• Net Income: $7 million, or $0.39 per share.

• Net Interest Margin: Increased by 1 basis point to 2.68%.

• Loan Growth: Loans increased by $44 million, supported by $175 million of loan production at a weighted average rate of 7.26%.

• Deposits: Increased by $69 million from the last quarter.

• Non-Performing Loans: Totaled $60.7 million or 1.52% of total assets.

• Allowance for Credit Losses: Increased to $2.1 million with a $3.3 million provision for credit losses.

• Non-Interest Income: Increased by $2.3 million to $5.7 million.

• Non-Interest Expenses: Increased by $297,000 to $17.4 million.

• Tangible Book Value Per Share: Increased to $24.64.

• Share Repurchases: About 508,000 shares repurchased at an average price of $21.53.

• Warning! GuruFocus has detected 5 Warning Sign with RBB.

Release Date: October 22, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• RBB Bancorp (NASDAQ:RBB) reported a net income of $7 million, or $0.39 per share, for the third quarter of 2024.

• The company experienced a $44 million increase in loans during the third quarter, supported by $175 million in loan production at a weighted average rate of 7.26%.

• Deposits increased by $69 million from the last quarter, with non-interest bearing deposits remaining stable.

• RBB Bancorp (NASDAQ:RBB) successfully resolved and terminated its Consent Order in August, allowing the company to focus on growth and value-creating opportunities.

• The tangible book value per share increased to $24.64 due to earnings, accretive share repurchases, and a recovery of AOCI.

Negative Points

• Net interest margin increased by only 1 basis point, which was less than expected.

• Non-performing loans increased to $60.7 million, or 1.52% of total assets, with two loans migrating to non-accrual status.

• The allowance for credit losses increased by $2.1 million in the third quarter, driven by a $3.3 million provision for credit losses.

• RBB Bancorp (NASDAQ:RBB) experienced higher non-interest expenses, which increased by $297,000 to $17.4 million due to higher salaries and other expenses.

• The company's reliance on wholesale deposits, although reduced, still accounted for 4.8% of total deposits.

Q & A Highlights

Q: Can you provide more details on the expected net interest margin (NIM) expansion as we move into 2025? A: Lynn Hopkins, CFO, explained that RBB Bancorp is positioned as a liability-sensitive bank, with deposit rates expected to trend downward. The repricing of the CD portfolio, with $800 million set to reprice over the next quarter, is a key driver. Loan production is also coming in higher than the average loan rate, which should support NIM expansion. While exact magnitude is uncertain, the deposit spot cost is a good indication of the minimum amount of expansion expected.