rbb20200820_8k.htm
false 0001499422 0001499422 2021-01-22 2021-01-22
 
 


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): January 25, 2021 (January 22, 2021)
 

 
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 January 25, 2021, RBB Bancorp issued a press release setting forth the financial results for the quarter ended December 31, 2020, 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 Item 9.01 of this Current Report on Form 8-K (including Exhibits 99.1 and 99.2) shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set for the by specific reference in such filing.
 
Item 8.01 Other Events.
 
On January 22, 2021, RBB Bancorp announced that its Board of Directors declared a cash dividend of $0.12 per share of its common stock. The dividend is payable on February 12, 2021, to common shareholders of record as of February 1, 2021. A copy of the press release announcing the dividend is attached hereto as Exhibit 99.2.
 
Item 9.01 Financial Statements and Exhibits.
 
(d)
 
Exhibits.
     
99.1
 
     
99.2
 
     
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: January 25, 2021
By:
 
/s/ David Morris
     
David Morris
     
Executive Vice President and
Chief Financial Officer
 
 
 

Exhibit 99.1

 

https://cdn.kscope.io/7c38facd27eb4d3a5bbcb2d46e993f75-logo.jpg

 

Press Release

For Immediate Release

 

 

Contacts:

Yee Phong (Alan) Thian

 

Chairman, President and CEO

 

(626) 307-7559

 

David Morris

 

Executive Vice President and CFO

 

(714) 670-2488

 

 

RBB Bancorp Reports Fourth Quarter and Full Year Earnings for 2020

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, CA, January 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.

 

1

 

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.

 

2

 

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.

 

3

 

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.

 

4

 

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.

 

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, 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.

 

6

 

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  

 

7

 

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  

 

8

 

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  

 

9

 

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.

 

10

 

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.

11

 

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 %

 

12

 

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 %

 

13

 

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 %

 

14

 

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