RBB Bancorp (RBB) Q1 2025 earnings summary

Executive summary

• Q1 2025 net income was $2.3 million ($0.13 per share), down from $4.4 million in Q4 2024, mainly due to higher credit loss provisions and lower noninterest income.

• Non-performing assets decreased by 20% to $64.6 million, and net exposure to non-performing loans dropped by 32% to $51 million.

• Tangible book value per share increased to $24.63; book value per share rose to $28.77.

• Leadership transition announced, with CEO David Morris retiring after the May 2025 annual meeting and Johnny Lee assuming the role.

• Efficiency ratio rose to 65.1% from 61.5% in Q4 2024, reflecting higher noninterest expense and lower noninterest income.

Financial highlights

• Net interest income before provision was $26.2 million, up $186,000 sequentially, as lower interest expense offset lower interest income.

• Net interest margin expanded to 2.88%, driven by a decline in cost of interest-bearing deposits.

• Total deposits increased at an 8% annualized rate to $3.14 billion, with growth in money market accounts and CDs.

• Return on average assets was 0.24%, and return on tangible common equity was 2.12%.

• Noninterest expense increased to $18.5 million, mainly due to higher salaries and legal expenses.

Outlook and guidance

• Loan growth is expected to continue at a more moderate pace, with a healthy pipeline.

• Net interest margin anticipated to benefit from further, but slower, decreases in funding costs.

• Non-performing loans expected to remain lumpy through 2025, with targeted resolution by H2 2025.

• Gain on sale of loans expected to normalize, with higher SBA loan funding anticipated.

• Management expects to remain well-capitalized under stress scenarios and does not anticipate the need for additional liquidity sources.