RBB Bancorp Reports Fourth Quarter and Full Year Earnings for 2020

Rhea-AI Summary

RBB Bancorp (NASDAQ:RBB) reported a net income of $11.1 million, or $0.56 EPS, for Q4 2020, an increase from $8.5 million in Q4 2019. Net interest income rose to $28.9 million, boosted by higher earning assets, while net interest margin improved to 3.67%. Noninterest income reached $4.5 million, up from $2.7 million in Q3 2020, driven by a $1.7 million gain on loan sales. The company declared a quarterly dividend of $0.12 per share. However, loans held for investment decreased by $48.4 million from Q3 2020, partly due to increased loan payoffs, signaling potential challenges ahead.

Positive

• Net income increased to $11.1 million, or $0.56 EPS, compared to $8.5 million in the previous year.
• Net interest income rose to $28.9 million, benefiting from higher earning assets.
• Improved net interest margin at 3.67%, up from 3.59% in Q3 2020.
• Declared a quarterly dividend of $0.12 per share, signaling confidence in future performance.

Negative

• Loans held for investment decreased by $48.4 million compared to Q3 2020 due to increased loan payoffs.
• Noninterest income decreased by $1.3 million compared to Q4 2019, primarily due to lower gains on loan sales.

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

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

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

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

Key Performance Ratios

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

Net Interest Income and Net Interest Margin

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

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

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

Noninterest Income

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

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

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

Noninterest Expense

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

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

Income Taxes

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

Loan Portfolio

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

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

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

Deposits

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

Asset Quality

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

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

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

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

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

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

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

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

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

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

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

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

Properties

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

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

Corporate Overview

RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. The Company has total assets of $3.3 billion. Its wholly-owned subsidiary, Royal Business Bank is a full service commercial bank, which provides business banking services to the Chinese-American communities in Los Angeles County, Orange County and Ventura County in California, in Las Vegas, Nevada, in Brooklyn, Queens, and Manhattan in New York, and three branches in the Chicago neighborhoods of Chinatown and Bridgeport, and Edison, New Jersey. Bank services include remote deposit, E-banking, mobile banking, commercial and investor real estate loans, business loans and lines of credit, commercial and industrial loans, SBA 7A and 504 loans, 1-4 single family residential loans, automobile lending, trade finance, a full range of depository account products and wealth management services. The Bank has nine branches in Los Angeles County, two branches in Ventura County, one branch in Irvine, California, one branch in Las Vegas, Nevada, six branches and one loan operation center in Brooklyn, Queens and Manhattan in New York, three branches in Chicago, Illinois and one branch in Edison, New Jersey. The Company's administrative and lending center is located at 1055 Wilshire Blvd., Los Angeles, California 90017, and its finance and operations center is located at 7025 Orangethorpe Avenue, Buena Park, California 90621. The Company's website address is www.royalbusinessbankusa.com.

Conference Call

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

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

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

Disclosure

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

Safe Harbor

Certain matters set forth herein (including the exhibits hereto) constitute forward-looking statements relating to the Company’s current business plans and expectations and our future financial position and operating results. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance and/or achievements to differ materially from those projected. These risks and uncertainties include, but are not limited to, local, regional, national and international economic and market conditions and events and the impact they may have on us, our customers and our assets and liabilities; our ability to attract deposits and other sources of funding or liquidity; supply and demand for real estate and periodic deterioration in real estate prices and/or values in California or other states where we lend, including both residential and commercial real estate; a prolonged slowdown or decline in real estate construction, sales or leasing activities; changes in the financial performance and/or condition of our borrowers, depositors or key vendors or counterparties; changes in our levels of delinquent loans, nonperforming assets, allowance for loan losses and charge-offs; expectations regarding the impact of the COVID-19 pandemic; the costs or effects of acquisitions or dispositions we may make, including our recent acquisition of PGB Holdings, Inc. and its wholly-owned subsidiary, Pacific Global Bank, and our recently completed acquisition of First American International Corp., whether we are able to obtain any required governmental or shareholder approvals in connection with any such acquisitions or dispositions, and/or our ability to realize the contemplated financial or business benefits associated with any such acquisitions or dispositions; the effect of changes in laws, regulations and applicable judicial decisions (including laws, regulations and judicial decisions concerning financial reforms, taxes, banking capital levels, consumer, commercial or secured lending, securities and securities trading and hedging, compliance, employment, executive compensation, insurance, vendor management and information security) with which we and our subsidiaries must comply or believe we should comply; changes in estimates of future reserve requirements and minimum capital requirements based upon the periodic review thereof under relevant regulatory and accounting requirements, including changes in the Basel Committee framework establishing capital standards for credit, operations and market risk; inflation, interest rate, securities market and monetary fluctuations; changes in government interest rates or monetary policies; changes in the amount and availability of deposit insurance; cyber-security threats, including loss of system functionality or theft or loss of Company or customer data or money; political instability; acts of war or terrorism, or natural disasters, such as earthquakes, drought, or the effects of pandemic diseases; the timely development and acceptance of new banking products and services and the perceived overall value of these products and services by our customers and potential customers; the Company’s relationships with and reliance upon vendors with respect to the operation of certain of the Company’s key internal and external systems and applications; changes in commercial or consumer spending, borrowing and savings preferences or behaviors; technological changes and the expanding use of technology in banking (including the adoption of mobile banking and funds transfer applications); the ability to retain and increase market share, retain and grow customers and control expenses; changes in the competitive and regulatory environment among financial and bank holding companies, banks and other financial service providers; volatility in the credit and equity markets and its effect on the general economy or local or regional business conditions; fluctuations in the price of the Company’s common stock or other securities; and the resulting impact on the Company’s ability to raise capital or make acquisitions, the effect of changes in accounting policies and practices, as may be adopted from time-to-time by our regulatory agencies, as well as by the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard-setters, including ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments”, commonly referenced as the Current Expected Credit Loss (“CECL”) model, which will change how we estimate credit losses and may increase the required level of our allowance for credit losses after adoption; changes in our organization, management, compensation and benefit plans, and our ability to retain or expand our workforce, management team and/or our board of directors; the costs and effects of legal, compliance and regulatory actions, changes and developments, including the initiation and resolution of legal proceedings (such as securities, consumer or employee class action litigation), regulatory or other governmental inquiries or investigations, and/or the results of regulatory examinations or reviews; our ongoing relations with our various federal and state regulators, including the SEC, FDIC, FRB and California DFPI (formerly DBO); our success at managing the risks involved in the foregoing items and all other factors set forth in the Company’s public reports, including its Annual Report as filed under Form 10-K for the year ended December 31, 2019, and particularly the discussion of risk factors within that document. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements except as required by law. Any statements about future operating results, such as those concerning accretion and dilution to the Company’s earnings or shareholders, are for illustrative purposes only, are not forecasts, and actual results may differ.

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

RBB BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands, except per share amounts)
		For the three months ended
		December 31, 2020				September 30, 2020				December 31, 2019
Interest and dividend income:
Interest and fees on loans		$	34,832			$	34,153			$	32,178
Interest on interest-bearing deposits			55				61				373
Interest on investment securities			639				621				676
Dividend income on FHLB stock			193				190				264
Interest on federal funds sold and other			145				100				416
Total interest income			35,864				35,125				33,907
Interest expense:
Interest on savings deposits, NOW and money market accounts			736				779				1,237
Interest on time deposits			3,900				4,746				7,559
Interest on subordinated debentures and long term debt			1,901				1,905				1,915
Interest on other borrowed funds			450				444				73
Total interest expense			6,987				7,874				10,784
Net interest income before provision for loan losses			28,877				27,251				23,123
Provision for loan losses			3,008				3,861				659
Net interest income after provision for loan losses			25,869				23,390				22,464
Noninterest income:
Service charges, fees and other			1,565				1,143				1,096
Gain on sale of loans			2,445				760				3,762
Loan servicing fees, net of amortization			206				546				817
Recoveries on loans acquired in business combinations			5				32				70
Gain on derivatives			78				—				—
Increase in cash surrender value of life insurance			191				194				195
Gain on sale of securities			—				52				—
(Loss)/Gain on sale of other real estate owned			—				—				(117	)
Total noninterest income			4,490				2,727				5,823
Noninterest expense:
Salaries and employee benefits			8,105				7,599				7,821
Occupancy and equipment expenses			2,400				2,360				2,390
Data processing			1,012				1,200				497
Legal and professional			794				675				317
Office expenses			295				271				292
Marketing and business promotion			295				131				382
Insurance and regulatory assessments			210				363				147
Core deposit premium			324				357				344
OREO expenses			4				3				176
Merger and conversion expenses			5				62				231
Other expenses			1,009				957				868
Total noninterest expense			14,453				13,978				13,465
Income before income taxes			15,906				12,139				14,822
Income tax expense			4,759				3,619				4,149
Net income		$	11,147			$	8,520			$	10,673
Net income per share
Basic		$	0.57			$	0.43			$	0.53
Diluted		$	0.56			$	0.43			$	0.52
Cash Dividends declared per common share		$	0.09			$	0.06			$	0.10
Weighted-average common shares outstanding
Basic			19,655,621				19,717,568				20,001,916
Diluted			19,812,401				19,804,892				20,389,099

RBB BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited, except for December 31, 2019) (Dollars in thousands, except per share amounts)
		For the twelve months ended
		December 31, 2020				December 31, 2019
Interest and dividend income:
Interest and fees on loans		$	133,894			$	135,159
Interest on interest-earning deposits			641				1,785
Interest on investment securities			2,968				2,652
Dividend income on FHLB stock			572				1,079
Interest on federal funds sold and other			1,045				1,050
Total interest income			139,120				141,725
Interest expense:
Interest on savings deposits, NOW and money market accounts			3,540				4,886
Interest on time deposits			21,665				29,347
Interest on subordinated debentures and long term debt			7,677				7,698
Interest on other borrowed funds			1,483				2,930
Total interest expense			34,365				44,861
Net interest income			104,755				96,864
Provision for loan losses			11,823				2,390
Net interest income after provision for loans losses			92,932				94,474
Noninterest income:
Service charges, fees and other			4,852				4,072
Gain on sale of loans			5,997				9,893
Loan servicing fees, net of amortization			2,052				3,383
Recoveries on loans acquired in business combinations			84				143
Unrealized gain on equity investments			—				147
Increase in cash surrender value of life insurance			767				775
Gain on derivatives			78				—
Gain on sale of securities			210				7
Gain on sale of fixed assets			—				6
Loss on sale of other real estate owned			—				(106	)
Total noninterest income			14,040				18,320
Noninterest expense:
Salaries and employee benefits			33,312				32,909
Occupancy and equipment expenses			9,691				9,750
Data processing			4,236				3,699
Legal and professional			2,743				1,832
Office expenses			1,226				1,257
Marketing and business promotion			751				1,308
Insurance and regulatory assessments			984				900
Core deposit premium			1,395				1,501
OREO expenses			35				337
Merger expenses			746				471
Other expenses			4,394				3,509
Total noninterest expense			59,513				57,473
Income before income taxes			47,459				55,321
Income tax expense			14,531				16,112
Net income		$	32,928			$	39,209
Net income per share
Basic		$	1.66			$	1.96
Diluted		$	1.65			$	1.92
Cash Dividends declared per common share		$	0.33			$	0.40
Weighted-average common shares outstanding
Basic			19,763,422				20,017,306
Diluted			19,921,859				20,393,424

RBB BANCORP AND SUBSIDIARIES AVERAGE BALANCE SHEET AND NET INTEREST INCOME (Unaudited) (Dollars in thousands, except per share amounts)
		For the three months ended
		December 31, 2020												September 30, 2020												December 31, 2019
		Average				Interest				Yield /				Average				Interest				Yield /				Average				Interest				Yield /
(tax-equivalent basis, dollars in thousands)		Balance				& Fees				Rate				Balance				& Fees				Rate				Balance				& Fees				Rate
Earning assets:
Federal funds sold, cash equivalents & other (1)		$	188,430			$	393				0.83	%		$	179,521			$	351				0.78	%		$	172,431			$	1,053				2.42	%
Securities
Available for sale			222,762				579				1.03	%			168,151				558				1.32	%			94,400				605				2.54	%
Held to maturity (2)			7,383				68				3.66	%			7,604				71				3.71	%			8,441				80				3.76	%
Mortgage loans held for sale			41,265				325				3.13	%			19,848				171				3.43	%			244,706				2,969				4.81	%
Loans held for investment: (3)
Real estate			2,282,937				29,705				5.18	%			2,266,752				29,616				5.20	%			1,793,647				24,182				5.35	%
Commercial			390,980				4,802				4.89	%			377,789				4,366				4.60	%			327,765				5,027				6.08	%
Total loans			2,673,917				34,507				5.13	%			2,644,541				33,982				5.11	%			2,121,412				29,209				5.46	%
Total earning assets			3,133,757			$	35,872				4.55	%			3,019,665			$	35,133				4.63	%			2,641,390			$	33,916				5.09	%
Noninterest-earning assets			196,071												204,638												165,659
Total assets		$	3,329,828											$	3,224,303											$	2,807,049
Interest-bearing liabilities
NOW and money market deposits		$	566,695			$	704				0.49	%		$	514,271			$	748				0.58	%		$	416,380			$	1,189				1.13	%
Savings deposits			128,727				32				0.10	%			126,635				31				0.10	%			96,813				48				0.20	%
Time deposits			1,293,070				3,900				1.20	%			1,284,351				4,746				1.47	%			1,296,379				7,559				2.31	%
Total interest-bearing deposits			1,988,492				4,636				0.93	%			1,925,257				5,525				1.14	%			1,809,572				8,796				1.93	%
FHLB advances			161,957				450				1.11	%			151,739				444				1.16	%			14,348				73				2.02	%
Long-term debt			104,335				1,748				6.67	%			104,252				1,748				6.67	%			103,997				1,748				6.67	%
Subordinated debentures			14,248				153				4.27	%			14,195				157				4.40	%			9,648				167				6.87	%
Total interest-bearing liabilities			2,269,032				6,987				1.23	%			2,195,443				7,874				1.43	%			1,937,565				10,784				2.21	%
Noninterest-bearing liabilities
Noninterest-bearing deposits			616,803												595,264												445,891
Other noninterest-bearing liabilities			16,830												13,270												19,851
Total noninterest-bearing liabilities			633,633												608,534												465,742
Shareholders' equity			427,163												420,326												403,742
Total liabilities and shareholders' equity		$	3,329,828											$	3,224,303											$	2,807,049
Net interest income / interest rate spreads						$	28,885				3.32	%						$	27,259				3.20	%						$	23,132				2.88	%
Net interest margin											3.67	%											3.59	%											3.47	%

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

RBB BANCORP AND SUBSIDIARIES AVERAGE BALANCE SHEET AND NET INTEREST INCOME (Unaudited) (Dollars in thousands, except per share amounts)
		For the twelve months ended
		December 31, 2020												December 31, 2019
		Average				Interest				Yield /				Average				Interest				Yield /
(tax-equivalent basis, dollars in thousands)		Balance				& Fees				Rate				Balance				& Fees				Rate
Earning assets:
Federal funds sold, cash equivalents & other (1)		$	212,594			$	2,257				1.06	%		$	135,133			$	3,914				2.90	%
Securities
Available for sale			175,307				2,714				1.55	%			85,775				2,354				2.74	%
Held to maturity (2)			7,665				289				3.77	%			8,978				334				3.72	%
Mortgage loans held for sale			41,019				1,779				4.34	%			325,039				15,754				4.85	%
Loans held for investment: (3)
Real estate			2,176,695				113,966				5.24	%			1,767,923				97,024				5.49	%
Commercial			367,718				18,149				4.94	%			345,010				22,381				6.49	%
Total loans			2,544,413				132,115				5.19	%			2,112,933				119,405				5.65	%
Total earning assets			2,980,998			$	139,154				4.67	%			2,667,858			$	141,761				5.31	%
Noninterest-earning assets			204,617												167,324
Total assets		$	3,185,615											$	2,835,182
Interest-bearing liabilities
NOW and money market deposits		$	504,905			$	3,391				0.67	%		$	395,376			$	4,689				1.19	%
Savings deposits			123,568				149				0.12	%			97,670				197				0.20	%
Time deposits			1,312,443				21,665				1.65	%			1,279,344				29,347				2.29	%
Total interest-bearing deposits			1,940,916				25,205				1.30	%			1,772,390				34,233				1.93	%
FHLB advances			129,071				1,483				1.15	%			114,388				2,930				2.56	%
Long-term debt			104,210				6,990				6.71	%			103,870				6,991				6.73	%
Subordinated debentures			14,228				687				4.83	%			9,586				707				7.38	%
Total interest-bearing liabilities			2,188,425			$	34,365				1.57	%			2,000,234			$	44,861				2.24	%
Noninterest-bearing liabilities
Noninterest-bearing deposits			564,111												421,174
Other noninterest-bearing liabilities			15,164												19,879
Total noninterest-bearing liabilities			579,275												441,053
Shareholders' equity			417,915												393,895
Total liabilities and shareholders' equity		$	3,185,615											$	2,835,182
Net interest income / interest rate spreads						$	104,789				3.10	%						$	96,900				3.07	%
Net interest margin											3.52	%											3.63	%

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

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

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

RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share amounts)
		As of
		December 31,				September 30,				December 31,
		2020				2020				2019
Loan to deposit ratio			102.72	%			105.49	%			97.69	%
Core deposits / total deposits			76.65	%			99.34	%			70.46	%
Net non-core funding dependence ratio			12.47	%			14.47	%			21.04	%
Credit Quality Data:
Loans 30-89 days past due		$	8,939			$	21,735			$	4,393
Loans 30-89 days past due to total loans			0.33	%			0.79	%			0.20	%
Nonperforming loans		$	19,554			$	17,975			$	13,218
Nonperforming loans to total loans			0.72	%			0.65	%			0.60	%
Nonperforming assets		$	19,847			$	18,268			$	13,511
Nonperforming assets to total assets			0.59	%			0.54	%			0.48	%
Allowance for loan losses to total loans			1.08	%			0.97	%			0.86	%
Allowance for loan losses to nonperforming loans			150.03	%			148.17	%			142.35	%
Net charge-offs to average loans (for the quarter-to-date period)			0.05	%			0.01	%			0.23	%
Regulatory and other capital ratios—Company
Tangible common equity to tangible assets			10.81	%			10.55	%			12.59	%
Tier 1 leverage ratio			11.32	%			11.47	%			12.89	%
Tier 1 common capital to risk-weighted assets			14.63	%			14.11	%			17.16	%
Tier 1 capital to risk-weighted assets			15.22	%			14.69	%			17.65	%
Total capital to risk-weighted assets			20.78	%			20.05	%			23.82	%
Regulatory capital ratios—Bank only
Tier 1 leverage ratio			14.09	%			14.16	%			15.23	%
Tier 1 common capital to risk-weighted assets			18.95	%			18.13	%			20.87	%
Tier 1 capital to risk-weighted assets			18.95	%			18.13	%			20.87	%
Total capital to risk-weighted assets			20.20	%			19.26	%			21.86	%

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

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

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

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

Tangible Book Value Reconciliations (non-GAAP)

The tangible book value per share is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. The following is a reconciliation of tangible book value to the Company shareholders’ equity computed in accordance with GAAP, as well as a calculation of tangible book value per share as of December 31, 2020 and 2019.

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

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

Earnings per share excluding merger and conversion expense is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. The following is a calculation of earnings per share with after-tax net income excluding tax-affected merger and conversion expense. This EPS calculation is presented for the quarters ended December 31, 2020, September 30, 2020 and December 31, 2019, plus for the twelve-month periods ending December 31, 2020 and 2019.

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

Efficiency Ratio (non-GAAP)

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

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

 

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FAQ

What were RBB Bancorp's earnings for Q4 2020?

RBB Bancorp reported a net income of $11.1 million, or $0.56 diluted EPS for Q4 2020.

How did RBB Bancorp's net interest income change in Q4 2020?

Net interest income increased to $28.9 million in Q4 2020, up from $27.3 million in Q3 2020.

What is RBB Bancorp's net interest margin for Q4 2020?

The net interest margin improved to 3.67% in Q4 2020.

Did RBB Bancorp declare dividends for Q4 2020?

Yes, RBB Bancorp declared a quarterly dividend of $0.12 per share.

How has RBB Bancorp's loan portfolio changed recently?

Loans held for investment decreased by $48.4 million from Q3 2020 due to increased loan payoffs.