RBB Bancorp Reports Second Quarter Earnings for 2021

July 26, 2021

Conference Call and Webcast Scheduled for Tuesday, July 27, 2021 at 11:00 a.m. Pacific Time/2:00 p.m. Eastern Time

Second Quarter 2021 Highlights

Reported record net income of $13.4 million, or $0.67 diluted earnings per share, increased $924,000, or 7.4%, from the prior quarter and increased $6.9 million, or 105.4%, from the second quarter of 2020
Total deposits increased by $248.6 million, or 35.3% annualized growth, from the end of the prior quarter
Loan growth (ex-mortgage) of $51.0 million, or 12.2% annualized, from the end of the prior quarter
Declared quarterly cash dividend of $0.13 per common share

LOS ANGELES--(BUSINESS WIRE)--Jul. 26, 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 June 30, 2021.

The Company reported record net income of $13.4 million, or $0.67 diluted earnings per share, for the three months ended June 30, 2021, compared to net income of $12.5 million, or $0.63 diluted earnings per share, and $6.5 million, or $0.33 diluted earnings per share, for the three months ended March 31, 2021 and June 30, 2020, respectively.

“We are pleased to report diluted earnings per share of $0.67, for the second quarter,” said Alan Thian, President and CEO of Royal Business Bank. “Continued focus on our deposit franchise reduced the cost of our interest-bearing deposits and delivered strong growth in non-interest bearing deposits which now comprise 30.6% of total deposits. While our net interest margin declined due to excess liquidity, our disciplined loan origination efforts kept our loan balance and yields stable. Our acquisition of the Hawaiian branch of the Bank of the Orient expands our presence in a vibrant Asian-American community and positions us for profitable growth.”

"Royal Business Bank’s excellent second quarter results demonstrate the continued strength of our differentiated business model and commitment to enhancing long-term shareholder value," said Dr. James Kao, Chairman of RBB Bancorp. “We remain well-positioned to pursue additional organic and strategic growth opportunities."

Key Performance Ratios

Net income of $13.4 million for the second quarter of 2021 produced an annualized return on average assets of 1.39%, an annualized return on average tangible common shareholders' equity of 14.57%, and an annualized return on average shareholders' equity of 12.13%. This compares to an annualized return on average assets of 1.47%, an annualized return on average tangible common shareholders' equity of 14.05%, and an annualized return on average shareholders' equity of 11.64% for the first quarter of 2021. The efficiency ratio for the second quarter of 2021 was 42.89%, compared to 44.64% for the prior quarter. The change in the efficiency ratio was primarily due to a decrease in non-interest income.

Net Interest Income and Net Interest Margin

Net interest income, before provision for loan losses, was $30.1 million for the second quarter of 2021, compared to $29.5 million for the first quarter of 2021. The $572,000 increase was primarily attributable to higher interest income due to a $410.6 million increase in average earning assets and an improvement in deposit costs related to a $259.8 million increase in average noninterest-bearing deposits, partially offset by a $138.0 million increase in average interest-bearing liabilities. Accretion of purchase discounts from prior acquisitions contributed $183,000 to net interest income in the second quarter of 2021, compared to $481,000 in the first quarter of 2021.

Compared to the second quarter of 2020, net interest income, before provision for loan losses, increased $5.0 million from $25.0 million. The increase was primarily attributable to a $670.6 million increase in average earning assets and a $355.5 million increase in average noninterest-bearing deposits, partially offset by a $277.7 million increase in average interest-bearing liabilities. The increases in average earning assets and total deposits were primarily due to increased loan and deposit originations.

Net interest margin was 3.33% for the second quarter of 2021, a decrease of 40 basis points from 3.73% in the first quarter of 2021. The decrease was primarily attributable to an increase in liquidity combined with a 50 basis point decrease in the yield on average earning assets and a 40 basis point decrease in the yield on federal funds sold, cash equivalents & other which was partially offset by a 19 basis point decrease in the cost of borrowings (FHLB advances, long-term debt and subordinated debentures). Loan discount accretion contributed 2 basis points to the net interest margin in the second quarter of 2021, compared to 6 basis points in the first quarter of 2021. The majority of the decrease in net interest margin was due to the increase in liquidity.

Noninterest Income

Noninterest income was $4.2 million for the second quarter of 2021, a decrease of $1.7 million from $5.9 million in the first quarter of 2021. The decrease was driven by a decrease in loans sold during the quarter. The Company sold $55.4 million fewer loans in the second quarter than in the prior quarter primarily due to selling fewer FNMA loans.

The Company sold $58.9 million in FNMA qualified mortgage loans for a net gain of $1.4 million and sold $13.4 million in non-qualified mortgage loans to private investors for a gain of $389,000 during the second quarter of 2021. This compared to $80.3 million in FNMA qualified mortgage loans for a net gain of $2.2 million and $49.8 million in non-qualified mortgage loans to private investors for a gain of $1.2 million during the first quarter of 2021. The Company sold $5.9 million in SBA loans during the second quarter of 2021 for a net gain of $747,000, compared to $3.5 million SBA loans sold for a net gain of $355,000 during the first quarter of 2021.

Compared to the second quarter of 2020, noninterest income increased by $2.0 million from $2.2 million. The increase was primarily attributable to an increase of $2.5 million in gain on loan sales partially offset by a decrease of $590,000 in loan servicing fees.

Noninterest Expense

Noninterest expense for the second quarter of 2021 was $14.7 million, compared to $15.8 million for the first quarter of 2021. The $1.1 million decrease was primarily attributable to a $500,000 decrease in salaries and employee benefits, a $269,000 decrease in legal and professional fees and $209,000 decrease in data processing expenses.

Noninterest expense decreased from $14.8 million in the second quarter of 2020. The $139,000 decrease was primarily due to a $366,000 decrease in MSR impairment write-down expense and a $392,000 decrease in occupancy and equipment expenses. These were partially offset by a $639,000 increase in salaries and employee benefits expense.

Income Taxes

The effective tax rate was 29.28% for the second quarter of 2021, 31.1% for the first quarter of 2021, and 30.8% for the second quarter of 2020.

CDFI Rapid Response Program

In 2016, RBB became a community development financial institution (CDFI). In mid-June, 2021 the Bank was awarded a $1.8 million grant under the US Treasury’s Rapid Response Program to facilitate a rapid response to the economic impacts of the COVID-19 pandemic in distressed and underserved communities. The award has not yet been received pending finalization of the contract between the Bank and the US Treasury which will include various performance goals and measures that specify the use of the funds.

Loan Portfolio

Loans held for investment, net of deferred fees and discounts, totaled $2.7 billion as of June 30, 2021, a decrease of $6.0 million from March 31, 2021, and an increase of $114.6 million from June 30, 2020 from $2.6 billion. The decrease from the prior quarter was primarily due to a decrease in mortgage loan originations. Single-family residential mortgages decreased by $56.9 million net of payoffs, paydowns and loan sales. Commercial real estate loans increased by $39.4 million, construction and land development loans increased by $27.2 million, SBA loans decreased by $12.8 million (which included a $13.7 million decrease in PPP loans), commercial and industrial loans decreased by $8.9 million and other loans increased by $6.0 million.

During the second quarter of 2021, single-family residential mortgage production was $107.9 million, payoffs and paydowns were $121.0 million, and single-family residential mortgage loan sales were $72.3 million. During the first quarter of 2021, single-family residential mortgage production was $114.5 million, payoffs and paydowns were $81.9 million, and loan sales were $130.1 million.

Mortgage loans held for sale were $9.2 million as of June 30, 2021, a decrease of $28.4 million from $37.7 million at March 31, 2021 and a decrease of $6.2 million from $15.5 million as of June 30, 2020. The Company originated approximately $29.2 million in FNMA mortgage loans for sale for the second quarter of 2021, compared with $55.3 million during the prior quarter.

In the second quarter of 2021, SBA loan production was $21.3 million and total SBA loan sales were $5.9 million.

Deposits and Borrowings

Deposits were $3.1 billion at June 30, 2021, an increase of $248.6 million from March 31, 2021, and an increase of $633.4 million from June 30, 2020, including brokered deposits. The increase in total deposits from the prior quarter was primarily attributable to organic deposit growth. During the second quarter of 2021, noninterest-bearing deposits increased by $152.6 million, interest-bearing non-maturity deposits increased by $67.1 million, and time deposits decreased by $28.9 million. As of June 30, 2021, time deposits included $17.4 million in brokered CDs, as compared to $17.4 million as of March 31, 2021 and $2.4 million as of June 30, 2020.

Asset Quality

Nonperforming assets totaled $19.5 million, or 0.50% of total assets at June 30, 2021, compared to $20.2 million, or 0.55%, of total assets at March 31, 2021. 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.

In the second quarter of 2021, there were $71,000 in net charge-offs, compared to net charge-offs of $42,000 in the prior quarter.

The Company recorded a provision for credit losses of $628,000 for the second quarter of 2021, a decrease from $872,000 in the prior quarter, primarily attributable to reduced loan growth.

The allowance for loan losses totaled $31.4 million, or 1.16% of loans held for investment at June 30, 2021, compared with $30.8 million, or 1.13%, of total loans at March 31, 2021.

As of June 30, 2021, borrowers representing 191 loans totaling $29.2 million, or 1.07% of the Company’s total loan portfolio, have funded under the SBA’s Paycheck Protection Program due to the COVID-19 pandemic. Presently none of our SBA customers are on a payment deferral plan due to the COVID-19 pandemic. The Company does not have any shared national credits or loans, backed by airlines or cruise lines, on deferral as of June 30, 2021.

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

	As of June 30, 2020				As of April 15, 2021				As of July 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		1	$	438		—	$	—
Mixed use commercial		38		58,841		4		2,602		—		—
Hospitality (excluding SBA)		5		25,343		1		6,394		—		—
Restaurants (excluding SBA)		11		4,186		—		—		—		—
Multifamily		6		9,086		1		688		—		—
Commercial, office and other		—		—		—		—		—		—
SFR mortgage loans - Western region		183		118,484		9		5,135		4		3,101
SFR mortgage loans - Eastern region		203		85,935		5		2,467		—		—
SFR mortgage loans - Chicago metropolitan		84		14,824		—		—		—		—
Total		564	$	410,950		21	$	17,724		4	$	3,101

Corporate Overview

RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. As of June 30, 2021, the company had total assets of $3.9 billion. Its wholly-owned subsidiary, the Bank is a full service commercial bank, which provides business banking services to the Chinese-American communities in Los Angeles County, Orange County, and Ventura County in California, in Las Vegas, Nevada, in Brooklyn, Queens, and Manhattan in New York, in Edison, New Jersey, and in the Chicago neighborhoods of Chinatown and Bridgeport, Illinois. Bank services include remote deposit, E-banking, mobile banking, commercial and investor real estate loans, business loans and lines of credit, commercial and industrial loans, SBA 7A and 504 loans, 1-4 single family residential loans, automobile lending, trade finance, a full range of depository account products and wealth management services. The Bank has nine branches in Los Angeles County, two branches in Ventura County, one branch in Orange County, California, one branch in Las Vegas, Nevada, two branches and one loan operation center in Brooklyn, three branches in Queens, one branch in Manhattan in New York, one branch in Edison, New Jersey and two branches in Chicago, Illinois. The Company's administrative and lending center is located at 1055 Wilshire Blvd., Los Angeles, California 90017, and its finance and operations center is located at 7025 Orangethorpe Ave., Buena Park, California 90621. The Company's website address is www.royalbusinessbankusa.com.

Conference Call

Management will hold a conference call at 11:00 a.m. Pacific time/2:00 p.m. Eastern time tomorrow, July 27, 2021, to discuss the Company’s second quarter 2021 financial results.

To listen to the conference call, please dial 1-833-519-1355 or 1-918-922-6505, passcode 5654379. A replay of the call will be made available at 1-800-585-8367 or 1-404-537-3406, passcode 5654379, approximately one hour after the conclusion of the call and will remain available through August 3, 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-A for the year ended December 31, 2020, 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, 2020) (Dollars in thousands)

	June 30,			March 31,			December 31,			September 30,			June 30,
	2021			2021			2020			2020			2020
Assets
Cash and due from banks	$	493,653		$	362,930		$	137,654		$	121,630		$	94,844
Federal funds sold and other cash equivalents		110,000			57,000			57,000			57,000			57,000
Total cash and cash equivalents		603,653			419,930			194,654			178,630			151,844
Interest-bearing deposits in other financial institutions		600			600			600			600			600
Investment securities available for sale		339,568			281,582			210,867			214,662			185,756
Investment securities held to maturity		6,664			6,668			7,174			7,569			7,615
Mortgage loans held for sale		9,246			37,675			49,963			23,886			15,479
Loans held for investment		2,709,206			2,715,205			2,706,766			2,755,153			2,594,620
Allowance for loan losses		(31,352	)		(30,795	)		(29,337	)		(26,634	)		(22,820	)
Net loans held for investment		2,677,854			2,684,410			2,677,429			2,728,519			2,571,800
Premises and equipment, net		27,039			27,093			27,103			24,237			23,965
Federal Home Loan Bank (FHLB) stock		15,000			15,641			15,641			15,641			15,641
Cash surrender value of life insurance		55,325			35,308			35,121			34,930			34,736
Goodwill		69,243			69,243			69,243			69,243			69,209
Servicing assets		12,558			13,264			13,965			14,724			15,595
Core deposit intangibles		4,608			4,895			5,196			5,519			5,876
Right-of-use assets- operating leases		25,050			25,500			—			—			—
Accrued interest and other assets		44,230			42,490			43,116			41,416			38,065
Total assets	$	3,890,638		$	3,664,299		$	3,350,072		$	3,359,576		$	3,136,181
Liabilities and shareholders' equity
Deposits:
Noninterest-bearing demand	$	940,041		$	787,439		$	617,206		$	642,332		$	574,553
Savings, NOW and money market accounts		858,597			791,486			731,084			654,378			601,941
Time deposits		1,271,287			1,242,368			1,286,838			1,315,038			1,260,026
Total deposits		3,069,925			2,821,293			2,635,128			2,611,748			2,436,520
Reserve for unfunded commitments		1,216			1,320			1,383			1,129			1,030
FHLB advances		150,000			150,000			150,000			190,000			150,000
Long-term debt, net of debt issuance costs		172,718			172,581			104,391			104,305			104,220
Subordinated debentures		14,393			14,338			14,283			14,229			14,174
Lease liabilities - operating leases		25,798			26,199			—			—			—
Accrued interest and other liabilities		14,263			42,900			16,399			16,749			16,212
Total liabilities		3,448,313			3,228,631			2,921,584			2,938,160			2,722,156
Shareholders' equity:
Shareholder's equity		442,086			435,746			427,287			420,329			412,827
Non-controlling interest		72			72			72			72			72
Accumulated other comprehensive (loss) income - Net of tax		167			(150	)		1,129			1,015			1,126
Total shareholders' equity		442,325			435,668			428,488			421,416			414,025
Total liabilities and shareholders’ equity	$	3,890,638		$	3,664,299		$	3,350,072		$	3,359,576		$	3,136,181

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

	For the Three Months Ended
	June 30, 2021			March 31, 2021			June 30, 2020
Interest and dividend income:
Interest and fees on loans	$	34,669		$	34,516		$	32,633
Interest on interest-bearing deposits		125			48			74
Interest on investment securities		794			627			887
Dividend income on FHLB stock		225			192			187
Interest on federal funds sold and other		158			157			322
Total interest income		35,971			35,540			34,103
Interest expense:
Interest on savings deposits, NOW and money market accounts		708			698			782
Interest on time deposits		2,410			2,964			5,933
Interest on subordinated debentures and long term debt		2,356			1,958			1,915
Interest on other borrowed funds		440			435			439
Total interest expense		5,914			6,055			9,069
Net interest income before provision for loan losses		30,057			29,485			25,034
Provision for loan losses		628			1,500			3,009
Net interest income after provision for loan losses		29,429			27,985			22,025
Noninterest income:
Service charges, fees and other		1,374			1,410			1,065
Gain on sale of loans		2,572			3,841			81
Loan servicing fees, net of amortization		118			246			708
Recoveries on loans acquired in business combinations		5			5			5
Unrealized (loss) on equity investments		(35	)		(20	)		—
(Loss) gain on derivatives		(80	)		225			—
Increase in cash surrender value of life insurance		217			187			191
Gain on sale of securities		—			—			158
Total noninterest income		4,171			5,894			2,208
Noninterest expense:
Salaries and employee benefits		8,742			9,242			8,103
Occupancy and equipment expenses		2,135			2,242			2,527
Data processing		1,231			1,440			882
Legal and professional		536			805			670
Office expenses		272			255			337
Marketing and business promotion		231			184			111
Insurance and regulatory assessments		354			348			234
Core deposit premium		287			301			357
OREO expenses		4			5			14
Merger expenses		17			42			276
Other expenses		871			928			1,308
Total noninterest expense		14,680			15,792			14,819
Income before income taxes		18,920			18,087			9,414
Income tax expense		5,540			5,631			2,901
Net income	$	13,380		$	12,456		$	6,513

Net income per share
Basic	$	0.69		$	0.64		$	0.33
Diluted	$	0.67		$	0.63		$	0.33
Cash Dividends declared per common share	$	0.13		$	0.12		$	0.06
Weighted-average common shares outstanding
Basic		19,432,204			19,475,814			19,710,330
Diluted		19,874,969			19,812,841			19,806,304

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

	For the Six Months Ended
	June 30, 2021			June 30, 2020
Interest and dividend income:
Interest and fees on loans	$	69,185		$	64,909
Interest on interest-earning deposits		173			525
Interest on investment securities		1,421			1,708
Dividend income on FHLB stock		417			189
Interest on federal funds sold and other		315			800
Total interest income		71,511			68,131
Interest expense:
Interest on savings deposits, NOW and money market accounts		1,406			2,025
Interest on time deposits		5,374			13,019
Interest on subordinated debentures and long term debt		4,314			3,871
Interest on other borrowed funds		875			589
Total interest expense		11,969			19,504
Net interest income		59,542			48,627
Provision for loan losses		2,128			4,954
Net interest income after provision for loans losses		57,414			43,673
Noninterest income:
Service charges, fees and other		2,784			2,144
Gain on sale of loans		6,413			2,792
Loan servicing fees, net of amortization		364			1,300
Recoveries on loans acquired in business combinations		10			47
Unrealized (loss) on equity investments		(55	)		—
Gain on derivatives		145			—
Increase in cash surrender value of life insurance		404			382
Gain on sale of securities		—			158
Total noninterest income		10,065			6,823
Noninterest expense:
Salaries and employee benefits		17,984			17,608
Occupancy and equipment expenses		4,377			4,931
Data processing		2,671			2,024
Legal and professional		1,341			1,274
Office expenses		527			660
Marketing and business promotion		415			325
Insurance and regulatory assessments		702			411
Core deposit premium		588			714
OREO expenses		9			28
Merger expenses		59			679
Other expenses		1,799			2,428
Total noninterest expense		30,472			31,082
Income before income taxes		37,007			19,414
Income tax expense		11,171			6,153
Net income	$	25,836		$	13,261

Net income per share
Basic	$	1.32		$	0.67
Diluted	$	1.30		$	0.66
Cash Dividends declared per common share	$	0.25		$	0.12
Weighted-average common shares outstanding
Basic		19,453,889			19,841,093
Diluted		19,844,077			20,036,316

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

	For the three months ended
	June 30, 2021							March 31, 2021							June 30, 2020
	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)	$	582,554	$	508		0.35	%	$	215,230	$	397		0.75	%	$	231,943	$	583		1.01	%
Securities
Available for sale		328,004		751		0.92	%		239,768		571		0.97	%		171,298		823		1.93	%
Held to maturity (2)		6,667		60		3.61	%		7,000		64		3.71	%		7,661		72		3.78	%
Mortgage loans held for sale		21,033		173		3.30	%		54,021		411		3.09	%		25,130		303		4.85	%
Loans held for investment: (3)
Real estate		2,292,145		29,794		5.21	%		2,307,431		29,521		5.19	%		2,147,646		28,216		5.28	%
Commercial		388,049		4,702		4.86	%		384,442		4,584		4.84	%		364,189		4,114		4.54	%
Total loans		2,680,194		34,496		5.16	%		2,691,873		34,105		5.14	%		2,511,835		32,330		5.18	%
Total earning assets		3,618,452	$	35,988		3.99	%		3,207,892	$	35,548		4.49	%		2,947,867	$	34,111		4.65	%
Noninterest-earning assets		230,049							228,002							206,833
Total assets	$	3,848,501						$	3,435,894						$	3,154,700

Interest-bearing liabilities
NOW	$	66,777	$	45		0.27	%	$	64,592	$	44		0.28	%	$	57,547	$	60		0.42	%
Money Market		640,026		628		0.39	%		579,347		623		0.44	%		404,480		691		0.69	%
Saving deposits		140,418		35		0.10	%		131,151		31		0.10	%		123,868		31		0.10	%
Time deposits, less than $250,000		657,494		1,163		0.71	%		663,029		1,496		0.92	%		725,142		3,143		1.74	%
Time deposits, $250,000 and over		604,429		1,247		0.83	%		593,981		1,468		1.00	%		589,090		2,790		1.90	%
Total interest-bearing deposits		2,109,144		3,118		0.59	%		2,032,100		3,662		0.73	%		1,900,127		6,715		1.42	%
FHLB advances		150,000		440		1.18	%		150,000		435		1.18	%		150,000		439		1.18	%
Long-term debt		172,622		2,206		5.13	%		111,739		1,808		6.56	%		104,168		1,747		6.75	%
Subordinated debentures		14,357		150		4.19	%		14,302		150		4.25	%		14,141		168		4.78	%
Total interest-bearing liabilities		2,446,123		5,914		0.97	%		2,308,141		6,055		1.06	%		2,168,436		9,069		1.68	%
Noninterest-bearing liabilities
Noninterest-bearing deposits		913,442							653,674							557,903
Other noninterest-bearing liabilities		46,549							40,118							15,509
Total noninterest-bearing liabilities		959,991							693,792							573,412
Shareholders' equity		442,387							433,960							412,852
Total liabilities and shareholders' equity	$	3,848,501						$	3,435,894						$	3,154,700
Net interest income / interest rate spreads			$	30,074		3.02	%			$	29,493		3.43	%			$	25,042		2.97	%
Net interest margin						3.33	%						3.73	%						3.42	%

(1)		Includes income and average balances for FHLB stock, term federal funds, interest-bearing time deposits and other miscellaneous interest-bearing assets.
(2)		Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis.
(3)		Average loan balances include nonaccrual loans and loans held for sale. Interest income on loans includes - amortization of deferred loan fees, net of deferred loan costs.

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

	For the six months ended
	June 30, 2021							June 30, 2020
	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)	$	399,907	$	905		0.46	%	$	240,755	$	1,514		1.26	%
Securities
Available for sale		284,129		1,323		0.94	%		154,936		1,578		2.05	%
Held to maturity (2)		6,832		126		3.72	%		7,839		147		3.77	%
Mortgage loans held for sale		37,436		584		3.15	%		51,595		1,284		5.00	%
Loans held for investment: (3)
Real estate		2,299,746		59,315		5.20	%		2,077,467		54,644		5.29	%
Commercial		386,256		9,286		4.85	%		350,869		8,981		5.15	%
Total loans		2,686,002		68,601		5.15	%		2,428,336		63,625		5.27	%
Total earning assets		3,414,306	$	71,539		4.23	%		2,883,461	$	68,148		4.75	%
Noninterest-earning assets		229,032							209,699
Total assets	$	3,643,338						$	3,093,160

Interest-bearing liabilities
NOW	$	65,690	$	88		0.27	%	$	50,692	$	102		0.40	%
Money Market		609,854		1,251		0.41	%		418,243		1,837		0.88	%
Saving deposits		135,810		67		0.10	%		119,410		86		0.14	%
Time deposits, less than $250,000		660,246		2,659		0.81	%		731,448		6,869		1.89	%
Time deposits, $250,000 and over		599,234		2,716		0.91	%		604,987		6,150		2.04	%
Total interest-bearing deposits		2,070,834		6,781		0.66	%		1,924,780		15,044		1.57	%
FHLB advances		150,000		875		1.18	%		100,989		589		1.17	%
Long-term debt		142,349		4,015		5.69	%		104,125		3,495		6.75	%
Subordinated debentures		14,330		298		4.19	%		14,234		376		5.31	%
Total interest-bearing liabilities		2,377,513	$	11,969		1.02	%		2,144,128	$	19,504		1.83	%
Noninterest-bearing liabilities
Noninterest-bearing deposits		784,276							521,729
Other noninterest-bearing liabilities		43,352							15,282
Total noninterest-bearing liabilities		827,628							537,011
Shareholders' equity		438,197							412,021
Total liabilities and shareholders' equity	$	3,643,338						$	3,093,160
Net interest income / interest rate spreads			$	59,570		3.21	%			$	48,644		2.92	%
Net interest margin						3.52	%						3.39	%

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

	For the Three Months Ended
	June 30,			March 31,			June 30,
	2021			2021			2020
Per share data (common stock)
Earnings
Basic	$	0.69		$	0.64		$	0.33
Diluted	$	0.67		$	0.63		$	0.33
Dividends declared	$	0.13		$	0.12		$	0.06
Book value	$	22.86		$	22.31		$	20.97
Tangible book value	$	19.04		$	18.51		$	17.17
Weighted average shares outstanding
Basic		19,432,204			19,475,814			19,710,330
Diluted		19,874,969			19,812,841			19,806,304
Shares outstanding at period end		19,349,802			19,528,249			19,739,280
Performance ratios
Return on average assets, annualized		1.39	%		1.47	%		0.83	%
Return on average shareholders' equity, annualized		12.13	%		11.64	%		6.34	%
Return on average tangible common equity, annualized		14.57	%		14.05	%		7.77	%
Noninterest income to average assets, annualized		0.43	%		0.70	%		0.28	%
Noninterest expense to average assets, annualized		1.53	%		1.86	%		1.89	%
Yield on average earning assets		3.99	%		4.49	%		4.65	%
Cost of average total deposits		0.41	%		0.55	%		1.10	%
Cost of average interest-bearing deposits		0.59	%		0.73	%		1.42	%
Cost of average interest-bearing liabilities		0.97	%		1.06	%		1.68	%
Accretion on loans to average earning assets		0.02	%		0.06	%		0.14	%
Net interest spread		3.02	%		3.43	%		2.97	%
Net interest margin		3.33	%		3.73	%		3.42	%
Efficiency ratio		42.89	%		44.64	%		54.40	%
Common stock dividend payout ratio		18.84	%		18.75	%		18.18	%

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

	For the six months ended June 30,
	2021			2020
Per share data (common stock)
Earnings
Basic	$	1.32		$	0.67
Diluted	$	1.30		$	0.66
Dividends declared	$	0.25		$	0.12
Book value	$	22.86		$	20.97
Tangible book value	$	19.04		$	17.17
Weighted average shares outstanding
Basic		19,453,889			19,841,093
Diluted		19,844,077			20,036,316
Shares outstanding at period end		19,349,802			19,739,280
Performance ratios
Return on average assets, annualized		1.43	%		0.86	%
Return on average shareholders' equity, annualized		11.89	%		6.47	%
Return on average tangible common equity, annualized		14.31	%		7.95	%
Noninterest income to average assets, annualized		0.56	%		0.44	%
Noninterest expense to average assets, annualized		1.69	%		2.02	%
Yield on average earning assets		4.23	%		4.75	%
Cost of average deposits		0.48	%		1.24	%
Cost of average interest-bearing deposits		0.66	%		1.57	%
Cost of average interest-bearing liabilities		1.02	%		1.83	%
Accretion on loans to average earning assets		0.04	%		0.13	%
Net interest spread		3.21	%		2.92	%
Net interest margin		3.52	%		3.39	%
Efficiency ratio		43.78	%		56.05	%
Common stock dividend payout ratio		18.94	%		26.87	%

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

	As of
	June 30,			March 31,			June 30,
	2021			2021			2020
Loan to deposit ratio		88.25	%		96.24	%		106.49	%
Core deposits / total deposits		80.04	%		78.97	%		76.84	%
Net non-core funding dependence ratio		0.87	%		4.27	%		9.87	%

Credit Quality Data:
Loans 30-89 days past due	$	5,449		$	10,653		$	23,872
Loans 30-89 days past due to total loans		0.20	%		0.39	%		0.92	%
Nonperforming loans	$	19,243		$	19,911		$	17,217
Nonperforming loans to total loans		0.71	%		0.73	%		0.66	%
Nonperforming assets	$	19,536		$	20,204		$	17,510
Nonperforming assets to total assets		0.50	%		0.55	%		0.56	%
Allowance for loan losses to total loans		1.16	%		1.13	%		0.88	%
Allowance for loan losses to nonperforming loans		162.93	%		154.66	%		132.54	%
Net charge-offs to average loans (for the quarter-to-date period)		0.01	%		0.01	%		0.05	%

Regulatory and other capital ratios—Company
Tangible common equity to tangible assets		9.65	%		10.07	%		11.07	%
Tier 1 leverage ratio		10.20	%		11.30	%		11.48	%
Tier 1 common capital to risk-weighted assets		14.76	%		14.53	%		14.87	%
Tier 1 capital to risk-weighted assets		15.33	%		15.11	%		15.49	%
Total capital to risk-weighted assets		23.48	%		23.27	%		21.10	%

Regulatory capital ratios—Bank only
Tier 1 leverage ratio		12.34	%		13.44	%		14.14	%
Tier 1 common capital to risk-weighted assets		18.58	%		17.96	%		19.09	%
Tier 1 capital to risk-weighted assets		18.58	%		17.96	%		19.09	%
Total capital to risk-weighted assets		19.83	%		19.21	%		20.13	%

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

	2nd Quarter			1st Quarter			4th Quarter			3rd Quarter			2nd Quarter
Quarterly Consolidated Statements of Earnings	2021			2021			2020			2020			2020
Interest income
Loans, including fees	$	34,669		$	34,516		$	34,832		$	34,153		$	32,633
Investment securities and other		1,302			1,024			1,032			972			1,470
Total interest income		35,971			35,540			35,864			35,125			34,103
Interest expense
Deposits		3,118			3,662			4,636			5,525			6,715
Interest on subordinated debentures and other		2,356			1,958			1,901			1,905			1,915
Other borrowings		440			435			450			444			439
Total interest expense		5,914			6,055			6,987			7,874			9,069
Net interest income before provision for loan losses		30,057			29,485			28,877			27,251			25,034
Provision for loan losses		628			1,500			3,008			3,861			3,009
Net interest income after provision for loan losses		29,429			27,985			25,869			23,390			22,025
Noninterest income		4,171			5,894			4,490			2,727			2,208
Noninterest expense		14,680			15,792			14,453			13,978			14,819
Earnings before income taxes		18,920			18,087			15,906			12,139			9,414
Income taxes		5,540			5,631			4,759			3,619			2,901
Net income	$	13,380		$	12,456		$	11,147		$	8,520		$	6,513
Net income per common share - basic	$	0.69		$	0.64		$	0.57		$	0.43		$	0.33
Net income per common share - diluted	$	0.67		$	0.63		$	0.56		$	0.43		$	0.33
Cash dividends declared per common share	$	0.13		$	0.12		$	0.09		$	0.06		$	0.06
Cash dividends declared on common shares	$	2,540		$	2,347		$	1,777		$	1,184		$	1,184
Yield on average assets, annualized		1.39	%		1.47	%		1.33	%		1.05	%		0.83	%
Yield on average earning assets		3.99	%		4.49	%		4.55	%		4.63	%		4.65	%
Cost of average deposits		0.41	%		0.55	%		0.71	%		0.87	%		1.10	%
Cost of average interest-bearing deposits		0.59	%		0.73	%		0.93	%		1.14	%		1.42	%
Cost of average interest-bearing liabilities		0.97	%		1.06	%		1.23	%		1.43	%		1.68	%
Accretion on loans to average earning assets		0.02	%		0.06	%		0.03	%		0.08	%		0.16	%
Net interest margin		3.33	%		3.73	%		3.67	%		3.59	%		3.42	%

RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited, except for December 31, 2020) *(Dollars in thousands, except per share amounts)*

Loan Portfolio Detail	As of June 30, 2021						As of March 31, 2021						As of December 31, 2020						As of September 30, 2020						As of June 30, 2020
(dollars in thousands)	$			%			$			%			$			%			$			%			$			%
Loans:
Commercial and industrial	$	277,080			10.2	%	$	286,016			10.5	%	$	290,139			10.7	%	$	317,891			11.5	%	$	267,481			10.3	%
SBA		98,572			3.6	%		111,330			4.1	%		97,821			3.6	%		111,193			4.0	%		104,069			4.0	%
Construction and land development		236,965			8.7	%		209,727			7.7	%		186,723			6.9	%		183,569			6.7	%		145,754			5.6	%
Commercial real estate (1)		1,102,467			40.7	%		1,063,104			39.2	%		1,003,637			37.1	%		975,187			35.4	%		900,302			34.7	%
Single-family residential mortgages		984,311			36.3	%		1,041,260			38.3	%		1,124,357			41.5	%		1,163,982			42.2	%		1,174,927			45.3	%
Other loans		9,811			0.5	%		3,768			0.2	%		4,089			0.2	%		3,331			0.2	%		2,087			0.1	%
Total loans (2)	$	2,709,206			100.0	%	$	2,715,205			100.0	%	$	2,706,766			100.0	%	$	2,755,153			100.0	%	$	2,594,620			100.0	%
Allowance for loan losses		(31,352	)					(30,795	)					(29,337	)					(26,634	)					(22,820	)
Total loans, net	$	2,677,854					$	2,684,410					$	2,677,429					$	2,728,519					$	2,571,800

(1)		Includes non-farm and non-residential loans, multi-family residential loans and non-owner occupied single family residential loans.
(2)		Net of discounts and deferred fees and costs.

	Three Months Ended						Six Months Ended
Change in Allowance for Loan Losses	June 30,						June 30,
(dollars in thousands)	2021			2020			2021			2020
Beginning balance	$	30,795		$	20,130		$	29,337		$	18,816
Additions to the allowance charged to expense		628			3,009			2,128			4,954
Net charge-offs on loans		(71	)		(319	)		(113	)		(950	)
Ending balance	$	31,352		$	22,820		$	31,352		$	22,820

Tangible Book Value Reconciliations (non-GAAP)

The tangible book value per share is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. The following is a reconciliation of tangible book value to the Company shareholders’ equity computed in accordance with GAAP, as well as a calculation of tangible book value per share as of June 30, 2021 and 2020 and March 31, 2021.


(dollars in thousands, except per share data)	June 30, 2021			March 31, 2021			June 30, 2020
Tangible common equity:
Total shareholders' equity	$	442,325		$	435,668		$	414,025
Adjustments
Goodwill		(69,243	)		(69,243	)		(69,209	)
Core deposit intangible		(4,608	)		(4,895	)		(5,876	)
Tangible common equity	$	368,474		$	361,530		$	338,940
Tangible assets:
Total assets-GAAP	$	3,890,638		$	3,664,299		$	3,136,181
Adjustments
Goodwill		(69,243	)		(69,243	)		(69,209	)
Core deposit intangible		(4,608	)		(4,895	)		(5,876	)
Tangible assets	$	3,816,787		$	3,590,161		$	3,061,096
Common shares outstanding	$	19,349,802			19,528,249			19,739,280
Tangible common equity to tangible assets ratio		9.65	%		10.07	%		11.07	%
Book value per share	$	22.86		$	22.31		$	20.97
Tangible book value per share	$	19.04		$	18.51		$	17.17

View source version on businesswire.com: https://www.businesswire.com/news/home/20210726005742/en/

Yee Phong (Alan) Thian
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 Second Quarter Earnings for 2021