Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries RBB Bancorp Reports Record Fourth Quarter and Full Year Earnings for 2021 By: RBB Bancorp via Business Wire January 24, 2022 at 16:37 PM EST Conference Call and Webcast Scheduled for Tuesday, January 25, 2022 at 11:00 a.m. Pacific Time/2:00 p.m. Eastern Time Fourth Quarter 2021 Highlights Record net income of $15.7 million, or $0.79 diluted earnings per share, increased $342,000, or 2.2%, from the prior quarter and increased $4.6 million, or 40.9%, from the fourth quarter of 2020 Loans grew by $81.8 million, or 11.4% annualized, from the end of the prior quarter Announced the entry into the San Francisco Bay area with an agreement to acquire Gateway Bank, F.S.B. and completed the previously announced purchase acquisition of the Bank of the Orient’s Honolulu, Hawaii branch 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, 2021. The Company reported record net income of $15.7 million, or $0.79 diluted earnings per share, for the three months ended December 31, 2021, compared to net income of $15.4 million, or $0.77 diluted earnings per share, and $11.1 million, or $0.56 diluted earnings per share, for the three months ended September 30, 2021 and December 31, 2020, respectively. “Royal Business Bank’s excellent fourth quarter results contributed to a record year of growth and performance in 2021,” said Alan Thian, President and CEO of RBB Bancorp. “Our strategy of expansion has proven to be an effective driver of shareholder value by enhancing earnings, accelerating loan growth, and improving our deposit franchise. Our recent expansion into the vibrant Hawaiian market and our announced acquisition of Gateway Bank in the San Francisco Bay area will provide us with additional opportunities to bring our relationship-banking model to new markets.” "2021 was a tremendous year for the Bank," said Dr. James Kao, Chairman of RBB Bancorp. “Not only did the Bank achieve record results and growth, but it was also recognized multiple times for the work it does to serve the financial needs of the communities in which it operates. Two members of the RBB team, Alan Thian and Simon Pang, were appointed to national commissions to advise on community development and the Bank was the awarded a CDFI grant from the US Treasury to support distressed and underserved communities.” Key Performance Ratios Net income of $15.7 million for the fourth quarter of 2021 produced an annualized return on average assets ("ROA") of 1.52%, an annualized return on average tangible common shareholders' equity ("ROTCE") of 15.98%, and an annualized return on average shareholders' equity ("ROE") of 13.45%. This compares to an annualized return on average assets of 1.54%, an annualized return on average tangible common shareholders' equity of 16.17%, and an annualized return on average shareholders' equity of 13.52% for the third quarter of 2021. The efficiency ratio for the fourth quarter of 2021 was 36.56%, compared to 38.87% for the prior quarter. Net Interest Income and Net Interest Margin Net interest income, before provision for loan losses, was $33.2 million for the fourth quarter of 2021, compared to $31.6 million for the third quarter of 2021. The $1.6 million increase was primarily attributable to higher interest income due to a $135.9 million increase in average earning assets and a $51.1 million decrease in average interest-bearing liabilities. Accretion of purchase discounts from prior acquisitions contributed $192,000 to net interest income in the fourth quarter of 2021, compared to $289,000 in the third quarter of 2021. Compared to the fourth quarter of 2020, net interest income, before provision for loan losses, increased $4.3 million from $28.9 million. The increase was primarily attributable to a $713.3 million increase in average earning assets, partially offset by a $137.3 million increase in average interest-bearing liabilities. The increases in average earning assets and total deposits were primarily due to increased loan and deposit originations. Net interest margin was 3.43% for the fourth quarter of 2021, an increase of 5 basis points from 3.38% in the third quarter of 2021. Loan discount accretion contributed 2 basis points to the net interest margin in the fourth quarter of 2021, compared to 3 basis points in the third quarter of 2021. Noninterest Income Noninterest income was $3.2 million for the fourth quarter of 2021, a decrease of $2.4 million from $5.5 million in the third quarter of 2021. The decrease was primarily driven by a one-time $1.8 million CDFI grant received during the third quarter and a $455,000 decrease in gain on derivatives, partially offset by a $196,000 increase in loan servicing fees during the quarter. The Company sold $37.7 million in FNMA qualified mortgage loans for a net gain of $1.4 million and sold no non-qualified mortgage loans during the fourth quarter of 2021. This compared to $36.6 million in FNMA qualified mortgage loans sold for a net gain of $1.2 million and no non-qualified mortgage loans during the third quarter of 2021. The Company sold $5.5 million in SBA loans during the fourth quarter of 2021 for a net gain of $436,000, compared to $5.9 million SBA loans sold for a net gain of $553,000 during the third quarter of 2021. Compared to the fourth quarter of 2020, noninterest income decreased by $1.3 million from $4.5 million. The decrease was primarily attributable to a decrease of $657,000 in gain on sale of loans and a decrease of $378,000 in unrealized gain (loss) on equity investment. Noninterest Expense Noninterest expense for the fourth quarter of 2021 was $13.3 million, compared to $14.4 million for the third quarter of 2021. The $1.1 million decrease was primarily attributable to a $2.0 million decrease in salaries and benefit expenses, partially offset by $940,000 increase in legal and professional expense. The fourth quarter increase in legal and professional expenses were due, in part, to expenses related to the acquisition of the branch in Honolulu, Hawaii and the announced acquisition of Gateway Bank. Noninterest expense decreased from $14.5 million in the fourth quarter of 2020. The $1.2 million decrease was primarily due to a $1.3 million decrease in salaries and benefits expenses, $275,000 decrease in occupancy and equipment expenses and a $174,000 decrease in data processing expenses, partially offset by an $892,000 increase in legal and professional expenses. Income Taxes The effective tax rate was 30.0% for the fourth quarter of 2021, 28.5% for the third quarter of 2021, and 29.9% for the fourth quarter of 2020. The Company recognized a tax expense (benefit) from stock option exercises of ($215,000), ($534,000) and zero for the fourth quarter of 2021, the third quarter of 2021, and the fourth quarter of 2020, respectively. Loan Portfolio Loans held for investment, net of deferred fees and discounts, totaled $2.93 billion as of December 31, 2021, an increase of $91.0 million from September 30, 2021, and an increase of $224.6 million from December 31, 2020. The increase from the prior quarter was primarily due to a $42.4 million increase in commercial real estate loans, $31.4 million increase in construction & land development loans and a $29.8 million increase in single-family residential mortgages. The increase from December 31, 2020 was primarily due to a $244.4 million increase in commercial real estate loans, $116.4 million increase in construction & land development loans, partially offset by a $119.8 million decrease in single-family residential mortgages. During the fourth quarter of 2021, single-family residential mortgage production was $137.7 million while payoffs and paydowns were $79.5 million. During the third quarter of 2021, single-family residential mortgage production was $112.0 million while payoffs and paydowns were $79.0 million. Mortgage loans held for sale were $6.0 million as of December 31, 2021, a decrease of $9.2 million from $15.2 million at September 30, 2021 and a decrease of $44.0 million from $50.0 million as of December 31, 2020. The Company originated approximately $18.2 million in FNMA mortgage loans for sale for the fourth quarter of 2021, compared with $12.2 million during the prior quarter. In the fourth quarter of 2021, SBA loan production was $4.6 million and total SBA loan sales were $5.5 million. Deposits Deposits were $3.4 billion at December 31, 2021, and compared to September 30, 2021, there was an increase of $417.7 million from September 30, 2021, and an increase of $750.4 million from December 31, 2020, including brokered deposits. During the fourth quarter of 2021, noninterest-bearing deposits increased by $466.7 million, interest-bearing non-maturity deposits decreased by $3.9 million, and time deposits decreased by $45.1 million. Noninterest-bearing deposits increased due to expanding relationships with a number of our commercial clients. As of December 31, 2021, time deposits included $2.4 million in brokered CDs, as compared to $2.4 million as of September 30, 2021 and $17.4 million as of December 31, 2020. Compared to December 31, 2020, total deposits increased by $750.4 million, which included a $674.3 million increase in noninterest bearing deposits and a $76.1 million increase in interest-bearing deposits. Asset Quality Nonperforming assets totaled $21.0 million, or 0.50% of total assets at December 31, 2021, compared to $14.5 million, or 0.38% of total assets at September 30, 2021. The $6.5 million increase in non-performing assets was due to the addition of three commercial real estate loans in the amount of $3.5 million, one SFR loan for $156,000 and three commercial and industrial loans for $3.7 million, less paydowns and payoffs on other non-performing loans. Nonperforming assets consist of other real estate owned, loans modified under troubled debt restructurings (“TDR”), non-accrual loans, and loans past due 90 days or more and still accruing interest. In the fourth quarter of 2021, there were $46,000 in net recoveries, compared to net charge-offs of $317,000 in the third quarter. The Company recorded a provision for credit losses of $635,000 for the fourth quarter of 2021, a decrease from $1.2 million in the prior quarter, primarily attributable to a reduction of the COVID-19 special reserve in the allowance for loan losses. The allowance for loan losses totaled $32.9 million, or 1.12% of loans held for investment at December 31, 2021, compared with $32.2 million, or 1.13%, of total loans at September 30, 2021. As of December 31, 2021, borrowers representing 69 loans totaling $11.8 million, or 0.40% of the Company’s total loan portfolio, have funded under the SBA’s Paycheck Protection Program due to the COVID-19 pandemic. Presently none of our SBA customers are on a payment deferral plan due to the COVID-19 pandemic. As of January 15, 2022, the Company had no COVID-19 loans deferred. During the fourth quarter of 2021, the Company repurchased 75,849 common shares at a weighted average price of $24.53. Agreement to Acquire Gateway Bank, F.S.B. On December 28, 2021, RBB Bancorp announced that it entered into a definitive agreement to acquire Gateway Bank, F.S.B. ("Gateway Bank") in a cash transaction valued at approximately $22.9 million, subject to certain terms and conditions, including customary holdbacks if certain contingencies are not met, and other possible adjustments as contained in the definitive agreement. Gateway Bank, a commercial bank based in Oakland, California, had total assets of $172.4 million, total gross loans of $123.1 million, total deposits of $147.5 million, and total tangible equity of $15.5 million as of September 30, 2021. Principally serving the Asian-American communities in the San Francisco Bay Area, Gateway Bank has one branch located in Oakland’s Chinatown neighborhood, offering consumer and business banking and loan products and services. The Company expects the transaction to be accretive to earnings per share in 2022 in the mid-single digit range. The Company also expects to incur tangible book value per share dilution of approximately 1.8% upon closing of the transaction, with a tangible book value dilution payback period of approximately 1.8 years. The earnings per share accretion estimates are based on estimated cost savings of approximately 60% of Gateway Bank's non-interest expense, with the cost savings phased in during 2022. The earnings per share accretion estimates do not include any assumption of revenue synergies. The transaction is expected to close in second quarter of 2022 and is subject to the Company obtaining all the regulatory approvals as well as other customary closing conditions. Corporate Overview RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. As of December 31, 2021, the company had total assets of $4.2 billion. Its wholly-owned subsidiary, the Bank is a full service commercial bank, which provides business banking services to the Chinese-American communities in Los Angeles County, Orange County, and Ventura County in California, in Las Vegas, Nevada, in Brooklyn, Queens, and Manhattan in New York, in Edison, New Jersey, in the Chicago neighborhoods of Chinatown and Bridgeport, Illinois, and in Oahu, Hawaii. Bank services include 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, automobile lending, trade finance, a full range of depository account products and wealth management services. The Bank has nine branches in Los Angeles County, two branches in Ventura County, one branch in Orange County, California, one branch in Las Vegas, Nevada, two branches and one loan operation center in Brooklyn, three branches in Queens, one branch in Manhattan in New York, one branch in Edison, New Jersey, two branches in Chicago, Illinois, and one branch in Honolulu, Hawaii. The Company's administrative and lending center is located at 1055 Wilshire Blvd., Los Angeles, California 90017, and its finance and operations center is located at 7025 Orangethorpe Ave., Buena Park, California 90621. The Company's website address is www.royalbusinessbankusa.com. Conference Call Management will hold a conference call at 11:00 a.m. Pacific time/2:00 p.m. Eastern time tomorrow, January 25, 2022, to discuss the Company’s fourth quarter 2021 financial results. To listen to the conference call, please dial 1-866-518-6930 or 1-203-518-9797, conference ID RBBQ421. A replay of the call will be made available at 1-800-938-1602 or 1-404-220-1548 (no passcode required) approximately one hour after the conclusion of the call and will remain available through February 2, 2022. 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. This webcast will be recorded and available for replay on our website approximately two hours after the conclusion of the conference call. 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 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; expectations regarding the impact of the COVID-19 pandemic; the costs or effects of acquisitions or dispositions we may make, including our recent acquisition of PGB Holdings, Inc. and its wholly-owned subsidiary, Pacific Global Bank, and our recently completed acquisition of First American International Corp., whether we are able to obtain any required governmental or shareholder 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, including ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments”, commonly referenced as the Current Expected Credit Loss (“CECL”) model, which will change how we estimate credit losses and may increase the required level of our allowance for credit losses after adoption; 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 DFPI (formerly 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 10-K-A for the year ended December 31, 2020, 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, except for December 31, 2020) (Dollars in thousands) December 31, September 30, June 30, March 31, December 31, 2021 2021 2021 2021 2020 Assets Cash and due from banks $ 501,372 $ 206,927 $ 493,653 $ 362,930 $ 137,654 Federal funds sold and other cash equivalents 193,000 170,000 110,000 57,000 57,000 Total cash and cash equivalents 694,372 376,927 603,653 419,930 194,654 Interest-bearing deposits in other financial institutions 600 600 600 600 600 Investment securities available for sale 368,260 345,000 339,568 281,582 210,867 Investment securities held to maturity 6,252 6,258 6,664 6,668 7,174 Mortgage loans held for sale 5,957 15,188 9,246 37,675 49,963 Loans held for investment 2,931,350 2,840,354 2,709,206 2,715,205 2,706,766 Allowance for loan losses (32,912 ) (32,231 ) (31,352 ) (30,795 ) (29,337 ) Net loans held for investment 2,898,438 2,808,123 2,677,854 2,684,410 2,677,429 Premises and equipment, net 27,199 27,157 27,039 27,093 27,103 Federal Home Loan Bank (FHLB) stock 15,000 15,000 15,000 15,641 15,641 Cash surrender value of life insurance 55,988 55,656 55,325 35,308 35,121 Goodwill 69,243 69,243 69,243 69,243 69,243 Servicing assets 11,517 12,141 12,558 13,264 13,965 Core deposit intangibles 4,075 4,327 4,608 4,895 5,196 Right-of-use assets- operating leases 22,454 23,735 25,050 25,500 — Accrued interest and other assets 48,839 42,452 44,230 42,490 43,116 Total assets $ 4,228,194 $ 3,801,807 $ 3,890,638 $ 3,664,299 $ 3,350,072 Liabilities and shareholders' equity Deposits: Noninterest-bearing demand $ 1,291,484 $ 824,771 $ 940,041 $ 787,439 $ 617,206 Savings, NOW and money market accounts 927,609 931,517 858,597 791,486 731,084 Time deposits, less than $250,000 587,940 614,146 658,393 649,190 688,875 Time deposits, greater than or equal to $250,000 578,499 597,379 612,894 593,178 597,963 Total deposits 3,385,532 2,967,813 3,069,925 2,821,293 2,635,128 Reserve for unfunded commitments 1,203 1,304 1,216 1,320 1,383 FHLB advances 150,000 150,000 150,000 150,000 150,000 Long-term debt, net of debt issuance costs 173,007 172,862 172,718 172,581 104,391 Subordinated debentures 14,502 14,447 14,393 14,338 14,283 Lease liabilities - operating leases 23,282 24,524 25,798 26,199 — Accrued interest and other liabilities 13,985 14,833 14,263 42,900 16,399 Total liabilities 3,761,511 3,345,783 3,448,313 3,228,631 2,921,584 Shareholders' equity: Shareholder's equity 468,267 456,490 442,086 435,746 427,287 Non-controlling interest 72 72 72 72 72 Accumulated other comprehensive (loss) income - Net of tax (1,656 ) (538 ) 167 (150 ) 1,129 Total shareholders' equity 466,683 456,024 442,325 435,668 428,488 Total liabilities and shareholders’ equity $ 4,228,194 $ 3,801,807 $ 3,890,638 $ 3,664,299 $ 3,350,072 RBB BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands, except per share amounts) For the Three Months Ended December 31, 2021 September 30, 2021 December 31, 2020 Interest and dividend income: Interest and fees on loans $ 36,783 $ 35,601 $ 34,832 Interest on interest-bearing deposits 160 219 55 Interest on investment securities 1,069 889 639 Dividend income on FHLB stock 227 225 193 Interest on federal funds sold and other 205 174 145 Total interest income 38,444 37,108 35,864 Interest expense: Interest on savings deposits, NOW and money market accounts 683 697 736 Interest on time deposits 1,748 2,048 3,900 Interest on subordinated debentures and long term debt 2,343 2,342 1,901 Interest on other borrowed funds 445 445 450 Total interest expense 5,219 5,532 6,987 Net interest income before provision for loan losses 33,225 31,576 28,877 Provision for loan losses 635 1,196 3,008 Net interest income after provision for loan losses 32,590 30,380 25,869 Noninterest income: Service charges, fees and other 1,351 3,100 1,565 Gain on sale of loans 1,788 1,790 2,445 Loan servicing fees, net of amortization 258 62 206 Recoveries on loans acquired in business combinations 4 68 5 Unrealized (loss) on equity investments (300 ) (5 ) 78 (Loss) gain on derivatives (277 ) 178 — Increase in cash surrender value of life insurance 332 331 191 Total noninterest income 3,156 5,524 4,490 Noninterest expense: Salaries and employee benefits 6,812 8,772 8,105 Occupancy and equipment expenses 2,125 2,189 2,400 Data processing 838 965 1,012 Legal and professional 1,686 746 794 Office expenses 359 311 295 Marketing and business promotion 418 324 295 Insurance and regulatory assessments 475 384 210 Core deposit premium 252 281 324 OREO expenses 4 4 4 Merger expenses 38 40 5 Other expenses 293 404 1,009 Total noninterest expense 13,300 14,420 14,453 Income before income taxes 22,446 21,484 15,906 Income tax expense 6,740 6,120 4,759 Net income $ 15,706 $ 15,364 $ 11,147 Net income per share Basic $ 0.81 $ 0.79 $ 0.57 Diluted $ 0.79 $ 0.77 $ 0.56 Cash Dividends declared per common share $ 0.13 $ 0.13 $ 0.09 Weighted-average common shares outstanding Basic 19,444,148 19,343,262 19,655,621 Diluted 19,851,202 19,798,187 19,812,401 RBB BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited, except for December 31, 2020) (Dollars in thousands, except per share amounts) For the Twelve Months Ended December 31, 2021 December 31, 2020 Interest and dividend income: Interest and fees on loans $ 141,569 $ 133,894 Interest on interest-earning deposits 552 641 Interest on investment securities 3,379 2,968 Dividend income on FHLB stock 869 572 Interest on federal funds sold and other 694 1,045 Total interest income 147,063 139,120 Interest expense: Interest on savings deposits, NOW and money market accounts 2,786 3,540 Interest on time deposits 9,170 21,665 Interest on subordinated debentures and long term debt 8,999 7,677 Interest on other borrowed funds 1,765 1,483 Total interest expense 22,720 34,365 Net interest income 124,343 104,755 Provision for loan losses 3,959 11,823 Net interest income after provision for loans losses 120,384 92,932 Noninterest income: Service charges, fees and other (1) 7,235 4,852 Gain on sale of loans 9,991 5,997 Loan servicing fees, net of amortization 684 2,052 Recoveries on loans acquired in business combinations 82 84 Unrealized (loss) gain on equity investments (360 ) — Gain on derivatives 46 78 Increase in cash surrender value of life insurance 1,067 767 Gain on sale of securities — 210 Total noninterest income 18,745 14,040 Noninterest expense: Salaries and employee benefits 33,568 33,312 Occupancy and equipment expenses 8,691 9,691 Data processing 4,474 4,236 Legal and professional 3,773 2,743 Office expenses 1,197 1,226 Marketing and business promotion 1,157 751 Insurance and regulatory assessments 1,561 984 Core deposit premium 1,121 1,395 OREO expenses 17 35 Merger expenses 137 746 Other expenses 2,496 4,394 Total noninterest expense 58,192 59,513 Income before income taxes 80,937 47,459 Income tax expense 24,031 14,531 Net income $ 56,906 $ 32,928 Net income per share Basic $ 2.92 $ 1.66 Diluted $ 2.86 $ 1.65 Cash Dividends declared per common share $ 0.51 $ 0.33 Weighted-average common shares outstanding Basic 19,423,549 19,763,422 Diluted 19,834,306 19,921,859 (1) Includes $1.8 million of the U.S. Treasury's CDFI rapid response program grant income, received in the third quarter of 2021. 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, 2021 September 30, 2021 December 31, 2020 Average Interest Yield / Average Interest Yield / Average Interest Yield / (tax-equivalent basis, dollars in thousands) Balance & Fees Rate Balance & Fees Rate Balance & Fees Rate Earning assets: Federal funds sold, cash equivalents & other (1) $ 587,980 $ 592 0.40 % $ 628,020 $ 618 0.39 % $ 188,430 $ 393 0.83 % Securities Available for sale (2) 376,601 1,037 1.09 % 336,130 856 1.01 % 222,762 579 1.03 % Held to maturity (2) 6,256 56 3.55 % 6,262 56 3.55 % 7,383 68 3.66 % Mortgage loans held for sale 3,721 40 4.26 % 5,218 46 3.50 % 41,265 325 3.13 % Loans held for investment: (3) Real estate 2,492,396 31,978 5.09 % 2,361,405 30,911 5.19 % 2,282,937 29,705 5.18 % Commercial 380,098 4,765 4.97 % 374,125 4,644 4.92 % 390,980 4,802 4.89 % Total loans 2,872,494 36,743 5.07 % 2,735,530 35,555 5.16 % 2,673,917 34,507 5.13 % Total earning assets 3,847,052 $ 38,468 3.97 % 3,711,160 $ 37,131 3.97 % 3,133,757 $ 35,872 4.55 % Noninterest-earning assets 240,059 242,742 196,071 Total assets $ 4,087,111 $ 3,953,902 $ 3,329,828 Interest-bearing liabilities NOW $ 73,896 $ 48 0.26 % $ 71,454 $ 48 0.27 % $ 62,232 $ 48 0.31 % Money Market 668,742 602 0.36 % 660,806 615 0.37 % 504,463 656 0.52 % Saving deposits 138,906 33 0.09 % 139,555 34 0.10 % 128,727 32 0.10 % Time deposits, less than $250,000 599,119 827 0.55 % 644,013 977 0.60 % 698,415 2,058 1.17 % Time deposits, $250,000 and over 588,265 921 0.62 % 604,394 1,071 0.70 % 594,655 1,842 1.23 % Total interest-bearing deposits 2,068,928 2,431 0.47 % 2,120,222 2,745 0.51 % 1,988,492 4,636 0.93 % FHLB advances 150,000 445 1.18 % 150,000 445 1.18 % 161,957 450 1.11 % Long-term debt 172,912 2,195 5.04 % 172,767 2,194 5.04 % 104,335 1,748 6.67 % Subordinated debentures 14,466 148 4.06 % 14,411 148 4.07 % 14,248 153 4.27 % Total interest-bearing liabilities 2,406,306 5,219 0.86 % 2,457,400 5,532 0.89 % 2,269,032 6,987 1.23 % Noninterest-bearing liabilities Noninterest-bearing deposits 1,177,948 1,003,304 616,803 Other noninterest-bearing liabilities 39,483 42,419 16,830 Total noninterest-bearing liabilities 1,217,431 1,045,723 633,633 Shareholders' equity 463,374 450,779 427,163 Total liabilities and shareholders' equity $ 4,087,111 $ 3,953,902 $ 3,329,828 Net interest income / interest rate spreads $ 33,249 3.11 % $ 31,599 3.08 % $ 28,885 3.32 % Net interest margin 3.43 % 3.38 % 3.67 % (1) Includes income and average balances for FHLB stock, term federal funds, interest-bearing time deposits and other miscellaneous interest-bearing assets. (2) Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis. (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. 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, 2021 December 31, 2020 Average Interest Yield / Average Interest Yield / (tax-equivalent basis, dollars in thousands) Balance & Fees Rate Balance & Fees Rate Earning assets: Federal funds sold, cash equivalents & other (1) $ 504,809 $ 2,115 0.42 % $ 212,594 $ 2,258 1.06 % Securities Available for sale (2) 320,544 3,217 1.00 % 175,307 2,714 1.55 % Held to maturity (2) 6,543 238 3.64 % 7,665 287 3.74 % Mortgage loans held for sale 20,817 670 3.22 % 41,019 1,779 4.34 % Loans held for investment: (3) Real estate 2,363,846 122,204 5.17 % 2,176,695 113,966 5.24 % Commercial 381,646 18,695 4.90 % 367,718 18,149 4.94 % Total loans 2,745,492 140,899 5.13 % 2,544,413 132,115 5.19 % Total earning assets 3,598,205 $ 147,139 4.09 % 2,980,998 $ 139,153 4.67 % Noninterest-earning assets 235,267 204,617 Total assets $ 3,833,472 $ 3,185,615 Interest-bearing liabilities NOW $ 69,211 $ 184 0.27 % $ 55,795 $ 201 0.36 % Money Market 637,539 2,468 0.39 % 449,110 3,190 0.71 % Saving deposits 137,534 134 0.10 % 123,568 149 0.12 % Time deposits, less than $250,000 640,747 4,462 0.70 % 715,181 11,466 1.60 % Time deposits, $250,000 and over 597,770 4,708 0.79 % 597,262 10,199 1.71 % Total interest-bearing deposits 2,082,801 11,956 0.57 % 1,940,916 25,205 1.30 % FHLB advances 150,000 1,765 1.18 % 129,071 1,483 1.15 % Long-term debt 157,720 8,404 5.33 % 104,210 6,990 6.71 % Subordinated debentures 14,384 595 4.14 % 14,228 687 4.83 % Total interest-bearing liabilities 2,404,905 $ 22,720 0.94 % 2,188,425 $ 34,365 1.57 % Noninterest-bearing liabilities Noninterest-bearing deposits 938,711 564,111 Other noninterest-bearing liabilities 42,142 15,164 Total noninterest-bearing liabilities 980,853 579,275 Shareholders' equity 447,714 417,915 Total liabilities and shareholders' equity $ 3,833,472 $ 3,185,615 Net interest income / interest rate spreads $ 124,419 3.15 % $ 104,788 3.10 % Net interest margin 3.46 % 3.52 % (1) Includes income and average balances for FHLB stock, term federal funds, interest-bearing time deposits and other miscellaneous interest-bearing assets. (2) Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis. (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. 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, 2021 2021 2020 Per share data (common stock) Earnings Basic $ 0.81 $ 0.79 $ 0.57 Diluted $ 0.79 $ 0.77 $ 0.56 Dividends declared $ 0.13 $ 0.13 $ 0.09 Book value $ 23.99 $ 23.37 $ 21.90 Tangible book value $ 20.22 $ 19.60 $ 18.10 Weighted average shares outstanding Basic 19,444,148 19,343,262 19,655,621 Diluted 19,851,202 19,798,187 19,812,401 Shares outstanding at period end 19,455,544 19,516,393 19,565,921 Performance ratios Return on average assets, annualized 1.52 % 1.54 % 1.33 % Return on average shareholders' equity, annualized 13.45 % 13.52 % 10.38 % Return on average tangible common equity, annualized 15.98 % 16.17 % 12.58 % Noninterest income to average assets, annualized 0.31 % 0.55 % 0.54 % Noninterest expense to average assets, annualized 1.29 % 1.45 % 1.73 % Yield on average earning assets 3.97 % 3.97 % 4.55 % Cost of average total deposits 0.30 % 0.35 % 0.71 % Cost of average interest-bearing deposits 0.47 % 0.51 % 0.93 % Cost of average interest-bearing liabilities 0.86 % 0.89 % 1.23 % Accretion on loans to average earning assets 0.02 % 0.03 % 0.03 % Net interest spread 3.11 % 3.08 % 3.32 % Net interest margin 3.43 % 3.38 % 3.67 % Efficiency ratio 36.56 % 38.87 % 43.32 % Common stock dividend payout ratio 16.05 % 16.46 % 15.79 % RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share amounts) For the twelve months ended December 31, 2021 2020 Per share data (common stock) Earnings Basic $ 2.92 $ 1.66 Diluted $ 2.86 $ 1.65 Dividends declared $ 0.51 $ 0.33 Book value $ 23.99 $ 21.90 Tangible book value $ 20.22 $ 18.10 Weighted average shares outstanding Basic 19,423,549 19,763,422 Diluted 19,834,306 19,921,859 Shares outstanding at period end 19,455,544 19,565,921 Performance ratios Return on average assets, annualized 1.48 % 1.03 % Return on average shareholders' equity, annualized 12.71 % 7.88 % Return on average tangible common equity, annualized 15.22 % 9.62 % Noninterest income to average assets, annualized 0.49 % 0.44 % Noninterest expense to average assets, annualized 1.52 % 1.87 % Yield on average earning assets 4.09 % 4.67 % Cost of average deposits 0.40 % 1.01 % Cost of average interest-bearing deposits 0.57 % 1.30 % Cost of average interest-bearing liabilities 0.94 % 1.57 % Accretion on loans to average earning assets 0.03 % 0.08 % Net interest spread 3.15 % 3.10 % Net interest margin 3.46 % 3.52 % Efficiency ratio 40.67 % 50.10 % Common stock dividend payout ratio 17.47 % 19.88 RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share amounts) As of December 31, September 30, December 31, 2021 2021 2020 Loan to deposit ratio 86.58 % 95.71 % 102.72 % Core deposits / total deposits 82.91 % 79.87 % 77.31 % Net non-core funding dependence ratio -6.50 % 9.27 % 12.47 % Credit Quality Data: Loans 30-89 days past due $ 17,640 $ 7,258 $ 8,939 Loans 30-89 days past due to total loans 0.60 % 0.26 % 0.33 % Nonperforming loans $ 20,725 $ 14,248 $ 19,554 Nonperforming loans to total loans 0.71 % 0.50 % 0.72 % Nonperforming assets $ 21,018 $ 14,541 $ 19,847 Nonperforming assets to total assets 0.50 % 0.38 % 0.59 % Allowance for loan losses to total loans 1.12 % 1.13 % 1.08 % Allowance for loan losses to nonperforming loans 158.80 % 226.21 % 150.03 % Net charge-offs to average loans (for the quarter-to-date period) -0.01 % 0.05 % 0.05 % Regulatory and other capital ratios—Company Tangible common equity to tangible assets 9.47 % 10.26 % 10.81 % Tier 1 leverage ratio 10.21 % 10.31 % 11.32 % Tier 1 common capital to risk-weighted assets 14.86 % 14.82 % 14.63 % Tier 1 capital to risk-weighted assets 15.40 % 15.38 % 15.22 % Total capital to risk-weighted assets 23.15 % 23.30 % 20.78 % Regulatory capital ratios—Bank only Tier 1 leverage ratio 12.45 % 12.48 % 14.09 % Tier 1 common capital to risk-weighted assets 18.80 % 18.64 % 18.95 % Tier 1 capital to risk-weighted assets 18.80 % 18.64 % 18.95 % Total capital to risk-weighted assets 20.05 % 19.89 % 20.20 % RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share amounts) 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter Quarterly Consolidated Statements of Earnings 2021 2021 2021 2021 2020 Interest income Loans, including fees $ 36,783 $ 35,601 $ 34,669 $ 34,516 $ 34,832 Investment securities and other 1,661 1,507 1,302 1,024 1,032 Total interest income 38,444 37,108 35,971 35,540 35,864 Interest expense Deposits 2,431 2,745 3,118 3,662 4,636 Interest on subordinated debentures and other 2,343 2,342 2,356 1,958 1,901 Other borrowings 445 445 440 435 450 Total interest expense 5,219 5,532 5,914 6,055 6,987 Net interest income before provision for loan losses 33,225 31,576 30,057 29,485 28,877 Provision for loan losses 635 1,196 628 1,500 3,008 Net interest income after provision for loan losses 32,590 30,380 29,429 27,985 25,869 Noninterest income 3,156 5,524 4,171 5,894 4,490 Noninterest expense 13,300 14,420 14,680 15,792 14,453 Earnings before income taxes 22,446 21,484 18,920 18,087 15,906 Income taxes 6,740 6,120 5,540 5,631 4,759 Net income $ 15,706 $ 15,364 $ 13,380 $ 12,456 $ 11,147 Net income per common share - basic $ 0.81 $ 0.79 $ 0.69 $ 0.64 $ 0.57 Net income per common share - diluted $ 0.79 $ 0.77 $ 0.67 $ 0.63 $ 0.56 Cash dividends declared per common share $ 0.13 $ 0.13 $ 0.13 $ 0.12 $ 0.09 Cash dividends declared on common shares $ 2,516 $ 2,537 $ 2,540 $ 2,347 $ 1,777 Yield on average assets, annualized 1.52 % 1.54 % 1.39 % 1.47 % 1.33 % Yield on average earning assets 3.97 % 3.97 % 3.99 % 4.49 % 4.55 % Cost of average deposits 0.30 % 0.35 % 0.41 % 0.55 % 0.71 % Cost of average interest-bearing deposits 0.47 % 0.51 % 0.59 % 0.73 % 0.93 % Cost of average interest-bearing liabilities 0.86 % 0.89 % 0.97 % 1.06 % 1.23 % Accretion on loans to average earning assets 0.02 % 0.03 % 0.02 % 0.06 % 0.03 % Net interest margin 3.43 % 3.38 % 3.33 % 3.73 % 3.67 % RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited, except for December 31, 2020) (Dollars in thousands, except per share amounts) Loan Portfolio Detail As of December 31, 2021 As of September 30, 2021 As of June 30, 2021 As of March 31, 2020 As of December 31, 2020 (dollars in thousands) $ % $ % $ % $ % $ % Loans: Commercial and industrial $ 268,709 9.2 % $ 276,387 9.7 % $ 277,080 10.2 % $ 286,016 10.5 % $ 290,139 10.7 % SBA 76,136 2.6 % 88,784 3.1 % 98,572 3.6 % 111,330 4.1 % 97,821 3.6 % Construction and land development 303,144 10.3 % 271,764 9.6 % 236,965 8.7 % 209,727 7.7 % 186,723 6.9 % Commercial real estate (1) 1,247,999 42.6 % 1,205,630 42.4 % 1,102,467 40.7 % 1,063,104 39.2 % 1,003,637 37.1 % Single-family residential mortgages 1,004,576 34.3 % 974,780 34.3 % 984,311 36.3 % 1,041,260 38.3 % 1,124,357 41.5 % Other loans 30,786 1.0 % 23,009 0.9 % 9,811 0.5 % 3,768 0.2 % 4,089 0.2 % Total loans (2) $ 2,931,350 100.0 % $ 2,840,354 100.0 % $ 2,709,206 100.0 % $ 2,715,205 100.0 % $ 2,706,766 100.0 % Allowance for loan losses (32,912 ) (32,231 ) (31,352 ) (30,795 ) (29,337 ) Total loans, net $ 2,898,438 $ 2,808,123 $ 2,677,854 $ 2,684,410 $ 2,677,429 (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. Three Months Ended Twelve Months Ended Change in Allowance for Loan Losses December 31, December 31, (dollars in thousands) 2021 2020 2021 2020 Beginning balance $ 32,231 $ 26,634 $ 29,337 $ 18,816 Additions to the allowance charged to expense 635 3,008 3,959 11,823 Net recoveries (charge-offs) on loans 46 (305 ) (384 ) (1,302 ) Ending balance $ 32,912 $ 29,337 $ 32,912 $ 29,337 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, 2021 and 2020, and September 30, 2021. (dollars in thousands, except per share data) December 31, 2021 September 30, 2021 December 31, 2020 Tangible common equity: Total shareholders' equity $ 466,683 $ 456,024 $ 428,488 Adjustments Goodwill (69,243 ) (69,243 ) (69,243 ) Core deposit intangible (4,075 ) (4,327 ) (5,196 ) Tangible common equity $ 393,365 $ 382,454 $ 354,049 Tangible assets: Total assets-GAAP $ 4,228,194 $ 3,801,807 $ 3,350,072 Adjustments Goodwill (69,243 ) (69,243 ) (69,243 ) Core deposit intangible (4,075 ) (4,327 ) (5,196 ) Tangible assets $ 4,154,876 $ 3,728,237 $ 3,275,633 Common shares outstanding $ 19,455,544 19,516,393 19,565,921 Tangible common equity to tangible assets ratio 9.47 % 10.26 % 10.81 % Book value per share $ 23.99 $ 23.37 $ 21.90 Tangible book value per share $ 20.22 $ 19.60 $ 18.10 View source version on businesswire.com: https://www.businesswire.com/news/home/20220124005765/en/Contacts Yee Phong (Alan) Thian President and CEO (626) 307-7559 David Morris Executive Vice President and CFO (714) 670-2488 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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RBB Bancorp Reports Record Fourth Quarter and Full Year Earnings for 2021 By: RBB Bancorp via Business Wire January 24, 2022 at 16:37 PM EST Conference Call and Webcast Scheduled for Tuesday, January 25, 2022 at 11:00 a.m. Pacific Time/2:00 p.m. Eastern Time Fourth Quarter 2021 Highlights Record net income of $15.7 million, or $0.79 diluted earnings per share, increased $342,000, or 2.2%, from the prior quarter and increased $4.6 million, or 40.9%, from the fourth quarter of 2020 Loans grew by $81.8 million, or 11.4% annualized, from the end of the prior quarter Announced the entry into the San Francisco Bay area with an agreement to acquire Gateway Bank, F.S.B. and completed the previously announced purchase acquisition of the Bank of the Orient’s Honolulu, Hawaii branch 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, 2021. The Company reported record net income of $15.7 million, or $0.79 diluted earnings per share, for the three months ended December 31, 2021, compared to net income of $15.4 million, or $0.77 diluted earnings per share, and $11.1 million, or $0.56 diluted earnings per share, for the three months ended September 30, 2021 and December 31, 2020, respectively. “Royal Business Bank’s excellent fourth quarter results contributed to a record year of growth and performance in 2021,” said Alan Thian, President and CEO of RBB Bancorp. “Our strategy of expansion has proven to be an effective driver of shareholder value by enhancing earnings, accelerating loan growth, and improving our deposit franchise. Our recent expansion into the vibrant Hawaiian market and our announced acquisition of Gateway Bank in the San Francisco Bay area will provide us with additional opportunities to bring our relationship-banking model to new markets.” "2021 was a tremendous year for the Bank," said Dr. James Kao, Chairman of RBB Bancorp. “Not only did the Bank achieve record results and growth, but it was also recognized multiple times for the work it does to serve the financial needs of the communities in which it operates. Two members of the RBB team, Alan Thian and Simon Pang, were appointed to national commissions to advise on community development and the Bank was the awarded a CDFI grant from the US Treasury to support distressed and underserved communities.” Key Performance Ratios Net income of $15.7 million for the fourth quarter of 2021 produced an annualized return on average assets ("ROA") of 1.52%, an annualized return on average tangible common shareholders' equity ("ROTCE") of 15.98%, and an annualized return on average shareholders' equity ("ROE") of 13.45%. This compares to an annualized return on average assets of 1.54%, an annualized return on average tangible common shareholders' equity of 16.17%, and an annualized return on average shareholders' equity of 13.52% for the third quarter of 2021. The efficiency ratio for the fourth quarter of 2021 was 36.56%, compared to 38.87% for the prior quarter. Net Interest Income and Net Interest Margin Net interest income, before provision for loan losses, was $33.2 million for the fourth quarter of 2021, compared to $31.6 million for the third quarter of 2021. The $1.6 million increase was primarily attributable to higher interest income due to a $135.9 million increase in average earning assets and a $51.1 million decrease in average interest-bearing liabilities. Accretion of purchase discounts from prior acquisitions contributed $192,000 to net interest income in the fourth quarter of 2021, compared to $289,000 in the third quarter of 2021. Compared to the fourth quarter of 2020, net interest income, before provision for loan losses, increased $4.3 million from $28.9 million. The increase was primarily attributable to a $713.3 million increase in average earning assets, partially offset by a $137.3 million increase in average interest-bearing liabilities. The increases in average earning assets and total deposits were primarily due to increased loan and deposit originations. Net interest margin was 3.43% for the fourth quarter of 2021, an increase of 5 basis points from 3.38% in the third quarter of 2021. Loan discount accretion contributed 2 basis points to the net interest margin in the fourth quarter of 2021, compared to 3 basis points in the third quarter of 2021. Noninterest Income Noninterest income was $3.2 million for the fourth quarter of 2021, a decrease of $2.4 million from $5.5 million in the third quarter of 2021. The decrease was primarily driven by a one-time $1.8 million CDFI grant received during the third quarter and a $455,000 decrease in gain on derivatives, partially offset by a $196,000 increase in loan servicing fees during the quarter. The Company sold $37.7 million in FNMA qualified mortgage loans for a net gain of $1.4 million and sold no non-qualified mortgage loans during the fourth quarter of 2021. This compared to $36.6 million in FNMA qualified mortgage loans sold for a net gain of $1.2 million and no non-qualified mortgage loans during the third quarter of 2021. The Company sold $5.5 million in SBA loans during the fourth quarter of 2021 for a net gain of $436,000, compared to $5.9 million SBA loans sold for a net gain of $553,000 during the third quarter of 2021. Compared to the fourth quarter of 2020, noninterest income decreased by $1.3 million from $4.5 million. The decrease was primarily attributable to a decrease of $657,000 in gain on sale of loans and a decrease of $378,000 in unrealized gain (loss) on equity investment. Noninterest Expense Noninterest expense for the fourth quarter of 2021 was $13.3 million, compared to $14.4 million for the third quarter of 2021. The $1.1 million decrease was primarily attributable to a $2.0 million decrease in salaries and benefit expenses, partially offset by $940,000 increase in legal and professional expense. The fourth quarter increase in legal and professional expenses were due, in part, to expenses related to the acquisition of the branch in Honolulu, Hawaii and the announced acquisition of Gateway Bank. Noninterest expense decreased from $14.5 million in the fourth quarter of 2020. The $1.2 million decrease was primarily due to a $1.3 million decrease in salaries and benefits expenses, $275,000 decrease in occupancy and equipment expenses and a $174,000 decrease in data processing expenses, partially offset by an $892,000 increase in legal and professional expenses. Income Taxes The effective tax rate was 30.0% for the fourth quarter of 2021, 28.5% for the third quarter of 2021, and 29.9% for the fourth quarter of 2020. The Company recognized a tax expense (benefit) from stock option exercises of ($215,000), ($534,000) and zero for the fourth quarter of 2021, the third quarter of 2021, and the fourth quarter of 2020, respectively. Loan Portfolio Loans held for investment, net of deferred fees and discounts, totaled $2.93 billion as of December 31, 2021, an increase of $91.0 million from September 30, 2021, and an increase of $224.6 million from December 31, 2020. The increase from the prior quarter was primarily due to a $42.4 million increase in commercial real estate loans, $31.4 million increase in construction & land development loans and a $29.8 million increase in single-family residential mortgages. The increase from December 31, 2020 was primarily due to a $244.4 million increase in commercial real estate loans, $116.4 million increase in construction & land development loans, partially offset by a $119.8 million decrease in single-family residential mortgages. During the fourth quarter of 2021, single-family residential mortgage production was $137.7 million while payoffs and paydowns were $79.5 million. During the third quarter of 2021, single-family residential mortgage production was $112.0 million while payoffs and paydowns were $79.0 million. Mortgage loans held for sale were $6.0 million as of December 31, 2021, a decrease of $9.2 million from $15.2 million at September 30, 2021 and a decrease of $44.0 million from $50.0 million as of December 31, 2020. The Company originated approximately $18.2 million in FNMA mortgage loans for sale for the fourth quarter of 2021, compared with $12.2 million during the prior quarter. In the fourth quarter of 2021, SBA loan production was $4.6 million and total SBA loan sales were $5.5 million. Deposits Deposits were $3.4 billion at December 31, 2021, and compared to September 30, 2021, there was an increase of $417.7 million from September 30, 2021, and an increase of $750.4 million from December 31, 2020, including brokered deposits. During the fourth quarter of 2021, noninterest-bearing deposits increased by $466.7 million, interest-bearing non-maturity deposits decreased by $3.9 million, and time deposits decreased by $45.1 million. Noninterest-bearing deposits increased due to expanding relationships with a number of our commercial clients. As of December 31, 2021, time deposits included $2.4 million in brokered CDs, as compared to $2.4 million as of September 30, 2021 and $17.4 million as of December 31, 2020. Compared to December 31, 2020, total deposits increased by $750.4 million, which included a $674.3 million increase in noninterest bearing deposits and a $76.1 million increase in interest-bearing deposits. Asset Quality Nonperforming assets totaled $21.0 million, or 0.50% of total assets at December 31, 2021, compared to $14.5 million, or 0.38% of total assets at September 30, 2021. The $6.5 million increase in non-performing assets was due to the addition of three commercial real estate loans in the amount of $3.5 million, one SFR loan for $156,000 and three commercial and industrial loans for $3.7 million, less paydowns and payoffs on other non-performing loans. Nonperforming assets consist of other real estate owned, loans modified under troubled debt restructurings (“TDR”), non-accrual loans, and loans past due 90 days or more and still accruing interest. In the fourth quarter of 2021, there were $46,000 in net recoveries, compared to net charge-offs of $317,000 in the third quarter. The Company recorded a provision for credit losses of $635,000 for the fourth quarter of 2021, a decrease from $1.2 million in the prior quarter, primarily attributable to a reduction of the COVID-19 special reserve in the allowance for loan losses. The allowance for loan losses totaled $32.9 million, or 1.12% of loans held for investment at December 31, 2021, compared with $32.2 million, or 1.13%, of total loans at September 30, 2021. As of December 31, 2021, borrowers representing 69 loans totaling $11.8 million, or 0.40% of the Company’s total loan portfolio, have funded under the SBA’s Paycheck Protection Program due to the COVID-19 pandemic. Presently none of our SBA customers are on a payment deferral plan due to the COVID-19 pandemic. As of January 15, 2022, the Company had no COVID-19 loans deferred. During the fourth quarter of 2021, the Company repurchased 75,849 common shares at a weighted average price of $24.53. Agreement to Acquire Gateway Bank, F.S.B. On December 28, 2021, RBB Bancorp announced that it entered into a definitive agreement to acquire Gateway Bank, F.S.B. ("Gateway Bank") in a cash transaction valued at approximately $22.9 million, subject to certain terms and conditions, including customary holdbacks if certain contingencies are not met, and other possible adjustments as contained in the definitive agreement. Gateway Bank, a commercial bank based in Oakland, California, had total assets of $172.4 million, total gross loans of $123.1 million, total deposits of $147.5 million, and total tangible equity of $15.5 million as of September 30, 2021. Principally serving the Asian-American communities in the San Francisco Bay Area, Gateway Bank has one branch located in Oakland’s Chinatown neighborhood, offering consumer and business banking and loan products and services. The Company expects the transaction to be accretive to earnings per share in 2022 in the mid-single digit range. The Company also expects to incur tangible book value per share dilution of approximately 1.8% upon closing of the transaction, with a tangible book value dilution payback period of approximately 1.8 years. The earnings per share accretion estimates are based on estimated cost savings of approximately 60% of Gateway Bank's non-interest expense, with the cost savings phased in during 2022. The earnings per share accretion estimates do not include any assumption of revenue synergies. The transaction is expected to close in second quarter of 2022 and is subject to the Company obtaining all the regulatory approvals as well as other customary closing conditions. Corporate Overview RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. As of December 31, 2021, the company had total assets of $4.2 billion. Its wholly-owned subsidiary, the Bank is a full service commercial bank, which provides business banking services to the Chinese-American communities in Los Angeles County, Orange County, and Ventura County in California, in Las Vegas, Nevada, in Brooklyn, Queens, and Manhattan in New York, in Edison, New Jersey, in the Chicago neighborhoods of Chinatown and Bridgeport, Illinois, and in Oahu, Hawaii. Bank services include 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, automobile lending, trade finance, a full range of depository account products and wealth management services. The Bank has nine branches in Los Angeles County, two branches in Ventura County, one branch in Orange County, California, one branch in Las Vegas, Nevada, two branches and one loan operation center in Brooklyn, three branches in Queens, one branch in Manhattan in New York, one branch in Edison, New Jersey, two branches in Chicago, Illinois, and one branch in Honolulu, Hawaii. The Company's administrative and lending center is located at 1055 Wilshire Blvd., Los Angeles, California 90017, and its finance and operations center is located at 7025 Orangethorpe Ave., Buena Park, California 90621. The Company's website address is www.royalbusinessbankusa.com. Conference Call Management will hold a conference call at 11:00 a.m. Pacific time/2:00 p.m. Eastern time tomorrow, January 25, 2022, to discuss the Company’s fourth quarter 2021 financial results. To listen to the conference call, please dial 1-866-518-6930 or 1-203-518-9797, conference ID RBBQ421. A replay of the call will be made available at 1-800-938-1602 or 1-404-220-1548 (no passcode required) approximately one hour after the conclusion of the call and will remain available through February 2, 2022. 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. This webcast will be recorded and available for replay on our website approximately two hours after the conclusion of the conference call. 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 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; expectations regarding the impact of the COVID-19 pandemic; the costs or effects of acquisitions or dispositions we may make, including our recent acquisition of PGB Holdings, Inc. and its wholly-owned subsidiary, Pacific Global Bank, and our recently completed acquisition of First American International Corp., whether we are able to obtain any required governmental or shareholder 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, including ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments”, commonly referenced as the Current Expected Credit Loss (“CECL”) model, which will change how we estimate credit losses and may increase the required level of our allowance for credit losses after adoption; 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 DFPI (formerly 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 10-K-A for the year ended December 31, 2020, 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, except for December 31, 2020) (Dollars in thousands) December 31, September 30, June 30, March 31, December 31, 2021 2021 2021 2021 2020 Assets Cash and due from banks $ 501,372 $ 206,927 $ 493,653 $ 362,930 $ 137,654 Federal funds sold and other cash equivalents 193,000 170,000 110,000 57,000 57,000 Total cash and cash equivalents 694,372 376,927 603,653 419,930 194,654 Interest-bearing deposits in other financial institutions 600 600 600 600 600 Investment securities available for sale 368,260 345,000 339,568 281,582 210,867 Investment securities held to maturity 6,252 6,258 6,664 6,668 7,174 Mortgage loans held for sale 5,957 15,188 9,246 37,675 49,963 Loans held for investment 2,931,350 2,840,354 2,709,206 2,715,205 2,706,766 Allowance for loan losses (32,912 ) (32,231 ) (31,352 ) (30,795 ) (29,337 ) Net loans held for investment 2,898,438 2,808,123 2,677,854 2,684,410 2,677,429 Premises and equipment, net 27,199 27,157 27,039 27,093 27,103 Federal Home Loan Bank (FHLB) stock 15,000 15,000 15,000 15,641 15,641 Cash surrender value of life insurance 55,988 55,656 55,325 35,308 35,121 Goodwill 69,243 69,243 69,243 69,243 69,243 Servicing assets 11,517 12,141 12,558 13,264 13,965 Core deposit intangibles 4,075 4,327 4,608 4,895 5,196 Right-of-use assets- operating leases 22,454 23,735 25,050 25,500 — Accrued interest and other assets 48,839 42,452 44,230 42,490 43,116 Total assets $ 4,228,194 $ 3,801,807 $ 3,890,638 $ 3,664,299 $ 3,350,072 Liabilities and shareholders' equity Deposits: Noninterest-bearing demand $ 1,291,484 $ 824,771 $ 940,041 $ 787,439 $ 617,206 Savings, NOW and money market accounts 927,609 931,517 858,597 791,486 731,084 Time deposits, less than $250,000 587,940 614,146 658,393 649,190 688,875 Time deposits, greater than or equal to $250,000 578,499 597,379 612,894 593,178 597,963 Total deposits 3,385,532 2,967,813 3,069,925 2,821,293 2,635,128 Reserve for unfunded commitments 1,203 1,304 1,216 1,320 1,383 FHLB advances 150,000 150,000 150,000 150,000 150,000 Long-term debt, net of debt issuance costs 173,007 172,862 172,718 172,581 104,391 Subordinated debentures 14,502 14,447 14,393 14,338 14,283 Lease liabilities - operating leases 23,282 24,524 25,798 26,199 — Accrued interest and other liabilities 13,985 14,833 14,263 42,900 16,399 Total liabilities 3,761,511 3,345,783 3,448,313 3,228,631 2,921,584 Shareholders' equity: Shareholder's equity 468,267 456,490 442,086 435,746 427,287 Non-controlling interest 72 72 72 72 72 Accumulated other comprehensive (loss) income - Net of tax (1,656 ) (538 ) 167 (150 ) 1,129 Total shareholders' equity 466,683 456,024 442,325 435,668 428,488 Total liabilities and shareholders’ equity $ 4,228,194 $ 3,801,807 $ 3,890,638 $ 3,664,299 $ 3,350,072 RBB BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands, except per share amounts) For the Three Months Ended December 31, 2021 September 30, 2021 December 31, 2020 Interest and dividend income: Interest and fees on loans $ 36,783 $ 35,601 $ 34,832 Interest on interest-bearing deposits 160 219 55 Interest on investment securities 1,069 889 639 Dividend income on FHLB stock 227 225 193 Interest on federal funds sold and other 205 174 145 Total interest income 38,444 37,108 35,864 Interest expense: Interest on savings deposits, NOW and money market accounts 683 697 736 Interest on time deposits 1,748 2,048 3,900 Interest on subordinated debentures and long term debt 2,343 2,342 1,901 Interest on other borrowed funds 445 445 450 Total interest expense 5,219 5,532 6,987 Net interest income before provision for loan losses 33,225 31,576 28,877 Provision for loan losses 635 1,196 3,008 Net interest income after provision for loan losses 32,590 30,380 25,869 Noninterest income: Service charges, fees and other 1,351 3,100 1,565 Gain on sale of loans 1,788 1,790 2,445 Loan servicing fees, net of amortization 258 62 206 Recoveries on loans acquired in business combinations 4 68 5 Unrealized (loss) on equity investments (300 ) (5 ) 78 (Loss) gain on derivatives (277 ) 178 — Increase in cash surrender value of life insurance 332 331 191 Total noninterest income 3,156 5,524 4,490 Noninterest expense: Salaries and employee benefits 6,812 8,772 8,105 Occupancy and equipment expenses 2,125 2,189 2,400 Data processing 838 965 1,012 Legal and professional 1,686 746 794 Office expenses 359 311 295 Marketing and business promotion 418 324 295 Insurance and regulatory assessments 475 384 210 Core deposit premium 252 281 324 OREO expenses 4 4 4 Merger expenses 38 40 5 Other expenses 293 404 1,009 Total noninterest expense 13,300 14,420 14,453 Income before income taxes 22,446 21,484 15,906 Income tax expense 6,740 6,120 4,759 Net income $ 15,706 $ 15,364 $ 11,147 Net income per share Basic $ 0.81 $ 0.79 $ 0.57 Diluted $ 0.79 $ 0.77 $ 0.56 Cash Dividends declared per common share $ 0.13 $ 0.13 $ 0.09 Weighted-average common shares outstanding Basic 19,444,148 19,343,262 19,655,621 Diluted 19,851,202 19,798,187 19,812,401 RBB BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited, except for December 31, 2020) (Dollars in thousands, except per share amounts) For the Twelve Months Ended December 31, 2021 December 31, 2020 Interest and dividend income: Interest and fees on loans $ 141,569 $ 133,894 Interest on interest-earning deposits 552 641 Interest on investment securities 3,379 2,968 Dividend income on FHLB stock 869 572 Interest on federal funds sold and other 694 1,045 Total interest income 147,063 139,120 Interest expense: Interest on savings deposits, NOW and money market accounts 2,786 3,540 Interest on time deposits 9,170 21,665 Interest on subordinated debentures and long term debt 8,999 7,677 Interest on other borrowed funds 1,765 1,483 Total interest expense 22,720 34,365 Net interest income 124,343 104,755 Provision for loan losses 3,959 11,823 Net interest income after provision for loans losses 120,384 92,932 Noninterest income: Service charges, fees and other (1) 7,235 4,852 Gain on sale of loans 9,991 5,997 Loan servicing fees, net of amortization 684 2,052 Recoveries on loans acquired in business combinations 82 84 Unrealized (loss) gain on equity investments (360 ) — Gain on derivatives 46 78 Increase in cash surrender value of life insurance 1,067 767 Gain on sale of securities — 210 Total noninterest income 18,745 14,040 Noninterest expense: Salaries and employee benefits 33,568 33,312 Occupancy and equipment expenses 8,691 9,691 Data processing 4,474 4,236 Legal and professional 3,773 2,743 Office expenses 1,197 1,226 Marketing and business promotion 1,157 751 Insurance and regulatory assessments 1,561 984 Core deposit premium 1,121 1,395 OREO expenses 17 35 Merger expenses 137 746 Other expenses 2,496 4,394 Total noninterest expense 58,192 59,513 Income before income taxes 80,937 47,459 Income tax expense 24,031 14,531 Net income $ 56,906 $ 32,928 Net income per share Basic $ 2.92 $ 1.66 Diluted $ 2.86 $ 1.65 Cash Dividends declared per common share $ 0.51 $ 0.33 Weighted-average common shares outstanding Basic 19,423,549 19,763,422 Diluted 19,834,306 19,921,859 (1) Includes $1.8 million of the U.S. Treasury's CDFI rapid response program grant income, received in the third quarter of 2021. 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, 2021 September 30, 2021 December 31, 2020 Average Interest Yield / Average Interest Yield / Average Interest Yield / (tax-equivalent basis, dollars in thousands) Balance & Fees Rate Balance & Fees Rate Balance & Fees Rate Earning assets: Federal funds sold, cash equivalents & other (1) $ 587,980 $ 592 0.40 % $ 628,020 $ 618 0.39 % $ 188,430 $ 393 0.83 % Securities Available for sale (2) 376,601 1,037 1.09 % 336,130 856 1.01 % 222,762 579 1.03 % Held to maturity (2) 6,256 56 3.55 % 6,262 56 3.55 % 7,383 68 3.66 % Mortgage loans held for sale 3,721 40 4.26 % 5,218 46 3.50 % 41,265 325 3.13 % Loans held for investment: (3) Real estate 2,492,396 31,978 5.09 % 2,361,405 30,911 5.19 % 2,282,937 29,705 5.18 % Commercial 380,098 4,765 4.97 % 374,125 4,644 4.92 % 390,980 4,802 4.89 % Total loans 2,872,494 36,743 5.07 % 2,735,530 35,555 5.16 % 2,673,917 34,507 5.13 % Total earning assets 3,847,052 $ 38,468 3.97 % 3,711,160 $ 37,131 3.97 % 3,133,757 $ 35,872 4.55 % Noninterest-earning assets 240,059 242,742 196,071 Total assets $ 4,087,111 $ 3,953,902 $ 3,329,828 Interest-bearing liabilities NOW $ 73,896 $ 48 0.26 % $ 71,454 $ 48 0.27 % $ 62,232 $ 48 0.31 % Money Market 668,742 602 0.36 % 660,806 615 0.37 % 504,463 656 0.52 % Saving deposits 138,906 33 0.09 % 139,555 34 0.10 % 128,727 32 0.10 % Time deposits, less than $250,000 599,119 827 0.55 % 644,013 977 0.60 % 698,415 2,058 1.17 % Time deposits, $250,000 and over 588,265 921 0.62 % 604,394 1,071 0.70 % 594,655 1,842 1.23 % Total interest-bearing deposits 2,068,928 2,431 0.47 % 2,120,222 2,745 0.51 % 1,988,492 4,636 0.93 % FHLB advances 150,000 445 1.18 % 150,000 445 1.18 % 161,957 450 1.11 % Long-term debt 172,912 2,195 5.04 % 172,767 2,194 5.04 % 104,335 1,748 6.67 % Subordinated debentures 14,466 148 4.06 % 14,411 148 4.07 % 14,248 153 4.27 % Total interest-bearing liabilities 2,406,306 5,219 0.86 % 2,457,400 5,532 0.89 % 2,269,032 6,987 1.23 % Noninterest-bearing liabilities Noninterest-bearing deposits 1,177,948 1,003,304 616,803 Other noninterest-bearing liabilities 39,483 42,419 16,830 Total noninterest-bearing liabilities 1,217,431 1,045,723 633,633 Shareholders' equity 463,374 450,779 427,163 Total liabilities and shareholders' equity $ 4,087,111 $ 3,953,902 $ 3,329,828 Net interest income / interest rate spreads $ 33,249 3.11 % $ 31,599 3.08 % $ 28,885 3.32 % Net interest margin 3.43 % 3.38 % 3.67 % (1) Includes income and average balances for FHLB stock, term federal funds, interest-bearing time deposits and other miscellaneous interest-bearing assets. (2) Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis. (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. 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, 2021 December 31, 2020 Average Interest Yield / Average Interest Yield / (tax-equivalent basis, dollars in thousands) Balance & Fees Rate Balance & Fees Rate Earning assets: Federal funds sold, cash equivalents & other (1) $ 504,809 $ 2,115 0.42 % $ 212,594 $ 2,258 1.06 % Securities Available for sale (2) 320,544 3,217 1.00 % 175,307 2,714 1.55 % Held to maturity (2) 6,543 238 3.64 % 7,665 287 3.74 % Mortgage loans held for sale 20,817 670 3.22 % 41,019 1,779 4.34 % Loans held for investment: (3) Real estate 2,363,846 122,204 5.17 % 2,176,695 113,966 5.24 % Commercial 381,646 18,695 4.90 % 367,718 18,149 4.94 % Total loans 2,745,492 140,899 5.13 % 2,544,413 132,115 5.19 % Total earning assets 3,598,205 $ 147,139 4.09 % 2,980,998 $ 139,153 4.67 % Noninterest-earning assets 235,267 204,617 Total assets $ 3,833,472 $ 3,185,615 Interest-bearing liabilities NOW $ 69,211 $ 184 0.27 % $ 55,795 $ 201 0.36 % Money Market 637,539 2,468 0.39 % 449,110 3,190 0.71 % Saving deposits 137,534 134 0.10 % 123,568 149 0.12 % Time deposits, less than $250,000 640,747 4,462 0.70 % 715,181 11,466 1.60 % Time deposits, $250,000 and over 597,770 4,708 0.79 % 597,262 10,199 1.71 % Total interest-bearing deposits 2,082,801 11,956 0.57 % 1,940,916 25,205 1.30 % FHLB advances 150,000 1,765 1.18 % 129,071 1,483 1.15 % Long-term debt 157,720 8,404 5.33 % 104,210 6,990 6.71 % Subordinated debentures 14,384 595 4.14 % 14,228 687 4.83 % Total interest-bearing liabilities 2,404,905 $ 22,720 0.94 % 2,188,425 $ 34,365 1.57 % Noninterest-bearing liabilities Noninterest-bearing deposits 938,711 564,111 Other noninterest-bearing liabilities 42,142 15,164 Total noninterest-bearing liabilities 980,853 579,275 Shareholders' equity 447,714 417,915 Total liabilities and shareholders' equity $ 3,833,472 $ 3,185,615 Net interest income / interest rate spreads $ 124,419 3.15 % $ 104,788 3.10 % Net interest margin 3.46 % 3.52 % (1) Includes income and average balances for FHLB stock, term federal funds, interest-bearing time deposits and other miscellaneous interest-bearing assets. (2) Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis. (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. 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, 2021 2021 2020 Per share data (common stock) Earnings Basic $ 0.81 $ 0.79 $ 0.57 Diluted $ 0.79 $ 0.77 $ 0.56 Dividends declared $ 0.13 $ 0.13 $ 0.09 Book value $ 23.99 $ 23.37 $ 21.90 Tangible book value $ 20.22 $ 19.60 $ 18.10 Weighted average shares outstanding Basic 19,444,148 19,343,262 19,655,621 Diluted 19,851,202 19,798,187 19,812,401 Shares outstanding at period end 19,455,544 19,516,393 19,565,921 Performance ratios Return on average assets, annualized 1.52 % 1.54 % 1.33 % Return on average shareholders' equity, annualized 13.45 % 13.52 % 10.38 % Return on average tangible common equity, annualized 15.98 % 16.17 % 12.58 % Noninterest income to average assets, annualized 0.31 % 0.55 % 0.54 % Noninterest expense to average assets, annualized 1.29 % 1.45 % 1.73 % Yield on average earning assets 3.97 % 3.97 % 4.55 % Cost of average total deposits 0.30 % 0.35 % 0.71 % Cost of average interest-bearing deposits 0.47 % 0.51 % 0.93 % Cost of average interest-bearing liabilities 0.86 % 0.89 % 1.23 % Accretion on loans to average earning assets 0.02 % 0.03 % 0.03 % Net interest spread 3.11 % 3.08 % 3.32 % Net interest margin 3.43 % 3.38 % 3.67 % Efficiency ratio 36.56 % 38.87 % 43.32 % Common stock dividend payout ratio 16.05 % 16.46 % 15.79 % RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share amounts) For the twelve months ended December 31, 2021 2020 Per share data (common stock) Earnings Basic $ 2.92 $ 1.66 Diluted $ 2.86 $ 1.65 Dividends declared $ 0.51 $ 0.33 Book value $ 23.99 $ 21.90 Tangible book value $ 20.22 $ 18.10 Weighted average shares outstanding Basic 19,423,549 19,763,422 Diluted 19,834,306 19,921,859 Shares outstanding at period end 19,455,544 19,565,921 Performance ratios Return on average assets, annualized 1.48 % 1.03 % Return on average shareholders' equity, annualized 12.71 % 7.88 % Return on average tangible common equity, annualized 15.22 % 9.62 % Noninterest income to average assets, annualized 0.49 % 0.44 % Noninterest expense to average assets, annualized 1.52 % 1.87 % Yield on average earning assets 4.09 % 4.67 % Cost of average deposits 0.40 % 1.01 % Cost of average interest-bearing deposits 0.57 % 1.30 % Cost of average interest-bearing liabilities 0.94 % 1.57 % Accretion on loans to average earning assets 0.03 % 0.08 % Net interest spread 3.15 % 3.10 % Net interest margin 3.46 % 3.52 % Efficiency ratio 40.67 % 50.10 % Common stock dividend payout ratio 17.47 % 19.88 RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share amounts) As of December 31, September 30, December 31, 2021 2021 2020 Loan to deposit ratio 86.58 % 95.71 % 102.72 % Core deposits / total deposits 82.91 % 79.87 % 77.31 % Net non-core funding dependence ratio -6.50 % 9.27 % 12.47 % Credit Quality Data: Loans 30-89 days past due $ 17,640 $ 7,258 $ 8,939 Loans 30-89 days past due to total loans 0.60 % 0.26 % 0.33 % Nonperforming loans $ 20,725 $ 14,248 $ 19,554 Nonperforming loans to total loans 0.71 % 0.50 % 0.72 % Nonperforming assets $ 21,018 $ 14,541 $ 19,847 Nonperforming assets to total assets 0.50 % 0.38 % 0.59 % Allowance for loan losses to total loans 1.12 % 1.13 % 1.08 % Allowance for loan losses to nonperforming loans 158.80 % 226.21 % 150.03 % Net charge-offs to average loans (for the quarter-to-date period) -0.01 % 0.05 % 0.05 % Regulatory and other capital ratios—Company Tangible common equity to tangible assets 9.47 % 10.26 % 10.81 % Tier 1 leverage ratio 10.21 % 10.31 % 11.32 % Tier 1 common capital to risk-weighted assets 14.86 % 14.82 % 14.63 % Tier 1 capital to risk-weighted assets 15.40 % 15.38 % 15.22 % Total capital to risk-weighted assets 23.15 % 23.30 % 20.78 % Regulatory capital ratios—Bank only Tier 1 leverage ratio 12.45 % 12.48 % 14.09 % Tier 1 common capital to risk-weighted assets 18.80 % 18.64 % 18.95 % Tier 1 capital to risk-weighted assets 18.80 % 18.64 % 18.95 % Total capital to risk-weighted assets 20.05 % 19.89 % 20.20 % RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share amounts) 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter Quarterly Consolidated Statements of Earnings 2021 2021 2021 2021 2020 Interest income Loans, including fees $ 36,783 $ 35,601 $ 34,669 $ 34,516 $ 34,832 Investment securities and other 1,661 1,507 1,302 1,024 1,032 Total interest income 38,444 37,108 35,971 35,540 35,864 Interest expense Deposits 2,431 2,745 3,118 3,662 4,636 Interest on subordinated debentures and other 2,343 2,342 2,356 1,958 1,901 Other borrowings 445 445 440 435 450 Total interest expense 5,219 5,532 5,914 6,055 6,987 Net interest income before provision for loan losses 33,225 31,576 30,057 29,485 28,877 Provision for loan losses 635 1,196 628 1,500 3,008 Net interest income after provision for loan losses 32,590 30,380 29,429 27,985 25,869 Noninterest income 3,156 5,524 4,171 5,894 4,490 Noninterest expense 13,300 14,420 14,680 15,792 14,453 Earnings before income taxes 22,446 21,484 18,920 18,087 15,906 Income taxes 6,740 6,120 5,540 5,631 4,759 Net income $ 15,706 $ 15,364 $ 13,380 $ 12,456 $ 11,147 Net income per common share - basic $ 0.81 $ 0.79 $ 0.69 $ 0.64 $ 0.57 Net income per common share - diluted $ 0.79 $ 0.77 $ 0.67 $ 0.63 $ 0.56 Cash dividends declared per common share $ 0.13 $ 0.13 $ 0.13 $ 0.12 $ 0.09 Cash dividends declared on common shares $ 2,516 $ 2,537 $ 2,540 $ 2,347 $ 1,777 Yield on average assets, annualized 1.52 % 1.54 % 1.39 % 1.47 % 1.33 % Yield on average earning assets 3.97 % 3.97 % 3.99 % 4.49 % 4.55 % Cost of average deposits 0.30 % 0.35 % 0.41 % 0.55 % 0.71 % Cost of average interest-bearing deposits 0.47 % 0.51 % 0.59 % 0.73 % 0.93 % Cost of average interest-bearing liabilities 0.86 % 0.89 % 0.97 % 1.06 % 1.23 % Accretion on loans to average earning assets 0.02 % 0.03 % 0.02 % 0.06 % 0.03 % Net interest margin 3.43 % 3.38 % 3.33 % 3.73 % 3.67 % RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited, except for December 31, 2020) (Dollars in thousands, except per share amounts) Loan Portfolio Detail As of December 31, 2021 As of September 30, 2021 As of June 30, 2021 As of March 31, 2020 As of December 31, 2020 (dollars in thousands) $ % $ % $ % $ % $ % Loans: Commercial and industrial $ 268,709 9.2 % $ 276,387 9.7 % $ 277,080 10.2 % $ 286,016 10.5 % $ 290,139 10.7 % SBA 76,136 2.6 % 88,784 3.1 % 98,572 3.6 % 111,330 4.1 % 97,821 3.6 % Construction and land development 303,144 10.3 % 271,764 9.6 % 236,965 8.7 % 209,727 7.7 % 186,723 6.9 % Commercial real estate (1) 1,247,999 42.6 % 1,205,630 42.4 % 1,102,467 40.7 % 1,063,104 39.2 % 1,003,637 37.1 % Single-family residential mortgages 1,004,576 34.3 % 974,780 34.3 % 984,311 36.3 % 1,041,260 38.3 % 1,124,357 41.5 % Other loans 30,786 1.0 % 23,009 0.9 % 9,811 0.5 % 3,768 0.2 % 4,089 0.2 % Total loans (2) $ 2,931,350 100.0 % $ 2,840,354 100.0 % $ 2,709,206 100.0 % $ 2,715,205 100.0 % $ 2,706,766 100.0 % Allowance for loan losses (32,912 ) (32,231 ) (31,352 ) (30,795 ) (29,337 ) Total loans, net $ 2,898,438 $ 2,808,123 $ 2,677,854 $ 2,684,410 $ 2,677,429 (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. Three Months Ended Twelve Months Ended Change in Allowance for Loan Losses December 31, December 31, (dollars in thousands) 2021 2020 2021 2020 Beginning balance $ 32,231 $ 26,634 $ 29,337 $ 18,816 Additions to the allowance charged to expense 635 3,008 3,959 11,823 Net recoveries (charge-offs) on loans 46 (305 ) (384 ) (1,302 ) Ending balance $ 32,912 $ 29,337 $ 32,912 $ 29,337 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, 2021 and 2020, and September 30, 2021. (dollars in thousands, except per share data) December 31, 2021 September 30, 2021 December 31, 2020 Tangible common equity: Total shareholders' equity $ 466,683 $ 456,024 $ 428,488 Adjustments Goodwill (69,243 ) (69,243 ) (69,243 ) Core deposit intangible (4,075 ) (4,327 ) (5,196 ) Tangible common equity $ 393,365 $ 382,454 $ 354,049 Tangible assets: Total assets-GAAP $ 4,228,194 $ 3,801,807 $ 3,350,072 Adjustments Goodwill (69,243 ) (69,243 ) (69,243 ) Core deposit intangible (4,075 ) (4,327 ) (5,196 ) Tangible assets $ 4,154,876 $ 3,728,237 $ 3,275,633 Common shares outstanding $ 19,455,544 19,516,393 19,565,921 Tangible common equity to tangible assets ratio 9.47 % 10.26 % 10.81 % Book value per share $ 23.99 $ 23.37 $ 21.90 Tangible book value per share $ 20.22 $ 19.60 $ 18.10 View source version on businesswire.com: https://www.businesswire.com/news/home/20220124005765/en/Contacts Yee Phong (Alan) Thian President and CEO (626) 307-7559 David Morris Executive Vice President and CFO (714) 670-2488
Conference Call and Webcast Scheduled for Tuesday, January 25, 2022 at 11:00 a.m. Pacific Time/2:00 p.m. Eastern Time Fourth Quarter 2021 Highlights Record net income of $15.7 million, or $0.79 diluted earnings per share, increased $342,000, or 2.2%, from the prior quarter and increased $4.6 million, or 40.9%, from the fourth quarter of 2020 Loans grew by $81.8 million, or 11.4% annualized, from the end of the prior quarter Announced the entry into the San Francisco Bay area with an agreement to acquire Gateway Bank, F.S.B. and completed the previously announced purchase acquisition of the Bank of the Orient’s Honolulu, Hawaii branch
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, 2021. The Company reported record net income of $15.7 million, or $0.79 diluted earnings per share, for the three months ended December 31, 2021, compared to net income of $15.4 million, or $0.77 diluted earnings per share, and $11.1 million, or $0.56 diluted earnings per share, for the three months ended September 30, 2021 and December 31, 2020, respectively. “Royal Business Bank’s excellent fourth quarter results contributed to a record year of growth and performance in 2021,” said Alan Thian, President and CEO of RBB Bancorp. “Our strategy of expansion has proven to be an effective driver of shareholder value by enhancing earnings, accelerating loan growth, and improving our deposit franchise. Our recent expansion into the vibrant Hawaiian market and our announced acquisition of Gateway Bank in the San Francisco Bay area will provide us with additional opportunities to bring our relationship-banking model to new markets.” "2021 was a tremendous year for the Bank," said Dr. James Kao, Chairman of RBB Bancorp. “Not only did the Bank achieve record results and growth, but it was also recognized multiple times for the work it does to serve the financial needs of the communities in which it operates. Two members of the RBB team, Alan Thian and Simon Pang, were appointed to national commissions to advise on community development and the Bank was the awarded a CDFI grant from the US Treasury to support distressed and underserved communities.” Key Performance Ratios Net income of $15.7 million for the fourth quarter of 2021 produced an annualized return on average assets ("ROA") of 1.52%, an annualized return on average tangible common shareholders' equity ("ROTCE") of 15.98%, and an annualized return on average shareholders' equity ("ROE") of 13.45%. This compares to an annualized return on average assets of 1.54%, an annualized return on average tangible common shareholders' equity of 16.17%, and an annualized return on average shareholders' equity of 13.52% for the third quarter of 2021. The efficiency ratio for the fourth quarter of 2021 was 36.56%, compared to 38.87% for the prior quarter. Net Interest Income and Net Interest Margin Net interest income, before provision for loan losses, was $33.2 million for the fourth quarter of 2021, compared to $31.6 million for the third quarter of 2021. The $1.6 million increase was primarily attributable to higher interest income due to a $135.9 million increase in average earning assets and a $51.1 million decrease in average interest-bearing liabilities. Accretion of purchase discounts from prior acquisitions contributed $192,000 to net interest income in the fourth quarter of 2021, compared to $289,000 in the third quarter of 2021. Compared to the fourth quarter of 2020, net interest income, before provision for loan losses, increased $4.3 million from $28.9 million. The increase was primarily attributable to a $713.3 million increase in average earning assets, partially offset by a $137.3 million increase in average interest-bearing liabilities. The increases in average earning assets and total deposits were primarily due to increased loan and deposit originations. Net interest margin was 3.43% for the fourth quarter of 2021, an increase of 5 basis points from 3.38% in the third quarter of 2021. Loan discount accretion contributed 2 basis points to the net interest margin in the fourth quarter of 2021, compared to 3 basis points in the third quarter of 2021. Noninterest Income Noninterest income was $3.2 million for the fourth quarter of 2021, a decrease of $2.4 million from $5.5 million in the third quarter of 2021. The decrease was primarily driven by a one-time $1.8 million CDFI grant received during the third quarter and a $455,000 decrease in gain on derivatives, partially offset by a $196,000 increase in loan servicing fees during the quarter. The Company sold $37.7 million in FNMA qualified mortgage loans for a net gain of $1.4 million and sold no non-qualified mortgage loans during the fourth quarter of 2021. This compared to $36.6 million in FNMA qualified mortgage loans sold for a net gain of $1.2 million and no non-qualified mortgage loans during the third quarter of 2021. The Company sold $5.5 million in SBA loans during the fourth quarter of 2021 for a net gain of $436,000, compared to $5.9 million SBA loans sold for a net gain of $553,000 during the third quarter of 2021. Compared to the fourth quarter of 2020, noninterest income decreased by $1.3 million from $4.5 million. The decrease was primarily attributable to a decrease of $657,000 in gain on sale of loans and a decrease of $378,000 in unrealized gain (loss) on equity investment. Noninterest Expense Noninterest expense for the fourth quarter of 2021 was $13.3 million, compared to $14.4 million for the third quarter of 2021. The $1.1 million decrease was primarily attributable to a $2.0 million decrease in salaries and benefit expenses, partially offset by $940,000 increase in legal and professional expense. The fourth quarter increase in legal and professional expenses were due, in part, to expenses related to the acquisition of the branch in Honolulu, Hawaii and the announced acquisition of Gateway Bank. Noninterest expense decreased from $14.5 million in the fourth quarter of 2020. The $1.2 million decrease was primarily due to a $1.3 million decrease in salaries and benefits expenses, $275,000 decrease in occupancy and equipment expenses and a $174,000 decrease in data processing expenses, partially offset by an $892,000 increase in legal and professional expenses. Income Taxes The effective tax rate was 30.0% for the fourth quarter of 2021, 28.5% for the third quarter of 2021, and 29.9% for the fourth quarter of 2020. The Company recognized a tax expense (benefit) from stock option exercises of ($215,000), ($534,000) and zero for the fourth quarter of 2021, the third quarter of 2021, and the fourth quarter of 2020, respectively. Loan Portfolio Loans held for investment, net of deferred fees and discounts, totaled $2.93 billion as of December 31, 2021, an increase of $91.0 million from September 30, 2021, and an increase of $224.6 million from December 31, 2020. The increase from the prior quarter was primarily due to a $42.4 million increase in commercial real estate loans, $31.4 million increase in construction & land development loans and a $29.8 million increase in single-family residential mortgages. The increase from December 31, 2020 was primarily due to a $244.4 million increase in commercial real estate loans, $116.4 million increase in construction & land development loans, partially offset by a $119.8 million decrease in single-family residential mortgages. During the fourth quarter of 2021, single-family residential mortgage production was $137.7 million while payoffs and paydowns were $79.5 million. During the third quarter of 2021, single-family residential mortgage production was $112.0 million while payoffs and paydowns were $79.0 million. Mortgage loans held for sale were $6.0 million as of December 31, 2021, a decrease of $9.2 million from $15.2 million at September 30, 2021 and a decrease of $44.0 million from $50.0 million as of December 31, 2020. The Company originated approximately $18.2 million in FNMA mortgage loans for sale for the fourth quarter of 2021, compared with $12.2 million during the prior quarter. In the fourth quarter of 2021, SBA loan production was $4.6 million and total SBA loan sales were $5.5 million. Deposits Deposits were $3.4 billion at December 31, 2021, and compared to September 30, 2021, there was an increase of $417.7 million from September 30, 2021, and an increase of $750.4 million from December 31, 2020, including brokered deposits. During the fourth quarter of 2021, noninterest-bearing deposits increased by $466.7 million, interest-bearing non-maturity deposits decreased by $3.9 million, and time deposits decreased by $45.1 million. Noninterest-bearing deposits increased due to expanding relationships with a number of our commercial clients. As of December 31, 2021, time deposits included $2.4 million in brokered CDs, as compared to $2.4 million as of September 30, 2021 and $17.4 million as of December 31, 2020. Compared to December 31, 2020, total deposits increased by $750.4 million, which included a $674.3 million increase in noninterest bearing deposits and a $76.1 million increase in interest-bearing deposits. Asset Quality Nonperforming assets totaled $21.0 million, or 0.50% of total assets at December 31, 2021, compared to $14.5 million, or 0.38% of total assets at September 30, 2021. The $6.5 million increase in non-performing assets was due to the addition of three commercial real estate loans in the amount of $3.5 million, one SFR loan for $156,000 and three commercial and industrial loans for $3.7 million, less paydowns and payoffs on other non-performing loans. Nonperforming assets consist of other real estate owned, loans modified under troubled debt restructurings (“TDR”), non-accrual loans, and loans past due 90 days or more and still accruing interest. In the fourth quarter of 2021, there were $46,000 in net recoveries, compared to net charge-offs of $317,000 in the third quarter. The Company recorded a provision for credit losses of $635,000 for the fourth quarter of 2021, a decrease from $1.2 million in the prior quarter, primarily attributable to a reduction of the COVID-19 special reserve in the allowance for loan losses. The allowance for loan losses totaled $32.9 million, or 1.12% of loans held for investment at December 31, 2021, compared with $32.2 million, or 1.13%, of total loans at September 30, 2021. As of December 31, 2021, borrowers representing 69 loans totaling $11.8 million, or 0.40% of the Company’s total loan portfolio, have funded under the SBA’s Paycheck Protection Program due to the COVID-19 pandemic. Presently none of our SBA customers are on a payment deferral plan due to the COVID-19 pandemic. As of January 15, 2022, the Company had no COVID-19 loans deferred. During the fourth quarter of 2021, the Company repurchased 75,849 common shares at a weighted average price of $24.53. Agreement to Acquire Gateway Bank, F.S.B. On December 28, 2021, RBB Bancorp announced that it entered into a definitive agreement to acquire Gateway Bank, F.S.B. ("Gateway Bank") in a cash transaction valued at approximately $22.9 million, subject to certain terms and conditions, including customary holdbacks if certain contingencies are not met, and other possible adjustments as contained in the definitive agreement. Gateway Bank, a commercial bank based in Oakland, California, had total assets of $172.4 million, total gross loans of $123.1 million, total deposits of $147.5 million, and total tangible equity of $15.5 million as of September 30, 2021. Principally serving the Asian-American communities in the San Francisco Bay Area, Gateway Bank has one branch located in Oakland’s Chinatown neighborhood, offering consumer and business banking and loan products and services. The Company expects the transaction to be accretive to earnings per share in 2022 in the mid-single digit range. The Company also expects to incur tangible book value per share dilution of approximately 1.8% upon closing of the transaction, with a tangible book value dilution payback period of approximately 1.8 years. The earnings per share accretion estimates are based on estimated cost savings of approximately 60% of Gateway Bank's non-interest expense, with the cost savings phased in during 2022. The earnings per share accretion estimates do not include any assumption of revenue synergies. The transaction is expected to close in second quarter of 2022 and is subject to the Company obtaining all the regulatory approvals as well as other customary closing conditions. Corporate Overview RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. As of December 31, 2021, the company had total assets of $4.2 billion. Its wholly-owned subsidiary, the Bank is a full service commercial bank, which provides business banking services to the Chinese-American communities in Los Angeles County, Orange County, and Ventura County in California, in Las Vegas, Nevada, in Brooklyn, Queens, and Manhattan in New York, in Edison, New Jersey, in the Chicago neighborhoods of Chinatown and Bridgeport, Illinois, and in Oahu, Hawaii. Bank services include 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, automobile lending, trade finance, a full range of depository account products and wealth management services. The Bank has nine branches in Los Angeles County, two branches in Ventura County, one branch in Orange County, California, one branch in Las Vegas, Nevada, two branches and one loan operation center in Brooklyn, three branches in Queens, one branch in Manhattan in New York, one branch in Edison, New Jersey, two branches in Chicago, Illinois, and one branch in Honolulu, Hawaii. The Company's administrative and lending center is located at 1055 Wilshire Blvd., Los Angeles, California 90017, and its finance and operations center is located at 7025 Orangethorpe Ave., Buena Park, California 90621. The Company's website address is www.royalbusinessbankusa.com. Conference Call Management will hold a conference call at 11:00 a.m. Pacific time/2:00 p.m. Eastern time tomorrow, January 25, 2022, to discuss the Company’s fourth quarter 2021 financial results. To listen to the conference call, please dial 1-866-518-6930 or 1-203-518-9797, conference ID RBBQ421. A replay of the call will be made available at 1-800-938-1602 or 1-404-220-1548 (no passcode required) approximately one hour after the conclusion of the call and will remain available through February 2, 2022. 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. This webcast will be recorded and available for replay on our website approximately two hours after the conclusion of the conference call. 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 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; expectations regarding the impact of the COVID-19 pandemic; the costs or effects of acquisitions or dispositions we may make, including our recent acquisition of PGB Holdings, Inc. and its wholly-owned subsidiary, Pacific Global Bank, and our recently completed acquisition of First American International Corp., whether we are able to obtain any required governmental or shareholder 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, including ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments”, commonly referenced as the Current Expected Credit Loss (“CECL”) model, which will change how we estimate credit losses and may increase the required level of our allowance for credit losses after adoption; 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 DFPI (formerly 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 10-K-A for the year ended December 31, 2020, 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, except for December 31, 2020) (Dollars in thousands) December 31, September 30, June 30, March 31, December 31, 2021 2021 2021 2021 2020 Assets Cash and due from banks $ 501,372 $ 206,927 $ 493,653 $ 362,930 $ 137,654 Federal funds sold and other cash equivalents 193,000 170,000 110,000 57,000 57,000 Total cash and cash equivalents 694,372 376,927 603,653 419,930 194,654 Interest-bearing deposits in other financial institutions 600 600 600 600 600 Investment securities available for sale 368,260 345,000 339,568 281,582 210,867 Investment securities held to maturity 6,252 6,258 6,664 6,668 7,174 Mortgage loans held for sale 5,957 15,188 9,246 37,675 49,963 Loans held for investment 2,931,350 2,840,354 2,709,206 2,715,205 2,706,766 Allowance for loan losses (32,912 ) (32,231 ) (31,352 ) (30,795 ) (29,337 ) Net loans held for investment 2,898,438 2,808,123 2,677,854 2,684,410 2,677,429 Premises and equipment, net 27,199 27,157 27,039 27,093 27,103 Federal Home Loan Bank (FHLB) stock 15,000 15,000 15,000 15,641 15,641 Cash surrender value of life insurance 55,988 55,656 55,325 35,308 35,121 Goodwill 69,243 69,243 69,243 69,243 69,243 Servicing assets 11,517 12,141 12,558 13,264 13,965 Core deposit intangibles 4,075 4,327 4,608 4,895 5,196 Right-of-use assets- operating leases 22,454 23,735 25,050 25,500 — Accrued interest and other assets 48,839 42,452 44,230 42,490 43,116 Total assets $ 4,228,194 $ 3,801,807 $ 3,890,638 $ 3,664,299 $ 3,350,072 Liabilities and shareholders' equity Deposits: Noninterest-bearing demand $ 1,291,484 $ 824,771 $ 940,041 $ 787,439 $ 617,206 Savings, NOW and money market accounts 927,609 931,517 858,597 791,486 731,084 Time deposits, less than $250,000 587,940 614,146 658,393 649,190 688,875 Time deposits, greater than or equal to $250,000 578,499 597,379 612,894 593,178 597,963 Total deposits 3,385,532 2,967,813 3,069,925 2,821,293 2,635,128 Reserve for unfunded commitments 1,203 1,304 1,216 1,320 1,383 FHLB advances 150,000 150,000 150,000 150,000 150,000 Long-term debt, net of debt issuance costs 173,007 172,862 172,718 172,581 104,391 Subordinated debentures 14,502 14,447 14,393 14,338 14,283 Lease liabilities - operating leases 23,282 24,524 25,798 26,199 — Accrued interest and other liabilities 13,985 14,833 14,263 42,900 16,399 Total liabilities 3,761,511 3,345,783 3,448,313 3,228,631 2,921,584 Shareholders' equity: Shareholder's equity 468,267 456,490 442,086 435,746 427,287 Non-controlling interest 72 72 72 72 72 Accumulated other comprehensive (loss) income - Net of tax (1,656 ) (538 ) 167 (150 ) 1,129 Total shareholders' equity 466,683 456,024 442,325 435,668 428,488 Total liabilities and shareholders’ equity $ 4,228,194 $ 3,801,807 $ 3,890,638 $ 3,664,299 $ 3,350,072 RBB BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands, except per share amounts) For the Three Months Ended December 31, 2021 September 30, 2021 December 31, 2020 Interest and dividend income: Interest and fees on loans $ 36,783 $ 35,601 $ 34,832 Interest on interest-bearing deposits 160 219 55 Interest on investment securities 1,069 889 639 Dividend income on FHLB stock 227 225 193 Interest on federal funds sold and other 205 174 145 Total interest income 38,444 37,108 35,864 Interest expense: Interest on savings deposits, NOW and money market accounts 683 697 736 Interest on time deposits 1,748 2,048 3,900 Interest on subordinated debentures and long term debt 2,343 2,342 1,901 Interest on other borrowed funds 445 445 450 Total interest expense 5,219 5,532 6,987 Net interest income before provision for loan losses 33,225 31,576 28,877 Provision for loan losses 635 1,196 3,008 Net interest income after provision for loan losses 32,590 30,380 25,869 Noninterest income: Service charges, fees and other 1,351 3,100 1,565 Gain on sale of loans 1,788 1,790 2,445 Loan servicing fees, net of amortization 258 62 206 Recoveries on loans acquired in business combinations 4 68 5 Unrealized (loss) on equity investments (300 ) (5 ) 78 (Loss) gain on derivatives (277 ) 178 — Increase in cash surrender value of life insurance 332 331 191 Total noninterest income 3,156 5,524 4,490 Noninterest expense: Salaries and employee benefits 6,812 8,772 8,105 Occupancy and equipment expenses 2,125 2,189 2,400 Data processing 838 965 1,012 Legal and professional 1,686 746 794 Office expenses 359 311 295 Marketing and business promotion 418 324 295 Insurance and regulatory assessments 475 384 210 Core deposit premium 252 281 324 OREO expenses 4 4 4 Merger expenses 38 40 5 Other expenses 293 404 1,009 Total noninterest expense 13,300 14,420 14,453 Income before income taxes 22,446 21,484 15,906 Income tax expense 6,740 6,120 4,759 Net income $ 15,706 $ 15,364 $ 11,147 Net income per share Basic $ 0.81 $ 0.79 $ 0.57 Diluted $ 0.79 $ 0.77 $ 0.56 Cash Dividends declared per common share $ 0.13 $ 0.13 $ 0.09 Weighted-average common shares outstanding Basic 19,444,148 19,343,262 19,655,621 Diluted 19,851,202 19,798,187 19,812,401 RBB BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited, except for December 31, 2020) (Dollars in thousands, except per share amounts) For the Twelve Months Ended December 31, 2021 December 31, 2020 Interest and dividend income: Interest and fees on loans $ 141,569 $ 133,894 Interest on interest-earning deposits 552 641 Interest on investment securities 3,379 2,968 Dividend income on FHLB stock 869 572 Interest on federal funds sold and other 694 1,045 Total interest income 147,063 139,120 Interest expense: Interest on savings deposits, NOW and money market accounts 2,786 3,540 Interest on time deposits 9,170 21,665 Interest on subordinated debentures and long term debt 8,999 7,677 Interest on other borrowed funds 1,765 1,483 Total interest expense 22,720 34,365 Net interest income 124,343 104,755 Provision for loan losses 3,959 11,823 Net interest income after provision for loans losses 120,384 92,932 Noninterest income: Service charges, fees and other (1) 7,235 4,852 Gain on sale of loans 9,991 5,997 Loan servicing fees, net of amortization 684 2,052 Recoveries on loans acquired in business combinations 82 84 Unrealized (loss) gain on equity investments (360 ) — Gain on derivatives 46 78 Increase in cash surrender value of life insurance 1,067 767 Gain on sale of securities — 210 Total noninterest income 18,745 14,040 Noninterest expense: Salaries and employee benefits 33,568 33,312 Occupancy and equipment expenses 8,691 9,691 Data processing 4,474 4,236 Legal and professional 3,773 2,743 Office expenses 1,197 1,226 Marketing and business promotion 1,157 751 Insurance and regulatory assessments 1,561 984 Core deposit premium 1,121 1,395 OREO expenses 17 35 Merger expenses 137 746 Other expenses 2,496 4,394 Total noninterest expense 58,192 59,513 Income before income taxes 80,937 47,459 Income tax expense 24,031 14,531 Net income $ 56,906 $ 32,928 Net income per share Basic $ 2.92 $ 1.66 Diluted $ 2.86 $ 1.65 Cash Dividends declared per common share $ 0.51 $ 0.33 Weighted-average common shares outstanding Basic 19,423,549 19,763,422 Diluted 19,834,306 19,921,859 (1) Includes $1.8 million of the U.S. Treasury's CDFI rapid response program grant income, received in the third quarter of 2021. 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, 2021 September 30, 2021 December 31, 2020 Average Interest Yield / Average Interest Yield / Average Interest Yield / (tax-equivalent basis, dollars in thousands) Balance & Fees Rate Balance & Fees Rate Balance & Fees Rate Earning assets: Federal funds sold, cash equivalents & other (1) $ 587,980 $ 592 0.40 % $ 628,020 $ 618 0.39 % $ 188,430 $ 393 0.83 % Securities Available for sale (2) 376,601 1,037 1.09 % 336,130 856 1.01 % 222,762 579 1.03 % Held to maturity (2) 6,256 56 3.55 % 6,262 56 3.55 % 7,383 68 3.66 % Mortgage loans held for sale 3,721 40 4.26 % 5,218 46 3.50 % 41,265 325 3.13 % Loans held for investment: (3) Real estate 2,492,396 31,978 5.09 % 2,361,405 30,911 5.19 % 2,282,937 29,705 5.18 % Commercial 380,098 4,765 4.97 % 374,125 4,644 4.92 % 390,980 4,802 4.89 % Total loans 2,872,494 36,743 5.07 % 2,735,530 35,555 5.16 % 2,673,917 34,507 5.13 % Total earning assets 3,847,052 $ 38,468 3.97 % 3,711,160 $ 37,131 3.97 % 3,133,757 $ 35,872 4.55 % Noninterest-earning assets 240,059 242,742 196,071 Total assets $ 4,087,111 $ 3,953,902 $ 3,329,828 Interest-bearing liabilities NOW $ 73,896 $ 48 0.26 % $ 71,454 $ 48 0.27 % $ 62,232 $ 48 0.31 % Money Market 668,742 602 0.36 % 660,806 615 0.37 % 504,463 656 0.52 % Saving deposits 138,906 33 0.09 % 139,555 34 0.10 % 128,727 32 0.10 % Time deposits, less than $250,000 599,119 827 0.55 % 644,013 977 0.60 % 698,415 2,058 1.17 % Time deposits, $250,000 and over 588,265 921 0.62 % 604,394 1,071 0.70 % 594,655 1,842 1.23 % Total interest-bearing deposits 2,068,928 2,431 0.47 % 2,120,222 2,745 0.51 % 1,988,492 4,636 0.93 % FHLB advances 150,000 445 1.18 % 150,000 445 1.18 % 161,957 450 1.11 % Long-term debt 172,912 2,195 5.04 % 172,767 2,194 5.04 % 104,335 1,748 6.67 % Subordinated debentures 14,466 148 4.06 % 14,411 148 4.07 % 14,248 153 4.27 % Total interest-bearing liabilities 2,406,306 5,219 0.86 % 2,457,400 5,532 0.89 % 2,269,032 6,987 1.23 % Noninterest-bearing liabilities Noninterest-bearing deposits 1,177,948 1,003,304 616,803 Other noninterest-bearing liabilities 39,483 42,419 16,830 Total noninterest-bearing liabilities 1,217,431 1,045,723 633,633 Shareholders' equity 463,374 450,779 427,163 Total liabilities and shareholders' equity $ 4,087,111 $ 3,953,902 $ 3,329,828 Net interest income / interest rate spreads $ 33,249 3.11 % $ 31,599 3.08 % $ 28,885 3.32 % Net interest margin 3.43 % 3.38 % 3.67 % (1) Includes income and average balances for FHLB stock, term federal funds, interest-bearing time deposits and other miscellaneous interest-bearing assets. (2) Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis. (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. 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, 2021 December 31, 2020 Average Interest Yield / Average Interest Yield / (tax-equivalent basis, dollars in thousands) Balance & Fees Rate Balance & Fees Rate Earning assets: Federal funds sold, cash equivalents & other (1) $ 504,809 $ 2,115 0.42 % $ 212,594 $ 2,258 1.06 % Securities Available for sale (2) 320,544 3,217 1.00 % 175,307 2,714 1.55 % Held to maturity (2) 6,543 238 3.64 % 7,665 287 3.74 % Mortgage loans held for sale 20,817 670 3.22 % 41,019 1,779 4.34 % Loans held for investment: (3) Real estate 2,363,846 122,204 5.17 % 2,176,695 113,966 5.24 % Commercial 381,646 18,695 4.90 % 367,718 18,149 4.94 % Total loans 2,745,492 140,899 5.13 % 2,544,413 132,115 5.19 % Total earning assets 3,598,205 $ 147,139 4.09 % 2,980,998 $ 139,153 4.67 % Noninterest-earning assets 235,267 204,617 Total assets $ 3,833,472 $ 3,185,615 Interest-bearing liabilities NOW $ 69,211 $ 184 0.27 % $ 55,795 $ 201 0.36 % Money Market 637,539 2,468 0.39 % 449,110 3,190 0.71 % Saving deposits 137,534 134 0.10 % 123,568 149 0.12 % Time deposits, less than $250,000 640,747 4,462 0.70 % 715,181 11,466 1.60 % Time deposits, $250,000 and over 597,770 4,708 0.79 % 597,262 10,199 1.71 % Total interest-bearing deposits 2,082,801 11,956 0.57 % 1,940,916 25,205 1.30 % FHLB advances 150,000 1,765 1.18 % 129,071 1,483 1.15 % Long-term debt 157,720 8,404 5.33 % 104,210 6,990 6.71 % Subordinated debentures 14,384 595 4.14 % 14,228 687 4.83 % Total interest-bearing liabilities 2,404,905 $ 22,720 0.94 % 2,188,425 $ 34,365 1.57 % Noninterest-bearing liabilities Noninterest-bearing deposits 938,711 564,111 Other noninterest-bearing liabilities 42,142 15,164 Total noninterest-bearing liabilities 980,853 579,275 Shareholders' equity 447,714 417,915 Total liabilities and shareholders' equity $ 3,833,472 $ 3,185,615 Net interest income / interest rate spreads $ 124,419 3.15 % $ 104,788 3.10 % Net interest margin 3.46 % 3.52 % (1) Includes income and average balances for FHLB stock, term federal funds, interest-bearing time deposits and other miscellaneous interest-bearing assets. (2) Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis. (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. 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, 2021 2021 2020 Per share data (common stock) Earnings Basic $ 0.81 $ 0.79 $ 0.57 Diluted $ 0.79 $ 0.77 $ 0.56 Dividends declared $ 0.13 $ 0.13 $ 0.09 Book value $ 23.99 $ 23.37 $ 21.90 Tangible book value $ 20.22 $ 19.60 $ 18.10 Weighted average shares outstanding Basic 19,444,148 19,343,262 19,655,621 Diluted 19,851,202 19,798,187 19,812,401 Shares outstanding at period end 19,455,544 19,516,393 19,565,921 Performance ratios Return on average assets, annualized 1.52 % 1.54 % 1.33 % Return on average shareholders' equity, annualized 13.45 % 13.52 % 10.38 % Return on average tangible common equity, annualized 15.98 % 16.17 % 12.58 % Noninterest income to average assets, annualized 0.31 % 0.55 % 0.54 % Noninterest expense to average assets, annualized 1.29 % 1.45 % 1.73 % Yield on average earning assets 3.97 % 3.97 % 4.55 % Cost of average total deposits 0.30 % 0.35 % 0.71 % Cost of average interest-bearing deposits 0.47 % 0.51 % 0.93 % Cost of average interest-bearing liabilities 0.86 % 0.89 % 1.23 % Accretion on loans to average earning assets 0.02 % 0.03 % 0.03 % Net interest spread 3.11 % 3.08 % 3.32 % Net interest margin 3.43 % 3.38 % 3.67 % Efficiency ratio 36.56 % 38.87 % 43.32 % Common stock dividend payout ratio 16.05 % 16.46 % 15.79 % RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share amounts) For the twelve months ended December 31, 2021 2020 Per share data (common stock) Earnings Basic $ 2.92 $ 1.66 Diluted $ 2.86 $ 1.65 Dividends declared $ 0.51 $ 0.33 Book value $ 23.99 $ 21.90 Tangible book value $ 20.22 $ 18.10 Weighted average shares outstanding Basic 19,423,549 19,763,422 Diluted 19,834,306 19,921,859 Shares outstanding at period end 19,455,544 19,565,921 Performance ratios Return on average assets, annualized 1.48 % 1.03 % Return on average shareholders' equity, annualized 12.71 % 7.88 % Return on average tangible common equity, annualized 15.22 % 9.62 % Noninterest income to average assets, annualized 0.49 % 0.44 % Noninterest expense to average assets, annualized 1.52 % 1.87 % Yield on average earning assets 4.09 % 4.67 % Cost of average deposits 0.40 % 1.01 % Cost of average interest-bearing deposits 0.57 % 1.30 % Cost of average interest-bearing liabilities 0.94 % 1.57 % Accretion on loans to average earning assets 0.03 % 0.08 % Net interest spread 3.15 % 3.10 % Net interest margin 3.46 % 3.52 % Efficiency ratio 40.67 % 50.10 % Common stock dividend payout ratio 17.47 % 19.88 RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share amounts) As of December 31, September 30, December 31, 2021 2021 2020 Loan to deposit ratio 86.58 % 95.71 % 102.72 % Core deposits / total deposits 82.91 % 79.87 % 77.31 % Net non-core funding dependence ratio -6.50 % 9.27 % 12.47 % Credit Quality Data: Loans 30-89 days past due $ 17,640 $ 7,258 $ 8,939 Loans 30-89 days past due to total loans 0.60 % 0.26 % 0.33 % Nonperforming loans $ 20,725 $ 14,248 $ 19,554 Nonperforming loans to total loans 0.71 % 0.50 % 0.72 % Nonperforming assets $ 21,018 $ 14,541 $ 19,847 Nonperforming assets to total assets 0.50 % 0.38 % 0.59 % Allowance for loan losses to total loans 1.12 % 1.13 % 1.08 % Allowance for loan losses to nonperforming loans 158.80 % 226.21 % 150.03 % Net charge-offs to average loans (for the quarter-to-date period) -0.01 % 0.05 % 0.05 % Regulatory and other capital ratios—Company Tangible common equity to tangible assets 9.47 % 10.26 % 10.81 % Tier 1 leverage ratio 10.21 % 10.31 % 11.32 % Tier 1 common capital to risk-weighted assets 14.86 % 14.82 % 14.63 % Tier 1 capital to risk-weighted assets 15.40 % 15.38 % 15.22 % Total capital to risk-weighted assets 23.15 % 23.30 % 20.78 % Regulatory capital ratios—Bank only Tier 1 leverage ratio 12.45 % 12.48 % 14.09 % Tier 1 common capital to risk-weighted assets 18.80 % 18.64 % 18.95 % Tier 1 capital to risk-weighted assets 18.80 % 18.64 % 18.95 % Total capital to risk-weighted assets 20.05 % 19.89 % 20.20 % RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share amounts) 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter Quarterly Consolidated Statements of Earnings 2021 2021 2021 2021 2020 Interest income Loans, including fees $ 36,783 $ 35,601 $ 34,669 $ 34,516 $ 34,832 Investment securities and other 1,661 1,507 1,302 1,024 1,032 Total interest income 38,444 37,108 35,971 35,540 35,864 Interest expense Deposits 2,431 2,745 3,118 3,662 4,636 Interest on subordinated debentures and other 2,343 2,342 2,356 1,958 1,901 Other borrowings 445 445 440 435 450 Total interest expense 5,219 5,532 5,914 6,055 6,987 Net interest income before provision for loan losses 33,225 31,576 30,057 29,485 28,877 Provision for loan losses 635 1,196 628 1,500 3,008 Net interest income after provision for loan losses 32,590 30,380 29,429 27,985 25,869 Noninterest income 3,156 5,524 4,171 5,894 4,490 Noninterest expense 13,300 14,420 14,680 15,792 14,453 Earnings before income taxes 22,446 21,484 18,920 18,087 15,906 Income taxes 6,740 6,120 5,540 5,631 4,759 Net income $ 15,706 $ 15,364 $ 13,380 $ 12,456 $ 11,147 Net income per common share - basic $ 0.81 $ 0.79 $ 0.69 $ 0.64 $ 0.57 Net income per common share - diluted $ 0.79 $ 0.77 $ 0.67 $ 0.63 $ 0.56 Cash dividends declared per common share $ 0.13 $ 0.13 $ 0.13 $ 0.12 $ 0.09 Cash dividends declared on common shares $ 2,516 $ 2,537 $ 2,540 $ 2,347 $ 1,777 Yield on average assets, annualized 1.52 % 1.54 % 1.39 % 1.47 % 1.33 % Yield on average earning assets 3.97 % 3.97 % 3.99 % 4.49 % 4.55 % Cost of average deposits 0.30 % 0.35 % 0.41 % 0.55 % 0.71 % Cost of average interest-bearing deposits 0.47 % 0.51 % 0.59 % 0.73 % 0.93 % Cost of average interest-bearing liabilities 0.86 % 0.89 % 0.97 % 1.06 % 1.23 % Accretion on loans to average earning assets 0.02 % 0.03 % 0.02 % 0.06 % 0.03 % Net interest margin 3.43 % 3.38 % 3.33 % 3.73 % 3.67 % RBB BANCORP AND SUBSIDIARIES SELECTED FINANCIAL HIGHLIGHTS (Unaudited, except for December 31, 2020) (Dollars in thousands, except per share amounts) Loan Portfolio Detail As of December 31, 2021 As of September 30, 2021 As of June 30, 2021 As of March 31, 2020 As of December 31, 2020 (dollars in thousands) $ % $ % $ % $ % $ % Loans: Commercial and industrial $ 268,709 9.2 % $ 276,387 9.7 % $ 277,080 10.2 % $ 286,016 10.5 % $ 290,139 10.7 % SBA 76,136 2.6 % 88,784 3.1 % 98,572 3.6 % 111,330 4.1 % 97,821 3.6 % Construction and land development 303,144 10.3 % 271,764 9.6 % 236,965 8.7 % 209,727 7.7 % 186,723 6.9 % Commercial real estate (1) 1,247,999 42.6 % 1,205,630 42.4 % 1,102,467 40.7 % 1,063,104 39.2 % 1,003,637 37.1 % Single-family residential mortgages 1,004,576 34.3 % 974,780 34.3 % 984,311 36.3 % 1,041,260 38.3 % 1,124,357 41.5 % Other loans 30,786 1.0 % 23,009 0.9 % 9,811 0.5 % 3,768 0.2 % 4,089 0.2 % Total loans (2) $ 2,931,350 100.0 % $ 2,840,354 100.0 % $ 2,709,206 100.0 % $ 2,715,205 100.0 % $ 2,706,766 100.0 % Allowance for loan losses (32,912 ) (32,231 ) (31,352 ) (30,795 ) (29,337 ) Total loans, net $ 2,898,438 $ 2,808,123 $ 2,677,854 $ 2,684,410 $ 2,677,429 (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. Three Months Ended Twelve Months Ended Change in Allowance for Loan Losses December 31, December 31, (dollars in thousands) 2021 2020 2021 2020 Beginning balance $ 32,231 $ 26,634 $ 29,337 $ 18,816 Additions to the allowance charged to expense 635 3,008 3,959 11,823 Net recoveries (charge-offs) on loans 46 (305 ) (384 ) (1,302 ) Ending balance $ 32,912 $ 29,337 $ 32,912 $ 29,337 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, 2021 and 2020, and September 30, 2021. (dollars in thousands, except per share data) December 31, 2021 September 30, 2021 December 31, 2020 Tangible common equity: Total shareholders' equity $ 466,683 $ 456,024 $ 428,488 Adjustments Goodwill (69,243 ) (69,243 ) (69,243 ) Core deposit intangible (4,075 ) (4,327 ) (5,196 ) Tangible common equity $ 393,365 $ 382,454 $ 354,049 Tangible assets: Total assets-GAAP $ 4,228,194 $ 3,801,807 $ 3,350,072 Adjustments Goodwill (69,243 ) (69,243 ) (69,243 ) Core deposit intangible (4,075 ) (4,327 ) (5,196 ) Tangible assets $ 4,154,876 $ 3,728,237 $ 3,275,633 Common shares outstanding $ 19,455,544 19,516,393 19,565,921 Tangible common equity to tangible assets ratio 9.47 % 10.26 % 10.81 % Book value per share $ 23.99 $ 23.37 $ 21.90 Tangible book value per share $ 20.22 $ 19.60 $ 18.10 View source version on businesswire.com: https://www.businesswire.com/news/home/20220124005765/en/
Yee Phong (Alan) Thian President and CEO (626) 307-7559 David Morris Executive Vice President and CFO (714) 670-2488