RBB Bancorp (RBB) 26 Apr 222022 Q1 Earnings call transcript

Good day, everyone, and welcome to the RBB Bancorp Earnings Conference Call for the First Quarter 2022. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note that today’s event is being recorded. It is now my pleasure turn the program over to Ms. Wei. Catherine begin. please Ma’am,

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

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

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

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

David? the turn like Morris. I’d to over call to Now, David

our growth. Business us interest James thank Royal and Thank $X by Christina great for me non-interest I in investments you, net Board deposits Board, a Dr. joining as first increased day, the today, bearing held of the Bank for Catherine. XX% today. start time. the Kao. Chairman member, Good With Kao, and year you everyone, to quarter income top loans billion first had Average for have

strategy strength continue ability in our value. know shareholder we economic questions, the be our announcements our I environments. of business confident grow driver our built look the the has the profits and demonstrates feel personnel recent I effective that the in raised RBB an forward. have Importantly, to Board team the have that me results but to drive will working a variety given I of to of rest support appreciate forward of bank with to

increased the also deposit average due interest decline to in to million $XXX.X last from the from financial Turning performance, and liabilities income yield to million $X.X income from but share in from interest in drove XX.X% increase per or increase first cost. income declined diluted bearing million quarter. record quarter. X.X% Net and in a the by year’s from interest several a net in in factors the a decline benefited benefited results. by quarter’s Net Net earning earlier a income a assets decline $XX.X $X.XX improving prior interest a expense average

increases number and fees basis loan processing non-interest for by the loans of The director’s to quarter X.XX% offset $X.X from reclassification in mortgage of Annualized and quarter professional fourth X for $XXX,XXX decreased a $XX Fannie mortgage real construction and fees. good decrease in cash estate were in which compensation increase first from the expense decreased combination last cash first quarter, in XX, projects a increase of increase to quarter. billion the was held to of was million from resulted in directors to The was quarter expenses. increase expenses, the RSUs. margin increase a as special expenses. both and $XXX,XXX income from for from $X of a X.XX% an investments and legal we the was non-interest These had a to and a for XXX% Net in decreased previous $XXX,XXX executives prior. the points a due in converting commercial in to of and ROA a a year Net quarter, ROTCE by basis points This bonus bonuses SBA due first while quarter. due and data fourth XX.XX%. reversal interest in executive lower director’s a growth quarter systems in and processing due a increase sales. XX prior First from million Mae the a increase expense, primarily March last in $XXX,XXX data from C&I, decrease And increased Non-interest exceeded quarter. and quarter compensation

On is the product to life. mortgage positive mortgage which our production, beginning side, signs our is profitable most non-QM show of

points Our the with quarter from year. basis the points to on X%, earning for down but basis yield average XX increased three prior assets

customer non-interest NIM, As to was the quarter. to on $XXX year-over-year over With bearing lower our this deposits funding with the drove respect million returns activity commercial capital. growth. of due excess decrease entirely In average,

end fully three quarter cost million interest in X.XX%, from the Non-performing the quarter, three and repaid. but year loans assets XX at $XX from declined basis of by quarter for stable points which non-performing was the as were the at bearing first about Our was of deposits prior basis million early April which the down were prior points $X

loan primarily As We provision in growth. of attributable in had credit $XXX,XXX we for a loans no took first loss of April COVID-XX XX, to deferment. the quarter,

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

come first Our will question KBW. [Operator Kelly Motta Instructions] from with

you at that showing growth your for on life all good as what good. what’s resi on is does you’re and was the product for Thanks the with call ahead What’s heard going the of Hi, mortgage? what’s growth that mentioned going non-QM morning. temper question. the rates quite outlook And non-QM signs I expecting again. going we for forward with look on Loan

our switch from Mae Well, mortgage I the with on a to Fannie what’s is going guess, production our non-QM. department

As rates our product like in much environment that Mae better than up, does. seems go product a it Fannie does

think I to going production in see our increase you’re non-QM. So

if going them We decision made our us them. we’re to halt sell not books any sell we’re yet or to on have or if going

Okay?

of That’s also for of expect every rising or in of and Okay. have prospect the the have, terms perform rate rate XX for in you How a helpful. heights environment, we to should see points basis do now do going NII And expansion a thumb balance then forward. sheet with rule hikes the you of kind what NIM? several of

You points three increase. only or just would probably see five basis

in Most You got very our reprice to cash. short-term remember our items. quickly, because investments we’re will of

So them Ray And the we repriced, strong are pretty they’ll right line price. all holding But of some reprise quickly, CDs the have of million very CD only now. $XXX or about

pricing increase So moved thinking may. or all we point increase in expect XX we’re haven’t I yet. XX it’s our in basis base at point with this

have will begin and We adjusting our to pricing. probably in money our pricing market CD

far automatically prime loans all our commercial as up. will move of loans our As are driven that are concerned, commercial

XX% So our XX% to – that’s of about and portfolio.

long – you search in Are the team? Are the Alan’s side, of at of replace? with departure, the as to looking fill more looking you go CFO. yet? just in have to CFO – you the kind CEO forward outlook management started interested for on of you’re David. you’re executive you in where as still role, share any well now board terms interim as you Thank you, And Can Okay. as in CEO the then thoughts

Right Okay. announcement finished Alan now forth. we so just and the about

now going a So few finding now that replacement is to board that concentrate the the Alan months. over is for done, on next

Okay. will Thanks, step for Appreciate back it. David. time I being. the

you. Thank

Terrell come next Stephens. with from Our question will Andrew

Hi Andrew.

where off terms replacement you Maybe do Lending of replacement mentioned morning. dovetailing point. board of good finding the last going Alan, know on to we just stand in for Chief a be the of Officer? Hey, was concentrating I but

to or decided was be don’t year created we we a need two Officer. it, that We position and Chief with we three not last lenders. and replacing believe will hire Lending That

of kind been have Okay. at has what on front you announced, lending And seen of the the bank? other any then outside attrition –

course, we haven’t not the loan seen of the being and It whether competitive right on depends are – really competitiveness maturing what bank of and we loans. we – those extremely or have now. are get We that

book We to have two most are defend the – best that, we our our will in to are of most penalties. ability. maturity, our to of Having said not – loans are we prepayment loans going our five of and years

type leave do be they related to if there some incremental of that. will So income

maybe other that Kao, CEO. a process how well. just to kind Okay. as love alternatives, realize thoughts partnership kind for of wondering including problem engaged then of would maybe another that or new of kind David institution about on, maybe kind could thinking you’re potentially And with But I in a search Dr. you’re a of strategic hear solve

Okay. I’ll answer too. that

we strategic Of price course, are the alternatives, always looking of does right value reflect not but the now our institution. at stock

on Okay. Fair on sale one I SBA could David And the enough. just quarter. in then more gain sneak this if

versus was X.X% last quarter. It down on quarter X.X% from sold. the Just looking to about what at the reported like gain this sale income came looks margin

SBA kind basis an of on is then on sale gain the what outlook level are point behind kind margin, swing. SBA how hoping margin with for driver and So a XXX the compression specifically, of about was forward gain you new about discuss was could it? I just X.X% that sale or the you thinking going

of the on was rate loans. offered that those That’s because

Okay.

the and the is whatever. all margin SBA the So based plus loan prime the the of rate, length upon

So they yielding. were bit little lower

Were these all XA?

were. they Yes,

back step Okay. for Thanks. I’ll now.

Thank you. All right.

will question next come Piper Cucharale with Our from Nick Sandler.

How everyone. are you? day, Good

I’m fine. How yourself? about

you. Thank Good.

on Just targets? on you growth to us organic non-QM can commentary, full your loan the year piggyback update

going year to and of growth between organic our XX%. and loan think instead I XX X% is X% full be

of have team SBA, left also anymore, bank we one Okay. the SBA have for that so. team commercial our already, the are Mainly couple SBA rehired and but we not have because lead a we lenders here leader

Okay.

the Okay. the And NIM, at your up least you the has to for more versus think continued cash average generally? decline. NIM the help position move in At about the point the then quarter excess to And liquidity seems us comparing it expectation suggest sizeable this of period balances, the can the near-term. in in end

Yes.

begin begun is losing moment. as would continued mean the Our on quarter, late from – the that general, predicted. bearing deposits at right our we year March down, our okay, we the the as non-interest in we said I’ve to April deposits expected excess third over have through and late in lose as and last I And DDA liquidity on

NIM XX most. see think a quarter points X the our it basis to expect basis at should be much I to increasing I be, be mean don’t as I will as So would people points

Okay.

gain the Okay. sale can you consistency on for the we discussion, us And then quarters should SBA total your just to this on expect expand from level? on business in update expectations and

I any only only think of quarter because you’ll see see Fannie – also are loan SBA loan which don’t Mae and you’ll declining think market. sales, the this I sales

So at I year. target third per being until or don’t fourth our $X quarter the of this see maybe million us quarter

taking questions. for you my Thank

Okay.

right. All Thank you.

come will question Hovde next Group. Gerlinger Our with from Ben the

good Hey, morning.

morning. Good

touch I know if we was a I can growth basically capital on curious a is bit the slowing bit. little little

price does incoming reflect said, priority progressive the there’s a company your are you with or going mean share that doesn’t As does and is stocks think that to the what worth be purchases something that, deal? you bigger

No.

have some Board days repurchase plan. reauthorized us restricting another XXX,XXX shares shares that in our In There’s shares only the stock has is What’s fact, traded, X,XXX we traded. just volume. X,XXX the

go quite the takes bit it XXX,XXX shares. to of through time So a

Okay. to that. do the this year rest Probably of

understand no, Yes, the totally constraint. that. liquidity I

Yes.

people, you you And of the know I being with that to associated target. think makes going expenses, think expenses the you when about three a you that’s kind said Lending then when kind now over mean cost price kind three have or Chief that roles. full of Officers you I’m converted of year the forward, assuming salary about but

kind looking lower managed run expenses kind has expenses we rate. Just of at because of potentially well see historically the been very growth

level because as we as will think is you’ll quarter to maybe other I level. next And believe a quarters see highest I $XX.X to be million this from our certain Again million million bonuses reductions two pay, our expenses and of – that over we the $XX first $XX.X down always quarter.

Got you.

appreciate Okay. That’s I it. helpful.

you. our Thank And Piper Nick next will from with Cucharale [Operator All Sandler. come question right. Instructions]

Hey Nick.

quarter? quick close still transaction a you Are expecting the Gateway the follow-up. second to Just in

year. expecting in second we’re No, the the it be closed of to half

Thank you much. very

Okay.

questions All It right. that we Thank at no you. this queue appears have in further time. the

you Thank everybody. Okay. to

may disconnect thank We gentlemen. your participation and today’s program. any time. Thank you, ladies at and does you conclude This you for