RBB Bancorp Reports Record Fourth Quarter and Full Year Earnings for 2021

Rhea-AI Summary

RBB Bancorp (NASDAQ:RBB) reported a record net income of $15.7 million or $0.79 diluted EPS for Q4 2021, marking a 2.2% increase from the previous quarter and a 40.9% rise year-over-year. Loans grew by $81.8 million (11.4% annualized), driven by commercial and construction loans. The Company announced its entry into the San Francisco Bay area through the acquisition of Gateway Bank. Noninterest income fell by $2.4 million due to a prior quarter grant. The efficiency ratio improved to 36.56%, and deposits increased by $417.7 million quarter-over-quarter.

Positive

• Record net income of $15.7 million for Q4 2021.
• Loans increased by $81.8 million (11.4% annualized) from the prior quarter.
• Expansion into San Francisco Bay area with Gateway Bank acquisition.
• Efficiency ratio improved to 36.56%.

Negative

• Noninterest income decreased by $2.4 million from the previous quarter.

Conference Call and Webcast Scheduled for Tuesday, January 25, 2022 at 11:00 a.m. Pacific Time/2:00 p.m. Eastern Time

Fourth Quarter 2021 Highlights

• Record net income of $15.7 million, or $0.79 diluted earnings per share, increased $342,000, or 2.2%, from the prior quarter and increased $4.6 million, or 40.9%, from the fourth quarter of 2020
• Loans grew by $81.8 million, or 11.4% annualized, from the end of the prior quarter
• Announced the entry into the San Francisco Bay area with an agreement to acquire Gateway Bank, F.S.B. and completed the previously announced purchase acquisition of the Bank of the Orient’s Honolulu, Hawaii branch

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 financial results for the quarter ended December 31, 2021.

The Company reported record net income of $15.7 million, or $0.79 diluted earnings per share, for the three months ended December 31, 2021, compared to net income of $15.4 million, or $0.77 diluted earnings per share, and $11.1 million, or $0.56 diluted earnings per share, for the three months ended September 30, 2021 and December 31, 2020, respectively.

“Royal Business Bank’s excellent fourth quarter results contributed to a record year of growth and performance in 2021,” said Alan Thian, President and CEO of RBB Bancorp. “Our strategy of expansion has proven to be an effective driver of shareholder value by enhancing earnings, accelerating loan growth, and improving our deposit franchise. Our recent expansion into the vibrant Hawaiian market and our announced acquisition of Gateway Bank in the San Francisco Bay area will provide us with additional opportunities to bring our relationship-banking model to new markets.”

"2021 was a tremendous year for the Bank," said Dr. James Kao, Chairman of RBB Bancorp. “Not only did the Bank achieve record results and growth, but it was also recognized multiple times for the work it does to serve the financial needs of the communities in which it operates. Two members of the RBB team, Alan Thian and Simon Pang, were appointed to national commissions to advise on community development and the Bank was the awarded a CDFI grant from the US Treasury to support distressed and underserved communities.”

Key Performance Ratios

Net income of $15.7 million for the fourth quarter of 2021 produced an annualized return on average assets ("ROA") of 1.52%, an annualized return on average tangible common shareholders' equity ("ROTCE") of 15.98%, and an annualized return on average shareholders' equity ("ROE") of 13.45%. This compares to an annualized return on average assets of 1.54%, an annualized return on average tangible common shareholders' equity of 16.17%, and an annualized return on average shareholders' equity of 13.52% for the third quarter of 2021. The efficiency ratio for the fourth quarter of 2021 was 36.56%, compared to 38.87% for the prior quarter.

Net Interest Income and Net Interest Margin

Net interest income, before provision for loan losses, was $33.2 million for the fourth quarter of 2021, compared to $31.6 million for the third quarter of 2021. The $1.6 million increase was primarily attributable to higher interest income due to a $135.9 million increase in average earning assets and a $51.1 million decrease in average interest-bearing liabilities. Accretion of purchase discounts from prior acquisitions contributed $192,000 to net interest income in the fourth quarter of 2021, compared to $289,000 in the third quarter of 2021.

Compared to the fourth quarter of 2020, net interest income, before provision for loan losses, increased $4.3 million from $28.9 million. The increase was primarily attributable to a $713.3 million increase in average earning assets, partially offset by a $137.3 million increase in average interest-bearing liabilities. The increases in average earning assets and total deposits were primarily due to increased loan and deposit originations.

Net interest margin was 3.43% for the fourth quarter of 2021, an increase of 5 basis points from 3.38% in the third quarter of 2021. Loan discount accretion contributed 2 basis points to the net interest margin in the fourth quarter of 2021, compared to 3 basis points in the third quarter of 2021.

Noninterest Income

Noninterest income was $3.2 million for the fourth quarter of 2021, a decrease of $2.4 million from $5.5 million in the third quarter of 2021. The decrease was primarily driven by a one-time $1.8 million CDFI grant received during the third quarter and a $455,000 decrease in gain on derivatives, partially offset by a $196,000 increase in loan servicing fees during the quarter.

The Company sold $37.7 million in FNMA qualified mortgage loans for a net gain of $1.4 million and sold no non-qualified mortgage loans during the fourth quarter of 2021. This compared to $36.6 million in FNMA qualified mortgage loans sold for a net gain of $1.2 million and no non-qualified mortgage loans during the third quarter of 2021. The Company sold $5.5 million in SBA loans during the fourth quarter of 2021 for a net gain of $436,000, compared to $5.9 million SBA loans sold for a net gain of $553,000 during the third quarter of 2021.

Compared to the fourth quarter of 2020, noninterest income decreased by $1.3 million from $4.5 million. The decrease was primarily attributable to a decrease of $657,000 in gain on sale of loans and a decrease of $378,000 in unrealized gain (loss) on equity investment.

Noninterest Expense

Noninterest expense for the fourth quarter of 2021 was $13.3 million, compared to $14.4 million for the third quarter of 2021. The $1.1 million decrease was primarily attributable to a $2.0 million decrease in salaries and benefit expenses, partially offset by $940,000 increase in legal and professional expense. The fourth quarter increase in legal and professional expenses were due, in part, to expenses related to the acquisition of the branch in Honolulu, Hawaii and the announced acquisition of Gateway Bank.

Noninterest expense decreased from $14.5 million in the fourth quarter of 2020. The $1.2 million decrease was primarily due to a $1.3 million decrease in salaries and benefits expenses, $275,000 decrease in occupancy and equipment expenses and a $174,000 decrease in data processing expenses, partially offset by an $892,000 increase in legal and professional expenses.

Income Taxes

The effective tax rate was 30.0% for the fourth quarter of 2021, 28.5% for the third quarter of 2021, and 29.9% for the fourth quarter of 2020. The Company recognized a tax expense (benefit) from stock option exercises of ($215,000), ($534,000) and zero for the fourth quarter of 2021, the third quarter of 2021, and the fourth quarter of 2020, respectively.

Loan Portfolio

Loans held for investment, net of deferred fees and discounts, totaled $2.93 billion as of December 31, 2021, an increase of $91.0 million from September 30, 2021, and an increase of $224.6 million from December 31, 2020. The increase from the prior quarter was primarily due to a $42.4 million increase in commercial real estate loans, $31.4 million increase in construction & land development loans and a $29.8 million increase in single-family residential mortgages. The increase from December 31, 2020 was primarily due to a $244.4 million increase in commercial real estate loans, $116.4 million increase in construction & land development loans, partially offset by a $119.8 million decrease in single-family residential mortgages.

During the fourth quarter of 2021, single-family residential mortgage production was $137.7 million while payoffs and paydowns were $79.5 million. During the third quarter of 2021, single-family residential mortgage production was $112.0 million while payoffs and paydowns were $79.0 million.

Mortgage loans held for sale were $6.0 million as of December 31, 2021, a decrease of $9.2 million from $15.2 million at September 30, 2021 and a decrease of $44.0 million from $50.0 million as of December 31, 2020. The Company originated approximately $18.2 million in FNMA mortgage loans for sale for the fourth quarter of 2021, compared with $12.2 million during the prior quarter.

In the fourth quarter of 2021, SBA loan production was $4.6 million and total SBA loan sales were $5.5 million.

Deposits

Deposits were $3.4 billion at December 31, 2021, and compared to September 30, 2021, there was an increase of $417.7 million from September 30, 2021, and an increase of $750.4 million from December 31, 2020, including brokered deposits. During the fourth quarter of 2021, noninterest-bearing deposits increased by $466.7 million, interest-bearing non-maturity deposits decreased by $3.9 million, and time deposits decreased by $45.1 million. Noninterest-bearing deposits increased due to expanding relationships with a number of our commercial clients. As of December 31, 2021, time deposits included $2.4 million in brokered CDs, as compared to $2.4 million as of September 30, 2021 and $17.4 million as of December 31, 2020. Compared to December 31, 2020, total deposits increased by $750.4 million, which included a $674.3 million increase in noninterest bearing deposits and a $76.1 million increase in interest-bearing deposits.

Asset Quality

Nonperforming assets totaled $21.0 million, or 0.50% of total assets at December 31, 2021, compared to $14.5 million, or 0.38% of total assets at September 30, 2021. The $6.5 million increase in non-performing assets was due to the addition of three commercial real estate loans in the amount of $3.5 million, one SFR loan for $156,000 and three commercial and industrial loans for $3.7 million, less paydowns and payoffs on other non-performing loans. 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.

In the fourth quarter of 2021, there were $46,000 in net recoveries, compared to net charge-offs of $317,000 in the third quarter.

The Company recorded a provision for credit losses of $635,000 for the fourth quarter of 2021, a decrease from $1.2 million in the prior quarter, primarily attributable to a reduction of the COVID-19 special reserve in the allowance for loan losses.

The allowance for loan losses totaled $32.9 million, or 1.12% of loans held for investment at December 31, 2021, compared with $32.2 million, or 1.13%, of total loans at September 30, 2021.

As of December 31, 2021, borrowers representing 69 loans totaling $11.8 million, or 0.40% of the Company’s total loan portfolio, have funded under the SBA’s Paycheck Protection Program due to the COVID-19 pandemic. Presently none of our SBA customers are on a payment deferral plan due to the COVID-19 pandemic.

As of January 15, 2022, the Company had no COVID-19 loans deferred.

During the fourth quarter of 2021, the Company repurchased 75,849 common shares at a weighted average price of $24.53.

Agreement to Acquire Gateway Bank, F.S.B.

On December 28, 2021, RBB Bancorp announced that it entered into a definitive agreement to acquire Gateway Bank, F.S.B. ("Gateway Bank") in a cash transaction valued at approximately $22.9 million, subject to certain terms and conditions, including customary holdbacks if certain contingencies are not met, and other possible adjustments as contained in the definitive agreement.

Gateway Bank, a commercial bank based in Oakland, California, had total assets of $172.4 million, total gross loans of $123.1 million, total deposits of $147.5 million, and total tangible equity of $15.5 million as of September 30, 2021. Principally serving the Asian-American communities in the San Francisco Bay Area, Gateway Bank has one branch located in Oakland’s Chinatown neighborhood, offering consumer and business banking and loan products and services.

The Company expects the transaction to be accretive to earnings per share in 2022 in the mid-single digit range. The Company also expects to incur tangible book value per share dilution of approximately 1.8% upon closing of the transaction, with a tangible book value dilution payback period of approximately 1.8 years. The earnings per share accretion estimates are based on estimated cost savings of approximately 60% of Gateway Bank's non-interest expense, with the cost savings phased in during 2022. The earnings per share accretion estimates do not include any assumption of revenue synergies. The transaction is expected to close in second quarter of 2022 and is subject to the Company obtaining all the regulatory approvals as well as other customary closing conditions.

Corporate Overview

RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. As of December 31, 2021, the company had total assets of $4.2 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 in 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, two branches and one loan operation center in Brooklyn, three branches in Queens, one branch in Manhattan in New York, one branch in Edison, New Jersey, 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, January 25, 2022, to discuss the Company’s fourth quarter 2021 financial results.

To listen to the conference call, please dial 1-866-518-6930 or 1-203-518-9797, conference ID RBBQ421. A replay of the call will be made available at 1-800-938-1602 or 1-404-220-1548 (no passcode required) approximately one hour after the conclusion of the call and will remain available through February 2, 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.

Safe Harbor

Certain matters set forth herein (including the exhibits hereto) constitute forward-looking statements relating to the Company’s current business plans and expectations and our future financial position and operating results. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance and/or achievements to differ materially from those projected. These risks and uncertainties include, but are not limited to, local, regional, national and international economic and market conditions and events and the impact they may have on us, our customers and our assets and liabilities; our ability to attract deposits and other sources of funding or liquidity; supply and demand for real estate and periodic deterioration in real estate prices and/or values in California or other states where we lend, including both residential and commercial real estate; a prolonged slowdown or decline in real estate construction, sales or leasing activities; changes in the financial performance and/or condition of our borrowers, depositors or key vendors or counterparties; changes in our levels of delinquent loans, nonperforming assets, allowance for loan losses and charge-offs; expectations regarding the impact of the COVID-19 pandemic; the costs or effects of acquisitions or dispositions we may make, including our recent acquisition of PGB Holdings, Inc. and its wholly-owned subsidiary, Pacific Global Bank, and our recently completed acquisition of First American International Corp., whether we are able to obtain any required governmental or shareholder approvals in connection with any such acquisitions or dispositions, and/or our ability to realize the contemplated financial or business benefits associated with any such acquisitions or dispositions; the effect of changes in laws, regulations and applicable judicial decisions (including laws, regulations and judicial decisions concerning financial reforms, taxes, banking capital levels, consumer, commercial or secured lending, securities and securities trading and hedging, compliance, employment, executive compensation, insurance, vendor management and information security) with which we and our subsidiaries must comply or believe we should comply; changes in estimates of future reserve requirements and minimum capital requirements based upon the periodic review thereof under relevant regulatory and accounting requirements, including changes in the Basel Committee framework establishing capital standards for credit, operations and market risk; inflation, interest rate, securities market and monetary fluctuations; changes in government interest rates or monetary policies; changes in the amount and availability of deposit insurance; cyber-security threats, including loss of system functionality or theft or loss of Company or customer data or money; political instability; acts of war or terrorism, or natural disasters, such as earthquakes, drought, or the effects of pandemic diseases; the timely development and acceptance of new banking products and services and the perceived overall value of these products and services by our customers and potential customers; the Company’s relationships with and reliance upon vendors with respect to the operation of certain of the Company’s key internal and external systems and applications; changes in commercial or consumer spending, borrowing and savings preferences or behaviors; technological changes and the expanding use of technology in banking (including the adoption of mobile banking and funds transfer applications); the ability to retain and increase market share, retain and grow customers and control expenses; changes in the competitive and regulatory environment among financial and bank holding companies, banks and other financial service providers; volatility in the credit and equity markets and its effect on the general economy or local or regional business conditions; fluctuations in the price of the Company’s common stock or other securities; and the resulting impact on the Company’s ability to raise capital or make acquisitions, the effect of changes in accounting policies and practices, as may be adopted from time-to-time by our regulatory agencies, as well as by the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard-setters, including ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments”, commonly referenced as the Current Expected Credit Loss (“CECL”) model, which will change how we estimate credit losses and may increase the required level of our allowance for credit losses after adoption; changes in our organization, management, compensation and benefit plans, and our ability to retain or expand our workforce, management team and/or our board of directors; the costs and effects of legal, compliance and regulatory actions, changes and developments, including the initiation and resolution of legal proceedings (such as securities, consumer or employee class action litigation), regulatory or other governmental inquiries or investigations, and/or the results of regulatory examinations or reviews; our ongoing relations with our various federal and state regulators, including the SEC, FDIC, FRB and California DFPI (formerly DBO); our success at managing the risks involved in the foregoing items and all other factors set forth in the Company’s public reports, including its Annual Report as filed under Form 10-K-A for the year ended December 31, 2020, and particularly the discussion of risk factors within that document. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements except as required by law. Any statements about future operating results, such as those concerning accretion and dilution to the Company’s earnings or shareholders, are for illustrative purposes only, are not forecasts, and actual results may differ.

RBB BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, except for December 31, 2020)
(Dollars in thousands)
		December 31,				September 30,				June 30,				March 31,				December 31,
		2021				2021				2021				2021				2020
Assets
Cash and due from banks		$	501,372			$	206,927			$	493,653			$	362,930			$	137,654
Federal funds sold and other cash equivalents			193,000				170,000				110,000				57,000				57,000
Total cash and cash equivalents			694,372				376,927				603,653				419,930				194,654
Interest-bearing deposits in other financial institutions			600				600				600				600				600
Investment securities available for sale			368,260				345,000				339,568				281,582				210,867
Investment securities held to maturity			6,252				6,258				6,664				6,668				7,174
Mortgage loans held for sale			5,957				15,188				9,246				37,675				49,963
Loans held for investment			2,931,350				2,840,354				2,709,206				2,715,205				2,706,766
Allowance for loan losses			(32,912	)			(32,231	)			(31,352	)			(30,795	)			(29,337	)
Net loans held for investment			2,898,438				2,808,123				2,677,854				2,684,410				2,677,429
Premises and equipment, net			27,199				27,157				27,039				27,093				27,103
Federal Home Loan Bank (FHLB) stock			15,000				15,000				15,000				15,641				15,641
Cash surrender value of life insurance			55,988				55,656				55,325				35,308				35,121
Goodwill			69,243				69,243				69,243				69,243				69,243
Servicing assets			11,517				12,141				12,558				13,264				13,965
Core deposit intangibles			4,075				4,327				4,608				4,895				5,196
Right-of-use assets- operating leases			22,454				23,735				25,050				25,500				—
Accrued interest and other assets			48,839				42,452				44,230				42,490				43,116
Total assets		$	4,228,194			$	3,801,807			$	3,890,638			$	3,664,299			$	3,350,072
Liabilities and shareholders' equity
Deposits:
Noninterest-bearing demand		$	1,291,484			$	824,771			$	940,041			$	787,439			$	617,206
Savings, NOW and money market accounts			927,609				931,517				858,597				791,486				731,084
Time deposits, less than $250,000			587,940				614,146				658,393				649,190				688,875
Time deposits, greater than or equal to $250,000			578,499				597,379				612,894				593,178				597,963
Total deposits			3,385,532				2,967,813				3,069,925				2,821,293				2,635,128
Reserve for unfunded commitments			1,203				1,304				1,216				1,320				1,383
FHLB advances			150,000				150,000				150,000				150,000				150,000
Long-term debt, net of debt issuance costs			173,007				172,862				172,718				172,581				104,391
Subordinated debentures			14,502				14,447				14,393				14,338				14,283
Lease liabilities - operating leases			23,282				24,524				25,798				26,199				—
Accrued interest and other liabilities			13,985				14,833				14,263				42,900				16,399
Total liabilities			3,761,511				3,345,783				3,448,313				3,228,631				2,921,584
Shareholders' equity:
Shareholder's equity			468,267				456,490				442,086				435,746				427,287
Non-controlling interest			72				72				72				72				72
Accumulated other comprehensive (loss) income - Net of tax			(1,656	)			(538	)			167				(150	)			1,129
Total shareholders' equity			466,683				456,024				442,325				435,668				428,488
Total liabilities and shareholders’ equity		$	4,228,194			$	3,801,807			$	3,890,638			$	3,664,299			$	3,350,072

RBB BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except per share amounts)
		For the Three Months Ended
		December 31, 2021				September 30, 2021				December 31, 2020
Interest and dividend income:
Interest and fees on loans		$	36,783			$	35,601			$	34,832
Interest on interest-bearing deposits			160				219				55
Interest on investment securities			1,069				889				639
Dividend income on FHLB stock			227				225				193
Interest on federal funds sold and other			205				174				145
Total interest income			38,444				37,108				35,864
Interest expense:
Interest on savings deposits, NOW and money market accounts			683				697				736
Interest on time deposits			1,748				2,048				3,900
Interest on subordinated debentures and long term debt			2,343				2,342				1,901
Interest on other borrowed funds			445				445				450
Total interest expense			5,219				5,532				6,987
Net interest income before provision for loan losses			33,225				31,576				28,877
Provision for loan losses			635				1,196				3,008
Net interest income after provision for loan losses			32,590				30,380				25,869
Noninterest income:
Service charges, fees and other			1,351				3,100				1,565
Gain on sale of loans			1,788				1,790				2,445
Loan servicing fees, net of amortization			258				62				206
Recoveries on loans acquired in business combinations			4				68				5
Unrealized (loss) on equity investments			(300	)			(5	)			78
(Loss) gain on derivatives			(277	)			178				—
Increase in cash surrender value of life insurance			332				331				191
Total noninterest income			3,156				5,524				4,490
Noninterest expense:
Salaries and employee benefits			6,812				8,772				8,105
Occupancy and equipment expenses			2,125				2,189				2,400
Data processing			838				965				1,012
Legal and professional			1,686				746				794
Office expenses			359				311				295
Marketing and business promotion			418				324				295
Insurance and regulatory assessments			475				384				210
Core deposit premium			252				281				324
OREO expenses			4				4				4
Merger expenses			38				40				5
Other expenses			293				404				1,009
Total noninterest expense			13,300				14,420				14,453
Income before income taxes			22,446				21,484				15,906
Income tax expense			6,740				6,120				4,759
Net income		$	15,706			$	15,364			$	11,147
Net income per share
Basic		$	0.81			$	0.79			$	0.57
Diluted		$	0.79			$	0.77			$	0.56
Cash Dividends declared per common share		$	0.13			$	0.13			$	0.09
Weighted-average common shares outstanding
Basic			19,444,148				19,343,262				19,655,621
Diluted			19,851,202				19,798,187				19,812,401

RBB BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, except for December 31, 2020)
(Dollars in thousands, except per share amounts)
		For the Twelve Months Ended
		December 31, 2021				December 31, 2020
Interest and dividend income:
Interest and fees on loans		$	141,569			$	133,894
Interest on interest-earning deposits			552				641
Interest on investment securities			3,379				2,968
Dividend income on FHLB stock			869				572
Interest on federal funds sold and other			694				1,045
Total interest income			147,063				139,120
Interest expense:
Interest on savings deposits, NOW and money market accounts			2,786				3,540
Interest on time deposits			9,170				21,665
Interest on subordinated debentures and long term debt			8,999				7,677
Interest on other borrowed funds			1,765				1,483
Total interest expense			22,720				34,365
Net interest income			124,343				104,755
Provision for loan losses			3,959				11,823
Net interest income after provision for loans losses			120,384				92,932
Noninterest income:
Service charges, fees and other (1)			7,235				4,852
Gain on sale of loans			9,991				5,997
Loan servicing fees, net of amortization			684				2,052
Recoveries on loans acquired in business combinations			82				84
Unrealized (loss) gain on equity investments			(360	)			—
Gain on derivatives			46				78
Increase in cash surrender value of life insurance			1,067				767
Gain on sale of securities			—				210
Total noninterest income			18,745				14,040
Noninterest expense:
Salaries and employee benefits			33,568				33,312
Occupancy and equipment expenses			8,691				9,691
Data processing			4,474				4,236
Legal and professional			3,773				2,743
Office expenses			1,197				1,226
Marketing and business promotion			1,157				751
Insurance and regulatory assessments			1,561				984
Core deposit premium			1,121				1,395
OREO expenses			17				35
Merger expenses			137				746
Other expenses			2,496				4,394
Total noninterest expense			58,192				59,513
Income before income taxes			80,937				47,459
Income tax expense			24,031				14,531
Net income		$	56,906			$	32,928
Net income per share
Basic		$	2.92			$	1.66
Diluted		$	2.86			$	1.65
Cash Dividends declared per common share		$	0.51			$	0.33
Weighted-average common shares outstanding
Basic			19,423,549				19,763,422
Diluted			19,834,306				19,921,859

(1) Includes $1.8 million of the U.S. Treasury's CDFI rapid response program grant income, received in the third quarter of 2021.

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, 2021												September 30, 2021												December 31, 2020
		Average				Interest				Yield /				Average				Interest				Yield /				Average				Interest				Yield /
(tax-equivalent basis, dollars in thousands)		Balance				& Fees				Rate				Balance				& Fees				Rate				Balance				& Fees				Rate
Earning assets:
Federal funds sold, cash equivalents & other (1)		$	587,980			$	592				0.40	%		$	628,020			$	618				0.39	%		$	188,430			$	393				0.83	%
Securities
Available for sale (2)			376,601				1,037				1.09	%			336,130				856				1.01	%			222,762				579				1.03	%
Held to maturity (2)			6,256				56				3.55	%			6,262				56				3.55	%			7,383				68				3.66	%
Mortgage loans held for sale			3,721				40				4.26	%			5,218				46				3.50	%			41,265				325				3.13	%
Loans held for investment: (3)
Real estate			2,492,396				31,978				5.09	%			2,361,405				30,911				5.19	%			2,282,937				29,705				5.18	%
Commercial			380,098				4,765				4.97	%			374,125				4,644				4.92	%			390,980				4,802				4.89	%
Total loans			2,872,494				36,743				5.07	%			2,735,530				35,555				5.16	%			2,673,917				34,507				5.13	%
Total earning assets			3,847,052			$	38,468				3.97	%			3,711,160			$	37,131				3.97	%			3,133,757			$	35,872				4.55	%
Noninterest-earning assets			240,059												242,742												196,071
Total assets		$	4,087,111											$	3,953,902											$	3,329,828
Interest-bearing liabilities
NOW		$	73,896			$	48				0.26	%		$	71,454			$	48				0.27	%		$	62,232			$	48				0.31	%
Money Market			668,742				602				0.36	%			660,806				615				0.37	%			504,463				656				0.52	%
Saving deposits			138,906				33				0.09	%			139,555				34				0.10	%			128,727				32				0.10	%
Time deposits, less than $250,000			599,119				827				0.55	%			644,013				977				0.60	%			698,415				2,058				1.17	%
Time deposits, $250,000 and over			588,265				921				0.62	%			604,394				1,071				0.70	%			594,655				1,842				1.23	%
Total interest-bearing deposits			2,068,928				2,431				0.47	%			2,120,222				2,745				0.51	%			1,988,492				4,636				0.93	%
FHLB advances			150,000				445				1.18	%			150,000				445				1.18	%			161,957				450				1.11	%
Long-term debt			172,912				2,195				5.04	%			172,767				2,194				5.04	%			104,335				1,748				6.67	%
Subordinated debentures			14,466				148				4.06	%			14,411				148				4.07	%			14,248				153				4.27	%
Total interest-bearing liabilities			2,406,306				5,219				0.86	%			2,457,400				5,532				0.89	%			2,269,032				6,987				1.23	%
Noninterest-bearing liabilities
Noninterest-bearing deposits			1,177,948												1,003,304												616,803
Other noninterest-bearing liabilities			39,483												42,419												16,830
Total noninterest-bearing liabilities			1,217,431												1,045,723												633,633
Shareholders' equity			463,374												450,779												427,163
Total liabilities and shareholders' equity		$	4,087,111											$	3,953,902											$	3,329,828
Net interest income / interest rate spreads						$	33,249				3.11	%						$	31,599				3.08	%						$	28,885				3.32	%
Net interest margin											3.43	%											3.38	%											3.67	%

(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, 2021												December 31, 2020
		Average				Interest				Yield /				Average				Interest				Yield /
(tax-equivalent basis, dollars in thousands)		Balance				& Fees				Rate				Balance				& Fees				Rate
Earning assets:
Federal funds sold, cash equivalents & other (1)		$	504,809			$	2,115				0.42	%		$	212,594			$	2,258				1.06	%
Securities
Available for sale (2)			320,544				3,217				1.00	%			175,307				2,714				1.55	%
Held to maturity (2)			6,543				238				3.64	%			7,665				287				3.74	%
Mortgage loans held for sale			20,817				670				3.22	%			41,019				1,779				4.34	%
Loans held for investment: (3)
Real estate			2,363,846				122,204				5.17	%			2,176,695				113,966				5.24	%
Commercial			381,646				18,695				4.90	%			367,718				18,149				4.94	%
Total loans			2,745,492				140,899				5.13	%			2,544,413				132,115				5.19	%
Total earning assets			3,598,205			$	147,139				4.09	%			2,980,998			$	139,153				4.67	%
Noninterest-earning assets			235,267												204,617
Total assets		$	3,833,472											$	3,185,615
Interest-bearing liabilities
NOW		$	69,211			$	184				0.27	%		$	55,795			$	201				0.36	%
Money Market			637,539				2,468				0.39	%			449,110				3,190				0.71	%
Saving deposits			137,534				134				0.10	%			123,568				149				0.12	%
Time deposits, less than $250,000			640,747				4,462				0.70	%			715,181				11,466				1.60	%
Time deposits, $250,000 and over			597,770				4,708				0.79	%			597,262				10,199				1.71	%
Total interest-bearing deposits			2,082,801				11,956				0.57	%			1,940,916				25,205				1.30	%
FHLB advances			150,000				1,765				1.18	%			129,071				1,483				1.15	%
Long-term debt			157,720				8,404				5.33	%			104,210				6,990				6.71	%
Subordinated debentures			14,384				595				4.14	%			14,228				687				4.83	%
Total interest-bearing liabilities			2,404,905			$	22,720				0.94	%			2,188,425			$	34,365				1.57	%
Noninterest-bearing liabilities
Noninterest-bearing deposits			938,711												564,111
Other noninterest-bearing liabilities			42,142												15,164
Total noninterest-bearing liabilities			980,853												579,275
Shareholders' equity			447,714												417,915
Total liabilities and shareholders' equity		$	3,833,472											$	3,185,615
Net interest income / interest rate spreads						$	124,419				3.15	%						$	104,788				3.10	%
Net interest margin											3.46	%											3.52	%

(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,
		2021				2021				2020
Per share data (common stock)
Earnings
Basic		$	0.81			$	0.79			$	0.57
Diluted		$	0.79			$	0.77			$	0.56
Dividends declared		$	0.13			$	0.13			$	0.09
Book value		$	23.99			$	23.37			$	21.90
Tangible book value		$	20.22			$	19.60			$	18.10
Weighted average shares outstanding
Basic			19,444,148				19,343,262				19,655,621
Diluted			19,851,202				19,798,187				19,812,401
Shares outstanding at period end			19,455,544				19,516,393				19,565,921
Performance ratios
Return on average assets, annualized			1.52	%			1.54	%			1.33	%
Return on average shareholders' equity, annualized			13.45	%			13.52	%			10.38	%
Return on average tangible common equity, annualized			15.98	%			16.17	%			12.58	%
Noninterest income to average assets, annualized			0.31	%			0.55	%			0.54	%
Noninterest expense to average assets, annualized			1.29	%			1.45	%			1.73	%
Yield on average earning assets			3.97	%			3.97	%			4.55	%
Cost of average total deposits			0.30	%			0.35	%			0.71	%
Cost of average interest-bearing deposits			0.47	%			0.51	%			0.93	%
Cost of average interest-bearing liabilities			0.86	%			0.89	%			1.23	%
Accretion on loans to average earning assets			0.02	%			0.03	%			0.03	%
Net interest spread			3.11	%			3.08	%			3.32	%
Net interest margin			3.43	%			3.38	%			3.67	%
Efficiency ratio			36.56	%			38.87	%			43.32	%
Common stock dividend payout ratio			16.05	%			16.46	%			15.79	%

RBB BANCORP AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands, except per share amounts)
		For the twelve months ended December 31,
		2021				2020
Per share data (common stock)
Earnings
Basic		$	2.92			$	1.66
Diluted		$	2.86			$	1.65
Dividends declared		$	0.51			$	0.33
Book value		$	23.99			$	21.90
Tangible book value		$	20.22			$	18.10
Weighted average shares outstanding
Basic			19,423,549				19,763,422
Diluted			19,834,306				19,921,859
Shares outstanding at period end			19,455,544				19,565,921
Performance ratios
Return on average assets, annualized			1.48	%			1.03	%
Return on average shareholders' equity, annualized			12.71	%			7.88	%
Return on average tangible common equity, annualized			15.22	%			9.62	%
Noninterest income to average assets, annualized			0.49	%			0.44	%
Noninterest expense to average assets, annualized			1.52	%			1.87	%
Yield on average earning assets			4.09	%			4.67	%
Cost of average deposits			0.40	%			1.01	%
Cost of average interest-bearing deposits			0.57	%			1.30	%
Cost of average interest-bearing liabilities			0.94	%			1.57	%
Accretion on loans to average earning assets			0.03	%			0.08	%
Net interest spread			3.15	%			3.10	%
Net interest margin			3.46	%			3.52	%
Efficiency ratio			40.67	%			50.10	%
Common stock dividend payout ratio			17.47	%			19.88

RBB BANCORP AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands, except per share amounts)
		As of
		December 31,				September 30,				December 31,
		2021				2021				2020
Loan to deposit ratio			86.58	%			95.71	%			102.72	%
Core deposits / total deposits			82.91	%			79.87	%			77.31	%
Net non-core funding dependence ratio			-6.50	%			9.27	%			12.47	%
Credit Quality Data:
Loans 30-89 days past due		$	17,640			$	7,258			$	8,939
Loans 30-89 days past due to total loans			0.60	%			0.26	%			0.33	%
Nonperforming loans		$	20,725			$	14,248			$	19,554
Nonperforming loans to total loans			0.71	%			0.50	%			0.72	%
Nonperforming assets		$	21,018			$	14,541			$	19,847
Nonperforming assets to total assets			0.50	%			0.38	%			0.59	%
Allowance for loan losses to total loans			1.12	%			1.13	%			1.08	%
Allowance for loan losses to nonperforming loans			158.80	%			226.21	%			150.03	%
Net charge-offs to average loans (for the quarter-to-date period)			-0.01	%			0.05	%			0.05	%
Regulatory and other capital ratios—Company
Tangible common equity to tangible assets			9.47	%			10.26	%			10.81	%
Tier 1 leverage ratio			10.21	%			10.31	%			11.32	%
Tier 1 common capital to risk-weighted assets			14.86	%			14.82	%			14.63	%
Tier 1 capital to risk-weighted assets			15.40	%			15.38	%			15.22	%
Total capital to risk-weighted assets			23.15	%			23.30	%			20.78	%
Regulatory capital ratios—Bank only
Tier 1 leverage ratio			12.45	%			12.48	%			14.09	%
Tier 1 common capital to risk-weighted assets			18.80	%			18.64	%			18.95	%
Tier 1 capital to risk-weighted assets			18.80	%			18.64	%			18.95	%
Total capital to risk-weighted assets			20.05	%			19.89	%			20.20	%

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		2021				2021				2021				2021				2020
Interest income
Loans, including fees		$	36,783			$	35,601			$	34,669			$	34,516			$	34,832
Investment securities and other			1,661				1,507				1,302				1,024				1,032
Total interest income			38,444				37,108				35,971				35,540				35,864
Interest expense
Deposits			2,431				2,745				3,118				3,662				4,636
Interest on subordinated debentures and other			2,343				2,342				2,356				1,958				1,901
Other borrowings			445				445				440				435				450
Total interest expense			5,219				5,532				5,914				6,055				6,987
Net interest income before provision for loan losses			33,225				31,576				30,057				29,485				28,877
Provision for loan losses			635				1,196				628				1,500				3,008
Net interest income after provision for loan losses			32,590				30,380				29,429				27,985				25,869
Noninterest income			3,156				5,524				4,171				5,894				4,490
Noninterest expense			13,300				14,420				14,680				15,792				14,453
Earnings before income taxes			22,446				21,484				18,920				18,087				15,906
Income taxes			6,740				6,120				5,540				5,631				4,759
Net income		$	15,706			$	15,364			$	13,380			$	12,456			$	11,147
Net income per common share - basic		$	0.81			$	0.79			$	0.69			$	0.64			$	0.57
Net income per common share - diluted		$	0.79			$	0.77			$	0.67			$	0.63			$	0.56
Cash dividends declared per common share		$	0.13			$	0.13			$	0.13			$	0.12			$	0.09
Cash dividends declared on common shares		$	2,516			$	2,537			$	2,540			$	2,347			$	1,777
Yield on average assets, annualized			1.52	%			1.54	%			1.39	%			1.47	%			1.33	%
Yield on average earning assets			3.97	%			3.97	%			3.99	%			4.49	%			4.55	%
Cost of average deposits			0.30	%			0.35	%			0.41	%			0.55	%			0.71	%
Cost of average interest-bearing deposits			0.47	%			0.51	%			0.59	%			0.73	%			0.93	%
Cost of average interest-bearing liabilities			0.86	%			0.89	%			0.97	%			1.06	%			1.23	%
Accretion on loans to average earning assets			0.02	%			0.03	%			0.02	%			0.06	%			0.03	%
Net interest margin			3.43	%			3.38	%			3.33	%			3.73	%			3.67	%

RBB BANCORP AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited, except for December 31, 2020)
(Dollars in thousands, except per share amounts)
Loan Portfolio Detail		As of December 31, 2021								As of September 30, 2021								As of June 30, 2021								As of March 31, 2020								As of December 31, 2020
(dollars in thousands)			$			%					$			%					$			%					$			%					$			%
Loans:
Commercial and industrial		$	268,709				9.2	%		$	276,387				9.7	%		$	277,080				10.2	%		$	286,016				10.5	%		$	290,139				10.7	%
SBA			76,136				2.6	%			88,784				3.1	%			98,572				3.6	%			111,330				4.1	%			97,821				3.6	%
Construction and land development			303,144				10.3	%			271,764				9.6	%			236,965				8.7	%			209,727				7.7	%			186,723				6.9	%
Commercial real estate (1)			1,247,999				42.6	%			1,205,630				42.4	%			1,102,467				40.7	%			1,063,104				39.2	%			1,003,637				37.1	%
Single-family residential mortgages			1,004,576				34.3	%			974,780				34.3	%			984,311				36.3	%			1,041,260				38.3	%			1,124,357				41.5	%
Other loans			30,786				1.0	%			23,009				0.9	%			9,811				0.5	%			3,768				0.2	%			4,089				0.2	%
Total loans (2)		$	2,931,350				100.0	%		$	2,840,354				100.0	%		$	2,709,206				100.0	%		$	2,715,205				100.0	%		$	2,706,766				100.0	%
Allowance for loan losses			(32,912	)							(32,231	)							(31,352	)							(30,795	)							(29,337	)
Total loans, net		$	2,898,438							$	2,808,123							$	2,677,854							$	2,684,410							$	2,677,429

(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)		2021				2020				2021				2020
Beginning balance		$	32,231			$	26,634			$	29,337			$	18,816
Additions to the allowance charged to expense			635				3,008				3,959				11,823
Net recoveries (charge-offs) on loans			46				(305	)			(384	)			(1,302	)
Ending balance		$	32,912			$	29,337			$	32,912			$	29,337

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, 2021 and 2020, and September 30, 2021.

(dollars in thousands, except per share data)		December 31, 2021				September 30, 2021				December 31, 2020
Tangible common equity:
Total shareholders' equity		$	466,683			$	456,024			$	428,488
Adjustments
Goodwill			(69,243	)			(69,243	)			(69,243	)
Core deposit intangible			(4,075	)			(4,327	)			(5,196	)
Tangible common equity		$	393,365			$	382,454			$	354,049
Tangible assets:
Total assets-GAAP		$	4,228,194			$	3,801,807			$	3,350,072
Adjustments
Goodwill			(69,243	)			(69,243	)			(69,243	)
Core deposit intangible			(4,075	)			(4,327	)			(5,196	)
Tangible assets		$	4,154,876			$	3,728,237			$	3,275,633
Common shares outstanding		$	19,455,544				19,516,393				19,565,921
Tangible common equity to tangible assets ratio			9.47	%			10.26	%			10.81	%
Book value per share		$	23.99			$	23.37			$	21.90
Tangible book value per share		$	20.22			$	19.60			$	18.10

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220124005765/en/

Yee Phong (Alan) Thian

President and CEO

(626) 307-7559

David Morris

Executive Vice President and CFO

(714) 670-2488

Source: RBB Bancorp

FAQ

What were RBB Bancorp's earnings for Q4 2021?

RBB Bancorp reported a record net income of $15.7 million or $0.79 diluted earnings per share for Q4 2021.

What is the loan growth percentage for RBB in Q4 2021?

Loans grew by $81.8 million, which is an 11.4% annualized growth from the prior quarter.

When is RBB Bancorp's conference call to discuss Q4 2021 results?

The conference call is scheduled for January 25, 2022, at 11:00 a.m. Pacific Time.

What is the expected impact of the Gateway Bank acquisition on RBB's earnings?

The transaction is expected to be accretive to earnings per share in the mid-single digit range for 2022.