• Net Income: $2.3 million, or $0.13 per share.
• Non-Performing Assets Reduction: Reduced by 20%.
• Net Exposure to Non-Performing Loans: Decreased by 32% to $51 million.
• Loan Growth: Increased by $90 million or 12% on an annualized basis.
• Mortgage Originations: $112 million in the first quarter.
• Total Loan Originations: $201 million at a blended yield of 6.77%.
• Net Interest Margin: Increased by 12 basis points to 2.88%.
• Net Interest Income Before Provision: $26.2 million.
• Non-Interest Income: Declined by $434,000 to $2.3 million.
• Non-Interest Expenses: Increased by $873,000 to $18.5 million.
• Provision for Credit Losses: $6.7 million.
• Total Deposits: Increased at an 8% annualized rate to $3.14 billion.
• Tangible Book Value Per Share: Increased to $24.63.
• Allowance for Loan Losses to Total Loans: Increased by 9 basis points to 1.65%.

• Warning! GuruFocus has detected 3 Warning Signs with RBB.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• RBB Bancorp (NASDAQ:RBB) successfully reduced non-performing assets by 20% and net exposure to non-performing loans by 32% to $51 million.
• The company achieved strong loan growth in the first quarter, with loans held for investment growing by $90 million or 12% on an annualized basis.
• Net interest margin increased by 12 basis points to 2.88%, driven by a decline in the cost of interest-bearing deposits.
• RBB Bancorp (NASDAQ:RBB) originated $201 million in loans at a blended yield of 6.77%, supporting future yield and margin expansion.
• The tangible book value per share increased to $24.63, and capital ratios remain strong, above regulatory well-capitalized levels.

Negative Points

• Net income declined to $2.3 million, or $0.13 per share, due to strategic actions addressing non-performing assets.
• First-quarter results were negatively impacted by a $6.7 million pre-tax provision for credit losses.
• Non-interest income declined by $434,000 to $2.3 million due to lower gains on the sale of loans and other income.
• First-quarter non-interest expenses increased by $873,000 to $18.5 million due to seasonal increases in compensation and benefits, higher data processing fees, and increased legal and professional expenses.
• The provision for credit losses increased to $6.7 million, with specific reserves rising by $2.8 million and net charge-offs totaling $2.6 million.

Q & A Highlights

Q: Can you provide an update on the potential for share repurchases this year given the current capital ratios and share price? A: Lynn Hopkins, CFO, stated that with the current share price and strong capital ratios, a buyback is considered one of the best uses of excess capital. The company is working hard to put a buyback in place and hopes to have more information soon.

Q: When did the FHLB advances roll from lower cost to higher cost, and how does this affect the quarter's margin? A: Lynn Hopkins, CFO, explained that the FHLB advances are fully priced into the March net interest margin, which is slightly below the quarter's average. The $150 million FHLB advances are a fraction of the total funding base, even though they moved to mid to high 3% rates.

Q: How much margin drag is currently experienced from the non-accrual base? A: Lynn Hopkins, CFO, noted that while it's not translated into basis points, there is a drag on the net interest margin. With $20 million potentially returning to accrual status at 6%, it could add about $1.2 million annually, with $60 million more to go.

Q: Did you have any outsized interest recoveries in the quarter from unloading problem loans? A: Lynn Hopkins, CFO, confirmed that there were no outsized interest recoveries in the quarter. The resolution of non-performing assets did not result in the recapture of any interest income as the loans were sold or moved to REO.

Q: What is the outlook for resolving non-performing loans, and when do you expect to complete the workout? A: David Morris, CEO, mentioned that while it's hard to predict exactly when NPLs will be resolved, the target is the second half of 2025. NPLs will continue to be lumpy, but steady progress is being made, with more expected to be resolved in the second quarter.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.