RBB Bancorp Reports Second Quarter Earnings for 2021

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Conference Call and Webcast Scheduled for Tuesday, July 27, 2021 at 11:00 a.m. Pacific Time/2:00 p.m. Eastern Time

Second Quarter 2021 Highlights

  • Reported record net income of $13.4 million, or $0.67 diluted earnings per share, increased $924,000, or 7.4%, from the prior quarter and increased $6.9 million, or 105.4%, from the second quarter of 2020

  • Total deposits increased by $248.6 million, or 35.3% annualized growth, from the end of the prior quarter

  • Loan growth (ex-mortgage) of $51.0 million, or 12.2% annualized, from the end of the prior quarter

  • Declared quarterly cash dividend of $0.13 per common share

LOS ANGELES, July 26, 2021--(BUSINESS WIRE)--RBB Bancorp (NASDAQ:RBB) and its subsidiaries, Royal Business Bank ("the Bank") and RBB Asset Management Company ("RAM"), collectively referred to herein as "the Company," announced financial results for the quarter ended June 30, 2021.

The Company reported record net income of $13.4 million, or $0.67 diluted earnings per share, for the three months ended June 30, 2021, compared to net income of $12.5 million, or $0.63 diluted earnings per share, and $6.5 million, or $0.33 diluted earnings per share, for the three months ended March 31, 2021 and June 30, 2020, respectively.

"We are pleased to report diluted earnings per share of $0.67, for the second quarter," said Alan Thian, President and CEO of Royal Business Bank. "Continued focus on our deposit franchise reduced the cost of our interest-bearing deposits and delivered strong growth in non-interest bearing deposits which now comprise 30.6% of total deposits. While our net interest margin declined due to excess liquidity, our disciplined loan origination efforts kept our loan balance and yields stable. Our acquisition of the Hawaiian branch of the Bank of the Orient expands our presence in a vibrant Asian-American community and positions us for profitable growth."

"Royal Business Bank’s excellent second quarter results demonstrate the continued strength of our differentiated business model and commitment to enhancing long-term shareholder value," said Dr. James Kao, Chairman of RBB Bancorp. "We remain well-positioned to pursue additional organic and strategic growth opportunities."

Key Performance Ratios

Net income of $13.4 million for the second quarter of 2021 produced 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%. This compares to an annualized return on average assets of 1.47%, an annualized return on average tangible common shareholders' equity of 14.05%, and an annualized return on average shareholders' equity of 11.64% for the first quarter of 2021. The efficiency ratio for the second quarter of 2021 was 42.89%, compared to 44.64% for the prior quarter. The change in the efficiency ratio was primarily due to a decrease in non-interest income.

Net Interest Income and Net Interest Margin

Net interest income, before provision for loan losses, was $30.1 million for the second quarter of 2021, compared to $29.5 million for the first quarter of 2021. The $572,000 increase was primarily attributable to higher interest income due to a $410.6 million increase in average earning assets and an improvement in deposit costs related to a $259.8 million increase in average noninterest-bearing deposits, partially offset by a $138.0 million increase in average interest-bearing liabilities. Accretion of purchase discounts from prior acquisitions contributed $183,000 to net interest income in the second quarter of 2021, compared to $481,000 in the first quarter of 2021.

Compared to the second quarter of 2020, net interest income, before provision for loan losses, increased $5.0 million from $25.0 million. The increase was primarily attributable to a $670.6 million increase in average earning assets and a $355.5 million increase in average noninterest-bearing deposits, partially offset by a $277.7 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 3.33% for the second quarter of 2021, a decrease of 40 basis points from 3.73% in the first quarter of 2021. The decrease was primarily attributable to an increase in liquidity combined with a 50 basis point decrease in the yield on average earning assets and a 40 basis point decrease in the yield on federal funds sold, cash equivalents & other which was partially offset by a 19 basis point decrease in the cost of borrowings (FHLB advances, long-term debt and subordinated debentures). Loan discount accretion contributed 2 basis points to the net interest margin in the second quarter of 2021, compared to 6 basis points in the first quarter of 2021. The majority of the decrease in net interest margin was due to the increase in liquidity.

Noninterest Income

Noninterest income was $4.2 million for the second quarter of 2021, a decrease of $1.7 million from $5.9 million in the first quarter of 2021. The decrease was driven by a decrease in loans sold during the quarter. The Company sold $55.4 million fewer loans in the second quarter than in the prior quarter primarily due to selling fewer FNMA loans.

The Company sold $58.9 million in FNMA qualified mortgage loans for a net gain of $1.4 million and sold $13.4 million in non-qualified mortgage loans to private investors for a gain of $389,000 during the second quarter of 2021. This compared to $80.3 million in FNMA qualified mortgage loans for a net gain of $2.2 million and $49.8 million in non-qualified mortgage loans to private investors for a gain of $1.2 million during the first quarter of 2021. The Company sold $5.9 million in SBA loans during the second quarter of 2021 for a net gain of $747,000, compared to $3.5 million SBA loans sold for a net gain of $355,000 during the first quarter of 2021.

Compared to the second quarter of 2020, noninterest income increased by $2.0 million from $2.2 million. The increase was primarily attributable to an increase of $2.5 million in gain on loan sales partially offset by a decrease of $590,000 in loan servicing fees.

Noninterest Expense

Noninterest expense for the second quarter of 2021 was $14.7 million, compared to $15.8 million for the first quarter of 2021. The $1.1 million decrease was primarily attributable to a $500,000 decrease in salaries and employee benefits, a $269,000 decrease in legal and professional fees and $209,000 decrease in data processing expenses.

Noninterest expense decreased from $14.8 million in the second quarter of 2020. The $139,000 decrease was primarily due to a $366,000 decrease in MSR impairment write-down expense and a $392,000 decrease in occupancy and equipment expenses. These were partially offset by a $639,000 increase in salaries and employee benefits expense.

Income Taxes

The effective tax rate was 29.28% for the second quarter of 2021, 31.1% for the first quarter of 2021, and 30.8% for the second quarter of 2020.

CDFI Rapid Response Program

In 2016, RBB became a community development financial institution (CDFI). 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 has not yet been received pending finalization of the contract between the Bank and the US Treasury which will include various performance goals and measures that specify the use of the funds.

Loan Portfolio

Loans held for investment, net of deferred fees and discounts, totaled $2.7 billion as of June 30, 2021, a decrease of $6.0 million from March 31, 2021, and an increase of $114.6 million from June 30, 2020 from $2.6 billion. The decrease from the prior quarter was primarily due to a decrease in mortgage loan originations. Single-family residential mortgages decreased by $56.9 million net of payoffs, paydowns and loan sales. Commercial real estate loans increased by $39.4 million, construction and land development loans increased by $27.2 million, SBA loans decreased by $12.8 million (which included a $13.7 million decrease in PPP loans), commercial and industrial loans decreased by $8.9 million and other loans increased by $6.0 million.

During the second quarter of 2021, single-family residential mortgage production was $107.9 million, payoffs and paydowns were $121.0 million, and single-family residential mortgage loan sales were $72.3 million. During the first quarter of 2021, single-family residential mortgage production was $114.5 million, payoffs and paydowns were $81.9 million, and loan sales were $130.1 million.

Mortgage loans held for sale were $9.2 million as of June 30, 2021, a decrease of $28.4 million from $37.7 million at March 31, 2021 and a decrease of $6.2 million from $15.5 million as of June 30, 2020. The Company originated approximately $29.2 million in FNMA mortgage loans for sale for the second quarter of 2021, compared with $55.3 million during the prior quarter.

In the second quarter of 2021, SBA loan production was $21.3 million and total SBA loan sales were $5.9 million.

Deposits and Borrowings

Deposits were $3.1 billion at June 30, 2021, an increase of $248.6 million from March 31, 2021, and an increase of $633.4 million from June 30, 2020, including brokered deposits. The increase in total deposits from the prior quarter was primarily attributable to organic deposit growth. During the second quarter of 2021, noninterest-bearing deposits increased by $152.6 million, interest-bearing non-maturity deposits increased by $67.1 million, and time deposits decreased by $28.9 million. As of June 30, 2021, time deposits included $17.4 million in brokered CDs, as compared to $17.4 million as of March 31, 2021 and $2.4 million as of June 30, 2020.

Asset Quality

Nonperforming assets totaled $19.5 million, or 0.50% of total assets at June 30, 2021, compared to $20.2 million, or 0.55%, of total assets at March 31, 2021. 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.

In the second quarter of 2021, there were $71,000 in net charge-offs, compared to net charge-offs of $42,000 in the prior quarter.

The Company recorded a provision for credit losses of $628,000 for the second quarter of 2021, a decrease from $872,000 in the prior quarter, primarily attributable to reduced loan growth.

The allowance for loan losses totaled $31.4 million, or 1.16% of loans held for investment at June 30, 2021, compared with $30.8 million, or 1.13%, of total loans at March 31, 2021.

As of June 30, 2021, borrowers representing 191 loans totaling $29.2 million, or 1.07% 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 June 30, 2021.

The following table provides details regarding the Company's COVID-19 loan deferral activity through July 15, 2021.

As of June 30, 2020

As of April 15, 2021

As of July 15, 2021

Loans Deferred

Loans Deferred

Loans Deferred

Number

Principal
Amount
($000)

Number

Principal
Amount
($000)

Number

Principal
Amount
($000)

General retail (excluding SBA)

34

$

94,251

1

$

438

$

Mixed use commercial

38

58,841

4

2,602

Hospitality (excluding SBA)

5

25,343

1

6,394

Restaurants (excluding SBA)

11

4,186

Multifamily

6

9,086

1

688

Commercial, office and other

SFR mortgage loans - Western region

183

118,484

9

5,135

4

3,101

SFR mortgage loans - Eastern region

203

85,935

5

2,467

SFR mortgage loans - Chicago metropolitan

84

14,824

Total

564

$

410,950

21

$

17,724

4

$

3,101

Corporate Overview

RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. As of June 30, 2021, the company had total assets of $3.9 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, July 27, 2021, to discuss the Company’s second quarter 2021 financial results.

To listen to the conference call, please dial 1-833-519-1355 or 1-918-922-6505, passcode 5654379. A replay of the call will be made available at 1-800-585-8367 or 1-404-537-3406, passcode 5654379, approximately one hour after the conclusion of the call and will remain available through August 3, 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)

June 30,

March 31,

December 31,

September 30,

June 30,

2021

2021

2020

2020

2020

Assets

Cash and due from banks

$

493,653

$

362,930

$

137,654

$

121,630

$

94,844

Federal funds sold and other cash equivalents

110,000

57,000

57,000

57,000

57,000

Total cash and cash equivalents

603,653

419,930

194,654

178,630

151,844

Interest-bearing deposits in other financial institutions

600

600

600

600

600

Investment securities available for sale

339,568

281,582

210,867

214,662

185,756

Investment securities held to maturity

6,664

6,668

7,174

7,569

7,615

Mortgage loans held for sale

9,246

37,675

49,963

23,886

15,479

Loans held for investment

2,709,206

2,715,205

2,706,766

2,755,153

2,594,620

Allowance for loan losses

(31,352

)

(30,795

)

(29,337

)

(26,634

)

(22,820

)

Net loans held for investment

2,677,854

2,684,410

2,677,429

2,728,519

2,571,800

Premises and equipment, net

27,039

27,093

27,103

24,237

23,965

Federal Home Loan Bank (FHLB) stock

15,000

15,641

15,641

15,641

15,641

Cash surrender value of life insurance

55,325

35,308

35,121

34,930

34,736

Goodwill

69,243

69,243

69,243

69,243

69,209

Servicing assets

12,558

13,264

13,965

14,724

15,595

Core deposit intangibles

4,608

4,895

5,196

5,519

5,876

Right-of-use assets- operating leases

25,050

25,500

Accrued interest and other assets

44,230

42,490

43,116

41,416

38,065

Total assets

$

3,890,638

$

3,664,299

$

3,350,072

$

3,359,576

$

3,136,181

Liabilities and shareholders' equity

Deposits:

Noninterest-bearing demand

$

940,041

$

787,439

$

617,206

$

642,332

$

574,553

Savings, NOW and money market accounts

858,597

791,486

731,084

654,378

601,941

Time deposits

1,271,287

1,242,368

1,286,838

1,315,038

1,260,026

Total deposits

3,069,925

2,821,293

2,635,128

2,611,748

2,436,520

Reserve for unfunded commitments

1,216

1,320

1,383

1,129

1,030

FHLB advances

150,000

150,000

150,000

190,000

150,000

Long-term debt, net of debt issuance costs

172,718

172,581

104,391

104,305

104,220

Subordinated debentures

14,393

14,338

14,283

14,229

14,174

Lease liabilities - operating leases

25,798

26,199

Accrued interest and other liabilities

14,263

42,900

16,399

16,749

16,212

Total liabilities

3,448,313

3,228,631

2,921,584

2,938,160

2,722,156

Shareholders' equity:

Shareholder's equity

442,086

435,746

427,287

420,329

412,827

Non-controlling interest

72

72

72

72

72

Accumulated other comprehensive (loss) income - Net of tax

167

(150

)

1,129

1,015

1,126

Total shareholders' equity

442,325

435,668

428,488

421,416

414,025

Total liabilities and shareholders’ equity

$

3,890,638

$

3,664,299

$

3,350,072

$

3,359,576

$

3,136,181

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share amounts)

For the Three Months Ended

June 30, 2021

March 31, 2021

June 30, 2020

Interest and dividend income:

Interest and fees on loans

$

34,669

$

34,516

$

32,633

Interest on interest-bearing deposits

125

48

74

Interest on investment securities

794

627

887

Dividend income on FHLB stock

225

192

187

Interest on federal funds sold and other

158

157

322

Total interest income

35,971

35,540

34,103

Interest expense:

Interest on savings deposits, NOW and money market accounts

708

698

782

Interest on time deposits

2,410

2,964

5,933

Interest on subordinated debentures and long term debt

2,356

1,958

1,915

Interest on other borrowed funds

440

435

439

Total interest expense

5,914

6,055

9,069

Net interest income before provision for loan losses

30,057

29,485

25,034

Provision for loan losses

628

1,500

3,009

Net interest income after provision for loan losses

29,429

27,985

22,025

Noninterest income:

Service charges, fees and other

1,374

1,410

1,065

Gain on sale of loans

2,572

3,841

81

Loan servicing fees, net of amortization

118

246

708

Recoveries on loans acquired in business combinations

5

5

5

Unrealized (loss) on equity investments

(35

)

(20

)

(Loss) gain on derivatives

(80

)

225

Increase in cash surrender value of life insurance

217

187

191

Gain on sale of securities

158

Total noninterest income

4,171

5,894

2,208

Noninterest expense:

Salaries and employee benefits

8,742

9,242

8,103

Occupancy and equipment expenses

2,135

2,242

2,527

Data processing

1,231

1,440

882

Legal and professional

536

805

670

Office expenses

272

255

337

Marketing and business promotion

...

231

184

111

Insurance and regulatory assessments

354

348

234

Core deposit premium

287

301

357

OREO expenses

4

5

14

Merger expenses

17

42

276

Other expenses

871

928

1,308

Total noninterest expense

14,680

15,792

14,819

Income before income taxes

18,920

18,087

9,414

Income tax expense

5,540

5,631

2,901

Net income

$

13,380

$

12,456

$

6,513

Net income per share

Basic

$

0.69

$

0.64

$

0.33

Diluted

$

0.67

$

0.63

$

0.33

Cash Dividends declared per common share

$

0.13

$

0.12

$

0.06

Weighted-average common shares outstanding

Basic

19,432,204

19,475,814

19,710,330

Diluted

19,874,969

19,812,841

19,806,304

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share amounts)

For the Six Months Ended

June 30, 2021

June 30, 2020

Interest and dividend income:

Interest and fees on loans

$

69,185

$

64,909

Interest on interest-earning deposits

173

525

Interest on investment securities

1,421

1,708

Dividend income on FHLB stock

417

189

Interest on federal funds sold and other

315

800

Total interest income

71,511

68,131

Interest expense:

Interest on savings deposits, NOW and money market accounts

1,406

2,025

Interest on time deposits

5,374

13,019

Interest on subordinated debentures and long term debt

4,314

3,871

Interest on other borrowed funds

875

589

Total interest expense

11,969

19,504

Net interest income

59,542

48,627

Provision for loan losses

2,128

4,954

Net interest income after provision for loans losses

57,414

43,673

Noninterest income:

Service charges, fees and other

2,784

2,144

Gain on sale of loans

6,413

2,792

Loan servicing fees, net of amortization

364

1,300

Recoveries on loans acquired in business combinations

10

47

Unrealized (loss) on equity investments

(55

)

Gain on derivatives

145

Increase in cash surrender value of life insurance

404

382

Gain on sale of securities

158

Total noninterest income

10,065

6,823

Noninterest expense:

Salaries and employee benefits

17,984

17,608

Occupancy and equipment expenses

4,377

4,931

Data processing

2,671

2,024

Legal and professional

1,341

1,274

Office expenses

527

660

Marketing and business promotion

415

325

Insurance and regulatory assessments

702

411

Core deposit premium

588

714

OREO expenses

9

28

Merger expenses

59

679

Other expenses

1,799

2,428

Total noninterest expense

30,472

31,082

Income before income taxes

37,007

19,414

Income tax expense

11,171

6,153

Net income

$

25,836

$

13,261

Net income per share

Basic

$

1.32

$

0.67

Diluted

$

1.30

$

0.66

Cash Dividends declared per common share

$

0.25

$

0.12

Weighted-average common shares outstanding

Basic

19,453,889

19,841,093

Diluted

19,844,077

20,036,316

RBB BANCORP AND SUBSIDIARIES

AVERAGE BALANCE SHEET AND NET INTEREST INCOME

(Unaudited)

(Dollars in thousands, except per share amounts)

For the three months ended

June 30, 2021

March 31, 2021

June 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)

$

582,554

$

508

0.35

%

$

215,230

$

397

0.75

%

$

231,943

$

583

1.01

%

Securities

Available for sale

328,004

751

0.92

%

239,768

571

0.97

%

171,298

823

1.93

%

Held to maturity (2)

6,667

60

3.61

%

7,000

64

3.71

%

7,661

72

3.78

%

Mortgage loans held for sale

21,033

173

3.30

%

54,021

411

3.09

%

25,130

303

4.85

%

Loans held for investment: (3)

Real estate

2,292,145

29,794

5.21

%

2,307,431

29,521

5.19

%

2,147,646

28,216

5.28

%

Commercial

388,049

4,702

4.86

%

384,442

4,584

4.84

%

364,189

4,114

4.54

%

Total loans

2,680,194

34,496

5.16

%

2,691,873

34,105

5.14

%

2,511,835

32,330

5.18

%

Total earning assets

3,618,452

$

35,988

3.99

%

3,207,892

$

35,548

4.49

%

2,947,867

$

34,111

4.65

%

Noninterest-earning assets

230,049

228,002

206,833

Total assets

$

3,848,501

$

3,435,894

$

3,154,700

Interest-bearing liabilities

NOW

$

66,777

$

45

0.27

%

$

64,592

$

44

0.28

%

$

57,547

$

60

0.42

%

Money Market

640,026

628

0.39

%

579,347

623

0.44

%

404,480

691

0.69

%

Saving deposits

140,418

35

0.10

%

131,151

31

0.10

%

123,868

31

0.10

%

Time deposits, less than $250,000

657,494

1,163

0.71

%

663,029

1,496

0.92

%

725,142

3,143

1.74

%

Time deposits, $250,000 and over

604,429

1,247

0.83

%

593,981

1,468

1.00

%

589,090

2,790

1.90

%

Total interest-bearing deposits

2,109,144

3,118

0.59

%

2,032,100

3,662

0.73

%

1,900,127

6,715

1.42

%

FHLB advances

150,000

440

1.18

%

150,000

435

1.18

%

150,000

439

1.18

%

Long-term debt

172,622

2,206

5.13

%

111,739

1,808

6.56

%

104,168

1,747

6.75

%

Subordinated debentures

14,357

150

4.19

%

14,302

150

4.25

%

14,141

168

4.78

%

Total interest-bearing liabilities

2,446,123

5,914

0.97

%

2,308,141

6,055

1.06

%

2,168,436

9,069

1.68

%

Noninterest-bearing liabilities

Noninterest-bearing deposits

913,442

653,674

557,903

Other noninterest-bearing liabilities

46,549

40,118

15,509

Total noninterest-bearing liabilities

959,991

693,792

573,412

Shareholders' equity

442,387

433,960

412,852

Total liabilities and shareholders' equity

$

3,848,501

$

3,435,894

$

3,154,700

Net interest income / interest rate spreads

$

30,074

3.02

%

$

29,493

3.43

%

$

25,042

2.97

%

Net interest margin

3.33

%

3.73

%

3.42

%

(1)

Includes income and average balances for FHLB stock, term federal funds, interest-bearing time deposits and other miscellaneous interest-bearing assets.

(2)

Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis.

(3)

Average loan balances include nonaccrual loans and loans held for sale. Interest income on loans includes - amortization of deferred loan fees, net of deferred loan costs.

RBB BANCORP AND SUBSIDIARIES

AVERAGE BALANCE SHEET AND NET INTEREST INCOME

(Unaudited)

(Dollars in thousands, except per share amounts)

For the six months ended

June 30, 2021

June 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)

$

399,907

$

905

0.46

%

$

240,755

$

1,514

1.26

%

Securities

Available for sale

284,129

1,323

0.94

%

154,936

1,578

2.05

%

Held to maturity (2)

6,832

126

3.72

%

7,839

147

3.77

%

Mortgage loans held for sale

37,436

584

3.15

%

51,595

1,284

5.00

%

Loans held for investment: (3)

Real estate

2,299,746

59,315

5.20

%

2,077,467

54,644

5.29

%

Commercial

386,256

9,286

4.85

%

350,869

8,981

5.15

%

Total loans

2,686,002

68,601

5.15

%

2,428,336

63,625

5.27

%

Total earning assets

3,414,306

$

71,539

4.23

%

2,883,461

$

68,148

4.75

%

Noninterest-earning assets

229,032

209,699

Total assets

$

3,643,338

$

3,093,160

Interest-bearing liabilities

NOW

$

65,690

$

88

0.27

%

$

50,692

$

102

0.40

%

Money Market

609,854

1,251

0.41

%

418,243

1,837

0.88

%

Saving deposits

135,810

67

0.10

%

119,410

86

0.14

%

Time deposits, less than $250,000

660,246

2,659

0.81

%

731,448

6,869

1.89

%

Time deposits, $250,000 and over

599,234

2,716

0.91

%

604,987

6,150

2.04

%

Total interest-bearing deposits

2,070,834

6,781

0.66

%

1,924,780

15,044

1.57

%

FHLB advances

150,000

875

1.18

%

100,989

589

1.17

%

Long-term debt

142,349

4,015

5.69

%

104,125

3,495

6.75

%

Subordinated debentures

14,330

298

4.19

%

14,234

376

5.31

%

Total interest-bearing liabilities

2,377,513

$

11,969

1.02

%

2,144,128

$

19,504

1.83

%

Noninterest-bearing liabilities

Noninterest-bearing deposits

784,276

521,729

Other noninterest-bearing liabilities

43,352

15,282

Total noninterest-bearing liabilities

827,628

537,011

Shareholders' equity

438,197

412,021

Total liabilities and shareholders' equity

$

3,643,338

$

3,093,160

Net interest income / interest rate spreads

$

59,570

3.21

%

$

48,644

2.92

%

Net interest margin

3.52

%

3.39

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

For the Three Months Ended

June 30,

March 31,

June 30,

2021

2021

2020

Per share data (common stock)

Earnings

Basic

$

0.69

$

0.64

$

0.33

Diluted

$

0.67

$

0.63

$

0.33

Dividends declared

$

0.13

$

0.12

$

0.06

Book value

$

22.86

$

22.31

$

20.97

Tangible book value

$

19.04

$

18.51

$

17.17

Weighted average shares outstanding

Basic

19,432,204

19,475,814

19,710,330

Diluted

19,874,969

19,812,841

19,806,304

Shares outstanding at period end

19,349,802

19,528,249

19,739,280

Performance ratios

Return on average assets, annualized

1.39

%

1.47

%

0.83

%

Return on average shareholders' equity, annualized

12.13

%

11.64

%

6.34

%

Return on average tangible common equity, annualized

14.57

%

14.05

%

7.77

%

Noninterest income to average assets, annualized

0.43

%

0.70

%

0.28

%

Noninterest expense to average assets, annualized

1.53

%

1.86

%

1.89

%

Yield on average earning assets

3.99

%

4.49

%

4.65

%

Cost of average total deposits

0.41

%

0.55

%

1.10

%

Cost of average interest-bearing deposits

0.59

%

0.73

%

1.42

%

Cost of average interest-bearing liabilities

0.97

%

1.06

%

1.68

%

Accretion on loans to average earning assets

0.02

%

0.06

%

0.14

%

Net interest spread

3.02

%

3.43

%

2.97

%

Net interest margin

3.33

%

3.73

%

3.42

%

Efficiency ratio

42.89

%

44.64

%

54.40

%

Common stock dividend payout ratio

18.84

%

18.75

%

18.18

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

For the six months ended June 30,

2021

2020

Per share data (common stock)

Earnings

Basic

$

1.32

$

0.67

Diluted

$

1.30

$

0.66

Dividends declared

$

0.25

$

0.12

Book value

$

22.86

$

20.97

Tangible book value

$

19.04

$

17.17

Weighted average shares outstanding

Basic

19,453,889

19,841,093

Diluted

19,844,077

20,036,316

Shares outstanding at period end

19,349,802

19,739,280

Performance ratios

Return on average assets, annualized

1.43

%

0.86

%

Return on average shareholders' equity, annualized

11.89

%

6.47

%

Return on average tangible common equity, annualized

14.31

%

7.95

%

Noninterest income to average assets, annualized

0.56

%

0.44

%

Noninterest expense to average assets, annualized

1.69

%

2.02

%

Yield on average earning assets

4.23

%

4.75

%

Cost of average deposits

0.48

%

1.24

%

Cost of average interest-bearing deposits

0.66

%

1.57

%

Cost of average interest-bearing liabilities

1.02

%

1.83

%

Accretion on loans to average earning assets

0.04

%

0.13

%

Net interest spread

3.21

%

2.92

%

Net interest margin

3.52

%

3.39

%

Efficiency ratio

43.78

%

56.05

%

Common stock dividend payout ratio

18.94

%

26.87

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

As of

June 30,

March 31,

June 30,

2021

2021

2020

Loan to deposit ratio

88.25

%

96.24

%

106.49

%

Core deposits / total deposits

80.04

%

78.97

%

76.84

%

Net non-core funding dependence ratio

0.87

%

4.27

%

9.87

%

Credit Quality Data:

Loans 30-89 days past due

$

5,449

$

10,653

$

23,872

Loans 30-89 days past due to total loans

0.20

%

0.39

%

0.92

%

Nonperforming loans

$

19,243

$

19,911

$

17,217

Nonperforming loans to total loans

0.71

%

0.73

%

0.66

%

Nonperforming assets

$

19,536

$

20,204

$

17,510

Nonperforming assets to total assets

0.50

%

0.55

%

0.56

%

Allowance for loan losses to total loans

1.16

%

1.13

%

0.88

%

Allowance for loan losses to nonperforming loans

162.93

%

154.66

%

132.54

%

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

0.01

%

0.01

%

0.05

%

Regulatory and other capital ratios—Company

Tangible common equity to tangible assets

9.65

%

10.07

%

11.07

%

Tier 1 leverage ratio

10.20

%

11.30

%

11.48

%

Tier 1 common capital to risk-weighted assets

14.76

%

14.53

%

14.87

%

Tier 1 capital to risk-weighted assets

15.33

%

15.11

%

15.49

%

Total capital to risk-weighted assets

23.48

%

23.27

%

21.10

%

Regulatory capital ratios—Bank only

Tier 1 leverage ratio

12.34

%

13.44

%

14.14

%

Tier 1 common capital to risk-weighted assets

18.58

%

17.96

%

19.09

%

Tier 1 capital to risk-weighted assets

18.58

%

17.96

%

19.09

%

Total capital to risk-weighted assets

19.83

%

19.21

%

20.13

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

2nd Quarter

1st Quarter

4th Quarter

3rd Quarter

2nd Quarter

Quarterly Consolidated Statements of Earnings

2021

2021

2020

2020

2020

Interest income

Loans, including fees

$

34,669

$

34,516

$

34,832

$

34,153

$

32,633

Investment securities and other

1,302

1,024

1,032

972

1,470

Total interest income

35,971

35,540

35,864

35,125

34,103

Interest expense

Deposits

3,118

3,662

4,636

5,525

6,715

Interest on subordinated debentures and other

2,356

1,958

1,901

1,905

1,915

Other borrowings

440

435

450

444

439

Total interest expense

5,914

6,055

6,987

7,874

9,069

Net interest income before provision for loan losses

30,057

29,485

28,877

27,251

25,034

Provision for loan losses

628

1,500

3,008

3,861

3,009

Net interest income after provision for loan losses

29,429

27,985

25,869

23,390

22,025

Noninterest income

4,171

5,894

4,490

2,727

2,208

Noninterest expense

14,680

15,792

14,453

13,978

14,819

Earnings before income taxes

18,920

18,087

15,906

12,139

9,414

Income taxes

5,540

5,631

4,759

3,619

2,901

Net income

$

13,380

$

12,456

$

11,147

$

8,520

$

6,513

Net income per common share - basic

$

0.69

$

0.64

$

0.57

$

0.43

$

0.33

Net income per common share - diluted

$

0.67

$

0.63

$

0.56

$

0.43

$

0.33

Cash dividends declared per common share

$

0.13

$

0.12

$

0.09

$

0.06

$

0.06

Cash dividends declared on common shares

$

2,540

$

2,347

$

1,777

$

1,184

$

1,184

Yield on average assets, annualized

1.39

%

1.47

%

1.33

%

1.05

%

0.83

%

Yield on average earning assets

3.99

%

4.49

%

4.55

%

4.63

%

4.65

%

Cost of average deposits

0.41

%

0.55

%

0.71

%

0.87

%

1.10

%

Cost of average interest-bearing deposits

0.59

%

0.73

%

0.93

%

1.14

%

1.42

%

Cost of average interest-bearing liabilities

0.97

%

1.06

%

1.23

%

1.43

%

1.68

%

Accretion on loans to average earning assets

0.02

%

0.06

%

0.03

%

0.08

%

0.16

%

Net interest margin

3.33

%

3.73

%

3.67

%

3.59

%

3.42

%

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 June 30,
2021

As of March 31,
2021

As of December 31,
2020

As of September 30,
2020

As of June 30,
2020

(dollars in thousands)

$

%

$

%

$

%

$

%

$

%

Loans:

Commercial and industrial

$

277,080

10.2

%

$

286,016

10.5

%

$

290,139

10.7

%

$

317,891

11.5

%

$

267,481

10.3

%

SBA

98,572

3.6

%

111,330

4.1

%

97,821

3.6

%

111,193

4.0

%

104,069

4.0

%

Construction and land development

236,965

8.7

%

209,727

7.7

%

186,723

6.9

%

183,569

6.7

%

145,754

5.6

%

Commercial real estate (1)

1,102,467

40.7

%

1,063,104

39.2

%

1,003,637

37.1

%

975,187

35.4

%

900,302

34.7

%

Single-family residential mortgages

984,311

36.3

%

1,041,260

38.3

%

1,124,357

41.5

%

1,163,982

42.2

%

1,174,927

45.3

%

Other loans

9,811

0.5

%

3,768

0.2

%

4,089

0.2

%

3,331

0.2

%

2,087

0.1

%

Total loans (2)

$

2,709,206

100.0

%

$

2,715,205

100.0

%

$

2,706,766

100.0

%

$

2,755,153

100.0

%

$

2,594,620

100.0

%

Allowance for loan losses

(31,352

)

(30,795

)

(29,337

)

(26,634

)

(22,820

)

Total loans, net

$

2,677,854

$

2,684,410

$

2,677,429

$

2,728,519

$

2,571,800

(1)

Includes non-farm and non-residential loans, multi-family residential loans and non-owner occupied single family residential loans.

(2)

Net of discounts and deferred fees and costs.

Three Months Ended

Six Months Ended

Change in Allowance for Loan Losses

June 30,

June 30,

(dollars in thousands)

2021

2020

2021

2020

Beginning balance

$

30,795

$

20,130

$

29,337

$

18,816

Additions to the allowance charged to expense

628

3,009

2,128

4,954

Net charge-offs on loans

(71

)

(319

)

(113

)

(950

)

Ending balance

$

31,352

$

22,820

$

31,352

$

22,820

Tangible Book Value Reconciliations (non-GAAP)

The tangible book value per share is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. The following is a reconciliation of tangible book value to the Company shareholders’ equity computed in accordance with GAAP, as well as a calculation of tangible book value per share as of June 30, 2021 and 2020 and March 31, 2021.

(dollars in thousands, except per share data)

June 30, 2021

March 31, 2021

June 30, 2020

Tangible common equity:

Total shareholders' equity

$

442,325

$

435,668

$

414,025

Adjustments

Goodwill

(69,243

)

(69,243

)

(69,209

)

Core deposit intangible

(4,608

)

(4,895

)

(5,876

)

Tangible common equity

$

368,474

$

361,530

$

338,940

Tangible assets:

Total assets-GAAP

$

3,890,638

$

3,664,299

$

3,136,181

Adjustments

Goodwill

(69,243

)

(69,243

)

(69,209

)

Core deposit intangible

(4,608

)

(4,895

)

(5,876