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RBB Bancorp Reports Second Quarter 2023 Earnings

RBB Bancorp (NASDAQ:RBB) and its subsidiaries, Royal Business Bank (“the Bank”) and RBB Asset Management Company (“RAM”), collectively referred to herein as “the Company,” announced financial results for the quarter ended June 30, 2023.

The Company reported net income of $10.9 million, or $0.58 diluted earnings per share, for the quarter ended June 30, 2023, compared to net income of $11.0 million, or $0.58 diluted earnings per share, and $15.5 million, or $0.80 diluted earnings per share, for the quarter ended March 31, 2023 and June 30, 2022, respectively.

“I’d like to welcome Johnny Lee to the Royal Business Bank team as President and Chief Banking Officer,” said David Morris, CEO of RBB Bancorp. “His hiring is one of the more visible steps we have taken over the past 15 months to strengthen our management team.”

Mr. Morris continued, “We continued to reduce our loan to deposit ratio in the second quarter by increasing deposit balances and allowing out-of-market loans to run off. We are proactively managing our loan portfolio and are confident that our underwriting standards will limit ultimate losses.”

“Over the past several months, the Board has taken important steps to enhance corporate governance and strengthen our Board and, as David noted, our management team,” said Dr. James Kao, Chairman of the Company. “In addition to the two independent directors we added in April, two independent directors were elected to the Board at our annual shareholder meeting in June, bringing the total number of independent directors to nine. We believe our governance and management enhancements, combined with our prudent approach to underwriting, credit risk management, and capital management, position us to continue to navigate the institution through this challenged operating environment.”

Second Quarter 2023 Highlights Compared to First Quarter 2023

  • Net income decreased to $10.9 million, or $0.58 diluted earnings per share.
  • Net interest income decreased to $31.9 million.
  • Noninterest income increased to $2.5 million and noninterest expense decreased to $18.5 million.
  • Total loans held for investment decreased by $146.4 million and total deposits increased by $24.4 million, resulting in a decrease in the net loan to deposit ratio to 99.3% from 104.7% at the end of the prior quarter.
  • Return on average assets decreased to 1.08%.
  • Return on average tangible common equity decreased to 10.33%. (1)
  • Net interest margin decreased to 3.37%.
  • The ratio of allowance for credit losses to total loans increased to 1.35% from 1.29% at the end of prior quarter.
  • The Company's capital position remained strong with a ratio of 16.9% tier 1 common equity to risk-weighted assets.

(1)

 

Reconciliations of the non–U.S. generally accepted accounting principles (“GAAP”) measures are set forth at the end of this press release.

Net Interest Income and Net Interest Margin

Net interest income before provision for credit losses was $31.9 million for the second quarter of 2023, compared to $34.1 million for the first quarter of 2023. The $2.2 million decrease was primarily attributable to an increase in interest expense on time deposits, partially offset by increases in yield in loans held for investment and available-for-sale securities. For the second quarter of 2023, average time deposits increased $256.1 million and the interest rate paid on time deposits increased 74 basis points to 3.98%, from 3.24% in the first quarter of 2023.

Compared to the second quarter of 2022, net interest income before provision for credit losses decreased $5.2 million from $37.1 million. The decrease was primarily attributable to an increase in average interest-bearing deposits of $599.7 million and a 298 basis points increase in the interest rate paid on interest-bearing deposits, partially offset by an increase in average loans of $282.5 million and an 84 basis points increase from 5.39% in the second quarter of 2022 to 6.23% in the yield earned on loans.

Net interest margin was 3.37% for the second quarter of 2023, a decrease of 33 basis points from 3.70% in the first quarter of 2023 due primarily to a 72 basis point increase in the average cost on interest-bearing deposits from 2.75% in the first quarter of 2023 to 3.47% in the second quarter of 2023. Cost of interest-bearing deposits increased due to increasing market rates and peer bank deposit competition.

Noninterest Income

Noninterest income was $2.5 million for the second quarter of 2023, an increase of $131,000 from $2.4 million in the first quarter of 2023. The increase was primarily driven by a $128,000 increase in wealth management commissions and an $89,000 increase in fees on deposit accounts, partially offset by a $125,000 decrease in loan servicing fees due to loan prepayments during the quarter.

Noninterest income decreased by $929,000 from $3.4 million in the second quarter of 2022. The decrease was primarily attributable to a $757,000 decrease in gain on sale of corporate real estate and a $326,000 decrease in gain on sale of loans due to interest rate hikes that caused decreases in both loans held for sale and gains on loans sold.

Noninterest Expense

Noninterest expense for the second quarter of 2023 was $18.5 million, compared to $18.9 million for the first quarter of 2023. The $394,000 decrease was primarily attributable to a $537,000 decrease in salaries and employee benefits expenses and a $141,000 decrease in legal and other professional fees, partially offset by a $305,000 increase in insurance and regulatory assessments. The decrease in salaries and employee benefits expenses was due to the decreases in payroll tax and 401K contribution related to employees' bonus distribution in the first quarter of 2023.

Noninterest expense for the three and six months ended June 30, 2023, includes legal expenses related to the Company’s voluntary cooperation with the Securities and Exchange Commission’s (“SEC”) requests for information as disclosed in the Company’s Current Report on Form 8-K filed with the SEC on July 24, 2023.

Income Taxes

The effective tax rate was 29.5% for the second quarter of 2023, 29.4% for the first quarter of 2023, and 29.6% for the second quarter of 2022.

Loan and Securities Portfolio

Loans held for investment, net of deferred fees and discounts, totaled $3.2 billion as of June 30, 2023, a decrease of $146.4 million from March 31, 2023, and an increase of $150.0 million from June 30, 2022. The decrease from March 31, 2023 was primarily due to a $104.8 million decrease in commercial real estate loans, a $24.6 million decrease in commercial and industrial loans, and a $24.3 million decrease in construction and land development loans. The increase from June 30, 2022 was primarily due to a $349.0 million increase in single-family residential mortgages, offset by a $106.6 million decrease in commercial and industrial loans and a $99.9 million decrease in construction and land development loans.

As of June 30, 2023, the Bank’s total available-for-sale securities amounted to $391.1 million, including available-for-sale securities maturing in over 12 months of $242.6 million. As of June 30, 2023, the Bank recorded gross unrealized losses of $32.3 million on its available-for-sale securities compared to gross unrealized losses of $28.7 million as of March 31, 2023 with respect to its available-for-sale securities.

Liquidity and Deposits

Total deposits were $3.2 billion as of June 30, 2023, which reflected an increase of $24.4 million or 0.8% compared to March 31, 2023. As of June 30, 2023, the Company had $246.3 million in cash on the balance sheet, which is an increase of $15.6 million or 6.8% from March 31, 2023. In addition, the Company had $893.1 million in Federal Home Loan Bank borrowing availability, Fed fund lines of $92.0 million, $40.8 million in available funds from the FRB Discount window and $391.0 million in available-for-sale securities that were unpledged. The Company has $95.0 million of loans qualified to be pledged to the FRB. The total of these available sources represents $1.8 billion or 183% of total uninsured deposits or 243% of adjusted uninsured deposits, which excludes ICS and CDARS program deposits and uninsured deposits affiliated with directors and officers of the Company.

Total adjusted uninsured deposits of $724.3 million represented approximately 23% of total deposits as of June 30, 2023. Since mid-March, we have been diligently working with our larger deposit clients to enroll them in the ICS and CDARS program to ensure that all of their deposits are FDIC insured. ICS and CDARS program deposits increased to $217.5 million at June 30, 2023 from $116.2 million at March 31, 2023.

Credit Quality

Nonperforming assets totaled $42.4 million, or 1.04% of total assets at June 30, 2023, compared to $27.0 million, or 0.66% of total assets at March 31, 2023. The $15.4 million increase in nonperforming assets was due to the increase in nonperforming commercial real estate loans of $10.4 million and nonperforming single-family residential loans of $10.1 million, partially offset by commercial real estate loan payoffs or paydowns of $2.0 million and single-family residential loan payoffs or paydowns of $1.9 million.

Special mention loans totaled $24.2 million or 0.76% of total loans at June 30, 2023, compared to $89.0 million, or 2.66% of total loans at March 31, 2023. The decrease is mainly due to upgrade of a large construction loan.

Substandard loans totaled $74.1 million or 2.32% of total loans at June 30, 2023, compared to $77.7 million, or 2.32% of total loans at March 31, 2023. The slight decrease is mainly due to loans paid off.

30-89 day delinquent loans, excluding non-accrual loans, decreased $7.0 million to $7.2 million as of June 30, 2023 compared to $14.3 million as of March 31, 2023. The $7.0 million decrease in past due loans was due to loans that converted to non-accrual status in the aggregate amount of $11.1 million, loans that migrated back to past due for less than 30 days in the amount of $618,000, loan payoffs or paydowns of $595,000, partially offset by new delinquent loans in the aggregate amount of $5.3 million.

Total net charge-offs were $580,000 for the second quarter of 2023, as compared to net charge-offs of $157,000 in the prior quarter and net charge-offs of $53,000 in the same quarter last year.

The allowance for credit losses totaled $43.1 million, or 1.35% of loans held for investment at June 30, 2023, compared with $43.1 million, or 1.29%, of loans held for investment at March 31, 2023.

Dividend Payout and Stock Repurchase

For the second quarter of 2023, the Board of Directors declared a common stock cash dividend of $0.16 per share, payable on August 11, 2023 to stockholders of record on July 31, 2023.

On June 14, 2022, the Board of Directors authorized the repurchase of up to 500,000 shares of common stock, of which 433,124 shares remain available. The repurchase program permits shares to be repurchased in open market or private transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rules 10b5-1 and 10b-8 of the SEC. The Company did not repurchase any shares during the second quarter of 2023, and has not repurchased any shares since October 24, 2022 pursuant to this authorization.

Corporate Overview

RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. As of June 30, 2023, the Company had total assets of $4.1 billion. Its wholly-owned subsidiary, the Bank, is a full service commercial bank, which provides business banking services to the Asian communities in Los Angeles County, Orange County, and Ventura County in California, in Las Vegas, Nevada, in Brooklyn, Queens, and Manhattan in New York, in Edison, New Jersey, in the Chicago neighborhoods of Chinatown and Bridgeport, Illinois, and on Oahu, Hawaii. Bank services include remote deposit, E-banking, mobile banking, commercial and investor real estate loans, business loans and lines of credit, commercial and industrial loans, SBA 7A and 504 loans, 1-4 single family residential loans, automobile lending, trade finance, a full range of depository account products and wealth management services. The Bank has nine branches in Los Angeles County, two branches in Ventura County, one branch in Orange County, California, one branch in Las Vegas, Nevada, three branches and one loan operation center in Brooklyn, three branches in Queens, one branch in Manhattan in New York, one branch in Edison, New Jersey, two branches in Chicago, Illinois, and one branch in Honolulu, Hawaii. The Company's administrative and lending center is located at 1055 Wilshire Blvd., Los Angeles, California 90017, and its finance and operations center is located at 7025 Orangethorpe Ave., Buena Park, California 90621. The Company's website address is www.royalbusinessbankusa.com.

Conference Call

Management will hold a conference call at 11:00 a.m. Pacific time/2:00 p.m. Eastern time on Tuesday, July 25, 2023, to discuss the Company’s second quarter 2023 financial results.

To listen to the conference call, please dial 1-888-506-0062 or 1-973-528-0011, the Participant ID code is 813494, conference ID RBBQ223. A replay of the call will be made available at 1-877-481-4010 or 1-919-882-2331, the passcode is 48674, approximately one hour after the conclusion of the call and will remain available through August 8, 2023.

The conference call will also be simultaneously webcast over the Internet; please visit our Royal Business Bank website at www.royalbusinessbankusa.com and click on the “Investors” tab to access the call from the site. This webcast will be recorded and available for replay on our website approximately two hours after the conclusion of the conference call.

Disclosure

This press release contains certain non-GAAP financial disclosures for tangible common equity and tangible assets and adjusted earnings. The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. Please refer to the tables at the end of this release for a presentation of performance ratios in accordance with GAAP and a reconciliation of the non-GAAP financial measures to the GAAP financial measures.

Safe Harbor

Certain matters set forth herein (including the exhibits hereto) constitute forward-looking statements relating to the Company’s current business plans and expectations and our future financial position and operating results. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance and/or achievements to differ materially from those projected. These risks and uncertainties include, but are not limited to, business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic markets, including the tight labor market, ineffective management of the U.S. federal budget or debt or turbulence or uncertainly in domestic of foreign financial markets; the strength of the United States economy in general and the strength of the local economies in which we conduct operations; our ability to attract and retain deposits and access other sources of liquidity; possible additional provisions for loan losses and charge-offs; credit risks of lending activities and deterioration in asset or credit quality; extensive laws and regulations and supervision that we are subject to, including potential supervisory action by bank supervisory authorities; increased costs of compliance and other risks associated with changes in regulation, including any amendments to the Dodd-Frank Wall Street Reform and Consumer Protection Act; compliance with the Bank Secrecy Act and other money laundering statutes and regulations; potential goodwill impairment; liquidity risk; fluctuations in interest rates; the transition away from the London Interbank Offering Rate ("LIBOR") and related uncertainty as well as the risks and costs related to our adopted alternative reference rate, including the Secured Overnight Financing Rate ("SOFR"); risks associated with acquisitions and the expansion of our business into new markets; inflation and deflation; real estate market conditions and the value of real estate collateral; environmental liabilities; our ability to compete with larger competitors; our ability to retain key personnel; successful management of reputational risk; severe weather, natural disasters, earthquakes, fires; or other adverse external events could harm our business; geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts or threats of terrorism and/or military conflicts, including the war between Russia and Ukraine, which could impact business and economic conditions in the United States and abroad; public health crises and pandemics, including the COVID-19 pandemic, and their effects on the economic and business environments in which we operate, including our credit quality and business operations, as well as the impact on general economic and financial market conditions; general economic or business conditions in Asia, and other regions where the Bank has operations; failures, interruptions, or security breaches of our information systems; climate change, including any enhanced regulatory, compliance, credit and reputational risks and costs; cybersecurity threats and the cost of defending against them; our ability to adapt our systems to the expanding use of technology in banking; risk management processes and strategies; adverse results in legal proceedings; the impact of regulatory enforcement actions, if any; certain provisions in our charter and bylaws that may affect acquisition of the Company; changes in tax laws and regulations; the impact of governmental efforts to restructure the U.S. financial regulatory system; the impact of future or recent changes in the Federal Deposit Insurance Corporation ("FDIC") insurance assessment rate of the rules and regulations related to the calculation of the FDIC insurance assessment amount; the effect of changes in accounting policies and practices or accounting standards, as may be adopted from time-to-time by bank regulatory agencies, the SEC, the Public Company Accounting Oversight Board, the Financial Accounting Standards Board (“FASB”) or other accounting standards setters, including Accounting Standards Update (“ASU” or “Update”) 2016-13 (Topic 326, “Measurement of Current Losses on Financial Instruments, commonly referenced as the Current Expected Credit Losses Model (“CECL”), which changed how we estimate credit losses and may further increase the required level of our allowance for credit losses in future periods; market disruption and volatility; fluctuations in the Bancorp’s stock price; restrictions on dividends and other distributions by laws and regulations and by our regulators and our capital structure; issuances of preferred stock; our ability to raise additional capital, if needed, and the potential resulting dilution of interests of holders of our common stock; the soundness of other financial institutions; our ongoing relations with our various federal and state regulators, including the SEC, FDIC, FRB and California DFPI (formerly DBO); our success at managing the risks involved in the foregoing items and all other factors set forth in the Company’s public reports, including its Annual Report as filed under Form 10-K and Form 10-K/A for the year ended December 31, 2022, and particularly the discussion of risk factors within that document. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements except as required by law. Any statements about future operating results, such as those concerning accretion and dilution to the Company’s earnings or shareholders, are for illustrative purposes only, are not forecasts, and actual results may differ.

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands) 

 

 

June 30,

 

March 31,

 

June 30,

 

 

2023

 

2023

 

2022

Assets

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

246,325

 

 

$

230,703

 

 

$

224,736

 

Federal funds sold and other cash equivalents

 

 

 

 

 

 

 

 

100,000

 

Total cash and cash equivalents

 

 

246,325

 

 

 

230,703

 

 

 

324,736

 

Interest-bearing deposits in other financial institutions

 

 

600

 

 

 

600

 

 

 

600

 

Investment securities available for sale

 

 

391,116

 

 

 

293,371

 

 

 

358,135

 

Investment securities held to maturity

 

 

5,718

 

 

 

5,722

 

 

 

5,741

 

Mortgage loans held for sale

 

 

555

 

 

 

 

 

 

 

Loans held for investment

 

 

3,195,995

 

 

 

3,342,416

 

 

 

3,045,946

 

Allowance for credit losses

 

 

(43,092

)

 

 

(43,071

)

 

 

(34,154

)

Net loans held for investment

 

 

3,152,903

 

 

 

3,299,345

 

 

 

3,011,792

 

Premises and equipment, net

 

 

26,600

 

 

 

27,040

 

 

 

27,104

 

Federal Home Loan Bank (FHLB) stock

 

 

15,000

 

 

 

15,000

 

 

 

15,000

 

Cash surrender value of life insurance

 

 

57,989

 

 

 

57,645

 

 

 

56,642

 

Goodwill

 

 

71,498

 

 

 

71,498

 

 

 

71,498

 

Servicing assets

 

 

8,702

 

 

 

9,159

 

 

 

10,456

 

Core deposit intangibles

 

 

3,246

 

 

 

3,481

 

 

 

4,248

 

Right-of-use assets- operating leases

 

 

28,677

 

 

 

29,931

 

 

 

25,931

 

Accrued interest and other assets

 

 

66,689

 

 

 

66,589

 

 

 

57,154

 

Total assets

 

$

4,075,618

 

 

$

4,110,084

 

 

$

3,969,037

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Noninterest-bearing demand

 

$

585,746

 

 

$

672,177

 

 

$

1,045,009

 

Savings, NOW and money market accounts

 

 

598,546

 

 

 

617,100

 

 

 

868,307

 

Time deposits, less than $250,000

 

 

1,275,476

 

 

 

1,122,687

 

 

 

574,050

 

Time deposits, greater than or equal to $250,000

 

 

715,648

 

 

 

739,098

 

 

 

540,199

 

Total deposits

 

 

3,175,416

 

 

 

3,151,062

 

 

 

3,027,565

 

FHLB advances

 

 

150,000

 

 

 

220,000

 

 

 

250,000

 

Long-term debt, net of debt issuance costs

 

 

173,874

 

 

 

173,730

 

 

 

173,296

 

Subordinated debentures

 

 

14,829

 

 

 

14,774

 

 

 

14,611

 

Lease liabilities - operating leases

 

 

29,915

 

 

 

31,078

 

 

 

26,823

 

Accrued interest and other liabilities

 

 

31,294

 

 

 

24,683

 

 

 

13,035

 

Total liabilities

 

 

3,575,328

 

 

 

3,615,327

 

 

 

3,505,330

 

Shareholders' equity:

 

 

 

 

 

 

 

 

 

Shareholders' equity

 

 

522,623

 

 

 

514,563

 

 

 

479,382

 

Non-controlling interest

 

 

72

 

 

 

72

 

 

 

72

 

Accumulated other comprehensive loss, net of tax

 

 

(22,405

)

 

 

(19,878

)

 

 

(15,747

)

Total shareholders' equity

 

 

500,290

 

 

 

494,757

 

 

 

463,707

 

Total liabilities and shareholders’ equity

 

$

4,075,618

 

 

$

4,110,084

 

 

$

3,969,037

 

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except share and per share data) 

 

 

For the Three Months Ended

 

 

June 30, 2023

 

March 31, 2023

 

June 30, 2022

Interest and dividend income:

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

50,810

 

 

$

49,942

 

$

40,157

Interest on interest-bearing deposits

 

 

2,112

 

 

 

791

 

 

111

Interest on investment securities

 

 

3,574

 

 

 

2,536

 

 

1,419

Dividend income on FHLB stock

 

 

259

 

 

 

265

 

 

222

Interest on federal funds sold and other

 

 

247

 

 

 

217

 

 

429

Total interest income

 

 

57,002

 

 

 

53,751

 

 

42,338

Interest expense:

 

 

 

 

 

 

 

 

 

Interest on savings deposits, NOW and money market accounts

 

 

2,778

 

 

 

2,296

 

 

844

Interest on time deposits

 

 

19,169

 

 

 

13,406

 

 

1,506

Interest on subordinated debentures and long term debt

 

 

2,550

 

 

 

2,539

 

 

2,379

Interest on other borrowed funds

 

 

579

 

 

 

1,409

 

 

519

Total interest expense

 

 

25,076

 

 

 

19,650

 

 

5,248

Net interest income before provision for credit losses

 

 

31,926

 

 

 

34,101

 

 

37,090

Provision for credit losses

 

 

380

 

 

 

2,014

 

 

915

Net interest income after provision for credit losses

 

 

31,546

 

 

 

32,087

 

 

36,175

Noninterest income:

 

 

 

 

 

 

 

 

 

Service charges, fees and other

 

 

1,528

 

 

 

1,257

 

 

1,480

Gain on sale of loans

 

 

18

 

 

 

29

 

 

344

Loan servicing fees, net of amortization

 

 

606

 

 

 

731

 

 

472

Unrealized (loss)/gain on derivatives

 

 

(3

)

 

 

10

 

 

39

Increase in cash surrender value of life insurance

 

 

344

 

 

 

335

 

 

330

Gain on sale of fixed assets

 

 

 

 

 

 

 

757

Total noninterest income

 

 

2,493

 

 

 

2,362

 

 

3,422

Noninterest expense:

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

9,327

 

 

 

9,864

 

 

9,628

Occupancy and equipment expenses

 

 

2,430

 

 

 

2,398

 

 

2,174

Data processing

 

 

1,356

 

 

 

1,299

 

 

1,293

Legal and professional

 

 

2,872

 

 

 

3,013

 

 

2,254

Office expenses

 

 

350

 

 

 

375

 

 

358

Marketing and business promotion

 

 

252

 

 

 

300

 

 

501

Insurance and regulatory assessments

 

 

809

 

 

 

504

 

 

478

Core deposit premium

 

 

235

 

 

 

237

 

 

277

Other expenses

 

 

886

 

 

 

921

 

 

649

Total noninterest expense

 

 

18,517

 

 

 

18,911

 

 

17,612

Income before income taxes

 

 

15,522

 

 

 

15,538

 

 

21,985

Income tax expense

 

 

4,573

 

 

 

4,568

 

 

6,508

Net income

 

$

10,949

 

 

$

10,970

 

$

15,477

 

 

 

 

 

 

 

 

 

 

Net income per share

 

 

 

 

 

 

 

 

 

Basic

 

$

0.58

 

 

$

0.58

 

$

0.81

Diluted

 

$

0.58

 

 

$

0.58

 

$

0.80

Cash Dividends declared per common share

 

$

0.16

 

 

$

0.16

 

$

0.14

Weighted-average common shares outstanding

 

 

 

 

 

 

 

 

 

Basic

 

 

18,993,483

 

 

 

18,985,846

 

 

19,066,621

Diluted

 

 

18,995,100

 

 

 

19,049,685

 

 

19,324,253

RBB BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except share and per share data) 

 

 

For the Six Months Ended

 

 

June 30, 2023

 

June 30, 2022

Interest and dividend income:

 

 

 

 

 

 

Interest and fees on loans

 

$

100,752

 

$

78,043

 

Interest on interest-earning deposits

 

 

2,903

 

 

282

 

Interest on investment securities

 

 

6,110

 

 

2,426

 

Dividend income on FHLB stock

 

 

524

 

 

449

 

Interest on federal funds sold and other

 

 

464

 

 

704

 

Total interest income

 

 

110,753

 

 

81,904

 

Interest expense:

 

 

 

 

 

 

Interest on savings deposits, NOW and money market accounts

 

 

5,074

 

 

1,562

 

Interest on time deposits

 

 

32,575

 

 

3,080

 

Interest on subordinated debentures and long term debt

 

 

5,089

 

 

4,727

 

Interest on other borrowed funds

 

 

1,988

 

 

954

 

Total interest expense

 

 

44,726

 

 

10,323

 

Net interest income before provision for credit losses

 

 

66,027

 

 

71,581

 

Provision for credit losses

 

 

2,394

 

 

1,281

 

Net interest income after provision for credit losses

 

 

63,633

 

 

70,300

 

Noninterest income:

 

 

 

 

 

 

Service charges, fees and other

 

 

2,784

 

 

2,725

 

Gain on sale of loans

 

 

47

 

 

1,518

 

Loan servicing fees, net of amortization

 

 

1,337

 

 

904

 

Unrealized gain/(loss) on derivatives

 

 

7

 

 

(194

)

Increase in cash surrender value of life insurance

 

 

680

 

 

654

 

Gain on sale of fixed assets

 

 

 

 

757

 

Total noninterest income

 

 

4,855

 

 

6,364

 

Noninterest expense:

 

 

 

 

 

 

Salaries and employee benefits

 

 

19,191

 

 

18,997

 

Occupancy and equipment expenses

 

 

4,828

 

 

4,380

 

Data processing

 

 

2,655

 

 

2,551

 

Legal and professional

 

 

5,885

 

 

3,260

 

Office expenses

 

 

725

 

 

651

 

Marketing and business promotion

 

 

552

 

 

808

 

Insurance and regulatory assessments

 

 

1,313

 

 

919

 

Core deposit premium

 

 

472

 

 

556

 

Other expenses

 

 

1,807

 

 

1,549

 

Total noninterest expense

 

 

37,428

 

 

33,671

 

Income before income taxes

 

 

31,060

 

 

42,993

 

Income tax expense

 

 

9,141

 

 

12,899

 

Net income

 

$

21,919

 

$

30,094

 

 

 

 

 

 

 

 

Net income per share

 

 

 

 

 

 

Basic

 

$

1.15

 

$

1.56

 

Diluted

 

$

1.15

 

$

1.54

 

Cash Dividends declared per common share

 

$

0.32

 

$

0.28

 

Weighted-average common shares outstanding

 

 

 

 

 

 

Basic

 

 

18,989,686

 

 

19,221,155

 

Diluted

 

 

19,022,242

 

 

19,560,476

 

RBB BANCORP AND SUBSIDIARIES

AVERAGE BALANCE SHEET AND NET INTEREST INCOME

(Unaudited)

 

 

For the Three Months Ended

 

 

June 30, 2023

 

March 31, 2023

 

June 30, 2022

 

 

Average

 

Interest

 

Yield /

 

Average

 

Interest

 

Yield /

 

Average

 

Interest

 

Yield /

(tax-equivalent basis, dollars in thousands)

 

Balance

 

& Fees

 

Rate

 

Balance

 

& Fees

 

Rate

 

Balance

 

& Fees

 

Rate

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold, cash equivalents & other (1)

 

$

179,023

 

$

2,619

 

 

5.87

%

 

$

110,750

 

$

1,272

 

 

4.66

%

 

$

249,738

 

$

762

 

 

1.22

%

Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for sale (2)

 

 

348,343

 

 

3,547

 

 

4.08

%

 

 

277,206

 

 

2,510

 

 

3.67

%

 

 

399,321

 

 

1,393

 

 

1.40

%

Held to maturity (2)

 

 

5,720

 

 

51

 

 

3.58

%

 

 

5,727

 

 

51

 

 

3.61

%

 

 

5,744

 

 

50

 

 

3.49

%

Mortgage loans held for sale

 

 

52

 

 

1

 

 

6.65

%

 

 

88

 

 

1

 

 

6.45

%

 

 

892

 

 

13

 

 

5.85

%

Loans held for investment: (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

3,064,633

 

 

46,304

 

 

6.06

%

 

 

3,092,667

 

 

44,903

 

 

5.89

%

 

 

2,663,753

 

 

35,207

 

 

5.30

%

Commercial

 

 

207,493

 

 

4,503

 

 

8.70

%

 

 

249,911

 

 

5,038

 

 

8.18

%

 

 

325,861

 

 

4,937

 

 

6.08

%

Total loans held for investment

 

 

3,272,126

 

 

50,807

 

 

6.23

%

 

 

3,342,578

 

 

49,941

 

 

6.06

%

 

 

2,989,614

 

 

40,144

 

 

5.39

%

Total interest-earning assets

 

 

3,805,264

 

$

57,025

 

 

6.01

%

 

 

3,736,349

 

$

53,775

 

 

5.84

%

 

 

3,645,309

 

$

42,362

 

 

4.66

%

Noninterest-earning assets

 

 

244,316

 

 

 

 

 

 

 

 

239,956

 

 

 

 

 

 

 

 

243,279

 

 

 

 

 

 

Total assets

 

$

4,049,580

 

 

 

 

 

 

 

$

3,976,305

 

 

 

 

 

 

 

$

3,888,588

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW

 

$

59,789

 

$

202

 

 

1.36

%

 

$

63,401

 

$

108

 

 

0.69

%

 

$

75,637

 

$

50

 

 

0.27

%

Money Market

 

 

432,384

 

 

2,519

 

 

2.34

%

 

 

458,824

 

 

2,140

 

 

1.89

%

 

 

631,807

 

 

759

 

 

0.48

%

Saving deposits

 

 

111,214

 

 

57

 

 

0.21

%

 

 

120,695

 

 

49

 

 

0.16

%

 

 

148,400

 

 

35

 

 

0.09

%

Time deposits, less than $250,000

 

 

1,221,760

 

 

12,391

 

 

4.07

%

 

 

912,694

 

 

7,425

 

 

3.30

%

 

 

553,282

 

 

724

 

 

0.52

%

Time deposits, $250,000 and over

 

 

709,803

 

 

6,778

 

 

3.83

%

 

 

762,770

 

 

5,981

 

 

3.18

%

 

 

526,164

 

 

782

 

 

0.60

%

Total interest-bearing deposits

 

 

2,534,950

 

 

21,947

 

 

3.47

%

 

 

2,318,384

 

 

15,703

 

 

2.75

%

 

 

1,935,290

 

 

2,350

 

 

0.49

%

FHLB advances

 

 

160,220

 

 

579

 

 

1.45

%

 

 

229,778

 

 

1,409

 

 

2.49

%

 

 

182,749

 

 

519

 

 

1.14

%

Long-term debt

 

 

173,780

 

 

2,194

 

 

5.06

%

 

 

173,635

 

 

2,194

 

 

5.12

%

 

 

173,201

 

 

2,195

 

 

5.08

%

Subordinated debentures

 

 

14,793

 

 

356

 

 

9.65

%

 

 

14,739

 

 

344

 

 

9.47

%

 

 

14,575

 

 

184

 

 

5.06

%

Total interest-bearing liabilities

 

 

2,883,743

 

 

25,076

 

 

3.49

%

 

 

2,736,536

 

 

19,650

 

 

2.91

%

 

 

2,305,815

 

 

5,248

 

 

0.91

%

Noninterest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

 

606,015

 

 

 

 

 

 

 

 

698,351

 

 

 

 

 

 

 

 

1,082,793

 

 

 

 

 

 

Other noninterest-bearing liabilities

 

 

59,760

 

 

 

 

 

 

 

 

49,118

 

 

 

 

 

 

 

 

33,377

 

 

 

 

 

 

Total noninterest-bearing liabilities

 

 

665,775

 

 

 

 

 

 

 

 

747,469

 

 

 

 

 

 

 

 

1,116,170

 

 

 

 

 

 

Shareholders' equity

 

 

500,062

 

 

 

 

 

 

 

 

492,300

 

 

 

 

 

 

 

 

466,603

 

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

4,049,580

 

 

 

 

 

 

 

$

3,976,305

 

 

 

 

 

 

 

$

3,888,588

 

 

 

 

 

 

Net interest income / interest rate spreads

 

 

 

 

$

31,949

 

 

2.52

%

 

 

 

 

$

34,125

 

 

2.93

%

 

 

 

 

$

37,114

 

 

3.75

%

Net interest margin

 

 

 

 

 

 

 

 

3.37

%

 

 

 

 

 

 

 

 

3.70

%

 

 

 

 

 

 

 

 

4.08

%

(1)

 

Includes income and average balances for FHLB stock, term federal funds, interest-bearing time deposits and other miscellaneous interest-bearing assets.

(2)

 

Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis.

(3)

 

Average loan balances include nonaccrual loans and loans held for sale. Interest income on loans includes - amortization of deferred loan fees, net of deferred loan costs.

RBB BANCORP AND SUBSIDIARIES

AVERAGE BALANCE SHEET AND NET INTEREST INCOME

(Unaudited) 

 

 

For the Six Months Ended

 

 

June 30, 2023

 

June 30, 2022

 

 

Average

 

Interest

 

Yield /

 

Average

 

Interest

 

Yield /

(tax-equivalent basis, dollars in thousands)

 

Balance

 

& Fees

 

Rate

 

Balance

 

& Fees

 

Rate

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold, cash equivalents & other (1)

 

$

145,075

 

$

3,891

 

 

5.41

%

 

$

438,140

 

$

1,435

 

 

0.66

%

Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for sale (2)

 

 

312,971

 

 

6,057

 

 

3.90

%

 

 

396,107

 

 

2,367

 

 

1.21

%

Held to maturity (2)

 

 

5,724

 

 

103

 

 

3.63

%

 

 

5,996

 

 

107

 

 

3.60

%

Mortgage loans held for sale

 

 

70

 

 

2

 

 

6.55

%

 

 

2,265

 

 

56

 

 

4.99

%

Loans held for investment: (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate

 

 

3,078,572

 

 

91,208

 

 

5.97

%

 

 

2,633,237

 

 

68,302

 

 

5.23

%

Commercial

 

 

228,585

 

 

9,541

 

 

8.42

%

 

 

353,267

 

 

9,685

 

 

5.53

%

Total loans held for investment

 

 

3,307,157

 

 

100,749

 

 

6.14

%

 

 

2,986,504

 

 

77,987

 

 

5.27

%

Total interest-earning assets

 

 

3,770,997

 

$

110,802

 

 

5.93

%

 

 

3,829,012

 

$

81,952

 

 

4.32

%

Noninterest-earning assets

 

 

242,148

 

 

 

 

 

 

 

 

242,261

 

 

 

 

 

 

Total assets

 

$

4,013,145

 

 

 

 

 

 

 

$

4,071,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW

 

$

61,585

 

$

310

 

 

1.02

%

 

$

75,519

 

$

94

 

 

0.25

%

Money Market

 

 

445,531

 

 

4,659

 

 

2.11

%

 

 

675,758

 

 

1,401

 

 

0.42

%

Saving deposits

 

 

115,928

 

 

105

 

 

0.18

%

 

 

146,872

 

 

67

 

 

0.09

%

Time deposits, less than $250,000

 

 

1,068,081

 

 

19,816

 

 

3.74

%

 

 

576,792

 

 

1,478

 

 

0.52

%

Time deposits, $250,000 and over

 

 

736,140

 

 

12,759

 

 

3.50

%

 

 

548,065

 

 

1,602

 

 

0.59

%

Total interest-bearing deposits

 

 

2,427,265

 

 

37,649

 

 

3.13

%

 

 

2,023,006

 

 

4,642

 

 

0.46

%

FHLB advances

 

 

194,807

 

 

1,988

 

 

2.06

%

 

 

166,465

 

 

954

 

 

1.16

%

Long-term debt

 

 

173,708

 

 

4,389

 

 

5.10

%

 

 

173,129

 

 

4,388

 

 

5.11

%

Subordinated debentures

 

 

14,766

 

 

700

 

 

9.56

%

 

 

14,548

 

 

339

 

 

4.70

%

Total interest-bearing liabilities

 

 

2,810,546

 

 

44,726

 

 

3.21

%

 

 

2,377,148

 

 

10,323

 

 

0.88

%

Noninterest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

 

651,928

 

 

 

 

 

 

 

 

1,191,540

 

 

 

 

 

 

Other noninterest-bearing liabilities

 

 

54,469

 

 

 

 

 

 

 

 

33,846

 

 

 

 

 

 

Total noninterest-bearing liabilities

 

 

706,397

 

 

 

 

 

 

 

 

1,225,386

 

 

 

 

 

 

Shareholders' equity

 

 

496,202

 

 

 

 

 

 

 

 

468,739

 

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

4,013,145

 

 

 

 

 

 

 

$

4,071,273

 

 

 

 

 

 

Net interest income / interest rate spreads

 

 

 

 

$

66,076

 

 

2.72

%

 

 

 

 

$

71,629

 

 

3.44

%

Net interest margin

 

 

 

 

 

 

 

 

3.53

%

 

 

 

 

 

 

 

 

3.77

%

(1)

 

Includes income and average balances for FHLB stock, term federal funds, interest-bearing time deposits and other miscellaneous interest-bearing assets.

(2)

 

Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis.

(3)

 

Average loan balances include nonaccrual loans and loans held for sale. Interest income on loans includes - amortization of deferred loan fees, net of deferred loan costs.

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited) 

 

 

For the Three Months Ended

 

 

June 30,

 

March 31,

 

June 30,

 

 

2023

 

2023

 

2022

Per share data (common stock)

 

 

 

 

 

 

 

 

 

Book value

 

$

26.34

 

 

$

26.05

 

 

$

24.56

 

Tangible book value (1)

 

$

22.40

 

 

$

22.10

 

 

$

20.55

 

Performance ratios

 

 

 

 

 

 

 

 

 

Return on average assets, annualized

 

 

1.08

%

 

 

1.12

%

 

 

1.60

%

Return on average shareholders' equity, annualized

 

 

8.78

%

 

 

9.04

%

 

 

13.30

%

Return on average tangible common equity, annualized (1)

 

 

10.33

%

 

 

10.66

%

 

 

15.89

%

Noninterest income to average assets, annualized

 

 

0.25

%

 

 

0.24

%

 

 

0.35

%

Noninterest expense to average assets, annualized

 

 

1.83

%

 

 

1.93

%

 

 

1.82

%

Yield on average earning assets

 

 

6.01

%

 

 

5.84

%

 

 

4.66

%

Cost of average total deposits

 

 

2.80

%

 

 

2.11

%

 

 

0.31

%

Cost of average interest-bearing deposits

 

 

3.47

%

 

 

2.75

%

 

 

0.49

%

Cost of average interest-bearing liabilities

 

 

3.49

%

 

 

2.91

%

 

 

0.91

%

Accretion on loans to average earning assets

 

 

0.04

%

 

 

0.02

%

 

 

0.01

%

Net interest spread

 

 

2.52

%

 

 

2.93

%

 

 

3.75

%

Net interest margin

 

 

3.37

%

 

 

3.70

%

 

 

4.08

%

Efficiency ratio (2)

 

 

53.80

%

 

 

51.86

%

 

 

43.47

%

Common stock dividend payout ratio

 

 

27.59

%

 

 

27.59

%

 

 

17.28

%

(1)

 

Reconciliations of the non–GAAP measures are set forth at the end of this press release.

(2)

 

Ratio calculated by dividing noninterest expense by the sum of net interest income before provision for credit losses and noninterest income.

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

 

 

For the Six Months Ended June 30,

 

 

2023

 

2022

Per share data (common stock)

 

 

 

 

 

 

Book value

 

$

26.34

 

$

24.56

Tangible book value (1)

 

$

22.40

 

$

20.55

Performance ratios

 

 

 

 

 

 

Return on average assets, annualized

 

 

1.10%

 

 

1.49%

Return on average shareholders' equity, annualized

 

 

8.91%

 

 

12.95%

Return on average tangible common equity, annualized (1)

 

 

10.49%

 

 

15.40%

Noninterest income to average assets, annualized

 

 

0.24%

 

 

0.32%

Noninterest expense to average assets, annualized

 

 

1.88%

 

 

1.67%

Yield on average earning assets

 

 

5.93%

 

 

4.32%

Cost of average deposits

 

 

2.47%

 

 

0.29%

Cost of average interest-bearing deposits

 

 

3.13%

 

 

0.46%

Cost of average interest-bearing liabilities

 

 

3.21%

 

 

0.88%

Accretion on loans to average earning assets

 

 

0.03%

 

 

0.02%

Net interest spread

 

 

2.72%

 

 

3.44%

Net interest margin

 

 

3.53%

 

 

3.77%

Efficiency ratio (2)

 

 

52.80%

 

 

43.20%

Common stock dividend payout ratio

 

 

27.83%

 

 

17.95%

(1)

 

Reconciliations of the non–GAAP measures are set forth at the end of this press release.

(2)

 

Ratio calculated by dividing noninterest expense by the sum of net interest income before provision for credit losses and noninterest income.

 

 

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited)

(Dollars in thousands) 

 

 

As of

 

 

June 30,

 

March 31,

 

June 30,

 

 

2023

 

2023

 

2022

Credit Quality Data:

 

 

 

 

 

 

 

 

 

Loans 30-89 days past due

 

$

7,242

 

 

$

14,288

 

 

$

8,346

 

Loans 30-89 days past due to total loans

 

 

0.23

%

 

 

0.43

%

 

 

0.27

%

Nonperforming loans

 

$

41,862

 

 

$

26,436

 

 

$

13,937

 

Nonperforming loans to total loans

 

 

1.31

%

 

 

0.79

%

 

 

0.46

%

Nonperforming assets

 

$

42,439

 

 

$

27,013

 

 

$

14,230

 

Nonperforming assets to total assets

 

 

1.04

%

 

 

0.66

%

 

 

0.36

%

Special mention loans

 

$

24,150

 

 

$

89,029

 

 

$

23,281

 

Special mention loans to total loans

 

 

0.76

%

 

 

2.66

%

 

 

0.76

%

Substandard loans

 

$

74,065

 

 

$

77,688

 

 

$

48,027

 

Substandard loans to total loans

 

 

2.32

%

 

 

2.32

%

 

 

1.58

%

Allowance for credit losses to total loans

 

 

1.35

%

 

 

1.29

%

 

 

1.12

%

Allowance for credit losses to nonperforming loans

 

 

102.94

%

 

 

162.93

%

 

 

245.06

%

Net charge-offs

 

$

580

 

 

$

157

 

 

$

53

 

Net charge-offs to average loans (for the quarter-to-date period)

 

 

0.07

%

 

 

0.02

%

 

 

0.01

%

 

 

 

 

 

 

 

 

 

 

Capital ratios

 

 

 

 

 

 

 

 

 

Tangible common equity to tangible assets (1)

 

 

10.64

%

 

 

10.40

%

 

 

9.96

%

Tier 1 leverage ratio

 

 

11.60

%

 

 

11.61

%

 

 

10.95

%

Tier 1 common capital to risk-weighted assets

 

 

16.91

%

 

 

16.33

%

 

 

14.82

%

Tier 1 capital to risk-weighted assets

 

 

17.46

%

 

 

16.88

%

 

 

15.35

%

Total capital to risk-weighted assets

 

 

25.27

%

 

 

24.58

%

 

 

22.94

%

(1)

 

Reconciliations of the non-GAAP measures are set forth at the end of this press release.

RBB BANCORP AND SUBSIDIARIES

SELECTED FINANCIAL HIGHLIGHTS

(Unaudited) 

Loan Portfolio Detail

 

As of June 30, 2023

 

As of March 31, 2023

 

As of June 30, 2022

(dollars in thousands)

 

$

 

%

 

$

 

%

 

$

 

%

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

131,456

 

 

 

4.1

%

 

$

156,023

 

 

 

4.7

%

 

$

238,045

 

 

 

7.8

%

SBA

 

 

53,459

 

 

 

1.7

%

 

 

58,531

 

 

 

1.7

%

 

 

59,303

 

 

 

1.9

%

Construction and land development

 

 

256,916

 

 

 

8.0

%

 

 

281,203

 

 

 

8.4

%

 

 

356,772

 

 

 

11.7

%

Commercial real estate (1)

 

 

1,183,396

 

 

 

37.0

%

 

 

1,288,188

 

 

 

38.5

%

 

 

1,160,350

 

 

 

38.1

%

Single-family residential mortgages

 

 

1,554,713

 

 

 

48.7

%

 

 

1,539,982

 

 

 

46.1

%

 

 

1,205,732

 

 

 

39.6

%

Other loans

 

 

16,055

 

 

 

0.5

%

 

 

18,489

 

 

 

0.6

%

 

 

25,744

 

 

 

0.9

%

Total loans (2)

 

$

3,195,995

 

 

 

100.0

%

 

$

3,342,416

 

 

 

100.0

%

 

$

3,045,946

 

 

 

100.0

%

Allowance for credit losses

 

 

(43,092

)

 

 

 

 

 

(43,071

)

 

 

 

 

 

(34,154

)

 

 

 

Total loans, net

 

$

3,152,903

 

 

 

 

 

$

3,299,345

 

 

 

 

 

$

3,011,792

 

 

 

 

(1)

 

Includes non-farm and non-residential loans, multi-family residential loans and non-owner occupied single family residential loans.

(2)

 

Net of discounts and deferred fees and costs.

Non-GAAP Financial Measures

Tangible Book Value Reconciliations

The tangible book value per share is a non-GAAP disclosure. Management measures the tangible book value per share to assess the Company’s capital strength and business performance and believes these are helpful to investors as additional tool for further understanding our performance. The following is a reconciliation of tangible book value to the Company shareholders’ equity computed in accordance with GAAP, as well as a calculation of tangible book value per share as of June 30, 2023, March 31, 2023, and June 30, 2022.

(dollars in thousands, except share and per share data)

 

June 30, 2023

 

March 31, 2023

 

June 30, 2022

Tangible common equity:

 

 

 

 

 

 

 

 

 

Total shareholders' equity

 

$

500,290

 

 

$

494,757

 

 

$

463,707

 

Adjustments

 

 

 

 

 

 

 

 

 

Goodwill

 

 

(71,498

)

 

 

(71,498

)

 

 

(71,498

)

Core deposit intangible

 

 

(3,246

)

 

 

(3,481

)

 

 

(4,248

)

Tangible common equity

 

$

425,546

 

 

$

419,778

 

 

$

387,961

 

Tangible assets:

 

 

 

 

 

 

 

 

 

Total assets-GAAP

 

$

4,075,618

 

 

$

4,110,084

 

 

$

3,969,037

 

Adjustments

 

 

 

 

 

 

 

 

 

Goodwill

 

 

(71,498

)

 

 

(71,498

)

 

 

(71,498

)

Core deposit intangible

 

 

(3,246

)

 

 

(3,481

)

 

 

(4,248

)

Tangible assets

 

$

4,000,874

 

 

$

4,035,105

 

 

$

3,893,291

 

Common shares outstanding

 

 

18,995,303

 

 

 

18,992,903

 

 

 

18,881,829

 

Tangible common equity to tangible assets ratio

 

 

10.64

%

 

 

10.40

%

 

 

9.96

%

Book value per share

 

$

26.34

 

 

$

26.05

 

 

$

24.56

 

Tangible book value per share

 

$

22.40

 

 

$

22.10

 

 

$

20.55

 

Return on Average Tangible Common Equity

Management measures return on average tangible common equity (“ROATCE”) to assess the Company’s capital strength and business performance and believes these are helpful to investors as an additional tool for further understanding our performance. Tangible equity excludes goodwill and other intangible assets (excluding mortgage servicing rights), and is reviewed by banking and financial institution regulators when assessing a financial institution’s capital adequacy. This non-GAAP financial measure should not be considered a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled measures used by other companies. The following table reconciles ROTCE to its most comparable GAAP measure:

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

(dollars in thousands)

 

2023

 

2022

 

2023

 

2022

Net income available to common shareholders

 

$

10,949

 

 

$

15,477

 

 

$

21,919

 

 

$

30,094

 

Average shareholders' equity

 

 

500,062

 

 

 

466,603

 

 

 

496,202

 

 

 

468,739

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

(71,498

)

 

 

(71,498

)

 

 

(71,498

)

 

 

(70,389

)

Core deposit intangible

 

 

(3,400

)

 

 

(4,430

)

 

 

(3,517

)

 

 

(4,246

)

Adjusted average tangible common equity

 

$

425,164

 

 

$

390,675

 

 

$

421,187

 

 

$

394,104

 

Return on average tangible common equity

 

 

10.33

%

 

 

15.89

%

 

 

10.49

%

 

 

15.40

%

 

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