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RBB Bancorp Reports Third Quarter Earnings for 2021

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, 2021.

The Company reported record net income of $15.4 million, or $0.77 diluted earnings per share, for the three months ended September 30, 2021, compared to net income of $13.4 million, or $0.67 diluted earnings per share, and $8.5 million, or $0.43 diluted earnings per share, for the three months ended June 30, 2021 and September 30, 2020, respectively. Third quarter results included the impact of a $1.8 million CDFI grant that increased diluted earnings per share by approximately $0.07.

"Our differentiated business model continued to outperform in the third quarter as we reported record diluted earnings per share of $0.77 and 20% annualized loan growth,” said Alan Thian, President and CEO of RBB Bancorp. “In addition to our financial performance and growth, continued pricing discipline and focus on our cost of deposits has kept our net interest margin stable in the first 9 months of 2021 versus the same period in 2020. We are also pleased that our efforts to support the communities in which we operate were recognized by the US Treasury which awarded Royal Business Bank with a $1.8 million CDFI grant to facilitate a rapid response to the economic impacts of the COVID-19 pandemic in distressed and underserved communities.”

"I am very pleased with Royal Business Bank’s record financial performance in the third quarter," said Dr. James Kao, Chairman of RBB Bancorp. “And I am very proud that RBB’s success in community development has been recognized with a CDFI grant and with the appointment of Alan to the Community Development Advisory Board.”

Key Performance Ratios

Net income of $15.4 million for the third quarter of 2021 produced an annualized return on average assets ("ROA") of 1.54%, an annualized return on average tangible common shareholders' equity ("ROTCE") of 16.17%, and an annualized return on average shareholders' equity ("ROE") of 13.52%. This compares to an annualized return on average assets of 1.39%, an annualized return on average tangible common shareholders' equity of 14.57%, and an annualized return on average shareholders' equity of 12.13% for the second quarter of 2021. Third quarter results included the impact of a $1.8 million CDFI grant that increased ROA by 0.03%, ROTCE by 0.35%, and ROE by 0.29%. The efficiency ratio for the third quarter of 2021 was 38.87%, compared to 42.89% for the prior quarter.

Net Interest Income and Net Interest Margin

Net interest income, before provision for loan losses, was $31.6 million for the third quarter of 2021, compared to $30.1 million for the second quarter of 2021. The $1.5 million increase was primarily attributable to higher interest income due to a $92.7 million increase in average earning assets, partially offset by an $11.3 million increase in average interest-bearing liabilities. Accretion of purchase discounts from prior acquisitions contributed $289,000 to net interest income in the third quarter of 2021, compared to $183,000 in the second quarter of 2021.

Compared to the third quarter of 2020, net interest income, before provision for loan losses, increased $4.3 million from $27.3 million. The increase was primarily attributable to a $691.5 million increase in average earning assets, partially offset by a $262.0 million increase in average interest-bearing liabilities. The increases in average earning assets and total deposits were primarily due to increased loan and deposit originations.

Net interest margin was 3.38% for the third quarter of 2021, an increase of 5 basis points from 3.33% in the second quarter of 2021. The increase was primarily attributable to a $89.9 million increase in average non-interest bearing deposits, combined with an 8 basis point decrease in the cost of average interest-bearing liabilities, which was partially offset by a 2 basis point decrease in the yield on average earning assets. Loan discount accretion contributed 3 basis points to the net interest margin in the third quarter of 2021, compared to 2 basis points in the second quarter of 2021.

Noninterest Income

Noninterest income was $5.5 million for the third quarter of 2021, an increase of $1.4 million from $4.2 million in the second quarter of 2021. The increase was primarily driven by a $1.8 million grant under the US Treasury’s Rapid Response Program, partially offset by a $782,000 decrease in gain on sale of loans during the quarter. The Company sold $35.7 million fewer loans in the third quarter than in the prior quarter primarily due to selling fewer FNMA loans.

The Company sold $36.6 million in FNMA qualified mortgage loans for a net gain of $1.3 million and sold no non-qualified mortgage loans during the third quarter of 2021. This compared to $58.9 million in FNMA qualified mortgage loans sold for a net gain of $1.4 million and $13.4 million in non-qualified mortgage loans to private investors for a gain of $389,000 during the second quarter of 2021. The Company sold $5.9 million in SBA loans during the third quarter of 2021 for a net gain of $553,000, compared to $5.9 million SBA loans sold for a net gain of $747,000 during the second quarter of 2021.

Compared to the third quarter of 2020, noninterest income increased by $2.8 million from $2.7 million. The increase was primarily attributable to an increase of $1.8 million grant under the US Treasury’s Rapid Response Program and an increase of $1.0 million in gain on loan sales.

Noninterest Expense

Noninterest expense for the third quarter of 2021 was $14.4 million, compared to $14.7 million for the second quarter of 2021. The $260,000 decrease was primarily attributable to a reversal of impairment write-down on mortgage servicing assets of $416,000 and a $266,000 decrease in data processing expense, partially offset by a $210,000 increase in legal and professional expenses and a $93,000 increase in marketing and business promotion expense.

Noninterest expense increased from $14.0 million in the third quarter of 2020. The $444,000 increase was primarily due to a $1.2 million increase in salaries and employee benefits and a $193,000 increase in marketing and business promotion expenses. These were partially offset by a $475,000 decrease in mortgage servicing assets impairment write-down, a $235,000 decrease in data processing expenses and a $171,000 decrease in occupancy and equipment expenses.

Income Taxes

The effective tax rate was 28.5% for the third quarter of 2021, 29.3% for the second quarter of 2021, and 29.8% for the third quarter of 2020. The Company recognized a tax benefit from stock option exercises of $534,000, $68,000 and zero for the third quarter of 2021, the second quarter of 2021, and the third quarter of 2020, respectively.

CDFI Rapid Response Program

In mid-June, 2021 the Bank was awarded a $1.8 million grant under the US Treasury’s Rapid Response Program to facilitate a rapid response to the economic impacts of the COVID-19 pandemic in distressed and underserved communities. The award was received in August 2021 after finalization of the contract between the Bank and the US Treasury which included various performance goals and measures that specify the use of the funds to provide affordable housing. The funds were disbursed for two loans that help provide affordable housing to underserved communities.

Loan Portfolio

Loans held for investment, net of deferred fees and discounts, totaled $2.84 billion as of September 30, 2021, an increase of $131.1 million from June 30, 2021, and an increase of $85.2 million from September 30, 2020. The increase from the prior quarter was primarily due to an increase in commercial real estate and construction & land development loans. Single-family residential mortgages decreased by $9.5 million net of payoffs, paydowns and loan sales. Commercial real estate loans increased by $103.2 million, construction and land development loans increased by $34.8 million, SBA loans decreased by $9.8 million (which included a $6.2 million decrease in PPP loans), commercial and industrial loans decreased by $693,000 and other loans increased by $13.2 million.

During the third quarter of 2021, single-family residential mortgage production was $112.0 million, payoffs and paydowns were $79.0 million, and single-family residential mortgage loan sales were $36.6 million. During the second quarter of 2021, single-family residential mortgage production was $107.9 million, payoffs and paydowns were $121.0 million, and loan sales were $72.3 million.

Mortgage loans held for sale were $15.2 million as of September 30, 2021, an increase of $5.9 million from $9.2 million at June 30, 2021 and a decrease of $8.7 million from $23.9 million as of September 30, 2020. The Company originated approximately $12.2 million in FNMA mortgage loans for sale for the third quarter of 2021, compared with $29.2 million during the prior quarter.

In the third quarter of 2021, SBA loan production was $22.7 million and total SBA loan sales were $5.9 million.

Deposits and Borrowings

Deposits were $3.0 billion at September 30, 2021, a decrease of $102.1 million from June 30, 2021, and an increase of $356.1 million from September 30, 2020, including brokered deposits. The decrease in total deposits from the prior quarter was primarily attributable to a decrease in noninterest-bearing demand deposits and time deposits. During the third quarter of 2021, noninterest-bearing deposits decreased by $115.3 million, interest-bearing non-maturity deposits increased by $72.9 million, and time deposits decreased by $59.8 million. As of September 30, 2021, time deposits included $2.4 million in brokered CDs, as compared to $17.4 million as of June 30, 2021 and $17.4 million as of September 30, 2020.

Asset Quality

Nonperforming assets totaled $14.5 million, or 0.38% of total assets at September 30, 2021, compared to $19.5 million, or 0.50%, of total assets at June 30, 2021. 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 third quarter of 2021, there were $317,000 in net charge-offs, compared to net charge-offs of $71,000 in the second quarter.

The Company recorded a provision for credit losses of $1.2 million for the third quarter of 2021, an increase from $628,000 in the prior quarter, primarily attributable to loan growth.

The allowance for loan losses totaled $32.2 million, or 1.13% of loans held for investment at September 30, 2021, compared with $31.4 million, or 1.16%, of total loans at June 30, 2021.

As of September 30, 2021, borrowers representing 167 loans totaling $23.0 million, or 0.80% of the Company’s total loan portfolio, have funded under the SBA’s Paycheck Protection Program due to the COVID-19 pandemic. Presently none of our SBA customers are on a payment deferral plan due to the COVID-19 pandemic. The Company does not have any shared national credits or loans, backed by airlines or cruise lines, on deferral as of September 30, 2021.

As of October 15, 2021, the Company had one COVID-19 loan deferral in the amount of $241,000.

Corporate Overview

RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. As of September 30, 2021, the company had total assets of $3.8 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, and in the Chicago neighborhoods of Chinatown and Bridgeport, Illinois. Bank services include remote deposit, E-banking, mobile banking, commercial and investor real estate loans, business loans and lines of credit, commercial and industrial loans, SBA 7A and 504 loans, 1-4 single family residential loans, automobile lending, trade finance, a full range of depository account products and wealth management services. The Bank has nine branches in Los Angeles County, two branches in Ventura County, one branch in Orange County, California, one branch in Las Vegas, Nevada, two branches and one loan operation center in Brooklyn, three branches in Queens, one branch in Manhattan in New York, one branch in Edison, New Jersey and two 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 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, October 26, 2021, to discuss the Company’s third quarter 2021 financial results.

To listen to the conference call, please dial 1-877-876-9174 or 1-785-424-1669, passcode RBBQ321. A replay of the call will be made available at 1-888-269-5324 or 1-402-220-7325 (no passcode required) approximately one hour after the conclusion of the call and will remain available through November 2, 2021.

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

Disclosure

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

Safe Harbor

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

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, except for December 31, 2020)

(Dollars in thousands)

September 30,

June 30,

March 31,

December 31,

September 30,

2021

2021

2021

2020

2020

Assets

Cash and due from banks

$

206,927

$

493,653

$

362,930

$

137,654

$

121,630

Federal funds sold and other cash equivalents

170,000

110,000

57,000

57,000

57,000

Total cash and cash equivalents

376,927

603,653

419,930

194,654

178,630

Interest-bearing deposits in other financial institutions

600

600

600

600

600

Investment securities available for sale

345,000

339,568

281,582

210,867

214,662

Investment securities held to maturity

6,258

6,664

6,668

7,174

7,569

Mortgage loans held for sale

15,188

9,246

37,675

49,963

23,886

Loans held for investment

2,840,354

2,709,206

2,715,205

2,706,766

2,755,153

Allowance for loan losses

(32,231

)

(31,352

)

(30,795

)

(29,337

)

(26,634

)

Net loans held for investment

2,808,123

2,677,854

2,684,410

2,677,429

2,728,519

Premises and equipment, net

27,157

27,039

27,093

27,103

24,237

Federal Home Loan Bank (FHLB) stock

15,000

15,000

15,641

15,641

15,641

Cash surrender value of life insurance

55,656

55,325

35,308

35,121

34,930

Goodwill

69,243

69,243

69,243

69,243

69,243

Servicing assets

12,141

12,558

13,264

13,965

14,724

Core deposit intangibles

4,327

4,608

4,895

5,196

5,519

Right-of-use assets- operating leases

23,735

25,050

25,500

—

—

Accrued interest and other assets

42,452

44,230

42,490

43,116

41,416

Total assets

$

3,801,807

$

3,890,638

$

3,664,299

$

3,350,072

$

3,359,576

Liabilities and shareholders' equity

Deposits:

Noninterest-bearing demand

$

824,771

$

940,041

$

787,439

$

617,206

$

642,332

Savings, NOW and money market accounts

931,517

858,597

791,486

731,084

654,378

Time deposits

1,211,525

1,271,287

1,242,368

1,286,838

1,315,038

Total deposits

2,967,813

3,069,925

2,821,293

2,635,128

2,611,748

Reserve for unfunded commitments

1,304

1,216

1,320

1,383

1,129

FHLB advances

150,000

150,000

150,000

150,000

190,000

Long-term debt, net of debt issuance costs

172,862

172,718

172,581

104,391

104,305

Subordinated debentures

14,447

14,393

14,338

14,283

14,229

Lease liabilities - operating leases

24,524

25,798

26,199

—

—

Accrued interest and other liabilities

14,833

14,263

42,900

16,399

16,749

Total liabilities

3,345,783

3,448,313

3,228,631

2,921,584

2,938,160

Shareholders' equity:

Shareholder's equity

456,490

442,086

435,746

427,287

420,329

Non-controlling interest

72

72

72

72

72

Accumulated other comprehensive (loss) income - Net of tax

(538

)

167

(150

)

1,129

1,015

Total shareholders' equity

456,024

442,325

435,668

428,488

421,416

Total liabilities and shareholders’ equity

$

3,801,807

$

3,890,638

$

3,664,299

$

3,350,072

$

3,359,576

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share amounts)

For the Three Months Ended

September 30, 2021

June 30, 2021

September 30, 2020

Interest and dividend income:

Interest and fees on loans

$

35,601

$

34,669

$

34,153

Interest on interest-bearing deposits

219

125

61

Interest on investment securities

889

794

621

Dividend income on FHLB stock

225

225

190

Interest on federal funds sold and other

174

158

100

Total interest income

37,108

35,971

35,125

Interest expense:

Interest on savings deposits, NOW and money market accounts

697

708

779

Interest on time deposits

2,048

2,410

4,746

Interest on subordinated debentures and long term debt

2,342

2,356

1,905

Interest on other borrowed funds

445

440

444

Total interest expense

5,532

5,914

7,874

Net interest income before provision for loan losses

31,576

30,057

27,251

Provision for loan losses

1,196

628

3,861

Net interest income after provision for loan losses

30,380

29,429

23,390

Noninterest income:

Service charges, fees and other(1)

3,100

1,374

1,143

Gain on sale of loans

1,790

2,572

760

Loan servicing fees, net of amortization

62

118

546

Recoveries on loans acquired in business combinations

68

5

32

Unrealized (loss) on equity investments

(5

)

(35

)

—

Gain (loss) on derivatives

178

(80

)

—

Increase in cash surrender value of life insurance

331

217

194

Gain on sale of securities

—

—

52

Total noninterest income

5,524

4,171

2,727

Noninterest expense:

Salaries and employee benefits

8,772

8,742

7,599

Occupancy and equipment expenses

2,189

2,135

2,360

Data processing

965

1,231

1,200

Legal and professional

746

536

675

Office expenses

311

272

271

Marketing and business promotion

324

231

131

Insurance and regulatory assessments

384

354

363

Core deposit premium

281

287

357

OREO expenses

4

4

3

Merger expenses

40

17

62

Other expenses

404

871

957

Total noninterest expense

14,420

14,680

13,978

Income before income taxes

21,484

18,920

12,139

Income tax expense

6,120

5,540

3,619

Net income

$

15,364

$

13,380

$

8,520

Net income per share

Basic

$

0.79

$

0.69

$

0.43

Diluted

$

0.77

$

0.67

$

0.43

Cash Dividends declared per common share

$

0.13

$

0.13

$

0.06

Weighted-average common shares outstanding

Basic

19,343,262

19,432,204

19,717,568

Diluted

19,798,187

19,874,969

19,804,892

 

(1)

Includes $1.8 million of the U.S. Treasury's CDFI rapid response program grant income.

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share amounts)

For the Nine Months Ended

September 30, 2021

September 30, 2020

Interest and dividend income:

Interest and fees on loans

$

104,786

$

99,062

Interest on interest-earning deposits

392

586

Interest on investment securities

2,310

2,329

Dividend income on FHLB stock

642

379

Interest on federal funds sold and other

489

900

Total interest income

108,619

103,256

Interest expense:

Interest on savings deposits, NOW and money market accounts

2,103

2,804

Interest on time deposits

7,422

17,765

Interest on subordinated debentures and long term debt

6,656

5,776

Interest on other borrowed funds

1,320

1,033

Total interest expense

17,501

27,378

Net interest income

91,118

75,878

Provision for loan losses

3,324

8,815

Net interest income after provision for loans losses

87,794

67,063

Noninterest income:

Service charges, fees and other (1)

5,884

3,287

Gain on sale of loans

8,203

3,552

Loan servicing fees, net of amortization

426

1,846

Recoveries on loans acquired in business combinations

78

79

Unrealized (loss) on equity investments

(60

)

—

Gain on derivatives

323

—

Increase in cash surrender value of life insurance

735

576

Gain on sale of securities

—

210

Total noninterest income

15,589

9,550

Noninterest expense:

Salaries and employee benefits

26,756

25,207

Occupancy and equipment expenses

6,566

7,291

Data processing

3,636

3,224

Legal and professional

2,087

1,949

Office expenses

838

931

Marketing and business promotion

739

456

Insurance and regulatory assessments

1,086

774

Core deposit premium

869

1,071

OREO expenses

13

31

Merger expenses

99

741

Other expenses

2,203

3,385

Total noninterest expense

44,892

45,060

Income before income taxes

58,491

31,553

Income tax expense

17,291

9,772

Net income

$

41,200

$

21,781

Net income per share

Basic

$

2.11

$

1.10

Diluted

$

2.07

$

1.09

Cash Dividends declared per common share

$

0.38

$

0.24

Weighted-average common shares outstanding

Basic

19,416,608

19,799,617

Diluted

19,828,612

19,958,612

(1)

Includes $1.8 million of the U.S. Treasury's CDFI rapid response program grant income.

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, 2021

June 30, 2021

September 30, 2020

Average

Interest

Yield /

Average

Interest

Yield /

Average

Interest

Yield /

(tax-equivalent basis, dollars in thousands)

Balance

& Fees

Rate

Balance

& Fees

Rate

Balance

& Fees

Rate

Earning assets:

Federal funds sold, cash equivalents & other (1)

$

628,020

$

618

0.39

%

$

582,554

$

508

0.35

%

$

179,521

$

351

0.78

%

Securities

Available for sale

336,130

856

1.01

%

328,004

751

0.92

%

168,151

558

1.32

%

Held to maturity (2)

6,262

56

3.55

%

6,667

60

3.61

%

7,604

71

3.71

%

Mortgage loans held for sale

5,218

46

3.50

%

21,033

173

3.30

%

19,848

171

3.43

%

Loans held for investment: (3)

Real estate

2,361,405

30,911

5.19

%

2,292,145

29,794

5.21

%

2,266,752

29,616

5.20

%

Commercial

374,125

4,644

4.92

%

388,049

4,702

4.86

%

377,789

4,366

4.60

%

Total loans

2,735,530

35,555

5.16

%

2,680,194

34,496

5.16

%

2,644,541

33,982

5.11

%

Total earning assets

3,711,160

$

37,131

3.97

%

3,618,452

$

35,988

3.99

%

3,019,665

$

35,133

4.63

%

Noninterest-earning assets

242,742

230,049

204,638

Total assets

$

3,953,902

$

3,848,501

$

3,224,303

Interest-bearing liabilities

NOW

$

71,454

$

48

0.27

%

$

66,777

$

45

0.27

%

$

59,451

$

50

0.33

%

Money Market

660,806

615

0.37

%

640,026

628

0.39

%

454,820

698

0.61

%

Saving deposits

139,555

34

0.10

%

140,418

35

0.10

%

126,635

31

0.10

%

Time deposits, less than $250,000

644,013

977

0.60

%

657,494

1,163

0.71

%

699,765

2,539

1.44

%

Time deposits, $250,000 and over

604,394

1,071

0.70

%

604,429

1,247

0.83

%

584,586

2,207

1.50

%

Total interest-bearing deposits

2,120,222

2,745

0.51

%

2,109,144

3,118

0.59

%

1,925,257

5,525

1.14

%

FHLB advances

150,000

445

1.18

%

150,000

440

1.18

%

151,739

444

1.16

%

Long-term debt

172,767

2,194

5.04

%

172,622

2,206

5.13

%

104,252

1,748

6.67

%

Subordinated debentures

14,411

148

4.07

%

14,357

150

4.19

%

14,195

157

4.40

%

Total interest-bearing liabilities

2,457,400

5,532

0.89

%

2,446,123

5,914

0.97

%

2,195,443

7,874

1.43

%

Noninterest-bearing liabilities

Noninterest-bearing deposits

1,003,304

913,442

595,264

Other noninterest-bearing liabilities

42,419

46,549

13,270

Total noninterest-bearing liabilities

1,045,723

959,991

608,534

Shareholders' equity

450,779

442,387

420,326

Total liabilities and shareholders' equity

$

3,953,902

$

3,848,501

$

3,224,303

Net interest income / interest rate spreads

$

31,599

3.08

%

$

30,074

3.02

%

$

27,259

3.20

%

Net interest margin

3.38

%

3.33

%

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, 2021

September 30, 2020

Average

Interest

Yield /

Average

Interest

Yield /

(tax-equivalent basis, dollars in thousands)

Balance

& Fees

Rate

Balance

& Fees

Rate

Earning assets:

Federal funds sold, cash equivalents & other (1)

$

476,781

$

1,523

0.43

%

$

220,195

$

1,865

1.13

%

Securities

Available for sale

301,653

2,180

0.97

%

159,373

2,136

1.79

%

Held to maturity (2)

6,640

182

3.66

%

7,760

218

3.75

%

Mortgage loans held for sale

26,579

630

3.17

%

40,936

1,454

4.74

%

Loans held for investment: (3)

Real estate

2,320,524

90,226

5.20

%

2,141,022

84,261

5.26

%

Commercial

382,168

13,930

4.87

%

359,907

13,347

4.95

%

Total loans

2,702,692

104,156

5.15

%

2,500,929

97,608

5.21

%

Total earning assets

3,514,345

$

108,671

4.13

%

2,929,193

$

103,281

4.71

%

Noninterest-earning assets

233,652

208,000

Total assets

$

3,747,997

$

3,137,193

Interest-bearing liabilities

NOW

$

67,633

$

136

0.27

%

$

53,633

$

153

0.38

%

Money Market

627,024

1,866

0.40

%

430,524

2,534

0.79

%

Saving deposits

137,072

101

0.10

%

121,836

117

0.13

%

Time deposits, less than $250,000

654,776

3,635

0.74

%

720,810

9,408

1.74

%

Time deposits, $250,000 and over

600,973

3,787

0.84

%

598,137

8,357

1.87

%

Total interest-bearing deposits

2,087,478

9,525

0.61

%

1,924,940

20,569

1.43

%

FHLB advances

150,000

1,320

1.18

%

118,029

1,033

1.17

%

Long-term debt

152,600

6,209

5.44

%

104,168

5,243

6.72

%

Subordinated debentures

14,357

447

4.16

%

14,221

533

5.01

%

Total interest-bearing liabilities

2,404,435

$

17,501

0.97

%

2,161,358

$

27,378

1.69

%

Noninterest-bearing liabilities

Noninterest-bearing deposits

858,087

546,419

Other noninterest-bearing liabilities

43,038

14,606

Total noninterest-bearing liabilities

901,125

561,025

Shareholders' equity

442,437

414,810

Total liabilities and shareholders' equity

$

3,747,997

$

3,137,193

Net interest income / interest rate spreads

$

91,170

3.16

%

$

75,903

3.02

%

Net interest margin

3.47

%

3.46

%

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,

2021

2021

2020

Per share data (common stock)

Earnings

Basic

$

0.79

$

0.69

$

0.43

Diluted

$

0.77

$

0.67

$

0.43

Dividends declared

$

0.13

$

0.13

$

0.06

Book value

$

23.37

$

22.86

$

21.35

Tangible book value

$

19.60

$

19.04

$

17.56

Weighted average shares outstanding

Basic

19,343,262

19,432,204

19,717,568

Diluted

19,798,187

19,874,969

19,804,892

Shares outstanding at period end

19,516,393

19,349,802

19,739,280

Performance ratios

Return on average assets, annualized

1.54

%

1.39

%

1.05

%

Return on average shareholders' equity, annualized

13.52

%

12.13

%

8.06

%

Return on average tangible common equity, annualized

16.17

%

14.57

%

9.81

%

Noninterest income to average assets, annualized

0.55

%

0.43

%

0.34

%

Noninterest expense to average assets, annualized

1.45

%

1.53

%

1.72

%

Yield on average earning assets

3.97

%

3.99

%

4.63

%

Cost of average total deposits

0.35

%

0.41

%

0.87

%

Cost of average interest-bearing deposits

0.51

%

0.59

%

1.14

%

Cost of average interest-bearing liabilities

0.89

%

0.97

%

1.43

%

Accretion on loans to average earning assets

0.03

%

0.02

%

0.08

%

Net interest spread

3.08

%

3.02

%

3.20

%

Net interest margin

3.38

%

3.33

%

3.59

%

Efficiency ratio

38.87

%

42.89

%

46.63

%

Common stock dividend payout ratio

16.46

%

18.84

%

13.95

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

For the nine months ended September 30,

2021

2020

Per share data (common stock)

Earnings

Basic

$

2.11

$

1.10

Diluted

$

2.07

$

1.09

Dividends declared

$

0.38

$

0.24

Book value

$

23.37

$

21.35

Tangible book value

$

19.60

$

17.56

Weighted average shares outstanding

Basic

19,416,608

19,799,617

Diluted

19,828,612

19,958,612

Shares outstanding at period end

19,516,393

19,739,280

Performance ratios

Return on average assets, annualized

1.47

%

0.93

%

Return on average shareholders' equity, annualized

12.45

%

7.01

%

Return on average tangible common equity, annualized

14.95

%

8.59

%

Noninterest income to average assets, annualized

0.56

%

0.41

%

Noninterest expense to average assets, annualized

1.60

%

1.92

%

Yield on average earning assets

4.13

%

4.71

%

Cost of average deposits

0.43

%

1.11

%

Cost of average interest-bearing deposits

0.61

%

1.43

%

Cost of average interest-bearing liabilities

0.97

%

1.69

%

Accretion on loans to average earning assets

0.04

%

0.10

%

Net interest spread

3.16

%

3.02

%

Net interest margin

3.47

%

3.46

%

Efficiency ratio

42.07

%

52.75

%

Common stock dividend payout ratio

18.01

%

21.82

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

As of

September 30,

June 30,

September 30,

2021

2021

2020

Loan to deposit ratio

95.71

%

88.25

%

105.49

%

Core deposits / total deposits

79.87

%

80.04

%

99.34

%

Net non-core funding dependence ratio

9.27

%

0.87

%

9.69

%

Credit Quality Data:

Loans 30-89 days past due

$

7,258

$

5,449

$

21,735

Loans 30-89 days past due to total loans

0.26

%

0.20

%

0.79

%

Nonperforming loans

$

14,248

$

19,243

$

17,975

Nonperforming loans to total loans

0.50

%

0.71

%

0.65

%

Nonperforming assets

$

14,541

$

19,536

$

18,268

Nonperforming assets to total assets

0.38

%

0.50

%

0.54

%

Allowance for loan losses to total loans

1.13

%

1.16

%

0.97

%

Allowance for loan losses to nonperforming loans

226.21

%

162.93

%

148.17

%

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

0.05

%

0.01

%

0.01

%

Regulatory and other capital ratios—Company

Tangible common equity to tangible assets

10.26

%

9.65

%

10.55

%

Tier 1 leverage ratio

10.31

%

10.20

%

11.47

%

Tier 1 common capital to risk-weighted assets

14.82

%

14.76

%

14.11

%

Tier 1 capital to risk-weighted assets

15.38

%

15.33

%

14.69

%

Total capital to risk-weighted assets

23.30

%

23.48

%

20.05

%

Regulatory capital ratios—Bank only

Tier 1 leverage ratio

12.48

%

12.34

%

14.16

%

Tier 1 common capital to risk-weighted assets

18.64

%

18.58

%

18.13

%

Tier 1 capital to risk-weighted assets

18.64

%

18.58

%

18.13

%

Total capital to risk-weighted assets

19.89

%

19.83

%

19.26

%

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

2021

2021

2021

2020

2020

Interest income

Loans, including fees

$

35,601

$

34,669

$

34,516

$

34,832

$

34,153

Investment securities and other

1,507

1,302

1,024

1,032

972

Total interest income

37,108

35,971

35,540

35,864

35,125

Interest expense

Deposits

2,745

3,118

3,662

4,636

5,525

Interest on subordinated debentures and other

2,342

2,356

1,958

1,901

1,905

Other borrowings

445

440

435

450

444

Total interest expense

5,532

5,914

6,055

6,987

7,874

Net interest income before provision for loan losses

31,576

30,057

29,485

28,877

27,251

Provision for loan losses

1,196

628

1,500

3,008

3,861

Net interest income after provision for loan losses

30,380

29,429

27,985

25,869

23,390

Noninterest income

5,524

4,171

5,894

4,490

2,727

Noninterest expense

14,420

14,680

15,792

14,453

13,978

Earnings before income taxes

21,484

18,920

18,087

15,906

12,139

Income taxes

6,120

5,540

5,631

4,759

3,619

Net income

$

15,364

$

13,380

$

12,456

$

11,147

$

8,520

Net income per common share - basic

$

0.79

$

0.69

$

0.64

$

0.57

$

0.43

Net income per common share - diluted

$

0.77

$

0.67

$

0.63

$

0.56

$

0.43

Cash dividends declared per common share

$

0.13

$

0.13

$

0.12

$

0.09

$

0.06

Cash dividends declared on common shares

$

2,516

$

2,540

$

2,347

$

1,777

$

1,184

Yield on average assets, annualized

1.54

%

1.39

%

1.47

%

1.33

%

1.05

%

Yield on average earning assets

3.97

%

3.99

%

4.49

%

4.55

%

4.63

%

Cost of average deposits

0.35

%

0.41

%

0.55

%

0.71

%

0.87

%

Cost of average interest-bearing deposits

0.51

%

0.59

%

0.73

%

0.93

%

1.14

%

Cost of average interest-bearing liabilities

0.89

%

0.97

%

1.06

%

1.23

%

1.43

%

Accretion on loans to average earning assets

0.03

%

0.02

%

0.06

%

0.03

%

0.08

%

Net interest margin

3.38

%

3.33

%

3.73

%

3.67

%

3.59

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited, except for December 31, 2020)

(Dollars in thousands, except per share amounts)

 

Loan Portfolio Detail

As of
September 30, 2021

As of
June 30, 2021

As of
March 31, 2021

As of
December 30, 2020

As of
September 30, 2020

(dollars in thousands)

$

%

$

%

$

%

$

%

$

%

Loans:

Commercial and industrial

$

276,387

9.7

%

$

277,080

10.2

%

$

286,016

10.5

%

$

290,139

10.7

%

$

317,891

11.5

%

SBA

88,784

3.1

%

98,572

3.6

%

111,330

4.1

%

97,821

3.6

%

111,193

4.0

%

Construction and land development

271,764

9.6

%

236,965

8.7

%

209,727

7.7

%

186,723

6.9

%

183,569

6.7

%

Commercial real estate (1)

1,205,630

42.4

%

1,102,467

40.7

%

1,063,104

39.2

%

1,003,637

37.1

%

975,187

35.4

%

Single-family residential mortgages

974,780

34.3

%

984,311

36.3

%

1,041,260

38.3

%

1,124,357

41.5

%

1,163,982

42.2

%

Other loans

23,009

0.9

%

9,811

0.5

%

3,768

0.2

%

4,089

0.2

%

3,331

0.2

%

Total loans (2)

$

2,840,354

100.0

%

$

2,709,206

100.0

%

$

2,715,205

100.0

%

$

2,706,766

100.0

%

$

2,755,153

100.0

%

Allowance for loan losses

(32,231

)

(31,352

)

(30,795

)

(29,337

)

(26,634

)

Total loans, net

$

2,808,123

$

2,677,854

$

2,684,410

$

2,677,429

$

2,728,519


(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)

2021

2020

2021

2020

Beginning balance

$

31,352

$

22,820

$

29,337

$

18,816

Additions to the allowance charged to expense

1,196

3,861

3,324

8,815

Net charge-offs on loans

(317

)

(47

)

(430

)

(997

)

Ending balance

$

32,231

$

26,634

$

32,231

$

26,634

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, 2021 and 2020 and June 30, 2021.

(dollars in thousands, except per share data)

September 30, 2021

June 30, 2021

September 30, 2020

Tangible common equity:

Total shareholders' equity

$

456,024

$

442,325

$

421,416

Adjustments

Goodwill

(69,243

)

(69,243

)

(69,243

)

Core deposit intangible

(4,327

)

(4,608

)

(5,519

)

Tangible common equity

$

382,454

$

368,474

$

346,654

Tangible assets:

Total assets-GAAP

$

3,801,807

$

3,890,638

$

3,359,576

Adjustments

Goodwill

(69,243

)

(69,243

)

(69,243

)

Core deposit intangible

(4,327

)

(4,608

)

(5,519

)

Tangible assets

$

3,728,237

$

3,816,787

$

3,284,814

Common shares outstanding

$

19,516,393

19,349,802

19,739,280

Tangible common equity to tangible assets ratio

10.26

%

9.65

%

10.55

%

Book value per share

$

23.37

$

22.86

$

21.35

Tangible book value per share

$

19.60

$

19.04

$

17.56

Contacts:

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

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