RBB - Earnings call 4 2023

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Operator

Good day, everyone, and welcome to the RBB Bancorp's Fourth Quarter 2023 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the floor over to your host, Brian Stevens.

Unknown Executive

Thank you, Matt. Good day, everyone and thank you for joining us to discuss RBB Bancorp's results for the fourth quarter of 2023. Gary Chief Financial David Credit Officer, Yeh; Administrative are Lee, President, Officer, today Risk Chief Chief Chief Interim Lynn Officer, me Executive Liu. Morris; Officer, Johnny Jeffrey Officer, With Vincent and Fan; Hopkins; Chief

ask briefly and the questions. David Release website. which regarding can Earnings Presentation And everyone Investor call Relations that your are that then the be and the summarize would the to results, open in Bank's up refer found to the I statements Lynn filings. forward-looking the our Investor we'll will Investor and Press please Presentation available SEC on Disclaimer in

turn Morris. Now to the I'd David over Executive to like RBB's Officer, Chief call

David Morris

reporting initiatives We as to future. Johnny last a for the Good restructured We liquidity balance Officer. Financial reducing executives, our business. sheet respected and strengthened higher We and exiting risk RBB risks Lynn year Hopkins interim national our joining and certain everyone, formal our better day, thank relationships. loan increased several you position and team mitigated strategically by as and President established including manage our for ratio senior Chief by franchise loan-to-deposit more structure management Lee adding undertook us. operations to We

enhanced required. the all be will not addressed we addressed measures disclosed Order but Consent governance also we Board by policies we guarantee respect identified, adopting have no regulatory the to of additional there corporate in We concerns and be Directors. With that reconstituting our deficiencies believe can October,

have against by any concluded intend notified the we it to action they recommend pleased its that Bank. did are to that also We that SEC not were share investigation enforcement and the

higher-risk attainment to loan namely deposit positioned our financing. the actions the our and last the Some are improve loans, behind steps and coming resume But with optimize XX% related AML of take did the took profitability majority expenses, to the reduction and results. work target the we loan-to-deposit create increased over funded expect value in growth liquidity higher-yielding long-term of and we impact of better us, cost Corporate Governance to ratio of shareholder as year, and quarters we

quarter, to the recognize the mentioned fourth last were award CDFI as to distributed we that the ERP In related million able quarter, recipients. $X we funds I

mention over Lynn, to thrilled we our buyers Before team, have to were of active approximately invested fourth our it million and in of almost I shares to to are XXX,XXX repurchase as quarter that hand who I $X.X did shares. part we want the

exhausted have the but a recognize We our welcome place and and Board expect discuss meeting. at current having buyback away. the in buyback next Lynn, to authorization, take it of benefits a reauthorization

Lynn Hopkins

Thank X.X you, here about for David. months. been I've

of needless XXXX provided share to speed, to Please everyone reconnecting company's up weeks. we fourth my getting Presentation to still I'm part have Investor free I to the the RBB quarter team. very be but with financial feel on to refer in coming the happy as I'm So of say, to performance. comments look I forward the

fourth income award. Net Adjusting a $X diluted per benefited for recognition from Slide our the diluted earnings, to unrealized income would share to quarter or pretax of at has book net end per or $X.XX a per the have increased share X our on investor ERP Tangible fourth $X.X due income share. net quarter CDFI quarter net $X.XX million achieved presentation the of $XX.XX securities lower X% quarter during the value been repurchases. losses in revenue, year portfolio million for share. We $XX.X fourth million fourth and summary of results. this

pressure in the loans primarily loan XX% This quarter on by average nonperforming due the decrease assets expenses income decreasing our to interest million to $X.X net in held losses. further interest due loans nonperforming but additional million a fourth investment. margin, improved million. slightly in Credit quarter, for increase net fourth stable resulted and a combined rate-related reduction declined interest income in with payoff quality to to $XX.X with X.XX% last interest-earning from in reduction, no which $X.X of decrease a interest This declined in million is was relatively with on the construction quarter. a Yield $XXX

due compared allowance anticipate primarily benefits compensation for salaries million of due the Our $XX.X reflect adjustments X.XX% taxes expenses to remained third to increase the the quarter. start X.X% quarter, increase quarter end to X.XX% losses the related loans, at year. of compared prior temporary we seasonal at totaled and loan a expenses stable to total Noninterest total by in to to noninterest to as and lower new expense. We and the first mostly declined

see are to noninterest summary and As can expenses X be around of the expected investment. for loans in a decline information result, held you $XX.X balance sheet million. Slide includes

David near-term which believe we As we net costs, income. benefit and reduce funding to mentioned, our are can interest steps take margins there should

our details total land our X end and exposure. fourth X and quarter a year $X X.XX%. XX% portfolio, detail loans, real had estate yield about and Commercial annualized about totaled include construction some loans, development the have provides loan which our of of Slides Slide additional loans, which of and X the billion comprise at

at limited and office of have the million loan quarter. X.X% loans We total fourth represented to exposure, which stood continue the $XX of end CRE at

XX%. Slide replaced some fourth third were by increase which average quarter, deposits billion which deposit quarter. increase $XX.X a $X.X increase deposits deposits. and franchise. end well-secured This Included in million million in decrease Slide at billion million our noninterest-bearing to XX deposits. due a Residential interest-bearing to non-maturity $XX.X Total interest-bearing million wholesale LTV the and $X.X compared the the of $XX.X $XX.X mortgages a increase York about a was in X non-QM of in details were deposits, about was consists with in the in New reduction deposits, details has Mortgage demand our has of portfolio, California, an

basis increase of second from versus quarter. average third cost to the points the third XX quarter interest-bearing the the XX X.XX%, fourth point quarter Our deposits from quarter, basis was for increase of the an

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

capital the remain Our ratios the well-capitalized regulatory questions. with strong capital Operator, that, to levels your all above take up happy thresholds. are please With open we call.

Operator

Piper Instructions] [Operator Race from question Sandler. is your first Nathan coming from

Nathan Race

XQ the expense the the think quarter. guidance cadence year. into well. on But about I starting XX.X% just how just and Question expenses in for for the you appreciate point rate of a as curious on run this first as XQ

Lynn Hopkins

over here. to meet you the Nice phone Sure.

we've fourth think down there's our that but closer XXX the couple relative noninterest operating think, I to about assets. we XXX of when expenses, earning ratio about So to ways, at was it We in beginning about XXXX. think expense a our it migrated of quarter the and one observed to of XXXX, is

as those, some XXXX expenses would earning I look XXX look some minus in related we of points. average anticipate basis and of bank expense or that to with think we assets the noninterest to forward the the plus initiatives undertook might closer

Nathan Race

so, growth do first in outlook you going higher and it. Got quarter, does And Loans if hires how about guys that guys those both Deposits expense you recently? of Okay. that And that kind does forward? for some the impacting rate run the think made contemplate have then hires

Lynn Hopkins

and the of goals the the into I expense, we think have able and believe and outs without of getting appropriately. ins achieve details all to XXXX staff hires grow I in salary be of think the we appropriate to

all included it's think in I So the number.

Nathan Race

you guys And Okay. during I of there could if of how provide guidepost can and in terms follow to about up. Loan think Deposit Are growth just any both that XXXX. kind

Lynn Hopkins

down our below we XX%. end of So ratio I at just think loan-to-deposit that the XXXX, have

be we do to again, some might a think, we think, this we range, wide We it to I there, our a with forward point. to with here. little bit can move during the XXXX growth but a economic guidance the at given bank fund be and provide growth. current took loan little deposit as bit loan premature specific growth I expect too in actions provide, expect participate the outlook, Might

Nathan Race

Understood. that of forward. the pace repurchases David in on I next there, appreciate likely just re-engaging out be And with over Lynn. share on any up but quarter, the understand will of of the that's going I fourth coming out X? the that guys could authorization follow just you thoughts the I buybacks if or pace just quarter

David Morris

pace think I have should the of that would on that, similar fourth to the we buybacks quarter. be

want do. to that's pretty what think we much I

Operator

Motta next is Kelly from coming from KBW. Your question

Kelly Motta

I was hoping touch loans there. pipeline in more on the to

could and if or you a I working develop to spend -- Johnny been relationships. Just discussing know so just minute build the pipelines has C&I wondering

to one come maybe or whether loan things the of and that contraction it time could takes for pipelines of kind another. see wondering a stands -- Just to those start we where quarter stabilize with X as another, on,

Johnny Lee

as Johnny. is loan-to-deposit to Well, know, achieve the trying this ratio Kelly, XX%. year, last we're you

So were kind demands, that it don't we overshoot there trying that then but obviously, navigating and it. so of we were through to balance we're

the that for promising. the I growth had So looks mix. ourselves for that now to year. simply I relatively momentum now think And right challenge we actually pipeline positioned But already build this the is right would share

demands to the We on want we fronts, all have but returns. obviously, optimize

to this credit of is far how first but is at But types I'm I I then the credit and pleased usually now. overall, with on. we take the foremost and mind, I relatively a right want but it, quality quality then think appropriate general returns, that's then But as looking there. generally still momentum definitely, and selecting think as we're to deals pipeline definitely slow But think is

Kelly Motta

I to helpful. normalized have look lot more bring ahead, of loan-to-deposit guys a That's the as ratio to And work it. down you we Got level. done a know

are Is of -- you lot of retail on. Just how anticipate funding? perspective any CDs, my still kind leaning it how banks growth, a wondering

you if looks outlook this time? cuts, the when quickly think and rate the downside? we what wondering when on Just get And will how for -- like react funding betas at

Lynn Hopkins

Sure, Kelly.

Johnny's will Let comments. mention of start. I me off

net I expectation as XX% of is it, at There's between, ratio XXX% the that we I there as down. look think an ratio think call at we look sources the growth. is to an brought to to And move building the that convert Deposits, Loan will funding. for pipeline other and we that into for opportunity we loan probably

the has Fed's -- there. program we I been all out think

been deposits successful I we've relationship in and in some deposits. bringing other think time nonmaturity

the It be opportunity business. funded I deposits is with for there is think opportunity an very that So on will an have net income grow and which -- some the to an expectation demand deposits, growth. focus the for helpful obviously we interest commercial of side with margin. There's

half second about going of of this comment we talk rates to appreciate I the balance question or betas, on coming side We timing important. With in your or interest think the the the funding can about exactly is respect magnitude. be the sheet None potentially know year. think flexible to us of down that staying

nonmaturity can environment. staying shorter, we're necessarily comment some us that be but to not on I that So through navigate helpful, recognized betas se, having I deposits a bit probably a potentially we don't the to know per a definitely changing give flexibility. rate have And then going little interest

Kelly Motta

Maybe On there's LTVs I'll for guys looks XX%. Slide last color helpful. back. Office Office like in and provide. the step slides like super really over through That's slides, $X Flipping it all and with the me, the million on X, I about one you

of and kind are kind Office general if what David higher bucket anybody you and concerned provide the not of on Just some or wondering portion? LTV with sits on how in that could or color

Jeffrey Yeh

Jeffrey. in is -- is a is that This This that we are forbearance. loan

-- to issue have entity with their with forbearance is to are we -- that agreement about They with pay rent. tenant. tenants already the that just that their working this a their the ability not source the are the of power government have and concerned they We power tenants with are have and and work their

optimistic are issue forbearance we could then be of This, So at the resolved. that the agreement. the kind end of

Operator

from Terrell Andrew Stephens. is Your next coming from question

Andrew Terrell

that anywhere in Office loan. I talk specific last it just today? could from the can that of sit there today? on like against risk on a -- it you up sits or from Does Is is or reserve follow the a question there where balance sheet And the some classified criticized If about then loan rating around just standpoint?

Johnny Lee

of the reserve In should the flow on able . the besides specific be value and to of is because no reserve, done there based impairment the And that impairment. source And terms [indiscernible] then on the and no of cash we they analysis the have indicated specific rent. based

David Morris

book. classified in certainly is it And

Johnny Lee

No, loan, no, classified yes.

Andrew Terrell

back to go business I funding David, carry a kind kind of that you deposits? Is mix the strategy? there. oriented could funding expectation the it. cost that that on DDAs of the cost into I funding? C&I could -- If more to cost XXXX or heard XXXX maybe the of anything the And prepared kind little just at which of kind obviously greater a you of to to core Got optimize that Very the Or looking is you in just some good. could would of Okay. pull the of elaborate there steps could in you of commentary remarks really taking mentioned of some around heavily in then lean and else that leverage, the optimize you're

David Morris

other rate that just us. and like also Deposits the cost there's locked options we investments, said flexibility the multiple is yielding something forth. go items and do give down the would there, just curve and Loans, so Andrew. that can have us promotions getting types out highest so with Also, that than of real vehicles something CD And ratios. to not quicker, won't there specifics, lower other Deposit into every to help Also, without into it sorry, I out we does the us in. It's it's help Loans be those we I'm guide funding the besides of can -- okay? promotions all and other there's bank Well,

Andrew Terrell

now us and Can maybe the deposit, what on following that and the Okay. got right or you're And term on you specials duration of rate on Understood. then also offering just point remind off at and And kind offering? you you've time is any you're up refresh rolling for the us if cost? on just repricing the first dynamics specials how could what the quarter, much specifically.

David Morris

do moment. for a there we for, real have not deposits. the We believe, special the right market time now, out out it's DDA, special I a Right have do in at

and checking. business checking Personal Okay.

answer the the question. also, have Now Lynn I'll rest of

Lynn Hopkins

can ask your again? Andrew, question you

Andrew Terrell

think just first the in dynamics I deposit other was quarter. answered David repricing Yes, part, first part the time the the

Just off roll is rolling at how to what much is scheduled at? and off cost they're

Lynn Hopkins

Sure.

of first were interest we cost we so funds -- with in, -- in Those that the of -- are are the of our like we deposits million -- quarter quarter fully within the have end numbers X% maturing at ended the So in said, X.XX%. about for the I And year, the pretty about environment. $XXX priced wholesale current rate quarter. fourth the

think extent the to net would our impact need we margin. So that to roll have interest I they those, on limited

curve is of There I deposits will to think retail the again, that some yield we're portion inversion first that costs. seeing quarter. And a the related in funding in our reprice

carrying pretty bit. extent the extent current they're XX might to that think, To we rates. look the that up very term, a we're short out months, probably So, they to, reprice I close

as to our reprice in I forward and current as So impact look a base going to funding environment. muted think the a it's of bit we have continues

hopefully, that's helpful. So

coming that think, I those time to and marketplace. million million, off the retain $XXX and work think are, then deposits between $XXX we'll the in are I current

Andrew Terrell

appreciate now. very out Perfect. it could right FHLB it. in. X% just the me, if at Can remind sneak that's Okay. No, you helpful. And termed cost I $XXX lastly, million that's low of I

remind the just in kind I you FHLB me was maturity Can serves. XXXX, think memory maturity the that of if of date of for specific the borrowings?

David Morris

XXXX. first dates. multiple -- It would first quarter maturity be quarter XXXX the late of of There's

-- all late of it's but XXXX. quarter in So first

Operator

from next Tim Your question from Instructions] Janney. coming Coffey [Operator is

Timothy Coffey

wondering opening loans originated near to it me was comes originated -- for term, you you in -- you talk if the can I David, are sale? to Dave, when of kind would

David Morris

side, yes. also. the and SBA And Mortgage yes. On mortgage SBA,

Timothy Coffey

year that over How market do the year? cuts to the the back this to half you we see course really customer that in evolving engage the rate base? start of Do need of

David Morris

SPA not I -- think side, the SPA is a no. on

Okay.

per you On se. rate the need know side, if don't cuts I mortgage

You a prices the mortgages. need yield of the because curve end -- that's lowering a maybe in of what long change

above to back that So get We be to we X% it XX-year down need around before need to went up the was treasury happen. where X%. it for down back to

Timothy Coffey

comes then just the of is the economic statement and you obviously, income your the reserve. dramatically what dependent if But year? a to reason to economy and And derisked through on improve in kind real on this -- you've And I it piece next understand outlook. the do portfolio, continues see provisions increase

David Morris

crystal economy, We have that happen and with forth. so Tim. project cannot we a we Really, not now, do don't the out know right going and what's ball, to

and saying quality, our However so its improved loan forth. has with that, portfolio

continues it down to something be there So and improve, if may there.

Operator

the session. over now will for turn Morris, David I question-and-answer have We remarks. closing the CEO, end to and reached of call President

David Morris

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

Operator

This lines concludes for your Thank your disconnect participation. may today's conference, and time. at you you this

RBB Bancorp (RBB) 23 Jan 242023 Q4 Earnings call transcript