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What were the key takeaways from RBB’s earnings call?

- **Record Profit Growth**: Q3 net income up 45% Y/Y to $10.1 million, driven by loan growth and credit stabilization.
- **Margin Expansion**: NIM +30bps over 4Qs to 2.98%, supported by 6.70% loan originations yield.
- **Credit Cleanup Progress**: NPLs down 20% Q/Q, with 93% of nonaccruals concentrated in a few large relationships.
- **Aggressive Capital Returns**: $10 million share buyback completed, with 1.6% of shares repurchased in Q3 alone.
- **Strategic Focus**: Shifting loan mix towards higher-margin C&I while maintaining strong SFR and CRE growth.

**【CEO Summary Section】**
- **Net Income Growth**: Q3 net income of $10.1 million ($0.59 per share), up 9% Q/Q and 45% Y/Y, driven by core earnings and lower credit costs.
- **Loan Performance**: Loans held for investment grew $68 million (8% annualized), with originations at 6.70% yield (67bps above portfolio average).
- **Margin Expansion**: Net interest margin (NIM) rose 6bps to 2.98%, up 30bps over 4 quarters. NIM improvement supported by strong loan growth and stable funding costs.
- **Credit Improvement**: Nonperforming loans (NPLs) decreased 20% Q/Q to $44.5 million. Criticized assets down 14% due to upgrades, including a $44 million construction loan completion.

**【CFO Financial Commentary】**
- **Revenue Growth**: Net interest income increased $3.2 million Q/Q, driven by higher loan yields. Noninterest income down $5.2 million due to one-time ERC benefits.
- **Expense Management**: Noninterest expenses decreased $1.8 million Q/Q to $18.7 million. Efficiency ratio improved to 57%, lowest in years.
- **Capital Returns**: Repurchased 660,000 shares (1.6% of outstanding shares). Tangible book value per share up 12% annualized to $25.89.
- **Deposit Growth**: Total deposits increased $178 million (5.4% Q/Q), with growth across all categories. Spot rate on deposits at 2.97%, down 6bps Q/Q.
- **Asset Quality**: Allowance for loan losses at 1.36% of loans, reflecting prudent risk management. Net charge-offs of $6.9 million related to one large borrower.

**【Q&A Key Highlights】**
- **Credit Resolution Progress**: CEO compares credit cleanup to being in the 9th inning, with $44 million construction loan upgrade. Remaining NPLs concentrated in a few large relationships.
- **Share Buyback**: $4 million remaining under current $10 million authorization. Management open to re-upping program if stock price remains attractive.
- **Deposit Beta**: Funding costs lagging rate cuts due to competitive CD market. 14% of CDs maturing in Q4 at high 3% rates, creating repricing opportunity.
- **Loan Pipeline**: Healthy pipeline with focus on C&I and SBA lending, despite government shutdown delays. CRE and SFR originations driving near-term growth.
- **Margin Outlook**: Expect continued NIM expansion from loan yield growth, offsetting potential rate cut impacts. 6.70% originations yield demonstrates disciplined pricing.
- **Capital Allocation**: Prioritizing buybacks, organic growth investments, and selective M&A. Efficiency ratio target below 55% as cost management matures.

RBB Bancorp (RBB) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

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Loss on Disposal of Assets

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Net Income

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Total Comprehensive Income Attributable to Owners of the Company

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