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RBB Bancorp : Reports Second Quarter Earnings for 2019

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07/22/2019 | 09:05pm EDT

LOS ANGELES, July 22, 2019/PRNewswire/ -- 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, 2019.

The Company reported net income of $10.1 million, or $0.50 diluted earnings per share, for the three months ended June 30, 2019, compared to net income of $10.4 million, or $0.51diluted earnings per share, and $9.4 million, or 0.54 diluted earnings per share, for the three months ended March 31, 2019and June 30, 2018, respectively.

'We are pleased with our operating performance for the second quarter,' said Mr. Alan Thian, Chairman, President and CEO. 'We made significant progress on our balance sheet initiatives, selling $175.0 millionin residential mortgage loans during the quarter and reducing our reliance on wholesale funding by $235.0 million. Our focus on increasing core deposits helped drive our deposit growth and we continued to experience low credit costs and well-managed expenses. These factors all contributed to another solid quarter of net income.

'Our integration of First American International Corp. is nearly complete. We have optimized its operational footprint, with the closing of two non-banking offices and one branch and the opening of one new branch. We have also renegotiated and entered into new contracts with our core system vendor. We are making good progress on introducing our business deposit and commercial lending products to the First American branch network and anticipate future growth from that franchise. Our last project is to implement a common residential mortgage origination platform for both regions.

'With our balance sheet repositioning nearly complete and given our loan pipeline, we are looking forward to resuming growth at a more normalized rate. In addition to organic growth opportunities, we plan to continue to expand our franchise through a combination of acquisitions and de novo branch openings,' concluded Mr. Thian.

Key Performance Ratios

Net income of $10.1 millionfor the second quarter of 2019 produced an annualized return on average assets of 1.43%, an annualized return on average tangible common equity of 12.51%, and an annualized return on average equity of 10.42%. This compares to an annualized return on average assets of 1.44%, an annualized return on average tangible common equity of 13.26%, and an annualized return on average equity of 10.98% for the first quarter of 2019. The efficiency ratio for the second quarter of 2019 was 50.0%, compared to 50.9% for the prior quarter. Normalizing for the 1,035,000 shares issued for options in 2018 and the 3,011,787 shares issued as a result of the First American International Corp. acquisition, diluted earnings per share would have been $0.52for the quarter ended June 30, 2019and $0.48for the quarter ended June 30, 2018.

Net Interest Income and Net Interest Margin

Net interest income, before provision for loan losses, was $24.3 millionfor the second quarter of 2019, compared to $25.9 millionfor the first quarter of 2019. The $1.6 milliondecrease was primarily attributable to a $94.7 million decrease in average loans held for sale and a $6.3 milliondecrease in average total loans held for investment, partially offset by a $74.3 milliondecrease in average interest-bearing liabilities. Net interest income was also impacted by a 20 basis point decrease in the net interest margin. Accretion of purchase discounts contributed $753,000to net interest income in the second quarter of 2019, compared to $1.1 millionin the first quarter of 2019.

Compared to the second quarter of 2018, net interest income, before provision for loan losses, increased from $17.8 million. The increase was primarily attributable to a $1.0 billionincrease in average earning assets, partially offset by a 73 basis point decrease in the net interest margin.

Net interest margin was 3.64% for the second quarter of 2019, a decrease from 3.84% in the first quarter of 2019. The decrease was primarily attributable to a 12 basis point increase in the cost of interest bearing liabilities, and a 14 basis point decrease in the yield on average earning assets resulting from lower average loan yields. Loan discount accretion contributed 11 basis points to the net interest margin in the second quarter of 2019, compared to 16 basis points in the first quarter of 2019.

Noninterest Income

Noninterest income was $5.5 millionfor the second quarter of 2019, an increase of $1.3 millionfrom $4.2 millionin the first quarter of 2019. The increase was driven by an increase in gain on loan sales of $922,000, higher service charges and fees of $402,000, higher net loan servicing fees of $59,000, and an increase in recoveries on loans acquired in business combinations of $49,000. These were partially offset by a decrease in unrealized gain on equity investments of $147,000.

The Company sold $175.0 million in mortgage loans for a net gain of $2.5million during the second quarter of 2019, compared to $129.8 millionin mortgage loan sales for a net gain of $1.9 millionduring the first quarter. The Company originated $28.3 million in mortgage loans for sale for the second quarter of 2019, compared with $49.0 millionduring the prior quarter.

The Company sold $10.0 million in SBA loans for a net gain of $616,000during the second quarter of 2019, compared to $3.7 millionin SBA loans sold for a net gain of $125,000during the first quarter of 2019.

The Company sold $1.6 millionin commercial real estate loans for a net gain of $24,000in the second quarter of 2019. In the prior quarter, $8.8 millionloans were sold for a gain of $154,000.

Compared to the second quarter of 2018, noninterest income increased by $2.7 millionfrom $2.8 million. The increase was primarily attributable to an increase of $1.0 millionin gain on sale of loans and a $776,000increase in service charges and fees, and an increase of $841,000in net loan servicing fees, mostly attributable to the First American International Bank merger.

Noninterest Expense

Noninterest expense for the second quarter of 2019 was $14.9 million, compared to $15.3 millionfor the first quarter of 2019. The $426,000 decrease was primarily attributable to a $949,000decrease in salaries and employee benefits expenses and a $235,000decrease in merger and other expenses, partially offset by a $422,000increase in occupancy and equipment expenses, of which $225,000was for prior period New York Cityproperty taxes, a $231,000increase in legal and professional expenses and a $210,000increase in data processing expenses, of which $82,000was for duplicative services which were not yet converted.

Compared to the second quarter of 2018, noninterest expense increased from $8.2 millionto $14.9 million. The $6.7 millionincrease was primarily due to an increase in salaries and employee benefits of $3.5 million, occupancy and equipment expenses of $1.8 million, data processing expenses of $732,000, and amortization of intangibles of $308,000. The increase in salary expense is attributable to additional staff for expansion and the First American acquisition. The increase in occupancy expense is mainly due to the First American International Corp. acquisition, including the new branch in Flushing, NYand our new Irvinelocation in Orange County, CA.

Income Taxes

The effective tax rate was 30.3%, including the tax impact for stock options exercised in the amount of $52,000for the second quarter of 2019, 27.1%, including the impact of a deduction for stock options exercised in the amount of $92,000, for the first quarter, and 19.5% for the second quarter of 2018, which included the impact of a deduction for stock options exercised in the amount of $1.2 million.

Loan Portfolio

Loans held for investment, net of deferred fees and discounts, totaled $2.1 billionas of June 30, 2019, a decrease of $28.0 millionfrom March 31, 2019, and an increase of $808.4 million from June 30, 2018. The slight decline in loans held for investment from the end of the first quarter was primarily due to loans sold that were previously classified as loans held for investment of $107.7 million, partially offset by an increase in loan production.

Mortgage loans held for sale were $249.6 million as of June 30, 2019, a decrease of $125.8 million from $375.4 millionat March 31, 2019.

Deposits

Deposits were $2.2 billionat June 30, 2019, an increase of $51.0 millionfrom March 31, 2019, and an increase of $810.9 millionfrom June 30, 2018. The increase in total deposits from the end of the prior quarter was primarily attributable to a $91.3 millionincrease in retail time deposits, partially offset by a decrease of $47.9 millionin brokered time deposits. We continue to experience customers moving funds to time deposits from savings, NOW and money market accounts, given the current expectations for lower interest rates. Non-maturity deposits decreased by $1.8 millionin the quarter. As of June 30, 2019, deposits included $135.0 millionin brokered CDs.

In the second quarter, noninterest-bearing deposits increased $16.7 millionto $435.6 millionas of June 30, 2019. The increase was due to a partial return of deposits that were withdrawn in the first quarter due to customer concern over uncertain international trade issues. Compared to June 30, 2018, noninterest-bearing deposits increased $129.3 millionfrom $306.4 million.

Asset Quality

Nonperforming assets totaled $8.6 million, or 0.31% of total assets at June 30, 2019, compared to $4.6 million, or 0.16%, of total assets at March 31, 2019. The increase in nonperforming assets was primarily due to the addition of a $2.9 millionSBA loan. 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.

Loans held-for-investment 30 to 89 days past due decreased to $3.4 million at June 30, 2019, from $5.2 millionat March 31, 2019.

In the second quarter of 2019, there was one charge-off of $32,000attributed to a commercial and industrial loan. There were $109,000in net recoveries in the first quarter.

The Company recorded a provision for loan losses of $357,000for the second quarter of 2019, which was primarily attributable to a change in the loan mix during the quarter.

The allowance for loan losses totaled $18.6 million, or 0.89% of total loans held for investment at June 30, 2019, compared with $18.2 million, or 0.86%, of total loans at March 31, 2019.

Properties

Our headquarters office is located at 1055 Wilshire Blvd. in Los Angeles, California. In 2019, we have closed one non-banking office and one branch and opened one new branch in New York City, with one additional non-banking office vacant but still paying rent.

Corporate Overview

RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. The Company has total assets of $2.8 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 Countyand Ventura Countyin California, in Las Vegas, Nevada, and in Brooklyn, Queens, and Manhattanin New York. 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 ten branches in Los Angeles County, two branches in Ventura County, one branch in Irvine, California, one branch in Las Vegas, Nevada, and nine branches and two loan offices in Brooklyn, Queensand Manhattanin New York. The Company's administrative and lending center is located at 1055 Wilshire Blvd., Los Angeles, California90017, and its finance and operations center is located at 7025 Orangethorpe Avenue, Buena Park, California90621. 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 on Tuesday, July 23, 2019, to discuss the Company's second quarter 2019 financial results.

To listen to the conference call, please dial 1-833-659-7620 or 1-430-775-1348, passcode 4677186. A replay of the call will be made available at 1-855-859-2056 or 1-404-537-3406, passcode 4677186, approximately one hour after the conclusion of the call and will remain available through July 30, 2019.

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 within the meaning of the Private Securities Litigation Reform Act of 1995, including 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 Californiaor 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; the costs or effects of acquisitions or dispositions we may make, including our recently completed acquisition of FAIC, 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; 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 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, 2018, 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)

(Dollars in thousands)

June 30

March 31

December 31,

September 30,

June 30,

2019

2019

2018

2018

2018

Assets

Cash and due from banks

$

185,643

$

250,079

$

147,685

$

171,553

$

72,788

Federal funds sold and other cash equivalents

20,000

-

-

-

-

Total cash and cash equivalents

205,643

250,079

147,685

171,553

72,788

Interest-bearing deposits in other financial institutions

1,196

1,196

600

600

600

Investment securities available for sale

71,629

58,537

73,762

87,066

61,299

Investment securities held to maturity

8,733

9,449

9,961

9,974

9,986

Mortgage loans held for sale

249,596

375,430

434,522

378,943

281,755

Loans held for investment

2,092,438

2,120,413

2,142,015

1,381,218

1,284,082

Allowance for loan losses

(18,561)

(18,236)

(17,577)

(16,178)

(14,657)

Net loans held for investment

2,073,877

2,102,177

2,124,438

1,365,040

1,269,425

Premises and equipment, net

17,214

17,342

17,307

8,119

7,502

Federal Home Loan Bank (FHLB) stock

15,000

8,899

9,707

7,738

7,738

Net deferred tax assets

4,318

4,389

4,642

7,320

7,089

Income tax receivable

3,001

-

656

1,845

2,170

Other real estate owned (OREO)

2,075

2,056

1,101

293

293

Cash surrender value of life insurance

33,963

33,769

33,578

33,380

33,180

Goodwill

58,383

58,383

58,383

29,940

29,940

Servicing assets

17,587

17,288

17,370

6,248

6,134

Core deposit intangibles

6,828

7,212

7,601

1,203

1,280

Accrued interest and other assets

32,913

31,912

32,689

27,577

25,693

Total assets

$

2,801,956

$

2,978,118

$

2,974,002

$

2,136,839

$

1,816,872

Liabilities and shareholders' equity

Deposits:

Noninterest-bearing demand

$

435,629

$

418,953

$

438,764

$

287,274

$

306,362

Savings, NOW and money market accounts

462,448

480,959

579,247

462,737

424,261

Time deposits

1,337,257

1,284,428

1,126,030

814,953

693,783

Total deposits

2,235,334

2,184,340

2,144,041

1,564,964

1,424,406

Reserve for unfunded commitments

621

639

688

550

483

Income tax payable

1,610

3,009

-

-

-

FHLB advances

40,000

275,000

319,500

210,000

40,000

Long-term debt, net of debt issuance costs

103,878

103,793

103,708

49,637

49,601

Subordinated debentures

9,590

9,548

9,506

3,492

3,470

Accrued interest and other liabilities

17,103

16,986

21,938

13,198

12,710

Total liabilities

2,408,136

2,593,315

2,599,381

1,841,841

1,530,670

Shareholders' equity:

Shareholder's equity

393,758

385,395

375,887

296,514

287,509

Non-controlling interest

72

72

72

-

-

Accumulated other comprehensive income (loss) - Net of tax

(10)

(664)

(1,338)

(1,516)

(1,307)

Total shareholders' equity

393,820

384,803

374,621

294,998

286,202

Total liabilities and stockholders' equity

$

2,801,956

$

2,978,118

$

2,974,002

$

2,136,839

$

1,816,872

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share amounts)

For the three months ended

June 30, 2019

March 31, 2019

June 30, 2018

Interest and dividend income:

Interest and fees on loans

$

34,240

$

35,839

$

21,132

Interest on interest-bearing deposits

515

468

209

Interest on investment securities

685

588

603

Dividend income on FHLB stock

379

198

134

Interest on federal funds sold and other

124

113

206

Total interest income

35,943

37,206

22,284

Interest expense:

Interest on savings deposits, NOW and money market accounts

1,238

1,294

998

Interest on time deposits

7,797

5,953

2,410

Interest on subordinated debentures and long term debt

1,929

1,933

920

Interest on other borrowed funds

662

2,114

129

Total interest expense

11,626

11,294

4,457

Net interest income

24,317

25,912

17,827

Provision for loan losses

357

550

700

Net interest income after provision for loan losses

23,960

25,362

17,127

Noninterest income:

Service charges, fees and other

1,222

820

446

Gain on sale of loans

3,120

2,198

2,085

Loan servicing fees, net of amortization

899

840

58

Recoveries on loans acquired in business combinations

55

6

5

Unrealized gain on equity investments

-

147

-

Increase in cash surrender value of life insurance

194

191

199

Gain on sale of fixed assets

6

-

-

5,496

4,202

2,793

Noninterest expense:

Salaries and employee benefits

8,169

9,118

4,709

Occupancy and equipment expenses

2,674

2,252

834

Data processing

1,219

1,009

487

Legal and professional

656

425

423

Office expenses

294

336

192

Marketing and business promotion

316

362

262

Insurance and regulatory assessments

284

298

213

Amortization of intangibles

385

388

77

OREO expenses

81

81

-

Merger expenses

15

71

183

Other expenses

806

985

811

14,899

15,325

8,191

Income before income taxes

14,557

14,239

11,729

Income tax expense

4,415

3,859

2,292

Net income

$

10,142

$

10,380

$

9,437

Net income per share

Basic

$

0.51

$

0.52

$

0.58

Diluted

$

0.50

$

0.51

$

0.54

Cash Dividends declared per common share

$

0.10

$

0.10

$

0.09

Weighted-average common shares outstanding

Basic

20,074,651

20,047,716

16,407,439

Diluted

20,445,013

20,436,741

17,322,800

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share amounts)

For the six months ended

June 30, 2019

June 30, 2018

Interest and dividend income:

Interest and fees on loans

$

70,079

$

40,206

Interest on interest-earning deposits

983

395

Interest on investment securities

1,273

1,163

Dividend income on FHLB stock

577

253

Interest on federal funds sold and other

237

443

Total interest income

73,149

42,460

Interest expense:

Interest on savings deposits, NOW and money market accounts

2,532

1,700

Interest on time deposits

13,750

4,456

Interest on subordinated debentures and long term debt

3,862

1,833

Interest on other borrowed funds

2,776

200

Total interest expense

22,920

8,189

Net interest income

50,229

34,271

Provision for loan losses

907

884

Net interest income after provision for loans losses

49,322

33,387

Noninterest income:

Service charges, fees and other

2,042

912

Gain on sale of loans

5,318

3,900

Loan servicing fees, net of amortization

1,739

27

Recoveries on loans acquired in business combinations

61

11

Unrealized gain on equity investments

147

-

Increase in cash surrender value of life insurance

385

398

Gain on sale of fixed assets

6

-

9,698

5,248

Noninterest expense:

Salaries and employee benefits

17,287

9,660

Occupancy and equipment expenses

4,926

1,626

Data processing

2,228

960

Legal and professional

1,081

680

Office expenses

630

363

Marketing and business promotion

678

465

Insurance and regulatory assessments

582

422

Amortization of intangibles

773

158

OREO expenses

162

7

Merger expenses

86

223

Other expenses

1,791

1,916

30,224

16,480

Income before income taxes

28,796

22,155

Income tax expense

8,274

3,872

Net income

$

20,522

$

18,283

Net income per share

Basic

$

1.02

$

1.13

Diluted

$

1.00

$

1.06

Cash Dividends declared per common share

$

0.20

$

0.17

Weighted-average common shares outstanding

Basic

20,061,258

16,246,063

Diluted

20,440,900

17,248,125

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, 2019

March 31, 2019

June 30, 2018

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)

$

120,818

$

1,018

3.38

%

$

92,692

$

779

3.41

%

$

79,065

$

549

2.78

%

Securities (2)

Available for sale

87,347

610

2.80

%

68,708

508

3.00

%

74,836

519

2.78

%

Held to maturity

9,127

84

3.69

%

9,629

89

3.75

%

9,992

92

3.68

%

Mortgage loans held for sale

355,168

4,245

4.79

%

449,828

5,490

4.95

%

209,423

2,428

4.65

%

Loans held for investment: (3)

Real estate

1,763,749

24,394

5.55

%

1,764,813

24,486

5.63

%

885,630

12,635

5.72

%

Commercial (4)

347,236

5,601

6.47

%

352,428

5,864

6.75

%

377,077

6,069

6.46

%

Total loans

2,110,985

29,995

5.70

%

2,117,241

30,350

5.81

%

1,262,707

18,704

5.94

%

Total earning assets

2,683,445

$

35,952

5.37

%

2,738,098

$

37,216

5.51

%

1,636,023

$

22,292

5.47

%

Noninterest-earning assets

166,719

176,813

100,442

Total assets

$

2,850,164

$

2,914,911

$

1,736,465

Interest-bearing liabilities

NOW and money market deposits

$

387,363

$

1,188

1.23

%

$

413,952

$

1,241

1.22

%

$

387,116

$

968

1.00

%

Savings deposits

97,584

50

0.21

%

100,623

53

0.21

%

29,499

30

0.40

%

Time deposits

1,338,631

7,797

2.34

%

1,139,214

5,953

2.12

%

666,493

2,410

1.45

%

Total interest-bearing deposits

1,823,578

9,035

1.99

%

1,653,789

7,247

1.78

%

1,083,108

3,408

1.26

%

FHLB short-term advances

95,220

662

2.79

%

339,406

2,114

2.53

%

34,011

129

1.52

%

Long-term debt

103,826

1,748

6.75

%

103,742

1,747

6.83

%

49,583

849

6.87

%

Subordinated debentures

9,564

181

7.59

%

9,523

186

7.92

%

3,459

71

8.26

%

Total interest-bearing liabilities

2,032,188

11,626

2.29

%

2,106,460

11,294

2.17

%

1,170,161

4,457

1.53

%

Noninterest-bearing liabilities

Noninterest-bearing deposits

408,219

405,190

271,920

Other noninterest-bearing liabilities

19,183

19,987

12,930

Total noninterest-bearing liabilities

427,402

425,177

284,850

Shareholders' equity

390,574

383,274

281,454

Total liabilities and shareholders' equity

$

2,850,164

$

2,914,911

$

1,736,465

Net interest income / interest rate spreads

$

24,326

3.08

%

$

25,922

3.34

%

$

17,835

3.94

%

Net interest margin

3.64

%

3.84

%

4.37

%

(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.

(4)

Includes purchased receivables, which are short term loans made to investment grade companies and are used for cash - management purposes by the Company.

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,

2019

2018

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)

$

111,601

$

1,798

3.25

%

$

85,509

$

1,092

2.58

%

Securities (2)

Available for sale

78,079

1,118

2.89

%

72,453

996

2.77

%

Held to maturity

9,377

173

3.72

%

9,997

184

3.71

%

Mortgage loans held for sale

402,237

9,735

4.88

%

184,315

4,266

4.67

%

Loans held for investment: (3)

Real estate

1,764,278

48,879

5.59

%

865,589

23,732

5.53

%

Commercial (4)

349,818

11,465

6.61

%

380,740

12,208

6.47

%

Total loans

2,114,097

60,344

5.76

%

1,246,329

35,940

5.82

%

Total earning assets

2,715,391

$

73,168

5.43

%

1,598,603

$

42,478

5.36

%

Noninterest-earning assets

166,967

95,754

Total assets

$

2,882,358

$

1,694,357

Interest-bearing liabilities

NOW and money market deposits

$

400,584

$

2,430

1.22

%

$

365,909

$

1,636

0.90

%

Savings deposits

99,095

102

0.21

%

30,709

65

0.43

%

Time deposits

1,239,474

13,750

2.24

%

653,837

4,456

1.37

%

Total interest-bearing deposits

1,739,153

16,282

1.89

%

1,050,455

6,157

1.18

%

FHLB short-term advances

216,638

2,776

2.58

%

32,565

200

1.24

%

Long-term debt

103,784

3,495

6.79

%

49,567

1,698

6.91

%

Subordinated debentures

9,544

367

7.75

%

3,449

135

7.92

%

Total interest-bearing liabilities

2,069,119

$

22,920

2.23

%

1,136,036

$

8,190

1.45

%

Noninterest-bearing liabilities

Noninterest-bearing deposits

406,713

269,957

Other noninterest-bearing liabilities

19,582

12,114

Total noninterest-bearing liabilities

426,295

282,071

Shareholders' equity

386,944

276,250

Total liabilities and shareholders' equity

$

2,882,358

$

1,694,357

Net interest income / interest rate spreads

$

50,248

3.20

%

$

34,288

3.91

%

Net interest margin

3.73

%

4.33

%

(1)

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

(2)

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

(3)

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

(4)

Includes purchased receivables, which are short term loans made to investment grade companies and are used for cash - management purposes by the Company.

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,

2019

2019

2018

Per share data (common stock)

Earnings

Basic

$

0.51

$

0.52

$

0.58

Diluted

$

0.50

$

0.51

$

0.54

Dividends declared

$

0.10

$

0.10

$

0.09

Basic, excluding merger expense

$

0.51

$

0.52

$

0.58

Diluted, excluding merger expense

$

0.50

$

0.51

$

0.55

Book value

$

19.61

$

19.17

$

17.30

Tangible book value

$

16.37

$

15.90

$

15.41

Weighted average shares outstanding

Basic

20,074,651

20,047,716

16,407,439

Diluted

20,445,013

20,436,741

17,322,800

Shares outstanding at period end

20,077,524

20,073,991

16,544,627

Performance ratios

Return on average assets, annualized

1.43

%

1.44

%

2.18

%

Return on average shareholders' equity, annualized

10.42

%

10.98

%

13.45

%

Return on average tangible common equity, annualized

12.51

%

13.26

%

15.13

%

Noninterest income to average assets, annualized

0.77

%

0.58

%

0.65

%

Noninterest expense to average assets, annualized

2.10

%

2.13

%

1.89

%

Yield on average earning assets

5.37

%

5.51

%

5.47

%

Cost of average deposits

1.62

%

1.43

%

1.01

%

Cost of average interest-bearing deposits

1.99

%

1.78

%

1.26

%

Cost of average interest-bearing liabilities

2.29

%

2.17

%

1.53

%

Accretion on loans to average earning assets

0.11

%

0.16

%

0.23

%

Net interest spread

3.08

%

3.34

%

3.94

%

Net interest margin

3.64

%

3.84

%

4.37

%

Efficiency ratio

49.97

%

50.89

%

39.72

%

Common stock dividend payout ratio

19.61

%

19.69

%

16.67

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

For the six months ended June 30,

2019

2018

Per share data (common stock)

Earnings

Basic

$

1.02

$

1.13

Diluted

$

1.00

$

1.06

Basic, excluding merger expense

$

1.03

$

1.14

Diluted, excluding merger expense

$

1.01

$

1.07

Dividends declared

$

0.20

$

0.17

Book value

$

19.61

$

17.30

Tangible book value

$

16.37

$

15.41

Weighted average shares outstanding

Basic

20,061,258

16,246,063

Diluted

20,440,900

17,248,125

Shares outstanding at period end

20,077,524

16,544,627

Performance ratios

Return on average assets, annualized

1.44

%

2.18

%

Return on average shareholders' equity, annualized

10.70

%

13.35

%

Return on average tangible common equity, annualized

12.88

%

15.05

%

Noninterest income to average assets, annualized

0.68

%

0.62

%

Noninterest expense to average assets, annualized

2.11

%

1.96

%

Yield on average earning assets

5.43

%

5.36

%

Cost of average deposits

1.53

%

0.94

%

Cost of average interest-bearing deposits

1.89

%

1.18

%

Cost of average interest-bearing liabilities

2.23

%

1.45

%

Accretion on loans to average earning assets

0.13

%

0.11

%

Net interest spread

3.20

%

3.90

%

Net interest margin

3.73

%

4.33

%

Efficiency ratio

50.43

%

41.70

%

Common stock dividend payout ratio

19.61

%

16.01

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

As of

June 30,

March 31,

June 30,

2019

2019

2018

Loan to deposit ratio

93.61

%

97.07

%

90.15

%

Core deposits / total deposits

67.22

%

66.79

%

82.43

%

Net non-core funding dependence ratio

18.46

%

22.81

%

17.43

%

Credit Quality Data:

Loans 30-89 days past due

$

4,230

$

5,666

$

1,064

Loans 30-89 days past due to total loans

0.20

%

0.27

%

0.08

%

Nonperforming loans

$

6,354

$

2,586

$

6,553

Nonperforming loans to total loans

0.30

%

0.12

%

0.51

%

Nonperforming assets

$

8,429

$

4,642

$

6,846

Nonperforming assets to total assets

0.30

%

0.16

%

0.38

%

Allowance for loan losses to total loans

0.89

%

0.86

%

1.14

%

Allowance for loan losses to nonperforming loans

292.12

%

705.18

%

223.67

%

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

0.01

%

-0.02

%

0.00

%

Regulatory and other capital ratios-Company

Tangible common equity to tangible assets

12.01

%

10.96

%

14.28

%

Tier 1 leverage ratio

12.19

%

11.61

%

15.23

%

Tier 1 common capital to risk-weighted assets

16.96

%

16.29

%

18.29

%

Tier 1 capital to risk-weighted assets

17.45

%

16.77

%

18.54

%

Total capital to risk-weighted assets

23.77

%

22.98

%

23.16

%

Regulatory capital ratios-bank only

Tier 1 leverage ratio

14.17

%

13.43

%

14.84

%

Tier 1 common capital to risk-weighted assets

20.31

%

19.39

%

18.06

%

Tier 1 capital to risk-weighted assets

20.31

%

19.39

%

18.06

%

Total capital to risk-weighted assets

21.30

%

20.35

%

19.14

%

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

2019

2019

2018

2018

2018

Interest income

Loans, including fees

$

34,240

$

35,839

$

33,829

$

23,445

$

21,132

Investment securities and other

1,703

1,367

1,352

1,028

1,152

Total interest income

35,943

37,206

35,181

24,473

22,284

Interest expense

Deposits

9,035

7,247

6,661

4,139

3,408

Interest on subordinated debentures and other

1,929

1,747

1,325

925

920

Other borrowings

662

2,300

1,613

793

129

Total interest expense

11,626

11,294

9,599

5,857

4,457

Net interest income before provision for loan losses

24,317

25,912

25,582

18,616

17,827

Provision for loan losses

357

550

1,890

1,695

700

Net interest income after provision for loan losses

23,960

25,362

23,692

16,921

17,127

Noninterest income

5,496

4,202

5,489

2,105

2,793

Noninterest expense

14,899

15,325

15,503

8,654

8,191

Earnings before income taxes

14,557

14,239

13,678

10,372

11,729

Income taxes

4,415

3,859

4,188

2,041

2,292

Net income

$

10,142

$

10,380

$

9,490

$

8,331

$

9,437

Net income per common share - basic

$

0.51

$

0.52

$

0.49

$

0.50

$

0.58

Net income per common share - diluted

$

0.50

$

0.51

$

0.48

$

0.48

$

0.54

Cash dividends declared per common share

$

0.10

$

0.10

$

-

$

0.09

$

0.09

Cash dividends declared

$

2,007

$

2,007

$

-

$

1,489

$

1,470

Yield on average assets, annualized

1.43

%

1.44

%

1.35

%

1.73

%

2.18

%

Yield on average earning assets

5.37

%

5.51

%

5.45

%

5.40

%

5.47

%

Cost of average deposits

1.62

%

1.43

%

1.28

%

1.17

%

1.01

%

Cost of average interest-bearing deposits

1.99

%

1.78

%

1.61

%

1.46

%

1.26

%

Cost of average interest-bearing liabilities

2.29

%

2.17

%

1.91

%

1.75

%

1.53

%

Accretion on loans to average earning assets

0.11

%

0.16

%

0.14

%

0.05

%

0.23

%

Net interest margin

3.64

%

3.84

%

3.88

%

4.11

%

4.37

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

Loan Portfolio Detail

As of June 30,

2019

As of March 31,

2019

As of December 31,

2018

As of September 30,

2018

As of June 30,

2018

(dollars in thousands)

$

%

$

%

$

%

$

%

$

%

Loans:

Commercial and industrial

$

283,919

13.6

$

269,556

12.7

$

304,084

14.2

$

299,817

21.7

$

311,186

24.2

SBA

79,474

3.8

82,571

3.9

84,500

3.9

87,406

6.3

97,142

7.6

Construction and land development

118,807

5.7

125,686

5.9

113,235

5.3

110,710

8.0

94,901

7.4

Commercial real estate (1)

756,452

36.2

756,313

35.7

758,721

35.4

524,174

38.0

492,993

38.4

Single-family residential mortgages

853,404

40.7

885,951

41.8

881,249

41.2

359,111

26.0

287,860

22.4

Other loans

382

0.0

336

0.0

226

0.0

-

-

-

-

Total loans (2)

$

2,092,438

100.0

$

2,120,413

100.0

$

2,142,015

100.0

$

1,381,218

100.0

$

1,284,082

100.0

Allowance for loan losses

(18,561)

(18,236)

(17,577)

(16,178)

(14,657)

Total loans, net

$

2,073,877

$

2,102,177

$

2,124,438

$

1,365,040

$

1,269,425

(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)

2019

2018

2019

2018

Beginning balance

$

18,236

$

13,957

$

17,577

$

13,773

Additions to the allowance charged to expense

357

700

907

884

Recoveries (charged-off) on loans

(32)

-

77

-

Ending balance

18,561

14,657

18,561

14,657

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, 2019and 2018.

June 30,

(dollars in thousands, except per share data)

2019

2018

Tangible common equity:

Total shareholders' equity

$

393,820

$

286,202

Adjustments

Goodwill

(58,383)

(29,940)

Core deposit intangible

(6,828)

(1,280)

Tangible common equity

$

328,609

$

254,982

Tangible assets:

Total assets-GAAP

$

2,801,956

$

1,816,872

Adjustments

Goodwill

(58,383)

(29,940)

Core deposit intangible

(6,828)

(1,280)

Tangible assets

$

2,736,745

$

1,785,652

Common shares outstanding

20,077,524

16,544,627

Tangible common equity to tangible assets ratio

12.01

%

14.28

%

Tangible book value per share

$

16.37

$

15.41

SOURCE RBB Bancorp

Related Links

http://www.royalbusinessbankusa.com

Disclaimer

RBB Bancorp published this content on 22 July 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 July 2019 01:04:06 UTC

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