RBB Bancorp (RBB) 28 Apr 212021 Q1 Earnings call transcript

Good day, everyone, and welcome to the RBB Bancorp Earnings Conference Call for the First Quarter 2021. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to Catherine Wei. you. Thank ahead. go Please

Chairman, the day, the RBB thank Investor the Bancorp's With management of Good EVP Alan we'll earnings us Morris. Chief and first that press Management for to of XXXX. Financial are from today discuss financial me and is a to Relations be everyone, then can you. CEO, you Thian; and call available joining quarter President brief Thank results provide David which up found our website, questions. release open and Officer, summary on will results, your in the for

are this within upon may that may made the During Litigation specific by not statements the or prove of include statements Private Securities forward-looking XXXX. statements based call, meaning of Reform assumptions management conference Act correct. may forward-looking Such

statements and risks of of Bancorp's of and and to also uncertainties to the subject and predict and which business Forward-looking to RBB known the control relating all are beyond environment, difficult operations factors unknown company. are are which other many

by incorrect, or could to forth these discussion to expectations in any detailed refer company uncertainties, no of such please The SEC. company assumes required uncertainties set with documents risks obligation differ update the these materially materialize, and from a statements of has prove If results these assumptions law. filed required For RBB as the Bancorp's the any unless its these statements. forward-looking

to like call Now I'd Alan? to turn the Thian. over Alan

the in business improving credit and first from rapidly results reported and today. margins, started excellent We day, deposits. benefited quarter economy. income, Thank strong us quality net We you, differentiated XXXX our Catherine. thank growth stable you improving everyone, joining non-interest-bearing for record Good as with model

increase earnings benefited to revenue related in sales. an interest in quarter and net from loan First margin our improvement further

quarter due pay First net interest on commissions compensation. fourth to were than tax higher mortgage expenses expenses quarter moderately and

still profitable, which our individuals, subordinated pursue expect XXXX quarter, to growth of loan we profitable We We of for opportunities. ability and growth the the customer our the serve. remainder year. have had we to communities the debt, we expected, to in growth increases in accelerate million positioned As healthy but first limited $XXX by that to strategic are providing service organic businesses well exceptional and growth believe raised

net quarter’s of repurchase bank’s the dividend share Directors Board our by the the call financial share Given to per some the David our questions. record discuss I’ll that, before $X.XX income future, With increased highlights for opening turn the to on the over of and renewed X% up and outlook the David? program. to call

I'll statement Alan. the before highlights or reviewing million income quarter. year which up record $XX.X you, record to and grew last our We XX% XX% diluted share the sheet. quarter a slightly from income to in some $XX.X our a million, pre-provision reported pre-tax, earlier Thank of balance first quarter’s of Net last on was moving per million. $X.XX $XX.X by income from from start of

from factors. benefited income net Our several

in improvements loan income increased due provision deposits million First to income, cost interest a our for in decrease net interest $X.X of stable and losses.

Second, by qualified loan Mae market. to increased Fannie million continue increase in mainly $X.X noninterest as income sales the about

an was fourth at a and optimistic quarter in in quarter. X.XX% to increase up will margin XXXX continue We X.XX% loan be a that prior. of sales Net the the second from for cautiously X.XX% continue interest the from similar quarter, year pace first

as million our XXXX. totaled the increasing As $X.X stable. deposits cost holding to and XX, March the Loans deposits from of interest of drive XX, investments held continue down increase of bearing yield $X.X our portfolio we our billion bearing while noninterest loans December for

XX% a rate annual estate, good at commercial grew in and have which grew XX% at a rate. growth construction annual real We which

meaningful originations mortgage payoff mortgages to decrease and low in lag continued sale loan the combined a portfolio. our when environment, million of to resulted with due non-QM rate Our $XX interest which in the mortgage

to but face improve. the does if headwinds action channels, non-QM could continue revitalize environment rate origination the continued take We not to

quarter with yield from down average our on prior gained efforts our Our six attract XX of traction. grew deposits these prior as noninterest Deposits million from from banking deposits from year. assets earning clients $XXX increase the million the for points basis was fourth the X.XX% quarter points bearing in basis the to $XXX quarter a

of Our X.XX%, from quarter was XX which points average prior points the was the XX basis prior deposits year. quarter interest the cost and from for down bearing basis

cost the the continue deposits replaced part quarter, expect the cost as lower $XXX of offering million end are sub-debt higher X% in by used completed to our mature deposits. cost we second to a rate, Near We at in of our to growth CDs, points X.X% which the quarter strategic and and by redeem decreasing was pursue million, cost assets in ability of X.XX% XX quarter, increases had We organic to sub-debt believe we opportunities. $XX.X low assets. attractive issuance capital outstanding. the basis $XXX,XXX four increased to total to additional first million that the decline Nonperforming

million April XX a primarily attributable loans COVID-XX We remaining in related the and loan we deferment million. in had risk XX, totaling took $XX provision for of losses of to first growth. credit As about economic X.X quarter

With of your call. all ratios remain above we our please that up well to Operator, with questions. regulatory minimums. the Our happy strong capital are open levels take capital

of Sandler. first Nick Your Instructions] is question from Piper Cucharale [Operator

Hi, everyone. you? How are

about Nick. Great, yourself? How

Thanks. well. very doing I'm

the give and decision So those loans similar certainly higher one of fourth some about it trade-off the Can us keeping strategically between sheet that the balance to looks production in sales core lot you compared were level color a had but quarter. as thinking how you're on on sales? like of first you a quarter,

Fannie fourth little $XX million, we up them significantly off the the to to than Right dropping And in bit were those similar. the already the future Mae that non-QM that but we million Mae Okay. that from side. So those expect honored the on Fannie In the commitments see third was will and sell, coming we rest $XX less had quarter. the we sales now, selling holdover especially be a of quarter of commitments okay?

That’s quarter, the your very you update quite as on appetite issuance are M&A are in Can strong the given us levels mind? geographies for capital helpful. your top And mentioned. in of you sub-debt specific that

We're in expand if good. Southern interested analytics in very San in Bay basically the even the we here would Texas, and Seattle a California look the mergers and merger acquisitions Area, do Francisco

you further dynamic repricing on do then for feel And as given the you the you improvement liability some room NIM, have though discussed?

so quarter, right million cash now right the X.XX% that any X.X%. million CD second down that the – as rate very that reprice much at to money in to moment. The going $XXX that in from makes – We will have we $XXX invest hard anything about low about is is it's going sorry into issue have and

So I of believe see cash. improvement, amount to non-loan but of the you'll becoming see fund down continued you because will on the cost investments yield

I'm be basically without about saying it I increasing So flat see or slightly.

my That's very taking helpful. Thanks for questions.

you. Thank

Motta Your with next question is from KBW. Kelly

morning Hi, over thanks question. there. for the Good

Kelly. Hey,

Hey.

higher were with probably that. were they Turning to I little part expenses, bit think a of commissions during quarter mortgage the a

rest there that kind this Are is any of Looking when year? should pieces run keep through? moving we to of the a rate go towards mind looking ahead, in good the forward

this the $XXX,XXX a I quarter. It’s think was little than higher $XXX,XXX of the for typically high our about to rest level year.

expect So down. go the I costs

construction really got you in as demand can Okay, categories the give then – And growth had to you the the be seeing can most at portfolio, kind strong, loan as has well there? it. looking you maybe good continued what us, of outlook provide and theory, really are

have of And commercial Well, XX% constructions either as growth or much where are be, actually looking are of XX% used a actually and about size – we as see commercial at the you this would units I use would mixed residential mixtures well maybe then is in or And side, ratio or floors. or on – – maybe XX% in construction York. property, construction mixtures apartments. XX% a floors the the the we upper condominium of – of the XX% loan about ground as may normally of is are construction And the apartments have in on apartments with then then Los condo between Alan mix XX storefronts. that the construction the as either financing to New to could most on the XX,XXX XX% loan-to-cost say pretty of and XX Most are multifamily we up, projects, units loan-to-value. the condos the you X,XXX Angeles about about on

Great. back. Thank I'll step you.

question from Brett [Operator of is Instructions] next Hovde Your Group. Rabatin

everyone. morning, good Hey,

morning. Good

Good morning.

going dynamic around make to understood Wanted the the forward income well. sure fee I

about you how can interacting any see while I know around components forward give SBA SBA color in pieces or us the declines? to you Or saw sales loans, forward, you the $XX less two the it think two mentioned that you million think dynamic was I increase as loans the Is little that Mae to originated going those continues Mae of million probably and of Fannie Fannie going way So going loans additional a on on the bit you those XQ. $XX forward?

gain round a our did Okay. SBA in Right portfolio big we now PPP. the was to

and market – rolling new non-QM residential regular for treading think out down but mostly off, growth going gets – I SBA very the year see traction is there loans, all Mae the sell go although issues our this I due as we quarter, in strong and water because see although big the SBA So we'll just quarter what selling that and of right out more That's did have do sales to just that, first I can And program I we originating I the PPP old is over about last we have had go foreseeable time Having see to slightly see because XA being you future, Fannie sales COVID much. not was commitments cleared replacing we coming SBA now the originations. Fannie some said of something and loans. be see up department backlog guarantee, really okay? our down XX% the in

doesn't Okay. I to it have filers are going seem That's helpful still non-CECL bit, around like, recognize would any but of. color. a reserves, like reserves to just to speak issues provisioning that asset then little you're bolstering to seem it and maybe keep going And quality need

XQ seem it about could think even suppose. than about it provisioning, forward mean, think around we like in I any you going As provisioning less color it forward? I would how growth, was depending on be But

– still and losses any see that's I take our our will to I think okay? you growth losses, any X.XX times plus and provisioning, large need just don't that additional

Okay.

in time, we in there shakes but we I to will be do But special when back coming we that credit the not bank don't second losses do that, have everything time out COVID the decided a don't that point quarter. and recapture out reserve, the think go you'll in and to how $X.X that quality. first any some in that's the against will quarter see there see the see million if at we

for That's the color. Thanks Okay. helpful. all

Okay.

Your final question from of is Stephens. Terrell Andrew

Hey, All good afternoon. right.

afternoon. Good

just base wanted in of guess, step release, I data Yes, trying of back expense processing brush think year. was on higher kind that typically put the comments about of go-forward run shouldn't this you kind $XXX,XXX a the expense see David, $XXX,XXX than really from, a quickly. expense it I down next running to I just circle XQ about call $XXX,XXX to in we or rate. out quarter appreciate I rest to the the the also the

Yes.

to to is had that system and that Some of amounts. of are one some pay we we another off – converting some was duplicate of

months. away, So be okay, that of couple the will next going over

and over Okay, just level And loan they portfolio as what of on dynamic forward, thinking new some few of on might loan this of quarters. quarters are yield pressure more change I perfect. past And about down I currently? or they kind yields couple originations thinking fell the about recently, just going of low origination yields, around it. competitive forward? moving guess appreciate kind put new kind then yields you yields, X% getting

Yes.

Okay.

depending CRE On type seeing we forth. so and so it loan are side the X.XX%, our forth, are what X.X%, is plus rates of on prime and

customer, our X%. you're a start looking a multifamily rate, So we a we at lot good forth, us, above will they that's loans, with deposits and up so unless rate a we X% about that had X.X% have talking very make exception. an they're When of

that's mortgages or the where the coupon X% X.XX% non-QM a X% coupon. we where pressure the a to seeing X.XX% with I is So a we're place in really coupon think a going runoff, be say, the coupon, mortgage side, on let's

creating the what's the moment. our at book right So pressure in that's

Yes. Right.

that looking are say are I X.XX% X.XX%, side, X%, to multifamily X.XX%. commercial real So we about commercial we mortgage are would we X% on at estate, and looking at at the to looking

We do any less will not X%. loans than

That's me. for and color. excellent And yesterday then renewed the dividend saw and I last Okay. the Thanks, thanks, David. Alan, question just morning. buyback

guys assume forward, buyback active going Just are still to that is on it to the announcement? be you fair given planning

Yes.

it for That's taking Perfect. Okay. Thanks my me. for questions.

Okay.

are no queue. further questions Do There any have remarks? all in you closing

for coming Okay. look us many weeks. days and forward in questions? day. to more a thank of We No Once to joining today. you the all again, nice Have you speaking

call. you today's concludes Ladies participation. and gentlemen, Thank your for conference this

You may now disconnect.