RBB Bancorp (RBB) Q2 Earnings call transcript Jul 23, 2024

RBB Bancorp recently held its second quarter 2024 earnings call, shedding light on the company's financial performance and strategic initiatives. The call, led by CEO David Morris and CFO Lynn Hopkins, provided insights into the bank's loan growth, net interest margin, and other key metrics, highlighting both challenges and opportunities for the future.

Loan Growth and Margin Stabilization

RBB Bancorp reported a net income of $7.2 million or $0.39 per share, marking a decline from the previous quarter's $0.43 per share. The company saw modest loan growth of $20 million, supported by loan production at a weighted average rate of 7.4%. This growth was driven by increased loan activity and a expanding loan pipeline, which is expected to support further net loan growth. Despite a decline in net interest margin by 2 basis points, management remains optimistic about its expansion in the third and fourth quarters.

Non-Performing Loans and Resolution Strategies

A significant topic of discussion during the call was the increase in non-performing loans, primarily due to three loans migrating to non-accrual. These loans totaled $22 million and consisted of a C&D loan, a CRE loan, and a C&I loan secured by a personal residence. While the increase in non-performing assets could be a cause for concern, management expressed confidence in the underlying collateral and their ability to resolve these loans without material loss. They expect to settle through trustee sales two SFR non-accrual loans totaling $8.1 million in the third quarter.

Deposit Growth and Expenses

RBB Bancorp's total deposits remained stable at $3 billion, with a focus on replacing wholesale funding with retail deposits. The company's average all-in-cost deposit for the second quarter was unchanged at 3.59%. The decline in interest expenses from the first quarter was attributed to a reduction in reliance on wholesale funding.

Future Outlook and Investor Questions

Management provided a cautiously optimistic outlook for the remainder of the year, emphasizing loan growth and margin stabilization. They acknowledged the challenges of the current environment, but expressed optimism about the potential for increased growth in the second half of the year. Investor questions focused on loan growth opportunities, the impact of non-performing loans, and the bank's strategies for managing these challenges.

Key Takeaways

RBB Bancorp's second quarter earnings call highlighted the bank's focus on stabilization and optimism amid challenges. The company's strategic initiatives, including loan growth, margin stabilization, and deposit growth, indicate a strong commitment to maintaining financial health and capitalizing on opportunities. The increase in non-performing loans presents challenges, but management's confidence in their resolution strategies and underlying collateral bodes well for the bank's future. Overall, RBB Bancorp's earnings call underscores the company's resilience and strategic focus, positioning it well for the challenges and opportunities ahead.