RBB Bancorp Announces Stock Repurchase Program

Rhea-AI Summary

RBB Bancorp (RBB) authorizes a stock repurchase program to buy back up to 1,000,000 shares, approximately 5% of outstanding shares, through March 31, 2026. The program allows open market or private transactions, block trades, and follows SEC rules. The Company may suspend, terminate, or modify the program based on various factors.

Insights

Financial Analyst

The authorization of a stock repurchase program by RBB Bancorp signals a strategic move that can have multiple implications for shareholder value and the company's capital allocation strategy. Repurchasing shares can be a sign of management's confidence in the company's intrinsic value, often perceived as a positive signal by the market. It can lead to an increase in earnings per share (EPS) by reducing the number of outstanding shares, potentially resulting in a higher stock price. However, it is essential to consider the opportunity cost of this capital deployment. By allocating funds to buy back shares, the company is choosing not to invest that capital into potentially higher growth opportunities or to maintain liquidity for future needs.

Investors should also consider the terms of the repurchase, such as the discretion allowed under the program and the fact that it does not obligate the company to repurchase any specific number of shares. This flexibility suggests that the company is leaving room to navigate changing market conditions and to optimize the timing of these repurchases. The impact on the stock will largely depend on how the repurchase is executed, the market's interpretation of the move and the company's performance relative to its industry peers.

Market Research Analyst

From a market perspective, RBB Bancorp's repurchase program must be contextualized within the broader banking industry and prevailing economic conditions. Share repurchases in the banking sector can often be a tool to manage regulatory capital ratios and return excess capital to shareholders. It is also indicative of the bank's capital adequacy and its ability to generate capital above its operational requirements. However, the effectiveness of the repurchase program in delivering shareholder value will depend on the bank's stock valuation at the time of the buyback. If the bank repurchases shares at a price below their intrinsic value, it can be accretive to shareholder value. Conversely, if shares are repurchased at a premium to their intrinsic value, it could represent a misallocation of resources.

Additionally, the bank operates in a highly competitive market, serving the Asian communities across various states. The repurchase program's announcement could affect the competitive dynamics, potentially signaling financial robustness to current and prospective customers, which could indirectly support the bank's market position and long-term growth prospects.

Economist

Examining the macroeconomic environment, the decision to engage in a stock repurchase program can be influenced by interest rate trends, inflation and overall economic health. In periods of low-interest rates, financing repurchases through debt can be more attractive, whereas in a rising rate environment, the cost of borrowing can offset the benefits of repurchasing shares. Given the current economic climate, with concerns about inflation and potential interest rate hikes, RBB Bancorp's decision to repurchase shares may reflect an assessment that the cost of equity is lower than the cost of potential debt or alternative investments.

Moreover, the repurchase program's timing and scale could be a response to economic cycles, aiming to provide stability to the company's stock during volatile market conditions. The program's end date in 2026 suggests a long-term perspective, which may reassure investors about the company's commitment to prudent capital management over time.

LOS ANGELES--(BUSINESS WIRE)-- 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 that its Board of Directors has authorized a stock repurchase program. Under the repurchase program, the Company may buy back up to 1,000,000 shares of its common stock, or approximately 5% of its outstanding shares, through March 31, 2026.

The repurchase program permits shares to be purchased in open market or private transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rules 10b5-1 and 10b-18 of the Securities and Exchange Commission.

The authorized repurchase program may be suspended, terminated or modified at any time for any reason, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate. These factors may also affect the timing and amount of share repurchases. The repurchase program does not obligate the Company to purchase any particular number of shares.

Corporate Overview

RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. As of December 31, 2023, the Company had total assets of $4.0 billion. Its wholly-owned subsidiary, the Bank, is a full service commercial bank, which provides business banking services to the Asian 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.

Safe Harbor

Certain matters set forth herein (including the exhibits hereto) constitute forward-looking statements relating to the Company’s current business plans and expectations and our future financial position and operating results. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance and/or achievements to differ materially from those projected. These risks and uncertainties include, but are not limited to, the Bank’s ability to comply with the requirements of the Consent Order we have entered into with the FDIC and the DFPI and the possibility that we may be required to incur additional expenses or be subject to additional regulatory action, if we are unable to timely and satisfactorily comply with the consent order; the effectiveness of the Company’s internal control over financial reporting and disclosure controls and procedures; the potential for additional material weaknesses in the Company’s internal controls over financial reporting or other potential control deficiencies of which the Company is not currently aware or which have not been detected; business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic markets, including the tight labor market, ineffective management of the U.S. federal budget or debt or turbulence or uncertainly in domestic of foreign financial markets; the strength of the United States economy in general and the strength of the local economies in which we conduct operations; our ability to attract and retain deposits and access other sources of liquidity; possible additional provisions for loan losses and charge-offs; credit risks of lending activities and deterioration in asset or credit quality; extensive laws and regulations and supervision that we are subject to, including potential supervisory action by bank supervisory authorities; increased costs of compliance and other risks associated with changes in regulation, including any amendments to the Dodd-Frank Wall Street Reform and Consumer Protection Act; compliance with the Bank Secrecy Act and other money laundering statutes and regulations; potential goodwill impairment; liquidity risk; fluctuations in interest rates; the transition away from the London Interbank Offering Rate (LIBOR) and related uncertainty as well as the risks and costs related to our adopted alternative reference rate, including the Secured Overnight Financing Rate (SOFR); risks associated with acquisitions and the expansion of our business into new markets; inflation and deflation; real estate market conditions and the value of real estate collateral; environmental liabilities; our ability to compete with larger competitors; our ability to retain key personnel; successful management of reputational risk; severe weather, natural disasters, earthquakes, fires; or other adverse external events could harm our business; geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts or threats of terrorism and/or military conflicts, including the conflicts between Russia and Ukraine and in the Middle East, which could impact business and economic conditions in the United States and abroad; public health crises and pandemics, and their effects on the economic and business environments in which we operate, including our credit quality and business operations, as well as the impact on general economic and financial market conditions; general economic or business conditions in Asia, and other regions where the Bank has operations; failures, interruptions, or security breaches of our information systems; climate change, including any enhanced regulatory, compliance, credit and reputational risks and costs; cybersecurity threats and the cost of defending against them; our ability to adapt our systems to the expanding use of technology in banking; risk management processes and strategies; adverse results in legal proceedings; the impact of regulatory enforcement actions, if any; certain provisions in our charter and bylaws that may affect acquisition of the Company; changes in tax laws and regulations; the impact of governmental efforts to restructure the U.S. financial regulatory system; the impact of future or recent changes in FDIC insurance assessment rate of the rules and regulations related to the calculation of the FDIC insurance assessment amount; the effect of changes in accounting policies and practices or accounting standards, as may be adopted from time-to-time by bank regulatory agencies, the SEC, the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setters, including Accounting Standards Update 2016-13 (Topic 326, “Measurement of Current Losses on Financial Instruments, commonly referenced as the Current Expected Credit Losses Model, which changed how we estimate credit losses and may further increase the required level of our allowance for credit losses in future periods; market disruption and volatility; fluctuations in the Company’s stock price; restrictions on dividends and other distributions by laws and regulations and by our regulators and our capital structure; issuances of preferred stock; our ability to raise additional capital, if needed, and the potential resulting dilution of interests of holders of our common stock; the soundness of other financial institutions; our ongoing relations with our various federal and state regulators, including the SEC, FDIC, FRB and DFPI; 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 and Form 10-K/A for the year ended December 31, 2022, 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240229322721/en/

Lynn Hopkins

Interim CFO

(213) 716-8066

Source: RBB Bancorp

FAQ

What is the stock repurchase program authorized by RBB Bancorp (RBB)?

RBB Bancorp (RBB) has authorized a stock repurchase program to buy back up to 1,000,000 shares, approximately 5% of its outstanding shares, through March 31, 2026.

Where is RBB Bancorp (RBB) headquartered?

RBB Bancorp (RBB) is headquartered in Los Angeles, California.

What are the services provided by RBB Bancorp's subsidiary, Royal Business Bank?

Royal Business Bank, a subsidiary of RBB Bancorp, provides business banking services to Asian communities in various locations across the US.

How many branches does RBB Bancorp's subsidiary, Royal Business Bank, have?

Royal Business Bank, a subsidiary of RBB Bancorp, has multiple branches across different states in the US.