RBB Bancorp Reports Fourth Quarter and Full Year Earnings for 2020

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Conference Call and Webcast Scheduled for Tuesday, January 26, 2021 at 11:00 a.m. Pacific Time/2:00 p.m. Eastern Time

Fourth Quarter 2020 Highlights

  • Net income of $11.1 million, or $ 0.56 diluted earnings per share, increased $2.6 million, or 30.8%, from the prior quarter and increased $474,000, or 4.4%, from the fourth quarter of 2019

  • Total deposits (excluding brokered deposits) increased by $23.4 million, or 3.6% annualized growth, from the end of the prior quarter

  • Net interest margin of 3.7% increased by 8 basis points from the prior quarter and increased 20 basis points from the fourth quarter of 2019

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 December 31, 2020.

The Company reported net income of $11.1 million, or $ 0.56 diluted earnings per share, for the three months ended December 31, 2020, compared to net income of $8.5 million, or $ 0.43 diluted earnings per share, and $10.7 million, or $0.52 diluted earnings per share, for the three months ended September 30, 2020 and December 31, 2019, respectively.

"Royal Business Bank finished 2020 with strong fourth quarter results, concluding a challenging year that demonstrated the resilience of our differentiated business model," said Mr. Alan Thian, Chairman, President and CEO of RBB Bancorp. "Fourth quarter earnings benefitted from an increase in our net interest margin and gains on loan sales. Higher than anticipated loan payoffs resulted in a modest reduction in our loan portfolio following the strong growth we saw in the third quarter. We anticipate returning to loan growth in the first quarter. Our asset quality remains solid and we remain well capitalized with ample access to liquidity. Loans modified under the CARES Act outstanding continue to decrease and now represent 1.8% of gross loans outstanding."

"Our board of directors approved a quarterly dividend of $0.12 per share, as clarity on our future performance improved," Mr. Thian concluded.

Key Performance Ratios

Net income of $11.1 million for the fourth quarter of 2020 produced an annualized return on average assets of 1.33%, an annualized return on average tangible common shareholders’ equity of 12.58%, and an annualized return on average shareholders’ equity of 10.38%. This compares to an annualized return on average assets of 1.05%, an annualized return on average tangible common shareholders’ equity of 9.81%, and an annualized return on average shareholders’ equity of 8.06% for the third quarter of 2020. The efficiency ratio for the fourth quarter of 2020 was 43.32%, compared to 46.63% for the prior quarter. The improvement in the efficiency ratio was primarily due to improved net interest income and non-interest income.

Net Interest Income and Net Interest Margin

Net interest income, before provision for loan losses, was $28.9 million for the fourth quarter of 2020, compared to $27.3 million for the third quarter of 2020. The $1.6 million increase was primarily attributable to a $114.1 million increase in average earning assets and a $21.5 million increase in average noninterest-bearing deposits, partially offset by a $73.6 million increase in average interest-bearing liabilities. Net interest income was also favorably impacted by an 8 basis point increase in the net interest margin. Accretion of purchase discounts from prior acquisitions contributed $275,000 to net interest income in the fourth quarter of 2020, compared to $634,000 in the third quarter of 2020.

Compared to the fourth quarter of 2019, net interest income, before provision for loan losses, increased $5.8 million from $23.1 million. The increase was primarily attributable to a $492.4 million increase in average earning assets and a $170.9 million increase in average noninterest-bearing deposits, partially offset by a $331.5 million increase in average interest-bearing liabilities. 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 3.67% for the fourth quarter of 2020, an increase of 8 basis points from 3.59% in the third quarter of 2020. The increase was primarily attributable to a 16 basis point decrease in the cost of total deposits and a 13 basis point decrease in the cost of borrowings (FHLB advances, long-term debt and subordinated debentures), partially offset by an 8 basis point decrease in the yield on average earning assets. Loan discount accretion contributed 3 basis points to the net interest margin in the fourth quarter of 2020, compared to 8 basis points in the third quarter of 2020.

Noninterest Income

Noninterest income was $4.5 million for the fourth quarter of 2020, an increase of $1.8 million from $2.7 million in the third quarter of 2020. The increase was driven by an increase in gain on loan sales of $1.7 million as the Company sold $30.6 million more loans in the fourth quarter than in the prior quarter generally due to increased market activity following the initial impact of the COVID-19 pandemic.

The Company sold $24.7 million in FNMA qualified mortgage loans for a net gain of $645,000 and sold $24.3 million in qualified and non-qualified mortgage loans to private investors for a gain of $1.2 million during the fourth quarter of 2020. This compared to $17.7 million in FNMA qualified mortgage loans for a net gain of $536,000 and $11.8 million in non-qualified mortgage loans to private investors for a gain of $224,000 during the third quarter of 2020. The Company sold $11.3 million in SBA loans during the fourth quarter of 2020 for a net gain of $595,000, compared to no SBA loans sold during the third quarter of 2020.

Compared to the fourth quarter of 2019, noninterest income decreased by $1.3 million from $5.8 million. The decrease was primarily attributable to a decrease of $1.3 million in gain on loan sales and a decrease of $611,000 in loan servicing fees.

Noninterest Expense

Noninterest expense for the fourth quarter of 2020 was $14.5 million, compared to $14.0 million for the third quarter of 2020. The $475,000 increase was primarily attributable to a $506,000 increase in compensation and employee benefits expenses, $164,000 increase in marketing and business promotion expenses, partially offset by a $188,000 decrease in data processing expenses, and a $153,000 decrease in insurance and regulatory assessments.

Noninterest expense increased from $13.5 million in the fourth quarter of 2019. The $988,000 increase was primarily due to a $515,000 increase in data processing expense, a $477,000 increase in legal and professional expense, and a $284,000 increase in salaries and employee benefits expenses. These were partially offset by a $226,000 decrease in merger and conversion expenses, and a $172,000 decrease in OREO expense.

Income Taxes

The effective tax rate was 29.92% for the fourth quarter of 2020, 29.81% for the third quarter of 2020, and 27.99% for the fourth quarter of 2019.

Loan Portfolio

Loans held for investment, net of deferred fees and discounts, totaled $2.7 billion as of December 31, 2020, a decrease of $48.4 million from September 30, 2020, and an increase of $509.8 million from December 31, 2019. The decrease from the prior quarter was primarily due to an increase in loan payoffs. Single-family residential mortgages decreased by $39.6 million net of payoffs, paydowns and loan sales. Commercial real estate loans increased by $28.5 million, construction and land development loans increased by $3.2 million, other loans increased by $758,000, SBA loans decreased by $13.4 million, and commercial and industrial loans decreased by $27.8 million.

During the fourth quarter of 2020, single-family residential mortgage production was $110.3 million (mortgage loans held for investment and held for sale), payoffs and paydowns were $74.5 million, and single-family residential mortgage loan sales were $49.3 million. During the third quarter of 2020, single-family residential mortgage production was $82.6 million, payoffs and paydowns were $45.7 million, and loan sales were $49.0 million.

Mortgage loans held for sale were $50.0 million as of December 31, 2020, an increase of $26.1 million from $23.9 million at September 30, 2020 and a decrease of $58.2 million from $108.2 million as of December 31, 2019. The Company originated approximately $50.0 million in mortgage loans for sale for the fourth quarter of 2020, compared with $28.7 million during the prior quarter. In the fourth quarter, SBA loan production was $5.8 million and total loan sales were $11.1 million.

Deposits

Deposits were $2.6 billion at December 31, 2020, an increase of $23.4 million from September 30, 2020, and an increase of $432.9 million from December 31, 2019, excluding brokered deposits. The increase in total deposits from the prior quarter was primarily attributable to organic deposit growth. Noninterest-bearing deposits decreased by $25.1 million and interest-bearing non-maturity deposits increased by $76.7 million. Time deposits decreased by $28.2 million. As of December 31, 2020, time deposits included $17.4 million in brokered CDs, as compared to $17.4 million as of September 30, 2020 and $67.1 million as of December 31, 2019.

Asset Quality

Nonperforming assets totaled $19.8 million, or 0.59% of total assets at December 31, 2020, compared to $18.3 million, or 0.54%, of total assets at September 30, 2020. The increase in nonperforming assets was primarily due to an increase in non-accrual loans. 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 $12.8 million to $8.9 million at December 31, 2020 from $21.7 million at September 30, 2020.

In the fourth quarter of 2020, there were $305,000 in net charge-offs, up from $47,000 in the prior quarter.

The Company recorded a provision for credit losses of $3.0 million for the fourth quarter of 2020, a decrease from $3.9 million in the prior quarter, primarily attributable to lower loan balances.

The allowance for loan losses totaled $29.3 million, or 1.08% of loans held for investment at December 31, 2020, compared with $26.6 million, or 0.97%, of total loans at September 30, 2020.

As of December 31, 2020, borrowers representing 256 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.

We have received 14 requests for payment deferments from our SBA customers. All SBA deferments are three-months, 13 of which started in October 2020. As of January 15, 2021 none of the SBA borrowers have made a payment due to waiting on new SBA payment support program that was part of the recent stimulus bill. The following table details the 14 SBA loan deferments:

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

7

$

29,591

75

%

$

22,193

$

7,398

7.6

%

General retail

2

3,195

72

%

2,396

799

0.8

%

Restaurant

1

1,846

75

%

1,384

461

0.5

%

Transportation

3

1,042

30

%

782

261

0.3

%

Fitness

1

101

0

%

86

15

0.0

%

14

$

35,775

$

26,841

$

8,934

9.1

%

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

As of June 30, 2020

As of October 23, 2020

As of January 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

3

$

26,840

2

$

3,174

Mixed use commercial

38

58,841

4

10,547

1

7,500

Hospitality (excluding SBA) (1)

5

25,343

2

12,929

1

6,419

Restaurants (excluding SBA)

11

4,186

1

12

Multifamily

6

9,086

Commercial, office and other (1)

6

22,983

5

19,881

5

18,742

SFR mortgage loans - Western region

183

118,484

38

29,604

14

8,770

SFR mortgage loans - Eastern region

203

85,935

10

4,106

11

4,925

SFR mortgage loans - Chicago metropolitan

84

14,824

4

719

1

249

Total

570

$

433,933

67

$

104,638

35

$

49,779

(1) Loans with a principal amount of $23.5 million are principal deferments only. Interest is paid up to date.

The Company does not have any shared national credits or loans, backed by airlines or cruise lines, on deferral as of January 15, 2021.

Properties

In October 2020, we closed the Flushing Financial Center branch and consolidated operations into our Roosevelt branch location.

The Bank opened a new full service banking branch in Edison, New Jersey on December 1, 2020. The branch is 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 the second half of 2021. The Bank has leased a location on Canal Street in Manhattan to which to move our Bowery Street branch in mid-2021.

Corporate Overview

RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. The Company has total assets of $3.3 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, and Edison, New Jersey. 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, three branches in Chicago, Illinois and one branch in Edison, New Jersey. 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, January 26, 2021, to discuss the Company’s fourth quarter 2020 financial results.

To listen to the conference call, please dial 1-833-519-1355 or 1-918-922-6505, passcode 5947189. A replay of the call will be made available at 1-800-585-8367 or 1-404-537-3406, passcode 5947189, approximately one hour after the conclusion of the call and will remain available through February 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 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)

December 31

September 30

June 30

March 31

December 31

2020

2020

2020

2019

2019

Assets

Cash and due from banks

$

137,654

$

121,630

$

94,844

$

250,079

$

114,763

Federal funds sold and other cash equivalents

57,000

57,000

57,000

67,000

Total cash and cash equivalents

194,654

178,630

151,844

250,079

181,763

Interest-bearing deposits in other financial institutions

600

600

600

1,196

600

Investment securities available for sale

210,867

214,662

185,756

58,537

126,069

Investment securities held to maturity

7,174

7,569

7,615

9,449

8,332

Mortgage loans held for sale

49,963

23,886

15,479

375,430

108,194

Loans held for investment

2,706,766

2,755,153

2,594,620

2,120,413

2,196,934

Allowance for loan losses

(29,337

)

(26,634

)

(22,820

)

(18,236

)

(18,816

)

Net loans held for investment

2,677,429

2,728,519

2,571,800

2,102,177

2,178,118

Premises and equipment, net

27,103

24,237

23,965

17,342

16,813

Federal Home Loan Bank (FHLB) stock

15,641

15,641

15,641

8,899

15,000

Net deferred tax assets

2,547

1,080

4,389

2,326

Cash surrender value of life insurance

35,121

34,930

34,736

33,769

34,353

Goodwill

69,243

69,243

69,209

58,383

58,563

Servicing assets

13,965

14,724

15,595

17,288

17,083

Core deposit intangibles

5,196

5,519

5,876

7,212

6,100

Accrued interest and other assets

40,569

40,336

38,065

33,968

35,221

Total assets

$

3,350,072

$

3,359,576

$

3,136,181

$

2,978,118

$

2,788,535

Liabilities and shareholders' equity

Deposits:

Noninterest-bearing demand

$

617,206

$

642,332

$

574,553

$

418,953

$

458,763

Savings, NOW and money market accounts

731,084

654,378

601,941

480,959

537,490

Time deposits

1,286,838

1,315,038

1,260,026

1,284,428

1,252,685

Total deposits

2,635,128

2,611,748

2,436,520

2,184,340

2,248,938

FHLB advances

150,000

190,000

150,000

275,000

Long-term debt, net of debt issuance costs

104,391

104,305

104,220

103,793

104,049

Subordinated debentures

14,283

14,229

14,174

9,548

9,673

Accrued interest and other liabilities

17,782

17,878

17,242

20,634

18,185

Total liabilities

2,921,584

2,938,160

2,722,156

2,593,315

2,380,845

Shareholders' equity:

Shareholder's equity

427,287

420,329

412,827

385,395

407,379

Non-controlling interest

72

72

72

72

72

Accumulated other comprehensive income - Net of tax

1,129

1,015

1,126

(664

)

239

Total shareholders' equity

428,488

421,416

414,025

384,803

407,690

Total liabilities and shareholders’ equity

$

3,350,072

$

3,359,576

$

3,136,181

$

2,978,118

$

2,788,535

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share amounts)

For the three months ended

December 31, 2020

September 30, 2020

December 31, 2019

Interest and dividend income:

Interest and fees on loans

$

34,832

$

34,153

$

32,178

Interest on interest-bearing deposits

55

61

373

Interest on investment securities

639

621

676

Dividend income on FHLB stock

193

190

264

Interest on federal funds sold and other

145

100

416

Total interest income

35,864

35,125

33,907

Interest expense:

Interest on savings deposits, NOW and money market accounts

736

779

1,237

Interest on time deposits

3,900

4,746

7,559

Interest on subordinated debentures and long term debt

1,901

1,905

1,915

Interest on other borrowed funds

450

444

73

Total interest expense

6,987

7,874

10,784

Net interest income before provision for loan losses

28,877

27,251

23,123

Provision for loan losses

3,008

3,861

659

Net interest income after provision for loan losses

25,869

23,390

22,464

Noninterest income:

Service charges, fees and other

1,565

1,143

1,096

Gain on sale of loans

2,445

760

3,762

Loan servicing fees, net of amortization

206

546

817

Recoveries on loans acquired in business combinations

5

32

70

Gain on derivatives

78

Increase in cash surrender value of life insurance

191

194

195

Gain on sale of securities

52

(Loss)/Gain on sale of other real estate owned

(117

)

Total noninterest income

4,490

2,727

5,823

Noninterest expense:

Salaries and employee benefits

8,105

7,599

7,821

Occupancy and equipment expenses

2,400

2,360

2,390

Data processing

1,012

1,200

497

Legal and professional

794

675

317

Office expenses

295

271

292

Marketing and business promotion

295

131

382

Insurance and regulatory assessments

210

363

147

Core deposit premium

324

357

344

OREO expenses

4

3

176

Merger and conversion expenses

5

62

231

Other expenses

1,009

957

868

Total noninterest expense

14,453

13,978

13,465

Income before income taxes

15,906

12,139

14,822

Income tax expense

4,759

3,619

4,149

Net income

$

11,147

$

8,520

$

10,673

Net income per share

Basic

$

0.57

$

0.43

$

0.53

Diluted

$

0.56

$

0.43

$

0.52

Cash Dividends declared per common share

$

0.09

$

0.06

$

0.10

Weighted-average common shares outstanding

Basic

19,655,621

19,717,568

20,001,916

Diluted

19,812,401

19,804,892

20,389,099

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited, except for December 31, 2019)

(Dollars in thousands, except per share amounts)

For the twelve months ended

December 31, 2020

December 31, 2019

Interest and dividend income:

Interest and fees on loans

$

133,894

$

135,159

Interest on interest-earning deposits

641

1,785

Interest on investment securities

2,968

2,652

Dividend income on FHLB stock

572

1,079

Interest on federal funds sold and other

1,045

1,050

Total interest income

139,120

141,725

Interest expense:

Interest on savings deposits, NOW and money market accounts

3,540

4,886

Interest on time deposits

21,665

29,347

Interest on subordinated debentures and long term debt

7,677

7,698

Interest on other borrowed funds

1,483

2,930

Total interest expense

34,365

44,861

Net interest income

104,755

96,864

Provision for loan losses

11,823

2,390

Net interest income after provision for loans losses

92,932

94,474

Noninterest income:

Service charges, fees and other

4,852

4,072

Gain on sale of loans

5,997

9,893

Loan servicing fees, net of amortization

2,052

3,383

Recoveries on loans acquired in business combinations

84

143

Unrealized gain on equity investments

147

Increase in cash surrender value of life insurance

767

775

Gain on derivatives

78

Gain on sale of securities

210

7

Gain on sale of fixed assets

6

Loss on sale of other real estate owned

(106

)

Total noninterest income

14,040

18,320

Noninterest expense:

Salaries and employee benefits

33,312

32,909

Occupancy and equipment expenses

9,691

9,750

Data processing

4,236

3,699

Legal and professional

2,743

1,832

Office expenses

1,226

1,257

Marketing and business promotion

751

1,308

Insurance and regulatory assessments

984

900

Core deposit premium

1,395

1,501

OREO expenses

35

337

Merger expenses

746

471

Other expenses

4,394

3,509

Total noninterest expense

59,513

57,473

Income before income taxes

47,459

55,321

Income tax expense

14,531

16,112

Net income

$

32,928

$

39,209

Net income per share

Basic

$

1.66

$

1.96

Diluted

$

1.65

$

1.92

Cash Dividends declared per common share

$

0.33

$

0.40

Weighted-average common shares outstanding

Basic

19,763,422

20,017,306

Diluted

19,921,859

20,393,424

RBB BANCORP AND SUBSIDIARIES

AVERAGE BALANCE SHEET AND NET INTEREST INCOME

(Unaudited)

(Dollars in thousands, except per share amounts)

For the three months ended

December 31, 2020

September 30, 2020

December 31, 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)

$

188,430

$

393

0.83

%

$

179,521

$

351

0.78

%

$

172,431

$

1,053

2.42

%

Securities

Available for sale

222,762

579

1.03

%

168,151

558

1.32

%

94,400

605

2.54

%

Held to maturity (2)

7,383

68

3.66

%

7,604

71

3.71

%

8,441

80

3.76

%

Mortgage loans held for sale

41,265

325

3.13

%

19,848

171

3.43

%

244,706

2,969

4.81

%

Loans held for investment: (3)

Real estate

2,282,937

29,705

5.18

%

2,266,752

29,616

5.20

%

1,793,647

24,182

5.35

%

Commercial

390,980

4,802

4.89

%

377,789

4,366

4.60

%

327,765

5,027

6.08

%

Total loans

2,673,917

34,507

5.13

%

2,644,541

33,982

5.11

%

2,121,412

29,209

5.46

%

Total earning assets

3,133,757

$

35,872

4.55

%

3,019,665

$

35,133

4.63

%

2,641,390

$

33,916

5.09

%

Noninterest-earning assets

196,071

204,638

165,659

Total assets

$

3,329,828

$

3,224,303

$

2,807,049

Interest-bearing liabilities

NOW and money market deposits

$

566,695

$

704

0.49

%

$

514,271

$

748

0.58

%

$

416,380

$

1,189

1.13

%

Savings deposits

128,727

32

0.10

%

126,635

31

0.10

%

96,813

48

0.20

%

Time deposits

1,293,070

3,900

1.20

%

1,284,351

4,746

1.47

%

1,296,379

7,559

2.31

%

Total interest-bearing deposits

1,988,492

4,636

0.93

%

1,925,257

5,525

1.14

%

1,809,572

8,796

1.93

%

FHLB advances

161,957

450

1.11

%

151,739

444

1.16

%

14,348

73

2.02

%

Long-term debt

104,335

1,748

6.67

%

104,252

1,748

6.67

%

103,997

1,748

6.67

%

Subordinated debentures

14,248

153

4.27

%

14,195

157

4.40

%

9,648

167

6.87

%

Total interest-bearing liabilities

2,269,032

6,987

1.23

%

2,195,443

7,874

1.43

%

1,937,565

10,784

2.21

%

Noninterest-bearing liabilities

Noninterest-bearing deposits

616,803

595,264

445,891

Other noninterest-bearing liabilities

16,830

13,270

19,851

Total noninterest-bearing liabilities

633,633

608,534

465,742

Shareholders' equity

427,163

420,326

403,742

Total liabilities and shareholders' equity

$

3,329,828

$

3,224,303

$

2,807,049

Net interest income / interest rate spreads

$

28,885

3.32

%

$

27,259

3.20

%

$

23,132

2.88

%

Net interest margin

3.67

%

3.59

%

3.47

%

(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 twelve months ended

December 31, 2020

December 31, 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)

$

212,594

$

2,257

1.06

%

$

135,133

$

3,914

2.90

%

Securities

Available for sale

175,307

2,714

1.55

%

85,775

2,354

2.74

%

Held to maturity (2)

7,665

289

3.77

%

8,978

334

3.72

%

Mortgage loans held for sale

41,019

1,779

4.34

%

325,039

15,754

4.85

%

Loans held for investment: (3)

Real estate

2,176,695

113,966

5.24

%

1,767,923

97,024

5.49

%

Commercial

367,718

18,149

4.94

%

345,010

22,381

6.49

%

Total loans

2,544,413

132,115

5.19

%

2,112,933

119,405

5.65

%

Total earning assets

2,980,998

$

139,154

4.67

%

2,667,858

$

141,761

5.31

%

Noninterest-earning assets

204,617

167,324

Total assets

$

3,185,615

$

2,835,182

Interest-bearing liabilities

NOW and money market deposits

$

504,905

$

3,391

0.67

%

$

395,376

$

4,689

1.19

%

Savings deposits

123,568

149

0.12

%

97,670

197

0.20

%

Time deposits

1,312,443

21,665

1.65

%

1,279,344

29,347

2.29

%

Total interest-bearing deposits

1,940,916

25,205

1.30

%

1,772,390

34,233

1.93

%

FHLB advances

129,071

1,483

1.15

%

114,388

2,930

2.56

%

Long-term debt

104,210

6,990

6.71

%

103,870

6,991

6.73

%

Subordinated debentures

14,228

687

4.83

%

9,586

707

7.38

%

Total interest-bearing liabilities

2,188,425

$

34,365

1.57

%

2,000,234

$

44,861

2.24

%

Noninterest-bearing liabilities

Noninterest-bearing deposits

564,111

421,174

Other noninterest-bearing liabilities

15,164

19,879

Total noninterest-bearing liabilities

579,275

441,053

Shareholders' equity

417,915

393,895

Total liabilities and shareholders' equity

$

3,185,615

$

2,835,182

Net interest income / interest rate spreads

$

104,789

3.10

%

$

96,900

3.07

%

Net interest margin

3.52

%

3.63

%

(1)

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

and other miscellaneous interest-bearing assets.

(2)

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

(3)

Average loan balances include nonaccrual loans and loans held for sale. Interest income on loans includes -

amortization of deferred loan fees, net of deferred loan costs.

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

For the three months ended

December 31

September 30,

December 31

2020

2020

2019

Per share data (common stock)

Earnings

Basic

$

0.57

$

0.43

$

0.53

Diluted

$

0.56

$

0.43

$

0.52

Dividends declared

$

0.09

$

0.06

$

0.10

Basic, excluding merger and conversion expense

$

0.57

$

0.43

$

0.54

Diluted, excluding merger and conversion expense

$

0.56

$

0.43

$

0.53

Book value

$

21.90

$

21.35

$

20.35

Tangible book value

$

18.10

$

17.56

$

17.12

Weighted average shares outstanding

Basic

19,655,621

19,717,568

20,001,916

Diluted

19,812,401

19,804,892

20,389,099

Shares outstanding at period end

19,565,921

19,739,280

20,030,866

Performance ratios

Return on average assets, annualized

1.33

%

1.05

%

1.51

%

Return on average shareholders' equity, annualized

10.38

%

8.06

%

10.49

%

Return on average tangible common equity, annualized

12.58

%

9.81

%

12.50

%

Noninterest income to average assets, annualized

0.54

%

0.34

%

0.82

%

Noninterest expense to average assets, annualized

1.73

%

1.72

%

1.90

%

Yield on average earning assets

4.55

%

4.63

%

5.09

%

Cost of average deposits

0.71

%

0.87

%

1.55

%

Cost of average interest-bearing deposits

0.93

%

1.14

%

1.93

%

Cost of average interest-bearing liabilities

1.23

%

1.43

%

2.21

%

Accretion on loans to average earning assets

0.03

%

0.08

%

0.10

%

Net interest spread

3.32

%

3.20

%

2.88

%

Net interest margin

3.67

%

3.59

%

3.47

%

Efficiency ratio

43.32

%

46.63

%

46.52

%

Common stock dividend payout ratio

15.79

%

13.95

%

18.87

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

For the twelve months ended December 31,

2020

2019

Per share data (common stock)

Earnings

Basic

$

1.66

$

1.96

Diluted

$

1.65

$

1.92

Basic, excluding merger expense

$

1.69

$

1.99

Diluted, excluding merger expense

$

1.68

$

1.94

Dividends declared

$

0.33

$

0.40

Book value

$

21.90

$

20.35

Tangible book value

$

18.10

$

17.12

Weighted average shares outstanding

Basic

19,763,422

20,017,306

Diluted

19,921,859

20,393,424

Shares outstanding at period end

19,565,921

20,030,866

Performance ratios

Return on average assets, annualized

1.03

%

1.38

%

Return on average shareholders' equity, annualized

7.88

%

9.95

%

Return on average tangible common equity, annualized

9.62

%

11.93

%

Noninterest income to average assets, annualized

0.44

%

0.65

%

Noninterest expense to average assets, annualized

1.87

%

2.03

%

Yield on average earning assets

4.67

%

5.31

%

Cost of average deposits

1.01

%

1.56

%

Cost of average interest-bearing deposits

1.30

%

1.93

%

Cost of average interest-bearing liabilities

1.57

%

2.24

%

Accretion on loans to average earning assets

0.08

%

0.11

%

Net interest spread

3.10

%

3.07

%

Net interest margin

3.52

%

3.63

%

Efficiency ratio

50.10

%

49.90

%

Common stock dividend payout ratio

19.88

%

20.41

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

As of

December 31,

September 30,

December 31,

2020

2020

2019

Loan to deposit ratio

102.72

%

105.49

%

97.69

%

Core deposits / total deposits

76.65

%

99.34

%

70.46

%

Net non-core funding dependence ratio

12.47

%

14.47

%

21.04

%

Credit Quality Data:

Loans 30-89 days past due

$

8,939

$

21,735

$

4,393

Loans 30-89 days past due to total loans

0.33

%

0.79

%

0.20

%

Nonperforming loans

$

19,554

$

17,975

$

13,218

Nonperforming loans to total loans

0.72

%

0.65

%

0.60

%

Nonperforming assets

$

19,847

$

18,268

$

13,511

Nonperforming assets to total assets

0.59

%

0.54

%

0.48

%

Allowance for loan losses to total loans

1.08

%

0.97

%

0.86

%

Allowance for loan losses to nonperforming loans

150.03

%

148.17

%

142.35

%

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

0.05

%

0.01

%

0.23

%

Regulatory and other capital ratios—Company

Tangible common equity to tangible assets

10.81

%

10.55

%

12.59

%

Tier 1 leverage ratio

11.32

%

11.47

%

12.89

%

Tier 1 common capital to risk-weighted assets

14.63

%

14.11

%

17.16

%

Tier 1 capital to risk-weighted assets

15.22

%

14.69

%

17.65

%

Total capital to risk-weighted assets

20.78

%

20.05

%

23.82

%

Regulatory capital ratios—Bank only

Tier 1 leverage ratio

14.09

%

14.16

%

15.23

%

Tier 1 common capital to risk-weighted assets

18.95

%

18.13

%

20.87

%

Tier 1 capital to risk-weighted assets

18.95

%

18.13

%

20.87

%

Total capital to risk-weighted assets

20.20

%

19.26

%

21.86

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

4th Quarter

3rd Quarter

2nd Quarter

1st Quarter

4th Quarter

Quarterly Consolidated Statements of Earnings

2020

2020

2020

2020

2019

Interest income

Loans, including fees

$

34,832

$

34,153

$

32,633

$

32,276

$

32,178

Investment securities and other

1,032

972

1,470

1,752

1,729

Total interest income

35,864

35,125

34,103

34,028

33,907

Interest expense

Deposits

4,636

5,525

6,715

8,329

8,796

Interest on subordinated debentures and other

1,901

1,905

1,915

1,956

1,915

Other borrowings

450

444

439

150

73

Total interest expense

6,987

7,874

9,069

10,435

10,784

Net interest income before provision for loan losses

28,877

27,251

25,034

23,593

23,123

Provision for loan losses

3,008

3,861

3,009

1,945

659

Net interest income after provision for loan losses

25,869

23,390

22,025

21,648

22,464

Noninterest income

4,490

2,727

2,208

4,615

5,823

Noninterest expense

14,453

13,978

14,819

16,263

13,465

Earnings before income taxes

15,906

12,139

9,414

10,000

14,822

Income taxes

4,759

3,619

2,901

3,252

4,149

Net income

$

11,147

$

8,520

$

6,513

$

6,748

$

10,673

Net income per common share - basic

$

0.57

$

0.43

$

0.33

$

0.34

$

0.53

Net income per common share - diluted

$

0.56

$

0.43

$

0.33

$

0.33

$

0.52

Cash dividends declared per common share

$

0.09

$

0.06

$

0.06

$

0.12

$

0.10

Cash dividends declared on common shares

$

1,777

$

1,184

$

1,184

$

2,407

$

2,003

Yield on average assets, annualized

1.33

%

1.05

%

0.83

%

0.90

%

1.51

%

Yield on average earning assets

4.55

%

4.63

%

4.60

%

4.86

%

5.09

%

Cost of average deposits

0.71

%

0.87

%

1.09

%

1.38

%

1.55

%

Cost of average interest-bearing deposits

0.93

%

1.14

%

1.41

%

1.72

%

1.93

%

Cost of average interest-bearing liabilities

1.23

%

1.43

%

1.66

%

1.98

%

2.21

%

Accretion on loans to average earning assets

0.03

%

0.08

%

0.13

%

0.10

%

0.10

%

Net interest margin

3.67

%

3.59

%

3.38

%

3.37

%

3.47

%

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
December 31, 2020

As of
September 30, 2020

As of
June 30, 2020

As of
March 31, 2020

As of
December 31, 2019

(dollars in thousands)

$

%

$

%

$

%

$

%

$

%

Loans:

Commercial and industrial

$

290,139

10.7

$

317,891

11.5

$

267,481

10.3

$

275,602

11.5

$

274,586

12.5

SBA

97,821

3.6

111,193

4.0

104,069

4.0

77,566

3.2

74,985

3.4

Construction and land development

186,723

6.9

183,569

6.7

145,754

5.6

120,115

5.0

96,020

4.4

Commercial real estate (1)

1,003,637

37.1

975,187

35.4

900,302

34.7

854,580

35.6

793,268

36.1

Single-family residential mortgages

1,124,357

41.5

1,163,982

42.2

1,174,927

45.3

1,070,649

44.6

957,254

43.6

Other loans

4,089

0.2

3,331

0.2

2,087

0.1

1,470

0.1

821

0.0

Total loans (2)

$

2,706,766

100.0

$

2,755,153

100.0

$

2,594,620

100.0

$

2,399,982

100.0

$

2,196,934

100.0

Allowance for loan losses

(29,337

)

(26,634

)

(22,820

)

(20,130

)

(18,816

)

Total loans, net

$

2,677,429

$

2,728,519