Earnings call transcript Q2 2023

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Operator

Good day, everyone, and welcome to the RBB Bancorp results for the Second Quarter of 2023. At this time, all participants have been placed on a listen-only mode and we will open the floor for your questions and comments after the presentation.

It is now my pleasure to turn the floor over to your host, Catherine Wei. Ma'am the floor is yours.

Catherine Wei

Thank you. thank for joining XXXX. the and RBB to everyone, results Bancorp's second day, you us for discuss Good quarter of me and Lee; Executive Chief Chief Jeffrey Yeh; Ko; today Morris; Officer, Officer, Officer, With and Gary Vincent Administrative President Fan; Chief Officer, Credit Banking Risk Financial Chief David Johnny Chief Officer, Chief Alex Officer, is Liu. on the presentation and results, and open which found available in the that website will investor can and summarize earnings Investor briefly Alex release then David, up Johnny to press Relations the our are your be we'll call questions.

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

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

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

over turn to call Morris. to like the I'd Now, David David?

David Morris

Catherine. you joining you, for us today. Thank day, everyone, Good thank and

how governance our presentation. visible steps corporate hiring is Johnny's the and have in These reputation his Chief Business us strengthen on Banking past our a page and our taken like we've pleased XX Johnny earnings say Royal actions team, of to President welcome X of Lee adopt join leadership and summarized to enhance Board industry-leading family First I and to experience Bank to role. someone Directors are we policies. would are months the of management over one thing first, more with the Officer as

named CEO These Officer, we I run Administrative Banking. Commercial a management bench to Manager of Head team year, have Branch to franchise. Since February RBB Financial banking Coast Manager, Officer, the Chief Lending new improved East SBA additions in and last Chief and of our an a deepened added was our nationwide have President, ability

wealth new employees, of the to experience. community Directors with enhanced directors banking and our Chairman management directors, addition Board classified including our directors. new Of In as leadership, independent with nine our management, we extensive are regulatory, six risk executive XX

shareholder value us ago, a were and community, are of policies of charters are and and we We new include a at departure think as we show also to governance update increasing the mention adopted look corporate bank enhanced that director hopeful but former today. and and Board employees serving a we repeat directors. the are folks serious we our Chair, how Board will events because preventing that about of ethics. bank committee I as standards they want the code year led standards, these actions the not new which to And I independent independent

it think With I couple Alex. of before items I a over important the all address to quarter it's that said, hand in to

the First, loans. we of nonperforming are in aware increase

delinquent loans last second from days in the loans quarter. nonperforming quarter, special decreased between XX XX increased the and classified, While mention and

for in from the to loans mention past million $XX the special Specifically quarter. significantly million decreased $XX

we credit decrease the liquidity in our quarters. lending, loans, bring on in our and few over are our slowed Second, to and to resulted efforts bank's our have ratio liquidity way loan-to-deposit have the sub-XX% tightening target. we down past as our well strengthened These increased a

will lending customers core our and with C&I to originate new significant create deposits. We continue to that lend to expect opportunities and come loans experience Chinese

Johnny, Alex the Now, handing the will a few over comments over it make discuss before to financial to who results. I'll call to hand Johnny?

Johnny Lee

Royal Thank Banking you, how been Business for as Officer. David. Bank I'd the am impressed team. join excited by the than and a dedication I've month to energy Chief President have like to and just here a say little whole I more been of and

We track shareholder build have the a to a successful build and of real opportunity on to to continue value. record bank,

As loan years C&I cost reporting on I to to the expand come. many in XX meeting adding of our our in lending I experience our opportunities to believe deposits. look portfolio, person you David progress my forward will mentioned, quarters to while of in diversify

Alex With over that, financial Alex? it results. I'll the to hand who discuss will

Alex Ko

drove you, but has results. income quarter another in Slide quarter offset interest interest Increasing summary X Johnny. yield loan record of were second expenses. by a Thank increase of

income quarter a As the result, million net stable share. at $XX.X per or for was $X.XX

million in and loan of increased offset due assessments. in decreased increases processing $XXX,XXX Non-interest $X.X from by as regulatory $XXX,XXX in data occupancy, and slightly a decline salaries income to fees. servicing legal Non-interest quarter offset service charges decreases $XXX,XXX in the expenses expenses first increase

of decreased quarter, increases outpace loan to cost points Second continue yield increases. interest basis margin deposit quarter XX as X.XX% net last from the

loans Slide X decreased by summary was million. sheet can balance held you that, for see investment the And biggest $XXX includes information. net change which

slowdown quarter. began originations, we the impact we see the from in discussed to last As

slightly. declined end with which mortgages, net balances second The was the at the exception of category increased XX%. of ratio residential loan-to-deposit quarter loan the All

pleased on our this important were goal. we with progress So

increase yield XXX the earning on second due in all virtually quarter on in basis increasing to basis interest-earning last The average a second was was XXXX. assets. from our quarter yield X.XX% XX of Our point from quarter, the last yield and increase the to which increase from of point increased assets quarter a

we with of on yield X Starting billion quarter, slide the $X.X second which at the X.XX%. about annualized portfolio totaled end our detail presentation, earnings of the provide an of additional loan

details about X exposure. our some estate XX% slides have Commercial loans X comprised real our and loans of and

of $XX Our has weighted is CRE office small LTD relatively at portfolio average XX%. million and

XX% multifamily loans of loans. of Our consist CRE

a California. X of $X.XX has of in portfolio, mortgage our which billion consists residential mostly snapshot Rio non-QM mortgages Slide and

Moving Slide on XX. to

the for deposits steadily two slower quarters. due last to increased deposits. last interest-bearing balance by Average deposit Average pace time a in at total than million declined $XXX Our quarter. increases deposits non-interest-bearing increased

uninsured which SEDAR's had decline a of at due now stands to have total steady deposits, in deposits. converting XX% We deposits, partially to

XX decline Our saw quarter. increase interest-bearing quarter the and slight point deposits of the cost in average quarter basis for up was X.XX%, we the first the a points XX prior from from basis

of quarters. to pace continue future increases We and expect costs slow in the to deposit

Moving credit. on to

the due to non-performing loans, $XX.X quarter $XX.X – to XX Slide increased million to million. three million primarily on detailed As loans from totaling from $XX.X last

One $XXX,XXX totaling off of them of mortgage from second loan loans. million are is and Also and category, XX loans a these nonperforming office the loans with the totaling million removed of were five off. quarter, $X.X CRE seven paying them being them two $X.X during of charged totaling residential

to a and when in credit multifamily As took $XXX,XXX allowance which outstanding of Slide provision part was loan. for losses, construction in second $XX loans. company credit recorded this can in our decline X.XX% XX, decline the classified loans losses with for quarter. an special The $XX.X and combined on a The total of David mentioned, you million largest a loans see mention we saw million of upgrade improvement

operating As quarter fees. service last increase of an noted mainly in Slide due slightly deposit shows to on Slide XX, the detail non-interest XX income expenses. from increased

of ratio reduction to interest mainly by and X.XX%, efficiency benefit in Our to asset non-interest offset to expenses. income mainly a slightly increased slightly salary the reflecting expenses quarter-over-quarter. due net improved average employee decrease Non-interest reduced ratio expense

ratio, capital we capital which given levels strong, capitalized the believe ratios all well prudent is Our remain above regulatory market risk. with well

that are we open to With Operator, call. your up take happy please questions. the

Operator

question from KBW. is Kelly Your Instructions] from [Operator first Motta coming

live. line is Your

Kelly Motta

Thanks questions. the morning. good for Hi,

members well I'll tremendous I you to bench adding to have comments broader think your I the kick it team. maybe building adding bench. the job, the Board, as management the on a with as guys on done off know independent

do have stages, to you place or to feel like in Just wondering, in and team executives looking look are execute terms on, at of still done areas? the what as you you you next in the some brought of kind now add you've

David Morris

Kelly, We that everybody other management we as example, a a the this holes. couple for have And I Good that team, far as on need to is of board. to physicians we some have that, would lender within C&I have morning. believe need Dave. on in do we like our executive put organization.

Kelly Motta

regions. Great. laid returns? you've pulling where on to areas, loan as loan-to-deposit you you're year, to believe much that well comes And back, then I towards your the year? expand are see back maybe some you second to towards growth on risk-adjusted also, half specifically of balances non-core I front, as Can want half just we release How the where are on loan look more And on loan the know continue the down. back where as where kind good the you we suggested pulling of the non-core back commentary as of from get you your and in ratio. that growth of look out pulling you're

David Morris

and a so many in our We're auto we're who state core Okay. also the like have Washington of auto paring will down forth. some the say Oregon, a do their relationship not also. lending. first our And back -- not us about I maybe bringing these or and do answer also our And non-core attempt of part. mortgage of have deposit are to other second we're out relationship of market, main we in have Texas lending, okay bit us, a customers with business most non-core talking areas ceased little relationship. deposit growth, they meaning When with we of or

we are not growing mortgage We to. used like

decreases ratio loans your be off the I both that earlier. As our probably decrease from it's talked in about of in rolling most in question, and those of part is the most second as areas the loan-to-deposit our far coming areas, going but of to

Okay.

million same the quarter a to going $XX so time, on probably deposits. or in at we're While bring

what's that's going on. So

Kelly Motta

then for Got accounts some last to sort I'll over aren't customers queue. some it. and there's of on that others now, been quarters core the past the several and the know declines of And question that of But let noninterest-bearing you go those I had at into XX% then we some those maybe larger just me letting signs any ahead. as as of -- ahead of you the Any around now. where that noninterest-bearing And details deposits? pace helpful percentage of But look of They're like look settling showing see sort runoff noninterest-bearing would is be out slowing? do we color of as a business. your deposits,

David Morris

that Kelly, Gary you. for going have answer question to I'm

Gary Fan

Kelly, definitely yes, that slowing. we of the see trend

looking with deal some growth like deposit for focus our market think management the team that's investments other shifts board and Johnny we're of bank trying of we're base, in help every customer services, with of to us year, that's people, making primary in to the the deposit in our the new way with on remainder deposit the coming but that and where the our I at noninterest-bearing and ultimately grow this segment broad the line of all products current book. systems,

think the XX immediate see expect So us results see year. I don't the but that's of you'll something positive in would before say days, momentum let's calendar XX, some I next end this to

Kelly Motta

step I’ll it. Appreciate Great. back.

Operator

you. Thank

next Your Sandler. Nathan is Piper from coming Race question from

Your live. line is

Nathan Race

on but Hi morning. term FHLB bring to the fairly the questions. question advances quarter. high, in for quarter. remain able two everyone. Cash some your the balances also dynamics Yes. in taking of Good down the Thanks you're A

going of should areas think So just about forward? those hear curious kind two to we how

David Morris

Nathan. to correct. Good you're to Sure, Yes, talk you.

loan-to-deposit bank As level. at a have you our to ratio know, lower strategy we the

I we are on track. So think

So investment growth those the and the to our of continue money park due also and to the kind liquidity on loan on the report just the cash security control banks. with increase monitoring deposit as as or well side from in we side, boosting

million And as about increase. It Compared year, the think to we is prudent might I keep it we with, go quarter, I being this it comfortable in loan bit, level, is cash side QX think, might little kind say, and to little grow decrease at million bit $XXX we have same of a last QX, cash liquidity $XX down, of $XXX but as I level. mechanism, adequate. maybe, the let's we a feel in funding million

from increase like did a it increase big to million. $XXX around wise, security investment quite also quarter, last close And

also strategy make as but -- boosting our to a we that liquidity some doing sure barbell we us interest matters, actually is So have short-term it helps income well. are

Nathan Race

maybe then about expense And changing the Got rate. Right. and thinking it. gears run

quarter I were back in we think, to half being $XX to talking last this of year. the closer million

should the particular to the quarter Just last costs. relative toward quarter? we decrease curious we areas all comp with in How the legal relative think about that still saw the two guidance to in relatively this those

Alex Ko

did We say Sure. that. Yes.

And We it legal the the is did down. we going quarter. not decrease I expected rate But to but go fees are actually go that professional of about magnitude to to which fact in of this just down, run happened six we continue legal to of fee the think incurred professional especially expecting and legal level $X other the you that fees, fees to will Yes, go fees, expect million expected down. forward forward. I going we think continue a is do give months not last

and expenses, thing insurance there which certain include obviously, is, one coverage. well. It fees note also reimburse will certain is to reduced, will some as legal be They

matters. to continue report expect would So basis -- but legal to related total growth the to of expenses our I

expenses the level to see QX reimbursement company that forward. from we But of legal insurance some the or some -- sort So, expenses. some I to but elevated of you will QX, would not but expect going level, for see

bank benefit think, it certain given So will we little the compensation -- to bit that salary think quarter. for And did and mentioned, asset this expenses, have persons I will key ratio. help hope and the strengthening a like I you continue us I lower average are But efficiency bench. expense new also a and we non-interest that also decrease over ratio, our joined

go think expense compensation I the a and So bit. little salary might up

like will did all assessment legal little kind one-off would I expenses, So forward, the like expect something operating in or as a amount going kind $XXX,XXX because to expenses some I offset will such decrease and small second increase that fee, of quarter. of bit of a increase other see the

for aspect that, plus/minus out expect management's million foresee said be I the certain would $XX those legal some $XX rate we'll for would run But kinds comfortable. million that is be of a comfortable there So control. non-interest obviously all can be some fees might things I feel rate in But like of now. that of neighborhood run having might the I expense

Nathan Race

all deck Okay. helpful. loan you through I of real guys And office additional commercial details provide in credit just in that are Great. quarter. moved of terms to and in any appreciate you the any the occupancy That's very can color estate on working that how details non-accrual the additional but the then rates just kind in particular?

David Morris

is definitely Jeff the to the slight Jeffrey can Nathan by more seven, try a chime and have also bit attempt. here in. details breakdown. can page I a so earnings kind maybe little We actually details Yes, distribution have we with portfolio. of me, LTD you regional on presentation more about provide which CRE office

exposure, total our office total of $XX a have loans. we minimum actually million X.X% But is very itself, which

that's small I So, start to have it, believe exposure. we of amount with

perform be kind loan-to-value that loans of impairment did portfolio. non-accrual loan quarter those happen migrate analysis, one net is However, ratio. we XX% And about of into to this which office

that isolated for now office even loss portfolio or reserve real nature one-off any small believe type we risk have of based office another a don't similar other we because of a content that on And see I of our is is in kind -- there have. portfolio And content. portfolio the appraisal

think that itself of carrier. is is closely but are industry-wide I high-risk isolated, a watching So, it's because space office we kind very

carefully. watching are we So,

we overall have color average-weighted low just more XX%. you I'd very like a give is portfolio on the more office bit little LTD

we kind And areas is the young low serve we NPL one-off New the more also again, like Jersey So all XX%. area. item. in LTD, XX% have is in or a XX% that of And one-off that

Nathan Race

to management just continue more of capital thoughts type helpful. can capital was imagine also curious repurchases on repurchases? this on that resume the resume give just very and on ongoing I build when me ability impact any timing your updated guys if to -- in I it, excess you one environment Got priorities. but could has just maybe ask share or investigation share to indicating And would want SEC Okay.

David Morris

the to we start as repurchases share can. at We the soon this don't know time, as on but want timing we repurchasing

Nathan Race

questions David. That’s you Okay, and Appreciate have. taking all guys Alex great. I

Operator

Thank you.

is Andrew from question next from Your Stephens. coming Terrell

Your live. line is

Andrew Terrell

Hey, good morning.

David Morris

Andrew. Hey

Andrew Terrell

loan. up portfolio overall Hey. the like could office very If looks that small. just understand It I I follow on very well underwritten the is here.

went gotten the the around sounded that it one had before is the loan you a was recent XX% office like the non-performing on right For curious what beforehand. maybe I that. appraisal updated LTV but appraisal LTV was just

the was degradation saw? in kind I the words, So, what property value guess other of

Jeffrey Yeh

Jeffrey. is this Hi, Yes.

reappraised, the is operating XXX% LTV the income was is know that occupied. the we appraisal of also -- because it about did of building appraisal Before that new XX% drop that you do

of And impact disagreement. rent the it evaluate rental of it's the negotiate is the if then because top mainly it reason just tenant a because on for the lower the approach of the income a and you're drop property to is value -- using actually there short-term

then it So, we will the that's into NPL reason just information. for put your why

Andrew Terrell

sure of That's And I or color. amount on correctly. quarter. just I then the maybe this for that of make million I mentions? it drove that construction want multifamily loan improvement deals other good very a to the $XX the mention heard construction side front, was special Was appreciate aggregate the special in it. specific see it decrease I handful mean to credit multifamily Understood. helpful for one

Jeffrey Yeh

mention Yes, is that big a decrease because That of is true. of property. this special

so for we institutions The from other a your to little also the than they upgraded one project doing because then property. then pre-leasing. then the and they color -- lease. project. they're And right is because out. the just the are of they a project actually why we also more then very are you that And mention. commitment is property the of take the This information this two already and and completed -- give from on breaking this good clear long are financial are to is in now them Just received is because And completed into bit just XXX% so that market of things area, market reason because later special XX%

Andrew Terrell

Yeah. Understood.

maybe Okay. David you would to off I I around letting color. you what lending. you per of know want here just growth guess in some was go see trying is some kind your out-of-market maybe the of and of I improvement. your targeting much some comments deem an I kind growth. much ring what comments appreciate portfolio, to -- to to $XX of us of at great quarter gave you view loan out roll was get would aggregate million fence question, And And you maybe hoping deposit I on could how What -- of in non-core back made how the would I'm as the deem that non-core? you and it's in kind similar on idea market?

get of at loan mostly expect Just trying the a that you to of or this quarters, deem similar amount the point? couple you forward, sense moving kind is decreases work loan non-core would a through growth pool on over would next that of

David Morris

to the First going the ours, off. pass about of today, this have talked million we all, core have compete tell actually we to that I quarter. next customer could as different on over this loan to not I'm much who rate. off Unfortunately, don't we don't we But past report but could Andrew have states. think Jeffrey you roll $XX we who is much and I project in come what how has quarter of just -- a concentration last as we'll books

rate play the was do -- not so we rate significantly lower we So game. the

of loan. that So taking unfortunately this customer one is

We other them loans another to with have bank.

Jeffrey Yeh

again. Jeffrey Yeah. This is

define David relationship and do basically area we out as of of loan complete deposits. out a market alone mentioned not lending such as that earlier have So that or

-- those is the are part strategy risk non-core So loans. that loans those to our of that we gradually

in Right give to color out-of-state the is we route happened and lending XXX lending already have reduced used $XXX decided $XXX -- and to year. of about to that Just are we to you now million little okay? that bit this executing about of months of very it. you out-of-state That on a tells in actually close the then to go then that when million. beginning six serious about -- we We

Andrew Terrell

remaining you And is kind last the of what would $XXX so deem that of million non-core?

Jeffrey Yeh

do we'll relationship. will non-core them relationship most We of have long the not -- us total consider especially they as with as deposit

Andrew Terrell

Understood. Yeah.

back for Thank taking question. Okay. the the step in I'll queue. you

Operator

Thank you.

Your next question coming from Coffey from Tim Janney. is

is live. line Your

Tim Coffey

kind Good margin of is next morning, early everybody. when something this or year might visibility trough year? David, Alex, do that you say later any into event have

David Morris

$X of CDs Well, renewal quarter. that that in come and about know Tim, fourth up we for the billion there's third

presently at We also X%. around know priced that they're

February this we're a see So And since we holding of steady think rates on on our huge repricing there. January CDs. I from rates issue offering don't year – the about or

really on I the the more year. of of it's end first next So think year

so Before improve, decreases – that? and then in any to any to for than see and rates, we'll more begin in year if bit takes our rates we margin see color little a Alex, a if about we seeing hopefully forth. decreases begin

Alex Ko

Sure. point. great That's a

one there's a lagging add, to Just point deposit impact. obviously

big to and of have the reprice the were quite and seen in it the last those or next this two the beginning We already the QX on will continue quarter repriced market but year QX, of kind rate quarters. year increase a

kind So a repricing world of in more much deposit once set the think of kind have normalized the cost. that I

have will on asset we increase an And the also side.

strategic reasons. Now earning as our with you know, assets reasons, good have we decreased

and to margin earning from market loans net interest going help going Johnny will assets, the With team back and it forward variable good increase. help to definitely the the the rate of other our

it's to this level in alluded, what a again, But seen David of we kind we'll not the I have quarter. would But next quarter say QX, have as compression. of

level. our will It something, end will XX net continue. next kind interest would I'm margin. by I hoping it point compression. We see will level the bouncing year be back have a but like less be to we starting the basis And think of of it don't year, that

Tim Coffey

you for do June? for deposits a Alex, have rate spot interest-bearing And Okay.

Alex Ko

X.XX%. for deposit do have. is And XX,XXX is money have spot X.X%. I market rate I for is than a breakdown of XXX,XXX CD I only less over have the Yes, X.XX% and

Tim Coffey

great. Okay,

thank that and you conclude then might it? for close the will that. switching any launch the have visibility Okay, SEC gears, because David, not never it's when you SEC on investigation inquiry much do very an uncommon

David Morris

answer know it's think if know can I don't what's really on. you announcing least comfortable where going really felt that Tim, we of what can I very to either. I just question I because don't going could publicly progressing enough that what's and X-K tell we I in say on or at

Tim Coffey

And me. Okay. That's fair. just question a then for final

On in this area? primary added the of them quarter, three loans non-performers to your out were any of service

Jeffrey Yeh

three two are in – – just of them also one And – covered. area. the like there LTV them, is there XX, is then actually information XX, think is – like we one there I loan There mean which mortgage is your our – for residential of XX

mentioned one about of office. The That but other that in... is out the state I that our is is one

David Morris

out which have Illinois, is market area that branches state. of It's our Springfield, in do technically in we but

Jeffrey Yeh

Right.

Tim Coffey

All are you. questions. much. right. you very Those Thank Well, Okay. my thank

Operator

Thank you.

from is coming Your next question Kelly from Motta KBW.

live. line is Your

Kelly Motta

Hi, the investigation. on thanks Kind note of for follow-up. that of the

contract at renegotiated, to for that the remind all deal? if us, be up, pending deal the wondering when you there's gateway Dave? Just needs And could any implication if is when

David Morris

that's to say can contract September expire all XX. right about I now. The And gateway

Kelly Motta

Thank you.

Operator

Thank you.

Piper from Race Your next from Sandler. Nathan is coming question

line live. is Your

Nathan Race

couple there's follow-up the of about the But expect you're during handful of pace on thinking you know, how you XQ to back clarify the expectations. of just a to to appreciate like on sounds trajectory I the kind taking slow year? just the XQ Can I quarters. kind of margin want as it. I guys it next and moving well. compression Alex, of Yes. you this of circle parts

Alex Ko

will QX. not one XX Sure. and that say to QX. time. but a at point that. crystal will Yeah. point we experienced experienced it, it say it level -- I quantifying but like QX we would maybe we compress half than have have basis to don't a of in compression be real compression the I have Yes, lower substantially margin have in more that would XX I XX% basis QX

it QX compressed QX will maybe. I'm and So be expansion. going the forward might next see we that QX hoping probably year of But

Nathan Race

And estate you're of the then kind had all the outlook. sounds Great. here guys your loan obviously on And lastly secure in office a ACL non-accrual real you in quarter. nice that that reserve moved Okay. just increase It in like a commercial XQ. in Should and expect maybe or then continue you how the to of term loan at this of to in provisioning we kind reserve grow some future shrinkage near guys light just about continued growth to return think XQ? in point, to maybe

Alex Ko

Yeah. to QX might Jeffrey first, coverage of chime allowance but say -- would answer I will our turn as I is with quite I ratio in. feel comfortable it.

of quarter, provision Let have me give a portfolio. our for you $XXX,XXX because million of a we little reduction bit of $XXX more color this

a loans, will of kind we estimate $X.X coverage losses, ACL multiplying million obviously credit positive you how a our impact but of X.XX% have of if the provision That of for uncertainties losses considering some also much and for provision have other $XXX,XXX economic see did for we quarter. it of has That on just that's the do non-performing increase classification that macro sort pop-up improved. right? though even this credit is some Reason did

want ACL coverage. be we to prudent So our

is we X.XX% our to think, forward, your the So reserve answer it's peers, forward build unless question, necessary. And allowance don't it trying are I think adequate. to to I we coverage ratio going relative feel I going think

very monitor will we credit carefully. the So

criteria that it strengthened. nonaccrual, kind a our be an maybe -- the increase and in item serious quite those of all have some have things but one-off we might we Given taking we underwriting we actually are

ratio. need the reserve deteriorates. coverage But monitor unless is macroeconomic the allowance or the great will we to So continue build don't we quality further to there a I anticipate,

Nathan Race

is I Yes, think definitely. that

David Morris

said. Yes, I with would Alex what agree

Nathan Race

again. Thanks, Great. Okay.

Operator

from Instructions] Your Gerlinger from next you. coming Hovde Group. Ben Thank [Operator is question

Your line is live.

Ben Gerlinger

morning, Good everyone.

David Morris

Ben. Hi,

Ben Gerlinger

During anything impactful of soon. on it or there's any seen in on I sometime material outsized flat, are pricing clients, this that competitors retain curious really you announce deposit deposit call scrambling the have area, Angeles people the not was rumor course sort to Angeles that kind just overall merger to likely overall been a time Los their a that two of, where are is Los costs? of any to pricing

David Morris

I see you're talking what okay. see -- like anything don't any about, don't we

Ben Gerlinger

before I a you potentially of be enough. margin think curious with potentially -- pricing about Fair if margin around at excuse out around if sharing curious me few it's a or rebounding speaking a where we've the least today? over added the the you'd sharing open end questions lot it end shift. the potentially mean, and then, let's troughing I especially year that get of next troughed open you. months in where was the margin and mix the the your the NIM of your Got to different higher. that year, call you'd model And just cloudy be there But six bit is? I to

Alex Ko

Yeah. Actually target ratio. grow we of focus components, there's us. will the XX% a will we pricing. bank And to side cost the on the have loan-to-deposit will Even deposits though level grow. moving net deposit we but lot deposit of be noninterest-bearing and honest, we Again to continue a will

some have sort We deposit of matters.

David to moving give a of deposit we not loan they kind side many -- the retain side, paying of would high just deposit loan of are the pricing, the -- not because there also as loan is by I allowing by going with are by the end projection to so Also mentioned the our -- sorry rate, for the compete will or if I'm accurate year asking for. But the difficult but QX NIM growth -- we parts. only or sake but

real give accurate other it's you NIM to for too me hard a at margin sorry, this again, time than guidance what… So

Ben Gerlinger

appreciate enough. I for I understand. Fair me. fully That’s color. it Okay.

David Morris

others? Any

Operator

session. That now Thank I you. concludes the go our closing our to hand remarks. conference Q&A will back for Please ahead. host

David Morris

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

Operator

today's concludes This event. everyone. you Thank

have disconnect Thank may your You a for wonderful at and participation. time day. this you

RBB Bancorp (RBB) 25 Jul 232023 Q2 Earnings call transcript