RBB Bancorp (RBB) 23 Apr 242024 Q1 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the RBB Bancorp First Quarter 2024 Earnings Conference Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Catherine Wei, Investor Relations Officer. Wei? You may begin.

Thank you. Good day, everyone, and thank you for joining us to discuss RBB Bancorp's results for the first quarter of 2024. Fan; Chief Officer, David Officer, Lynn Chief Officer, are Lee; President, Jeffrey today Officer, Administrative Financial Risk Chief Hopkins; Gary me Executive Morris; Officer, Johnny Ye; Vincent With Liu. Chief and Chief Credit

that the results, I Relations will the please found forward-looking we'll website, everyone release investor and the press would available are up can presentations be then company's David and investor that the summarize call on SEC to which questions. disclaimer Lynn in and briefly statements ask to presentation in your earnings the our and refer open filings. Investor regarding the

Now over David? to I'd David call Morris. the Officer, to like RBB's, Chief turn Executive

Catherine. day, Thank thank you, you today. Good and everyone, for us joining

Hopkins Lynn leadership of has We her XXXX forward that share ongoing been Financial appointed as look as our RBB to member happy her interim an I'm appreciated our in as Officer. to team. contributions since Chief expertise joining late and formally CFO, First, official

first CDFI basis and X loan quarter's we income Turning to flat. from stabilizing signs declining per declining remained margin the share exclude quarter showed margins our when $X.XX interest from last Net and balances award. of earnings points results and Earnings the performance.

deposit and stabilize While optimistic increase. challenging, as we rate and creep that to to size changing are loan continue margins the costs expectations cuts about timing up back cautiously our yields of makes forecasting should start

] our rather market the quarter remained quarter, levels the put loans growth at first intentional a that this in adding on billion and in profitability. loan by pressure [ originations investment We pricing we're quarters for some than declines. stable surprised but held further at expected Loans of $X back would few had helped after the

portfolio in other yield in an loan quarter increase with XX basis and the That million point did a commercial X.X%, of coupled approximately $XX had renewal our activities first which contributed repricing yield originate loans of of overall X.XX%. said, we to

quarter. I some it Lynn? who to go about over hand that, Lynn, can into With the more detail

feel have has provided, as refer David. presentation quarter the XXXX our of quarter company's results. investor summary you, comments first to X first investor of Please of to Slide Thank a free financial I my the performance. on share presentation, we

Net million relatively compared per first $X.XX quarter diluted was share, per last income after was quarter's to in income stable $X no income. $X CDFI adjusting quarter's XXXX. or so million share for $X.XX similar last There of the

XX decreased XX yield XX The net from mentioned, basis David on funds points points, while is mostly loan total as of assets X yield margin increasing our interest-earning our increased increased due expansion asset our basis yield last As basis interest by earning to quarter. our points. cost points basis

liabilities. X.XX% of quarter to Interest XX was points stable notes total The to million. small noninterest-bearing on at continued deposits, in million income but remained cost cost by the during increase and offset funds pressure of subordinated benefit $XX in redemption of increased of basis by the a our was interest-bearing the due decline fourth the average $XX.X which

due a interest award. positive net decreased result, million $X.X of impact $XXX,XXX. of decreased quarter's ERP million primarily to As income CDFI $X income Noninterest last the

the on from current also and REO quarter. to the in X in X gains of due $XXX,XXX property benefited sale The quarter on appraisals the first properties

LTV offset offset consisting the payoffs placed million expenses of As $XXX,XXX million the to pay to $X.X primarily and expected remain are quarter assessment and in legal due by recovery and by high lower low legal to mortgages, expense expected, single-family fees, downs. million of level. million being on loans Nonperforming $XX increased Noninterest around due which increased $XX noninterest $XX to nonaccrual, million lower $X by fees. second included benefits seasonally expenses salaries of regulatory a $XXX,XXX to

Nonperforming March totaled and million X REOs. included $X.X assets new $XX at XX million in

loan Slides X remained our an loans LTV and our of X have these and were California nonperforming York about investment well-secured represent at for loans billion stable about X of held total mortgage loans. exposure and additional XXX% which for Commercial development and and $X.X in primarily in details consists New of X% our XX%. at losses of allowance and of has XX% and details average Slide total portfolios. loans, residential mortgages, X.XX% portfolio, with loans construction stable land Our real estate non-QM

Slide about $X the expensive roll $XXX stable. deposits we decrease billion to our maintain a the fourth more noninterest-bearing at deposits quarter, end compared quarter Total as deposits details XX and were deposit million let relatively first off has the franchise. of time

the average all-in XX quarter. cost increase was points fourth from quarter deposits first basis for of an of X.XX%, Our the

While the see costs, pace $XX namely increase. quarters, redeeming upward the of reduced deposits we funding our subordinated on took continue actions and notes we to wholesale reducing pressure X last has the in of million

lower strategies contribute costs attract expect deposits, implement cost to funding continue to will time. we improved We longer-term to over which

tangible X during offset dividends shares Our end of about quarter. securities repurchased the to portfolio million $XX.XX X% and We a and the earnings shares book first repurchase by XX,XXX share due to authorized plan first million. at $X of to [ quarter February, a $X.X million and in unrealized of increase increased up per on the value accretive during our losses ] share share repurchases

capital Our above capital levels regulatory levels. remained strong well-capitalized with ratios all

up your call? Operator, you With the please are take questions. to that, would happy we open

[Operator Instructions]

Race Our with Nathan first is coming question Piper from Sandler.

the on formally. Lynn appointment Congrats

you, Thank Nathan.

on question a outlook. Just margin the

there. may mark think I trough his comments in alluded David first to the that quarter a

actually the So higher on as to rates prolonged just margin a the Fed begins that's end the short the in cut forward case, rate of environment trending guys see going curious also and the curve. you and how if

can I start.

net compression the think with prior point to So margin, basis interest I our we're the were quarter. when at we X looking compared pleased

deposit pricing I is still think outlook it. I for of longer think upward with some the have curve, the the going shape higher to pressure on and yield

modest, compression. The repricing, consideration. into the the X that first that think of in points it just and origination were in quarter taken I resulted basis we to see able we've However,

we some ability for opportunity I challenging would that come loan margin still growth, net interest think, I have think currently. our But to bit. with, it's So little up pretty the a would expect

little would we be is know So I word. a interest if -- But opportunity come strong rates, based the for I stabilized, current up trough opportunity think growth, don't I it the for our think funding on will a bit. to have

going That's fluid year. helpful. and this loan but Great. a the pace it's And you thoughts just forward growth curious on both if appreciate environment, Okay. any just guys of have I pretty deposit

will and year. this tough the be loan deposit think We growth

the to think I if enough low going loan in low, will still the digits. a be be mid-single think the get to to rate end lucky it's of And to growth cut. we're year, I more

one. You to may with see lucky we're some get stimulation enough that if

been think are And coming though. I filling I price remain to, I competition. down the think pipelines It's up, healthy. we've those really noticing think, some

on we're portfolio. how So grow to being the able selective

saw So the rest of to in we I you some first and there. pivot because quarter the looking opportunities there's that think year, through the

me. one last helpful. Okay. for just And Great. one Very

how as think in well. Lynn, for this solidly we think quarter, Curious million you trending the were came in you about in run $XX.X about XQ. quarter, overall obviously guys below I and on that XQ rate here talking last expenses, XQ

Yes. Sure.

million be a last about first quarter, we benefits. Yes, can little range and quarter million. taxes to bit $XX think a higher $XX.X of I talked with

the I is items. on think recovery down And stabilize. opportunity for to pushed a those line there which did of of one in an quarter, have sort we this

think I looks So correct. being $XX around million, approximately

we come However, appropriate. as But bit more in some off up million around could modest a $XX little growth, participate we production of loan that. and is

is question from next KBW. coming Motta Our with Kelly

Instructions] next Zwick hear question with can't is time. this Group. [Operator We Kelly Our Hovde Eric coming [Operator at Instructions] appear to from

I wanted you. with start Lynn, follow-up, maybe for to a

curious -- mentioned active the there's kind than particularly you activity geographic in provide pipeline loan regions where of color types if You any today? stronger I'm terms others, line are you're that of particular could or if seeing any somewhat that pipeline product today.

We're New York including specific it categories and is California. getting and it all Okay. over We're market not we're retail seeing area, and one it, seeing seeing We're both in mortgage activity, seeing all. our in stronger. types loan

see is stronger, much we getting And also too. side then commercial the that

at -- is It we price competitive price it's right extremely of It's this time. now. competitive. very So kind [indiscernible]

So.

is I appreciate read on the price still commentary there, from there. competitive structure reasonable. your of perspective is And I the guess kind

more You're be not seeing there any competitors maybe kind competitive? of weakening to

do not our Our main our some this is that strategy competitors, in will without marketplace deposits, main we anything not are which competitors that competitors take changing. see the loans not time. do We at have

of assume kind maturing then roll just in weighted just if what intend available back for maybe securities higher about mentioned I those next for into be? and gave XX Curious this the months. release, And of from you might the And $XXX new on would securities yield I of million you point? at and press think already at the the the that's outlook over sale commentary Okay. on the you margin those contemplated average kind to yields

Sure.

you phrase assumption. reasonable I a think how

the think, still relatively for portfolio. planning portfolio in off, with we the to keep we on move kind X- the X-year but reinvest securities rolling securities as to short Our current portfolio are securities given balance appropriately is There duration to to reinvest up in of good the sized is environment, I the yield our now opportunity And the sheet. range. looking

of of Then strategies Okay. you've could of you've over into you've deposit -- you terms Lynn, color the place what time. to put changed to cost Any on some over there recently. or in you the what switching kind add implemented improve mentioned, kind side

Sure.

slow I very moving a a think landscape. everyone base is appreciate It's deposit competitive can overtime.

base we it's any we're to bit But nonmaturity few I to expectation progress. declining our a be be deposits demonstrate savings to think transition quarters a money rate for would of CD focused with environment. maybe able think little the that maybe market, on that and in to I opportunities take a going to

that think expectation focused that, that with would on we the have I our a there noninterest-bearing impact deposits our we as forward. and that portfolio opportunities are on C&I growing shared move positive have the we're

more just And to in compensated, lenders of the today changes in place in deposits any terms bringing of addition of the and quick relationship that follow-up on favor to incentives are how a loans? there would managers kind

can up. all So stiff that I I we recognize again, think no, competition. say can others follow can start, generally, I'd

we folks deposits. in that think we for on focus have here. good incentive we a And So as bringing noninterest-bearing program

results. don't it's operating reflected there's changes, any and in think I So our big

[Operator Race Instructions] We have another Piper with from question Nathan Sandler.

Yes.

obviously Just a for versus pace slowed expectations going repurchases XQ. follow-up The forward. share on the

weeks thoughts believe. I'm just few So for on curious updated the any light authorization of I ago, updated from

Sure.

was reauthorizing the through there move little we will of think as a process pause program. a I bit of our

time tangible book we our in be it's yes, subject we our quarter think a from to, level at I point conditions quarter repurchase first active the market little in new bit share into we'd but time, stock the expect evaluating to fourth lighter remain But our I transitioned appreciate the program. to time. that is value, at looked than we and able authorizing and this where a So we're given priced as maximum that would it

Got you.

as things repurchases of future of over would stand to quarter XQ be next it So the today, closer two? the terms at kind least or in level

So -- that own pivot. think their I to I to investment decision. be to need able everyone And we I needs make think look, think

quarter you're what And this explain versus why X shares comment quarter. lower million want out on I really a only little bit I there. point at is it's appreciate fourth the So we're this for to asking, all

we and assumption a there. capital so the make I I to you levels if So participate, we have choose probably can cash reasonable the think think

Understood.

looks the And run for revenue on sale like on then fees fourth forward? versus good. forward. Any nicely overall the just the rate ticked income on It just quarter. fee Sounds going going thoughts up gain

Thanks that question. Sure. for

secondary and the loans We them. and selling market been originating in have successful participating in

think bit that growing move see into we we I XXXX. as a forward

team be would that what our and expectation working on. the is So

substandard in obviously, level or in Okay. nice the and when Great. at classified forward. And you quality there's And improvement then ACL just the reserve about just loans going one credit some thinking last one, quarter. look

come that the any just of given Just ACL where Or appetite just trending to of for to loan continue just it has down? going cushion? keep forward? ] kind kind with on do of above want it see quarter, average you you expectations Or operate this of the first growth do guys thoughts [ out to kind

analyzing time do our We go lot right. we Right, spend of through a it and process.

the is is our of some I portfolio like expectation the think we it to is, to well the dependent economic continues I think be going environment the on have credit generally, some -- I We're how have protected. at think we the cycle that unfold forward. got extent I on we would that have some I level going to that To evaluate But based now. potentially that it's have to continue the information growth, all it we think we think we reserves.

lot have capital. a of We

a I reserve, have think unfolds. healthy the will monitor but year it to it's we as

on further for As questions will hand back I Mr. no David the line we over this have the at to remarks. any closing Morris call time,

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

Thank This you, ladies does event. and gentlemen. today's conclude

and You and disconnect we for a have may day, time, thank your lines participation. your at wonderful this you