced therein, and the Company does not undertake any obligation to, and disclaims any duty to, update any of the information provided.
 
The information furnished under Item 7.01 and Item 9.01 of this Current Report on Form 8-K (including Exhibit 99.2) shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of such Section, nor shall such information be deemed incorporated by reference into any registration statement or other filings of the Company under the Securities Act, except as otherwise expressly stated in such filing.
 
Item 8.01 Other Events.
 
On October 21, 2024, RBB Bancorp announced that its Board of Directors declared a cash dividend of $0.16 per share of its common stock, payable on November 12, 2024, to common shareholders of record as of October 31, 2024. A copy of the press release announcing the cash dividend described in this Item 8.01 is attached as Exhibit 99.1 hereto and incorporated by reference herein. The information contained in Exhibit 99.1 shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of such Section, nor shall such information and Exhibit be deemed incorporated by reference into any registration statement or other filings of the Company under the Securities Act, except as shall be expressly set forth by specific reference in such filing.
 
Item 9.01 Financial Statements and Exhibits.
 
(d)
 
Exhibits.
     
99.1
 
     
99.2   Presentation Materials
     
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 

 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
RBB BANCORP
(Registrant)
       
Date: October 21, 2024
By:
 
/s/ Lynn Hopkins
     
Lynn Hopkins
     
Chief Financial Officer
 
 
ex_715894.htm
 

Exhibit 99.1

 

https://cdn.kscope.io/7df2bb980c4c76c4a110af2765df5758-rbblogo02.jpg

 

 

RBB Bancorp Reports Third Quarter 2024 Earnings and Declares Quarterly Cash Dividend of $0.16 Per Common Share

 

Los Angeles, CA, October 21, 2024 – 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 September 30, 2024.

 

Third Quarter 2024 Highlights

 

  Net income totaled $7.0 million, or $ 0.39 diluted earnings per share
  Return on average assets of 0.72%, compared to 0.76% for the quarter ended June 30, 2024
  Net interest margin of 2.68% compared to 2.67% for the quarter ended June 30, 2024
  Repurchased 508,275 shares of common stock for $11.0 million during the quarter ended September 30, 2024, and completed the authorized program
  Book value and tangible book value per share(1) increased to $28.81 and $24.64 at September 30, 2024, up from $28.12 and $24.06 at June 30, 2024

 

The Company reported net income of $7.0 million, or $ 0.39 diluted earnings per share, for the quarter ended September 30, 2024, compared to net income of $7.2 million, or $ 0.39 diluted earnings per share, for the quarter ended June 30, 2024. 

 

“Loans increased at a 6% annualized rate in the third quarter as our work to expand lending and deposit relationships began to deliver results,” said David Morris, Chief Executive Officer of RBB Bancorp. “Net interest margin increased slightly, and we are optimistic that it will continue to expand from here.  We continue to work through our non-performing loans and believe we will be able to resolve the majority of them by mid-2025.”

“The team has done an excellent job building on the Bank’s reputation as one of the premier Asian-centric financial institutions,” said Christina Kao, Chair of the Board of Directors. “Returning the Bank to growth has been a priority for the Board of Directors as we believe it will enhance long-term shareholder value.”

 

(1)

Reconciliations of the non–U.S. generally accepted accounting principles (“GAAP”) measures included at the end of this press release.

 

1

 

Net Interest Income and Net Interest Margin

 

Net interest income was $24.5 million for the third quarter of 2024, compared to $24.0 million for the second quarter of 2024. The $580,000 increase was due to an increase in interest income of $1.5 million offset by an increase in interest expense of $959,000. The increase in interest income was due mostly to higher interest income on loans held for investment (“HFI”) of $2.0 million, partially offset by lower interest income on investment securities of $504,000. The increase in loan interest income was mostly due to higher average loans HFI of $54.4 million combined with a 9 basis point increase in the HFI loan yield. The decrease in investment income was attributed to lower average balances and a lower portfolio yield as proceeds from maturing short-term commercial paper were invested into loans and interest-earning cash. The increase in interest expense was due to higher average interest-bearing deposits of $42.3 million in the third quarter of 2024.

 

Net interest margin (“NIM”) was 2.68% for the third quarter of 2024, an increase of 1 basis point from 2.67% for the second quarter of 2024. The increase was due to a 5 basis point increase in the yield on average interest-earning assets, partially offset by a 3 basis point increase in the overall cost of funds. The yield on average interest-earning assets increased to 5.94% for the third quarter of 2024 from 5.89% for the second quarter of 2024 due mainly to a 9 basis point increase in the yield on average loans HFI to 6.13% for the third quarter of 2024. The increase in the loan yield was largely attributed to nonaccrual loan activity in the current and prior quarter, including both the recapture of interest income for fully paid off nonaccrual loans and reversals of interest income for loans migrating to nonaccrual status. Such activity increased the third quarter loan yield by 1 basis point and decreased the second quarter loan yield by 7 basis points. Average loans represented 84% of average interest-earning assets in the third quarter of 2024, unchanged from the second quarter of 2024.

 

The overall cost of funds increased to 3.57% in the third quarter of 2024 from 3.54% in the second quarter of 2024 due to a higher average cost of interest-bearing deposits in the third quarter of 2024 as compared to the second quarter of 2024. The overall funding mix remained relatively unchanged from the second quarter of 2024 as the ratio of average noninterest-bearing deposits to average total funding sources remained relatively unchanged at 16% for the third and second quarters of 2024. The all-in spot rate for total deposits was 3.53% at September 30, 2024.

 

Provision for Credit Losses

 

The Company recorded a provision for credit losses of $3.3 million for the third quarter of 2024 compared to $557,000 for the second quarter of 2024. The third quarter provision took into consideration factors including changes in the loan portfolio mix, higher specific reserves, the outlook for economic conditions and market interest rates, and credit quality metrics, including higher nonperforming, special mention and substandard loans at the end of the third quarter of 2024 as compared to the end of the second quarter of 2024.

 

Noninterest Income

 

Noninterest income for the third quarter of 2024 was $5.7 million, an increase of $2.3 million from $3.5 million for the second quarter of 2024. This increase was mostly due to a $2.8 million recovery of a fully charged off loan, which had been acquired in a bank acquisition (included in other income), partially offset by lower net gain on other real estate owned ("OREO") of $292,000. 

 

Noninterest Expense

 

Noninterest expense for the third quarter of 2024 was $17.4 million, an increase of $297,000 from $17.1 million for the second quarter of 2024. This increase was due to higher salaries and employee benefits expense of $475,000 due in part to higher loan production and higher other expenses of $304,000 due to higher loan related expense. These increases were partially offset by lower insurance and regulatory assessments of $323,000 and lower legal and professional expenses of $302,000, the latter being due to reimbursed legal costs from nonaccrual loan payoffs. The annualized noninterest expenses to average assets ratio was 1.78% for the third quarter of 2024, down from 1.79% for the second quarter of 2024. The efficiency ratio was 57.51% for the third quarter of 2024, down from 62.38% for the second quarter of 2024 due mostly to higher noninterest income.

 

Income Taxes

 

The effective tax rate was 26.9% for the third quarter of 2024 and 25.9% for the second quarter of 2024. The effective tax rate for 2024 is estimated to range between 26.0% and 28.0%.

 

2

 

Balance Sheet

 

At September 30, 2024, total assets were $4.0 billion, a $122.3 million increase compared to June 30, 2024, and a $78.9 million decrease compared to September 30, 2023.

 

Loan and Securities Portfolio

 

Loans HFI totaled $3.1 billion as of September 30, 2024, an increase of $44.2 million compared to June 30, 2024 and a $29.1 million decrease compared to September 30, 2023. The increase from June 30, 2024 was primarily due to a $62.5 million increase in commercial real estate ("CRE") loans, a $5.6 million increase in single-family residential ("SFR") mortgages and a $2.2 million increase in commercial and industrial ("C&I") loans, partially offset by a $22.3 million decrease in construction and land development ("C&D") loans and a $2.2 million decrease in Small Business Administration ("SBA") loans. The loan to deposit ratio was 98.6% at September 30, 2024, compared to 99.4% at June 30, 2024 and 97.6% at September 30, 2023. 

 

As of September 30, 2024, available-for-sale securities totaled $305.7 million, a decrease of $19.9 million from June 30, 2024. As of September 30, 2024, net unrealized losses totaled $23.2 million, a $6.9 million decrease due to decreases in market interest rates, when compared to net unrealized losses as of June 30, 2024.

 

Deposits

 

Total deposits were $3.1 billion as of September 30, 2024, a $68.6 million increase compared to June 30, 2024 and a $61.9 million decrease compared to September 30, 2023. The increase during the third quarter of 2024 was due to an increase in interest-bearing deposits, while noninterest-bearing deposits remained relatively stable at $543.6 million as of September 30, 2024 compared to $543.0 million as of June 30, 2024. The increase in interest-bearing deposits included an increase in time deposits of $49.6 million and an increase in non-maturity deposits of $18.3 million. The increase in time deposits included a $26.6 million increase in wholesale deposits (brokered deposits, collateralized State of California certificates of deposit and deposits acquired through internet listing services). Wholesale deposits totaled $147.3 million at September 30, 2024, and $120.7 million at June 30, 2024. Noninterest-bearing deposits represented 17.6% of total deposits at September 30, 2024 compared to 18.0% at June 30, 2024.

 

Credit Quality

 

Nonperforming assets totaled $60.7 million, or 1.52% of total assets, at September 30, 2024, compared to $54.6 million, or 1.41% of total assets, at June 30, 2024. The $6.1 million increase in nonperforming assets was mostly due to two loans that migrated to nonaccrual totaling $13.3 million and consisted of a C&D loan and a CRE loan, offset by $6.1 million in payoffs with no losses and $1.2 million in partial charge-offs of nonaccrual loans.

 

Special mention loans totaled $77.5 million, or 2.51% of total loans, at September 30, 2024, compared to $19.5 million, or 0.64% of total loans, at June 30, 2024. The $58.0 million increase was primarily due to one $43.6 million C&D loan for a completed hotel construction project, CRE loans totaling $25.2 million and C&I loans totaling $1.2 million. The increase was partially offset by one $11.7 million C&D loan, which migrated from special mention to substandard during the third quarter of 2024. All special mention loans, including the $11.7 million C&D loan which migrated to substandard rating, are all paying current.

 

Substandard loans totaled $79.8 million, or 2.58% of total loans, at September 30, 2024, compared to $63.1 million, or 2.07% of total loans, at June 30, 2024. The $16.8 million increase was primarily due to downgrades of two C&D loans totaling $21.7 million and one $3.3 million CRE loan, offset by loan payoffs of $6.7 million and charge-offs of $1.2 million. Of the substandard loans at September 30, 2024, there are $19.2 million which are paying current.

 

30-89 day delinquent loans, excluding nonperforming loans, decreased $645,000 to $10.6 million as of September 30, 2024, compared to $11.3 million as of June 30, 2024. The decrease in past due loans was mostly due to 12 loans totaling $4.7 million that returned to current status and other decreases totaling $784,000, partially offset by new delinquent loans totaling $4.9 million, of which $4.1 million were 30 days past due.

 

3

 

As of September 30, 2024, the allowance for credit losses totaled $44.5 million and was comprised of an allowance for loan losses of $43.7 million and a reserve for unfunded commitments of $779,000 (included in “Accrued interest and other liabilities”). This compares to the allowance for credit losses of $42.4 million comprised of an allowance for loan losses of $41.7 million and a reserve for unfunded commitments of $624,000 at June 30, 2024. The $2.1 million increase in the allowance for credit losses for the third quarter of 2024 was due to a $3.3 million provision for credit losses, including higher specific reserves of $2.5 million, offset by net charge-offs of $1.2 million. The increase in specific reserves and charge-offs in the third quarter of 2024 was primarily due to a decrease in the estimated fair value of collateral dependent loans, including estimated selling costs. Charge-offs in the third quarter of 2024 were related to one C&D loan and one CRE loan, which were written-down to their estimated fair value. The allowance for loan losses as a percentage of loans HFI was 1.41% at September 30, 2024, compared to 1.37% at June 30, 2024. The allowance for loan losses as a percentage of nonperforming loans was 72% at September 30, 2024, a decrease from 76% at June 30, 2024. The decrease in the allowance for loan losses as a percentage of nonperforming loans was due in part to an increase in individually evaluated loans, which required no allowance for loan losses.

 

   

For the Three Months Ended September 30, 2024

   

For the Nine Months Ended September 30, 2024

 

(dollars in thousands)

 

Allowance for loan losses

   

Reserve for unfunded loan commitments

   

Allowance for credit losses

   

Allowance for loan losses

   

Reserve for unfunded loan commitments

   

Allowance for credit losses

 

Beginning balance

  $ 41,741     $ 624     $ 42,365     $ 41,903     $ 640     $ 42,543  

Provision for credit losses

    3,145       155       3,300       3,718       139       3,857  

Less loans charged-off

    (1,210 )           (1,210 )     (1,991 )           (1,991 )

Recoveries on loans charged-off

    9             9       55             55  

Ending balance

  $ 43,685     $ 779     $ 44,464     $ 43,685     $ 779     $ 44,464  

 

Shareholders' Equity

 

At September 30, 2024, total shareholders' equity was $509.7 million, a $1.6 million decrease compared to June 30, 2024, and a $7.2 million increase compared to September 30, 2023. The decrease in shareholders' equity for the third quarter of 2024 was due to common stock repurchases of $11.0 million and common stock cash dividends paid of $2.9 million, offset by net income of $7.0 million, lower net unrealized loss on available-for-sale securities of $4.8 million and equity compensation activity of $528,000. Book value per share and tangible book value per share(1) increased to $28.81 and $24.64 at September 30, 2024, up from $28.12 and $24.06 at June 30, 2024.

 

On February 29, 2024, the Board of Directors authorized the repurchase of up to 1,000,000 shares of common stock. The repurchase program permitted shares to be repurchased in open market or private transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Securities and Exchange Commission (“SEC”) Rules 10b5-1 and 10b-8. The Company repurchased 508,275 shares at a weighted average share price of $21.53 during the third quarter of 2024 and completed the authorized program.

 

Dividend Announcement

 

The Board of Directors has declared a common stock cash dividend of $0.16 per common share, payable on November 12, 2024 to shareholders of record on October 31, 2024.

 

 

 

Contact:

Lynn Hopkins, Chief Financial Officer

 

(213) 716-8066

  lhopkins@rbbusa.com

 

(1)

Reconciliations of the non–U.S. generally accepted accounting principles (“GAAP”) measures included at the end of this press release.

 

4

 

 

Corporate Overview

 

RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. As of September 30, 2024, the Company had total assets of $4.0 billion. Its wholly-owned subsidiary, Royal Business Bank, is a full service commercial bank, which provides consumer and business banking services predominately to the Asian-centric 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, 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 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 on Tuesday, October 22, 2024, to discuss the Company’s third quarter 2024 financial results.

 

To listen to the conference call, please dial 1-888-506-0062 or 1-973-528-0011, the Participant ID code is 392446, conference ID RBBQ324. A replay of the call will be made available at 1-877-481-4010 or 1-919-882-2331, the passcode is 51366, approximately one hour after the conclusion of the call and will remain available through November 5, 2024.

 

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.

 

5

 

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, the effectiveness of the Companys internal control over financial reporting and disclosure controls and procedures; the potential for additional material weaknesses in the Companys internal controls over financial reporting or other potential control deficiencies of which the Company is not currently aware or which have not been detected; business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic markets, including the tight labor market, ineffective management of the United States (U.S.) federal budget or debt or turbulence or uncertainly in domestic or foreign financial markets; the strength of the U.S. economy in general and the strength of the local economies in which we conduct operations; adverse developments in the banking industry highlighted by high-profile bank failures and the potential impact of such developments on customer confidence, liquidity and regulatory responses to these developments; our ability to attract and retain deposits and access other sources of liquidity; possible additional provisions for credit losses and charge-offs; credit risks of lending activities and deterioration in asset or credit quality; extensive laws and regulations and supervision that we are subject to, including potential supervisory action by bank supervisory authorities; increased costs of compliance and other risks associated with changes in regulation, including any amendments to the Dodd-Frank Wall Street Reform and Consumer Protection Act; compliance with the Bank Secrecy Act and other money laundering statutes and regulations; potential goodwill impairment; liquidity risk; failure to comply with debt covenants;  fluctuations in interest rates; risks associated with acquisitions and the expansion of our business into new markets; inflation and deflation; real estate market conditions and the value of real estate collateral; the effects of having concentrations in our loan portfolio, including commercial real estate and the risks of geographic and industry concentrations; environmental liabilities; our ability to compete with larger competitors; our ability to retain key personnel; successful management of reputational risk; severe weather, natural disasters, earthquakes, fires; or other adverse external events could harm our business; geopolitical conditions, including acts or threats of terrorism, actions taken by the U.S. or other governments in response to acts or threats of terrorism and/or military conflicts, including the conflicts between Russia and Ukraine, in the Middle East, and increasing tensions between China and Taiwan, which could impact business and economic conditions in the U.S. and abroad; public health crises and pandemics, and their effects on the economic and business environments in which we operate, including our credit quality and business operations, as well as the impact on general economic and financial market conditions; general economic or business conditions in Asia, and other regions where the Bank has operations; failures, interruptions, or security breaches of our information systems; climate change, including any enhanced regulatory, compliance, credit and reputational risks and costs; cybersecurity threats and the cost of defending against them; our ability to adapt our systems to the expanding use of technology in banking; risk management processes and strategies; adverse results in legal proceedings; the impact of regulatory enforcement actions, if any; certain provisions in our charter and bylaws that may affect acquisition of the Company; changes in tax laws and regulations; the impact of governmental efforts to restructure the U.S. financial regulatory system; the impact of future or recent changes in the Federal Deposit Insurance Corporation ("FDIC") insurance assessment rate and the rules and regulations related to the calculation of the FDIC insurance assessments; the effect of changes in accounting policies and practices or accounting standards, as may be adopted from time-to-time by bank regulatory agencies, the SEC, the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setters, including Accounting Standards Update 2016-13 (Topic 326, “Measurement of Current Losses on Financial Instruments, commonly referenced as the Current Expected Credit Losses Model, which changed how we estimate credit losses and may further increase the required level of our allowance for credit losses in future periods; market disruption and volatility; fluctuations in the Company’s stock price; restrictions on dividends and other distributions by laws and regulations and by our regulators and our capital structure; issuances of preferred stock; our ability to raise additional capital, if needed, and the potential resulting dilution of interests of holders of our common stock; the soundness of other financial institutions; our ongoing relations with our various federal and state regulators, including the SEC, FDIC, FRB and California Department of Financial Protection and Innovation; 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, 2023, 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.

 

 

6

 

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands)

 

   

September 30,

   

June 30,

   

March 31,

   

December 31,

   

September 30,

 
   

2024

   

2024

   

2024

   

2023

   

2023

 

Assets

                                       

Cash and due from banks

  $ 26,388     $ 23,313     $ 21,887     $ 22,671     $ 23,809  

Interest-earning deposits with financial institutions

    323,002       229,456       247,356       408,702       306,982  

Cash and Cash Equivalents

    349,390       252,769       269,243       431,373       330,791  

Interest-earning time deposits with financial institutions

    600       600       600       600       600  

Investment securities available for sale

    305,666       325,582       335,194       318,961       354,378  

Investment securities held to maturity

    5,195       5,200       5,204       5,209       5,214  

Mortgage loans held for sale

    812       3,146       3,903       1,911       62  

Loans held for investment

    3,091,896       3,047,712       3,027,361       3,031,861       3,120,952  

Allowance for loan losses

    (43,685 )     (41,741 )     (41,688 )     (41,903 )     (42,430 )

Net loans held for investment

    3,048,211       3,005,971       2,985,673       2,989,958       3,078,522  

Premises and equipment, net

    24,839       25,049       25,363       25,684       26,134  

Federal Home Loan Bank (FHLB) stock

    15,000       15,000       15,000       15,000       15,000  

Cash surrender value of bank owned life insurance

    59,889       59,486       59,101       58,719       58,346  

Goodwill

    71,498       71,498       71,498       71,498       71,498  

Servicing assets

    7,256       7,545       7,794       8,110       8,439  

Core deposit intangibles

    2,194       2,394       2,594       2,795       3,010  

Right-of-use assets

    29,283       30,530       31,231       29,803       29,949  

Accrued interest and other assets

    70,644       63,416       65,608       66,404       87,411  

Total assets

  $ 3,990,477     $ 3,868,186     $ 3,878,006     $ 4,026,025     $ 4,069,354  

Liabilities and shareholders' equity

                                       

Deposits:

                                       

Noninterest-bearing demand

  $ 543,623     $ 542,971     $ 539,517     $ 539,621     $ 572,393  

Savings, NOW and money market accounts

    666,089       647,770       642,840       632,729       608,020  

Time deposits, $250,000 and under

    1,052,462       1,014,189       1,083,898       1,190,821       1,237,831  

Time deposits, greater than $250,000

    830,010       818,675       762,074       811,589       735,828  

Total deposits

    3,092,184       3,023,605       3,028,329       3,174,760       3,154,072  

FHLB advances

    200,000       150,000       150,000       150,000       150,000  

Long-term debt, net of issuance costs

    119,433       119,338       119,243       119,147       174,019  

Subordinated debentures

    15,102       15,047       14,993       14,938       14,884  

Lease liabilities - operating leases

    30,880       32,087       32,690       31,191       31,265  

Accrued interest and other liabilities

    23,150       16,818       18,765       24,729       42,603  

Total liabilities

    3,480,749       3,356,895       3,364,020       3,514,765       3,566,843  

Shareholders' equity:

                                       

Common Stock

    259,280       266,160       271,645       271,925       277,462  

Additional paid-in capital

    3,520       3,456       3,348       3,623       3,579  

Retained Earnings

    262,946       262,518       259,903       255,152       247,159  

Non-controlling interest

    72       72       72       72       72  

Accumulated other comprehensive loss, net

    (16,090 )     (20,915 )     (20,982 )     (19,512 )     (25,761 )

Total shareholders' equity

    509,728       511,291       513,986       511,260       502,511  

Total liabilities and shareholders equity

  $ 3,990,477     $ 3,868,186     $ 3,878,006     $ 4,026,025     $ 4,069,354  

 

7

 

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except share and per share data) 

 

   

For the Three Months Ended

   

For the Nine Months Ended

 
   

September 30, 2024

   

June 30, 2024

   

September 30, 2023

   

September 30, 2024

   

September 30, 2023

 

Interest and dividend income:

                                       

Interest and fees on loans

  $ 47,326     $ 45,320     $ 47,617     $ 138,193     $ 148,369  

Interest on interest-earning deposits

    3,388       3,353       3,193       11,781       6,096  

Interest on investment securities

    3,127       3,631       4,211       10,369       10,321  

Dividend income on FHLB stock

    326       327       290       984       814  

Interest on federal funds sold and other

    258       255       252       779       716  

Total interest and dividend income

    54,425       52,886       55,563       162,106       166,316  

Interest expense:

                                       

Interest on savings deposits, NOW and money market accounts

    5,193       4,953       3,106       14,624       8,180  

Interest on time deposits

    22,553       21,850       21,849       67,725       54,424  

Interest on long-term debt and subordinated debentures

    1,681       1,679       2,579       5,039       7,668  

Interest on other borrowed funds

    453       439       440       1,331       2,428  

Total interest expense

    29,880       28,921       27,974       88,719       72,700  

Net interest income before provision for credit losses

    24,545       23,965       27,589       73,387       93,616  

Provision for credit losses

    3,300       557       1,399       3,857       3,793  

Net interest income after provision for credit losses

    21,245       23,408       26,190       69,530       89,823  

Noninterest income:

                                       

Service charges and fees

    1,071       1,064       1,057       3,127       3,200  

Gain on sale of loans

    447       451       212       1,210       258  

Loan servicing fees, net of amortization

    605       579       623       1,773       1,959  

Increase in cash surrender value of life insurance

    402       385       356       1,169       1,036  

Gain on OREO

          292       190       1,016       190  

Other income

    3,221       717       332       4,311       982  

Total noninterest income

    5,746       3,488       2,770       12,606       7,625  

Noninterest expense:

                                       

Salaries and employee benefits

    10,008       9,533       9,744       29,468       28,935  

Occupancy and equipment expenses

    2,518       2,439       2,414       7,400       7,242  

Data processing

    1,472       1,466       1,315       4,358       3,969  

Legal and professional

    958       1,260       1,022       3,098       6,907  

Office expenses

    348       352       437       1,056       1,163  

Marketing and business promotion

    252       189       340       613       892  

Insurance and regulatory assessments

    658       981       730       2,621       2,043  

Core deposit premium

    200       201       236       602       708  

Other expenses

    1,007       703       638       2,298       2,445  

Total noninterest expense

    17,421       17,124       16,876       51,514       54,304  

Income before income taxes

    9,570       9,772       12,084       30,622       43,144  

Income tax expense

    2,571       2,527       3,611       8,342       12,752  

Net income

  $ 6,999     $ 7,245     $ 8,473     $ 22,280     $ 30,392  
                                         

Net income per share

                                       

Basic

  $ 0.39     $ 0.39     $ 0.45     $ 1.22     $ 1.60  

Diluted

  $ 0.39     $ 0.39     $ 0.45     $ 1.22     $ 1.60  

Cash Dividends declared per common share

  $ 0.16     $ 0.16     $ 0.16     $ 0.48     $ 0.48  

Weighted-average common shares outstanding

                                       

Basic

    17,812,791       18,375,970       18,995,303       18,261,702       18,991,579  

Diluted

    17,885,359       18,406,897       18,997,304       18,313,086       19,013,838  

 

8

 

RBB BANCORP AND SUBSIDIARIES

AVERAGE BALANCE SHEET AND NET INTEREST INCOME

(Unaudited)

 

   

For the Three Months Ended

 
   

September 30, 2024

   

June 30, 2024

   

September 30, 2023

 
   

Average

   

Interest

   

Yield /

   

Average

   

Interest

   

Yield /

   

Average

   

Interest

   

Yield /

 

(tax-equivalent basis, dollars in thousands)

 

Balance

   

& Fees

   

Rate

   

Balance

   

& Fees

   

Rate

   

Balance

   

& Fees

   

Rate

 

Interest-earning assets

                                                                       

Cash and cash equivalents (1)

  $ 260,205     $ 3,646       5.57 %   $ 255,973     $ 3,608       5.67 %   $ 270,484     $ 3,445       5.05 %

FHLB Stock

    15,000       326       8.65 %     15,000       327       8.77 %     15,000       290       7.67 %

Securities

                                                                       

Available for sale (2)

    298,948       3,105       4.13 %     318,240       3,608       4.56 %     369,459       4,187       4.50 %

Held to maturity (2)

    5,198       46       3.52 %     5,203       46       3.56 %     5,385       48       3.54 %

Mortgage loans held for sale

    1,165       23       7.85 %     3,032       57       7.56 %     739       13       6.98 %

Loans held for investment: (3)

                                                                       

Real estate

    2,888,528       43,495       5.99 %     2,828,339       41,590       5.91 %     2,968,246       43,583       5.83 %

Commercial

    179,885       3,808       8.42 %     185,679       3,673       7.96 %     187,140       4,021       8.52 %

Total loans held for investment

    3,068,413       47,303       6.13 %     3,014,018       45,263       6.04 %     3,155,386       47,604       5.99 %

Total interest-earning assets

    3,648,929     $ 54,449       5.94 %     3,611,466     $ 52,909       5.89 %     3,816,453     $ 55,587       5.78 %

Total noninterest-earning assets

    242,059                       240,016                       250,083                  

Total average assets

  $ 3,890,988                     $ 3,851,482                     $ 4,066,536                  
                                                                         

Interest-bearing liabilities

                                                                       

NOW

    55,757       277       1.98 %   $ 56,081     $ 276       1.98 %   $ 55,325     $ 201       1.44 %

Money Market

    439,936       4,093       3.70 %     431,559       3,877       3.61 %     403,300       2,656       2.61 %

Saving deposits

    164,515       823       1.99 %     164,913       800       1.95 %     123,709       249       0.80 %

Time deposits, $250,000 and under

    1,037,365       12,312       4.72 %     1,049,666       12,360       4.74 %     1,285,320       14,090       4.35 %

Time deposits, greater than $250,000

    819,207       10,241       4.97 %     772,255       9,490       4.94 %     717,026       7,759       4.29 %

Total interest-bearing deposits

    2,516,780       27,746       4.39 %     2,474,474       26,803       4.36 %     2,584,680       24,955       3.83 %

FHLB advances

    150,543       453       1.20 %     150,000       439       1.18 %     150,000       440       1.16 %

Long-term debt

    119,370       1,295       4.32 %     119,275       1,296       4.37 %     173,923       2,194       5.00 %

Subordinated debentures

    15,066       386       10.19 %     15,011       383       10.26 %     14,848       385       10.29 %

Total interest-bearing liabilities

    2,801,759       29,880       4.24 %     2,758,760       28,921       4.22 %     2,923,451       27,974       3.80 %

Noninterest-bearing liabilities

                                                                       

Noninterest-bearing deposits

    528,081                       529,450                       571,371                  

Other noninterest-bearing liabilities

    52,428                       51,087                       67,282                  

Total noninterest-bearing liabilities

    580,509                       580,537                       638,653                  

Shareholders' equity

    508,720                       512,185                       504,432                  

Total liabilities and shareholders' equity

  $ 3,890,988                     $ 3,851,482                     $ 4,066,536                  

Net interest income / interest rate spreads

          $ 24,569       1.70 %           $ 23,988       1.67 %           $ 27,613       1.98 %

Net interest margin

                    2.68 %                     2.67 %                     2.87 %
                                                                         

Total cost of deposits

  $ 3,044,861     $ 27,746       3.63 %   $ 3,003,924     $ 26,803       3.59 %   $ 3,156,051     $ 24,955       3.14 %

Total cost of funds

  $ 3,329,840     $ 29,880       3.57 %   $ 3,288,210     $ 28,921       3.54 %   $ 3,494,822     $ 27,974       3.18 %

 


(1)

Includes income and average balances for interest-earning time deposits and other miscellaneous interest-earning assets.

(2)

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

(3)

Average loan balances include nonaccrual loans. Interest income on loans includes the effects of discount accretion and net deferred loan origination fees and costs accounted for as yield adjustments.

 

 

9

 

RBB BANCORP AND SUBSIDIARIES

AVERAGE BALANCE SHEET AND NET INTEREST INCOME

(Unaudited)

 

   

For the Nine Months Ended

 
   

September 30, 2024

   

September 30, 2023

 
   

Average

   

Interest

   

Yield /

   

Average

   

Interest

   

Yield /

 

(tax-equivalent basis, dollars in thousands)

 

Balance

   

& Fees

   

Rate

   

Balance

   

& Fees

   

Rate

 

Interest-earning assets

                                               

Cash and cash equivalents (1)

  $ 293,597     $ 12,560       5.71 %   $ 177,393     $ 6,812       5.13 %

FHLB Stock

    15,000       984       8.76 %     15,000       814       7.26 %

Securities

                                               

Available for sale (2)

    312,352       10,302       4.41 %     332,007       10,245       4.13 %

Held to maturity (2)

    5,203       140       3.59 %     5,610       151       3.60 %

Mortgage loans held for sale

    1,802       105       7.78 %     295       16       7.25 %

Loans held for investment: (3)

                                               

Real estate

    2,851,625       126,852       5.94 %     3,041,393       134,791       5.93 %

Commercial

    181,716       11,236       8.26 %     214,618       13,562       8.45 %

Total loans held for investment

    3,033,341       138,088       6.08 %     3,256,011       148,353       6.09 %

Total interest-earning assets

    3,661,295     $ 162,179       5.92 %     3,786,316     $ 166,391       5.88 %

Total noninterest-earning assets

    242,802                       244,822                  

Total average assets

  $ 3,904,097                     $ 4,031,138                  
                                                 

Interest-bearing liabilities

                                               

NOW

  $ 56,924       851       2.00 %   $ 59,476     $ 511       1.15 %

Money Market

    427,884       11,496       3.59 %     431,299       7,315       2.27 %

Saving deposits

    162,207       2,277       1.88 %     118,550       354       0.40 %

Time deposits, $250,000 and under

    1,087,501       38,476       4.73 %     1,141,290       33,905       3.97 %

Time deposits, greater than $250,000

    792,310       29,249       4.93 %     729,699       20,519       3.76 %

Total interest-bearing deposits

    2,526,826       82,349       4.35 %     2,480,314       62,604       3.37 %

FHLB advances

    150,182       1,331       1.18 %     179,707       2,428       1.81 %

Long-term debt

    119,276       3,886       4.35 %     173,780       6,584       5.07 %

Subordinated debentures

    15,012       1,153       10.26 %     14,794       1,084       9.80 %

Total interest-bearing liabilities

    2,811,296       88,719       4.22 %     2,848,595       72,700       3.41 %

Noninterest-bearing liabilities

                                               

Noninterest-bearing deposits

    528,624                       624,781                  

Other noninterest-bearing liabilities

    52,955                       58,786                  

Total noninterest-bearing liabilities

    581,579                       683,567                  

Shareholders' equity

    511,222                       498,976                  

Total liabilities and shareholders' equity

  $ 3,904,097                     $ 4,031,138                  

Net interest income / interest rate spreads

          $ 73,460       1.70 %           $ 93,691       2.47 %

Net interest margin

                    2.68 %                     3.31 %
                                                 

Total cost of deposits

  $ 3,055,450     $ 82,349       3.60 %   $ 3,105,095     $ 62,604       2.70 %

Total cost of funds

  $ 3,339,920     $ 88,719       3.55 %   $ 3,473,376     $ 72,700       2.80 %

 


(1)

Includes income and average balances for interest-earning time deposits and other miscellaneous interest-earning assets.

(2)

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

(3)

Average loan balances include nonaccrual loans. Interest income on loans includes the effects of discount accretion and net deferred loan origination fees and costs accounted for as yield adjustments.

 

 

10

 

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

 

 

At or for the Three Months Ended

   

At or for the Nine Months Ended September 30,

 
 

September 30,

 

June 30,

   

September 30,

                 
 

2024

 

2024

   

2023

   

2024

   

2023

 

Per share data (common stock)

                                 

Book value

$ 28.81

  $ 28.12     $ 26.45     $ 28.81     $ 26.45  

Tangible book value (1)

$ 24.64

  $ 24.06     $ 22.53     $ 24.64     $ 22.53  

Performance ratios

                                 

Return on average assets, annualized

0.72%

    0.76 %     0.83 %     0.76 %     1.01 %

Return on average shareholders' equity, annualized

5.47%

    5.69 %     6.66 %     5.82 %     8.14 %

Return on average tangible common equity, annualized (1)

6.40%

    6.65 %     7.82 %     6.81 %     9.58 %

Noninterest income to average assets, annualized

0.59%

    0.36 %     0.27 %     0.43 %     0.25 %

Noninterest expense to average assets, annualized

1.78%

    1.79 %     1.65 %     1.76 %     1.80 %

Yield on average earning assets

5.94%

    5.89 %     5.78 %     5.92 %     5.88 %

Yield on average loans

6.13%

    6.04 %     5.99 %     6.08 %     6.09 %

Cost of average total deposits (2)

3.63%

    3.59 %     3.14 %     3.60 %     2.70 %

Cost of average interest-bearing deposits

4.39%

    4.36 %     3.83 %     4.35 %     3.37 %

Cost of average interest-bearing liabilities

4.24%

    4.22 %     3.80 %     4.22 %     3.41 %

Net interest spread

1.70%

    1.67 %     1.98 %     1.70 %     2.47 %

Net interest margin

2.68%

    2.67 %     2.87 %     2.68 %     3.31 %

Efficiency ratio (3)

57.51%

    62.38 %     55.59 %     59.90 %     53.64 %

Common stock dividend payout ratio

41.03%

    41.03 %     35.56 %     39.34 %     30.00 %

 


(1)

Non-GAAP measure. See Non–GAAP reconciliations set forth at the end of this press release.
(2) Total deposits include non-interest bearing deposits and interest-bearing deposits.

(3)

Ratio calculated by dividing noninterest expense by the sum of net interest income before provision for credit losses and noninterest income.

 

11

 

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands)

 

   

At or for the quarter ended

 
   

September 30,

   

June 30,

   

September 30,

 
   

2024

   

2024

   

2023

 

Credit Quality Data:

                       

Special mention loans

  $ 77,501     $ 19,520     $ 31,212  

Special mention loans to total loans

    2.51 %     0.64 %     1.00 %

Substandard loans

  $ 79,831     $ 63,076     $ 71,401  

Substandard loans to total loans

    2.58 %     2.07 %     2.29 %

Loans 30-89 days past due, excluding nonperforming loans

  $ 10,625     $ 11,270     $ 19,662  

Loans 30-89 days past due, excluding nonperforming loans, to total loans

    0.34 %     0.37 %     0.63 %

Nonperforming loans

  $ 60,662     $ 54,589     $ 40,146  

OREO

                284  

Nonperforming assets

  $ 60,662     $ 54,589     $ 40,430  

Nonperforming loans to total loans

    1.96 %     1.79 %     1.29 %

Nonperforming assets to total assets

    1.52 %     1.41 %     0.99 %
                         

Allowance for loan losses

  $ 43,685     $ 41,741     $ 42,430  

Allowance for loan losses to total loans

    1.41 %     1.37 %     1.36 %

Allowance for loan losses to nonperforming loans

    72.01 %     76.46 %     105.69 %

Net charge-offs

  $ 1,201     $ 551     $ 2,206  

Net charge-offs to average loans

    0.16 %     0.07 %     0.28 %
                         

Capital ratios (1)

                       

Tangible common equity to tangible assets (2)

    11.13 %     11.53 %     10.71 %

Tier 1 leverage ratio

    12.19 %     12.48 %     11.68 %

Tier 1 common capital to risk-weighted assets

    18.16 %     18.89 %     17.65 %

Tier 1 capital to risk-weighted assets

    18.74 %     19.50 %     18.22 %

Total capital to risk-weighted assets

    24.79 %     25.67 %     26.24 %

 


(1) September 30, 2024 capital ratios are preliminary.
(2)

Non-GAAP measure. See Non-GAAP reconciliations set forth at the end of this press release.

 

12

 

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

 

 

Loan Portfolio Detail

 

As of September 30, 2024

 

As of June 30, 2024

   

As of September 30, 2023

 

(dollars in thousands)

 

$

 

%

 

$

    %    

$

    %  

Loans:

                                         

Commercial and industrial

  $ 128,861  

4.2%

  $ 126,649       4.2 %   $ 127,655       4.1 %

SBA

    48,089  

1.6%

    50,323       1.7 %     50,420       1.6 %

Construction and land development

    180,196  

5.8%

    202,459       6.6 %     259,778       8.3 %

Commercial real estate (1)

    1,252,682  

40.5%

    1,190,207       39.1 %     1,164,210       37.3 %

Single-family residential mortgages

    1,473,396  

47.7%

    1,467,802       48.2 %     1,505,307       48.2 %

Other loans

    8,672  

0.2%

    10,272       0.2 %     13,582       0.5 %

Total loans (2)

  $ 3,091,896  

100.0%

  $ 3,047,712       100.0 %   $ 3,120,952       100.0 %

Allowance for loan losses

    (43,685 )       (41,741 )             (42,430 )        

Total loans, net

  $ 3,048,211       $ 3,005,971             $ 3,078,522          

 


(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 of $467, $645, and $383 as of September 30, 2024, June 30, 2024, and September 30, 2023, respectively.

 

Deposits

 

As of September 30, 2024

 

As of June 30, 2024

   

As of September 30, 2023

 

(dollars in thousands)

 

$

 

%

 

$

    %    

$

    %  

Deposits:

                                         

Noninterest-bearing demand

  $ 543,623  

17.6%

  $ 542,971       18.0 %   $ 572,393       18.1 %

Savings, NOW and money market accounts

    666,089  

21.5%

    647,770       21.4 %     608,020       19.3 %

Time deposits, $250,000 and under

    926,877  

30.0%

    921,712       30.5 %     848,868       26.9 %

Time deposits, greater than $250,000

    808,304  

26.1%

    790,478       26.1 %     687,365       21.8 %

Wholesale deposits (1)

    147,291  

4.8%

    120,674       4.0 %     437,426       13.9 %

Total deposits

  $ 3,092,184  

100.0%

  $ 3,023,605       100.0 %   $ 3,154,072       100.0 %

 


(1)

Includes brokered deposits, collateralized deposits from the State of California, and deposits acquired through internet listing services.

 

13

 

Non-GAAP Reconciliations

 

Tangible Book Value Reconciliations

 

Tangible book value per share is a non-GAAP disclosure. Management measures tangible book value per share to assess the Company’s capital strength and business performance and believes this is helpful to investors as additional tools for further understanding our 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 September 30, 2024, June 30, 2024, and September 30, 2023.

 

                       

(dollars in thousands, except share and per share data)

 

September 30, 2024

   

June 30, 2024

   

September 30, 2023

 

Tangible common equity:

                       

Total shareholders' equity

  $ 509,728     $ 511,291     $ 502,511  

Adjustments

                       

Goodwill

    (71,498 )     (71,498 )     (71,498 )

Core deposit intangible

    (2,194 )     (2,394 )     (3,010 )

Tangible common equity

  $ 436,036     $ 437,399     $ 428,003  

Tangible assets:

                       

Total assets-GAAP

  $ 3,990,477     $ 3,868,186     $ 4,069,354  

Adjustments

                       

Goodwill

    (71,498 )     (71,498 )     (71,498 )

Core deposit intangible

    (2,194 )     (2,394 )     (3,010 )

Tangible assets

  $ 3,916,785     $ 3,794,294     $ 3,994,846  

Common shares outstanding

    17,693,416       18,182,154       18,995,303  

Common equity to assets ratio

    12.77 %     13.22 %     12.35 %

Tangible common equity to tangible assets ratio

    11.13 %     11.53 %     10.71 %

Book value per share

  $ 28.81     $ 28.12     $ 26.45  

Tangible book value per share

  $ 24.64     $ 24.06     $ 22.53  

 

Return on Average Tangible Common Equity

 

Management measures return on average tangible common equity (“ROATCE”) to assess the Company’s capital strength and business performance and believes this is helpful to investors as an additional tool for further understanding our performance. Tangible equity excludes goodwill and other intangible assets (excluding mortgage servicing rights), and is reviewed by banking and financial institution regulators when assessing a financial institution’s capital adequacy. This non-GAAP financial measure should not be considered a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled measures used by other companies. The following table reconciles ROATCE to its most comparable GAAP measure:

 

   

Three Months Ended

   

Nine Months Ended September 30,

 

(dollars in thousands)

 

September 30, 2024

   

June 30, 2024

   

September 30, 2023

   

2024

   

2023

 

Net income available to common shareholders

  $ 6,999     $ 7,245     $ 8,473     $ 22,280     $ 30,392  

Average shareholders' equity

    508,720       512,185       504,432       511,222       498,976  

Adjustments:

                                       

Average goodwill

    (71,498 )     (71,498 )     (71,498 )     (71,498 )     (71,498 )

Average core deposit intangible

    (2,326 )     (2,525 )     (3,165 )     (2,525 )     (3,398 )

Adjusted average tangible common equity

  $ 434,896     $ 438,162     $ 429,769     $ 437,199     $ 424,080  

Return on average common equity

    5.47 %     5.69 %     6.66 %     5.82 %     8.14 %

Return on average tangible common equity

    6.40 %     6.65 %     7.82 %     6.81 %     9.58 %

 

 

14
Image Exhibit

Exhibit 99.2

 

 

 

https://cdn.kscope.io/7df2bb980c4c76c4a110af2765df5758-rbb_page01.jpg

 

 

 

 
https://cdn.kscope.io/7df2bb980c4c76c4a110af2765df5758-rbb_page02.jpg

 

 

 
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