RBB Bancorp Reports Fourth Quarter Earnings for 2017

January 22, 2018 | By forimmediaterele | Filed in: Press Releases.

Travel & Tourism Industry release:

LOS ANGELES, Jan. 22, 2018 /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 December 31, 2017.

The Company reported net income of $4.9 million, or $0.29 diluted earnings per share, for the three months ended December 31, 2017, compared to net income of $6.6 million, or $0.42 diluted earnings per share, and $5.4 million, or $0.39 diluted earnings per share, for the three months ended September 30, 2017 and December 31, 2016, respectively. Included in the fourth quarter 2017 results is a $2.4 million, or $0.14 per diluted share, write-down related to the reduction in the value of the Company’s net deferred tax assets as a result of the decrease in the federal corporate tax rate.

“We had a milestone year in 2017, completing our initial public offering and generating the highest level of net income in the history of the Company,” said Mr. Alan Thian, Chairman, President and CEO of RBB Bancorp. “We continued our positive momentum in the fourth quarter, generating strong loan growth, an improvement in our efficiency ratio, and pristine asset quality.”

“In 2018, we plan to continue expanding our franchise through a combination of organic growth, acquisitions and de novo branch openings. In addition, we are investing in the business to diversify our revenue mix and provide additional catalysts for generating organic growth.  Our Wealth Management unit is up and running.  In addition we have hired a specialist to start our income property unit, mainly apartments, mobile home parks and student housing properties. We are also finalizing the hiring of a new SBA manager who will lead our business development efforts, as well as recruit new team members,” concluded Mr. Thian.

Key Performance Ratios

Net income of $4.9 million for the fourth quarter of 2017 produced an annualized return on average equity of 7.31% and an annualized return on average assets of 1.18%. The efficiency ratio for the fourth quarter of 2017 was 31.8%, compared to 39.0% for the prior quarter. Adjusted annualized return on average assets and average tangible common equity for the fourth quarter of 2017 was 1.51% and 10.60%, respectively compared to 1.55% and 11.97% for the third quarter of 2017. (See adjusted earnings metrics table on the last page).

Net Interest Income and Net Interest Margin

Net interest income, before provision for loan losses, was $17.9 million for the fourth quarter of 2017, compared to $14.7 million for the third quarter of 2017.  The increase was primarily attributable to a $43.3 million increase in average earning assets, combined with a 71 basis point increase in the net interest margin.  Accretion of purchase discounts contributed $2.7 million to net interest income in the fourth quarter of 2017, compared to $0.6 million in the third quarter of 2017. The increase in accretion income was primarily attributable to the early payoff of one large acquired loan.

Compared to the fourth quarter of 2016, net interest income, before provision for loan losses, increased from $13.5 million. The increase was primarily attributable to a $187.8 million increase in average earning assets, partially resulting from the proceeds from the Company’s July 2017 IPO, combined with a 64 basis point increase in the net interest margin.

Net interest margin was 4.62% for the fourth quarter of 2017, an increase from 3.91% in the third quarter of 2017. The increase was primarily attributable to a 67 basis point increase in the yield on earning assets (primarily due to a favorable shift in the mix of earning assets and to higher loan discount accretion income). Loan discount accretion contributed 71 basis points to the net interest margin in the fourth quarter of 2017, compared to 17 basis points in the third quarter of 2017.

Compared to the fourth quarter of 2016, net interest margin increased from 3.98%. The increase was primarily attributable to a 62 basis point increase in the yield on earning assets, primarily due to a favorable shift in the mix of earning assets.

Noninterest Income

Noninterest income was $3.8 million for the fourth quarter of 2017, unchanged from $3.8 million in the third quarter of 2017.  In the fourth quarter, gain on loan sales increased by $366,000, but was offset by a $163,000 net decrease in service charges and loan servicing fees and a $142,000 decrease in gain on OREO sale.

The Company sold $90.3 million in mortgage loans for a net gain of $2.0 million during the quarter ended December 31, 2017, compared to $43.4 million in mortgage loans for a net gain of $1.0 million during the quarter ended September 30, 2017. The Company originated $120.5 million in mortgage loans for the quarter ended December 31, 2017, compared with $118.6 million during the quarter ended September 30, 2017.

The Company sold $16.6 million in SBA loans for a net gain of $1.0 million during the fourth quarter of 2017, compared to $22.6 million in SBA loans for a net gain of $1.6 million during the third quarter of 2017.  SBA loan originations for the fourth quarter were $1.9 million, compared to $19.3 million for the third quarter of 2017. The decrease in SBA loan originations was attributable to the departure of certain SBA business development officers.

Compared to the fourth quarter of 2016, noninterest income increased from $2.7 million. The increase was primarily attributable to an additional $1.2 million in gains on loan sales.

Noninterest Expense

Noninterest expense for the fourth quarter of 2017 was $6.9 million, compared to $7.2 million for the third quarter of 2017.  The decrease was primarily attributable to a $215,000 reduction in legal and professional expenses.

Compared to the fourth quarter of 2016, noninterest expense increased from $5.5 million. The $1.4 million increase was primarily due to an increase in salaries and employee benefits of $979,000 and an increase in other expenses of $491,000, partially offset by decreases in data processing costs.

Income Taxes

On December 22, 2017, “H.R.1”, formerly known as the “Tax Cuts and Jobs Act”, was signed into law. Among other items, H.R.1 reduces the federal corporate tax rate to 21% effective January 1, 2018.  As a result, RBB concluded that the reduction in the federal corporate tax rate required the revaluation of the Company’s net deferred tax assets.  The Company’s net deferred tax assets represents net operating loss carryforwards that will be used to reduce corporate taxes expected to be paid in the future as well as differences between the carrying amounts and tax bases of assets and liabilities carried on the Company’s balance sheet.  The Company performed an analysis and determined that the value of the deferred tax assets had declined by $2.4 million.   To reflect the decline in the value of the deferred tax assets, the Company recorded additional tax expense of $2.4 million during the fourth quarter of 2017.

The effective tax rate for the three and twelve months ended December 31, 2017 was 60.5% and 45.5%, respectively, compared with 41.9% and 41.4% for the three and twelve months ended December 31, 2016, respectively.

As a result of the newly enacted tax legislation, the Company estimates that its effective tax rate for 2018 will be in the range of 29% and 31%. The estimated annual effective tax rate will vary depending upon tax-advantaged income, stock option exercises, and available tax credits.

Loan Portfolio

Loans held for investment, net of deferred fees and discounts, totaled $1.25 billion as of December 31, 2017, an increase of $52.6 million, or 17.4% annualized growth, from $1.2 billion at September 30, 2017, and an increase of $138.6 million, or 12.5%, from December 31, 2016.  The increase in loans held for investment from the end of the prior quarter was primarily attributable to growth in the commercial & industrial and residential real estate portfolios.

Mortgage loans held for sale were $125.8 million as of December 31, 2017, essentially unchanged from $125.7 million at September 30, 2017. 

Deposits

Deposits were at $1.34 billion at December 31, 2017, an increase of $19.0 million, or 5.7% annualized growth, from $1.32 billion at September 30, 2017, and an increase of $184.5 million, or 16.0%, from December 31, 2016. The increase in total deposits from the end of the prior quarter was attributable to growth in interest-bearing non-maturity deposits, partially offset by decreases in certificates of deposit.

Noninterest-bearing deposits decreased slightly to $285.7 million as of December 31, 2017, compared to $287.6 million at September 30, 2017 and $174.3 million at December 31, 2016. 

Asset Quality

Nonperforming assets totaled $2.9 million, or 0.17% of total assets at December 31, 2017, a decline from $4.2 million, or 0.26% of total assets, at September 30, 2017.  Nonperforming assets consist of Other Real Estate Owned (foreclosed properties), loans modified under troubled debt restructurings (TDRs), non-accrual loans, and loans past due 90 days or more and still accruing interest. Nonperforming assets exclude PCI loans acquired in prior acquisitions.

Loans held-for-investment 30 to 89 days past due increased to $2.9 million at December 31, 2017, up from $2.4 million at September 30, 2017.  One loan held-for-sale in the amount of $697,000 that was 30 to 89 days past due at December 31, 2017, was brought current in January.

Net charge-offs were 0.01% of average loans during the fourth quarter of 2017, consisting of $83,000 in gross charge-offs, and no loan loss recoveries.

The Company recorded provision for loan losses of $2.4 million for the fourth quarter of 2017, which was primarily attributable to the growth in total loans during the quarter.  During the fourth quarter a Tomato Bank loan was paid off, eliminating the associated credit discount and thus requiring an additional $1.0 million replenishment of our loan loss provision.

The allowance for loan losses totaled $13.8 million, or 1.10% of total loans, at December 31, 2017, compared with $11.4 million, or 0.95% of total loans, at September 30, 2017. 

Properties

Our headquarters office is located at 660 South Figueroa Street, Suite 1888, Los Angeles, California. It is in downtown Los Angeles at “Metro Center” and houses our risk management unit, including compliance and BSA groups, and our single-family residential mortgage group. The lease expires in June 2018. In October 2017, the Company signed a lease for a new headquarters office at 1055 Wilshire Boulevard, Suite 1220, Los Angeles, California, which we expect to occupy in June 2018.

Corporate Overview

RBB Bancorp is a $1.7 billion in assets bank holding company headquartered in Los Angeles, California. Its wholly-owned subsidiary, Royal Business Bank (the “Bank”), is a full service commercial bank which provides business banking services to the Chinese-American communities in Los Angeles County, Orange County, Ventura County and in Las Vegas, Nevada, including 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, trade finance and a full range of depository accounts. The Bank has ten branches in Los Angeles County, located in downtown Los Angeles, San Gabriel, Torrance, Rowland Heights, Monterey Park, Silver Lake, Arcadia, Cerritos, Diamond Bar, and west Los Angeles, two branches in Ventura County, located in Oxnard and Westlake Village, and one branch in Las Vegas, Nevada. The Company’s administrative and lending center is located at 123 E. Valley Blvd., San Gabriel, California 91176, and its finance and operations center is located at 7025 Orangethorpe Avenue, Buena Park, California 90621. RBB’s website address is www.royalbusinessbankusa.com.

Conference Call

Management will hold a conference call at 10:00 a.m. PST/1:00 p.m. EST on Tuesday, January 23, 2018, to discuss the Company’s fourth quarter 2017 financial results.

To listen to the conference call, please dial 1-833-659-7620, passcode 7797327. A replay of the call will be made available at 1-855-859-2056, passcode 7797327, approximately one hour after the conclusion of the call and will remain available through January 31, 2018 at 5:00 p.m. PST/8:00 p.m. EST.

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. Please access the website 15 minutes prior to the call to download any necessary audio software. This webcast will be recorded and available for replay on the Company’s website approximately two hours after the conclusion of the conference call, and will be available on the website for approximately 12 months.

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 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; the costs or effects of acquisitions or dispositions we may make, whether we are able to obtain any required governmental 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 S-1 for the year ended December 31, 2016, 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)

December 31,

September 30,

June 30,

March 31,

December 31,

2017

2017

2017

2017

2016

Assets

Cash and due from banks

$

70,048

$

69,552

$

104,366

$

147,547

$

74,213

Federal funds sold and other cash equivalents

80,000

96,500

58,500

20,000

44,500

Total cash and cash equivalents

150,048

166,052

162,866

167,547

118,713

Interest-bearing deposits in other financial institutions

600

100

100

100

345

Investment securities available for sale

64,957

55,697

40,241

39,155

39,277

Investment securities held to maturity

10,009

5,191

6,199

6,206

6,214

Mortgage loans held for sale

125,847

125,704

83,263

66,555

44,345

Loans held for investment

1,249,074

1,196,522

1,146,005

1,139,563

1,110,446

Allowance for loan losses

(13,773)

(11,420)

(10,627)

(14,186)

(14,162)

Net loans held for investment

1,235,301

1,185,102

1,135,378

1,125,377

1,096,284

Premises and equipment, net

6,583

6,300

6,441

6,538

6,585

Federal Home Loan Bank (FHLB) stock

6,770

6,770

6,770

6,770

6,770

Net deferred tax assets

6,086

9,517

10,214

11,068

11,097

Income tax receivable

272

Other real estate owned (OREO)

293

293

833

833

833

Cash surrender value of life insurance

32,782

32,578

32,358

32,142

21,958

Goodwill

29,940

29,940

29,940

29,940

29,940

Servicing assets

5,957

5,370

4,661

4,223

3,704

Core deposit intangibles

1,438

1,525

1,612

1,699

1,793

Accrued interest and other assets

14,176

12,575

12,723

7,595

7,693

Total assets

$

1,691,059

$

1,642,714

$

1,533,599

$

1,505,748

$

1,395,551

Liabilities and shareholders’ equity

Deposits:

Noninterest-bearing demand

$

285,690

$

287,574

$

215,716

$

215,652

$

174,272

Savings, NOW and money market accounts

411,663

362,018

348,627

325,589

296,699

Time deposits

639,928

668,700

714,105

707,016

681,792

Total deposits

1,337,281

1,318,292

1,278,448

1,248,257

1,152,763

Reserve for unfunded commitments

282

489

517

985

604

Income tax payable

4,664

793

FHLB advances

25,000

10,000

Long-term debt

49,528

49,492

49,456

49,419

49,383

Subordinated debentures

3,424

3,402

3,379

3,357

3,334

Accrued interest and other liabilities

10,368

10,708

9,462

5,570

7,089

Total liabilities

1,425,883

1,382,383

1,341,262

1,322,252

1,213,966

Shareholders’ equity:

Shareholder’s equity

265,620

260,468

192,427

183,695

181,852

Accumulated other comprehensive income (loss) – Net of tax

(444)

(137)

(90)

(199)

(267)

Total shareholders’ equity

265,176

260,331

192,337

183,496

181,585

Total liabilities and stockholders’ equity

$

1,691,059

$

1,642,714

$

1,533,599

$

1,505,748

$

1,395,551

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share amounts) 

Three Months Ended

December 31, 2017

September 30, 2017

December 31, 2016

Interest and dividend income:

Interest and fees on loans

$

20,297

$

17,200

$

15,846

Interest on interest-bearing deposits

209

371

98

Interest on investment securities

484

331

252

Dividend income on FHLB stock

119

118

384

Interest on federal funds sold and other

370

326

136

Total interest income

21,479

18,346

16,716

Interest expense:

Interest on savings deposits, NOW and money market accounts

684

649

486

Interest on time deposits

1,987

2,061

1,824

Interest on subordinated debentures and other

909

908

723

Interest on other borrowed funds

7

193

Total interest expense

3,587

3,618

3,226

Net interest income

17,892

14,728

13,490

Provision for loan losses

2,436

700

1,375

Net interest income after provision for loan losses

15,456

14,028

12,115

Noninterest income:

Service charges, fees and other

487

518

573

Gain on sale of loans

2,949

2,584

1,711

Loan servicing fees, net of amortization

151

314

231

Recoveries on loans acquired in business combinations

7

19

31

Increase in cash surrender value of life insurance

204

219

137

Gain on sale of OREO

142

3,798

3,796

2,683

Noninterest expense:

Salaries and employee benefits

4,216

4,178

3,237

Occupancy and equipment expenses

764

705

710

Data processing

358

458

530

Legal and professional

104

318

87

Amortization of intangibles

87

87

104

Other expenses

1,355

1,454

864

6,884

7,200

5,532

Income before income taxes

12,370

10,624

9,266

Income tax expense

7,481

4,013

3,880

Net income

$

4,889

$

6,611

$

5,386

Net income per share

Basic

$

0.31

$

0.45

$

0.42

Diluted

$

0.29

$

0.42

$

0.39

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share amounts) 

Twelve Months Ended

December 31,

2017

2016

Interest and dividend income:

Interest and fees on loans

$

70,289

$

65,888

Interest on interest-bearing deposits

940

334

Interest on investment securities

1,406

872

Dividend income on FHLB stock

472

800

Interest on federal funds sold and other

997

295

Total interest income

74,104

68,189

Interest expense:

Interest on savings deposits, NOW and money market accounts

2,382

1,975

Interest on time deposits

7,891

6,968

Interest on subordinated debentures and other

3,629

2,547

Interest on other borrowed funds

36

217

Total interest expense

13,938

11,707

Net interest income

60,166

56,482

Provision (recapture) for loan losses

(1,053)

4,974

Net interest income after provision (recapture) for loans losses

61,219

51,508

Noninterest income:

Service charges, fees and other

2,111

1,758

Gain on sale of loans

9,318

5,847

Loan servicing fees, net of amortization

722

615

Recoveries on loans acquired in business combinations

84

170

Increase in cash surrender value of life insurance

824

560

Gain on Sale of Securities

19

Gain on Sale of OREO

142

Loss on sale of fixed assets

(3)

13,201

8,966

Noninterest expense:

Salaries and employee benefits

16,821

13,784

Occupancy and equipment expenses

2,940

3,098

Data processing

1,622

2,018

Legal and professional

331

1,565

Amortization of intangibles

355

372

Other expenses

5,554

7,069

27,623

27,906

Income before income taxes

46,797

32,568

Income tax expense

21,269

13,489

Net income

$

25,528

$

19,079

Net income per share

Basic

$

1.81

$

1.49

Diluted

$

1.68

$

1.39

Cash Dividends declared per common share

$

0.38

$

0.20

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, 2017

September 30, 2017  

December 31, 2016

(tax-equivalent basis, dollars in thousands)

Average

Balance

Interest

& Fees

Yield /

Rate

Average

Balance

Interest

& Fees

Yield /

Rate

Average

Balance

Interest

& Fees

Yield /

Rate

Earning assets:

Federal funds sold, cash equivalents & other (1)

$

155,403

$

698

1.78

%

$

202,005

$

815

1.60

%

$

126,300

$

618

1.95

%

Securities (2)

Available for sale

61,386

424

2.74

%

43,075

276

2.54

%

35,710

191

2.13

%

Held to maturity

6,472

60

3.68

%

5,533

55

3.92

%

6,219

61

3.90

%

Mortgage loans held for sale

132,170

1,531

4.60

%

98,807

1,149

4.61

%

58,168

699

4.78

%

Loans held for investment: (3)

Real estate

802,024

13,279

6.57

%

766,911

10,672

5.52

%

758,184

10,774

5.65

%

Commercial (4)

379,651

5,487

5.73

%

377,501

5,379

5.65

%

364,713

4,373

4.77

%

Total loans

1,181,675

18,766

6.30

%

1,144,412

16,051

5.56

%

1,122,897

15,147

5.37

%

Total earning assets

1,537,106

$

21,479

5.54

%

1,493,832

$

18,346

4.87

%

1,349,294

$

16,716

4.93

%

Noninterest-earning assets

104,056

96,555

79,651

Total assets

$

1,641,162

$

1,590,387

$

1,428,945

Interest-bearing liabilities

NOW and money market deposits

$

357,972

$

643

0.71

%

$

333,471

$

606

0.72

%

$

269,972

$

443

0.65

%

Savings deposits

35,118

41

0.46

%

36,746

43

0.46

%

35,966

44

0.49

%

Time deposits

645,178

1,987

1.22

%

690,378

2,061

1.18

%

696,167

1,824

1.04

%

Total interest-bearing deposits

1,038,268

2,671

1.02

%

1,060,595

2,710

1.01

%

1,002,105

2,311

0.92

%

FHLB short-term advances

3,043

7

0.91

%

8,120

10

0.49

%

Long-term debt

49,505

848

6.80

%

49,470

848

6.80

%

49,359

849

6.84

%

Subordinated debentures

3,411

61

7.10

%

3,388

60

7.03

%

3,257

56

6.84

%

Total interest-bearing liabilities

1,094,227

$

3,587

1.30

%

1,113,453

$

3,618

1.29

%

1,062,841

$

3,226

1.21

%

Noninterest-bearing liabilities

Noninterest-bearing deposits

268,588

227,855

174,967

Other noninterest-bearing liabilities

13,151

11,599

11,497

Total noninterest-bearing liabilities

281,738

239,454

186,464

Shareholders’ equity

265,197

237,480

179,640

Total liabilities and shareholders’ equity

$

1,641,162

$

1,590,387

$

1,428,945

Net interest income / interest rate spreads

$

17,892

4.24

%

$

14,728

3.58

%

$

13,490

3.72

%

Net interest margin

4.62

%

3.91

%

3.98

%

(1)

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

(2)

We have an insignificant amount of tax-exempt loans and securities, less than $1 million. Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis as of December 31, 2017 and 2016.

(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

AVERAGE BALANCE SHEET AND NET INTEREST INCOME

(Unaudited)

(Dollars in thousands, except per share amounts) 

For the twelve months ended December 31,

2017

2016

(tax-equivalent basis, dollars in thousands)

Average

Balance

Interest

& Fees

Yield /

Rate

Average

Balance

Interest

& Fees

Yield /

Rate

Earning assets:

Federal funds sold, cash equivalents & other (1)

$

152,674

$

2,409

1.58

%

$

91,979

$

1,429

1.55

%

Securities (2)

Available for sale

46,035

1,170

2.54

%

30,464

624

2.05

%

Held to maturity

6,104

236

3.87

%

6,338

248

3.91

%

Mortgage loans held for sale

88,834

4,149

4.67

%

64,638

3,120

4.84

%

Loans held for investment: (3)

Real estate

775,809

45,268

5.83

%

739,679

45,655

6.17

%

Commercial (4)

376,156

20,872

5.55

%

340,769

17,113

5.02

%

Total loans

1,151,965

66,140

5.74

%

1,080,448

62,768

5.81

%

Total earning assets

1,445,612

$

74,104

5.13

%

1,273,867

$

68,189

5.35

%

Noninterest-earning assets

95,906

83,367

Total assets

$

1,541,518

$

1,357,234

Interest-bearing liabilities

NOW and money market deposits

$

315,550

$

2,220

0.70

%

$

271,320

$

1,813

0.67

%

Savings deposits

34,939

162

0.46

%

34,149

162

0.47

%

Time deposits

682,457

7,891

1.16

%

666,804

6,968

1.05

%

Total interest-bearing deposits

1,032,946

10,273

0.99

%

972,273

8,943

0.92

%

FHLB short-term advances

4,603

36

0.78

%

6,494

35

0.54

%

Long-term debt

49,451

3,395

6.87

%

37,113

2,547

6.86

%

Subordinated debentures

3,377

234

6.93

%

2,820

182

6.45

%

Total interest-bearing liabilities

1,090,377

$

13,938

1.28

%

1,018,700

$

11,707

1.15

%

Noninterest-bearing liabilities

Noninterest-bearing deposits

221,425

151,441

Other noninterest-bearing liabilities

10,998

15,953

Total noninterest-bearing liabilities

232,424

167,394

Shareholders’ equity

218,717

172,140

Total liabilities and shareholders’ equity

$

1,541,518

$

1,358,234

Net interest income / interest rate spreads

$

60,166

3.85

%

$

56,482

4.20

%

Net interest margin

4.16

%

4.43

%

(1)

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

(2)

We have an insignificant amount of tax-exempt loans and securities, less than $1 million. Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis as of December 31, 2017 and 2016.

(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

December 31,

September 30,

December 31,

2017

2017

2016

Per share data (common stock)

Earnings

Basic

$

0.31

$

0.45

$

0.42

Diluted

$

0.29

$

0.42

$

0.39

Book value

$

16.67

$

16.49

$

14.16

Tangible book value

$

14.70

$

14.49

$

11.68

Weighted average shares outstanding

Basic

15,849,285

14,767,457

12,800,990

Diluted

16,981,009

15,851,929

13,695,900

Shares outstanding at period end

15,908,893

15,790,611

12,827,803

Performance ratios

Return on average assets, annualized

1.18

%

1.65

%

2.38

%

Return on average shareholders’ equity, annualized

7.31

%

11.04

%

18.90

%

Return on average tangible common equity, annualized

8.30

%

12.73

%

22.84

%

Noninterest income to average assets, annualized

0.92

%

0.95

%

0.88

%

Noninterest expense to average assets, annualized

1.66

%

1.80

%

1.94

%

Yield on average earning assets

5.54

%

4.87

%

4.93

%

Cost of average deposits

0.81

%

0.83

%

0.78

%

Cost of average interest-bearing deposits

1.02

%

1.01

%

0.92

%

Cost of average interest-bearing liabilities

1.30

%

1.29

%

1.21

%

Accretion on loans to average earning assets

0.71

%

0.17

%

0.38

%

Net interest spread

4.24

%

3.58

%

3.72

%

Net interest margin

4.62

%

3.91

%

3.98

%

Efficiency ratio

31.74

%

38.87

%

37.65

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

For the twelve months ended December 31,

2017

2016

Per share data (common stock)

Earnings

Basic

$

1.81

$

1.49

Diluted

$

1.68

$

1.39

Dividends declared

$

0.38

$

0.20

Book value

$

16.67

$

14.16

Tangible book value

$

14.70

$

11.68

Weighted average shares outstanding

Basic

14,078,281

12,800,990

Diluted

15,238,365

13,695,900

Shares outstanding at period end

15,908,893

12,827,803

Performance ratios

Return on average assets, annualized

1.66

%

1.41

%

Return on average shareholders’ equity, annualized

11.67

%

11.08

%

Return on average tangible common equity, annualized

13.52

%

13.14

%

Noninterest income to average assets, annualized

0.86

%

0.66

%

Noninterest expense to average assets, annualized

1.79

%

2.06

%

Yield on average earning assets

5.13

%

5.35

%

Cost of average deposits

1.09

%

1.06

%

Cost of average interest-bearing deposits

0.99

%

0.92

%

Cost of average interest-bearing liabilities

1.28

%

1.15

%

Accretion on loans to average earning assets

0.23

%

0.64

%

Net interest spread

3.85

%

4.20

%

Net interest margin

4.16

%

4.43

%

Efficiency ratio

37.65

%

42.64

%

Common stock dividend payout ratio

20.95

%

13.42

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

For the periods ending

December 31,

September 30,

December 31,

2017

2017

2016

Loan to deposit ratio

93.40

%

90.76

%

96.33

%

Core deposits / total deposits

74.09

%

73.37

%

67.83

%

Net non-core funding dependence ratio

18.11

%

22.81

%

12.20

%

Credit Quality Data:

Loans 30-89 days past due

$

3,636

$

2,432

$

343

Loans 30-89 days past due to total loans

0.29

%

0.19

%

0.03

%

Nonperforming loans

$

2,575

$

3,950

$

6,133

Nonperforming loans to total loans

0.21

%

0.33

%

0.55

%

Nonperforming assets

$

2,868

$

4,243

$

6,966

Nonperforming assets to total assets

0.17

%

0.26

%

0.50

%

Allowance for loan losses to total loans

1.10

%

0.95

%

1.28

%

Allowance for loan losses to nonperforming loans

534.87

%

289.12

%

230.91

%

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

0.01

%

-0.07

%

0.05

%

Regulatory and other capital ratios—Company

Tangible common equity to tangible assets

14.09

%

14.20

%

10.99

%

Tier 1 leverage ratio

14.77

%

14.91

%

10.99

%

Tier 1 common capital to risk-weighted assets

17.71

%

18.23

%

13.30

%

Tier 1 capital to risk-weighted assets

17.96

%

18.49

%

13.55

%

Total capital to risk-weighted assets

22.76

%

23.37

%

19.16

%

Regulatory capital ratios—bank only

Tier 1 leverage ratio

14.51

%

14.57

%

12.81

%

Tier 1 common capital to risk-weighted assets

17.66

%

18.13

%

15.81

%

Tier 1 capital to risk-weighted assets

17.66

%

18.13

%

15.81

%

Total capital to risk-weighted assets

18.73

%

19.08

%

17.06

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

4Q

3Q

2Q

1Q

4Q

Quarterly Consolidated Statements of Earnings

2017

2017

2017

2017

2016

Interest income

Loans, including fees

$

20,297

$

17,200

$

16,759

$

16,033

$

15,846

Investment securities and other

1,182

1,146

762

726

870

Total interest income

21,479

18,346

17,521

16,759

16,716

Interest expense

Deposits

2,671

2,710

2,568

2,323

2,310

Interest on subordinated debentures and other

909

908

907

905

723

Other borrowings

7

12

17

193

Total interest expense

3,587

3,618

3,487

3,245

3,226

Net interest income before provision for loan losses

17,892

14,728

14,034

13,514

13,490

Provision (recapture) for loan losses

2,436

700

(4,188)

1,375

Net interest income after provision for loan losses

15,456

14,028

18,222

13,514

12,115

Noninterest income

3,798

3,796

3,175

2,432

2,683

Noninterest expense

6,884

7,200

6,960

6,578

5,532

Earnings before income taxes

12,370

10,624

14,437

9,368

9,266

Income taxes

7,481

4,013

5,901

3,875

3,880

Net income

$

4,889

$

6,611

$

8,536

$

5,493

$

5,386

Net income per common share – basic

$

0.31

$

0.45

$

0.67

$

0.43

$

0.42

Net income per common share – diluted

$

0.29

$

0.42

$

0.62

$

0.40

$

0.39

Cash dividends declared per common share

$

0.08

$

0.30

Cash dividends declared

$

1,270

$

3,848

Yield on average assets, annualized

1.18

%

1.65

%

2.29

%

1.55

%

1.49

%

Yield on average earning assets

5.54

%

4.87

%

5.02

%

5.04

%

4.92

%

Cost of average deposits

0.81

%

0.83

%

0.83

%

0.80

%

0.78

%

Cost of average interest-bearing deposits

1.02

%

1.01

%

0.99

%

0.95

%

0.91

%

Cost of average interest-bearing liabilities

1.30

%

1.29

%

1.28

%

1.24

%

1.20

%

Accretion on loans to average earning assets

0.71

%

0.17

%

0.25

%

0.25

%

0.54

%

Net interest margin

4.62

%

3.91

%

4.02

%

4.06

%

3.97

%

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands, except per share amounts)

Loan Portfolio Detail

As of December 31,

 

As of September 30,

As of June 30,

As of March 31,

As of December 31,

(dollars in thousands)

2017

%

2017

%

2017

%

2017

%

2016

%

Loans:

Commercial and industrial

$

280,766

22.5

$

225,968

18.9

$

229,985

20.1

$

214,480

18.8

$

203,843

18.4

SBA

131,421

10.5

148,005

12.4

158,372

13.8

149,926

13.2

158,968

14.3

Construction and land development

91,908

7.4

94,297

7.9

100,239

8.7

89,869

7.9

89,409

8.1

Commercial real estate (1)

496,039

39.7

491,085

41.0

439,204

38.3

493,416

43.3

501,798

45.2

Single-family residential mortgages

248,940

19.9

237,167

19.8

218,205

19.0

191,872

16.8

156,428

14.1

Total loans (2)

$

1,249,074

100.0

$

1,196,522

100.0

$

1,146,005

100.0

$

1,139,563

100.0

$

1,110,446

100.0

Allowance for loan losses

(13,773)

(11,420)

(10,627)

(14,186)

(14,162)

Total loans, net

$

1,235,301

$

1,185,102

$

1,135,378

$

1,125,377

$

1,096,284

(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.

Twelve months ended

Change in Allowance for Loan Losses

December 31,

(dollars in thousands)

2017

2016

Beginning balance

$

14,162

$

10,023

(Recapture) additions to the allowance charged to expense

(1,053)

4,974

Recoveries on loans charged-off

747

0

13,856

14,997

Less loans charged-off

(83)

(836)

Ending balance

$

13,773

$

14,162

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 December 31, 2017 and 2016.

December 31,

(dollars in thousands, except per share data)

2017

2016

Tangible common equity:

Total shareholders’ equity

$

265,176

$

181,585

Adjustments

Goodwill

(29,940)

(29,940)

Core deposit intangible

(1,438)

(1,793)

Tangible common equity

$

233,798

$

149,852

Tangible assets:

Total assets-GAAP

$

1,691,059

$

1,395,551

Adjustments

Goodwill

(29,940)

(29,940)

Core deposit intangible

(1,438)

(1,793)

Tangible assets

$

1,659,681

$

1,363,818

Common shares outstanding

15,908,893

12,827,803

Tangible common equity to tangible assets ratio

14.09

%

10.99

%

Tangible book value per share

$

14.70

$

11.68

Adjusted Earnings Metrics (non-GAAP)

Management uses the measure adjusted earnings to assess the performance of our core business and the strength of our capital position. We believe that this non-GAAP financial measure provides meaningful additional information about us to assist investors in evaluating our operating results. This non-GAAP financial measure should not be considered a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled measures used by other companies. The following table reconciles adjusted earnings, adjusted diluted earnings per share, adjusted return on average assets and adjusted return on average tangible common equity to their most comparable GAAP measures.

Three Months Ended

December 31,

September 30,

December 31,

(dollars in thousands, except per share data)

2017

2017

2016

Income before taxes – GAAP

$         12,370

$          10,624

$           9,266

Adjustments

Accretion of purchase discounts

(2,739)

(638)

(1,292)

Provision for loan loss

979

1,492

Total pre-tax adjustments

(1,760)

(638)

200

Adjusted earnings pre-tax

10,610

9,986

9,466

Income taxes on adjusted earnings (1)

4,366

3,772

3,964

Adjusted earnings non-GAAP

$           6,244

$            6,214

$           5,502

Adjusted diluted EPS

$             0.37

$              0.39

$             0.40

Weighted average diluted common shares outstanding

16,981,009

15,851,929

13,695,900

Average assets

$    1,641,162

$     1,590,387

$    1,428,945

Adjusted return on average assets

1.51%

1.55%

1.53%

Average tangible common equity

$       233,766

$        205,964

$       148,702

Adjusted return on average tangible common equity

10.60%

11.97%

14.72%

1.  Adjusted tax expense for the fourth quarter of 2017 does not include the decline in the value of the deferred tax assets of $2.4 million referred to above.

Cision View original content:http://www.prnewswire.com/news-releases/rbb-bancorp-reports-fourth-quarter-earnings-for-2017-300586285.html

SOURCE RBB Bancorp

Related Links

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