RBB Bancorp Reports Second Quarter Earnings for 2022

Rhea-AI Summary

RBB Bancorp (NASDAQ:RBB) reported a net income of $15.5 million for Q2 2022, reflecting a 5.9% increase from Q1 and a 15.7% rise year-over-year. Diluted earnings per share rose to $0.80. Loans grew by $35.9 million or 4.8% annualized. The bank declared a $0.14 per share quarterly dividend. Noninterest income saw a 16.5% rise compared to Q1 but a decline from the previous year. Net interest income increased to $37.1 million, driven by higher interest rates. Nonperforming assets decreased, indicating an improvement in asset quality.

Positive

• Net income of $15.5 million, up 5.9% from the previous quarter.
• Diluted EPS increased to $0.80, a 15.7% rise year-over-year.
• Loans grew by $35.9 million or 4.8% annualized.
• Declared a quarterly dividend of $0.14 per share.
• Net interest income at $37.1 million, boosted by interest rate increases.

Negative

• Noninterest expenses rose to $17.6 million due to investigation costs.
• Noninterest income decreased by $749,000 compared to the prior year.

Conference Call and Webcast Scheduled for Tuesday, July 26, 2022 at 11:00 a.m. Pacific Time/2:00 p.m. Eastern Time

Second Quarter 2022 Highlights

• Net income of $15.5 million, or $0.80 diluted earnings per share, increased $860,000, or 5.9%, from the prior quarter and increased $2.1 million, or 15.7%, from the second quarter of 2021
• Loans grew by $35.9 million, or 4.8% annualized, from the end of the prior quarter
• Declared $0.14 per share quarterly dividend

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 June 30, 2022.

The Company reported net income of $15.5 million, or $0.80 diluted earnings per share, for the three months ended June 30, 2022, compared to net income of $14.6 million, or $0.74 diluted earnings per share, and $13.4 million, or $ 0.67 diluted earnings per share, for the three months ended March 31, 2022 and June 30, 2021, respectively.

“Our performance in the second quarter demonstrated the strength of our differentiated business model as the Bank delivered strong earnings, improving margins, and loan growth,” said David Morris, Interim President and CEO of RBB Bancorp. “Expenses were higher than expected due to the ongoing costs related to the Board of Directors investigation, which we expect to wind down in the third quarter. We were pleased to announce several new hires and re-hires during the quarter and look forward to working with our new colleagues to build shareholder value.”

"The excellent second quarter results demonstrate the value of Royal Business Bank," said Dr. James Kao, Chairman of RBB Bancorp. “The Bank is well-positioned to continue to generate attractive returns and shareholder value.”

Key Performance Ratios

Net income of $15.5 million for the second quarter of 2022 produced an annualized return on average assets ("ROA") of 1.60%, an annualized return on average tangible common shareholders' equity ("ROTCE") of 15.89%, and an annualized return on average shareholders' equity ("ROE") of 13.30%. This compares to an annualized ROA of 1.39%, an annualized ROTCE of 14.91%, and an annualized ROE of 12.59% for the first quarter of 2022. The efficiency ratio for the second quarter of 2022 was 43.47%, compared to 42.90% for the prior quarter.

Net Interest Income and Net Interest Margin

Net interest income, before provision for loan losses, was $37.1 million for the second quarter of 2022, compared to $34.5 million for the first quarter of 2022. The $2.6 million increase was primarily attributable to 1.25% increase in interest rate by Federal Reserve Bank in the second quarter of 2022. Accretion of purchase discounts from prior acquisitions contributed $75,000 to net interest income in the second quarter of 2022, compared to $246,000 in the first quarter of 2022.

Compared to the second quarter of 2021, net interest income, before provision for loan losses, increased $7.0 million from $30.1 million. The increase was primarily attributable to a $289.3 million increase in average loans and a 1.25% increase in interest rate by the Federal Reserve Bank in the second quarter of 2022. The increases in average earning assets were primarily due to increased loan originations.

Net interest margin was 4.08% for the second quarter of 2022, an increase of 59 basis points from 3.49% in the first quarter of 2022. Loan discount accretion contributed 1 basis point to the net interest margin in the second quarter of 2022, compared to 2 basis points in the first quarter of 2022.

Noninterest Income

Noninterest income was $3.4 million for the second quarter of 2022, an increase of $478,000 from $2.9 million in the first quarter of 2022. The increase was primarily driven by a $757,000 increase in gain on sale of corporate real estate, a $272,000 decrease in loss on derivatives and a $94,000 increase in recoveries on purchased loans, partially offset by an $830,000 decrease in gain on sale of loans during the quarter.

The Company sold $12.6 million in FNMA qualified mortgage loans for a net gain of $284,000 during the second quarter of 2022 compared to $26.9 million in FNMA qualified mortgage loans sold for a net gain of $711,000 during the first quarter of 2022. The Company sold $1.1 million in SBA loans during the second quarter of 2022 for a net gain of $60,000, compared to $8.3 million SBA loans sold for a net gain of $463,000 during the first quarter of 2022.

Compared to the second quarter of 2021, noninterest income decreased by $749,000 from $4.2 million. The decrease was primarily attributable to a $2.2 million decrease in gain on sale of loans, partially offset by a $757,000 increase in gain on corporate real estate, a $354,000 increase in loan servicing fees, an $113,000 increase in income from bank owned life insurance and a $93,000 increase in recoveries on purchased loans.

Noninterest Expense

Noninterest expense for the second quarter of 2022 was $17.6 million, compared to $16.1 million for the first quarter of 2022. The $1.6 million increase was primarily attributable to a $1.2 million increase in legal and professional expenses due to a Board of Director special investigation and a $259,000 increase in salaries and employee benefits expense due to additional new hires and salary adjustments to reflect economic inflation.

Noninterest expense increased from $14.7 million in the second quarter of 2021. The $2.9 million increase was primarily due to a $1.7 million increase in legal and professional expenses due to a Board of Director special investigation, an $886,000 increase in salaries and employee benefits expenses and a $270,000 increase in business promotion and CRA donation expenses.

Income Taxes

The effective tax rate was 29.6% for the second quarter of 2022, 30.4% for the first quarter of 2022, and 29.3% for the second quarter of 2021. The Company recognized a tax benefit from stock option exercises of $279,000, $23,000 and $68,000 for the second quarter of 2022, the first quarter of 2022, and the second quarter of 2021, respectively.

Loan and Securities Portfolio

Loans held for investment, net of deferred fees and discounts, totaled $3.05 billion as of June 30, 2022, an increase of $39.5 million from March 31, 2022, and an increase of $336.7 million from June 30, 2021. The increase from the prior quarter was primarily due to a $141.2 million increase in single-family residential mortgage loans and a $10.0 million increase in construction & land development loans, partially offset by a $57.6 million decrease in commercial real estate loans and a $42.8 million decrease in commercial and industrial loans. The increase from June 30, 2021 was primarily due to a $221.4 million increase in single-family residential mortgages and a $119.8 million increase in construction & land development loans.

During the second quarter of 2022, single-family residential mortgage production was $216.9 million while net payoffs and paydowns were $66.8 million. During the first quarter of 2022, single-family residential mortgage production was $132.6 million while payoffs and paydowns were $48.1 million.

There were no mortgage loans held for sale as of June 30, 2022 compared to $3.6 million as of March 31, 2022 and $9.2 million as of June 30, 2021. The Company originated approximately $1.2 million in FNMA mortgage loans for sale for the second quarter of 2022, compared with $23.4 million during the prior quarter.

In the second quarter of 2022, SBA loan production was $1.4 million and total SBA loan sales were $1.1 million compared to SBA loan production of $11.9 million and total SBA loan sales of $8.3 million in the first quarter of 2022.

As of June 30, 2022, the Bank’s total Available-for-Sale securities maturing in over 12 months were $249.2 million, and the Bank recorded an unrealized loss of $20.2 million under the Accumulated Other Comprehensive Income (AOCI) since January 1, 2022.

Deposits

Deposits were $3.0 billion at June 30, 2022, which was a decrease of $140.7 million compared to March 31, 2022. During the second quarter of 2022, noninterest-bearing deposits decreased by $114.7 million, interest-bearing non-maturity deposits decreased by $16.7 million, and time deposits decreased by $9.3 million. As of June 30, 2022, there were $50.0 million in brokered CDs, as compared to no brokered CDs as of March 31, 2022 and $17.4 million brokered CDs as of June 30, 2021. Compared to June 30, 2021, total deposits decreased by $42.4 million primarily due to a $157.0 million decrease in time deposits, partially offset by a $105.0 million increase in noninterest-bearing demand deposits.

Asset Quality

Nonperforming assets totaled $14.2 million, or 0.36% of total assets at June 30, 2022, compared to $21.0 million, or 0.52% of total assets at March 31, 2022. The decrease in nonperforming assets was due to the pay-off of certain nonperforming loans in the second quarter. 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 second quarter of 2022, there were $53,000 in net charge-offs, compared to net recoveries of $14,000 in the first quarter of 2022 and net charge-offs of $71,000 in the second quarter of 2021.

The Company recorded a provision for credit losses of $915,000 for the second quarter of 2022 which was primarily attributable to loan growth and was an increase from $366,000 in the prior quarter. Allowance for loan losses continue to include $599,000 of reserves taken as a precaution against COVID-19 losses in 2020 and 2021.

The allowance for loan losses totaled $34.2 million, or 1.12% of loans held for investment at June 30, 2022, compared with $33.3 million, or 1.11%, of total loans at March 31, 2022.

During the second quarter of 2022, the Company repurchased 525,754 common shares at a weighted average price of $21.10.

Corporate Overview

RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. As of June 30, 2022, the company had total assets of $4.0 billion. Its wholly-owned subsidiary, the Bank is a full service commercial bank, which provides business banking services to the Chinese-American communities in Los Angeles County, Orange County, and Ventura County in California, in Las Vegas, Nevada, in Brooklyn, Queens, and Manhattan in New York, in Edison, New Jersey, in the Chicago neighborhoods of Chinatown and Bridgeport, Illinois, and on Oahu, Hawaii. Bank services include remote deposit, E-banking, mobile banking, commercial and investor real estate loans, business loans and lines of credit, commercial and industrial loans, SBA 7A and 504 loans, 1-4 single family residential loans, automobile lending, trade finance, a full range of depository account products and wealth management services. The Bank has nine branches in Los Angeles County, two branches in Ventura County, one branch in Orange County, California, one branch in Las Vegas, Nevada, three branches and one loan operation center in Brooklyn, three branches in Queens, one branch in Manhattan in New York, one branch in Edison, New Jersey, two branches in Chicago, Illinois, and one branch in Honolulu, Hawaii. The Company's administrative and lending center is located at 1055 Wilshire Blvd., Los Angeles, California 90017, and its finance and operations center is located at 7025 Orangethorpe Ave., Buena Park, California 90621. The Company's website address is www.royalbusinessbankusa.com.

Conference Call

Management will hold a conference call at 11:00 a.m. Pacific time/2:00 p.m. Eastern time tomorrow, July 26, 2022, to discuss the Company’s second quarter 2022 financial results.

To listen to the conference call, please dial 1-866-459-5346 or 1-203-518-9544, conference ID RBBQ222. A replay of the call will be made available at 1-877-274-8334 or 1-402-220-2326 (no passcode required) approximately one hour after the conclusion of the call and will remain available through August 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, whether we are able to obtain any required governmental or shareholder approvals in connection with any such acquisitions or dispositions, and/or our ability to realize the contemplated financial or business benefits associated with any such acquisitions or dispositions; the effect of changes in laws, regulations and applicable judicial decisions (including laws, regulations and judicial decisions concerning financial reforms, taxes, banking capital levels, consumer, commercial or secured lending, securities and securities trading and hedging, compliance, employment, executive compensation, insurance, vendor management and information security) with which we and our subsidiaries must comply or believe we should comply; changes in estimates of future reserve requirements and minimum capital requirements based upon the periodic review thereof under relevant regulatory and accounting requirements, including changes in the Basel Committee framework establishing capital standards for credit, operations and market risk; inflation, interest rate, securities market and monetary fluctuations; changes in government interest rates or monetary policies; changes in the amount and availability of deposit insurance; cyber-security threats, including loss of system functionality or theft or loss of Company or customer data or money; political instability; acts of war or terrorism, or natural disasters, such as earthquakes, drought, or the effects of pandemic diseases; the timely development and acceptance of new banking products and services and the perceived overall value of these products and services by our customers and potential customers; the Company’s relationships with and reliance upon vendors with respect to the operation of certain of the Company’s key internal and external systems and applications; changes in commercial or consumer spending, borrowing and savings preferences or behaviors; technological changes and the expanding use of technology in banking (including the adoption of mobile banking and funds transfer applications); the ability to retain and increase market share, retain and grow customers and control expenses; changes in the competitive and regulatory environment among financial and bank holding companies, banks and other financial service providers; volatility in the credit and equity markets and its effect on the general economy or local or regional business conditions; fluctuations in the price of the Company’s common stock or other securities; and the resulting impact on the Company’s ability to raise capital or make acquisitions, the effect of changes in accounting policies and practices, as may be adopted from time-to-time by our regulatory agencies, as well as by the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard-setters, including ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments”, commonly referenced as the Current Expected Credit Loss (“CECL”) model, which will change how we estimate credit losses and may increase the required level of our allowance for credit losses after adoption; changes in our organization, management, compensation and benefit plans, and our ability to retain or expand our workforce, management team and/or our board of directors; the costs and effects of legal, compliance and regulatory actions, changes and developments, including the initiation and resolution of legal proceedings (such as securities, consumer or employee class action litigation), regulatory or other governmental inquiries or investigations, and/or the results of regulatory examinations or reviews; our ongoing relations with our various federal and state regulators, including the SEC, FDIC, FRB and California DFPI (formerly DBO); our success at managing the risks involved in the foregoing items and all other factors set forth in the Company’s public reports, including its Annual Report as filed under Form 10-K/A and Form 10-K for the year ended December 31, 2021, and particularly the discussion of risk factors within that document. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements except as required by law. Any statements about future operating results, such as those concerning accretion and dilution to the Company’s earnings or shareholders, are for illustrative purposes only, are not forecasts, and actual results may differ.

RBB BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, except for December 31, 2021) (Dollars in thousands)
		June 30,				March 31,				December 31,				September 30,				June 30,
		2022				2022				2021				2021				2021
Assets
Cash and due from banks		$	224,736			$	149,767			$	501,372			$	206,927			$	493,653
Federal funds sold and other cash equivalents			100,000				200,000				193,000				170,000				110,000
Total cash and cash equivalents			324,736				349,767				694,372				376,927				603,653
Interest-bearing deposits in other financial institutions			600				600				600				600				600
Investment securities available for sale			358,135				420,448				368,260				345,000				339,568
Investment securities held to maturity			5,741				6,246				6,252				6,258				6,664
Mortgage loans held for sale			—				3,572				5,957				15,188				9,246
Loans held for investment			3,045,946				3,006,484				2,931,350				2,840,354				2,709,206
Allowance for loan losses			(34,154	)			(33,292	)			(32,912	)			(32,231	)			(31,352	)
Net loans held for investment			3,011,792				2,973,192				2,898,438				2,808,123				2,677,854
Premises and equipment, net			27,104				27,455				27,199				27,157				27,039
Federal Home Loan Bank (FHLB) stock			15,000				15,000				15,000				15,000				15,000
Cash surrender value of life insurance			56,642				56,313				55,988				55,656				55,325
Goodwill			71,498				71,498				69,243				69,243				69,243
Servicing assets			10,456				11,048				11,517				12,141				12,558
Core deposit intangibles			4,248				4,525				4,075				4,327				4,608
Right-of-use assets- operating leases			21,166				22,451				22,454				23,735				25,050
Accrued interest and other assets			57,153				51,454				48,839				42,452				44,230
Total assets		$	3,964,271			$	4,013,569			$	4,228,194			$	3,801,807			$	3,890,638
Liabilities and shareholders' equity
Deposits:
Noninterest-bearing demand		$	1,045,009			$	1,159,703			$	1,291,484			$	824,771			$	940,041
Savings, NOW and money market accounts			868,307				885,050				927,609				931,517				858,597
Time deposits, less than $250,000			574,050				570,274				587,940				614,146				658,393
Time deposits, greater than or equal to $250,000			540,199				553,226				578,499				597,379				612,894
Total deposits			3,027,565				3,168,253				3,385,532				2,967,813				3,069,925
Reserve for unfunded commitments			1,070				1,186				1,203				1,304				1,216
FHLB advances			250,000				150,000				150,000				150,000				150,000
Long-term debt, net of debt issuance costs			173,296				173,152				173,007				172,862				172,718
Subordinated debentures			14,611				14,556				14,502				14,447				14,393
Lease liabilities - operating leases			22,057				23,314				23,282				24,524				25,798
Accrued interest and other liabilities			11,965				18,283				13,985				14,833				14,263
Total liabilities			3,500,564				3,548,744				3,761,511				3,345,783				3,448,313
Shareholders' equity:
Shareholder's equity			479,382				475,077				468,267				456,490				442,086
Non-controlling interest			72				72				72				72				72
Accumulated other comprehensive (loss) income - Net of tax			(15,747	)			(10,324	)			(1,656	)			(538	)			167
Total shareholders' equity			463,707				464,825				466,683				456,024				442,325
Total liabilities and shareholders’ equity		$	3,964,271			$	4,013,569			$	4,228,194			$	3,801,807			$	3,890,638

RBB BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands, except per share amounts)
		For the Three Months Ended
		June 30, 2022			March 31, 2022				June 30, 2021
Interest and dividend income:
Interest and fees on loans		$	40,157		$	37,886			$	34,669
Interest on interest-bearing deposits			111			171				125
Interest on investment securities			1,419			1,007				794
Dividend income on FHLB stock			222			227				225
Interest on federal funds sold and other			429			275				158
Total interest income			42,338			39,566				35,971
Interest expense:
Interest on savings deposits, NOW and money market accounts			844			718				708
Interest on time deposits			1,506			1,574				2,410
Interest on subordinated debentures and long term debt			2,379			2,348				2,356
Interest on other borrowed funds			519			435				440
Total interest expense			5,248			5,075				5,914
Net interest income before provision for loan losses			37,090			34,491				30,057
Provision for loan losses			915			366				628
Net interest income after provision for loan losses			36,175			34,125				29,429
Noninterest income:
Service charges, fees and other			1,382			1,241				1,332
Gain on sale of loans			344			1,174				2,572
Loan servicing fees, net of amortization			472			432				118
Recoveries on loans acquired in business combinations			98			5				5
Unrealized (loss) on equity investments			—			—				(35	)
Gain (loss) on derivatives			39			(233	)			(38	)
Increase in cash surrender value of life insurance			330			325				217
Gain on sale of fixed assets			757			—				—
Total noninterest income			3,422			2,944				4,171
Noninterest expense:
Salaries and employee benefits			9,628			9,369				8,742
Occupancy and equipment expenses			2,174			2,206				2,135
Data processing			1,293			1,258				1,231
Legal and professional			2,254			1,006				536
Office expenses			358			293				272
Marketing and business promotion			501			307				231
Insurance and regulatory assessments			478			441				354
Core deposit premium			277			279				287
OREO expenses			5			8				4
Merger expenses			23			37				17
Other expenses			621			857				871
Total noninterest expense			17,612			16,061				14,680
Income before income taxes			21,985			21,008				18,920
Income tax expense			6,508			6,391				5,540
Net income		$	15,477		$	14,617			$	13,380
Net income per share
Basic		$	0.81		$	0.75			$	0.69
Diluted		$	0.80		$	0.74			$	0.67
Cash Dividends declared per common share		$	0.14		$	0.14			$	0.13
Weighted-average common shares outstanding
Basic			19,066,621			19,377,407				19,432,204
Diluted			19,368,860			19,799,323				19,874,969

RBB BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands, except per share amounts)
		For the Six Months Ended
		June 30, 2022				June 30, 2021
Interest and dividend income:
Interest and fees on loans		$	78,043			$	69,185
Interest on interest-earning deposits			282				173
Interest on investment securities			2,426				1,421
Dividend income on FHLB stock			449				417
Interest on federal funds sold and other			704				315
Total interest income			81,904				71,511
Interest expense:
Interest on savings deposits, NOW and money market accounts			1,562				1,406
Interest on time deposits			3,080				5,374
Interest on subordinated debentures and long term debt			4,727				4,314
Interest on other borrowed funds			954				875
Total interest expense			10,323				11,969
Net interest income			71,581				59,542
Provision for loan losses			1,282				2,128
Net interest income after provision for loans losses			70,299				57,414
Noninterest income:
Service charges, fees and other (1)			2,622				2,800
Gain on sale of loans			1,518				6,413
Loan servicing fees, net of amortization			904				364
Recoveries on loans acquired in business combinations			103				10
Unrealized (loss) gain on equity investments			—				(55	)
(Loss) gain on derivatives			(194	)			129
Increase in cash surrender value of life insurance			654				404
Gain on sale of fixed assets			757				—
Total noninterest income			6,364				10,065
Noninterest expense:
Salaries and employee benefits			18,997				17,984
Occupancy and equipment expenses			4,380				4,377
Data processing			2,551				2,671
Legal and professional			3,260				1,341
Office expenses			651				527
Marketing and business promotion			808				415
Insurance and regulatory assessments			919				702
Core deposit premium			556				588
OREO expenses			13				9
Merger expenses			60				59
Other expenses			1,475				1,799
Total noninterest expense			33,670				30,472
Income before income taxes			42,993				37,007
Income tax expense			12,899				11,171
Net income		$	30,094			$	25,836
Net income per share
Basic		$	1.56			$	1.32
Diluted		$	1.54			$	1.30
Cash Dividends declared per common share		$	0.28			$	0.25
Weighted-average common shares outstanding
Basic			19,221,155				19,453,889
Diluted			19,582,902				19,844,077

RBB BANCORP AND SUBSIDIARIES AVERAGE BALANCE SHEET AND NET INTEREST INCOME (Unaudited) (Dollars in thousands, except per share amounts)
		For the three months ended
		June 30, 2022									March 31, 2022									June 30, 2021
		Average			Interest			Yield /			Average			Interest			Yield /			Average			Interest			Yield /
(tax-equivalent basis, dollars in thousands)		Balance			& Fees			Rate			Balance			& Fees			Rate			Balance			& Fees			Rate
Earning assets:
Federal funds sold, cash equivalents & other (1)		$	249,738		$	762		1.22	%		$	628,634		$	673		0.43	%		$	582,554		$	508		0.35	%
Securities
Available for sale (2)			399,321			1,393		1.40	%			392,858			974		1.01	%			328,004			751		0.92	%
Held to maturity (2)			5,744			50		3.49	%			6,250			57		3.70	%			6,667			60		3.61	%
Mortgage loans held for sale			892			13		5.85	%			3,652			43		4.78	%			21,033			173		3.30	%
Loans held for investment: (3)
Real estate			2,663,753			35,207		5.30	%			2,602,382			33,095		5.16	%			2,292,145			29,794		5.21	%
Commercial			325,861			4,937		6.08	%			380,978			4,748		5.05	%			388,049			4,702		4.86	%
Total loans			2,989,614			40,144		5.39	%			2,983,360			37,843		5.14	%			2,680,194			34,496		5.16	%
Total earning assets			3,645,309		$	42,362		4.66	%			4,014,754		$	39,590		4.00	%			3,618,452		$	35,988		3.99	%
Noninterest-earning assets			243,227									241,235									230,049
Total assets		$	3,888,536								$	4,255,989								$	3,848,501
Interest-bearing liabilities
NOW		$	75,637		$	50		0.27	%		$	75,399		$	43		0.23	%		$	66,777		$	45		0.27	%
Money Market			631,807			759		0.48	%			720,197			643		0.36	%			640,026			628		0.39	%
Saving deposits			148,400			35		0.09	%			145,327			32		0.09	%			140,418			35		0.10	%
Time deposits, less than $250,000			553,282			724		0.52	%			600,563			754		0.51	%			657,494			1,163		0.71	%
Time deposits, $250,000 and over			526,164			782		0.60	%			570,210			820		0.58	%			604,429			1,247		0.83	%
Total interest-bearing deposits			1,935,290			2,350		0.49	%			2,111,696			2,292		0.44	%			2,109,144			3,118		0.59	%
FHLB advances			182,749			519		1.14	%			150,000			435		1.18	%			150,000			440		1.18	%
Long-term debt			173,201			2,195		5.08	%			173,058			2,194		5.14	%			172,622			2,206		5.13	%
Subordinated debentures			14,575			184		5.06	%			14,521			154		4.30	%			14,357			150		4.19	%
Total interest-bearing liabilities			2,305,815			5,248		0.91	%			2,449,275			5,075		0.84	%			2,446,123			5,914		0.97	%
Noninterest-bearing liabilities
Noninterest-bearing deposits			1,082,793									1,301,497									913,442
Other noninterest-bearing liabilities			33,325									34,319									46,549
Total noninterest-bearing liabilities			1,116,118									1,335,816									959,991
Shareholders' equity			466,603									470,898									442,387
Total liabilities and shareholders' equity		$	3,888,536								$	4,255,989								$	3,848,501
Net interest income / interest rate spreads					$	37,114		3.75	%					$	34,515		3.16	%					$	30,074		3.02	%
Net interest margin								4.08	%								3.49	%								3.33	%

(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 six months ended
		June 30, 2022									June 30, 2021
		Average			Interest			Yield /			Average			Interest			Yield /
(tax-equivalent basis, dollars in thousands)		Balance			& Fees			Rate			Balance			& Fees			Rate
Earning assets:
Federal funds sold, cash equivalents & other (1)		$	438,140		$	1,435		0.66	%		$	399,907		$	905		0.46	%
Securities
Available for sale (2)			396,107			2,367		1.21	%			284,129			1,323		0.94	%
Held to maturity (2)			5,996			107		3.60	%			6,832			126		3.72	%
Mortgage loans held for sale			2,265			56		4.99	%			37,436			584		3.15	%
Loans held for investment: (3)
Real estate			2,633,237			68,302		5.23	%			2,299,746			59,315		5.20	%
Commercial			353,267			9,685		5.53	%			386,256			9,286		4.85	%
Total loans			2,986,504			77,987		5.27	%			2,686,002			68,601		5.15	%
Total earning assets			3,829,012		$	81,952		4.32	%			3,414,306		$	71,539		4.23	%
Noninterest-earning assets			242,235									229,032
Total assets		$	4,071,247								$	3,643,338
Interest-bearing liabilities
NOW		$	75,519		$	94		0.25	%		$	65,690		$	88		0.27	%
Money Market			675,758			1,401		0.42	%			609,854			1,251		0.41	%
Saving deposits			146,872			67		0.09	%			135,810			67		0.10	%
Time deposits, less than $250,000			576,792			1,478		0.52	%			660,246			2,659		0.81	%
Time deposits, $250,000 and over			548,065			1,602		0.59	%			599,234			2,716		0.91	%
Total interest-bearing deposits			2,023,006			4,642		0.46	%			2,070,834			6,781		0.66	%
FHLB advances			166,465			954		1.16	%			150,000			875		1.18	%
Long-term debt			173,129			4,388		5.11	%			142,349			4,015		5.69	%
Subordinated debentures			14,548			339		4.70	%			14,330			298		4.19	%
Total interest-bearing liabilities			2,377,148		$	10,323		0.88	%			2,377,513		$	11,969		1.02	%
Noninterest-bearing liabilities
Noninterest-bearing deposits			1,191,540									784,276
Other noninterest-bearing liabilities			33,820									43,352
Total noninterest-bearing liabilities			1,225,360									827,628
Shareholders' equity			468,739									438,197
Total liabilities and shareholders' equity		$	4,071,247								$	3,643,338
Net interest income / interest rate spreads					$	71,629		3.44	%					$	59,570		3.21	%
Net interest margin								3.77	%								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
		June 30,				March 31,				June 30,
			2022				2022				2021
Per share data (common stock)
Earnings
Basic		$	0.81			$	0.75			$	0.69
Diluted		$	0.80			$	0.74			$	0.67
Dividends declared		$	0.14			$	0.14			$	0.13
Book value		$	24.56			$	24.15			$	22.86
Tangible book value		$	20.55			$	20.20			$	19.04
Weighted average shares outstanding
Basic			19,066,621				19,377,407				19,432,204
Diluted			19,368,860				19,799,323				19,874,969
Shares outstanding at period end			18,881,829				19,247,970				19,349,802
Performance ratios
Return on average assets, annualized			1.60	%			1.39	%			1.39	%
Return on average shareholders' equity, annualized			13.30	%			12.59	%			12.13	%
Return on average tangible common equity, annualized			15.89	%			14.91	%			14.57	%
Noninterest income to average assets, annualized			0.35	%			0.28	%			0.43	%
Noninterest expense to average assets, annualized			1.82	%			1.53	%			1.53	%
Yield on average earning assets			4.66	%			4.00	%			3.99	%
Cost of average total deposits			0.31	%			0.27	%			0.41	%
Cost of average interest-bearing deposits			0.49	%			0.44	%			0.59	%
Cost of average interest-bearing liabilities			0.91	%			0.84	%			0.97	%
Accretion on loans to average earning assets			0.01	%			0.02	%			0.02	%
Net interest spread			3.75	%			3.16	%			3.02	%
Net interest margin			4.08	%			3.49	%			3.33	%
Efficiency ratio			43.47	%			42.90	%			42.89	%
Common stock dividend payout ratio			17.28	%			18.67	%			18.84	%

 

RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share amounts)
		For the six months ended June 30,
			2022				2021
Per share data (common stock)
Earnings
Basic		$	1.56			$	1.32
Diluted		$	1.54			$	1.30
Dividends declared		$	0.28			$	0.25
Book value		$	24.56			$	22.86
Tangible book value		$	20.55			$	19.04
Weighted average shares outstanding
Basic			19,221,155				19,453,889
Diluted			19,582,902				19,844,077
Shares outstanding at period end			18,881,829				19,349,802
Performance ratios
Return on average assets, annualized			1.49	%			1.43	%
Return on average shareholders' equity, annualized			12.95	%			11.89	%
Return on average tangible common equity, annualized			15.40	%			14.31	%
Noninterest income to average assets, annualized			0.32	%			0.56	%
Noninterest expense to average assets, annualized			1.67	%			1.69	%
Yield on average earning assets			4.32	%			4.23	%
Cost of average deposits			0.29	%			0.48	%
Cost of average interest-bearing deposits			0.46	%			0.66	%
Cost of average interest-bearing liabilities			0.88	%			1.02	%
Accretion on loans to average earning assets			0.02	%			0.04	%
Net interest spread			3.44	%			3.21	%
Net interest margin			3.77	%			3.52	%
Efficiency ratio			43.20	%			43.78	%
Common stock dividend payout ratio			17.95	%			18.94	%

 

RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share amounts)
		As of
		June 30,				March 31,				June 30,
			2022				2022				2021
Loan to deposit ratio			100.61	%			94.89	%			88.25	%
Core deposits / total deposits			82.16	%			82.54	%			80.04	%
Net non-core funding dependence ratio			-0.44	%			-0.28	%			0.87	%
Credit Quality Data:
Loans 30-89 days past due		$	8,346			$	17,635			$	5,449
Loans 30-89 days past due to total loans			0.27	%			0.59	%			0.20	%
Nonperforming loans		$	13,937			$	20,691			$	19,243
Nonperforming loans to total loans			0.46	%			0.69	%			0.71	%
Nonperforming assets		$	14,230			$	20,984			$	19,536
Nonperforming assets to total assets			0.36	%			0.52	%			0.50	%
Allowance for loan losses to total loans			1.12	%			1.11	%			1.16	%
Allowance for loan losses to nonperforming loans			245.06	%			160.90	%			162.93	%
Net charge-offs to average loans (for the quarter-to-date period)			0.01	%			0.00	%			0.01	%
Regulatory and other capital ratios—Company
Tangible common equity to tangible assets			9.98	%			9.87	%			9.65	%
Tier 1 leverage ratio			10.96	%			9.90	%			10.20	%
Tier 1 common capital to risk-weighted assets			14.84	%			14.12	%			14.76	%
Tier 1 capital to risk-weighted assets			15.38	%			14.63	%			15.33	%
Total capital to risk-weighted assets			22.98	%			21.96	%			23.48	%
Regulatory capital ratios—Bank only
Tier 1 leverage ratio			13.90	%			12.29	%			12.34	%
Tier 1 common capital to risk-weighted assets			19.55	%			18.15	%			18.58	%
Tier 1 capital to risk-weighted assets			19.55	%			18.15	%			18.58	%
Total capital to risk-weighted assets			20.80	%			19.37	%			19.83	%

 

RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share amounts)
		2nd Quarter				1st Quarter				4th Quarter				3rd Quarter				2nd Quarter
Quarterly Consolidated Statements of Earnings			2022				2022				2021				2021				2021
Interest income
Loans, including fees		$	40,157			$	37,886			$	36,783			$	35,601			$	34,669
Investment securities and other			2,181				1,680				1,661				1,507				1,302
Total interest income			42,338				39,566				38,444				37,108				35,971
Interest expense
Deposits			2,350				2,292				2,431				2,745				3,118
Interest on subordinated debentures and other			2,379				2,348				2,343				2,342				2,356
Other borrowings			519				435				445				445				440
Total interest expense			5,248				5,075				5,219				5,532				5,914
Net interest income before provision for loan losses			37,090				34,491				33,225				31,576				30,057
Provision for loan losses			915				366				635				1,196				628
Net interest income after provision for loan losses			36,175				34,125				32,590				30,380				29,429
Noninterest income			3,422				2,944				3,156				5,524				4,171
Noninterest expense			17,612				16,061				13,300				14,420				14,680
Earnings before income taxes			21,985				21,008				22,446				21,484				18,920
Income taxes			6,508				6,391				6,740				6,120				5,540
Net income		$	15,477			$	14,617			$	15,706			$	15,364			$	13,380
Net income per common share - basic		$	0.81			$	0.75			$	0.81			$	0.79			$	0.69
Net income per common share - diluted		$	0.80			$	0.74			$	0.79			$	0.77			$	0.67
Cash dividends declared per common share		$	0.14			$	0.14			$	0.13			$	0.13			$	0.13
Cash dividends declared on common shares		$	2,687			$	2,724			$	2,537			$	2,516			$	2,540
Yield on average assets, annualized			1.60	%			1.39	%			1.52	%			1.54	%			1.39	%
Yield on average earning assets			4.66	%			4.00	%			3.97	%			3.97	%			3.99	%
Cost of average deposits			0.31	%			0.27	%			0.30	%			0.35	%			0.41	%
Cost of average interest-bearing deposits			0.49	%			0.44	%			0.47	%			0.51	%			0.59	%
Cost of average interest-bearing liabilities			0.91	%			0.84	%			0.86	%			0.89	%			0.97	%
Accretion on loans to average earning assets			0.01	%			0.02	%			0.02	%			0.03	%			0.02	%
Net interest margin			4.08	%			3.49	%			3.43	%			3.38	%			3.33	%

 

RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited, except for December 31, 2021) (Dollars in thousands, except per share amounts)
Loan Portfolio Detail		As of June 30, 2022							As of March 31, 2022							As of December 31, 2021							As of September 30, 2021							As of June 30, 2021
(dollars in thousands)		$				%			$				%			$				%			$				%			$				%
Loans:
Commercial and industrial		$	238,045			7.8	%		$	280,825			9.3	%		$	268,709			9.2	%		$	276,387			9.7	%		$	277,080			10.2	%
SBA			59,303			1.9	%			67,688			2.3	%			76,136			2.6	%			88,784			3.1	%			98,572			3.6	%
Construction and land development			356,772			11.7	%			346,766			11.5	%			303,144			10.3	%			271,764			9.6	%			236,965			8.7	%
Commercial real estate (1)			1,160,350			38.1	%			1,217,985			40.5	%			1,247,999			42.6	%			1,205,630			42.4	%			1,102,467			40.7	%
Single-family residential mortgages			1,205,732			39.6	%			1,064,581			35.4	%			1,004,576			34.3	%			974,780			34.3	%			984,311			36.3	%
Other loans			25,744			0.9	%			28,639			1.0	%			30,786			1.0	%			23,009			0.9	%			9,811			0.5	%
Total loans (2)		$	3,045,946			100.0	%		$	3,006,484			100.0	%		$	2,931,350			100.0	%		$	2,840,354			100.0	%		$	2,709,206			100.0	%
Allowance for loan losses			(34,154	)						(33,292	)						(32,912	)						(32,231	)						(31,352	)
Total loans, net		$	3,011,792						$	2,973,192						$	2,898,438						$	2,808,123						$	2,677,854

(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								Six Months Ended
Change in Allowance for Loan Losses		June 30,								June 30,
(dollars in thousands)			2022				2021				2022				2021
Beginning balance		$	33,292			$	30,795			$	32,912			$	29,337
Additions to the allowance charged to expense			915				628				1,282				2,128
Net recoveries (charge-offs) on loans			(53	)			(71	)			(40	)			(113	)
Ending balance		$	34,154			$	31,352			$	34,154			$	31,352

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 June 30, 2022 and 2021, and March 31, 2022.

(dollars in thousands, except per share data)		June 30, 2022				March 31, 2022				June 30, 2021
Tangible common equity:
Total shareholders' equity		$	463,707			$	464,825			$	442,325
Adjustments
Goodwill			(71,498	)			(71,498	)			(69,243	)
Core deposit intangible			(4,248	)			(4,525	)			(4,608	)
Tangible common equity		$	387,961			$	388,802			$	368,474
Tangible assets:
Total assets-GAAP		$	3,964,271			$	4,013,569			$	3,890,638
Adjustments
Goodwill			(71,498	)			(71,498	)			(69,243	)
Core deposit intangible			(4,248	)			(4,525	)			(4,608	)
Tangible assets		$	3,888,525			$	3,937,546			$	3,816,787
Common shares outstanding		$	18,881,829				19,247,970				19,349,802
Tangible common equity to tangible assets ratio			9.98	%			9.87	%			9.65	%
Book value per share		$	24.56			$	24.15			$	22.86
Tangible book value per share		$	20.55			$	20.20			$	19.04

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220725005787/en/

David Morris

Interim President and CEO

CFO

(714) 670-2488

Source: RBB Bancorp

FAQ

What were RBB's earnings for the second quarter of 2022?

RBB Bancorp reported a net income of $15.5 million for Q2 2022.

How much did RBB's diluted earnings per share increase in Q2 2022?

The diluted earnings per share increased to $0.80 in Q2 2022.

What is the loan growth reported by RBB for Q2 2022?

Loans increased by $35.9 million, representing a 4.8% annualized growth.

Did RBB declare a dividend for Q2 2022?

Yes, RBB declared a quarterly dividend of $0.14 per share.

What is the status of noninterest income for RBB in Q2 2022?

Noninterest income was $3.4 million, a decrease of $749,000 from the previous year.