rbb20220809b_8k.htm
false 0001499422 0001499422 2022-10-20 2022-10-20
 
 


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

 
FORM 8-K
 

 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): October 24, 2022 (October 20, 2022) 
 

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

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

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


 
 

 
Item 2.02 Results of Operations and Financial Condition.
 
On October 24, 2022, RBB Bancorp issued a press release setting forth the financial results for the quarter ended September 30, 2022, 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 October 20, 2022, RBB Bancorp announced that its Board of Directors declared a cash dividend of $0.14 per share of its common stock. The dividend is payable on November 11, 2022, to common shareholders of record as of October 31, 2022.
 
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: October 24, 2022
By:
 
/s/ David Morris
     
David Morris
     
President and Chief Executive Officer,
Executive Vice President and
Chief Financial Officer
 
 
ex_409553.htm
 

Exhibit 99.1

 

https://cdn.kscope.io/c0cb0d7cc4552d96a7c5948eb04356f1-logo.jpg

 

Press Release

For Immediate Release

 

Contact:

David Morris

 

President, CEO and CFO

 

CFO

 

(714) 670-2488

   

 

RBB Bancorp Reports Third Quarter Earnings for 2022

Conference Call and Webcast Scheduled for Tuesday, October 25, 2022 at

11:00 a.m. Pacific Time/2:00 p.m. Eastern Time

 

 

Third Quarter 2022 Highlights 

 

Record net income of $16.7 million, or $0.87 diluted earnings per share, increased $1.2 million, or 7.6%, from the prior quarter and increased $1.3 million, or 8.4%, from the third quarter of 2021

 

Loans grew by $176.2 million, or 22.9% annualized, from the end of the prior quarter

 

Declared $0.14 per share quarterly dividend

 

Los Angeles, CA, October 24, 2022 – RBB Bancorp (NASDAQ:RBB) and its subsidiaries, Royal Business Bank (“the Bank”) and RBB Asset Management Company (“RAM”), collectively referred to herein as “the Company,” announced financial results for the quarter ended September 30, 2022.

 

The Company reported record net income of $16.7 million, or $0.87 diluted earnings per share, for the three months ended September 30, 2022, compared to net income of $15.5 million, or $0.80 diluted earnings per share, and $15.4 million, or $0.77 diluted earnings per share, for the three months ended June 30, 2022 and September 30, 2021, respectively. 

 

“Increasing rates continued to drive performance to record levels in the third quarter,” said David Morris, President and CEO of RBB Bancorp. “Expenses declined as expected due to the near conclusion of the Board of Directors investigation, and net interest income increased to a record $39.0 million as loans grew and margins improved. We are starting to see pressure on deposit costs which we anticipate will continue over the next few quarters.”

“Royal Business Bank had another quarter of excellent results and loan growth in the third quarter,” said Dr. James Kao, Chairman of RBB Bancorp. “We believe it demonstrates the value of the franchise and the strength of David’s leadership and management's efforts over the past few quarters.  We are also pleased to welcome David to the Board of Directors and to his new role as President and CEO of RBB Bancorp.”

 

1

 

Key Performance Ratios

 

Net income of $16.7 million for the third quarter of 2022 produced an annualized return on average assets ("ROA") of 1.72% and an annualized return on average shareholders' equity ("ROE") of 13.93% compared to an annualized ROA of 1.60% and an annualized ROE of 13.30% for the second quarter of 2022. The efficiency ratio, see definition in Selected Financial Highlights section, for the third quarter of 2022 was 40.22%, compared to 43.47% for the prior quarter. 

 

Net Interest Income and Net Interest Margin

 

Net interest income, before provision for loan losses, was $39.0 million for the third quarter of 2022, compared to $37.1 million for the second quarter of 2022. The $1.9 million increase was primarily attributable to a $150.6 million decrease in lower-yielding cash and a $211.1 million increase in higher yielding commercial real estate and mortgage loans. Accretion of purchase discounts from prior acquisitions contributed $112,000 to net interest income in the third quarter of 2022, compared to $75,000 in the second quarter of 2022.

 

Compared to the third quarter of 2021, net interest income, before provision for loan losses, increased $7.4 million from $31.6 million. The $7.4 million increase was primarily attributable to a $202.8 million decrease in lower-yielding cash and a $396.7 million increase in higher yielding commercial real estate and mortgage loans.

 

Net interest margin was 4.31% for the third quarter of 2022, an increase of 23 basis points from 4.08% in the second quarter of 2022. Loan discount accretion contributed 1 basis point to the net interest margin in the third quarter of 2022 and in the second quarter of 2022. 

 

Noninterest Income

 

Noninterest income was $2.5 million for the third quarter of 2022, a decrease of $887,000 from $3.4 million in the second quarter of 2022. The decrease was primarily driven by a $757,000 decrease in gain on sale of corporate real estate, a $107,000 decrease in gain on derivatives and a $93,000 decrease in recoveries on purchased loans, partially offset by a $252,000 increase in loan servicing fees during the quarter. 

 

The Company sold $3.8 million in FNMA qualified mortgage loans for a net gain of $135,000 during the third quarter of 2022 compared to $12.6 million in FNMA qualified mortgage loans sold for a net gain of $284,000 during the second quarter of 2022. The Company sold $2.5 million in SBA loans during the third quarter of 2022 for a net gain of $130,000, compared to $1.1 million SBA loans sold for a net gain of $60,000 during the second quarter of 2022.

 

Compared to the third quarter of 2021, noninterest income decreased by $3.0 million from $5.5 million. The decrease was primarily attributable to a $1.8 million CDFI RRP award received in the third quarter of 2021, a $1.5 million decrease in gain on sale of loans due to rate hikes that caused both sellable loan volume and premium decreases and a $193,000 decrease in gain on derivatives, partially offset by a $662,000 increase in loan servicing fees.

 

2

 

Noninterest Expense

 

Noninterest expense for the third quarter of 2022 was $16.7 million, compared to $17.6 million for the second quarter of 2022. The $915,000 decrease was primarily attributable to a $1.2 million decrease in legal and professional expenses as the Company is getting close to completing the Board special investigation and a $137,000 decrease in marketing and business promotion expenses, partially offset by a $246,000 increase in directors RSU compensation expense and director fees and a $175,000 increase in occupancy and equipment expenses.

 

Noninterest expense increased from $14.4 million in the third quarter of 2021. The $2.3 million increase was primarily due to a $789,000 increase in salaries and employee benefits expenses due to new hires and salary adjustments to reflect economic inflation, a reversal of $416,000 valuation allowance on mortgage servicing rights in third quarter of 2021, a $275,000 increase in director RSU compensation expense and travel expense, a $341,000 increase in data processing expenses, a $331,000 increase in legal and professional expenses and a $160,000 increase in occupancy and equipment expenses.

 

Income Taxes

 

The effective tax rate was 27.8% for the third quarter of 2022, 29.6% for the second quarter of 2022, and 28.5% for the third quarter of 2021. The Company recognized a tax benefit from stock option exercises of $276,000, $279,000 and $534,000 for the third quarter of 2022, the second quarter of 2022, and the third quarter of 2021, respectively. The Company amended its 2020 tax returns and 2018 California state tax return and recorded a total of $300,000 tax expense reduction in the third quarter of 2022.

 

Loan and Securities Portfolio

 

Loans held for investment, net of deferred fees and discounts, totaled $3.22 billion as of September 30, 2022, an increase of $175.0 million from June 30, 2022, and an increase of $380.6 million from September 30, 2021. The increase from the prior quarter was primarily due to a $150.6 million increase in single-family residential mortgage loans and a $60.4 million increase in commercial real estate loans, partially offset by a $33.2 million decrease in commercial and industrial loans and a $3.3 million decrease in construction & land development loans. The increase from September 30, 2021 was primarily due to a $381.6 million increase in single-family residential mortgages and an $81.7 million increase in construction & land development loans offset by a $71.6 million decrease in commercial and industrial loans and a $26.9 million decrease in SBA loans.

 

During the third quarter of 2022, single-family residential mortgage production was $191.8 million while net payoffs and paydowns were $36.2 million. During the second quarter of 2022, single-family residential mortgage production was $216.9 million while payoffs and paydowns were $66.8 million.

 

There were $1.2 million mortgage loans held for sale as of September 30, 2022 compared to none as of June 30, 2022 and $15.2 million as of September 30, 2021. The Company originated approximately $1.8 million in FNMA mortgage loans for sale for the third quarter of 2022, compared with $1.2 million during the prior quarter. 

 

In the third quarter of 2022, SBA loan production was $7.7 million and total SBA loan sales were $2.5 million compared to SBA loan production of $1.4 million and total SBA loan sales of $1.1 million in the second quarter of 2022. 

 

As of September 30, 2022, the Bank’s total available-for-sale securities maturing in over 12 months were $237.9 million. As of September 30, 2022 the Bank recorded gross unrealized losses of $32.5 million compared to gross unrealized losses of $2.3 million as of December 31, 2022.

 

Deposits

 

Deposits were $3.0 billion at September 30, 2022, which was a decrease of $67.9 million compared to June 30, 2022. During the third quarter of 2022, noninterest-bearing deposits decreased by $128.7 million due to the continued reduction of a single deposit relationship, interest-bearing non-maturity deposits increased by $13.8 million, and time deposits increased by $47.0 million. As of September 30, 2022, there were $105.5 million in brokered CDs, as compared to $50.0 million brokered CDs as of June 30, 2022 and $2.4 million brokered CDs as of September 30, 2021. Compared to September 30, 2021, total deposits decreased by $8.1 million primarily due to a $50.3 million decrease in time deposits and a $49.4 million decrease in interest-bearing non-maturity deposits, partially offset by a $91.5 million increase in noninterest-bearing demand deposits.

 

Asset Quality

 

Nonperforming assets totaled $11.8 million, or 0.30% of total assets at September 30, 2022, compared to $14.2 million, or 0.36% of total assets at June 30, 2022. The decrease in nonperforming assets was due to the pay-off of certain nonperforming loans in the third quarter of 2022. Nonperforming assets consist of other real estate owned, loans modified under troubled debt restructurings (“TDR”), non-accrual loans, and loans past due 90 days or more and still accruing interest.

 

Our 30-89 day delinquent loans, excluding non-accrual loans increased to $39.9 million as of June 30, 2022 compared to $8.3 million as of June 30, 2022. The $31.6 million increase in past due loans was due in part to: one construction loan of $11.3 million on a project that is substantially complete that was delinquent for 52 days due to administrative delays in processing an extension, which was processed as of October 6, 2022, and one commercial real estate loan of $8.8 million that was delinquent for 52 days due to administrative delays in the processing of an extension, which was processed as of October 3, 2022. As of October 21, $14.5 million of loans were 30-89 days delinquent.

 

3

 

In the third quarter of 2022, there were $127,000 in net recoveries, compared to net charge-offs of $53,000 in the second quarter of 2022 and net charge-offs of $317,000 in the third quarter of 2021.

 

The Company recorded a provision for loan losses of $1.8 million for the third quarter of 2022 which was primarily attributable to loan growth. Provision for loan losses were $915,000 in the second quarter of 2022. Allowance for loan losses continue to include $625,000 of reserves taken as a precaution against COVID-19 losses in 2020 and 2021.

 

The allowance for loan losses totaled $36.0 million, or 1.12% of loans held for investment at September 30, 2022, compared with $34.2 million, or 1.12%, of total loans at June 30, 2022.

 

During the third quarter of 2022, the Company repurchased 94,539 common shares at a weighted average price of $20.93.

 

4

 

Corporate Overview

 

RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. As of September 30, 2022, 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, in the Chicago neighborhoods of Chinatown and Bridgeport, Illinois, and on Oahu, Hawaii. Bank services include remote deposit, E-banking, mobile banking, commercial and investor real estate loans, business loans and lines of credit, commercial and industrial loans, SBA 7A and 504 loans, 1-4 single family residential loans, automobile lending, trade finance, a full range of depository account products and wealth management services. The Bank has nine branches in Los Angeles County, two branches in Ventura County, one branch in Orange County, California, one branch in Las Vegas, Nevada, three branches and one loan operation center in Brooklyn, three branches in Queens, one branch in Manhattan in New York, one branch in Edison, New Jersey, two branches in Chicago, Illinois, and one branch in Honolulu, Hawaii. The Company's administrative and lending center is located at 1055 Wilshire Blvd., Los Angeles, California 90017, and its finance and operations center is located at 7025 Orangethorpe Ave., Buena Park, California 90621. The Company's website address is www.royalbusinessbankusa.com.

 

Conference Call

 

Management will hold a conference call at 11:00 a.m. Pacific time/2:00 p.m. Eastern time tomorrow, October 25, 2022, to discuss the Company’s third quarter 2022 financial results.

 

To listen to the conference call, please dial 1-800-343-4136 or 1-203-518-9708, conference ID RBBQ322. A replay of the call will be made available at 1-877-925-9639 or 1-402-220-5391 (no passcode required) approximately one hour after the conclusion of the call and will remain available through November 1, 2022.

 

The conference call will also be simultaneously webcast over the Internet; please visit our Royal Business Bank website at www.royalbusinessbankusa.com and click on the “Investors” tab to access the call from the site. This webcast will be recorded and available for replay on our website approximately two hours after the conclusion of the conference call.

 

Disclosure

 

This press release contains certain non-GAAP financial disclosures for tangible common equity and tangible assets and adjusted earnings. The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. Please refer to the tables at the end of this release for a presentation of performance ratios in accordance with GAAP and a reconciliation of the non-GAAP financial measures to the GAAP financial measures.

 

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, whether we are able to obtain any required governmental or shareholder approvals in connection with any such acquisitions or dispositions, and/or our ability to realize the contemplated financial or business benefits associated with any such acquisitions or dispositions; the effect of changes in laws, regulations and applicable judicial decisions (including laws, regulations and judicial decisions concerning financial reforms, taxes, banking capital levels, consumer, commercial or secured lending, securities and securities trading and hedging, compliance, employment, executive compensation, insurance, vendor management and information security) with which we and our subsidiaries must comply or believe we should comply; changes in estimates of future reserve requirements and minimum capital requirements based upon the periodic review thereof under relevant regulatory and accounting requirements, including changes in the Basel Committee framework establishing capital standards for credit, operations and market risk; inflation, interest rate, securities market and monetary fluctuations; changes in government interest rates or monetary policies; changes in the amount and availability of deposit insurance; cyber-security threats, including loss of system functionality or theft or loss of Company or customer data or money; political instability; acts of war or terrorism, or natural disasters, such as earthquakes, drought, or the effects of pandemic diseases; the timely development and acceptance of new banking products and services and the perceived overall value of these products and services by our customers and potential customers; the Company’s relationships with and reliance upon vendors with respect to the operation of certain of the Company’s key internal and external systems and applications; changes in commercial or consumer spending, borrowing and savings preferences or behaviors; technological changes and the expanding use of technology in banking (including the adoption of mobile banking and funds transfer applications); the ability to retain and increase market share, retain and grow customers and control expenses; changes in the competitive and regulatory environment among financial and bank holding companies, banks and other financial service providers; volatility in the credit and equity markets and its effect on the general economy or local or regional business conditions; fluctuations in the price of the Company’s common stock or other securities; and the resulting impact on the Company’s ability to raise capital or make acquisitions, the effect of changes in accounting policies and practices, as may be adopted from time-to-time by our regulatory agencies, as well as by the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard-setters, including ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments”, commonly referenced as the Current Expected Credit Loss (“CECL”) model, which will change how we estimate credit losses and may increase the required level of our allowance for credit losses after adoption; changes in our organization, management, compensation and benefit plans, and our ability to retain or expand our workforce, management team and/or our board of directors; the costs and effects of legal, compliance and regulatory actions, changes and developments, including the initiation and resolution of legal proceedings (such as securities, consumer or employee class action litigation), regulatory or other governmental inquiries or investigations, and/or the results of regulatory examinations or reviews; our ongoing relations with our various federal and state regulators, including the SEC, FDIC, FRB and California DFPI (formerly DBO); our success at managing the risks involved in the foregoing items and all other factors set forth in the Company’s public reports, including its Annual Report as filed under Form 10-K/A and Form 10-K for the year ended December 31, 2021, and particularly the discussion of risk factors within that document. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements except as required by law. Any statements about future operating results, such as those concerning accretion and dilution to the Company’s earnings or shareholders, are for illustrative purposes only, are not forecasts, and actual results may differ.

 

 

6

 

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, except for December 31, 2021)

(Dollars in thousands)

 

   

September 30,

   

June 30,

   

March 31,

   

December 31,

   

September 30,

 
   

2022

   

2022

   

2022

   

2021

   

2021

 

Assets

                                       

Cash and due from banks

  $ 134,179     $ 224,736     $ 149,767     $ 501,372     $ 206,927  

Federal funds sold and other cash equivalents

    40,000       100,000       200,000       193,000       170,000  

Total cash and cash equivalents

    174,179       324,736       349,767       694,372       376,927  

Interest-bearing deposits in other financial institutions

    600       600       600       600       600  

Investment securities available for sale

    266,270       358,135       420,448       368,260       345,000  

Investment securities held to maturity

    5,735       5,741       6,246       6,252       6,258  

Mortgage loans held for sale

    1,185             3,572       5,957       15,188  

Loans held for investment

    3,220,913       3,045,946       3,006,484       2,931,350       2,840,354  

Allowance for loan losses

    (36,047 )     (34,154 )     (33,292 )     (32,912 )     (32,231 )

Net loans held for investment

    3,184,866       3,011,792       2,973,192       2,898,438       2,808,123  

Premises and equipment, net

    26,850       27,104       27,455       27,199       27,157  

Federal Home Loan Bank (FHLB) stock

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

Cash surrender value of life insurance

    56,975       56,642       56,313       55,988       55,656  

Goodwill

    71,498       71,498       71,498       69,243       69,243  

Servicing assets

    10,054       10,456       11,048       11,517       12,141  

Core deposit intangibles

    3,971       4,248       4,525       4,075       4,327  

Right-of-use assets- operating leases

    24,768       25,931       22,451       22,454       23,735  

Accrued interest and other assets

    63,278       57,154       51,454       48,839       42,452  

Total assets

  $ 3,905,229     $ 3,969,037     $ 4,013,569     $ 4,228,194     $ 3,801,807  

Liabilities and shareholders' equity

                                       

Deposits:

                                       

Noninterest-bearing demand

  $ 916,301     $ 1,045,009     $ 1,159,703     $ 1,291,484     $ 824,771  

Savings, NOW and money market accounts

    882,126       868,307       885,050       927,609       931,517  

Time deposits, less than $250,000

    608,489       574,050       570,274       587,940       614,146  

Time deposits, greater than or equal to $250,000

    552,754       540,199       553,226       578,499       597,379  

Total deposits

    2,959,670       3,027,565       3,168,253       3,385,532       2,967,813  

FHLB advances

    240,000       250,000       150,000       150,000       150,000  

Long-term debt, net of debt issuance costs

    173,441       173,296       173,152       173,007       172,862  

Subordinated debentures

    14,665       14,611       14,556       14,502       14,447  

Lease liabilities - operating leases

    25,701       26,823       23,314       23,282       24,524  

Accrued interest and other liabilities

    19,953       13,035       19,469       15,188       16,137  

Total liabilities

    3,433,430       3,505,330       3,548,744       3,761,511       3,345,783  

Shareholders' equity:

                                       

Shareholder's equity

    494,248       479,382       475,077       468,267       456,490  

Non-controlling interest

    72       72       72       72       72  

Accumulated other comprehensive (loss) income - Net of tax

    (22,521 )     (15,747 )     (10,324 )     (1,656 )     (538 )

Total shareholders' equity

    471,799       463,707       464,825       466,683       456,024  

Total liabilities and shareholders’ equity

  $ 3,905,229     $ 3,969,037     $ 4,013,569     $ 4,228,194     $ 3,801,807  

 

7

 

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share amounts) 

 

   

For the Three Months Ended

 
   

September 30, 2022

   

June 30, 2022

   

September 30, 2021

 

Interest and dividend income:

                       

Interest and fees on loans

  $ 43,588     $ 40,157     $ 35,601  

Interest on interest-bearing deposits

    373       111       219  

Interest on investment securities

    1,784       1,419       889  

Dividend income on FHLB stock

    224       222       225  

Interest on federal funds sold and other

    445       429       174  

Total interest income

    46,414       42,338       37,108  

Interest expense:

                       

Interest on savings deposits, NOW and money market accounts

    1,529       844       697  

Interest on time deposits

    2,460       1,506       2,048  

Interest on subordinated debentures and long term debt

    2,427       2,379       2,342  

Interest on other borrowed funds

    1,020       519       445  

Total interest expense

    7,436       5,248       5,532  

Net interest income before provision for loan losses

    38,978       37,090       31,576  

Provision for loan losses

    1,766       915       1,196  

Net interest income after provision for loan losses

    37,212       36,175       30,380  

Noninterest income:

                       

Service charges, fees and other

    1,277       1,382       3,153  

Gain on sale of loans

    265       344       1,790  

Loan servicing fees, net of amortization

    724       472       62  

Recoveries on loans acquired in business combinations

    5       98       68  

Unrealized (loss) on equity investments

                (5 )

Unrealized (loss) gain on derivatives

    (68 )     39       125  

Increase in cash surrender value of life insurance

    332       330       331  

Gain on sale of fixed assets

          757        

Total noninterest income

    2,535       3,422       5,524  

Noninterest expense:

                       

Salaries and employee benefits

    9,561       9,628       8,772  

Occupancy and equipment expenses

    2,349       2,174       2,189  

Data processing

    1,306       1,293       965  

Legal and professional

    1,077       2,254       746  

Office expenses

    382       358       311  

Marketing and business promotion

    364       501       324  

Insurance and regulatory assessments

    441       478       384  

Core deposit premium

    277       277       281  

OREO expenses

    4       5       4  

Merger expenses

          23       40  

Other expenses

    936       621       404  

Total noninterest expense

    16,697       17,612       14,420  

Income before income taxes

    23,050       21,985       21,484  

Income tax expense

    6,398       6,508       6,120  

Net income

  $ 16,652     $ 15,477     $ 15,364  
                         

Net income per share

                       

Basic

  $ 0.88     $ 0.81     $ 0.79  

Diluted

  $ 0.87     $ 0.80     $ 0.77  

Cash Dividends declared per common share

  $ 0.14     $ 0.14     $ 0.13  

Weighted-average common shares outstanding

                       

Basic

    18,988,443       19,066,621       19,343,262  

Diluted

    19,130,447       19,324,253       19,798,187  
8

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share amounts) 

 

   

For the Nine Months Ended

 
   

September 30, 2022

   

September 30, 2021

 

Interest and dividend income:

               

Interest and fees on loans

  $ 121,631     $ 104,786  

Interest on interest-earning deposits

    655       392  

Interest on investment securities

    4,210       2,310  

Dividend income on FHLB stock

    673       642  

Interest on federal funds sold and other

    1,149       489  

Total interest income

    128,318       108,619  

Interest expense:

               

Interest on savings deposits, NOW and money market accounts

    3,091       2,103  

Interest on time deposits

    5,540       7,422  

Interest on subordinated debentures and long term debt

    7,154       6,656  

Interest on other borrowed funds

    1,974       1,320  

Total interest expense

    17,759       17,501  

Net interest income

    110,559       91,118  

Provision for loan losses

    3,048       3,324  

Net interest income after provision for loans losses

    107,511       87,794  

Noninterest income:

               

Service charges, fees and other

    3,899       5,953  

Gain on sale of loans

    1,783       8,203  

Loan servicing fees, net of amortization

    1,628       426  

Recoveries on loans acquired in business combinations

    108       78  

Unrealized (loss) gain on equity investments

          (60 )

Unrealized (loss) gain on derivatives

    (262 )     254  

Increase in cash surrender value of life insurance

    986       735  

Gain on sale of fixed assets

    757        

Total noninterest income

    8,899       15,589  

Noninterest expense:

               

Salaries and employee benefits

    28,558       26,756  

Occupancy and equipment expenses

    6,728       6,566  

Data processing

    3,857       3,636  

Legal and professional

    4,337       2,087  

Office expenses

    1,033       838  

Marketing and business promotion

    1,172       739  

Insurance and regulatory assessments

    1,360       1,086  

Core deposit premium

    833       869  

OREO expenses

    17       13  

Merger expenses

    60       99  

Other expenses

    2,412       2,203  

Total noninterest expense

    50,367       44,892  

Income before income taxes

    66,043       58,491  

Income tax expense

    19,297       17,291  

Net income

  $ 46,746     $ 41,200  
                 

Net income per share

               

Basic

  $ 2.44     $ 2.11  

Diluted

  $ 2.41     $ 2.07  

Cash Dividends declared per common share

  $ 0.42     $ 0.39  

Weighted-average common shares outstanding

               

Basic

    19,142,732       19,416,608  

Diluted

    19,415,558       19,828,612  

 

 
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

 
   

September 30, 2022

   

June 30, 2022

   

September 30, 2021

 
   

Average

   

Interest

   

Yield /

   

Average

   

Interest

   

Yield /

   

Average

   

Interest

   

Yield /

 

(tax-equivalent basis, dollars in thousands)

 

Balance

   

& Fees

   

Rate

   

Balance

   

& Fees

   

Rate

   

Balance

   

& Fees

   

Rate

 

Earning assets:

                                                                       

Federal funds sold, cash equivalents & other (1)

  $ 141,737     $ 1,042       2.92 %   $ 249,738     $ 762       1.22 %   $ 628,020     $ 618       0.39 %

Securities

                                                                       

Available for sale (2)

    318,066       1,758       2.19 %     399,321       1,393       1.40 %     336,130       856       1.01 %

Held to maturity (2)

    5,738       50       3.46 %     5,744       50       3.49 %     6,262       56       3.55 %

Mortgage loans held for sale

    420       6       5.48 %     892       13       5.85 %     5,218       46       3.50 %

Loans held for investment: (3)

                                                                       

Real estate

    2,820,022       38,999       5.49 %     2,663,753       35,207       5.30 %     2,361,405       30,911       5.19 %

Commercial

    303,899       4,583       5.98 %     325,861       4,937       6.08 %     374,125       4,644       4.92 %

Total loans

    3,123,921       43,582       5.53 %     2,989,614       40,144       5.39 %     2,735,530       35,555       5.16 %

Total earning assets

    3,589,882     $ 46,438       5.13 %     3,645,309     $ 42,362       4.66 %     3,711,160     $ 37,131       3.97 %

Noninterest-earning assets

    250,737                       243,279                       242,742                  

Total assets

  $ 3,840,619                     $ 3,888,588                     $ 3,953,902                  
                                                                         

Interest-bearing liabilities

                                                                       

NOW

  $ 74,518     $ 91       0.48 %   $ 75,637     $ 50       0.27 %   $ 71,454     $ 48       0.27 %

Money Market

    612,743       1,376       0.89 %     631,807       759       0.48 %     660,806       615       0.37 %

Saving deposits

    147,349       62       0.17 %     148,400       35       0.09 %     139,555       34       0.10 %

Time deposits, less than $250,000

    566,730       1,221       0.85 %     553,282       724       0.52 %     644,013       977       0.60 %

Time deposits, $250,000 and over

    531,655       1,239       0.92 %     526,164       782       0.60 %     604,394       1,071       0.70 %

Total interest-bearing deposits

    1,932,995       3,989       0.82 %     1,935,290       2,350       0.49 %     2,120,222       2,745       0.51 %

FHLB advances

    239,674       1,020       1.69 %     182,749       519       1.14 %     150,000       445       1.18 %

Long-term debt

    173,345       2,194       5.02 %     173,201       2,195       5.08 %     172,767       2,194       5.04 %

Subordinated debentures

    14,629       233       6.32 %     14,575       184       5.06 %     14,411       148       4.07 %

Total interest-bearing liabilities

    2,360,643       7,436       1.25 %     2,305,815       5,248       0.91 %     2,457,400       5,532       0.89 %

Noninterest-bearing liabilities

                                                                       

Noninterest-bearing deposits

    964,867                       1,082,793                       1,003,304                  

Other noninterest-bearing liabilities

    41,003                       33,377                       42,419                  

Total noninterest-bearing liabilities

    1,005,870                       1,116,170                       1,045,723                  

Shareholders' equity

    474,106                       466,603                       450,779                  

Total liabilities and shareholders' equity

  $ 3,840,619                     $ 3,888,588                     $ 3,953,902                  

Net interest income / interest rate spreads

          $ 39,002       3.88 %           $ 37,114       3.75 %           $ 31,599       3.08 %

Net interest margin

                    4.31 %                     4.08 %                     3.38 %

 


(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 Nine Months Ended

 
   

September 30, 2022

   

September 30, 2021

 
   

Average

   

Interest

   

Yield /

   

Average

   

Interest

   

Yield /

 

(tax-equivalent basis, dollars in thousands)

 

Balance

   

& Fees

   

Rate

   

Balance

   

& Fees

   

Rate

 

Earning assets:

                                               

Federal funds sold, cash equivalents & other (1)

  $ 338,253     $ 2,477       0.98 %   $ 476,780     $ 1,523       0.43 %

Securities

                                               

Available for sale (2)

    369,808       4,126       1.49 %     301,653       2,180       0.97 %

Held to maturity (2)

    5,909       158       3.57 %     6,640       182       3.66 %

Mortgage loans held for sale

    1,624       62       5.10 %     26,579       630       3.17 %

Loans held for investment: (3)

                                               

Real estate

    2,696,183       107,301       5.32 %     2,320,525       90,226       5.20 %

Commercial

    336,630       14,268       5.67 %     382,168       13,930       4.87 %

Total loans

    3,032,813       121,569       5.36 %     2,702,693       104,156       5.15 %

Total earning assets

    3,748,407     $ 128,392       4.58 %     3,514,345     $ 108,671       4.13 %

Noninterest-earning assets

    245,137                       233,652                  

Total assets

  $ 3,993,544                     $ 3,747,997                  
                                                 

Interest-bearing liabilities

                                               

NOW

  $ 75,182     $ 185       0.33 %   $ 67,633     $ 136       0.27 %

Money Market

    654,522       2,777       0.57 %     627,024       1,866       0.40 %

Saving deposits

    147,033       129       0.12 %     137,072       101       0.10 %

Time deposits, less than $250,000

    573,401       2,698       0.63 %     654,776       3,635       0.74 %

Time deposits, $250,000 and over

    542,535       2,842       0.70 %     600,973       3,787       0.84 %

Total interest-bearing deposits

    1,992,673       8,631       0.58 %     2,087,478       9,525       0.61 %

FHLB advances

    191,136       1,974       1.38 %     150,000       1,320       1.18 %

Long-term debt

    173,202       6,583       5.08 %     152,600       6,209       5.44 %

Subordinated debentures

    14,575       571       5.24 %     14,357       447       4.16 %

Total interest-bearing liabilities

    2,371,586     $ 17,759       1.00 %     2,404,435     $ 17,501       0.97 %

Noninterest-bearing liabilities

                                               

Noninterest-bearing deposits

    1,115,153                       858,087                  

Other noninterest-bearing liabilities

    36,257                       43,038                  

Total noninterest-bearing liabilities

    1,151,410                       901,125                  

Shareholders' equity

    470,548                       442,437                  

Total liabilities and shareholders' equity

  $ 3,993,544                     $ 3,747,997                  

Net interest income / interest rate spreads

          $ 110,633       3.58 %           $ 91,170       3.16 %

Net interest margin

                    3.95 %                     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.

 

 

11

 

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

 

   

For the Three Months Ended

 
   

September 30,

   

June 30,

   

September 30,

 
   

2022

   

2022

   

2021

 

Per share data (common stock)

                       

Earnings

                       

Basic

  $ 0.88     $ 0.81     $ 0.79  

Diluted

  $ 0.87     $ 0.80     $ 0.77  

Dividends declared

  $ 0.14     $ 0.14     $ 0.13  

Book value

  $ 24.82     $ 24.56     $ 23.37  

Tangible book value (1)

  $ 20.85     $ 20.55     $ 19.60  

Weighted average shares outstanding

                       

Basic

    18,988,443       19,066,621       19,343,262  

Diluted

    19,130,447       19,324,253       19,798,187  

Shares outstanding at period end

    19,011,672       18,881,829       19,516,393  

Performance ratios

                       

Return on average assets, annualized

    1.72 %     1.60 %     1.54 %

Return on average shareholders' equity, annualized

    13.93 %     13.30 %     13.52 %

Return on average tangible common equity, annualized (1)

    16.58 %     15.89 %     16.17 %

Noninterest income to average assets, annualized

    0.26 %     0.35 %     0.55 %

Noninterest expense to average assets, annualized

    1.72 %     1.82 %     1.45 %

Yield on average earning assets

    5.13 %     4.66 %     3.97 %

Cost of average total deposits

    0.55 %     0.31 %     0.35 %

Cost of average interest-bearing deposits

    0.82 %     0.49 %     0.51 %

Cost of average interest-bearing liabilities

    1.25 %     0.91 %     0.89 %

Accretion on loans to average earning assets

    0.01 %     0.01 %     0.03 %

Net interest spread

    3.88 %     3.75 %     3.08 %

Net interest margin

    4.31 %     4.08 %     3.38 %

Efficiency ratio (2)

    40.22 %     43.47 %     38.87 %

Common stock dividend payout ratio

    15.91 %     17.28 %     16.46 %

 


(1)

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

(2)

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

 

12

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

 

 

   

For the Nine Months Ended September 30,

 
   

2022

   

2021

 

Per share data (common stock)

               

Earnings

               

Basic

  $ 2.44     $ 2.11  

Diluted

  $ 2.41     $ 2.07  

Dividends declared

  $ 0.42     $ 0.39  

Book value

  $ 24.82     $ 23.37  

Tangible book value (1)

  $ 20.85     $ 19.60  

Weighted average shares outstanding

               

Basic

    19,142,732       19,416,608  

Diluted

    19,415,558       19,828,612  

Shares outstanding at period end

    19,011,672       19,516,393  

Performance ratios

               

Return on average assets, annualized

    1.57 %     1.47 %

Return on average shareholders' equity, annualized

    13.28 %     12.45 %

Return on average tangible common equity, annualized (1)

    15.80 %     14.95 %

Noninterest income to average assets, annualized

    0.30 %     0.56 %

Noninterest expense to average assets, annualized

    1.69 %     1.60 %

Yield on average earning assets

    4.58 %     4.13 %

Cost of average deposits

    0.37 %     0.43 %

Cost of average interest-bearing deposits

    0.58 %     0.61 %

Cost of average interest-bearing liabilities

    1.00 %     0.97 %

Accretion on loans to average earning assets

    0.02 %     0.04 %

Net interest spread

    3.58 %     3.16 %

Net interest margin

    3.95 %     3.47 %

Efficiency ratio (2)

    42.16 %     42.07 %

Common stock dividend payout ratio

    17.21 %     18.01 %

 


(1)

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

(2)

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

 

13

 

 

 

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

 

   

As of

 
   

September 30,

   

June 30,

   

September 30,

 
   

2022

   

2022

   

2021

 

Loan to deposit ratio

    108.83 %     100.61 %     95.71 %

Core deposits (1) / total deposits

    81.32 %     82.16 %     79.87 %

Net non-core funding dependence ratio (2)

    11.09 %     -0.44 %     9.27 %
                         

Credit Quality Data:

                       

Loans 30-89 days past due

  $ 39,938     $ 8,346     $ 7,258  

Loans 30-89 days past due to total loans

    1.24 %     0.27 %     0.26 %

Nonperforming loans

  $ 11,503     $ 13,937     $ 14,248  

Nonperforming loans to total loans

    0.36 %     0.46 %     0.50 %

Nonperforming assets

  $ 11,796     $ 14,230     $ 14,541  

Nonperforming assets to total assets

    0.30 %     0.36 %     0.38 %

Allowance for loan losses to total loans

    1.12 %     1.12 %     1.13 %

Allowance for loan losses to nonperforming loans

    313.37 %     245.06 %     226.21 %

Net (recoveries) charge-offs to average loans (for the quarter-to-date period)

    -0.02 %     0.00 %     0.05 %
                         

Regulatory and other capital ratios—Company

                       

Tangible common equity to tangible assets (2)

    10.35 %     9.96 %     10.26 %

Tier 1 leverage ratio

    11.47 %     10.95 %     10.26 %

Tier 1 common capital to risk-weighted assets

    15.52 %     14.82 %     14.82 %

Tier 1 capital to risk-weighted assets

    16.06 %     15.35 %     15.38 %

Total capital to risk-weighted assets

    23.72 %     22.94 %     23.30 %
                         

Regulatory capital ratios—Bank only

                       

Tier 1 leverage ratio

    14.57 %     13.90 %     12.42 %

Tier 1 common capital to risk-weighted assets

    20.41 %     19.51 %     18.64 %

Tier 1 capital to risk-weighted assets

    20.41 %     19.51 %     18.64 %

Total capital to risk-weighted assets

    21.67 %     20.76 %     19.89 %

 


(1)

Comprised of demand and savings deposits of any amount plus time deposits less than $250,000.

(2)

Reconciliations of the non–U.S. generally accepted accounting principles (“GAAP”) measures are set forth at the end of this press release.
14

 

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

 

   

3rd Quarter

   

2nd Quarter

   

1st Quarter

   

4th Quarter

   

3rd Quarter

 

Quarterly Consolidated Statements of Earnings

 

2022

   

2022

   

2022

   

2021

   

2021

 

Interest income

                                       

Loans, including fees

  $ 43,588     $ 40,157     $ 37,886     $ 36,783     $ 35,601  

Investment securities and other

    2,826       2,181       1,680       1,661       1,507  

Total interest income

    46,414       42,338       39,566       38,444       37,108  

Interest expense

                                       

Deposits

    3,989       2,350       2,292       2,431       2,745  

Interest on subordinated debentures and other

    2,427       2,379       2,348       2,343       2,342  

Other borrowings

    1,020       519       435       445       445  

Total interest expense

    7,436       5,248       5,075       5,219       5,532  

Net interest income before provision for loan losses

    38,978       37,090       34,491       33,225       31,576  

Provision for loan losses

    1,766       915       366       635       1,196  

Net interest income after provision for loan losses

    37,212       36,175       34,125       32,590       30,380  

Noninterest income

    2,535       3,422       2,944       3,156       5,524  

Noninterest expense

    16,697       17,612       16,061       13,300       14,420  

Earnings before income taxes

    23,050       21,985       21,008       22,446       21,484  

Income taxes

    6,398       6,508       6,391       6,740       6,120  

Net income

  $ 16,652     $ 15,477     $ 14,617     $ 15,706     $ 15,364  

Net income per common share - basic

  $ 0.88     $ 0.81     $ 0.75     $ 0.81     $ 0.79  

Net income per common share - diluted

  $ 0.87     $ 0.80     $ 0.74     $ 0.79     $ 0.77  

Cash dividends declared per common share

  $ 0.14     $ 0.14     $ 0.14     $ 0.13     $ 0.13  

Cash dividends declared on common shares

  $ 2,663     $ 2,687     $ 2,724     $ 2,537     $ 2,516  

Yield on average assets, annualized

    1.72 %     1.60 %     1.39 %     1.52 %     1.54 %

Yield on average earning assets

    5.13 %     4.66 %     4.00 %     3.97 %     3.97 %

Cost of average deposits

    0.55 %     0.31 %     0.27 %     0.30 %     0.35 %

Cost of average interest-bearing deposits

    0.82 %     0.49 %     0.44 %     0.47 %     0.51 %

Cost of average interest-bearing liabilities

    1.25 %     0.91 %     0.84 %     0.86 %     0.89 %

Accretion on loans to average earning assets

    0.01 %     0.01 %     0.02 %     0.02 %     0.03 %

Net interest margin

    4.31 %     4.08 %     3.49 %     3.43 %     3.38 %

 

15

 

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited, except for December 31, 2021)

(Dollars in thousands, except per share amounts)

 

 

Loan Portfolio Detail

 

As of September 30, 2022

   

As of June 30, 2022

   

As of March 31, 2022

   

As of December 31, 2021

   

As of September 30, 2021

 

(dollars in thousands)

 

 

   

$%

   

 

   

$%

   

 

   

$%

   

 

   

$%

   

 

   

$%

 

Loans:

                                                                               

Commercial and industrial

  $ 204,817       6.4 %   $ 238,045       7.8 %   $ 280,825       9.3 %   $ 268,709       9.2 %   $ 276,387       9.7 %

SBA

    61,934       1.9 %     59,303       1.9 %     67,688       2.3 %     76,136       2.6 %     88,784       3.1 %

Construction and land development

    353,473       11.0 %     356,772       11.7 %     346,766       11.5 %     303,144       10.3 %     271,764       9.6 %

Commercial real estate (1)

    1,220,791       37.9 %     1,160,350       38.1 %     1,217,985       40.5 %     1,247,999       42.6 %     1,205,630       42.4 %

Single-family residential mortgages

    1,356,342       42.1 %     1,205,732       39.6 %     1,064,581       35.4 %     1,004,576       34.3 %     974,780       34.3 %

Other loans

    23,556       0.7 %     25,744       0.9 %     28,639       1.0 %     30,786       1.0 %     23,009       0.9 %

Total loans (2)

  $ 3,220,913       100.0 %   $ 3,045,946       100.0 %   $ 3,006,484       100.0 %   $ 2,931,350       100.0 %   $ 2,840,354       100.0 %

Allowance for loan losses

    (36,047 )             (34,154 )             (33,292 )             (32,912 )             (32,231 )        

Total loans, net

  $ 3,184,866             $ 3,011,792             $ 2,973,192             $ 2,898,438             $ 2,808,123          

 


(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

   

Nine Months Ended

 

Change in Allowance for Loan Losses

 

September 30,

   

September 30,

 

(dollars in thousands)

 

2022

   

2021

   

2022

   

2021

 

Beginning balance

  $ 34,154     $ 31,352     $ 32,912     $ 29,337  

Additions to the allowance charged to expense

    1,766       1,196       3,048       3,324  

Net recoveries (charge-offs) on loans

    127       (317 )     87       (430 )

Ending balance

  $ 36,047     $ 32,231     $ 36,047     $ 32,231  

 

16

 

Non-GAAP Financial Measures

 

Tangible Book Value Reconciliations

 

The tangible book value per share is a non-GAAP disclosure. Management measures the tangible book value per share to assess the Company’s capital strength and business performance and believes these are helpful to investors as additional tool for further understanding our performance. The following is a reconciliation of tangible book value to the Company shareholders’ equity computed in accordance with GAAP, as well as a calculation of tangible book value per share as of September 30, 2022 and 2021, and June 30, 2022. 

 

                         

(dollars in thousands, except per share data)

 

September 30, 2022

   

June 30, 2022

   

September 30, 2021

 

Tangible common equity:

                       

Total shareholders' equity

  $ 471,799     $ 463,707     $ 456,024  

Adjustments

                       

Goodwill

    (71,498 )     (71,498 )     (69,243 )

Core deposit intangible

    (3,971 )     (4,248 )     (4,327 )

Tangible common equity

  $ 396,330     $ 387,961     $ 382,454  

Tangible assets:

                       

Total assets-GAAP

  $ 3,905,229     $ 3,969,037     $ 3,801,807  

Adjustments

                       

Goodwill

    (71,498 )     (71,498 )     (69,243 )

Core deposit intangible

    (3,971 )     (4,248 )     (4,327 )

Tangible assets

  $ 3,829,760     $ 3,893,291     $ 3,728,237  

Common shares outstanding

  $ 19,011,672       18,881,829       19,516,393  

Tangible common equity to tangible assets ratio

    10.35 %     9.96 %     10.26 %

Book value per share

  $ 24.82     $ 24.56     $ 23.37