RBB Bancorp Earnings 2020-03-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

10-Q 1 rbb-10q_20200331.htm 10-Q rbb-10q_20200331.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 March 31, 2020 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 ☐

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: 19,739,281 outstanding as of May 8, 2020.

TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION (UNAUDITED)		3

ITEM 1.	CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	3

	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	9

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	35

	CRITICAL ACCOUNTING POLICIES	37

	OVERVIEW	39

	ANALYSIS OF THE RESULTS OF OPERATIONS	40

	ANALYSIS OF FINANCIAL CONDITION	49

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	65

ITEM 4.	CONTROLS AND PROCEDURES	66

PART II - OTHER INFORMATION		67

ITEM 1.	LEGAL PROCEEDINGS	67

ITEM 1A.	RISK FACTORS	67

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	69

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	69

ITEM 4.	MINE SAFETY DISCLOSURES	69

ITEM 5.	OTHER INFORMATION	69

ITEM 6.	EXHIBITS	70

SIGNATURES		71

PART I - FINANCIAL INFORMATION (UNAUDITED)

ITEM 1.

CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

RBB BANCORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

MARCH 31, 2020 (UNAUDITED) AND DECEMBER 31, 2019 (AUDITED)

(In thousands, except share amounts)

	March 31,			December 31,
	2020			2019
Assets
Cash and due from banks	$	285,667		$	114,763
Federal funds sold and other cash equivalents		75,300			67,000
Cash and cash equivalents		360,967			181,763
Interest-earning deposits in other financial institutions		600			600
Securities:
Available for sale		126,294			126,069
Held to maturity (fair value of $8,154 and $8,632 at March 31, 2020 and December 31, 2019, respectively)		7,825			8,332
Mortgage loans held for sale		52,096			108,194
Loans held for investment:
Real estate		2,051,767			1,852,206
Commercial and other		353,722			349,391
Total loans		2,405,489			2,201,597
Unaccreted discount on acquired loans		(5,065	)		(5,067	)
Deferred loan (fees) costs, net		(442	)		404
Total loans, net of deferred loan fees		2,399,982			2,196,934
Allowance for loan losses		(20,130	)		(18,816	)
Net loans		2,379,852			2,178,118

Premises and equipment		24,472			16,813
Federal Home Loan Bank (FHLB) stock		15,630			15,000
Net deferred tax assets		—			2,326
Other real estate owned (OREO)		293			293
Cash surrender value of life insurance (BOLI)		34,544			34,353
Goodwill		69,790			58,563
Servicing assets		16,826			17,083
Core deposit intangibles		6,234			6,100
Accrued interest and other assets		33,230			34,928
Total assets	$	3,128,653		$	2,788,535

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

RBB BANCORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

MARCH 31, 2020 (UNAUDITED) AND DECEMBER 31, 2019 (AUDITED) (CONTINUED)

(In thousands, except share amounts)

	March 31,		December 31,
	2020		2019
Liabilities and Shareholders’ Equity
Deposits:
Noninterest-bearing demand	$	504,324	$	458,763
Savings, NOW and money market accounts		571,870		537,490
Time deposits under $100,000		245,827		257,362
Time deposits $100,000 and over		1,113,960		995,323
Total deposits		2,435,981		2,248,938

Reserve for unfunded commitments		979		826
Net deferred tax liabilities		312		—
FHLB advances		150,000		—
Long-term debt, net of debt issuance costs		104,135		104,049
Subordinated debentures		14,120		9,673
Accrued interest and other liabilities		15,133		17,359
Total liabilities		2,720,660		2,380,845

Commitments and contingencies - Note 13		—		—

Shareholders' equity:
Preferred Stock - 100,000,000 shares authorized, no par value; none outstanding		—		—
Common Stock - 100,000,000 shares authorized, no par value; 19,739,280 shares issued and outstanding at March 31, 2020 and 20,030,866 shares at December 31, 2019		286,350		290,395
Additional paid-in capital		4,833		4,938
Retained earnings		116,149		112,046
Non-controlling interest		72		72
Accumulated other comprehensive income, net		589		239
Total shareholders’ equity		407,993		407,690
Total liabilities and shareholders’ equity	$	3,128,653	$	2,788,535

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

RBB BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME – (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(In thousands, except per share amounts)

	Three Months Ended
	March 31,
	2020		2019
Interest and dividend income:
Interest and fees on loans	$	32,276	$	35,839
Interest on interest-earning deposits		451		468
Interest on investment securities		821		588
Dividend income on FHLB stock		2		198
Interest on federal funds sold and other		478		113
Total interest income		34,028		37,206
Interest expense:
Interest on savings deposits, now and money market accounts		1,243		1,294
Interest on time deposits		7,086		5,953
Interest on subordinated debentures and long-term debt		1,956		1,933
Interest on other borrowed funds		150		2,114
Total interest expense		10,435		11,294
Net interest income		23,593		25,912
Provision for loan losses		1,945		550

Net interest income after provision for loan losses		21,648		25,362
Noninterest income:
Service charges, fees and other		1,079		820
Gain on sale of loans		2,711		2,198
Loan servicing fees, net of amortization		592		840
Recoveries on loans acquired in business combinations		42		6
Unrealized gain on equity investments		—		147
Increase in cash surrender value of life insurance		191		191
		4,615		4,202
Noninterest expense:
Salaries and employee benefits		9,505		9,118
Occupancy and equipment expenses		2,404		2,252
Data processing		1,142		1,009
Legal and professional		604		425
Office expenses		323		336
Marketing and business promotion		214		362
Insurance and regulatory assessments		177		298
Core deposit premium		357		388
OREO expenses		14		81
Merger and conversion expenses		403		71
Other expenses		1,120		985
		16,263		15,325
Income before income taxes		10,000		14,239
Income tax expense		3,252		3,859
Net income	$	6,748	$	10,380

Net income per share
Basic	$	0.34	$	0.52
Diluted		0.33		0.51
Cash dividends declared per common share		0.12		0.10

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

RBB BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME – (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(In thousands)

	Three Months Ended
	March 31,
	2020			2019
Net income	$	6,748		$	10,380

Other comprehensive income:
Unrealized gains on securities available for sale:
Change in unrealized gains		498			958
		498			958
Related income tax effect:
Change in unrealized gains		(148	)		(284	)
		(148	)		(284	)

Total other comprehensive income		350			674

Total comprehensive income	$	7,098		$	11,054

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

RBB BANCORP AND SUBSIDIARIES

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

FOR THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(In thousands, except share amounts)

	Common Stock														Accumulated
	Shares			Amount			Additional Paid-in Capital			Retained Earnings			Non- Controlling Interest		Other Comprehensive Income (Loss)			Total
Balance at January 1, 2020		20,030,866		$	290,395		$	4,938		$	112,046		$	72	$	239		$	407,690
Net income		—			—			—			6,748			—		—			6,748
Stock-based compensation		—			—			161			—			—		—			161
Cash dividend		—			—			—			(2,414	)		—		—			(2,414	)
Stock options exercised, net of expense recognized		56,498			978			(266	)		—			—		—			712
Repurchase of common stock		(348,084	)		(5,023	)		—			(231	)		—		—			(5,254	)
Other comprehensive income, net of taxes		—			—			—			—			—		350			350
Balance at March 31, 2020		19,739,280		$	286,350		$	4,833		$	116,149		$	72	$	589		$	407,993

Balance at January 1, 2019		20,000,022		$	288,610		$	5,659		$	81,618		$	72	$	(1,338	)	$	374,621
Net income		—			—			—			10,380			—		—			10,380
Stock-based compensation		—			—			231			—			—		—			231
Cash dividend		—			—			—			(2,007	)		—		—			(2,007	)
Stock options exercised		73,969			1,303			(399	)		—			—		—			904
Other comprehensive income, net of taxes		—			—			—			—			—		674			674
Balance at March 31, 2019		20,073,991		$	289,913		$	5,491		$	89,991		$	72	$	(664	)	$	384,803

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

RBB BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS – (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

(In thousands)

	Three Months Ended
	March 31,
	2020			2019
Operating activities
Net income	$	6,748		$	10,380
Adjustments to reconcile net income to net cash from
Operating activities:
Depreciation and amortization of premises, and equipment		522			481
Net accretion of securities, loans, deposits, and other		(873	)		(964	)
Unrealized gain on equity securities		—			(147	)
Amortization of investment in affordable housing tax credits		247			225
Amortization of intangible assets		1,441			1,187
Provision for loan losses		1,945			550
Stock-based compensation		161			231
Deferred tax benefit (expense)		1,503			(31	)
Gain on sale of loans		(2,711	)		(2,198	)
Increase in cash surrender value of life insurance		(191	)		(191	)
Loans originated and purchased for sale		(30,423	)		(41,348	)
Proceeds from loans sold		104,273			144,272
Other items		(4,442	)		(663	)
Net cash provided by operating activities		78,200			111,784
Investing activities
Increase in interest-earning deposits		—			(596	)
Securities available for sale:
Purchases		(151,163	)		—
Maturities, prepayments and calls		151,707			16,185
Securities held to maturity:
Maturities, prepayments and calls		500			500
Redemption of Federal Home Loan Bank stock		—			1,751
Purchase of Federal Home Loan Bank stock and other equity securities, net		(621	)		(1,007	)
Purchase of investment in qualified affordable housing projects		(2,004	)		—
Net increase in loans		(45,668	)		(20,438	)
Net cash received in connection with acquisition		6,634			—
Purchases of premises and equipment		(135	)		(484	)
Net cash used in investing activities		(40,750	)		(4,089	)
Financing activities
Net decrease in demand deposits and savings accounts		(108,420	)		(118,098	)
Net increase in time deposits		107,130			158,400
Net decrease in short-term FHLB advances		—			(44,500	)
Net increase in long-term FHLB advances		150,000			—
Cash dividends paid		(2,414	)		(2,007	)
Common stock repurchased, net of repurchased costs		(5,254	)		—
Exercise of stock options		712			904
Net cash provided by (used in) financing activities		141,754			(5,301	)
Net increase in cash and cash equivalents		179,204			102,394
Cash and cash equivalents at beginning of period		181,763			147,685
Cash and cash equivalents at end of period	$	360,967		$	250,079
Supplemental disclosure of cash flow information
Cash paid during the period:
Interest paid	$	8,643		$	2,350
Non-cash investing and financing activities:
Transfer from loans to other real estate owned		—			955
Transfer of loans to held for sale, net		15,041			33,633
Loan to facilitate OREO		1,025			412
Net change in unrealized holding gain on securities available for sale		350			674
Additions to servicing assets		827			—
Acquisition:
Assets acquired, net of cash received		183,524			—
Liabilities assumed		201,3

Price	20.00	EPS	2
Shares	20	P/E	11
MCap	409	P/FCF	2
Net Debt	-79	EBIT	98
TEV	330	TEV/EBIT	3
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-03-31	Filed 2020-05-11
10-K	2019-12-31	Filed 2020-03-17
10-Q	2019-09-30	Filed 2019-11-12
10-Q	2019-06-30	Filed 2019-08-09
10-Q	2019-03-31	Filed 2019-05-10
10-K	2018-12-31	Filed 2019-03-27
10-Q	2018-09-30	Filed 2018-11-13
10-Q	2018-06-30	Filed 2018-08-14
10-Q	2018-03-31	Filed 2018-05-15
10-K	2017-12-31	Filed 2018-03-30
10-Q	2017-09-30	Filed 2017-11-13
10-Q	2017-06-30	Filed 2017-09-06

8-K	2020-06-15
8-K	2020-05-13
8-K	2020-05-12
8-K	2020-04-20
8-K	2020-01-29
8-K	2020-01-23
8-K	2020-01-10
8-K	2019-09-30
8-K	2019-09-30
8-K	2019-09-24
8-K	2019-09-06
8-K	2019-07-29
8-K	2019-07-22
8-K	2019-07-18
8-K	2019-06-24
8-K	2019-06-07
8-K	2019-05-08
8-K	2019-05-08
8-K	2019-04-22
8-K	2019-03-26
8-K	2019-03-22
8-K	2019-03-05
8-K	2019-01-30
8-K	2019-01-24
8-K	2018-12-20
8-K	2018-11-29
8-K	2018-11-27
8-K	2018-10-22
8-K	2018-10-15
8-K	2018-10-12
8-K	2018-09-20
8-K	2018-09-20
8-K	2018-09-17
8-K	2018-07-25
8-K	2018-07-20
8-K	2018-07-11
8-K	2018-06-07
8-K	2018-04-23
8-K	2018-01-31
8-K	2018-01-18
8-K	2017-12-31

EX-31.1	rbb-ex311_6.htm
EX-31.2	rbb-ex312_9.htm
EX-32.1	rbb-ex321_8.htm
EX-32.2	rbb-ex322_7.htm

RBB 10Q Quarterly Report

RBB Bancorp Earnings 2020-03-31