RBB Bancorp Reports Second Quarter 2025 Earnings and Declares Quarterly Cash Dividend of $0.16 Per Common Share

LOS ANGELES, July 21, 2025 (GLOBE NEWSWIRE) -- 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 June 30, 2025.

Second Quarter 2025 Highlights

• Net income totaled $9.3 million, or $0.52 diluted earnings per share

• Return on average assets of 0.93%, compared to 0.24% for the quarter ended March 31, 2025

• Net interest margin expanded to 2.92%, up from 2.88% for the quarter ended March 31, 2025

• Net loans held for investment growth of $91.6 million, or 12% annualized

• Nonperforming assets decreased $3.6 million, or 5.5%, to $61.0 million at June 30, 2025, down from $64.6 million at March 31, 2025

• Book value and tangible book value per share⁽¹⁾ increased to $29.25 and $25.11 at June 30, 2025, up from $28.77 and $24.63 at March 31, 2025

The Company reported net income of $9.3 million, or $0.52 diluted earnings per share, for the quarter ended June 30, 2025, compared to net income of $2.3 million, or $0.13 diluted earnings per share, for the quarter ended March 31, 2025. Net income for the second quarter of 2025 included income from an Employee Retention Credit ("ERC") of $5.2 million (pre-tax), which was included in other income, offset partially by professional and advisory costs associated with filing and determining eligibility for the ERC totaling $1.2 million (pre-tax).

“Another quarter of strong loan growth and stable loan yields drove increasing net interest income and margin expansion in the second quarter,” said Johnny Lee, President and Chief Executive Officer of RBB Bancorp. “We also benefited from the receipt of a $5.2 million ERC in the second quarter. We continue to work through our nonperforming assets and remain focused on resolving our nonperforming loans as quickly as possible while minimizing the impact to earnings and capital.”

Net Interest Income and Net Interest Margin

Net interest income was $27.3 million for the second quarter of 2025, compared to $26.2 million for the first quarter of 2025. The $1.2 million increase was due to a $1.9 million increase in interest income, offset by a $698,000 increase in interest expense. The increase in interest income was mostly due to a $2.1 million increase in interest and fees on loans. The increase in interest expense was due to a $433,000 increase in interest on borrowings and a $265,000 increase in interest on deposits.

The net interest margin (“NIM”) was 2.92% for the second quarter of 2025, an increase of 4 basis points from 2.88% for the first quarter of 2025. The NIM expansion was due to a 3 basis point increase in the yield on average interest-earning assets, combined with a 1 basis point decrease in the overall cost of funds. The yield on average interest-earning assets increased to 5.79% for the second quarter of 2025 from 5.76% for the first quarter of 2025 due mainly to a 2 basis point increase in the yield on average loans to 6.03%. Average loans represented 85% of average interest-earning assets in the second quarter of 2025, as compared to 84% in the first quarter of 2025.

The average cost of funds decreased to 3.14% for the second quarter of 2025 from 3.15% for the first quarter of 2025, driven by an 11 basis point decrease in the average cost of interest-bearing deposits, partially offset by a 75 basis point increase in the average cost of total borrowings. The average cost of interest-bearing deposits decreased to 3.66% for the second quarter of 2025 from 3.77% for the first quarter of 2025. The overall funding mix for the second quarter of 2025 remained relatively unchanged from the first quarter of 2025 with total deposits representing 90% of interest bearing liabilities and average noninterest-bearing deposits representing 17% of average total deposits. The average cost of borrowings increased as $150 million in long term FHLB advances matured during the first quarter of 2025, the majority of which were replaced and repriced at current market rates. The all-in average spot rate for total deposits was 2.95% at June 30, 2025.

Provision for Credit Losses

The provision for credit losses was $2.4 million for the second quarter of 2025 compared to $6.7 million for the first quarter of 2025. The second quarter of 2025 provision for credit losses reflected an increase in general reserves of $1.5 million due mainly to net loan growth, and an increase in a specific reserve of $924,000 related to one lending relationship. The second quarter provision also took into consideration factors such as changes in the outlook for economic conditions and market interest rates, and changes in credit quality metrics, including changes in loans 30-89 days past due, nonperforming loans, special mention and substandard loans during the period. Net charge-offs of $3.3 million in the second quarter related to loans which had these specific reserves at March 31, 2025. Net charge-offs on an annualized basis represented 0.42% of average loans for the second quarter of 2025 compared to 0.35% for the first quarter of 2025.

Noninterest Income

Noninterest income for the second quarter of 2025 was $8.5 million, an increase of $6.2 million from $2.3 million for the first quarter of 2025. The second quarter of 2025 included other income of $5.2 million for the receipt of ERC funds from the IRS. The ERC was a grant program established under the Coronavirus Aid, Relief, and Economic Security Act in response to the COVID-19 pandemic and these funds relate to qualifying amended payroll tax returns the Company filed for the first and second quarters of 2021.

Upon receipt of the ERC funds, certain professional and tax advisory costs associated with the assessment and compilation of the ERC refunds became due and payable. These amounts totaled $1.2 million and are included in legal and professional expense in our consolidated statements of income for the second quarter of 2025. There were no such ERC amounts received or associated costs recognized during the first quarter of 2025 or the quarter ended June 30, 2024.

The second quarter of 2025 also included a higher gain on sale of loans of $277,000 and recoveries associated with a fully-charged off loan acquired in a bank acquisition of $350,000, the latter included in "other income."

Noninterest Expense

Noninterest expense for the second quarter of 2025 was $20.5 million, an increase of $2.0 million from $18.5 million for the first quarter of 2025. This increase was mostly due to higher legal and professional expense of $1.4 million, of which $1.2 million was attributed to the aforementioned ERC advisory costs, and a $437,000 increase in salaries and employee benefits expenses. The increase in compensation includes higher incentives related to sustained production levels, the impact of annual pay increases, and approximately $330,000 in costs related to executive management transitions, offset by lower payroll taxes. The efficiency ratio was 57.2% for the second quarter of 2025, down from 65.1% for the first quarter of 2025 due mostly to higher noninterest income related to the ERC, partially offset by higher noninterest expense related to the ERC advisory costs.

Income Taxes

The effective tax rate was 27.8% for the second quarter of 2025 and 28.2% for the first quarter of 2025.

Balance Sheet

At June 30, 2025, total assets were $4.1 billion, an $80.6 million increase compared to March 31, 2025, and a $221.9 million increase compared to June 30, 2024.

Loan and Securities Portfolio

Loans held for investment ("HFI") totaled $3.2 billion as of June 30, 2025, an increase of $91.6 million, or 12% annualized, compared to March 31, 2025 and an increase of $187.0 million, or 6.1%, compared to June 30, 2024. The second quarter of 2025 net loan growth included $182.8 million in new production with an average yield of 6.76%. The increase from March 31, 2025 was primarily due to a $57.3 million increase in single-family residential ("SFR") mortgage loans, a $28.0 million increase in commercial real estate ("CRE") loans, a $5.3 million increase in Small Business Administration ("SBA") loans and a $2.7 million increase in commercial and industrial ("C&I") loans. The loan to deposit ratio was 101.5% at June 30, 2025, compared to 100.0% at March 31, 2025 and 100.9% at June 30, 2024.

As of June 30, 2025, available for sale securities ("AFS") totaled $413.1 million, an increase of $35.0 million from March 31, 2025, primarily related to purchases of $68.0 million, offset by maturities and amortization of $33.0 million during the second quarter of 2025. As of June 30, 2025, net unrealized losses totaled $23.1 million, a $1.9 million decrease, when compared to net unrealized losses of $25.0 million as of March 31, 2025.

Deposits

Total deposits were $3.2 billion as of June 30, 2025, an increase of $45.6 million, or 5.8% annualized, compared to March 31, 2025 and an increase of $164.6 million, or 5.4%, compared to June 30, 2024. The increase during the second quarter of 2025 was due to a $29.9 million increase in interest-bearing deposits coupled with a $15.7 million increase in noninterest-bearing deposits. The increase in interest-bearing deposits included increases in time deposits of $59.5 million, offset by decreases in interest-bearing non-maturity deposits of $29.5 million. Wholesale deposits totaled $183.8 million at June 30, 2025, an increase of $25.3 million compared to $158.5 million at March 31, 2025. Noninterest-bearing deposits totaled $543.9 million and represented 17.1% of total deposits at June 30, 2025 compared to $528.2 million and 16.8% at March 31, 2025.

Credit Quality

Nonperforming assets totaled $61.0 million, or 1.49% of total assets, at June 30, 2025, down from $64.6 million, or 1.61% of total assets, at March 31, 2025. The $3.6 million decrease in nonperforming assets was due to $3.3 million in net charge-offs and $1.7 million in payoffs and paydowns, partially offset by $1.4 million in additions from loans migrating to nonaccrual status in the second quarter of 2025. Nonperforming assets included one $4.2 million other real estate owned (included in “accrued interest and other assets”) at June 30, 2025 and March 31, 2025.

Special mention loans totaled $91.3 million, or 2.82% of total loans, at June 30, 2025, up from $64.3 million, or 2.05% of total loans, at March 31, 2025. The $27.0 million increase was primarily due to the addition of loans totaling $30.1 million and $1.6 million in balance increases, partially offset by the downgrade of two CRE loans totaling $4.0 million to substandard-rated loans and payoffs and paydowns totaling $660,000. As of June 30, 2025, all special mention loans were paying current.

Substandard loans totaled $91.0 million at June 30, 2025, up from $76.4 million at March 31, 2025. The $14.6 million increase was primarily due to the downgrades totaling $20.6 million, partially offset by net charge-offs totaling $3.3 million and payoffs and paydowns totaling $2.7 million. Of the total substandard loans at June 30, 2025, there were $34.2 million on accrual status.

30-89 day delinquent loans, excluding nonperforming loans, totaled $18.0 million, or 0.56% of total loans, at June 30, 2025, up from $5.9 million, or 0.19% of total loans, at March 31, 2025. The $12.1 million increase was mostly due to $15.5 million in new delinquent loans, offset by $2.2 million in loans returning to current status, $798,000 in loans migrating to nonaccrual status, and $427,000 in paydowns and payoffs. The additions include an $8.5 million CRE loan that has since been brought current.

As of June 30, 2025, the allowance for credit losses totaled $51.6 million and was comprised of an allowance for loan losses of $51.0 million and a reserve for unfunded commitments of $629,000 (included in “accrued interest and other liabilities”). This compares to the allowance for credit losses of $52.6 million, comprised of an allowance for loan losses of $51.9 million and a reserve for unfunded commitments of $629,000 at March 31, 2025. The $918,000 decrease in the allowance for credit losses for the second quarter of 2025 was due to net charge-offs of $3.3 million, offset by a $2.4 million provision for credit losses. The allowance for loan losses as a percentage of loans HFI decreased to 1.58% at June 30, 2025, compared to 1.65% at March 31, 2025, due mainly to net charge-offs of amounts included in specific reserves at March 31, 2025. The allowance for loan losses as a percentage of nonperforming loans HFI was 90% at June 30, 2025, an increase from 86% at March 31, 2025.

Shareholders' Equity

At June 30, 2025, total shareholders' equity was $517.7 million, a $7.3 million increase compared to March 31, 2025, and a $6.4 million increase compared to June 30, 2024. The increase in shareholders' equity for the second quarter of 2025 was due to net income of $9.3 million, lower net unrealized losses on AFS securities of $1.3 million and equity compensation activity of $1.1 million, offset by common stock cash dividends paid totaling $2.9 million and common stock repurchases totaling $1.5 million. The increase in shareholders' equity for the last twelve months was due to net income of $23.0 million, lower net unrealized losses on AFS securities of $4.9 million, and equity compensation activity of $2.5 million, offset by common stock repurchases totaling $12.5 million and common stock cash dividends paid totaling $11.5 million. Book value per share and tangible book value per share⁽¹⁾ increased to $29.25 and $25.11 at June 30, 2025, up from $28.77 and $24.63 at March 31, 2025 and up from $28.12 and $24.06 at June 30, 2024.

Dividend Announcement

The Board of Directors has declared a quarterly cash dividend of $0.16 per common share. The dividend is payable on August 12, 2025 to shareholders of record on July 31, 2025.

Corporate Overview

RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. As of June 30, 2025, the Company had total assets of $4.1 billion. Its wholly-owned subsidiary, Royal Business Bank, is a full service commercial bank, which provides consumer and business banking services predominately to the Asian-centric 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 on 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, 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, three 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 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 on Tuesday, July 22, 2025, to discuss the Company’s second quarter 2025 financial results.

To listen to the conference call, please dial 1-888-506-0062 or 1-973-528-0011, the Participant ID code is 710803, conference ID RBBQ225. A replay of the call will be made available at 1-877-481-4010 or 1-919-882-2331, the passcode is 52690, approximately one hour after the conclusion of the call and will remain available through August 05, 2025.

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, the effectiveness of the Company’s internal control over financial reporting and disclosure controls and procedures; the potential for additional material weaknesses in the Company’s internal controls over financial reporting or other potential control deficiencies of which the Company is not currently aware or which have not been detected; business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic markets, including the tight labor market, ineffective management of the United States (“U.S.”) federal budget or debt or turbulence or uncertainly in domestic or foreign financial markets; the strength of the U.S. economy in general and the strength of the local economies in which we conduct operations; adverse developments in the banking industry highlighted by high-profile bank failures and the potential impact of such developments on customer confidence, liquidity and regulatory responses to these developments; possible additional provisions for credit losses and charge-offs; credit risks of lending activities and deterioration in asset or credit quality; extensive laws and regulations and supervision that we are subject to, including potential supervisory action by bank supervisory authorities; compliance with the Bank Secrecy Act and other money laundering statutes and regulations; potential goodwill impairment; liquidity risk; failure to comply with debt covenants; fluctuations in interest rates; risks associated with acquisitions and the expansion of our business into new markets; inflation and deflation; real estate market conditions and the value of real estate collateral; the effects of having concentrations in our loan portfolio, including commercial real estate and the risks of geographic and industry concentrations; environmental liabilities; our ability to compete with larger competitors; our ability to retain key personnel; successful management of reputational risk; severe weather, natural disasters, earthquakes, fires, including direct and indirect costs and impacts on clients, the Company and its employees from the January 2025 Los Angeles County wildfires; or other adverse external events could harm our business; geopolitical conditions, including acts or threats of terrorism, actions taken by the U.S. or other governments in response to acts or threats of terrorism and/or military conflicts, including the conflicts between Russia and Ukraine, in the Middle East, and increasing tensions between China and Taiwan, which could impact business and economic conditions in the U.S. and abroad; tariffs, trade policies, and related tensions, which could impact our clients, specific industry sectors, and/or broader economic conditions and financial market; public health crises and pandemics, and their effects on the economic and business environments in which we operate, including our credit quality and business operations, as well as the impact on general economic and financial market conditions; general economic or business conditions in Asia, and other regions where the Bank has operations; failures, interruptions, or security breaches of our information systems; climate change, including any enhanced regulatory, compliance, credit and reputational risks and costs; cybersecurity threats and the cost of defending against them; our ability to adapt our systems to the expanding use of technology in banking; risk management processes and strategies; adverse results in legal proceedings; the impact of regulatory enforcement actions, if any; certain provisions in our charter and bylaws that may affect acquisition of the Company; changes in tax laws and regulations; the impact of governmental efforts to restructure the U.S. financial regulatory system and increased costs of compliance and other risks associated with changes in regulation, including any amendments to the Dodd-Frank Wall Street Reform and Consumer Protection Act; the impact of changes in the Federal Deposit Insurance Corporation ("FDIC") insurance assessment rate and the rules and regulations related to the calculation of the FDIC insurance assessments; the effect of changes in accounting policies and practices or accounting standards, as may be adopted from time-to-time by bank regulatory agencies, the SEC, the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setters; fluctuations in the Company’s stock price; restrictions on dividends and other distributions by laws and regulations and by our regulators and our capital structure; our ability to raise additional capital, if needed, and the potential resulting dilution of interests of holders of our common stock; the soundness of other financial institutions; our ongoing relations with our various federal and state regulators, including the SEC, FDIC, FRB and California Department of Financial Protection and Innovation; 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 for the year ended December 31, 2024, 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.

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Non-GAAP Reconciliations

Tangible Book Value Reconciliations

Tangible book value per share is a non-GAAP disclosure. Management measures tangible book value per share to assess the Company’s capital strength and business performance and believes this is helpful to investors as additional tools for further understanding our 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 as of the dates indicated.