RBB - Earnings call transcript Q3 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, everyone, and welcome to the RBB Bancorp Earnings Conference Call for the Third Quarter of 2020. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. [Operator Instructions] And please note that today's event is being recorded. Thank you. would turn I to conference time, Wei. Catherine this like the to over At ahead. go Please

Catherine Wei

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

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

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

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

Alan? Alan call over would I turn like Now, Thian. to to the

Alan Thian

results, joining I day, in then providing thank and more performance you start us quarter detail. David of overview Thank you, by everyone, our discuss will financial and third Catherine. our today. Good a brief will for

and exposure previous assets results our estate generated earnings, management opportunity Effective New and growth this expanding our which an were entered to back. with acquisition we this margin of of will quarter's growth C&I are created that our net of loans continue attractive franchise, we expansion forced deposit as and commercial two and I'm the originate strength York underwriting but came returns new in demonstrated loan Much confident strong market quarter region, Bank. the third feel as growth in we to interest American competitors growth. rigorous Our the pull in to strategy slowly we'll our our from International which ago real the resiliency get of validates of these We our standard years believe First economy that sure loans. for we questions, optimistic maintain and normal.

to a Our from we efforts and strong deposit rate was by as ongoing costs our declines environment. franchise benefited declining deposit deposit growth in accompanied improve

Our to effect. efforts deposit the to improve take franchise are beginning

quality and remained with asset X% outstanding. just XX% solid over decreased quarter to loans of to remained liquidity. ample Deferred Our outstanding access loans the well capitalized

outlook earnings with and the to our decided increase dividend Given the to our our share the would guidance per we dividend more quarter. becomes results increase consistent that when this certain, improved Board $X.XX

with We a the loan performance. While allocation our portfolios quarter of economic sudden balance, paying our we capital increase very financial delivered proper I not stock were growing flexibilities franchise. pandemic, believe maximum restoration remaining the we in resumption to pleased strike that and combined the $X.XX deposit program, a before when full this strong repurchase with our earnings while while the third deterioration. improving am the event of

over I credit clients pandemic will from the for financial our to than call sheet, has stronger balance further emerge David? to results. needs of combined the expanding and conservative presence national the us focus second discussion Our David with culture ever. servicing our flexible positioned now our quarter of turn on

David Morris

before income earlier X% Alan. our from Thank to reviewing highlights a moving We reported the sheet. grew and start quarter. $XX of income quarter. I'll of of to per some in by you, million our or of diluted on $X.XX from quarter income the million an $X.X from share year balance $X.X XX% pre-provision statement record third last the pre-tax Net prior million, increase

factors. Our net income benefited from several

$X.X our First, improvements cost increased loan net income due and in of to interest deposits. growth million

more we were Mae income Fannie non-interest as in $X.X about returned, by market. Second, sell loans activity market able increased as the qualified million to mainly

interest million continue loans, liquidity carry. $XX.X excess Third, and decline and the XX, was non-interest in million to organic This in growth the X.XX% loans Net primarily the up and began the earning commercial increase quarter, loans. increase million roll growth our included second expenses annualized $XXX.X the year expense more declined investment the increase on to and $XX.X $X.X our to off. about merger-related a we as an billion from September XX. $XX.X quarter of construction a X.XX% made for June cost increase in than for assets stable temporary third liabilities development estate for commercial loan was as land real Loans prior, yield increasing in industrial in totaled in decline margin as XX.X% from $XXX,XXX of million due by from held and

this extending management prior levels. in peers. on capital our of CRE low of was and quarters worth concentration CRE our current is quarter regulatory C&I Alan's by our comments to of I growth exposure XXX% A that our our possible much relatively made and capital, it's effective compared think

for of we this, forced and to As loans residential are CRE for loans high flat competitors advantage at investment. our step quarter family take and our with make Single XX% stayed held the mortgages back. billion class relatively a of largest when C&I result opportunities of asset quality $X.X can to remained

credit our noting the residential that worth concerns mortgage LTV industry-wide about XX%. Given was quality, average portfolio it's on

by X.XX%, XX points quarter, the from was was the Deposits assets year. billion XX, increase average prior down September million from at quarter June only $XX growth. increased were by $XXX from by prior we points for non-maturity rates interest-bearing basis $XX including which Our basis and deposits $XX yield of deposits but increased XX. deposits a million to $X.X took of million as our fund CDs, Time Non-interest loan X advantage earning increased brokered the $XX on million favorable million. in increase bearing

the prior Our cost X.XX%, points basis quarter points year. deposits the XX and prior basis from was of was XX interest-bearing quarter for from which down the

the $XX.X by third million are quarter, $XXX,XXX but lower to the quarter fourth quarter, X a deposits. in declined attributable as loan X.XX% due provision expect by cost to credit to CDs $X.X cost cost in assets. the to deposits losses total in our growth We points and and balances of replaced impact Non-performing the higher basis COVID-XX third decline of by We to million continue mature increased the higher on assets of pandemic. to primarily took of

been for target loan losses X%. our allowance Our close has to

So, absent any deterioration to our in provision moderated credit future expect quality, quarters. COVID-XX-related be in we

resumed XX strong please outstanding. $XX.X was questions. the to with XX%, remained loan making and million our XX% large the and LTV represent One deferment our resolve up October a $XXX XX, was a them principal only loans quick of open office with borrowers remaining call. loan of minimums. deferrals came million to about all cases, are June working above with for we XX.X%. for as for CRE levels Two upfront. XX% down commercial retail take In both we we borrowers an loans. amount the their other that, capital FERC general regular loans deferred $XX million from of payments on deferrals most with in of it LTV dollar regulatory questions. well ratios word up a to are of I'll open before an Operator, happy the The capital Our on finish your With one with and the

Operator

have do Yes, Please Piper sir. [Operator Cucharale ahead. Nick with from go Sandler. Instructions] a question Okay, we

Nick Cucharale

Hi guys, good afternoon.

David Morris

Nick. Hey,

Nick Cucharale

the mortgage expectation I levels help your the quarter. On Can that returning coming your quarters? heard you previous quantify the fourth over commentary in to line on sales,

David Morris

levels quarter. as first will to prior increase but we Okay. Nick, next production we non-QM sales, going have in year. mortgage in it in I in I the Fannie to that increase loan expect are continued quarters the think quarter, the don't fourth do the to first, the especially said comes be to we back previous side the And coming levels, think fourth in think then I the will of quarter back Mae second on

Okay?

Nick Cucharale

to And Okay. production of a you're consistent or single-family sold? little then be higher expecting just bit production the a percentage relatively

David Morris

production would to about be the expect same. the I

Okay?

Nick Cucharale

shares That's remind Can just us remain on current Yes. you how authorization? good. repurchase many your

David Morris

XXX,XXX. about There's

Nick Cucharale

Then lastly, provision on remarks. the just moderated

credit be points guidance is of the expectation of continue you allowance, a You reserve that do periods? a your build? more XX quarter. future Understanding fluid function this Or provision prudently that the pretty will is build for situation, in of reserve continued in the increase basis anticipate your previous you much a to loss content hit

David Morris

We - point want points X would I say, that to basis a is continue still we would X reserve we basis there basis on. build have points to X want

is as we expect them think loans two haven't of about on concerned, I quarter are loans, until There like don't other do closed and loss $XXX,XXX some far that guess that, horizon losses I declared we over. we to we crisis believe. the fourth every around the hotel And cleanup yet talked we've quarter. As maximum, know that at in there's of only there may anything COVID-XX besides two be the have close the

Nick Cucharale

my taking for you questions. Thank

Operator

KBW. is Kelly from next The question Motta ahead. go Please with

Kelly Motta

afternoon. if at when growth pulling that in was are you commentary been your clip? rapid any and grow loan proactive Hey I to back. of you competitive wondering the quarter good others Thanks. your landscape fourth really early loan now about change expect the continue there's ability help can if the balances everyone, be a to appreciate and I

David Morris

Okay.

fourth of that year, growth our Kelly two quarter. second followed then is the so third best quarter and first for quarters know the and the typically quarter are that and Just our worst by the you loan

grow the that as as expect strong did fourth third quarter in in we don't will the I quarter. So we

able a we Although we'll very very, much. pipeline believe be we that have grow strong to don't

so quarter I have construction you The I think have a our a lot did last multifamily, second growth we of and realize is safer in, of to although forth this is lot call too. CRE work class but thing would

Kelly Motta

Thanks.

there. next kind You of until question actually my led

York you're lot you just a of to growth you of help putting CRE color asset around if I'm us maybe was LTVs that on could safety provide have. New in any class market. that kind mentioned of the City You wondering gauge there, the that

David Morris

XX%. is average its Kelly,

Kelly Motta

thank one in… if I maybe And you. sneak sorry. Great, could another

David Morris

on the months deferment, That's top of that. P&I a six-month plus of six

Okay.

six that of P&I the That's loan we not process. reserve do months. booked every So required into we a just underwriting

Okay?

Kelly Motta

strong high really seem basis with That's in on Wondering function that helpful. then helps holds was like anything or a average and in kind was more up margin, hang of on core the if bit And or just loan quarter assets. earning it the really if and any yields Yes. pressure it there it loan a a unusual, unusually of the to was mix? that fees helping anything

David Morris

right function is of mix. of It's of function a about deposit. a mix in decrease it's - decrease it's of the not really, Overall now, the NIM function function and a the in a yield, and it's the the mix really

Kelly Motta

Right. is resi in on kind where just mortgage? CRE help can out question, you versus as And production terms yield of new me a just final in, coming of

David Morris

anywhere loans, bit still our that. X%. to Resi X.XX%, other higher about our non-QM the than is probably the same even construction is mortgage, are little I'm at CRE rate, loans going X%, say

Okay?

Kelly Motta

Great, thank you.

Operator

comments. Instructions] to turn over conference Thian at this to time for Alan are there no would [Operator I like questions. closing the And any further

Alan Thian

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

Operator

conference Ladies call. participating gentlemen thank you and today's in for

You may now disconnect.

RBB Bancorp (RBB) 27 Oct 202020 Q3 Earnings call transcript