Skip to main content

RBB Bancorp Reports Third Quarter Earnings for 2020

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 September 30, 2020.

The Company reported net income of $8.5 million, or $0.43 diluted earnings per share, for the three months ended September 30, 2020, compared to net income of $6.5 million, or $0.33 diluted earnings per share, and $8.0 million, or $0.39 diluted earnings per share, for the three months ended June 30, 2020 and September 30, 2019, respectively.

“Our performance in the third quarter demonstrated the strength of our growing franchise as we generated strong earnings, increasing net interest margin, and asset and deposit growth,” said Mr. Alan Thian, Chairman, President and CEO of RBB Bancorp. “Effective management of our loan exposure in prior quarters – which resulted in lower concentrations of CRE and C&I loans relative to our peers – created an opportunity to selectively originate attractive loans in markets in which our competitors were forced to pull back. Strong deposit growth was accompanied by declines in corresponding costs as we benefited from ongoing efforts to improve our deposit franchise and a declining rate environment. Our asset quality remains solid and we remain well capitalized with ample access to liquidity. Loans modified under the CARES Act outstanding decreased 76% over the quarter to just 4% of loans outstanding.”

“Our board of directors approved the reinstatement of the stock repurchase program to the maximum of what the plan allows, which will further enhance shareholder value,” Mr. Thian concluded.

Key Performance Ratios

Net income of $8.5 million for the third quarter of 2020 produced an annualized return on average assets of 1.05%, an annualized return on average tangible common equity of 9.81%, and an annualized return on average equity of 8.06%. This compares to an annualized return on average assets of 0.83%, an annualized return on average tangible common equity of 7.77%, and an annualized return on average equity of 6.34% for the second quarter of 2020. The efficiency ratio for the third quarter of 2020 was 46.63%, compared to 54.40% for the prior quarter. The improvement in the efficiency ratio was primarily due to improved net interest income.

Net Interest Income and Net Interest Margin

Net interest income, before provision for loan losses, was $27.3 million for the third quarter of 2020, compared to $25.0 million for the second quarter of 2020. The $2.2 million increase was primarily attributable to a $71.8 million increase in average earning assets and a $37.4 million increase in average noninterest-bearing deposits, partially offset by a $27.0 million increase in average interest-bearing liabilities. Net interest income was also favorably impacted by a 17 basis point increase in the net interest margin. Accretion of purchase discounts from prior acquisitions contributed $634,000 to net interest income in the third quarter of 2020, compared to $818,000 in the second quarter of 2020.

Compared to the third quarter of 2019, net interest income, before provision for loan losses, increased $3.7 million from $23.5 million. The increase was primarily attributable to a $418.9 million increase in average earning assets and a $170.3 million increase in average noninterest-bearing deposits, partially offset by a $268.1 million increase in average interest-bearing liabilities. The net interest margin was unchanged at 3.59% between the third quarters of 2020 and 2019. The increases in average earning assets and total deposits were primarily due to the Pacific Global Bank (“PGB”) acquisition and increased loan and deposit originations.

Net interest margin was 3.59% for the third quarter of 2020, an increase from 3.42% in the second quarter of 2020. The increase was primarily attributable to a 51 basis point decrease in the cost of total deposits and a 48 basis point decrease in the cost of borrowings (FHLB advances, long-term debt and subordinated debentures), partially offset by a 2 basis point decrease in the yield on average earning assets. Loan discount accretion contributed 8 basis points to the net interest margin in the third quarter of 2020, compared to 14 basis points in the second quarter of 2020.

Noninterest Income

Noninterest income was $2.7 million for the third quarter of 2020, an increase of $519,000 from $2.2 million in the second quarter of 2020. The increase was driven by an increase in gain on loan sales of $679,000 as the Company sold $28.2 million more loans in the third quarter than in the prior quarter generally due to increased market activity following the initial impact of the COVID-19 pandemic. The Company expects gain on sale of loan income to return to prior levels in the fourth quarter.

The Company sold $17.7 million in FNMA qualified mortgage loans for a net gain of $537,000 and sold $11.8 million in non-qualified mortgage loans to private investors for a gain of $227,000 during the third quarter of 2020. This compared to $5.2 million in FNMA qualified mortgage loans for a net gain of $105,000 during the second quarter of 2020. The Company sold no SBA loans during the third quarter of 2020, compared to $1.4 million in SBA loans sold for a net gain of $70,000 during the second quarter of 2020.

Compared to the third quarter of 2019, noninterest income decreased by $73,000 from $2.8 million. The decrease was primarily attributable to a decrease of $281,000 in loan servicing fees.

Noninterest Expense

Noninterest expense for the third quarter of 2020 was $14.0 million, compared to $14.8 million for the second quarter of 2020. The $855,000 decrease was primarily attributable to a $424,000 decrease in salaries and employee benefits expenses, $214,000 decrease in merger expenses, $167,000 decrease in occupancy and equipment expenses, partially offset by a $318,000 increase in data processing expenses and a $128,000 increase in insurance and regulatory assessments. The decrease in salary and employee benefits was primarily attributable to severance paid in the second quarter for employees affected by restructuring related to the completion of the PGB acquisition.

RBB incurred $62,000 in merger and conversion expenses in the third quarter of 2020, of which $20,000 is a reversal of expenses related to the First American International Corp. acquisition and $82,000 to the PGB acquisition, a decrease of $214,000 from the prior quarter.

Noninterest expense increased from $13.8 million in the third quarter of 2019. The $192,000 increase was primarily due to a $226,000 increase in data processing expense, a $240,000 increase in legal and professional expense, and a $190,000 increase in insurance and regulatory assessments. These were partially offset by a $122,000 decrease salaries and employee benefit expense, a $117,000 decrease in marketing and business promotion expense.

Income Taxes

The effective tax rate was 29.8% for the third quarter of 2020, 30.8% for the second quarter of 2020, and 31.5% for the third quarter of 2019. The slightly lower effective tax rate in the third quarter of 2020 was a result of affordable housing tax credits.

Loan Portfolio

Loans held for investment, net of deferred fees and discounts, totaled $2.8 billion as of September 30, 2020, an increase of $160.5 million from June 30, 2020, and an increase of $629.0 million from September 30, 2019. The increase from the prior quarter was primarily due to organic loan growth. Single-family residential mortgages decreased by $10.9 million, net of payoffs, paydowns and loan sales, and was driven by loan sales. Commercial real estate loans increased by $74.9 million, construction and land development loans increased by $37.8 million, SBA loans increased by $7.1 million, and commercial and industrial loans increased by $50.4 million.

During the third quarter of 2020, single-family residential mortgage production was $82.6 million (mortgage loans held for investment and held for sale), payoffs and paydowns were $45.7 million, and single-family residential mortgage loan sales were $29.5 million. During the second quarter of 2020, single-family residential mortgage production was $117.6 million, payoffs and paydowns were $36.0 million, and loan sales were $1.4 million.

Mortgage loans held for sale were $23.9 million as of September 30, 2020, an increase of $8.4 million from $15.5 million at June 30, 2020 and a decrease of $235.4 million from $259.3 million as of September 30, 2019. The Company originated approximately $28.7 million in mortgage loans for sale for the third quarter of 2020, compared with $19.0 million during the prior quarter. In the third quarter, SBA loan production was $7.2 million. In the prior quarter, SBA loan production was $33.1 million, which consisted exclusively of PPP loans and total loan sales were $1.4 million.

Deposits

Deposits were $2.6 billion at September 30, 2020, an increase of $160.2 million from June 30, 2020, and an increase of $445.0 million from September 30, 2019, excluding brokered deposits. The increase in total deposits from the prior quarter was primarily attributable to organic deposit growth. Noninterest-bearing deposits increased by $66.5 million and interest-bearing non-maturity deposits increased by $53.7 million. Time deposits increased by $55.0 million, including a $15.0 million increase in brokered CDs. As of September 30, 2020, time deposits included $17.4 million in brokered CDs, as compared to $2.4 million as of June 30, 2020 and $102.6 million as of September 30, 2019.

Asset Quality

Nonperforming assets totaled $18.3 million, or 0.54% of total assets at September 30, 2020, compared to $17.5 million, or 0.56%, of total assets at June 30, 2020. The decrease in nonperforming assets was primarily due to an increase in total assets. Nonperforming assets consist of OREO, loans modified under troubled debt restructurings (“TDR”), non-accrual loans, and loans past due 90 days or more and still accruing interest.

Loans held-for-investment 30 to 89 days past due decreased by $2.2 million to $21.7 million at September 30, 2020 from $23.9 million at June 30, 2020.

In the third quarter of 2020, there were $47,000 in net charge-offs, down from $320,000 in the prior quarter.

The Company recorded a provision for credit losses of $3.9 million for the third quarter of 2020, an increase from $3.0 million in the prior quarter, primarily attributable to the higher loan balances and the impact of the COVID-19 pandemic.

The allowance for loan losses totaled $26.6 million, or 0.97% of loans held for investment at September 30, 2020, compared with $22.8 million, or 0.88%, of total loans at June 30, 2020.

The following table, as of September 30, 2020, is intended to summarize the Company’s overall loan exposure to major industries that are considered “at-risk” for business interruption due to the COVID-19 pandemic:

Industry / Property Type

Total Exposure ($000)

% of Total HFI Loans

General retail (excluding SBA)

$

235,153

8.5

%

Mixed use commercial

106,166

3.9

%

Commercial

62,678

2.3

%

Hospitality (excluding SBA)

27,666

1.0

%

Service stations (excluding SBA)

13,825

0.5

%

SBA loans

111,193

4.0

%

Shared National Credits (excluding airlines, cruise lines and hotels)

35,998

1.3

%

Airlines, cruise lines and hotels (SNC)

11,825

0.4

%

Restaurants (excluding SBA)

5,520

0.2

%

Total loans

$

610,024

22.1

%

In the above table, the general retail exposure now includes warehouse loans and the mixed use commercial exposure now includes residential mixed use loans.

As of September 30, 2020, borrowers representing 260 loans totaling $32.9 million, or 1.2% of the Company’s total loan portfolio, have funded under the SBA’s Paycheck Protection Program due to the COVID-19 pandemic.

Under the CARES Act SBA loan payments were made through September 30, 2020 by the SBA. We have contacted nearly all of our SBA borrowers and the following table details new deferments of SBA loans:

Requested SBA Loan Deferments

Number

Principal Amount ($000)

Principal Amount Average LTV%

Guaranteed Amount ($000)

Unguaranteed Amount ($000)

Unguaranteed Amount to Total SBA Loans

Hospitality

9

$

38,965

75

%

$

29,224

$

9,741

8.8

%

General retail

5

5,051

51

%

3,794

1,257

1.1

%

Restaurant

2

2,681

81

%

2,016

665

0.6

%

Transportation

3

1,042

30

%

782

261

0.2

%

Fitness

1

101

N/A

86

15

0.0

%

Mixed use commercial

1

45

N/A

33

11

0.0

%

21

$

47,885

$

35,935

$

11,950

10.7

%

We have not been able to contact four borrowers listed in the above table to determine if they need a deferment under SBA guidelines. The unguaranteed balance of those four loans is $27,665. All four have not made their payments as of October 15, 2020. There are two loans with an unguaranteed balance of $54,766 that will not qualify for a SBA deferment due to delinquency or deferment issues prior to COVID-19. Those two loans are not listed above and the borrowers have not made their payments as of October 15, 2020.

The following table provides details regarding the Company's COVID-19 loan deferral activity through October 21, 2020.

As of June 30, 2020

As of October 23, 2020

Deferred Loans

Loans Resuming Payments

Loans Deferred

Number

Principal Amount ($000)

% of Total HFI Loans

Number

Principal Amount ($000)

Number

Principal Amount ($000)

General retail (excluding SBA)

34

$

94,251

3.4

%

31

$

67,411

3

$

26,840

Mixed use commercial

38

58,841

2.1

%

34

48,294

4

10,547

Hospitality (excluding SBA)

5

25,343

0.9

%

3

12,414

2

12,929

Restaurants (excluding SBA)

11

4,186

0.2

%

10

4,186

1

12

Multifamily

6

9,086

0.3

%

6

9,086

Commercial, office and other (1)

6

22,983

0.8

%

1

3,102

5

19,881

SFR mortgage loans - Western region

183

118,484

4.3

%

145

88,880

38

29,604

SFR mortgage loans - Eastern region

203

85,935

3.1

%

194

82,699

10

4,106

SFR mortgage loans - Chicago metropolitan

84

14,824

0.5

%

83

14,575

4

719

Total

570

$

433,933

15.7

%

507

$

330,647

67

$

104,638

(1) Loan with a principal amount of $17 million is on a principal deferment only.

The Company does not have any shared national credits or loans backed by service stations, airlines or cruise lines on deferral as of October 20, 2020.

Properties

On March 31, 2020, we closed the Grand Street branch in New York City as the lease for this branch expired in April 2020. Branch operations and staff were transferred to the Bowery Street branch.

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

Corporate Overview

RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. The Company has total assets of $3.4 billion. Its wholly-owned subsidiary, Royal Business Bank is a full service commercial bank, which provides business banking services to the Chinese-American communities in Los Angeles County, Orange County and Ventura County in California, in Las Vegas, Nevada, in Brooklyn, Queens, and Manhattan in New York, and three branches in the Chicago neighborhoods of Chinatown and Bridgeport. Bank services include remote deposit, E-banking, mobile banking, commercial and investor real estate loans, business loans and lines of credit, commercial and industrial loans, SBA 7A and 504 loans, 1-4 single family residential loans, automobile lending, trade finance, a full range of depository account products and wealth management services. The Bank has nine branches in Los Angeles County, two branches in Ventura County, one branch in Irvine, California, one branch in Las Vegas, Nevada, six branches and one loan operation center in Brooklyn, Queens and Manhattan in New York, and three branches in Chicago, Illinois. The Company's administrative and lending center is located at 1055 Wilshire Blvd., Los Angeles, California 90017, and its finance and operations center is located at 7025 Orangethorpe Avenue, Buena Park, California 90621. The Company's website address is www.royalbusinessbankusa.com.

Conference Call

Management will hold a conference call at 11:00 a.m. Pacific time/2:00 p.m. Eastern time tomorrow, October 27, 2020, to discuss the Company’s third quarter 2020 financial results.

To listen to the conference call, please dial 1-833-519-1355 or 1-918-922-6505, passcode 8574857. A replay of the call will be made available at 1-800-585-8367 or 1-404-537-3406, passcode 8574857, approximately one hour after the conclusion of the call and will remain available through November 3, 2020.

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

Disclosure

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

Safe Harbor

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

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, except for December 31, 2019)

(Dollars in thousands)

 

September
30

June
30

March
31

December
31

September
30

2020

2020

2020

2019

2019

Assets

Cash and due from banks

$

121,630

$

94,844

$

285,667

$

114,763

$

136,076

Federal funds sold and other cash equivalents

57,000

57,000

75,300

67,000

47,000

Total cash and cash equivalents

178,630

151,844

360,967

181,763

183,076

Interest-bearing deposits in other financial institutions

600

600

600

600

949

Investment securities available for sale

214,662

185,756

126,294

126,069

72,923

Investment securities held to maturity

7,569

7,615

7,825

8,332

8,724

Mortgage loans held for sale

23,886

15,479

52,096

108,194

259,339

Loans held for investment

2,755,153

2,594,620

2,399,982

2,196,934

2,126,145

Allowance for loan losses

(26,634

)

(22,820

)

(20,130

)

(18,816

)

(19,386

)

Net loans held for investment

2,728,519

2,571,800

2,379,852

2,178,118

2,106,759

Premises and equipment, net

24,237

23,965

24,472

16,813

16,871

Federal Home Loan Bank (FHLB) stock

15,641

15,641

15,630

15,000

15,000

Net deferred tax assets

1,080

2,326

4,378

Cash surrender value of life insurance

34,930

34,736

34,544

34,353

34,158

Goodwill

69,243

69,209

69,790

58,563

58,383

Servicing assets

14,724

15,595

16,826

17,083

17,180

Core deposit intangibles

5,519

5,876

6,234

6,100

6,444

Accrued interest and other assets

40,336

38,065

33,523

35,221

36,118

Total assets

$

3,359,576

$

3,136,181

$

3,128,653

$

2,788,535

$

2,820,302

Liabilities and shareholders' equity

Deposits:

Noninterest-bearing demand

$

642,332

$

574,553

$

504,324

$

458,763

$

446,141

Savings, NOW and money market accounts

654,378

601,941

571,870

537,490

493,965

Time deposits

1,315,038

1,260,026

1,359,787

1,252,685

1,311,817

Total deposits

2,611,748

2,436,520

2,435,981

2,248,938

2,251,923

Net deferred tax liabilities

656

312

FHLB advances

190,000

150,000

150,000

35,000

Long-term debt, net of debt issuance costs

104,305

104,220

104,135

104,049

103,964

Subordinated debentures

14,229

14,174

14,120

9,673

9,632

Accrued interest and other liabilities

17,878

16,586

16,112

18,185

20,942

Total liabilities

2,938,160

2,722,156

2,720,660

2,380,845

2,421,461

Shareholders' equity:

Shareholder's equity

420,329

412,827

407,332

407,379

398,438

Non-controlling interest

72

72

72

72

72

Accumulated other comprehensive income (loss) - Net of tax

1,015

1,126

589

239

331

Total shareholders' equity

421,416

414,025

407,993

407,690

398,841

Total liabilities and stockholders’ equity

$

3,359,576

$

3,136,181

$

3,128,653

$

2,788,535

$

2,820,302

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share amounts)

 

For the three months ended

September 30,
2020

June 30,
2020

September 30,
2019

Interest and dividend income:

Interest and fees on loans

$

34,153

$

32,633

$

32,902

Interest on interest-bearing deposits

61

74

429

Interest on investment securities

621

887

703

Dividend income on FHLB stock

190

187

238

Interest on federal funds sold and other

100

322

397

Total interest income

35,125

34,103

34,669

Interest expense:

Interest on savings deposits, NOW and money market accounts

779

782

1,117

Interest on time deposits

4,746

5,933

8,038

Interest on subordinated debentures and long term debt

1,905

1,915

1,921

Interest on other borrowed funds

444

439

81

Total interest expense

7,874

9,069

11,157

Net interest income before provision for loan losses

27,251

25,034

23,512

Provision for loan losses

3,861

3,009

824

Net interest income after provision for loan losses

23,390

22,025

22,688

Noninterest income:

Service charges, fees and other

1,143

1,065

934

Gain on sale of loans

760

81

813

Loan servicing fees, net of amortization

546

708

827

Recoveries on loans acquired in business combinations

32

5

12

Increase in cash surrender value of life insurance

194

191

195

Gain on sale of securities

52

158

7

Gain on sale of other real estate owned

11

Total noninterest income

2,727

2,208

2,799

Noninterest expense:

Salaries and employee benefits

7,599

8,103

7,801

Occupancy and equipment expenses

2,360

2,527

2,434

Data processing

1,200

882

974

Legal and professional

675

670

435

Office expenses

271

337

335

Marketing and business promotion

131

111

248

Insurance and regulatory assessments

363

234

172

Core deposit premium

357

357

384

OREO expenses/(income)

3

14

(1

)

Merger and conversion expenses

62

276

154

Other expenses

957

1,308

850

Total noninterest expense

13,978

14,819

13,786

Income before income taxes

12,139

9,414

11,701

Income tax expense

3,619

2,901

3,689

Net income

$

8,520

$

6,513

$

8,012

Net income per share

Basic

$

0.43

$

0.33

$

0.40

Diluted

$

0.43

$

0.33

$

0.39

Cash Dividends declared per common share

$

0.06

$

0.06

$

0.10

Weighted-average common shares outstanding

Basic

19,717,568

19,710,330

20,067,847

Diluted

19,804,892

19,806,304

20,425,966

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share amounts)

 

For the nine months ended

September 30,
2020

September 30,
2019

Interest and dividend income:

Interest and fees on loans

$

99,062

$

102,981

Interest on interest-earning deposits

586

1,412

Interest on investment securities

2,329

1,976

Dividend income on FHLB stock

379

815

Interest on federal funds sold and other

900

634

Total interest income

103,256

107,818

Interest expense:

Interest on savings deposits, NOW and money market accounts

2,804

3,649

Interest on time deposits

17,765

21,788

Interest on subordinated debentures and long term debt

5,776

5,783

Interest on other borrowed funds

1,033

2,857

Total interest expense

27,378

34,077

Net interest income

75,878

73,741

Provision for loan losses

8,815

1,731

Net interest income after provision for loans losses

67,063

72,010

Noninterest income:

Service charges, fees and other

3,287

2,976

Gain on sale of loans

3,552

6,131

Loan servicing fees, net of amortization

1,846

2,566

Recoveries on loans acquired in business combinations

79

73

Unrealized gain on equity investments

147

Increase in cash surrender value of life insurance

576

580

Gain on sale of securities

210

7

Gain on sale of fixed assets

6

Loss on sale of other real estate owned

11

Total noninterest income

9,550

12,497

Noninterest expense:

Salaries and employee benefits

25,207

25,088

Occupancy and equipment expenses

7,291

7,360

Data processing

3,224

3,202

Legal and professional

1,949

1,516

Office expenses

931

965

Marketing and business promotion

456

926

Insurance and regulatory assessments

774

754

Amortization of intangibles

1,071

1,157

OREO expenses

31

161

Merger expenses

741

240

Other expenses

3,385

2,641

Total noninterest expense

45,060

44,010

Income before income taxes

31,553

40,497

Income tax expense

9,772

11,963

Net income

$

21,781

$

28,534

Net income per share

Basic

$

1.10

$

1.42

Diluted

$

1.09

$

1.40

Cash Dividends declared per common share

$

0.24

$

0.30

Weighted-average common shares outstanding

Basic

19,799,617

20,063,479

Diluted

19,958,612

20,435,867

RBB BANCORP AND SUBSIDIARIES

AVERAGE BALANCE SHEET AND NET INTEREST INCOME

(Unaudited)

(Dollars in thousands, except per share amounts)

 

For the three months ended

September 30, 2020

June 30, 2020

September 30, 2019

Average

Interest

Yield/

Average

Interest

Yield/

Average

Interest

Yield/

(tax-equivalent basis, dollars in thousands)

Balance

& Fees

Rate

Balance

& Fees

Rate

Balance

& Fees

Rate

Earning assets:

Federal funds sold, cash equivalents & other (1)

$

179,521

$

351

0.78

%

$

231,943

$

583

1.01

%

$

144,131

$

1,064

2.93

%

Securities

Available for sale

168,151

558

1.32

%

171,298

823

1.93

%

92,292

631

2.71

%

Held to maturity (2)

7,604

71

3.71

%

7,661

72

3.78

%

8,730

81

3.68

%

Mortgage loans held for sale

19,848

171

3.43

%

25,130

303

4.85

%

253,492

3,050

4.77

%

Loans held for investment: (3)

Real estate

2,266,752

29,616

5.20

%

2,147,646

28,216

5.28

%

1,749,371

23,963

5.43

%

Commercial

377,789

4,366

4.60

%

364,189

4,114

4.54

%

352,795

5,889

6.62

%

Total loans

2,644,541

33,982

5.11

%

2,511,835

32,330

5.18

%

2,102,166

29,852

5.63

%

Total earning assets

3,019,665

$

35,133

4.63

%

2,947,867

$

34,111

4.65

%

2,600,811

$

34,678

5.29

%

Noninterest-earning assets

204,638

206,833

169,691

Total assets

$

3,224,303

$

3,154,700

$

2,770,502

Interest-bearing liabilities

NOW and money market deposits

$

514,271

$

748

0.58

%

$

462,027

$

751

0.65

%

$

364,127

$

1,070

1.17

%

Savings deposits

126,635

31

0.10

%

123,868

31

0.10

%

95,725

47

0.19

%

Time deposits

1,284,351

4,746

1.47

%

1,314,232

5,933

1.82

%

1,340,751

8,038

2.38

%

Total interest-bearing deposits

1,925,257

5,525

1.14

%

1,900,127

6,715

1.42

%

1,800,603

9,155

2.02

%

FHLB advances

151,739

444

1.16

%

150,000

439

1.18

%

13,261

81

2.42

%

Long-term debt

104,252

1,748

6.67

%

104,168

1,747

6.75

%

103,912

1,748

6.67

%

Subordinated debentures

14,195

157

4.40

%

14,141

168

4.78

%

9,606

173

7.15

%

Total interest-bearing liabilities

2,195,443

7,874

1.43

%

2,168,436

9,069

1.68

%

1,927,382

11,157

2.30

%

Noninterest-bearing liabilities

Noninterest-bearing deposits

595,264

557,903

424,908

Other noninterest-bearing liabilities

13,270

15,509

20,490

Total noninterest-bearing liabilities

608,534

573,412

445,398

Shareholders' equity

420,326

412,852

397,722

Total liabilities and shareholders' equity

$

3,224,303

$

3,154,700

$

2,770,502

Net interest income / interest rate spreads

$

27,259

3.20

%

$

25,042

2.97

%

$

23,521

2.99

%

Net interest margin

3.59

%

3.42

%

3.59

%


(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 nine months ended

September 30, 2020

September 30, 2019

Average

Interest

Yield /

Average

Interest

Yield /

(tax-equivalent basis, dollars in thousands)

Balance

& Fees

Rate

Balance

& Fees

Rate

Earning assets:

Federal funds sold, cash equivalents & other (1)

$

220,195

$

1,865

1.13

%

$

122,563

$

2,861

3.12

%

Securities

Available for sale

159,373

2,136

1.79

%

82,868

1,749

2.82

%

Held to maturity (2)

7,760

218

3.75

%

9,159

255

3.72

%

Mortgage loans held for sale

40,936

1,454

4.74

%

352,110

12,785

4.85

%

Loans held for investment: (3)

Real estate

2,141,022

84,261

5.26

%

1,759,253

72,842

5.54

%

Commercial

359,907

13,347

4.95

%

350,823

17,354

6.61

%

Total loans

2,500,929

97,608

5.21

%

2,110,076

90,196

5.72

%

Total earning assets

2,929,193

$

103,281

4.71

%

2,676,776

$

107,846

5.39

%

Noninterest-earning assets

208,000

167,887

Total assets

$

3,137,193

$

2,844,663

Interest-bearing liabilities

NOW and money market deposits

$

484,157

$

2,687

0.74

%

$

388,298

$

3,500

1.21

%

Savings deposits

121,836

117

0.13

%

97,959

149

0.20

%

Time deposits

1,318,947

17,765

1.80

%

1,273,604

21,788

2.29

%

Total interest-bearing deposits

1,924,940

20,569

1.43

%

1,759,861

25,437

1.93

%

FHLB advances

118,029

1,033

1.17

%

148,101

2,857

2.58

%

Long-term debt

104,168

5,243

6.72

%

103,827

5,243

6.75

%

Subordinated debentures

14,221

533

5.01

%

9,565

540

7.55

%

Total interest-bearing liabilities

2,161,358

$

27,378

1.69

%

2,021,354

$

34,077

2.25

%

Noninterest-bearing liabilities

Noninterest-bearing deposits

546,419

412,845

Other noninterest-bearing liabilities

14,606

19,888

Total noninterest-bearing liabilities

561,025

432,733

Shareholders' equity

414,810

390,576

Total liabilities and shareholders' equity

$

3,137,193

$

2,844,663

Net interest income / interest rate spreads

$

75,903

3.02

%

$

73,769

3.13

%

Net interest margin

3.46

%

3.68

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

 

For the three months ended

September 30

June 30,

September 30

2020

2020

2019

Per share data (common stock)

Earnings

Basic

$

0.43

$

0.33

$

0.40

Diluted

$

0.43

$

0.33

$

0.39

Dividends declared

$

0.06

$

0.06

$

0.10

Basic, excluding merger and conversion expense

$

0.43

$

0.34

$

0.40

Diluted, excluding merger and conversion expense

$

0.43

$

0.34

$

0.40

Book value

$

21.35

$

20.97

$

19.91

Tangible book value

$

17.56

$

17.17

$

16.67

Weighted average shares outstanding

Basic

19,717,568

19,710,330

20,067,847

Diluted

19,804,892

19,806,304

20,425,966

Shares outstanding at period end

19,739,280

19,739,280

20,030,866

Performance ratios

Return on average assets, annualized

1.05

%

0.83

%

1.15

%

Return on average shareholders' equity, annualized

8.06

%

6.34

%

7.99

%

Return on average tangible common equity, annualized

9.81

%

7.77

%

9.56

%

Noninterest income to average assets, annualized

0.34

%

0.28

%

0.40

%

Noninterest expense to average assets, annualized

1.72

%

1.89

%

1.97

%

Yield on average earning assets

4.63

%

4.65

%

5.29

%

Cost of average total deposits

0.87

%

1.10

%

1.63

%

Cost of average interest-bearing deposits

1.14

%

1.42

%

2.02

%

Cost of average interest-bearing liabilities

1.43

%

1.68

%

2.30

%

Accretion on loans to average earning assets

0.08

%

0.14

%

0.10

%

Net interest spread

3.20

%

2.97

%

2.99

%

Net interest margin

3.59

%

3.42

%

3.59

%

Efficiency ratio

46.63

%

54.40

%

52.40

%

Common stock dividend payout ratio

13.95

%

18.18

%

25.00

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

 

For the nine months ended September 30,

2020

2019

Per share data (common stock)

Earnings

Basic

$

1.10

$

1.42

Diluted

$

1.09

$

1.40

Basic, excluding merger expense

$

1.13

$

1.44

Diluted, excluding merger expense

$

1.12

$

1.41

Dividends declared

$

0.24

$

0.30

Book value

$

21.35

$

19.91

Tangible book value

$

17.56

$

16.67

Weighted average shares outstanding

Basic

19,799,617

20,063,479

Diluted

19,958,612

20,435,867

Shares outstanding at period end

19,739,280

20,030,866

Performance ratios

Return on average assets, annualized

0.93

%

1.34

%

Return on average shareholders' equity, annualized

7.01

%

9.77

%

Return on average tangible common equity, annualized

8.59

%

11.73

%

Noninterest income to average assets, annualized

0.41

%

0.59

%

Noninterest expense to average assets, annualized

1.92

%

2.07

%

Yield on average earning assets

4.71

%

5.39

%

Cost of average deposits

1.11

%

1.57

%

Cost of average interest-bearing deposits

1.43

%

1.93

%

Cost of average interest-bearing liabilities

1.69

%

2.25

%

Accretion on loans to average earning assets

0.10

%

0.12

%

Net interest spread

3.02

%

3.13

%

Net interest margin

3.46

%

3.68

%

Efficiency ratio

52.75

%

51.03

%

Common stock dividend payout ratio

21.82

%

21.13

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

 

As of

September 30,

June 30,

September 30,

2020

2020

2019

Loan to deposit ratio

105.49

%

106.49

%

94.41

%

Core deposits / total deposits

99.34

%

76.84

%

68.32

%

Net non-core funding dependence ratio

14.47

%

13.39

%

25.41

%

Credit Quality Data:

Loans 30-89 days past due

$

21,735

$

23,872

$

4,578

Loans 30-89 days past due to total loans

0.79

%

0.92

%

0.22

%

Nonperforming loans

$

17,975

$

17,217

$

9,628

Nonperforming loans to total loans

0.65

%

0.66

%

0.39

%

Nonperforming assets

$

18,268

$

17,510

$

10,895

Nonperforming assets to total assets

0.54

%

0.56

%

0.39

%

Allowance for loan losses to total loans

0.97

%

0.88

%

0.91

%

Allowance for loan losses to nonperforming loans

148.17

%

132.54

%

201.35

%

Net charge-offs to average loans (for the quarter-to-date period)

0.01

%

0.05

%

0.00

%

Regulatory and other capital ratios—Company

Tangible common equity to tangible assets

10.55

%

11.07

%

12.12

%

Tier 1 leverage ratio

11.47

%

11.48

%

12.74

%

Tier 1 common capital to risk-weighted assets

14.11

%

14.87

%

16.95

%

Tier 1 capital to risk-weighted assets

14.69

%

15.49

%

17.44

%

Total capital to risk-weighted assets

20.05

%

21.10

%

23.71

%

Regulatory capital ratios—Bank only

Tier 1 leverage ratio

14.16

%

14.14

%

14.98

%

Tier 1 common capital to risk-weighted assets

18.16

%

19.09

%

20.53

%

Tier 1 capital to risk-weighted assets

18.16

%

19.09

%

20.53

%

Total capital to risk-weighted assets

19.29

%

20.13

%

21.54

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

 

3rd
Quarter

2nd
Quarter

1st
Quarter

4th
Quarter

3rd
Quarter

Quarterly Consolidated Statements of Earnings

2020

2020

2020

2019

2019

Interest income

Loans, including fees

$

34,153

$

32,633

$

32,276

$

32,178

$

32,902

Investment securities and other

972

1,470

1,752

1,729

1,767

Total interest income

35,125

34,103

34,028

33,907

34,669

Interest expense

Deposits

5,525

6,715

8,329

8,796

9,155

Interest on subordinated debentures and other

1,905

1,915

1,956

1,915

1,921

Other borrowings

444

439

150

73

81

Total interest expense

7,874

9,069

10,435

10,784

11,157

Net interest income before provision for loan losses

27,251

25,034

23,593

23,123

23,512

Provision for loan losses

3,861

3,009

1,945

659

824

Net interest income after provision for loan losses

23,390

22,025

21,648

22,464

22,688

Noninterest income

2,727

2,208

4,615

5,823

2,799

Noninterest expense

13,978

14,819

16,263

13,463

13,786

Earnings before income taxes

12,139

9,414

10,000

14,824

11,701

Income taxes

3,619

2,901

3,252

4,149

3,689

Net income

$

8,520

$

6,513

$

6,748

$

10,675

$

8,012

Net income per common share - basic

$

0.43

$

0.33

$

0.34

$

0.53

$

0.40

Net income per common share - diluted

$

0.43

$

0.33

$

0.33

$

0.52

$

0.39

Cash dividends declared per common share

$

0.06

$

0.06

$

0.12

$

0.10

$

0.10

Cash dividends declared on common shares

$

3,592

$

1,184

$

2,407

$

2,003

$

2,016

Yield on average assets, annualized

1.05

%

0.83

%

0.90

%

1.51

%

1.15

%

Yield on average earning assets

4.63

%

4.60

%

4.86

%

5.09

%

5.29

%

Cost of average deposits

0.87

%

1.09

%

1.38

%

1.55

%

1.63

%

Cost of average interest-bearing deposits

1.14

%

1.41

%

1.72

%

1.93

%

2.02

%

Cost of average interest-bearing liabilities

1.43

%

1.66

%

1.98

%

2.21

%

2.30

%

Accretion on loans to average earning assets

0.08

%

0.13

%

0.10

%

0.10

%

0.10

%

Net interest margin

3.59

%

3.38

%

3.37

%

3.47

%

3.59

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited, except for December 31, 2019)

(Dollars in thousands, except per share amounts)

 

Loan Portfolio Detail

As of September 30,
2020

As of June 30,
2020

As of March 31,
2020

As of December 31,
2019

As of September 30,
2019

(dollars in thousands)

$

%

$

%

$

%

$

%

$

%

Loans:

Commercial and industrial

$

317,891

11.5

$

267,481

10.3

$

275,602

11.5

$

274,586

12.5

$

276,478

13.0

SBA

111,193

4.0

104,069

4.0

77,566

3.2

74,985

3.4

70,978

3.3

Construction and land development

183,569

6.7

145,754

5.6

120,115

5.0

96,020

4.4

101,649

4.8

Commercial real estate (1)

975,187

35.4

900,302

34.7

854,580

35.6

793,268

36.1

787,927

37.1

Single-family residential mortgages

1,163,982

42.2

1,174,927

45.3

1,070,649

44.6

957,254

43.6

888,577

41.8

Other loans

3,331

0.1

2,087

0.1

1,470

0.1

821

0.0

536

0.0

Total loans (2)

$

2,755,153

99.9

$

2,594,620

100.0

$

2,399,982

100.0

$

2,196,934

100.0

$

2,126,145

100.0

Allowance for loan losses

(26,634

)

(22,820

)

(20,130

)

(18,816

)

(19,386

)

Total loans, net

$

2,728,519

$

2,571,800

$

2,379,852

$

2,178,118

$

2,106,759


(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

Nine Months Ended

Change in Allowance for Loan Losses

September 30,

September 30,

(dollars in thousands)

2020

2019

2020

2019

Beginning balance

$

22,820

$

18,561

$

18,816

$

17,577

Additions to the allowance charged to expense

3,861

824

8,815

1,731

Net (charge-offs) recoveries on loans

(47

)

1

(997

)

78

Ending balance

$

26,634

$

19,386

$

26,634

$

19,386

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 September 30, 2020 and 2019.

September 30,

(dollars in thousands, except per share data)

2020

2019

Tangible common equity:

Total shareholders' equity

$

421,416

$

398,841

Adjustments

Goodwill

(69,243

)

(58,383

)

Core deposit intangible

(5,519

)

(6,444

)

Tangible common equity

$

346,654

$

334,014

Tangible assets:

Total assets-GAAP

$

3,359,576

$

2,820,302

Adjustments

Goodwill

(69,243

)

(58,383

)

Core deposit intangible

(5,519

)

(6,444

)

Tangible assets

$

3,284,814

$

2,755,475

Common shares outstanding

19,739,280

20,030,866

Tangible common equity to tangible assets ratio

10.55

%

12.12

%

Book value per share

$

21.35

$

19.91

Tangible book value per share

$

17.56

$

16.67

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

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

For the three months ended

For the nine months ended

September 30,
2020

June 30,
2020

September 30,
2019

September 30,
2020

September 30,
2019

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

Net income after tax

$

8,520

$

6,513

$

8,012

$

21,781

$

28,534

Merger and conversion expense

62

276

100

741

282

Tax on merger and conversion expense

(18

)

(85

)

(32

)

(229

)

(83

)

Net adjustment

44

191

68

512

199

Adjusted net income after tax

$

8,564

$

6,704

$

8,080

$

22,293

$

28,733

Weighted average shares outstanding

Basic

19,717,568

19,710,330

20,067,847

19,799,617

20,063,479

Diluted

19,804,892

19,806,304

20,425,966

19,958,612

20,435,867

Adjusted Earnings Per Share

Basic, excluding merger and conversion expense

$

0.43

$

0.34

$

0.40

$

1.13

$

1.44

Diluted, excluding merger and conversion expense

$

0.43

$

0.34

$

0.40

$

1.12

$

1.41

Efficiency Ratio (non-GAAP)

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

For the three months ended

For the nine months ended

September 30,
2020

June 30,
2020

September 30,
2019

September 30,
2020

September 30,
2019

Efficiency Ratio (non-GAAP)

Noninterest expense

$

13,978

$

14,819

$

13,786

$

45,060

$

44,010

Net interest income

27,251

25,034

23,512

75,878

73,741

Noninterest income

2,727

2,208

2,799

9,550

12,497

Net interest income and non-interest income

$

29,978

$

27,242

$

26,311

$

85,428

$

86,238

Efficiency ratio

46.63

%

54.40

%

52.40

%

52.75

%

51.03

%

Contacts:

Yee Phong (Alan) Thian
Chairman, President and CEO
(626) 307-7559

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.