RBB Bancorp (RBB) 27 Jul 212021 Q2 Earnings call transcript

Good day, everyone, and welcome to the RBB Bancorp Earnings Conference Call for the Second 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 note that today’s event is being recorded. I would now like to turn the conference over to Catherine Wei. you. Thank ahead. go Please

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

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

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

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

Alan. over call to Now Thian. I would the turn like to Alan

focus day, total record common deposit deposit, strength our us franchise bearing our in a return earnings Good growth differentiated of the Consistent everyone, business significant resulted on tangible thank and Thank approximately joining continued XX% deposits. delivered non-interest you of in quarter. on now today. of and which healthy second model represents equity The you, for Catherine.

non-mortgage liquidity, excess pleased for efforts, soft vibrant our communities. due yields entry make announce that declines the market, had balances market and We interest to our growth, also to stable. quarter We loan of a origination home up discipline, reported is Asian-American Hawaiian were to Our loan quarter which loan mortgage. strong in into another a

call the this continuing are for call our and some excited questions. Hawaii. We long-term highlights the to to the additional value. to and positioned market over With up discuss will strategic banking remain model look growth to and bring enter opening enhance to David? well opportunities new David organic relationship-based We pursue quarter’s that, of shareholders’ to I turn financial to before forward

Thank income Net will statement share. income and highlights We than reported reviewing you, pre-provision I grew to income before the $XX.X our on to million. year or a quarter-over-quarter per a record from doubled some of stable earlier last our Alan. $XX.X million moving more X.X% of of balance pretax from by start $X.XX quarter sheet. diluted

from net several factors. benefited income Our

last [indiscernible], prior. XX basis points was seasonally excess we decrease First, a loan to primarily non-interest income nine margin but mortgage which another a real was the liquidity would billion and was in which due interest net down by at We estate commercial have in increased largely from held our loan Loans been Adjusting our stable quarter. are portfolio. decrease production, a a million after had annualized continues interest mortgage growth net quarter and non-interest grew million XX% June stable the carrying, first and most a our in mortgage by to income $X.X second in margin basis our lag the lower quarter second profitable which grew $XX to non-QM normalized which quarter. from X.XX% leading provision expense decrease as for for rate for sales, interest annualized of a is and of first quarter, as decreased interest for Unfortunately, income high $X.X costs investment Net the of construction, loan from at XX% losses, lower good product, mortgage rate. to X.X%. a due XX, offset quarter expense totaled year points

We challenged rate non-QM are the acting environment. channel, continue to but origination be revitalize to the by

points basis on yield prior year. down X.XX%, from the and XX earning XX for average prior points quarter was basis Our from quarter the assets the

deposits million, XXX very million. NIM, total was the due on deposits almost with our growth by again to this excess returns strong non-interest-bearing decrease XXX and lower once entirely showed As increasing with Deposits, by capital. increasing

are with the monitor deposit higher-yielding our deploy time progress some to base, but them have we rapid new intend the into pleased assets. we We made for before balances improving

expect five CDs to cost our prior less from replaced points the year. of lower-cost total and deposits. to deposits quarter by of some assets our the in average as in high-cost quarter, the and for of X.X% down deposits second points Our quarter mature which basis X.XX%, was still the XX decreasing interest-bearing basis was Non-performing million points from improvements are prior basis $XXX,XXX decreased by the We XX.X assets. XX

of about $X losses loan As primarily quarter, for took We in provision loans July we growth. second deferment XXth, had million. of in four $XXX,XXX the to a attributable credit totaling

above remain minimum. all well levels capital regulatory our ratios of strong capital Our with

as a a is of happy Finally, and that, million were are only one the testament feel eight Response were up to before impacts underserved communities. With this questions, Treasury reputation we your take us Rapid take the We in open Operator, economic we were U.S. notified in the community-focused banks COVID-XX questions. pandemic CDFI respond call. that will allow and under awarded to receive to California the of we Program. distressed in to $X.X please your funds lender. These it a we to we our award, mid-June,

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

have in the what and loan net growth remainder the year-to-date for But impeded book. your to It loan expectation single-family I would on growth. Yes. like is of like year? for the the start looks growth paydowns payoffs

X% will target on to loan we XX%. at be think growth. still I XX%

that Okay. on slowing the predicated significantly quarter from paydown level? target the and prepayment Is second

in of I side are things to the prepays the mortgage beginning slow. see

in strong commercial is strong. We second that decrease going right our side are pipeline at believe significantly, the strong the It quarter very very origination side. to also but commercial the also moment, is in the loan

a with this mentioned, any you on has industry. very at in have secondly, in second advance And there? you Can how a even non-interest-bearing you change some as such bank? And that able to compared strong to color row when the been growth deposit prompted give us is quarter strategy the robust drive the

and of to Okay. it okay. A deposit third is a is just of in in putting half ton of there. then will it the excess customers of excess is amount I maybe because bank customers, balances. out more third everything showing delayed. bank, That going out And break up third is groups. back liquidity that a in for from existing There asking and of is of is the significant maybe of that. the customer it One base the deposits it with is is group a liquidity this, just a the is just And three accounts market. new third - maybe there

market. hear the You

is purchase hear The the of delayed. everything all and You commentaries.

over So used. hopefully, believe will that at liquidity this market will all. our in money liquidity that a just the of instead once. The excess of go is is of Has in away, being go some it time changed excess until XXXX strategy sitting is away. We that period at

not going to as are of much invest increase loan so We it. to we possible. amount certain production And therefore, a our as want

We moment. are not loans this selling non-QM at

rise. to loan million we short-term I comes term we it in a we can shorter of than relation, loans funds, But will We rates life earning are to get stable on dollars more of do into putting or keep keep the our Fed that that points we to okay. three production want back if believe years, mortgage basis there. we investments couple holding to because are are hundred And until month short that on normal are eight finally, every average

And looks What the your on David. business in there. color, is and lastly, a just sales pop It environment SBA great the you favorable that a for capitalizing in is expectation are quarter. like generate? That revenue nice can it

Well, this Alan. is

SBA, quarter least would it same be first two at third on our fourth and the as The quarters.

PPP - is now, Yes. now year, I SBA it our about. it more But that origination operational last forgiveness. was do think out people and And is is - PPP. all just are it

doing And year. rest be I for think okay will of the so the we

other on to to assistance. And suffering lot last survive. business or the business the their inventory, thanks a slowing and the back in with all lot PPP the pandemic, to year, of trying And a trying business. the like their to small it more addition, back of increase feet they really starting see and Hopefully, their are increase seems small down just to we productivities or getting

that on property Southern So that for. so business industrial we looking has properties. or even and property a really financing bids or almost a either more the are strong multiple inventory about inquiries in of SBA been quite warehouse it industrial expiration improvement see industrial purchase has lot California, all on The small the

strong we growth industrial business a sector. and in strong, So the see

taking Thanks thank you my for for the color and questions.

Kelly Motta with from Your the next comes of KBW. question line

talked you there strategic market believe Hawaii, is is I about Alan, remarks, new And a still you. growth prepared which a you opportunities. of in earlier obviously, are entering lot your for

how Just wondering can quarter? you more last bit looking any is a expand if the update since on on guys M&A

Yes.

see for pandemic, In institution of alliance we or some kind that partnerships. the fact, a after more lot looking

right that at now, we targets see been two least have more looking to fact, in at. So probably three we

how a banks consider, quality, pandemic, nice management larger than of big way a good that larger of good just or banks better those growth distribution to board is one believe one that better strategic they bet the are It at the quite is This for that partnership. actually, I looking outlet. is They survive bank. pretty are are is but looking two. are on It a they asset plus of of is they members with for that. So we to larger way lot I A part in of after see few not more some part location or the bank. or just in organization a believe become that a lot

So we and states the Washington Texas including Atlanta in California, looking of a well. we are areas see and at, including quite as Northern including opportunities Georgia, that course, few

a more we So lot than see pre-pandemic. opportunity now

needs market thanks what also priority a running. production And up David, happen wanted to Alan. still same. channel to ever and of if you non-QM the and there? that a the the the bit ask a when one question you Great in mortgages. going about on that order getting I about to Do follow-up just it is on is have to get sense normalize kind of spoke

seems land looking bank a reasons, are non-QM most the less processing. see. are for This pandemic is is for because quite than same competition aggressive in lenders. looking time, margin. Land really certain the of They bank underwriting quite compliance volume. be It the bank see the recover a we at actually what the to on lender, we Unfortunately, issue our of from land they They lender tend in the for lot smaller has bank. and

months, three be system. brokers, to own bring year, they banking even successful in is our though customers who about bringing our with work shift to branch trying of we past lender. of correspondent know That us, go So not in a customers proven the in from the bank retail really lot and our of land on since still are focus beginning we these it our pretty to to

that see back quarters picking least say to it we normal. to have close probably need will bring I volume to the So up. at that to as will two volume

for is on question that It last dropped me. kind is think Alan Thanks time. on said what was They quarter-over-quarter, expenses. it. pretty Got to helpful. nicely I of similar call Last the

half back should any about be if we we the the into expense as Just is thinking run there wanted on update how of see get rate year? the to

every company pressures we having probably as on and salaries the forth. is are Well, around country, so

would $XX.X million I that be million So and range we in $XX say our expenses, okay. would between quarterly

back. set will I you. thanks David, Thanks

next of line Terrell Your Stephens. comes from Andrew with question the

any production? of where David, kind Fannie given or Fannie hear business. sales and mortgage non-QM increased mortgage updated So there appetite non-QM of any on kind of piece I back half the the the the to production clear you in But loud appetite at. any more balance expectations of year is sheet there Is on is of more the just

XX-year are loans, on Well, about probably have Fannie, in they a we range will you so very sub-X.XX% forth. putting prepay when and thought fast they not are

to going be you forever. us So with stuck are

review we the and to rates made quarterly. it we is because economy, review sell decision going quarterly, production We happen have to same this to about kind our Mae where has going we go at know are production forth. our it going will that to don’t know of Fannie is So remain We what with the we so it We and the been. time. think as continue don’t

We New are region with that happy out million going just out that region and all, I to there shouldn’t all performance York we of reminder be our production Mae. it comes of range a at time. Fannie XX% the are of $XX say and and of the comes York this New

was gain or sale blended it the at around looking this margin just X.X% then And great. quarter, mortgage so. Okay, on

lesser Just margin kind a sale could be here given a of gain we from you volume. floor? on might little sale near compress or or Do likely of non-QM the at mix there are bit think

our Well, Mae, been Mae a is X.X%, No. Fannie about - close in last would is say was we sale that. which has two sale the Fannie averaging closer on non-QM than to gain point gain margin on our I to X.X% to similar had margin

hope the things so come we would X.X to done, especially will because our range some X.X, moment. and that third right the go average the of that August September, have So is to I in slightly where you I we have mandatory would and is gain But forth, the begin the X.X, delivery in that quarter, because sales that. now, see right at say, margin on up of of

Understood.

about know a might one it, last Okay. this squeeze but And talk appetite moving valuations in. have one quarter? since the improved maybe can the I just I you then if you can we for repurchases I And did shares repurchase spoke. missed bit any last forward?

repurchasing also it to on have in be still believe the is we we find believe, is that the that our I here. are yes, just trading, we or probably could will if active more but believe stock in as what quarter. depends have going all quarter program about the shares. to We have do XXX,XXX market be I it do. same probably the during repurchased. in to XXX,XXX I our We shares, not, we we degree, repurchased third XXX,XXX it. And I where

you taking my I appreciate I step will back. questions. Okay.

from [Operator do Instructions] We Terrell have a question Andrew with Stephens.

us back year Just have the one more quick in in one. between the Can you is the repricing of the today? and you book CDs back what and new what differential the half remind just CDs rate

Okay.

third We have the mature in at million will quarter XXX bps. XX

is have too, XXX approximately okay. a so at it bps is Our be pages about I the have have XX bps. it will but I of it. I to find because down to here, bps, Again, couple rate quarter ongoing Xo And turn fourth to do the quarter, quarter, year is just million. going fourth you one The ask, if XX

Okay. moving compression of is up bulk And been behind the pressuring new quarters last step yields loan you is around markets on the one pressure one new as competition low yield just new or range your still in are or anything seeing X% is low the X% or you in expecting well. of past that yields or yield any forward? know you originating the kind of that loan and are Perfect. level us over I origination in margin then for several kind the production originations of kind have credit are today, the

I the of yields our the that able level still are I Yes. believe - now. are competitive out throughout at on yields is year very there, maintain rest we this to think but it our they same

Okay.

quarter. Thanks for my taking Okay. questions. the on Congrats

you. Thank Okay.

There are time. I to back will turn management closing call no additional for at questions remarks. the over this

many forward thank nice you We day. to look Have speaking of again, the to today. in Once weeks. coming a you days for us joining and all

Thank conclude today’s call. you does for This conference participating.

now may You disconnect.