RBB Bancorp Reports Second Quarter 2024 Earnings

Rhea-AI Summary

RBB Bancorp (NASDAQ:RBB) reported Q2 2024 net income of $7.2 million, or $0.39 diluted EPS, compared to $8.0 million, or $0.43 diluted EPS in Q1 2024. Net interest margin decreased from 2.69% to 2.67%, with net interest income dropping by $912,000 to $24.0 million. Noninterest income rose by $116,000 to $3.5 million, while noninterest expense increased by $155,000 to $17.1 million. The company recorded a $557,000 provision for credit losses, up from no provision in Q1 2024.

Loan growth was seen at $20 million, with a rise in nonperforming loans to $54.6 million. Total assets were $3.9 billion, a slight decrease from $3.91 billion in Q1 2024. Shareholder equity was $511.3 million, with book value per share rising to $28.12. The board declared a $0.16 per share dividend payable on August 12, 2024. RBB repurchased 448,190 shares for $8.1 million.

Positive

• Net income of $7.2 million.
• Book value per share increased to $28.12.
• Declared $0.16 per share dividend.

Negative

• Net interest margin declined to 2.67%.
• Provision for credit losses of $557,000.
• Increase in nonperforming loans to $54.6 million.
• Net interest income decreased by $912,000.

Insights

Financial Analyst

The second quarter earnings report for RBB Bancorp reveals a mixed picture. The net income for the quarter was $7.2 million, down from $8.0 million in the previous quarter, which might raise concerns about the company's ability to generate consistent earnings. However, the book value per share increased to $28.12 from $27.67.

One key aspect to note is the net interest margin (NIM), which slightly declined to 2.67% from 2.69%. This could be a signal of tightening spreads, likely influenced by changes in interest rates and the economic environment. Despite the decrease, the company repurchased 448,190 shares, indicating confidence in its valuation.

Investors should also note the provision for credit losses of $557,000, reflecting some caution due to the current economic uncertainties. While the repurchase and improvement in book value are positives, the decline in net income and NIM suggests a cautious outlook.

Market Research Analyst

RBB Bancorp's performance in the second quarter underlines a steady yet cautious growth trajectory. The loan production increase of over $115 million and net loan growth of $20 million showcases the bank's efforts in expanding its loan portfolio amidst challenging times. This could be a positive indicator for future revenue streams, provided the quality of these loans remains robust.

However, the increase in non-performing assets to $54.6 million is concerning. Such a rise requires close monitoring as it can impact future profitability and credit quality. The company has acknowledged these risks by recording a provision for credit losses, which is a prudent step.

The strategic repurchase of shares suggests a focus on enhancing shareholder value, but the market may remain cautious until there is a clearer sign of stabilization in interest margins and non-performing assets.

Legal Expert

From a regulatory and compliance perspective, RBB Bancorp's latest earnings report demonstrates a balanced approach to managing its financial and operational risks. The company’s actions in provisioning for credit losses and maintaining a stable net interest margin reflect adherence to prudent banking practices. Legal and professional expenses have increased, predominantly due to credit-related matters, indicating proactive legal management of non-performing loans and other issues.

The share repurchase program, conducted in accordance with SEC Rules 10b5-1 and 10b-8, is another point of compliance and investor confidence. Additionally, the increase in tangible book value per share is a positive outcome, showcasing the company's financial health and shareholder equity management. Investors can view these steps as evidence of the bank's commitment to both regulatory compliance and value creation.

LOS ANGELES, July 22, 2024 (GLOBE NEWSWIRE) -- RBB Bancorp (NASDAQ:RBB) and its subsidiaries, Royal Business Bank (the “Bank”) and RBB Asset Management Company (“RAM”), collectively referred to herein as “the Company,” announced financial results for the quarter ended June 30, 2024.

Second Quarter 2024 Highlights

• Net income totaled $7.2 million, or $0.39 diluted earnings per share.
• Return on average assets of 0.76%, compared to 0.81% for the quarter ended March 31, 2024.
• Net interest margin of 2.67%, down two basis points, compared to 2.69% for the quarter ended March 31, 2024.
• Repurchased 448,190 shares of common stock for $8.1 million during the quarter ended Jun 30, 2024.
• Book value and tangible book value per share⁽¹⁾ increased to $28.12 and $24.06 at June 30, 2024, up from $27.67 and $23.68 at March 31, 2024.

The Company reported net income of $7.2 million, or $0.39 diluted earnings per share, for the quarter ended June 30, 2024, compared to net income of $8.0 million, or $0.43 diluted earnings per share, for the quarter ended March 31, 2024. 

“We saw further signs of stabilization in the second quarter with modest loan growth and unchanged funding costs,” said David Morris, Chief Executive Officer of RBB Bancorp. “Net interest margin declined 2 basis points, but we are cautiously optimistic that it will begin to expand in the third and fourth quarter. We did see an increase in non-performing loans in the second quarter, due primarily to three loans, which have sufficient collateral at the end of the quarter. Our loan production of over $115 million resulted in $20 million in net loan growth and higher gain on sale of loans. We are seeing positive loan pipeline activity and as a result expect to have ongoing net loan growth.”

“The Board of Directors appreciates all of the hard work that went into stabilizing the business in a very difficult banking environment,” said Christina Kao, Chair of the Board of Directors. “We’re now ready to build on the Bank’s well-deserved reputation as one of the premier Asian-American financial institutions to serve our clients and enhance shareholder value.”

⁽¹⁾ Reconciliations of the non–U.S. generally accepted accounting principles (“GAAP”) measures included at the end of this press release.

Net Interest Income and Net Interest Margin

Net interest income was $24.0 million for the second quarter of 2024, compared to $24.9 million for the first quarter of 2024. The $912,000 decrease in net interest income was due to a decrease in interest income of $1.9 million offset by a decrease in interest expense of $997,000. The decrease in interest income was due to lower interest income on interest-bearing deposits in other financial institutions of $1.7 million and loans of $227,000. Interest and fees on loans included a reversal of interest income for loans that migrated to nonaccrual of $710,000 for the second quarter of 2024 compared to $190,000 for the first quarter. The decrease in interest expense was due to lower average interest-bearing deposits, as brokered deposits were replaced with retail deposits.

Net interest margin (“NIM”) was 2.67% for the second quarter of 2024, a decrease of two basis points from 2.69% for the first quarter of 2024. The decrease was due to a 3 basis point decrease in the yield on average interest-earning assets combined with no change in the overall cost of funds. The yield on average interest-earning assets decreased to 5.89% for the second quarter of 2024 from 5.92% for the first quarter of 2024 due mainly to a 3 basis point decrease in the yield on average loans to 6.04% for the second quarter of 2024 combined with a change in the mix of average-earnings assets. Average loans represented 84% of average interest-earning assets in the second quarter of 2024 compared to 81% in the first quarter of 2024. During the second quarter, $22.5 million in loans migrated to nonaccrual, which reduced the second quarter's average loan yield by 9 basis points and the NIM by 8 basis points. In comparison, during the first quarter of 2024, $7.7 million in loans migrated to nonaccrual, which reduced the first quarter's average loan yield by 2 basis points and the NIM by 2 basis points. The overall cost of funds remained flat at 3.59% due to the average cost of interest-bearing deposits increasing 4 basis points to 4.36% in the second quarter of 2024, which was offset by an improvement in the overall funding mix. The ratio of average noninterest-bearing deposits to average total funding sources increased to 16.1% from 15.5%.

Provision for Credit Losses

The Company recorded a $557,000 provision for credit losses for the second quarter of 2024 compared to no provision for credit losses for the first quarter of 2024. The second quarter provision took into consideration factors including changes in the loan portfolio mix, ongoing uncertainty in the economy related to inflation and the outlook for market interest rates, and credit quality metrics, including higher nonperforming loans at the end of the second quarter of 2024 compared to the end of the first quarter of 2024.

Noninterest Income

Noninterest income for the second quarter of 2024 was $3.5 million, an increase of $116,000 from $3.4 million for the first quarter of 2024. This increase was due to income of $359,000 from an equity investment (included in other income) and $139,000 in higher gain on sale of loans, partially offset by lower net gain on other real estate owned ("OREO") of $432,000. OREO totaling $1.1 million was sold during the second quarter of 2024 for a gain of $292,000. This compared to a $560,000 gain on transfer of loans to OREO and net gain on the sale of OREO of $164,000 in the first quarter of 2024. There was no OREO outstanding at June 30, 2024.

Noninterest Expense

Noninterest expense for the second quarter of 2024 was $17.1 million, an increase of $155,000 from $17.0 million for the first quarter of 2024. This increase was due primarily to higher legal and professional expenses and other expenses, partially offset by a decrease in salaries and employee benefits expense due to the timing of taxes and benefits. The increase in legal and professional expenses are due primarily to legal expenses for credit-related matters and an insurance reimbursement during the first quarter of 2024. There was no similar insurance reimbursement in the second quarter of 2024. The annualized noninterest expenses divided by average assets for the second quarter of 2024 was 1.79%, up from 1.72% for the first quarter of 2024. 

Income Taxes

The effective tax rate was 25.9% for the second quarter of 2024 and 28.8% for the first quarter of 2024. The decrease in the effective tax rate in the second quarter is due in part to utilizing a higher level of tax credits. The effective tax rate for 2024 is estimated to be 28.0%.

Balance Sheet

At June 30, 2024, total assets were $3.9 billion, a $9.8 million decrease compared to March 31, 2024, and a $207.4 million decrease compared to June 30, 2023.

Loan and Securities Portfolio

Loans held for investment, net of deferred fees and discounts, totaled $3.0 billion as of June 30, 2024, an increase of $20.4 million from March 31, 2024. The increase from March 31, 2024 was primarily due to an $11.7 million increase in commercial real estate ("CRE") loans, a $5.2 million increase in commercial and industrial ("C&I") loans, a $4.4 million increase in construction and land development ("C&D") loans and a $4.3 million increase in single-family residential ("SFR") mortgages, partially offset by a $4.4 million decrease in Small Business Administration ("SBA") loans. The loan to deposit ratio was 99.4% at June 30, 2024, compared to 98.6% at March 31, 2024 and 99.3% at June 30, 2023. 

As of June 30, 2024, available-for-sale securities totaled $325.6 million, a decrease of $9.6 million from March 31, 2024. As of June 30, 2024, net unrealized losses totaled $30.2 million, a $44,000 decrease due to increases in market interest rates, when compared to net unrealized losses as of March 31, 2024.

Deposits

Total deposits were $3.0 billion as of June 30, 2024, a $4.7 million decrease compared to March 31, 2024. This decrease was due to a decrease in interest-bearing deposits, while noninterest-bearing deposits increased $3.5 million to $543.0 million. The decrease in interest-bearing deposits included a decrease in time deposits of $13.1 million, offset by an increase in non-maturity deposits of $4.9 million. The decrease in time deposits included a $76.9 million decrease in higher cost wholesale deposits (brokered deposits, collateralized State of California certificates of deposit and deposits acquired through internet listing services). Wholesale deposits totaled $120.7 million at June 30, 2024, and $197.6 million at March 31, 2024. Noninterest-bearing deposits represented 18.0% of total deposits at June 30, 2024 compared to 17.8% at March 31, 2024.

Credit Quality

Nonperforming assets totaled $54.6 million, or 1.41% of total assets, at June 30, 2024, compared to $37.0 million, or 0.95% of total assets, at March 31, 2024. The $17.6 million increase in nonperforming assets was due to an $18.7 million increase in nonperforming loans and a decrease of $1.1 million in OREO. The increase in nonperforming loans was mostly due to three loans that migrated to nonaccrual totaling $22.0 million, consisting of a C&D loan, a CRE loan and a C&I loan. The other nonperforming loan activity for the second quarter of 2024 included additions of $540,000, payoffs or paydowns of $3.0 million, loans that migrated to accruing status of $784,000, and nonaccrual loan charge-offs of $117,000. As previously noted, OREO totaling $1.1 million was sold during the second quarter of 2024 for a gain  of $292,000.

Special mention loans totaled $19.5 million, or 0.64% of total loans, at June 30, 2024, compared to $20.6 million, or 0.68% of total loans, at March 31, 2024. The decrease was due to downgrades to substandard loans of $1.4 million, and loan paydowns of $711,000, offset by additions of $1.0 million. 

Substandard loans totaled $63.1 million, or 2.07% of total loans, at June 30, 2024, compared to $57.2 million, or 1.89% of total loans, at March 31, 2024. The $5.9 million increase was primarily due to a $10.0 million C&D loan downgraded from pass to substandard and downgrades from special mention loans totaling $1.4 million, offset by loan paydowns of $6.0 million, upgrades to pass loans of $856,000, and charge-offs of $541,000.

30-89 day delinquent loans, excluding nonperforming loans, decreased $9.7 million to $11.3 million as of June 30, 2024, compared to $21.0 million as of March 31, 2024. The decrease in past due loans was due to $12.7 million in loans that migrated to nonaccrual, $4.4 million in loans that migrated back to past due for less than 30 days, and $1.6 million in loan payoffs or paydowns, partially offset by $9.0 million in new delinquent loans. 

As of June 30, 2024, the allowance for credit losses totaled $42.4 million and was comprised of an allowance for loan losses of $41.7 million and a reserve for unfunded commitments of $624,000 (included in “Accrued interest and other liabilities”). This compares to the allowance for credit losses of $42.4 million comprised of an allowance for loan losses of $41.7 million and a reserve for unfunded commitments of $671,000 at March 31, 2024. The allowance for credit losses for the second quarter of 2024 was impacted by a $557,000 provision for credit losses, net charge-offs of $551,000, and a reduction in specific reserves of $14,000. Although nonperforming loans increased, specific reserves decreased based on the level of collateral for individually reviewed, collateral dependent loans. Charge-offs in the second quarter of 2024 were primarily related to a CRE non-owner occupied loan that migrated to nonaccrual and was written-down to its estimated fair value. The allowance for loan losses as a percentage of loans held for investment was 1.37% at June 30, 2024, compared to 1.38% at March 31, 2024. The allowance for loan losses as a percentage of nonperforming loans was 76% at June 30, 2024, a decrease from 116% at March 31, 2024.

		For the Three Months Ended June 30, 2024												For the Six Months Ended June 30, 2024
(dollars in thousands)		Allowance for loan losses				Reserve for unfunded loan commitments				Allowance for credit losses				Allowance for loan losses				Reserve for unfunded loan commitments				Allowance for credit losses
Beginning balance		$	41,688			$	671			$	42,359			$	41,903			$	640			$	42,543
Provision for/(reversal of) credit losses			604				(47	)			557				573				(16	)			557
Less loans charged-off			(567	)			—				(567	)			(781	)			—				(781	)
Recoveries on loans charged-off			16				—				16				46				—				46
Ending balance		$	41,741			$	624			$	42,365			$	41,741			$	624			$	42,365

Shareholders' Equity and Capital Actions

At June 30, 2024, total shareholders' equity was $511.3 million, a $2.7 million decrease compared to March 31, 2024, and an $11.0 million increase compared to June 30, 2023. The decrease in shareholders' equity for the second quarter of 2024 was due to dividends paid of $3.0 million and share repurchases of $8.1 million, offset by net earnings of $7.2 million, equity compensation activity of $1.1 million and lower net unrealized loss on available-for-sale securities of $67,000. Book value per share increased to $28.12 from $27.67 and tangible book value per share⁽¹⁾ increased to $24.06 from $23.68.

On July 18, 2024, the Company announced the Board of Directors had declared a common stock cash dividend of $0.16 per share, payable on August 12, 2024 to shareholders of record on July 31, 2024.

On February 29, 2024, the Board of Directors authorized the repurchase of up to 1,000,000 shares of common stock, of which 508,275 shares were available as of June 30, 2024. The repurchase program permits shares to be repurchased in open market or private transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Securities and Exchange Commission (“SEC”) Rules 10b5-1 and 10b-8. The Company repurchased 448,190 shares at a weighted average share price of $18.01 during the second quarter of 2024.

Contact:
Lynn Hopkins, Chief Financial Officer
(213) 716-8066
hopkins@rbbusa.com

⁽¹⁾ Reconciliations of the non–U.S. generally accepted accounting principles (“GAAP”) measures included at the end of this press release.

Corporate Overview

RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. As of June 30, 2024, the Company had total assets of $3.9 billion. Its wholly-owned subsidiary, Royal Business Bank, is a full service commercial bank, which provides consumer and business banking services predominately to the Asian centric communities in Los Angeles County, Orange County, and Ventura County in California, in Las Vegas, Nevada, in Brooklyn, Queens, and Manhattan in New York, in Edison, New Jersey, in the Chicago neighborhoods of Chinatown and Bridgeport, Illinois, and on Oahu, Hawaii. Bank services include remote deposit, E-banking, mobile banking, commercial and investor real estate loans, business loans and lines of credit, commercial and industrial loans, SBA 7A and 504 loans, 1-4 single family residential loans, trade finance, a full range of depository account products and wealth management services. The Bank has nine branches in Los Angeles County, two branches in Ventura County, one branch in Orange County, California, one branch in Las Vegas, Nevada, three branches and one loan operation center in Brooklyn, three branches in Queens, one branch in Manhattan in New York, one branch in Edison, New Jersey, two branches in Chicago, Illinois, and one branch in Honolulu, Hawaii. The Company's administrative and lending center is located at 1055 Wilshire Blvd., Los Angeles, California 90017, and its 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 on Tuesday, July 23, 2024, to discuss the Company’s second quarter 2024 financial results.

To listen to the conference call, please dial 1-888-506-0062 or 1-973-528-0011, the Participant ID code is 723739, conference ID RBBQ224. A replay of the call will be made available at 1-877-481-4010 or 1-919-882-2331, the passcode is 50850, approximately one hour after the conclusion of the call and will remain available through August 6, 2024.

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, the Bank’s ability to comply with the requirements of the consent order we have entered into with the Federal Deposit Insurance Corporation (“FDIC”) and the California Department of Financial Protection and Innovation (“DFPI”) and the possibility that we may be required to incur additional expenses or be subject to additional regulatory action, if we are unable to timely and satisfactorily comply with the consent order; the effectiveness of the Company’s internal control over financial reporting and disclosure controls and procedures; the potential for additional material weaknesses in the Company’s internal controls over financial reporting or other potential control deficiencies of which the Company is not currently aware or which have not been detected; business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic markets, including the tight labor market, ineffective management of the United States (“U.S.”) federal budget or debt or turbulence or uncertainly in domestic or foreign financial markets; the strength of the U.S. economy in general and the strength of the local economies in which we conduct operations; adverse developments in the banking industry highlighted by high-profile bank failures and the potential impact of such developments on customer confidence, liquidity and regulatory responses to these developments; our ability to attract and retain deposits and access other sources of liquidity; possible additional provisions for credit losses and charge-offs; credit risks of lending activities and deterioration in asset or credit quality; extensive laws and regulations and supervision that we are subject to, including potential supervisory action by bank supervisory authorities; increased costs of compliance and other risks associated with changes in regulation, including any amendments to the Dodd-Frank Wall Street Reform and Consumer Protection Act; compliance with the Bank Secrecy Act and other money laundering statutes and regulations; potential goodwill impairment; liquidity risk; failure to comply with debt covenants;  fluctuations in interest rates; risks associated with acquisitions and the expansion of our business into new markets; inflation and deflation; real estate market conditions and the value of real estate collateral; the effects of having concentrations in our loan portfolio, including commercial real estate and the risks of geographic and industry concentrations; environmental liabilities; our ability to compete with larger competitors; our ability to retain key personnel; successful management of reputational risk; severe weather, natural disasters, earthquakes, fires; or other adverse external events could harm our business; geopolitical conditions, including acts or threats of terrorism, actions taken by the U.S. or other governments in response to acts or threats of terrorism and/or military conflicts, including the conflicts between Russia and Ukraine and in the Middle East, which could impact business and economic conditions in the U.S. and abroad; public health crises and pandemics, and their effects on the economic and business environments in which we operate, including our credit quality and business operations, as well as the impact on general economic and financial market conditions; general economic or business conditions in Asia, and other regions where the Bank has operations; failures, interruptions, or security breaches of our information systems; climate change, including any enhanced regulatory, compliance, credit and reputational risks and costs; cybersecurity threats and the cost of defending against them; our ability to adapt our systems to the expanding use of technology in banking; risk management processes and strategies; adverse results in legal proceedings; the impact of regulatory enforcement actions, if any; certain provisions in our charter and bylaws that may affect acquisition of the Company; changes in tax laws and regulations; the impact of governmental efforts to restructure the U.S. financial regulatory system; the impact of future or recent changes in the FDIC insurance assessment rate and the rules and regulations related to the calculation of the FDIC insurance assessments; the effect of changes in accounting policies and practices or accounting standards, as may be adopted from time-to-time by bank regulatory agencies, the SEC, the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setters, including Accounting Standards Update 2016-13 (Topic 326, “Measurement of Current Losses on Financial Instruments, commonly referenced as the Current Expected Credit Losses Model, which changed how we estimate credit losses and may further increase the required level of our allowance for credit losses in future periods; market disruption and volatility; fluctuations in the Company’s stock price; restrictions on dividends and other distributions by laws and regulations and by our regulators and our capital structure; issuances of preferred stock; our ability to raise additional capital, if needed, and the potential resulting dilution of interests of holders of our common stock; the soundness of other financial institutions; our ongoing relations with our various federal and state regulators, including the SEC, FDIC, FRB and DFPI; our success at managing the risks involved in the foregoing items and all other factors set forth in the Company’s public reports, including its Annual Report as filed under Form 10-K for the year ended December 31, 2023, 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) (Dollars in thousands)
		June 30,				March 31,				December 31,				September 30,				June 30,
		2024				2024				2023				2023				2023
Assets
Cash and due from banks		$	252,769			$	269,243			$	431,373			$	330,791			$	246,325
Interest-bearing time deposits with financial institutions			600				600				600				600				600
Investment securities available for sale			325,582				335,194				318,961				354,378				391,116
Investment securities held to maturity			5,200				5,204				5,209				5,214				5,718
Mortgage loans held for sale			3,146				3,903				1,911				62				555
Loans held for investment			3,047,712				3,027,361				3,031,861				3,120,952				3,195,995
Allowance for loan losses			(41,741	)			(41,688	)			(41,903	)			(42,430	)			(43,092	)
Net loans held for investment			3,005,971				2,985,673				2,989,958				3,078,522				3,152,903
Premises and equipment, net			25,049				25,363				25,684				26,134				26,600
Federal Home Loan Bank (FHLB) stock			15,000				15,000				15,000				15,000				15,000
Cash surrender value of bank owned life insurance			59,486				59,101				58,719				58,346				57,989
Goodwill			71,498				71,498				71,498				71,498				71,498
Servicing assets			7,545				7,794				8,110				8,439				8,702
Core deposit intangibles			2,394				2,594				2,795				3,010				3,246
Right-of-use assets			30,530				31,231				29,803				29,949				28,677
Accrued interest and other assets			63,416				65,608				66,404				87,411				66,689
Total assets		$	3,868,186			$	3,878,006			$	4,026,025			$	4,069,354			$	4,075,618
Liabilities and shareholders' equity
Deposits:
Noninterest-bearing demand		$	542,971			$	539,517			$	539,621			$	572,393			$	585,746
Savings, NOW and money market accounts			647,770				642,840				632,729				608,020				598,546
Time deposits, $250,000 and under			1,014,189				1,083,898				1,190,821				1,237,831				1,275,476
Time deposits, greater than $250,000			818,675				762,074				811,589				735,828				715,648
Total deposits			3,023,605				3,028,329				3,174,760				3,154,072				3,175,416
FHLB advances			150,000				150,000				150,000				150,000				150,000
Long-term debt, net of issuance costs			119,338				119,243				119,147				174,019				173,874
Subordinated debentures			15,047				14,993				14,938				14,884				14,829
Lease liabilities - operating leases			32,087				32,690				31,191				31,265				29,915
Accrued interest and other liabilities			16,818				18,765				24,729				42,603				31,294
Total liabilities			3,356,895				3,364,020				3,514,765				3,566,843				3,575,328
Shareholders' equity:
Common Stock			266,160				271,645				271,925				277,462				277,462
Additional paid-in capital			3,456				3,348				3,623				3,579				3,436
Retained Earnings			262,518				259,903				255,152				247,159				241,725
Non-controlling interest			72				72				72				72				72
Accumulated other comprehensive loss, net of tax			(20,915	)			(20,982	)			(19,512	)			(25,761	)			(22,405	)
Total shareholders' equity			511,291				513,986				511,260				502,511				500,290
Total liabilities and shareholders’ equity		$	3,868,186			$	3,878,006			$	4,026,025			$	4,069,354			$	4,075,618

RBB BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except share and per share data)
		For the Three Months Ended												For the Six Months Ended
		June 30, 2024				March 31, 2024				June 30, 2023				June 30, 2024				June 30, 2023
Interest and dividend income:
Interest and fees on loans		$	45,320			$	45,547			$	50,810			$	90,867			$	100,752
Interest on interest-bearing deposits			3,353				5,040				2,112				8,393				2,903
Interest on investment securities			3,631				3,611				3,574				7,242				6,110
Dividend income on FHLB stock			327				331				259				658				524
Interest on federal funds sold and other			255				266				247				521				464
Total interest and dividend income			52,886				54,795				57,002				107,681				110,753
Interest expense:
Interest on savings deposits, NOW and money market accounts			4,953				4,478				2,778				9,431				5,074
Interest on time deposits			21,850				23,322				19,169				45,172				32,575
Interest on long-term debt and subordinated debentures			1,679				1,679				2,550				3,358				5,089
Interest on other borrowed funds			439				439				579				878				1,988
Total interest expense			28,921				29,918				25,076				58,839				44,726
Net interest income before provision for credit losses			23,965				24,877				31,926				48,842				66,027
Provision for credit losses			557				—				380				557				2,394
Net interest income after provision for credit losses			23,408				24,877				31,546				48,285				63,633
Noninterest income:
Service charges and fees			1,064				992				1,120				2,056				2,143
Gain on sale of loans			451				312				18				763				47
Loan servicing fees, net of amortization			579				589				606				1,168				1,337
Increase in cash surrender value of life insurance			385				382				344				767				679
Gain on OREO			292				724				—				1,016				—
Other income			717				373				405				1,090				649
Total noninterest income			3,488				3,372				2,493				6,860				4,855
Noninterest expense:
Salaries and employee benefits			9,533				9,927				9,327				19,460				19,191
Occupancy and equipment expenses			2,438				2,443				2,430				4,882				4,828
Data processing			1,466				1,420				1,356				2,886				2,655
Legal and professional			1,260				880				2,872				2,140				5,885
Office expenses			352				356				350				708				725
Marketing and business promotion			189				172				252				361				552
Insurance and regulatory assessments			981				982				809				1,963				1,313
Core deposit premium			201				201				235				402				472
Other expenses			704				588				886				1,291				1,807
Total noninterest expense			17,124				16,969				18,517				34,093				37,428
Income before income taxes			9,772				11,280				15,522				21,052				31,060
Income tax expense			2,527				3,244				4,573				5,771				9,141
Net income		$	7,245			$	8,036			$	10,949			$	15,281			$	21,919
Net income per share
Basic		$	0.39			$	0.43			$	0.58			$	0.83			$	1.15
Diluted		$	0.39			$	0.43			$	0.58			$	0.82			$	1.15
Cash Dividends declared per common share		$	0.16			$	0.16			$	0.16			$	0.32			$	0.32
Weighted-average common shares outstanding
Basic			18,375,970				18,601,277				18,993,483				18,488,623				18,989,686
Diluted			18,406,897				18,651,702				18,995,100				18,529,299				19,022,242

RBB BANCORP AND SUBSIDIARIES AVERAGE BALANCE SHEET AND NET INTEREST INCOME (Unaudited)
		For the Three Months Ended
		June 30, 2024												March 31, 2024												June 30, 2023
		Average				Interest				Yield /				Average				Interest				Yield /				Average				Interest				Yield /
(tax-equivalent basis, dollars in thousands)		Balance				& Fees				Rate				Balance				& Fees				Rate				Balance				& Fees				Rate
Interest-earning assets
Federal funds sold, cash equivalents & other (1)		$	271,073			$	3,935				5.84	%		$	379,979			$	5,637				5.97	%		$	179,023			$	2,619				5.87	%
Securities
Available for sale (2)			318,240				3,608				4.56	%			320,015				3,589				4.51	%			348,343				3,547				4.08	%
Held to maturity (2)			5,203				46				3.56	%			5,207				46				3.55	%			5,720				51				3.58	%
Mortgage loans held for sale			3,032				57				7.56	%			1,215				26				8.61	%			52				1				6.65	%
Loans held for investment: (3)
Real estate			2,828,339				41,590				5.91	%			2,837,603				41,765				5.92	%			3,064,633				46,304				6.06	%
Commercial			185,679				3,673				7.96	%			179,605				3,756				8.41	%			207,493				4,503				8.70	%
Total loans held for investment			3,014,018				45,263				6.04	%			3,017,208				45,521				6.07	%			3,272,126				50,807				6.23	%
Total interest-earning assets			3,611,566			$	52,909				5.89	%			3,723,624			$	54,819				5.92	%			3,805,264			$	57,025				6.01	%
Total noninterest-earning assets			239,916												246,341												244,316
Total average assets		$	3,851,482											$	3,969,965											$	4,049,580
Interest-bearing liabilities
NOW			56,081				276				1.98	%		$	58,946			$	298				2.03	%		$	59,789			$	202				1.36	%
Money Market			431,559				3,877				3.61	%			411,751				3,526				3.44	%			432,384				2,519				2.34	%
Saving deposits			164,913				800				1.95	%			157,227				654				1.67	%			111,214				57				0.21	%
Time deposits, $250,000 and under			1,049,666				12,360				4.74	%			1,175,804				13,805				4.72	%			1,221,760				12,391				4.07	%
Time deposits, greater than $250,000			772,255				9,490				4.94	%			785,172				9,517				4.88	%			709,803				6,778				3.83	%
Total interest-bearing deposits			2,474,474				26,803				4.36	%			2,588,900				27,800				4.32	%			2,534,950				21,947				3.47	%
FHLB advances			150,000				439				1.18	%			150,000				439				1.18	%			160,220				579				1.45	%
Long-term debt			119,275				1,296				4.37	%			119,180				1,295				4.37	%			173,780				2,194				5.06	%
Subordinated debentures			15,011				383				10.26	%			14,957				384				10.33	%			14,793				356				9.65	%
Total interest-bearing liabilities			2,758,760				28,921				4.22	%			2,873,037				29,918				4.19	%			2,883,743				25,076				3.49	%
Noninterest-bearing liabilities
Noninterest-bearing deposits			529,450												528,346												606,015
Other noninterest-bearing liabilities			51,087												55,795												59,760
Total noninterest-bearing liabilities			580,537												584,141												665,775
Shareholders' equity			512,185												512,787												500,062
Total liabilities and shareholders' equity		$	3,851,482											$	3,969,965											$	4,049,580
Net interest income / interest rate spreads						$	23,988				1.67	%						$	24,901				1.73	%						$	31,949				2.52	%
Net interest margin											2.67	%											2.69	%											3.37	%
Total cost of deposits		$	3,003,924			$	26,803				3.59	%		$	3,117,246			$	27,800				3.59	%		$	3,140,965			$	21,947				2.80	%
Total cost of funds		$	3,288,210			$	28,921				3.54	%		$	3,401,383			$	29,918				3.54	%		$	3,489,758			$	25,076				2.88	%

⁽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)
		For the Six Months Ended
		June 30, 2024												June 30, 2023
		Average				Interest				Yield /				Average				Interest				Yield /
(tax-equivalent basis, dollars in thousands)		Balance				& Fees				Rate				Balance				& Fees				Rate
Interest-earning assets
Federal funds sold, cash equivalents & other (1)		$	325,528			$	9,572				5.91	%		$	145,075			$	3,891				5.41	%
Securities
Available for sale (2)			319,127				7,197				4.54	%			312,971				6,057				3.90	%
Held to maturity (2)			5,205				94				3.63	%			5,724				103				3.63	%
Mortgage loans held for sale			2,124				83				7.86	%			70				2				6.55	%
Loans held for investment: (3)
Real estate			2,832,971				83,356				5.92	%			3,078,572				91,208				5.97	%
Commercial			182,642				7,428				8.18	%			228,585				9,541				8.42	%
Total loans held for investment			3,015,613				90,784				6.05	%			3,307,157				100,749				6.14	%
Total interest-earning assets			3,667,597			$	107,730				5.91	%			3,770,997			$	110,802				5.93	%
Total noninterest-earning assets			243,126												242,148
Total average assets		$	3,910,723											$	4,013,145
Interest-bearing liabilities
NOW		$	57,513				574				2.01	%		$	61,585			$	310				1.02	%
Money Market			421,655				7,403				3.53	%			445,531				4,659				2.11	%
Saving deposits			161,070				1,454				1.82	%			115,928				105				0.18	%
Time deposits, $250,000 and under			1,112,735				26,165				4.73	%			1,068,081				19,816				3.74	%
Time deposits, greater than $250,000			778,713				19,007				4.91	%			736,140				12,759				3.50	%
Total interest-bearing deposits			2,531,686				54,603				4.34	%			2,427,265				37,649				3.13	%
FHLB advances			150,000				878				1.18	%			194,807				1,988				2.06	%
Long-term debt			119,228				2,591				4.37	%			173,708				4,389				5.10	%
Subordinated debentures			14,984				767				10.29	%			14,766				700				9.56	%
Total interest-bearing liabilities			2,815,898				58,839				4.20	%			2,810,546				44,726				3.21	%
Noninterest-bearing liabilities
Noninterest-bearing deposits			528,898												651,928
Other noninterest-bearing liabilities			53,441												54,469
Total noninterest-bearing liabilities			582,339												706,397
Shareholders' equity			512,486												496,202
Total liabilities and shareholders' equity		$	3,910,723											$	4,013,145
Net interest income / interest rate spreads						$	48,891				1.71	%						$	66,076				2.72	%
Net interest margin											2.68	%											3.53	%
Total cost of deposits		$	3,060,584			$	54,603				3.59	%		$	3,079,193			$	37,649				2.47	%
Total cost of funds		$	3,344,796			$	58,839				3.54	%		$	3,462,474			$	44,726				2.60	%

⁽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)
	For the Three Months Ended												For the Six Months Ended June 30,
	June 30,				March 31,				June 30,
		2024			2024				2023				2024				2023
Per share data (common stock)
Book value	$	28.12			$	27.67			$	26.34			$	28.12			$	26.34
Tangible book value (1)	$	24.06			$	23.68			$	22.40			$	24.06			$	22.40
Performance ratios
Return on average assets, annualized		0.76	%			0.81	%			1.08	%			0.79	%			1.10	%
Return on average shareholders' equity, annualized		5.69	%			6.30	%			8.78	%			6.00	%			8.91	%
Return on average tangible common equity, annualized (1)		6.65	%			7.37	%			10.33	%			7.01	%			10.49	%
Noninterest income to average assets, annualized		0.36	%			0.34	%			0.25	%			0.35	%			0.24	%
Noninterest expense to average assets, annualized		1.79	%			1.72	%			1.83	%			1.75	%			1.88	%
Yield on average earning assets		5.89	%			5.92	%			6.01	%			5.91	%			5.93	%
Yield on average loans		6.04	%			6.07	%			6.23	%			6.05	%			6.14	%
Cost of average total deposits (2)		3.59	%			3.59	%			2.80	%			3.59	%			2.47	%
Cost of average interest-bearing deposits		4.36	%			4.32	%			3.47	%			4.34	%			3.13	%
Cost of average interest-bearing liabilities		4.22	%			4.19	%			3.49	%			4.20	%			3.21	%
Net interest spread		1.67	%			1.73	%			2.52	%			1.71	%			2.72	%
Net interest margin		2.67	%			2.69	%			3.37	%			2.68	%			3.53	%
Efficiency ratio (3)		62.38	%			60.07	%			53.80	%			61.21	%			52.80	%
Common stock dividend payout ratio		41.03	%			37.21	%			27.59	%			38.55	%			27.83	%

⁽¹⁾ Non-GAAP measure. See Non–GAAP reconciliations set forth at the end of this press release.
⁽²⁾ Total deposits include non-interest bearing deposits and interest-bearing deposits.
⁽³⁾ Ratio calculated by dividing noninterest expense by the sum of net interest income before provision for credit losses and noninterest income.

RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands)
		At or for the quarter ended
		June 30,				March 31,				June 30,
		2024				2024				2023
Credit Quality Data:
Special mention loans		$	19,520			$	20,580			$	24,150
Special mention loans to total loans			0.64	%			0.68	%			0.76	%
Substandard loans		$	63,076			$	57,170			$	74,065
Substandard loans to total loans			2.07	%			1.89	%			2.32	%
Loans 30-89 days past due, excluding nonperforming loans		$	11,270			$	20,950			$	7,242
Loans 30-89 days past due, excluding nonperforming loans, to total loans			0.37	%			0.69	%			0.23	%
Nonperforming loans		$	54,589			$	35,935			$	41,862
OREO			—				1,071				577
Nonperforming assets		$	54,589			$	37,006			$	42,439
Nonperforming loans to total loans			1.79	%			1.19	%			1.31	%
Nonperforming assets to total assets			1.41	%			0.95	%			1.04	%
Allowance for loan losses		$	41,741			$	41,688			$	43,092
Allowance for loan losses to total loans			1.37	%			1.38	%			1.35	%
Allowance for loan losses to nonperforming loans			76.46	%			116.01	%			102.94	%
Net charge-offs		$	551			$	184			$	580
Net charge-offs to average loans			0.07	%			0.02	%			0.07	%
Capital ratios (1)
Tangible common equity to tangible assets (2)			11.53	%			11.56	%			10.64	%
Tier 1 leverage ratio			12.48	%			12.16	%			11.60	%
Tier 1 common capital to risk-weighted assets			18.89	%			19.10	%			16.91	%
Tier 1 capital to risk-weighted assets			19.50	%			19.72	%			17.46	%
Total capital to risk-weighted assets			25.67	%			25.91	%			25.27	%

⁽¹⁾ June 30, 2024 capital ratios are preliminary.
⁽²⁾ Non-GAAP measure. See Non-GAAP reconciliations set forth at the end of this press release.

RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
Loan Portfolio Detail		As of June 30, 2024						As of March 31, 2024								As of June 30, 2023
(dollars in thousands)		$			%			$						%		$						%
Loans:
Commercial and industrial		$	126,649		4.2	%		$	121,441				4.0	%		$	131,456				4.1	%
SBA			50,323		1.7	%			54,677				1.8	%			53,459				1.7	%
Construction and land development			202,459		6.6	%			198,070				6.5	%			256,916				8.0	%
Commercial real estate (1)			1,190,207		39.1	%			1,178,498				38.9	%			1,183,396				37.0	%
Single-family residential mortgages			1,467,802		48.2	%			1,463,497				48.4	%			1,554,713				48.7	%
Other loans			10,272		0.2	%			11,178				0.4	%			16,055				0.5	%
Total loans (2)		$	3,047,712		100.0	%		$	3,027,361				100.0	%		$	3,195,995				100.0	%
Allowance for loan losses			(41,741	)					(41,688	)							(43,092	)
Total loans, net		$	3,005,971					$	2,985,673							$	3,152,903

⁽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 of $645, $474, and $766 as of June 30, 2024, March 31, 2024, and June 30, 2023, respectively

Deposits		As of June 30, 2024						As of March 31, 2024								As of June 30, 2023
(dollars in thousands)		$			%			$						%		$						%
Deposits:
Noninterest-bearing demand		$	542,971		18.0	%		$	539,517				17.8	%		$	585,746				18.4	%
Savings, NOW and money market accounts			647,770		21.4	%			642,840				21.2	%			598,546				18.8	%
Time deposits, $250,000 and under			921,712		30.5	%			901,738				29.8	%			826,665				26.0	%
Time deposits, greater than $250,000			790,478		26.1	%			746,611				24.7	%			662,763				20.9	%
Wholesale deposits (1)			120,674		4.0	%			197,623				6.5	%			501,696				15.8	%
Total deposits		$	3,023,605		100.0	%		$	3,028,329				100.0	%		$	3,175,416				100.0	%

⁽¹⁾ Includes brokered deposits, collateralized deposits from the State of California, and internet listing services.

Non-GAAP Reconciliations

Tangible Book Value Reconciliations

Tangible book value per share is a non-GAAP disclosure. Management measures tangible book value per share to assess the Company’s capital strength and business performance and believes this is helpful to investors as additional tools for further understanding our performance. The following is a reconciliation of tangible book value to the Company shareholders’ equity computed in accordance with GAAP, as well as a calculation of tangible book value per share as of June 30, 2024, March 31, 2024, and June 30, 2023.

(dollars in thousands, except share and per share data)		June 30, 2024				March 31, 2024				June 30, 2023
Tangible common equity:
Total shareholders' equity		$	511,291			$	513,986			$	500,290
Adjustments
Goodwill			(71,498	)			(71,498	)			(71,498	)
Core deposit intangible			(2,394	)			(2,594	)			(3,246	)
Tangible common equity		$	437,399			$	439,894			$	425,546
Tangible assets:
Total assets-GAAP		$	3,868,186			$	3,878,006			$	4,075,618
Adjustments
Goodwill			(71,498	)			(71,498	)			(71,498	)
Core deposit intangible			(2,394	)			(2,594	)			(3,246	)
Tangible assets		$	3,794,294			$	3,803,914			$	4,000,874
Common shares outstanding			18,182,154				18,578,132				18,995,303
Common equity to assets ratio			13.22	%			13.25	%			12.28	%
Tangible common equity to tangible assets ratio			11.53	%			11.56	%			10.64	%
Book value per share		$	28.12			$	27.67			$	26.34
Tangible book value per share		$	24.06			$	23.68			$	22.40

Return on Average Tangible Common Equity

Management measures return on average tangible common equity (“ROATCE”) to assess the Company’s capital strength and business performance and believes this is helpful to investors as an additional tool for further understanding our performance. Tangible equity excludes goodwill and other intangible assets (excluding mortgage servicing rights), and is reviewed by banking and financial institution regulators when assessing a financial institution’s capital adequacy. This non-GAAP financial measure should not be considered a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled measures used by other companies. The following table reconciles ROATCE to its most comparable GAAP measure:

		Three Months Ended												Six Months Ended June 30,
(dollars in thousands)		June 30, 2024				March 31, 2024				June 30, 2023				2024				2023
Net income available to common shareholders		$	7,245			$	8,036			$	10,949			$	15,281			$	21,919
Average shareholders' equity			512,185				512,787				500,062				512,486				496,202
Adjustments:
Average Goodwill			(71,498	)			(71,498	)			(71,498	)			(71,498	)			(71,498	)
Average Core deposit intangible			(2,525	)			(2,726	)			(3,400	)			(2,625	)			(3,517	)
Adjusted average tangible common equity		$	438,162			$	438,563			$	425,164			$	438,363			$	421,187
Return on average common equity			5.69	%			6.30	%			8.78	%			6.00	%			8.91	%
Return on average tangible common equity			6.65	%			7.37	%			10.33	%			7.01	%			10.49	%

FAQ

What were RBB Bancorp's earnings for Q2 2024?

RBB Bancorp reported a net income of $7.2 million, or $0.39 diluted EPS, for Q2 2024.

What is the net interest margin for RBB Bancorp in Q2 2024?

The net interest margin for RBB Bancorp in Q2 2024 was 2.67%, down from 2.69% in Q1 2024.

How many shares did RBB Bancorp repurchase in Q2 2024?

RBB Bancorp repurchased 448,190 shares of common stock for $8.1 million during Q2 2024.

What is the book value per share for RBB Bancorp as of Q2 2024?

The book value per share for RBB Bancorp increased to $28.12 as of Q2 2024.

What is the declared dividend by RBB Bancorp for Q2 2024?

RBB Bancorp declared a common stock cash dividend of $0.16 per share for Q2 2024, payable on August 12, 2024.