Third Quarter 2025 Highlights
Net income increased 8.7% to $10.1 million, or $0.59 diluted earnings per share from the quarter ended June 30, 2025
Return on average assets of 0.97%, compared to 0.93% for the quarter ended June 30, 2025
Net interest margin expanded to 2.98%, up from 2.92% for the quarter ended June 30, 2025
Loans held for investment growth of $67.9 million, or 8.3% annualized
Common stock repurchases totaled $12.5 million
Classified and criticized loans decreased $56.1 million, or 30.8%, to $126.2 million at September 30, 2025, down from $182.3 million at June 30, 2025
Nonperforming assets decreased $6.7 million, or 11.0%, to $54.3 million at September 30, 2025, down from $61.0 million at June 30, 2025
Book value and tangible book value per share(1) increased to $30.18 and $25.89 at September 30, 2025, up from $29.25 and $25.11 at June 30, 2025
The Company reported net income of $10.1 million, or $0.59 diluted earnings per share, for the quarter ended September 30, 2025, compared to net income of $9.3 million, or $0.52 diluted earnings per share, for the quarter ended June 30, 2025. Net income for the third quarter of 2025 reflected higher net interest income, lower credit costs and a lower effective tax rate as compared to the prior quarter. Net income for the prior quarter included income from an Employee Retention Credit ("ERC") of $5.2 million (pre-tax), which was included in other income, offset partially by professional and advisory costs associated with filing and determining eligibility for the ERC totaling $1.2 million (pre-tax).
"Third quarter net income increased to $10.1 million, or $0.59 per share, and was driven by core earnings growth and lower credit costs," said Johnny Lee, President and Chief Executive Officer of RBB Bancorp. "Continued loan growth supported increased asset yields and net interest income. Loan loss provisions decreased as credit continued to stabilize and we made good progress addressing many of our non-performing loans and performing criticized loans."
(1)
Reconciliations of the non–U.S. generally accepted accounting principles ("GAAP") measures included at the end of this press release.
Net Interest Income and Net Interest Margin
Net interest income was $29.3 million for the third quarter of 2025, compared to $27.3 million for the second quarter of 2025. The $1.9 million increase was due to a $3.2 million increase in interest income, offset by a $1.2 million increase in interest expense. The increase in interest income was due mainly to a $2.4 million increase in interest and fees on loans. The increase in interest expense was due mainly to a $1.0 million increase in interest on deposits.
The net interest margin ("NIM") was 2.98% for the third quarter of 2025, an increase of 6 basis points from 2.92% for the second quarter of 2025. The NIM expansion included a 6 basis point increase in the yield on average interest-earning assets and a 2 basis point decrease in the overall cost of funds. The yield on average interest-earning assets increased to 5.85% for the third quarter of 2025 from 5.79% for the second quarter of 2025 driven by a 9 basis point increase in the yield on average loans to 6.12%. Average loans represented 83.3% of average interest-earning assets in the third quarter of 2025, as compared to 84.5% in the second quarter of 2025.
The average cost of funds decreased to 3.12% for the third quarter of 2025 from 3.14% for the second quarter of 2025, due to a 3 basis point decrease in the average cost of interest-bearing deposits, and a 9 basis point decrease in the average cost of total borrowings. The average cost of interest-bearing deposits decreased to 3.63% for the third quarter of 2025 from 3.66% for the second quarter of 2025. The overall funding mix for the third quarter of 2025 remained relatively unchanged from the second quarter of 2025 with average total interest-bearing deposits representing 89.4% of average interest-bearing liabilities and average noninterest-bearing deposits representing 16.6% of average total deposits. The spot rate for total deposits was 2.97% at September 30, 2025.
Provision for Credit Losses
The provision for credit losses was $625,000 for the third quarter of 2025 compared to $2.4 million for the second quarter of 2025. The third quarter of 2025 provision for credit losses reflected a provision for loan loss of $750,000 due mainly to net loan growth, and a decrease in provision for unfunded commitments of $125,000 due to lower volume of unfunded commitments. The third quarter provision also took into consideration factors such as changes in the outlook for economic conditions and market interest rates, and changes in credit quality metrics, including changes in loans 30-89 days past due, nonperforming loans, special mention and substandard loans during the period. Net charge-offs totaled $6.9 million in the third quarter and related almost entirely to a commercial construction loan, of which $6.6 million of this credit loss was reserved in prior periods, and the borrower filed for bankruptcy this quarter. Net charge-offs on an annualized basis represented 0.84% of average loans for the third quarter of 2025 compared to 0.42% for the second quarter of 2025.
Noninterest Income
Noninterest income for the third quarter of 2025 was $3.3 million, a decrease of $5.2 million from $8.5 million for the second quarter of 2025. The decrease was mostly due to the second quarter of 2025 including other income of $5.2 million for the receipt of ERC funds from the IRS. There were no such ERC amounts received or associated advisory costs recognized during the third quarter of 2025. In addition, other income increased $148,000 due to higher equity investment income of $498,000, offset by lower recoveries on fully charged-off acquired loans of $350,000.
Noninterest Expense
Noninterest expense for the third quarter of 2025 was $18.7 million, a decrease of $1.8 million from $20.5 million for the second quarter of 2025. The decrease was mainly due to lower legal and professional expenses of $1.5 million, including $1.2 million of ERC advisory costs incurred in the second quarter of 2025. Salaries and employee benefits also decreased by $480,000, of which $330,000 related to executive management transitions recognized in the prior quarter. The efficiency ratio was 57.36% for the third quarter of 2025, compared to 57.22% for the second quarter of 2025.
Income Taxes
The effective tax rate was 23.5% for the third quarter of 2025 and 27.8% for the second quarter of 2025. The decrease in the effective tax rate for the third quarter of 2025 was due mostly to a change in California tax law (Senate Bill 132), which changes the way banks and financial institutions apportion income for California tax purposes. The annual effective tax rate for fiscal 2025 is estimated to be in the range of 26% to 27%.
Balance Sheet
At September 30, 2025, total assets were $4.2 billion, a $118.4 million, or 2.9%, increase compared to June 30, 2025, and a $218.0 million, or 5.5%, increase compared to September 30, 2024.
Loan and Securities Portfolio
Loans held for investment ("HFI") totaled $3.3 billion as of September 30, 2025, an increase of $67.9 million, or 8.3% annualized, compared to June 30, 2025, and an increase of $210.7 million, or 6.8%, compared to September 30, 2024. The third quarter of 2025 net loan growth included $187.8 million in originations with an average yield of 6.70%. The net increase from June 30, 2025 was largely due to net increases of $47.9 million in single-family residential ("SFR") mortgage loans, $13.2 million in commercial real estate ("CRE") loans, and $8.4 million in commercial and industrial ("C&I") loans. The loan to deposit ratio was 98.1% at September 30, 2025, compared to 101.5% at June 30, 2025 and 100.0% at September 30, 2024.
As of September 30, 2025, available for sale securities ("AFS") totaled $410.6 million, a decrease of $2.5 million from June 30, 2025, primarily related to maturities and paydowns of $62.3 million, offset by purchases of $58.3 million during the third quarter of 2025. As of September 30, 2025, net unrealized losses totaled $20.5 million, a $2.6 million decrease when compared to net unrealized losses of $23.1 million as of June 30, 2025.
Deposits
Total deposits were $3.4 billion as of September 30, 2025, an increase of $178.3 million, or 22.2% annualized, compared to June 30, 2025 and an increase of $274.3 million, or 8.9%, compared to September 30, 2024. The increase during the third quarter of 2025 was due to a $171.7 million increase in interest-bearing deposits coupled with a $6.6 million increase in noninterest-bearing deposits. The increase in interest-bearing deposits included increases in wholesale time deposits of $84.3 million, retail time deposits of $57.4 million, and interest-bearing non-maturity deposits of $30.0 million. Wholesale time deposits were raised to repay $50.0 million in maturing FHLB advances. Noninterest-bearing deposits totaled $550.5 million, or 16.4% of total deposits at September 30, 2025 compared to $543.9 million, or 17.1% of total deposits at June 30, 2025.
Credit Quality
Nonperforming assets totaled $54.3 million, or 1.29% of total assets, at September 30, 2025, down from $61.0 million, or 1.49% of total assets, at June 30, 2025. Nonperforming assets included $8.8 million other real estate owned ("OREO") (included in "accrued interest and other assets") at September 30, 2025 and $4.2 million at June 30, 2025. The increase in OREO in the third quarter related to the foreclosure of 2 SBA loans with $3.7 million guaranteed. Accordingly, including the SBA guarantees, OREO exposure totaled $5.1 million at September 30, 2025.
Nonperforming loans totaled $45.4 million at September 30, 2025, down from $56.8 million at June 30, 2025. The $11.3 million decrease in nonperforming loans during the third quarter of 2025 was due to $6.9 million in net charge-offs, $5.0 million of loans migrating back to accrual status, $1.2 million in payoffs and paydowns, and $970,000 moving to OREO. These decreases were partially offset by additions to nonaccrual loans of $2.8 million.
Special mention loans, also referred to as criticized loans, totaled $49.3 million, or 1.49% of total loans, at September 30, 2025, down from $91.3 million, or 2.82% of total loans, at June 30, 2025. The $42.0 million decrease was primarily due to the upgrade of one $44.4 million completed construction loan, downgrades to substandard-rated loans totaling $8.4 million, and payoffs and paydowns totaling $2.9 million. These decreases were partially offset by the downgrade of loans to special mention totaling $10.8 million and $2.8 million in balance increases. As of September 30, 2025, all special mention loans were paying current.
Substandard loans, also referred to as classified loans, totaled $76.9 million at September 30, 2025, down from $91.0 million at June 30, 2025. The $14.1 million decrease in substandard loans during the third quarter was primarily due to payoffs and paydowns of $16.6 million, net charge-offs of $6.9 million, upgrades to pass-rated loans of $5.0 million, and transfers to OREO of $970,000. These decreases were partially offset by downgrades of loans to substandard of $15.4 million. Of the total substandard loans at September 30, 2025, there were $31.4 million on accrual status.
30-89 day delinquent loans, excluding nonperforming loans, totaled $6.5 million, or 0.20% of total loans, at September 30, 2025, down from $18.0 million, or 0.56% of total loans, at June 30, 2025. The $11.5 million decrease was mainly due to $13.0 million in loans returning to current status and $2.4 million in loans migrating to nonaccrual status, offset by $4.0 million in new delinquent loans.
As of September 30, 2025, the allowance for credit losses totaled $45.4 million and was comprised of an allowance for loan losses of $44.9 million and a reserve for unfunded commitments of $504,000 (included in "accrued interest and other liabilities"). This compares to the allowance for credit losses of $51.6 million, comprised of an allowance for loan losses of $51.0 million and a reserve for unfunded commitments of $629,000 at June 30, 2025. The $6.2 million decrease in the allowance for credit losses for the third quarter of 2025 was due to net charge-offs of $6.9 million, offset by a $625,000 provision for credit losses. The allowance for loan losses as a percentage of loans HFI decreased to 1.36% at September 30, 2025, compared to 1.58% at June 30, 2025, due mainly to net charge-offs which were specific reserves at June 30, 2025. The allowance for loan losses as a percentage of nonperforming loans HFI was 98.70% at September 30, 2025, up from 89.79% at June 30, 2025.
For the Three Months Ended September 30, 2025
For the Nine Months Ended September 30, 2025
(dollars in thousands)
Allowance for loan losses
Reserve for unfunded loan commitments
Allowance for credit losses
Allowance for loan losses
Reserve for unfunded loan commitments
Allowance for credit losses
Beginning balance
$
51,014
$
629
$
51,643
$
47,729
$
729
$
48,458
Provision for (reversal of) credit losses
750
(125
)
625
9,983
(225
)
9,758
Less loans charged-off
(7,019
)
—
(7,019
)
(13,084
)
—
(13,084
)
Recoveries on loans charged-off
147
—
147
264
—
264
Ending balance
$
44,892
$
504
$
45,396
$
44,892
$
504
$
45,396
Shareholders' Equity
At September 30, 2025, total shareholders' equity was $514.3 million, a $3.3 million decrease compared to June 30, 2025, and a $4.6 million increase compared to September 30, 2024. The decrease in shareholders' equity for the third quarter of 2025 was due mostly to common stock repurchases totaling $12.5 million and common stock cash dividends paid of $2.8 million, offset by net income of $10.1 million and lower net unrealized losses on AFS securities of $1.6 million.
The increase in shareholders' equity for the last twelve months was due to net income of $26.2 million, lower net unrealized losses on AFS securities of $1.6 million, and equity compensation activity of $2.2 million, offset by common stock repurchases totaling $14.0 million and common stock cash dividends paid of $11.4 million. Book value per share and tangible book value per share(1) increased to $30.18 and $25.89 at September 30, 2025, up from $29.25 and $25.11 at June 30, 2025 and up from $28.81 and $24.64 at September 30, 2024.
Dividend Announcement
The Board of Directors has declared a quarterly cash dividend of $0.16 per common share. The dividend is payable on November 12, 2025 to shareholders of record on October 31, 2025.
Contact:Lynn Hopkins, Chief Financial Officer(213)
(1)
Reconciliations of the non–U.S. generally accepted accounting principles ("GAAP") measures included at the end of this press release.
Corporate Overview
RBB Bancorp is a community-based financial holding company headquartered in Los Angeles, California. As of September 30, 2025, the Company had total assets of $4.2 billion. Its wholly-owned subsidiary, Royal Business Bank, is a full service commercial bank, which provides consumer and business banking services predominately to the Asian-centric 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, 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 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, October 21, 2025, to discuss the Company's third quarter 2025 financial results.
To listen to the conference call, please dial 1-888-506-0062 or 1-973-528-0011, the Participant ID code is 341289, conference ID RBBQ325. A replay of the call will be made available at 1-877-481-4010 or 1-919-882-2331, the passcode is 53065, approximately one hour after the conclusion of the call and will remain available through November 4, 2025.
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, the effectiveness of the Company's internal control over financial reporting and disclosure controls and procedures; the potential for additional material weaknesses in the Company's internal controls over financial reporting or other potential control deficiencies of which the Company is not currently aware or which have not been detected; 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 United States ("U.S.") federal budget or debt or turbulence or uncertainly in domestic or foreign financial markets; the strength of the U.S. economy in general and the strength of the local economies in which we conduct operations; adverse developments in the banking industry highlighted by high-profile bank failures and the potential impact of such developments on customer confidence, liquidity and regulatory responses to these developments; federal government shutdowns and uncertainty regarding the federal government's debt limit; possible additional provisions for credit 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; compliance with the Bank Secrecy Act and other money laundering statutes and regulations; potential goodwill impairment; liquidity risk; failure to comply with debt covenants; fluctuations in interest rates; 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; the effects of having concentrations in our loan portfolio, including commercial real estate and the risks of geographic and industry concentrations; 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, including direct and indirect costs and impacts on clients, the Company and its employees from the January 2025 Los Angeles County wildfires; or other adverse external events could harm our business; geopolitical conditions, including acts or threats of terrorism, actions taken by the U.S. or other governments in response to acts or threats of terrorism and/or military conflicts, including the conflicts between Russia and Ukraine, in the Middle East, and increasing tensions between China and Taiwan, which could impact business and economic conditions in the U.S. and abroad; tariffs, trade policies, and related tensions, which could impact our clients, specific industry sectors, and/or broader economic conditions and financial market; public health crises and pandemics, 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 and 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; the impact of changes in the Federal Deposit Insurance Corporation ("FDIC") insurance assessment rate and the rules and regulations related to the calculation of the FDIC insurance assessments; 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 or other accounting standards setters; fluctuations in the Company's stock price; restrictions on dividends and other distributions by laws and regulations and by our regulators and our capital structure; 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 Department of Financial Protection and Innovation; 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 for the year ended December 31, 2024, 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 SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)(Dollars in thousands)
September, 30,
June, 30,
March, 31,
December, 31,
September, 30,
2025
2025
2025
2024
2024
Assets
Cash and due from banks
$
24,251
$
27,338
$
25,315
$
27,747
$
26,388
Interest-earning deposits with financial institutions
210,679
164,514
213,508
229,998
323,002
Cash and cash equivalents
234,930
191,852
238,823
257,745
349,390
Interest-earning time deposits with financial institutions
600
600
600
600
600
Investment securities available for sale
410,631
413,142
378,188
420,190
305,666
Investment securities held to maturity
4,185
4,186
5,188
5,191
5,195
Loans held for sale
756
—
655
11,250
812
Loans held for investment
3,302,577
3,234,695
3,143,063
3,053,230
3,091,896
Allowance for loan losses
(44,892
)
(51,014
)
(51,932
)
(47,729
)
(43,685
)
Net loans held for investment
3,257,685
3,183,681
3,091,131
3,005,501
3,048,211
Premises and equipment, net
23,851
23,945
24,308
24,601
24,839
Federal Home Loan Bank (FHLB) stock
15,000
15,000
15,000
15,000
15,000
Cash surrender value of bank owned life insurance
61,538
61,111
60,699
60,296
59,889
Goodwill
71,498
71,498
71,498
71,498
71,498
Servicing assets
6,252
6,482
6,766
6,985
7,256
Core deposit intangibles
1,495
1,667
1,839
2,011
2,194
Right-of-use assets
24,305
25,554
26,779
28,048
29,283
Accrued interest and other assets
95,729
91,322
87,926
83,561
70,644
Total assets
$
4,208,455
$
4,090,040
$
4,009,400
$
3,992,477
$
3,990,477
Liabilities and shareholders' equity
Deposits:
Noninterest-bearing demand
$
550,488
$
543,885
$
528,205
$
563,012
$
543,623
Savings, NOW and money market accounts
721,697
691,679
721,216
663,034
666,089
Time deposits, $250,000 and under
1,119,258
1,010,674
1,000,106
1,007,452
1,052,462
Time deposits, greater than $250,000
975,054
941,993
893,101
850,291
830,010
Total deposits
3,366,497
3,188,231
3,142,628
3,083,789
3,092,184
FHLB advances
130,000
180,000
160,000
200,000
200,000
Long-term debt, net of issuance costs
119,815
119,720
119,624
119,529
119,433
Subordinated debentures
15,320
15,265
15,211
15,156
15,102
Lease liabilities - operating leases
26,066
27,294
28,483
29,705
30,880
Accrued interest and other liabilities
36,422
41,877
33,148
36,421
23,150
Total liabilities
3,694,120
3,572,387
3,499,094
3,484,600
3,480,749
Shareholders' equity:
Common stock
250,362
259,863
260,284
259,957
259,280
Additional paid-in capital
3,734
3,579
3,360
3,645
3,520
Retained earnings
274,608
270,152
263,885
264,460
262,946
Non-controlling interest
72
72
72
72
72
Accumulated other comprehensive loss, net
(14,441
)
(16,013
)
(17,295
)
(20,257
)
(16,090
)
Total shareholders' equity
514,335
517,653
510,306
507,877
509,728
Total liabilities and shareholders' equity
$
4,208,455
$
4,090,040
$
4,009,400
$
3,992,477
$
3,990,477
RBB BANCORP AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF INCOME(Unaudited)(In thousands, except share and per share data)
For the Three Months Ended
For the Nine Months Ended
September 30, 2025
June 30, 2025
September 30, 2024
September 30, 2025
September 30, 2024
Interest and dividend income:
Interest and fees on loans
$
50,094
$
47,687
$
47,326
$
143,402
$
138,193
Interest on interest-earning deposits
2,140
1,750
3,388
5,904
11,781
Interest on investment securities
4,592
4,213
3,127
12,941
10,369
Dividend income on FHLB stock
327
324
326
981
984
Interest on federal funds sold and other
239
231
258
705
779
Total interest and dividend income
57,392
54,205
54,425
163,933
162,106
Interest expense:
Interest on savings deposits, NOW and money market accounts
4,674
4,567
5,193
13,709
14,624
Interest on time deposits
20,152
19,250
22,553
58,486
67,725
Interest on long-term debt and subordinated debentures
1,635
1,634
1,681
4,901
5,039
Interest on FHLB advances
1,654
1,420
453
4,063
1,331
Total interest expense
28,115
26,871
29,880
81,159
88,719
Net interest income before provision for credit losses
29,277
27,334
24,545
82,774
73,387
Provision for credit losses
625
