RBB Bancorp Reports Fourth Quarter and Full Year Earnings for 2020

January 25, 2021

Conference Call and Webcast Scheduled for Tuesday, January 26, 2021 at 11:00 a.m. Pacific Time/2:00 p.m. Eastern Time

Fourth Quarter 2020 Highlights

Net income of $11.1 million, or $ 0.56 diluted earnings per share, increased $2.6 million, or 30.8%, from the prior quarter and increased $474,000, or 4.4%, from the fourth quarter of 2019
Total deposits (excluding brokered deposits) increased by $23.4 million, or 3.6% annualized growth, from the end of the prior quarter
Net interest margin of 3.7% increased by 8 basis points from the prior quarter and increased 20 basis points from the fourth quarter of 2019

LOS ANGELES--(BUSINESS WIRE)--Jan. 25, 2021-- RBB Bancorp (NASDAQ:RBB) and its subsidiaries, Royal Business Bank (“the Bank”) and RBB Asset Management Company (“RAM”), collectively referred to herein as “the Company,” announced financial results for the quarter ended December 31, 2020.

The Company reported net income of $11.1 million, or $ 0.56 diluted earnings per share, for the three months ended December 31, 2020, compared to net income of $8.5 million, or $ 0.43 diluted earnings per share, and $10.7 million, or $0.52 diluted earnings per share, for the three months ended September 30, 2020 and December 31, 2019, respectively.

“Royal Business Bank finished 2020 with strong fourth quarter results, concluding a challenging year that demonstrated the resilience of our differentiated business model,” said Mr. Alan Thian, Chairman, President and CEO of RBB Bancorp. “Fourth quarter earnings benefitted from an increase in our net interest margin and gains on loan sales. Higher than anticipated loan payoffs resulted in a modest reduction in our loan portfolio following the strong growth we saw in the third quarter. We anticipate returning to loan growth in the first quarter. Our asset quality remains solid and we remain well capitalized with ample access to liquidity. Loans modified under the CARES Act outstanding continue to decrease and now represent 1.8% of gross loans outstanding.”

"Our board of directors approved a quarterly dividend of $0.12 per share, as clarity on our future performance improved," Mr. Thian concluded.

Key Performance Ratios

Net income of $11.1 million for the fourth quarter of 2020 produced an annualized return on average assets of 1.33%, an annualized return on average tangible common shareholders’ equity of 12.58%, and an annualized return on average shareholders’ equity of 10.38%. This compares to an annualized return on average assets of 1.05%, an annualized return on average tangible common shareholders’ equity of 9.81%, and an annualized return on average shareholders’ equity of 8.06% for the third quarter of 2020. The efficiency ratio for the fourth quarter of 2020 was 43.32%, compared to 46.63% for the prior quarter. The improvement in the efficiency ratio was primarily due to improved net interest income and non-interest income.

Net Interest Income and Net Interest Margin

Net interest income, before provision for loan losses, was $28.9 million for the fourth quarter of 2020, compared to $27.3 million for the third quarter of 2020. The $1.6 million increase was primarily attributable to a $114.1 million increase in average earning assets and a $21.5 million increase in average noninterest-bearing deposits, partially offset by a $73.6 million increase in average interest-bearing liabilities. Net interest income was also favorably impacted by an 8 basis point increase in the net interest margin. Accretion of purchase discounts from prior acquisitions contributed $275,000 to net interest income in the fourth quarter of 2020, compared to $634,000 in the third quarter of 2020.

Compared to the fourth quarter of 2019, net interest income, before provision for loan losses, increased $5.8 million from $23.1 million. The increase was primarily attributable to a $492.4 million increase in average earning assets and a $170.9 million increase in average noninterest-bearing deposits, partially offset by a $331.5 million increase in average interest-bearing liabilities. The increases in average earning assets and total deposits were primarily due to the Pacific Global Bank (“PGB”) acquisition, and increased loan and deposit originations.

Net interest margin was 3.67% for the fourth quarter of 2020, an increase of 8 basis points from 3.59% in the third quarter of 2020. The increase was primarily attributable to a 16 basis point decrease in the cost of total deposits and a 13 basis point decrease in the cost of borrowings (FHLB advances, long-term debt and subordinated debentures), partially offset by an 8 basis point decrease in the yield on average earning assets. Loan discount accretion contributed 3 basis points to the net interest margin in the fourth quarter of 2020, compared to 8 basis points in the third quarter of 2020.

Noninterest Income

Noninterest income was $4.5 million for the fourth quarter of 2020, an increase of $1.8 million from $2.7 million in the third quarter of 2020. The increase was driven by an increase in gain on loan sales of $1.7 million as the Company sold $30.6 million more loans in the fourth quarter than in the prior quarter generally due to increased market activity following the initial impact of the COVID-19 pandemic.

The Company sold $24.7 million in FNMA qualified mortgage loans for a net gain of $645,000 and sold $24.3 million in qualified and non-qualified mortgage loans to private investors for a gain of $1.2 million during the fourth quarter of 2020. This compared to $17.7 million in FNMA qualified mortgage loans for a net gain of $536,000 and $11.8 million in non-qualified mortgage loans to private investors for a gain of $224,000 during the third quarter of 2020. The Company sold $11.3 million in SBA loans during the fourth quarter of 2020 for a net gain of $595,000, compared to no SBA loans sold during the third quarter of 2020.

Compared to the fourth quarter of 2019, noninterest income decreased by $1.3 million from $5.8 million. The decrease was primarily attributable to a decrease of $1.3 million in gain on loan sales and a decrease of $611,000 in loan servicing fees.

Noninterest Expense

Noninterest expense for the fourth quarter of 2020 was $14.5 million, compared to $14.0 million for the third quarter of 2020. The $475,000 increase was primarily attributable to a $506,000 increase in compensation and employee benefits expenses, $164,000 increase in marketing and business promotion expenses, partially offset by a $188,000 decrease in data processing expenses, and a $153,000 decrease in insurance and regulatory assessments.

Noninterest expense increased from $13.5 million in the fourth quarter of 2019. The $988,000 increase was primarily due to a $515,000 increase in data processing expense, a $477,000 increase in legal and professional expense, and a $284,000 increase in salaries and employee benefits expenses. These were partially offset by a $226,000 decrease in merger and conversion expenses, and a $172,000 decrease in OREO expense.

Income Taxes

The effective tax rate was 29.92% for the fourth quarter of 2020, 29.81% for the third quarter of 2020, and 27.99% for the fourth quarter of 2019.

Loan Portfolio

Loans held for investment, net of deferred fees and discounts, totaled $2.7 billion as of December 31, 2020, a decrease of $48.4 million from September 30, 2020, and an increase of $509.8 million from December 31, 2019. The decrease from the prior quarter was primarily due to an increase in loan payoffs. Single-family residential mortgages decreased by $39.6 million net of payoffs, paydowns and loan sales. Commercial real estate loans increased by $28.5 million, construction and land development loans increased by $3.2 million, other loans increased by $758,000, SBA loans decreased by $13.4 million, and commercial and industrial loans decreased by $27.8 million.

During the fourth quarter of 2020, single-family residential mortgage production was $110.3 million (mortgage loans held for investment and held for sale), payoffs and paydowns were $74.5 million, and single-family residential mortgage loan sales were $49.3 million. During the third quarter of 2020, single-family residential mortgage production was $82.6 million, payoffs and paydowns were $45.7 million, and loan sales were $49.0 million.

Mortgage loans held for sale were $50.0 million as of December 31, 2020, an increase of $26.1 million from $23.9 million at September 30, 2020 and a decrease of $58.2 million from $108.2 million as of December 31, 2019. The Company originated approximately $50.0 million in mortgage loans for sale for the fourth quarter of 2020, compared with $28.7 million during the prior quarter. In the fourth quarter, SBA loan production was $5.8 million and total loan sales were $11.1 million.

Deposits

Deposits were $2.6 billion at December 31, 2020, an increase of $23.4 million from September 30, 2020, and an increase of $432.9 million from December 31, 2019, excluding brokered deposits. The increase in total deposits from the prior quarter was primarily attributable to organic deposit growth. Noninterest-bearing deposits decreased by $25.1 million and interest-bearing non-maturity deposits increased by $76.7 million. Time deposits decreased by $28.2 million. As of December 31, 2020, time deposits included $17.4 million in brokered CDs, as compared to $17.4 million as of September 30, 2020 and $67.1 million as of December 31, 2019.

Asset Quality

Nonperforming assets totaled $19.8 million, or 0.59% of total assets at December 31, 2020, compared to $18.3 million, or 0.54%, of total assets at September 30, 2020. The increase in nonperforming assets was primarily due to an increase in non-accrual loans. Nonperforming assets consist of OREO, loans modified under troubled debt restructurings (“TDR”), non-accrual loans, and loans past due 90 days or more and still accruing interest.

Loans held-for-investment 30 to 89 days past due decreased by $12.8 million to $8.9 million at December 31, 2020 from $21.7 million at September 30, 2020.

In the fourth quarter of 2020, there were $305,000 in net charge-offs, up from $47,000 in the prior quarter.

The Company recorded a provision for credit losses of $3.0 million for the fourth quarter of 2020, a decrease from $3.9 million in the prior quarter, primarily attributable to lower loan balances.

The allowance for loan losses totaled $29.3 million, or 1.08% of loans held for investment at December 31, 2020, compared with $26.6 million, or 0.97%, of total loans at September 30, 2020.

As of December 31, 2020, borrowers representing 256 loans totaling $32.9 million, or 1.2% of the Company’s total loan portfolio, have funded under the SBA’s Paycheck Protection Program due to the COVID-19 pandemic.

We have received 14 requests for payment deferments from our SBA customers. All SBA deferments are three-months, 13 of which started in October 2020. As of January 15, 2021 none of the SBA borrowers have made a payment due to waiting on new SBA payment support program that was part of the recent stimulus bill. The following table details the 14 SBA loan deferments:

	Requested SBA Loan Deferments
	Number		Principal Amount ($000)		Principal Amount Average LTV%			Guaranteed Amount ($000)		Unguaranteed Amount ($000)		Unguaranteed Amount to Total SBA Loans
Hospitality		7	$	29,591		75	%	$	22,193	$	7,398		7.6	%
General retail		2		3,195		72	%		2,396		799		0.8	%
Restaurant		1		1,846		75	%		1,384		461		0.5	%
Transportation		3		1,042		30	%		782		261		0.3	%
Fitness		1		101		0	%		86		15		0.0	%
		14	$	35,775				$	26,841	$	8,934		9.1	%

The following table provides details regarding the Company's COVID-19 loan deferral activity through January 15, 2021.

	As of June 30, 2020				As of October 23, 2020				As of January 15, 2021
	Loans Deferred				Loans Deferred				Loans Deferred
	Number		Principal Amount ($000)		Number		Principal Amount ($000)		Number		Principal Amount ($000)
General retail (excluding SBA)		34	$	94,251		3	$	26,840		2	$	3,174
Mixed use commercial		38		58,841		4		10,547		1		7,500
Hospitality (excluding SBA) (1)		5		25,343		2		12,929		1		6,419
Restaurants (excluding SBA)		11		4,186		1		12		—		—
Multifamily		6		9,086		—		—		—		—
Commercial, office and other (1)		6		22,983		5		19,881		5		18,742
SFR mortgage loans - Western region		183		118,484		38		29,604		14		8,770
SFR mortgage loans - Eastern region		203		85,935		10		4,106		11		4,925
SFR mortgage loans - Chicago metropolitan		84		14,824		4		719		1		249
Total		570	$	433,933		67	$	104,638		35	$	49,779

(1) Loans with a principal amount of $23.5 million are principal deferments only. Interest is paid up to date.

The Company does not have any shared national credits or loans, backed by airlines or cruise lines, on deferral as of January 15, 2021.

Properties

In October 2020, we closed the Flushing Financial Center branch and consolidated operations into our Roosevelt branch location.

The Bank opened a new full service banking branch in Edison, New Jersey on December 1, 2020. The branch is located at 561 US-1, in the Wicks Shopping Plaza in Edison. The Bank purchased a property located at 2057 86th Street, Brooklyn, New York, in the Bensonhurst neighborhood, to house a full-service branch. We expect this branch to open in the second half of 2021. The Bank has leased a location on Canal Street in Manhattan to which to move our Bowery Street branch in mid-2021.

Corporate Overview

RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. The Company has total assets of $3.3 billion. Its wholly-owned subsidiary, Royal Business 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, and three branches in the Chicago neighborhoods of Chinatown and Bridgeport, and Edison, New Jersey. 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 Irvine, California, one branch in Las Vegas, Nevada, six branches and one loan operation center in Brooklyn, Queens and Manhattan in New York, three branches in Chicago, Illinois and one branch in Edison, New Jersey. The Company's administrative and lending center is located at 1055 Wilshire Blvd., Los Angeles, California 90017, and its finance and operations center is located at 7025 Orangethorpe Avenue, Buena Park, California 90621. The Company's website address is www.royalbusinessbankusa.com.

Conference Call

Management will hold a conference call at 11:00 a.m. Pacific time/2:00 p.m. Eastern time tomorrow, January 26, 2021, to discuss the Company’s fourth quarter 2020 financial results.

To listen to the conference call, please dial 1-833-519-1355 or 1-918-922-6505, passcode 5947189. A replay of the call will be made available at 1-800-585-8367 or 1-404-537-3406, passcode 5947189, approximately one hour after the conclusion of the call and will remain available through February 2, 2021.

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, including our recent acquisition of PGB Holdings, Inc. and its wholly-owned subsidiary, Pacific Global Bank, and our recently completed acquisition of First American International Corp., 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 for the year ended December 31, 2019, 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, 2019) (Dollars in thousands)

	December 31			September 30			June 30			March 31			December 31
	2020			2020			2020			2019			2019
Assets
Cash and due from banks	$	137,654		$	121,630		$	94,844		$	250,079		$	114,763
Federal funds sold and other cash equivalents		57,000			57,000			57,000						67,000
Total cash and cash equivalents		194,654			178,630			151,844			250,079			181,763
Interest-bearing deposits in other financial institutions		600			600			600			1,196			600
Investment securities available for sale		210,867			214,662			185,756			58,537			126,069
Investment securities held to maturity		7,174			7,569			7,615			9,449			8,332
Mortgage loans held for sale		49,963			23,886			15,479			375,430			108,194
Loans held for investment		2,706,766			2,755,153			2,594,620			2,120,413			2,196,934
Allowance for loan losses		(29,337	)		(26,634	)		(22,820	)		(18,236	)		(18,816	)
Net loans held for investment		2,677,429			2,728,519			2,571,800			2,102,177			2,178,118
Premises and equipment, net		27,103			24,237			23,965			17,342			16,813
Federal Home Loan Bank (FHLB) stock		15,641			15,641			15,641			8,899			15,000
Net deferred tax assets		2,547			1,080			—			4,389			2,326
Cash surrender value of life insurance		35,121			34,930			34,736			33,769			34,353
Goodwill		69,243			69,243			69,209			58,383			58,563
Servicing assets		13,965			14,724			15,595			17,288			17,083
Core deposit intangibles		5,196			5,519			5,876			7,212			6,100
Accrued interest and other assets		40,569			40,336			38,065			33,968			35,221
Total assets	$	3,350,072		$	3,359,576		$	3,136,181		$	2,978,118		$	2,788,535
Liabilities and shareholders' equity
Deposits:
Noninterest-bearing demand	$	617,206		$	642,332		$	574,553		$	418,953		$	458,763
Savings, NOW and money market accounts		731,084			654,378			601,941			480,959			537,490
Time deposits		1,286,838			1,315,038			1,260,026			1,284,428			1,252,685
Total deposits		2,635,128			2,611,748			2,436,520			2,184,340			2,248,938
FHLB advances		150,000			190,000			150,000			275,000			—
Long-term debt, net of debt issuance costs		104,391			104,305			104,220			103,793			104,049
Subordinated debentures		14,283			14,229			14,174			9,548			9,673
Accrued interest and other liabilities		17,782			17,878			17,242			20,634			18,185
Total liabilities		2,921,584			2,938,160			2,722,156			2,593,315			2,380,845
Shareholders' equity:
Shareholder's equity		427,287			420,329			412,827			385,395			407,379
Non-controlling interest		72			72			72			72			72
Accumulated other comprehensive income - Net of tax		1,129			1,015			1,126			(664	)		239
Total shareholders' equity		428,488			421,416			414,025			384,803			407,690
Total liabilities and shareholders’ equity	$	3,350,072		$	3,359,576		$	3,136,181		$	2,978,118		$	2,788,535

RBB BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) *(Dollars in thousands, except per share amounts)*

	For the three months ended
	December 31, 2020		September 30, 2020		December 31, 2019
Interest and dividend income:
Interest and fees on loans	$	34,832	$	34,153	$	32,178
Interest on interest-bearing deposits		55		61		373
Interest on investment securities		639		621		676
Dividend income on FHLB stock		193		190		264
Interest on federal funds sold and other		145		100		416
Total interest income		35,864		35,125		33,907
Interest expense:
Interest on savings deposits, NOW and money market accounts		736		779		1,237
Interest on time deposits		3,900		4,746		7,559
Interest on subordinated debentures and long term debt		1,901		1,905		1,915
Interest on other borrowed funds		450		444		73
Total interest expense		6,987		7,874		10,784
Net interest income before provision for loan losses		28,877		27,251		23,123
Provision for loan losses		3,008		3,861		659
Net interest income after provision for loan losses		25,869		23,390		22,464
Noninterest income:
Service charges, fees and other		1,565		1,143		1,096
Gain on sale of loans		2,445		760		3,762
Loan servicing fees, net of amortization		206		546		817
Recoveries on loans acquired in business combinations		5		32		70
Gain on derivatives		78		—		—
Increase in cash surrender value of life insurance		191		194		195
Gain on sale of securities		—		52		—
(Loss)/Gain on sale of other real estate owned		—		—		(117	)
Total noninterest income		4,490		2,727		5,823
Noninterest expense:
Salaries and employee benefits		8,105		7,599		7,821
Occupancy and equipment expenses		2,400		2,360		2,390
Data processing		1,012		1,200		497
Legal and professional		794		675		317
Office expenses		295		271		292
Marketing and business promotion		295		131		382
Insurance and regulatory assessments		210		363		147
Core deposit premium		324		357		344
OREO expenses		4		3		176
Merger and conversion expenses		5		62		231
Other expenses		1,009		957		868
Total noninterest expense		14,453		13,978		13,465
Income before income taxes		15,906		12,139		14,822
Income tax expense		4,759		3,619		4,149
Net income	$	11,147	$	8,520	$	10,673

Net income per share
Basic	$	0.57	$	0.43	$	0.53
Diluted	$	0.56	$	0.43	$	0.52
Cash Dividends declared per common share	$	0.09	$	0.06	$	0.10
Weighted-average common shares outstanding
Basic		19,655,621		19,717,568		20,001,916
Diluted		19,812,401		19,804,892		20,389,099

RBB BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited, except for December 31, 2019) *(Dollars in thousands, except per share amounts)*

	For the twelve months ended
	December 31, 2020		December 31, 2019
Interest and dividend income:
Interest and fees on loans	$	133,894	$	135,159
Interest on interest-earning deposits		641		1,785
Interest on investment securities		2,968		2,652
Dividend income on FHLB stock		572		1,079
Interest on federal funds sold and other		1,045		1,050
Total interest income		139,120		141,725
Interest expense:
Interest on savings deposits, NOW and money market accounts		3,540		4,886
Interest on time deposits		21,665		29,347
Interest on subordinated debentures and long term debt		7,677		7,698
Interest on other borrowed funds		1,483		2,930
Total interest expense		34,365		44,861
Net interest income		104,755		96,864
Provision for loan losses		11,823		2,390
Net interest income after provision for loans losses		92,932		94,474
Noninterest income:
Service charges, fees and other		4,852		4,072
Gain on sale of loans		5,997		9,893
Loan servicing fees, net of amortization		2,052		3,383
Recoveries on loans acquired in business combinations		84		143
Unrealized gain on equity investments		—		147
Increase in cash surrender value of life insurance		767		775
Gain on derivatives		78		—
Gain on sale of securities		210		7
Gain on sale of fixed assets		—		6
Loss on sale of other real estate owned		—		(106	)
Total noninterest income		14,040		18,320
Noninterest expense:
Salaries and employee benefits		33,312		32,909
Occupancy and equipment expenses		9,691		9,750
Data processing		4,236		3,699
Legal and professional		2,743		1,832
Office expenses		1,226		1,257
Marketing and business promotion		751		1,308
Insurance and regulatory assessments		984		900
Core deposit premium		1,395		1,501
OREO expenses		35		337
Merger expenses		746		471
Other expenses		4,394		3,509
Total noninterest expense		59,513		57,473
Income before income taxes		47,459		55,321
Income tax expense		14,531		16,112
Net income	$	32,928	$	39,209

Net income per share
Basic	$	1.66	$	1.96
Diluted	$	1.65	$	1.92
Cash Dividends declared per common share	$	0.33	$	0.40
Weighted-average common shares outstanding
Basic		19,763,422		20,017,306
Diluted		19,921,859		20,393,424

RBB BANCORP AND SUBSIDIARIES AVERAGE BALANCE SHEET AND NET INTEREST INCOME (Unaudited) *(Dollars in thousands, except per share amounts)*

	For the three months ended
	December 31, 2020							September 30, 2020							December 31, 2019
	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)	$	188,430	$	393		0.83	%	$	179,521	$	351		0.78	%	$	172,431	$	1,053		2.42	%
Securities
Available for sale		222,762		579		1.03	%		168,151		558		1.32	%		94,400		605		2.54	%
Held to maturity (2)		7,383		68		3.66	%		7,604		71		3.71	%		8,441		80		3.76	%
Mortgage loans held for sale		41,265		325		3.13	%		19,848		171		3.43	%		244,706		2,969		4.81	%
Loans held for investment: (3)
Real estate		2,282,937		29,705		5.18	%		2,266,752		29,616		5.20	%		1,793,647		24,182		5.35	%
Commercial		390,980		4,802		4.89	%		377,789		4,366		4.60	%		327,765		5,027		6.08	%
Total loans		2,673,917		34,507		5.13	%		2,644,541		33,982		5.11	%		2,121,412		29,209		5.46	%
Total earning assets		3,133,757	$	35,872		4.55	%		3,019,665	$	35,133		4.63	%		2,641,390	$	33,916		5.09	%
Noninterest-earning assets		196,071							204,638							165,659
Total assets	$	3,329,828						$	3,224,303						$	2,807,049

Interest-bearing liabilities
NOW and money market deposits	$	566,695	$	704		0.49	%	$	514,271	$	748		0.58	%	$	416,380	$	1,189		1.13	%
Savings deposits		128,727		32		0.10	%		126,635		31		0.10	%		96,813		48		0.20	%
Time deposits		1,293,070		3,900		1.20	%		1,284,351		4,746		1.47	%		1,296,379		7,559		2.31	%
Total interest-bearing deposits		1,988,492		4,636		0.93	%		1,925,257		5,525		1.14	%		1,809,572		8,796		1.93	%
FHLB advances		161,957		450		1.11	%		151,739		444		1.16	%		14,348		73		2.02	%
Long-term debt		104,335		1,748		6.67	%		104,252		1,748		6.67	%		103,997		1,748		6.67	%
Subordinated debentures		14,248		153		4.27	%		14,195		157		4.40	%		9,648		167		6.87	%
Total interest-bearing liabilities		2,269,032		6,987		1.23	%		2,195,443		7,874		1.43	%		1,937,565		10,784		2.21	%
Noninterest-bearing liabilities
Noninterest-bearing deposits		616,803							595,264							445,891
Other noninterest-bearing liabilities		16,830							13,270							19,851
Total noninterest-bearing liabilities		633,633							608,534							465,742
Shareholders' equity		427,163							420,326							403,742
Total liabilities and shareholders' equity	$	3,329,828						$	3,224,303						$	2,807,049
Net interest income / interest rate spreads			$	28,885		3.32	%			$	27,259		3.20	%			$	23,132		2.88	%
Net interest margin						3.67	%						3.59	%						3.47	%

(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 twelve months ended
	December 31, 2020							December 31, 2019
	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)	$	212,594	$	2,257		1.06	%	$	135,133	$	3,914		2.90	%
Securities
Available for sale		175,307		2,714		1.55	%		85,775		2,354		2.74	%
Held to maturity (2)		7,665		289		3.77	%		8,978		334		3.72	%
Mortgage loans held for sale		41,019		1,779		4.34	%		325,039		15,754		4.85	%
Loans held for investment: (3)
Real estate		2,176,695		113,966		5.24	%		1,767,923		97,024		5.49	%
Commercial		367,718		18,149		4.94	%		345,010		22,381		6.49	%
Total loans		2,544,413		132,115		5.19	%		2,112,933		119,405		5.65	%
Total earning assets		2,980,998	$	139,154		4.67	%		2,667,858	$	141,761		5.31	%
Noninterest-earning assets		204,617							167,324
Total assets	$	3,185,615						$	2,835,182

Interest-bearing liabilities
NOW and money market deposits	$	504,905	$	3,391		0.67	%	$	395,376	$	4,689		1.19	%
Savings deposits		123,568		149		0.12	%		97,670		197		0.20	%
Time deposits		1,312,443		21,665		1.65	%		1,279,344		29,347		2.29	%
Total interest-bearing deposits		1,940,916		25,205		1.30	%		1,772,390		34,233		1.93	%
FHLB advances		129,071		1,483		1.15	%		114,388		2,930		2.56	%
Long-term debt		104,210		6,990		6.71	%		103,870		6,991		6.73	%
Subordinated debentures		14,228		687		4.83	%		9,586		707		7.38	%
Total interest-bearing liabilities		2,188,425	$	34,365		1.57	%		2,000,234	$	44,861		2.24	%
Noninterest-bearing liabilities
Noninterest-bearing deposits		564,111							421,174
Other noninterest-bearing liabilities		15,164							19,879
Total noninterest-bearing liabilities		579,275							441,053
Shareholders' equity		417,915							393,895
Total liabilities and shareholders' equity	$	3,185,615						$	2,835,182
Net interest income / interest rate spreads			$	104,789		3.10	%			$	96,900		3.07	%
Net interest margin						3.52	%						3.63	%

(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
	December 31			September 30,			December 31
	2020			2020			2019
Per share data (common stock)
Earnings
Basic	$	0.57		$	0.43		$	0.53
Diluted	$	0.56		$	0.43		$	0.52
Dividends declared	$	0.09		$	0.06		$	0.10
Basic, excluding merger and conversion expense	$	0.57		$	0.43		$	0.54
Diluted, excluding merger and conversion expense	$	0.56		$	0.43		$	0.53
Book value	$	21.90		$	21.35		$	20.35
Tangible book value	$	18.10		$	17.56		$	17.12
Weighted average shares outstanding
Basic		19,655,621			19,717,568			20,001,916
Diluted		19,812,401			19,804,892			20,389,099
Shares outstanding at period end		19,565,921			19,739,280			20,030,866
Performance ratios
Return on average assets, annualized		1.33	%		1.05	%		1.51	%
Return on average shareholders' equity, annualized		10.38	%		8.06	%		10.49	%
Return on average tangible common equity, annualized		12.58	%		9.81	%		12.50	%
Noninterest income to average assets, annualized		0.54	%		0.34	%		0.82	%
Noninterest expense to average assets, annualized		1.73	%		1.72	%		1.90	%
Yield on average earning assets		4.55	%		4.63	%		5.09	%
Cost of average deposits		0.71	%		0.87	%		1.55	%
Cost of average interest-bearing deposits		0.93	%		1.14	%		1.93	%
Cost of average interest-bearing liabilities		1.23	%		1.43	%		2.21	%
Accretion on loans to average earning assets		0.03	%		0.08	%		0.10	%
Net interest spread		3.32	%		3.20	%		2.88	%
Net interest margin		3.67	%		3.59	%		3.47	%
Efficiency ratio		43.32	%		46.63	%		46.52	%
Common stock dividend payout ratio		15.79	%		13.95	%		18.87	%

RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited) *(Dollars in thousands, except per share amounts)*

	For the twelve months ended December 31,
	2020			2019
Per share data (common stock)
Earnings
Basic	$	1.66		$	1.96
Diluted	$	1.65		$	1.92
Basic, excluding merger expense	$	1.69		$	1.99
Diluted, excluding merger expense	$	1.68		$	1.94
Dividends declared	$	0.33		$	0.40
Book value	$	21.90		$	20.35
Tangible book value	$	18.10		$	17.12
Weighted average shares outstanding
Basic		19,763,422			20,017,306
Diluted		19,921,859			20,393,424
Shares outstanding at period end		19,565,921			20,030,866
Performance ratios
Return on average assets, annualized		1.03	%		1.38	%
Return on average shareholders' equity, annualized		7.88	%		9.95	%
Return on average tangible common equity, annualized		9.62	%		11.93	%
Noninterest income to average assets, annualized		0.44	%		0.65	%
Noninterest expense to average assets, annualized		1.87	%		2.03	%
Yield on average earning assets		4.67	%		5.31	%
Cost of average deposits		1.01	%		1.56	%
Cost of average interest-bearing deposits		1.30	%		1.93	%
Cost of average interest-bearing liabilities		1.57	%		2.24	%
Accretion on loans to average earning assets		0.08	%		0.11	%
Net interest spread		3.10	%		3.07	%
Net interest margin		3.52	%		3.63	%
Efficiency ratio		50.10	%		49.90	%
Common stock dividend payout ratio		19.88	%		20.41	%

RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited) *(Dollars in thousands, except per share amounts)*

	As of
	December 31,			September 30,			December 31,
	2020			2020			2019
Loan to deposit ratio		102.72	%		105.49	%		97.69	%
Core deposits / total deposits		76.65	%		99.34	%		70.46	%
Net non-core funding dependence ratio		12.47	%		14.47	%		21.04	%

Credit Quality Data:
Loans 30-89 days past due	$	8,939		$	21,735		$	4,393
Loans 30-89 days past due to total loans		0.33	%		0.79	%		0.20	%
Nonperforming loans	$	19,554		$	17,975		$	13,218
Nonperforming loans to total loans		0.72	%		0.65	%		0.60	%
Nonperforming assets	$	19,847		$	18,268		$	13,511
Nonperforming assets to total assets		0.59	%		0.54	%		0.48	%
Allowance for loan losses to total loans		1.08	%		0.97	%		0.86	%
Allowance for loan losses to nonperforming loans		150.03	%		148.17	%		142.35	%
Net charge-offs to average loans (for the quarter-to-date period)		0.05	%		0.01	%		0.23	%

Regulatory and other capital ratios—Company
Tangible common equity to tangible assets		10.81	%		10.55	%		12.59	%
Tier 1 leverage ratio		11.32	%		11.47	%		12.89	%
Tier 1 common capital to risk-weighted assets		14.63	%		14.11	%		17.16	%
Tier 1 capital to risk-weighted assets		15.22	%		14.69	%		17.65	%
Total capital to risk-weighted assets		20.78	%		20.05	%		23.82	%

Regulatory capital ratios—Bank only
Tier 1 leverage ratio		14.09	%		14.16	%		15.23	%
Tier 1 common capital to risk-weighted assets		18.95	%		18.13	%		20.87	%
Tier 1 capital to risk-weighted assets		18.95	%		18.13	%		20.87	%
Total capital to risk-weighted assets		20.20	%		19.26	%		21.86	%

RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited) *(Dollars in thousands, except per share amounts)*

	4th Quarter			3rd Quarter			2nd Quarter			1st Quarter			4th Quarter
Quarterly Consolidated Statements of Earnings	2020			2020			2020			2020			2019
Interest income
Loans, including fees	$	34,832		$	34,153		$	32,633		$	32,276		$	32,178
Investment securities and other		1,032			972			1,470			1,752			1,729
Total interest income		35,864			35,125			34,103			34,028			33,907
Interest expense
Deposits		4,636			5,525			6,715			8,329			8,796
Interest on subordinated debentures and other		1,901			1,905			1,915			1,956			1,915
Other borrowings		450			444			439			150			73
Total interest expense		6,987			7,874			9,069			10,435			10,784
Net interest income before provision for loan losses		28,877			27,251			25,034			23,593			23,123
Provision for loan losses		3,008			3,861			3,009			1,945			659
Net interest income after provision for loan losses		25,869			23,390			22,025			21,648			22,464
Noninterest income		4,490			2,727			2,208			4,615			5,823
Noninterest expense		14,453			13,978			14,819			16,263			13,465
Earnings before income taxes		15,906			12,139			9,414			10,000			14,822
Income taxes		4,759			3,619			2,901			3,252			4,149
Net income	$	11,147		$	8,520		$	6,513		$	6,748		$	10,673
Net income per common share - basic	$	0.57		$	0.43		$	0.33		$	0.34		$	0.53
Net income per common share - diluted	$	0.56		$	0.43		$	0.33		$	0.33		$	0.52
Cash dividends declared per common share	$	0.09		$	0.06		$	0.06		$	0.12		$	0.10
Cash dividends declared on common shares	$	1,777		$	1,184		$	1,184		$	2,407		$	2,003
Yield on average assets, annualized		1.33	%		1.05	%		0.83	%		0.90	%		1.51	%
Yield on average earning assets		4.55	%		4.63	%		4.60	%		4.86	%		5.09	%
Cost of average deposits		0.71	%		0.87	%		1.09	%		1.38	%		1.55	%
Cost of average interest-bearing deposits		0.93	%		1.14	%		1.41	%		1.72	%		1.93	%
Cost of average interest-bearing liabilities		1.23	%		1.43	%		1.66	%		1.98	%		2.21	%
Accretion on loans to average earning assets		0.03	%		0.08	%		0.13	%		0.10	%		0.10	%
Net interest margin		3.67	%		3.59	%		3.38	%		3.37	%		3.47	%

RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited, except for December 31, 2019) *(Dollars in thousands, except per share amounts)*

Loan Portfolio Detail	As of December 31, 2020					As of September 30, 2020					As of June 30, 2020					As of March 31, 2020					As of December 31, 2019
(dollars in thousands)	$			%		$			%		$			%		$			%		$			%
Loans:
Commercial and industrial	$	290,139			10.7	$	317,891			11.5	$	267,481			10.3	$	275,602			11.5	$	274,586			12.5
SBA		97,821			3.6		111,193			4.0		104,069			4.0		77,566			3.2		74,985			3.4
Construction and land development		186,723			6.9		183,569			6.7		145,754			5.6		120,115			5.0		96,020			4.4
Commercial real estate (1)		1,003,637			37.1		975,187			35.4		900,302			34.7		854,580			35.6		793,268			36.1
Single-family residential mortgages		1,124,357			41.5		1,163,982			42.2		1,174,927			45.3		1,070,649			44.6		957,254			43.6
Other loans		4,089			0.2		3,331			0.2		2,087			0.1		1,470			0.1		821			0.0
Total loans (2)	$	2,706,766			100.0	$	2,755,153			100.0	$	2,594,620			100.0	$	2,399,982			100.0	$	2,196,934			100.0
Allowance for loan losses		(29,337	)				(26,634	)				(22,820	)				(20,130	)				(18,816	)
Total loans, net	$	2,677,429				$	2,728,519				$	2,571,800				$	2,379,852				$	2,178,118

(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						Twelve Months Ended
Change in Allowance for Loan Losses	December 31,						December 31,
(dollars in thousands)	2020			2019			2020			2019
Beginning balance	$	26,634		$	19,386		$	18,816		$	17,577
Additions to the allowance charged to expense		3,008			659			11,823			2,390
Net charge-offs on loans		(305	)		(1,229	)		(1,302	)		(1,151	)
Ending balance	$	29,337		$	18,816		$	29,337		$	18,816

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 December 31, 2020 and 2019.


(dollars in thousands, except per share data)	December 31, 2020			September 30, 2020			December 31, 2019
Tangible common equity:
Total shareholders' equity	$	428,488		$	421,416		$	407,567
Adjustments
Goodwill		(69,243	)		(69,243	)		(58,563	)
Core deposit intangible		(5,196	)		(5,519	)		(6,100	)
Tangible common equity	$	354,049		$	346,654		$	342,904
Tangible assets:
Total assets-GAAP	$	3,350,072		$	3,359,576		$	2,788,535
Adjustments
Goodwill		(69,243	)		(69,243	)		(58,563	)
Core deposit intangible		(5,196	)		(5,519	)		(6,100	)
Tangible assets	$	3,275,633		$	3,284,814		$	2,723,872
Common shares outstanding		19,565,921			19,739,280			20,030,866
Tangible common equity to tangible assets ratio		10.81	%		10.55	%		12.59	%
Book value per share	$	21.90		$	21.35		$	20.35
Tangible book value per share	$	18.10		$	17.56		$	17.12

Earnings Per Share Excluding Merger and Conversion Expense (non-GAAP)

Earnings per share excluding merger and conversion expense 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 calculation of earnings per share with after-tax net income excluding tax-affected merger and conversion expense. This EPS calculation is presented for the quarters ended December 31, 2020, September 30, 2020 and December 31, 2019, plus for the twelve-month periods ending December 31, 2020 and 2019.

	For the three months ended									For the twelve months ended
	December 31, 2020			September 30, 2020			December 31, 2019			December 31, 2020			December 31, 2019
Earnings Per Share Excluding Merger and Conversion Expense (non-GAAP)
Net income after tax	$	11,147		$	8,520		$	10,673		$	32,928		$	39,209
Merger and conversion expense		5			62			231			746			471
Tax on merger and conversion expense		(1	)		(18	)		(65	)		(228	)		(137	)
Net adjustment		4			44			166			518			334
Adjusted net income after tax	$	11,151		$	8,564		$	10,839		$	33,446		$	39,543
Weighted average shares outstanding
Basic		19,655,621			19,717,568			20,001,916			19,763,422			20,017,306
Diluted		19,812,401			19,804,892			20,389,099			19,921,859			20,393,424
Adjusted Earnings Per Share
Basic, excluding merger and conversion expense	$	0.57		$	0.43		$	0.54		$	1.69		$	1.99
Diluted, excluding merger and conversion expense	$	0.56		$	0.43		$	0.53		$	1.68		$	1.94

Efficiency Ratio (non-GAAP)

The efficiency ratio is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. The efficiency ratio is non-interest expense divided by net interest income plus non-interest income. The efficiency ratio is presented for the quarters ended December 31, 2020, September 30, 2020 and December 31, 2019, plus the twelve-month periods ending December 31, 2020 and 2019.

	For the three months ended									For the twelve months ended
	December 31, 2020			September 30, 2020			December 31, 2019			December 31, 2020			December 31, 2019
Efficiency Ratio (non-GAAP)
Noninterest expense	$	14,453		$	13,978		$	13,465		$	59,513		$	57,473
Net interest income		28,877			27,251			23,123			104,755			96,864
Noninterest income		4,490			2,727			5,823			14,040			18,320
Net interest income and non-interest income	$	33,367		$	29,978		$	28,946		$	118,795		$	115,184
Efficiency ratio		43.32	%		46.63	%		46.52	%		50.10	%		49.90	%

View source version on businesswire.com: https://www.businesswire.com/news/home/20210125005866/en/

Yee Phong (Alan) Thian
Chairman, President and CEO
(626) 307-7559
David Morris
Executive Vice President and CFO
(714) 670-2488

Source: RBB Bancorp

Press Release Details

RBB Bancorp Reports Fourth Quarter and Full Year Earnings for 2020