RBB Bancorp's Q4 2024: Navigating Contradictions in Deposits, Expenses, and Loan Growth

These are the key contradictions discussed in RBB Bancorp's latest 2024Q4 earnings call, specifically including: Non-Interest Bearing Deposits Growth Expectations, Legal and Professional Expense Run Rate, NIM Expectations, Loan Growth Outlook, and Deposit Cost Trends:



Credit Challenges and Loan Performance:
- RBB Bancorp reported a decrease in earnings due to credit issues, with a provision for credit losses of $6 million in Q4, up from $3.3 million in the prior quarter.
- The increase was mainly driven by partial charge-offs on three loans moved to held for sale and a $4.5 million increase in specific reserves for a C&D loan that migrated to non-performing status.

Net Interest Margin and Deposit Costs:
- The net interest margin increased by 8 basis points to 2.76% due to a 33 basis point decline in the cost of interest-bearing deposits.
- This decline was primarily attributed to the interest rate environment, with the weighted average interest rate on CDs repricing into the current lower-rate environment.

Loan and Deposit Dynamics:
- Loan balances declined in Q4, but the company anticipates growth to resume in the coming quarters, with $126 million of loan production in Q4.
- Total deposits remained stable, with a $20 million increase in non-interest-bearing deposits, driven by new commercial clients and efforts to expand the C&I clientele.

Capital Allocation and Stock Buyback:
- RBB Bancorp completed a $1 million share buyback earlier in 2024 and expressed interest in potentially restarting a stock buyback program in 2025.
- The decision was influenced by the need to focus on credit issues but may now consider further share buybacks due to a strong capital position.