RBB - Earnings call transcript Q4 2020

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Operator

Good day, everyone, and welcome to the RBB Bancorp Earnings Conference Call for the Fourth Quarter and Fiscal Year 2020. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] And please note that today's event is being recorded. I'd now like to turn the conference over to Catherine Wei.

Catherine Wei

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

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

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

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

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

Alan Thian

challenging today. Thank business you, a Catherine. demonstrate of XXXX that finished We us strong you everyone, with quarter model. and joining Good our concluding year day, the for fourth results, thank differentiated resilience

the Fourth the net anticipate sales and benefitted an Higher we the reduction the to on first growth loan growth will from assets portfolio expenses increased our growing XXXX quarter. year anticipate quarter. similar loan the earnings modestly year to which in continue but as we fourth from pre-provision modest a significantly. expect of managed pretax, our while last finish gains interest the quarter, net in income in For we first loan our in quarter increase following payoffs margin the strong saw third years. in growth full our quarter We in resulted anticipated limited with

well the now loans a the share. quality and This liquidity. consistent and our than Asset future and pre-pandemic had with solid with X% represent decrease Deferred remain approved ample for on its company. would to $X.XX less our continue Board loans capitalized investment. of Last to guidance once clarity a of we dividend and access we Directors we held returns to of that quantitative at week, even potential dividend remains is per higher increase more our earnings restore the level level conditions business all dividend

strong to our all call take Before and last from the over I work bank's a these David, and the support high dedication hand moment like people's and employees has investors life. over our to The years. to economy pandemic their the for I'd thank disrupted

Our financial of employees remained and David? companies clients focused serve. on we the the needs our serving

David Morris

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

increased average due cost higher of benefited net interest income to earning income in million factors; several $X.X assets deposits. our and improvement net Our from first

to loan as by sales in Second, Fannie qualified noninterest million about income continue $X.X Mae the mainly market. increase, increased

increase first similar quarter. the -- will the we quarter, margin prior pace mortgage continue fourth third the Although at for it optimistic can that forecast, in for was sales be difficult cautiously interest an are Net a X.XX% year to loan the assets. Loans the declines continue totaled and quarter yield in payoff $X.X X.XX% September an earnings decrease than in a to our outpace held originations as from X.XX% investment the Higher billion of client cost $XX CRE and sales of the in from third and our for the quarter liabilities otherwise XX, of and of up exceeded to normal quarter reduced million resulting payoffs for quarter. impact loans. sales in Mortgage loans million loan in of $XX.X our CRE $XX as and XX. in loan million decreasing a sales. in also the anticipated C&I mortgage million robust December of from of $XXX the due portfolio the decrease some originations SBA

first we that grow to to of portfolio anticipate Alan growth last loan expected mentioned, our quarter, will for loan be year. similar the As but year slightly in the

on demand Our in basis quarter average for from the the stable we Deposits see eight usual assets quarter basis was quarter end December. X.XX% every with were earning the third from prior billion of deposits from and yield the the the decrease $X.X year. relatively point down points that prior at XX

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

quarter deposits. X.XX% our the in $X.X to continue million mature basis Nonperforming $XX.X assets. to assets decline total of million expect CDs of cost deposits five the are points by and as higher increasing in replaced to lower to increased We first the cost quarter cost by

have continued mentioned, Alan to loan decreased. deferred As

in loans As totaling of of we about million. million. principle January had $XX.X XX, with Of outstanding two $XX these XX deferment loans

X% for provision any quality, higher and making to expect deferment the our of now pandemic, principal loan slightly we still target is rate primarily loan their million allowance Because impact losses are our to COVID-XX of COVID-XX interest deterioration losses For last future our in provision payments. related credit and the attributable $X quarter balances of total credit quarters. in above our moderate of the fourth

the Our call. regulatory up minimum. our open to above ratios questions. With capital levels Operator are capital that, happy strong with please remained well your take we

Operator

Piper from Your first question Sandler. with instructions] [Operator Nick Cucharale is

Unidentified Analyst

Hi guys. Nick. It's [indiscernible] for

business. investors? and sales if could on rebound the wondering on us you to private to the So in I gain expansion little the give a margin sales see color was it's nice the

Alan Thian

and Mae loans that loans of were [ph]. we're XXX now. we pricing that XXX.XX saw XXX on Fannie mostly Fannie non-QM priced to million at right $XX were loans These only There they Mae is on getting

Unidentified Analyst

the And all-in on commentary maturing and I deposit costs appreciate the 'XX. the XQ CD into

what XX offering do rates on March quarter Just your end? amount curious the the are have current CDs scheduled mature ended you in to of and

Alan Thian

Yes do. I

I up. can give Just right second, it so it I have here. pull one

reprice have quarter. is The now. have that we X.XX%. Right interest the average our a X.X% for right We it's $XXX XXX in about first were rate -- now on rate CDs will and over $XXX,XXX CD million

Unidentified Analyst

you Perfect. you. could, have in XQ. that the last you one repurchase then And Thank just one some back looks I like program October shares in back bought may if reinstated

Just of remind curious to the authorization? is repurchasing as your quantity what us on current your and can appetite for share you shares

Alan Thian

only is period. and shares the XXX,XXX There we're have about plan, under still the so in okay blackout we -- left still our

and So shares now, months another of specifics the trading and they're to volume that that told to the get we right that XXX,XXX because we probably we've two continue the will repurchase, people our still plan will limitation to the take if right continue it the three the put, plan volume probably of now. through in place

Operator

is next question Your Kelly KBW. from Motta with

Kelly Motta

year, comments on loan tripping it of… XXXX that is to clarify was last mean some or you clarity growth similar to that growth was the I I similar appreciate maybe organic PGB the or outlook. to would be wanted I do just out inclusive hoping

Alan Thian

…our organic growth.

are by and year, we and will said last deposits the loans for I we high our grow low plans digits double what year. think digits, very single that's

Kelly Motta

you book decision up question than volume active not It's last value more where was a trading the rather much. the to function Thank be helpful. just then more tangible And given very the of building wondering about below is stock on appetite… your repurchase prior quarter, buybacks,

Alan Thian

day. every out were We

out Just we day. We get back. our couldn't were shares every

bought day we X,XXX shares. back Some a

Kelly Motta

And then that credit, and to for there any mainly additional me you're expecting you next can cost CECIL prepare you're is that just if adopting when remind on year?

Alan Thian

okay. we recall ECC by rundown because to has December XXXX XX, be fully that's CECIL implemented when

So CECIL our our will January XXXX. the six closures months at the Having six have and forth to in have we that. we that, prior months time said to equity and Q entry put starting prior in that's that point have XX, have running be when we towards so to to

concrete we reports economic of into may such not also do have have are and have have we We So that model moment the is -- XXXX know we have to model. give early right have of numbers a the We the don't to next not But that first will we -- validation step now. what of of our put model that that time. may is expense extra okay. game do do whatever this don’t data have the at buy plan to we that and our one sometime in either validation the veto that have we not the have any this the at don't that

Kelly Motta

mind be and so QX? expenses, that the release doing this a know kind for understanding for our other with implementation expense that are XQ [ph] Okay, correctly, saves will And actual any in am the okay. CECIL if then XXXX I of model, you there incremental million checking $XX you I with around your I mid went in cost in off of branches you we through budgeting should in keep you're back. know

to gives the what of the are how now? wondering outlook kind just and you So expense relative like takes of

Alan Thian

typically the $XXX,XXX after quarter, a quarter expenses Okay couple probably okay but our to quarter remainder very our year go the highest fourth it'll be similar of the of that, our quarter. fourth and although is first the year for down typically

that that that is that same first So that see I expenses will is expenses and higher services higher And of higher and the quarter for I is a you'll benefit lot also about for quarter. reductions expenses, think and quarter a couple that. are tax quarter for after the would is are first professional the there $XXX,XXX expense first see of then the our be next

Operator

instructions] [Operator is with next Stephens. Your Andrew question Terrell from

Andrew Terrell

make of kind right. loans got basis, Similar does of of growth last just commentary or organic wanted is two start assumption round this for PPP loan on terms growth on be year that? I include rate to to an going exclusive sure I've just to any that to the that in

David Morris

we'll of the see don't to were applications see also the we're are think of just do plus player it excluding with of huge I a to we're forgiveness than and that the but know we think beginning but PPP we're on last don't patient in. getting year I now some we'll $XX -- more application, loans. is year that beginning get getting We million this now, not PPP don't just I That a

growth okay. on the that goes wipe see forgiveness the go-round probably we'll So first just as for out any

Andrew Terrell

point basis Okay. quarter. so just this XX margin quickly step Got it. really about That's helpful. down Maybe just curious another

are purchasing Just yield curious right securities and of new assume bad given is now yield book further it from what type are that of to you're getting you purchases debt margin here? of accretive the staying on just

David Morris

we is about able commercial which what to use be to mean What right so have XX-XX the that by paper lot and now and used to points something going quarter. $XXX that in money forth than we in on money I'll now XX of call basis I basis a to getting only and to in liquid points we're What get lower have we're and better that money. probably we yielding first put money, is million

during to loan growth we're of fees securities some going put of the that first quarter. So

Andrew Terrell

or built quickly on like that? [indiscernible] guess the couple me where to maybe over think if X.X%. then the the on a reserves, reserve maintain you And Do for reserve releasing flat how trends guys the up would thoughts also some you I of to next the just quarters. just last is you here about of kind reserve one with

Alan Thian

then. there We're adjusting amount. where is until the raise be We're dollar be we do reason time, COVID any the will known and kind to not reserves mean a budget little We some reserve reserves our X.XX%. tiny are. they could fully of going significant that because we keep bit reserve at I at

how that's you get loan So growth.

pretty deal in should good that's you your So model, that's how average. a

the continue it's because grow we depressed So loans as AOOO our as to the that of such. provision artificially our discounts that we we include model will because in that purchase have to not purchased we continue grow, the do

Andrew Terrell

Thanks my helpful. I'll back. That's taking very for Okay. questions. step

Operator

is question Motta KBW. from next Your Kelly with

Kelly Motta

seems industry a am pages M&A talked I years been you’ve of pace Thanks for past small just the if you bank any the buying couple thanks? of about banking follow-up, just your the picking wondering bit, past, the across kind [ph] of given the it in like M&A and in up conversation there of year that is capital, a

Alan Thian

say that is in there there I increase nothing is eminent. that would is some talk,

but gets is active to buy stronger, stock moment, our in our buy main our are be goal right our these begin really the back at to right price main capital that, is now will goal we extra As stock okay.

Operator

no are questions further in queue there at And this time.

Alan Thian

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

Operator

today's gentlemen, participating. conference call. you this concludes Ladies for and Thank

now disconnect. may You

RBB Bancorp (RBB) 26 Jan 212020 Q4 Earnings call transcript