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RBB(RBB) - 2025 Q1 - Earnings Call Transcript
RBBRBB(RBB)2025-04-29 22:55
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Financial Data and Key Metrics Changes - First quarter net income declined to 2.3millionor2.3 million or 0.13 per share, primarily due to strategic actions taken to address non-performing assets [3] - Non-performing assets were reduced by 20% and net exposure to non-performing loans decreased by 32% to 51million[3]−Netinterestincomebeforeprovisionsincreasedforthethirdconsecutivequarterto51 million [3] - Net interest income before provisions increased for the third consecutive quarter to 26.2 million [8] - Net interest margin increased by 12 basis points to 2.88% due to a decline in the cost of interest-bearing deposits [6][10] Business Line Data and Key Metrics Changes - Loans held for investment grew by 90millionor1290 million or 12% on an annualized basis, driven by growth in commercial, SBA, and SFR balances [5] - Total first quarter loan originations amounted to 201 million at a blended yield of 6.77% [6] - Non-interest income declined by 4.34millionto4.34 million to 2.3 million due to lower gains on the sale of loans [10] Market Data and Key Metrics Changes - Total deposits increased at an 8% annualized rate to 3.14billion,withgrowthinmoneymarketaccountsandCDsoffsettingadeclineinnon−interestbearingaccounts[13]−Theloanportfolioyieldremainedstableat6.033.14 billion, with growth in money market accounts and CDs offsetting a decline in non-interest bearing accounts [13] - The loan portfolio yield remained stable at 6.03% [12] Company Strategy and Development Direction - The company is focusing on resolving non-performing loans quickly while minimizing the impact on earnings and capital [3] - There is an ongoing effort to reduce reliance on wholesale funding, with a successful CD campaign in the first quarter [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in resolving remaining non-performing assets and expects to report additional progress in upcoming quarters [4] - The company anticipates continued loan growth, albeit at a more moderate pace than the first quarter [6] - Management believes that by the second half of 2025, there could be a target for reducing non-performing loans to a normal baseline [54] Other Important Information - The company’s tangible book value per share increased to 24.63 [13] - Capital ratios remain strong, with all capital ratios above regulatory well-capitalized levels [14] Q&A Session Summary Question: Thoughts on potential share repurchase - Management recognizes that a buyback is one of the best uses of excess capital and is working to put a buyback in place [19] Question: Dynamics within the margin and FHLB advances - The FHLB advances are fully priced into the March net interest margin, and the net interest margin is slightly below the quarter's average [21] Question: Margin drag from non-accrual loans - There is a drag on net interest margin from non-accrual loans, with 20millionpotentiallyreturningtoaccrualstatus[24]Question:Appetiteformoreproblemloansales−Managementisopentosalesbutbelievestheyarewellreservedforfuturewrite−offs[29]Question:Exposuretotariffimpacts−Managementhasreachedouttotopcustomersanddoesnotobserveanypotentialfinancialimpactfromtariffsatthistime[34]Question:Loangrowthexpectationsanddeposittrends−Managementexpectstofundloangrowthorganicallyandnotedsomemigrationintohigher−yieldingproducts[46]Question:Non−interestexpensesoutlook−Managementestimatesoperatingexpensestobearound20 million potentially returning to accrual status [24] Question: Appetite for more problem loan sales - Management is open to sales but believes they are well reserved for future write-offs [29] Question: Exposure to tariff impacts - Management has reached out to top customers and does not observe any potential financial impact from tariffs at this time [34] Question: Loan growth expectations and deposit trends - Management expects to fund loan growth organically and noted some migration into higher-yielding products [46] Question: Non-interest expenses outlook - Management estimates operating expenses to be around 17.5 million to $18 million, with some moderation expected [66]