RBB Bancorp [RBB] Filings

10-Q 1 rbb20240630_10q.htm FORM 10-Q rbb20240630_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024 or

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number: 001-38149

RBB BANCORP

(Exact name of registrant as specified in its charter)

California

27-2776416

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1055 Wilshire Blvd., Suite 1200,
Los Angeles, California	90017

(Address of principal executive offices)

(Zip Code)

(213) 627-9888

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12 (b) of the Act:

Title of each class		Trading Symbol(s)		Name of exchange on which registered
Common Stock, No Par Value		RBB		NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Table of Contents

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock of the registrant: 17,804,788 outstanding as of August 2, 2024.

Table of Contents

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION (UNAUDITED)		3
ITEM 1.	CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	3
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	8
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	36
	CRITICAL ACCOUNTING POLICIES	37
	OVERVIEW	39
	ANALYSIS OF THE RESULTS OF OPERATIONS	40
	ANALYSIS OF FINANCIAL CONDITION	50
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	68
ITEM 4.	CONTROLS AND PROCEDURES	69
PART II - OTHER INFORMATION		71
ITEM 1.	LEGAL PROCEEDINGS	71
ITEM 1A.	RISK FACTORS	71
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	71
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	71
ITEM 4.	MINE SAFETY DISCLOSURES	71
ITEM 5.	OTHER INFORMATION	71
ITEM 6.	EXHIBITS	72
SIGNATURES		74

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1.

CONSOLIDATED FINANCIAL STATEMENTS

RBB BANCORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2024 AND DECEMBER 31, 2023

(In thousands, except share amounts)

	(Unaudited)
	*June 30,*			*December 31,*
	*2024*			*2023*
Assets
Cash and due from banks	$	23,313		$	22,671
Interest-earning deposits with financial institutions		229,456			408,702
Cash and cash equivalents		252,769			431,373
Interest-earning time deposits in other financial institutions		600			600
Securities:
Available for sale		325,582			318,961
Held to maturity (fair value of $4,928 and $5,097 at June 30, 2024 and December 31, 2023)		5,200			5,209
Mortgage loans held for sale		3,146			1,911
Loans held for investment		3,047,067			3,031,319
Unaccreted discount on acquired loans		(866	)		(970	)
Deferred loan costs, net		1,511			1,512
Total loans held for investment, net of deferred loan costs and unaccreted discounts on acquired loans		3,047,712			3,031,861
Allowance for loan losses		(41,741	)		(41,903	)
Total loans held for investment, net		3,005,971			2,989,958

Premises and equipment, net		25,049			25,684
Federal Home Loan Bank (FHLB) stock		15,000			15,000
Net deferred tax assets		16,577			15,765
Cash surrender value of bank owned life insurance (BOLI)		59,486			58,719
Goodwill		71,498			71,498
Servicing assets		7,545			8,110
Core deposit intangibles		2,394			2,795
Right-of-use assets- operating leases		30,530			29,803
Accrued interest and other assets		46,839			50,639
Total assets	$	3,868,186		$	4,026,025
Liabilities and Shareholders’ Equity
Deposits:
Noninterest-bearing demand	$	542,971		$	539,621
Savings, NOW and money market accounts		647,770			632,729
Time deposits $250,000 and under		1,014,189			1,190,821
Time deposits over $250,000		818,675			811,589
Total deposits		3,023,605			3,174,760

Reserve for unfunded commitments		624			640
FHLB advances		150,000			150,000
Long-term debt, net of issuance costs		119,338			119,147
Subordinated debentures, net		15,047			14,938
Lease liabilities - operating leases		32,087			31,191
Accrued interest and other liabilities		16,194			24,089
Total liabilities		3,356,895			3,514,765

Commitments and contingencies - Note 12

Shareholders' equity:
Preferred Stock - 100,000,000 shares authorized, no par value; none outstanding		—			—
Common Stock - 100,000,000 shares authorized, no par value; 18,182,154 shares issued and outstanding at June 30, 2024 and 18,609,179 shares issued and outstanding at December 31, 2023		266,160			271,925
Additional paid-in capital		3,456			3,623
Retained earnings		262,518			255,152
Non-controlling interest		72			72
Accumulated other comprehensive loss, net		(20,915	)		(19,512	)
Total shareholders’ equity		511,291			511,260
Total liabilities and shareholders’ equity	$	3,868,186		$	4,026,025

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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RBB BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME – (UNAUDITED)

FOR THE THREE MONTHS ENDED JUNE 30, 2024, MARCH 31, 2024, AND JUNE 30, 2023 AND THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(In thousands, except per share amounts)


	*Three Months Ended*						*Six Months Ended June 30,*
	*June 30, 2024*		*March 31, 2024*		*June 30, 2023*		*2024*		*2023*
Interest and dividend income:
Interest and fees on loans	$	45,320	$	45,547	$	50,810	$	90,867	$	100,752
Interest on interest-earning deposits		3,353		5,040		2,112		8,393		2,903
Interest on investment securities		3,631		3,611		3,574		7,242		6,110
Dividend income on FHLB stock		327		331		259		658		524
Interest on federal funds sold and other		255		266		247		521		464
Total interest and dividend income		52,886		54,795		57,002		107,681		110,753
Interest expense:
Interest on savings deposits, NOW and money market accounts		4,953		4,478		2,778		9,431		5,074
Interest on time deposits		21,850		23,322		19,169		45,172		32,575
Interest on long-term debt and subordinated debentures		1,679		1,679		2,550		3,358		5,089
Interest on other borrowed funds		439		439		579		878		1,988
Total interest expense		28,921		29,918		25,076		58,839		44,726
Net interest income before provision for credit losses		23,965		24,877		31,926		48,842		66,027
Provision for credit losses		557		—		380		557		2,394
Net interest income after provision for credit losses		23,408		24,877		31,546		48,285		63,633
Noninterest income:
Service charges and fees		1,064		992		1,120		2,056		2,143
Gain on sale of loans		451		312		18		763		47
Loan servicing income, net of amortization		579		589		606		1,168		1,337
Increase in cash surrender value of life insurance		385		382		344		767		679
Gain on other real estate owned		292		724		—		1,016		—
Other income		717		373		405		1,090		649
Total noninterest income		3,488		3,372		2,493		6,860		4,855
Noninterest expense:
Salaries and employee benefits		9,533		9,927		9,327		19,460		19,191
Occupancy and equipment expenses		2,439		2,443		2,430		4,882		4,828
Data processing		1,466		1,420		1,356		2,886		2,655
Legal and professional		1,260		880		2,872		2,140		5,885
Office expenses		352		356		350		708		725
Marketing and business promotion		189		172		252		361		552
Insurance and regulatory assessments		981		982		809		1,963		1,313
Core deposit premium		201		201		235		402		472
Other expenses		703		588		886		1,291		1,807
Total noninterest expense		17,124		16,969		18,517		34,093		37,428
Net income before income taxes		9,772		11,280		15,522		21,052		31,060
Income tax expense		2,527		3,244		4,573		5,771		9,141
Net income	$	7,245	$	8,036	$	10,949	$	15,281	$	21,919

Net income per share
Basic	$	0.39	$	0.43	$	0.58	$	0.83	$	1.15
Diluted		0.39		0.43		0.58		0.82		1.15

Weighted-average common shares outstanding
Basic		18,375,970		18,601,277		18,993,483		18,488,623		18,989,686
Diluted		18,406,897		18,651,702		18,995,100		18,529,299		19,022,242

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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RBB BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME – (UNAUDITED)

FOR THE THREE MONTHS ENDED JUNE 30, 2024, MARCH 31, 2024, AND JUNE 30, 2023, AND THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(In thousands)

	*Three Months Ended*								*Six Months Ended*
	*June 30, 2024*		*March 31, 2024*			*June 30, 2023*			*June 30, 2024*			*June 30, 2023*
Net income	$	7,245	$	8,036		$	10,949		$	15,281		$	21,919

Other comprehensive income/(loss):
Unrealized gain/(loss) on securities available for sale		43		(2,085	)		(3,591	)		(2,042	)		(1,014	)
Related income tax effect		24		615			1,064			639			274
Total other comprehensive income/(loss)		67		(1,470	)		(2,527	)		(1,403	)		(740	)

Total comprehensive income	$	7,312	$	6,566		$	8,422		$	13,878		$	21,179

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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RBB BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY – (UNAUDITED)

FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(In thousands, except share amounts)

	*Common Stock*														*Accumulated*
	*Shares*			*Amount*			*Additional Paid-in Capital*			*Retained Earnings*			*Non- Controlling Interest*		*Other Comprehensive Loss, net*			*Total*
Balance at March 31, 2024		18,578,132		$	271,645		$	3,348		$	259,903		$	72	$	(20,982	)	$	513,986
Net income		—			—			—			7,245			—		—			7,245
Stock-based compensation, net		—			—			688			—			—		—			688
Restricted stock units vested		23,962			448			(448	)		—			—		—			—
Cash dividends on common stock ($0.16 per share)		—			—			—			(3,010	)		—		—			(3,010	)
Stock options exercised		28,250			590			(132	)		—			—		—			458
Repurchase of common stock		(448,190	)		(6,523	)		—			(1,620	)		—		—			(8,143	)
Other comprehensive income, net of taxes		—			—			—			—			—		67			67
Balance at June 30, 2024		18,182,154		$	266,160		$	3,456		$	262,518		$	72	$	(20,915	)	$	511,291

Balance at March 31, 2023		18,992,903		$	277,478		$	3,270		$	233,815		$	72	$	(19,878	)	$	494,757
Net income		—			—			—			10,949			—		—			10,949
Stock-based compensation, net		—			—			150			—			—		—			150
Restricted stock units vested		2,400			30			(30	)		—			—		—			—
Cash dividends on common stock ($0.16 per share)		—			—			—			(3,039	)		—		—			(3,039	)
Other comprehensive loss, net of taxes		—			—			—			—			—		(2,527	)		(2,527	)
Balance at June 30, 2023		18,995,303		$	277,508		$	3,390		$	241,725		$	72	$	(22,405	)	$	500,290

	*Common Stock*														*Accumulated*
	*Shares*			*Amount*			*Additional Paid-in Capital*			*Retained Earnings*			*Non- Controlling Interest*		*Other Comprehensive Loss, net*			*Total*
Balance at January 1, 2024		18,609,179		$	271,925		$	3,623		$	255,152		$	72	$	(19,512	)	$	511,260
Net income		—			—			—			15,281			—		—			15,281
Stock-based compensation, net		—			—			828			—			—		—			828
Restricted stock units vested		32,200			593			(657	)		—			—		—			(64	)
Cash dividends on common stock ($0.32 per share)		—			—			—			(5,986	)		—		—			(5,986	)
Stock options exercised		69,250			1,337			(338	)		—			—		—			999
Repurchase of common stock		(528,475	)		(7,695	)		—			(1,929	)		—		—			(9,624	)
Other comprehensive loss, net of taxes		—			—			—			—			—		(1,403	)		(1,403	)
Balance at June 30, 2024		18,182,154		$	266,160		$	3,456		$	262,518		$	72	$	(20,915	)	$	511,291

Balance at January 1, 2023		18,965,776		$	276,912		$	3,361		$	225,883		$	72	$	(21,665	)	$	484,563
Net income		—			—			—			21,919			—		—			21,919
Stock-based compensation, net		—			—			466			—			—		—			466
Restricted stock units vested		20,374			391			(391	)		—			—		—			—
Cash dividends on common stock ($0.32 per share)		—			—			—			(6,077	)		—		—			(6,077	)
Stock options exercised		9,153			205			(46	)		—			—

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